ICL Group Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Sales were $1,767 million, up 2% year-over-year and 10% quarter-over-quarter due to solid strategic execution. Specialties-driven sales were $1,412 million, up 3% year-over-year.
• Industrial Products benefited from higher volumes in flame retardants; Bromine market prices picked up but had fluctuations. Potash addressed operational issues post-maintenance shutdown and focused on optimizing operations in Spain and Israel. Phosphate Solutions saw growth due to commodity strength. Growing Solutions grew via acquisitions like Custom Ag Formulators and GreenBest, and launched biostimulant product Bioz.
• Mentioned innovation and R&D as key to creating solutions for customers, and diversification in global approach for specialties businesses.

Segment Performance

• Industrial Products: Q1 sales were $344 million, up 3% year-over-year, with EBITDA of $76 million, up 6%. EBITDA margin improved to 22%, a 60 basis point increase. Benefited from higher volumes in flame retardants.
• Potash: Q1 sales were $405 million, with EBITDA of $118 million. Average potash price was $300 CIF per ton, down year-over-year but up $15 per ton quarter-over-quarter. Sales volumes were 1,103,000 metric tons, up ~20,000 tons year-over-year.
• Phosphate Solutions: Q1 sales were $573 million, up 3%, with EBITDA of $139 million, up 6%. EBITDA margin expanded to 24% due to strength in commodities.
• Growing Solutions: Q1 sales were $495 million, up 3% year-over-year, with EBITDA of $47 million, up 9%. Driven by strategic execution, including regional acquisitions and biostimulant sales.

Guidance

• Maintained 2025 guidance for Specialties-driven business divisions (Industrial Products, Growing Solutions, Phosphate Solutions) with EBITDA expected to be between $0.95 billion and $1.15 billion.
• Expected potash sales volumes to be between 4.5 million metric tons to 4.7 million metric tons.
• Effective annual tax rate for 2025 anticipated to be approximately 30% anticipating higher potash prices. Impact of potential tariffs on 2025 is de minimis currently.

Risks

• Timing gap between published and realized prices for many businesses.
• Global tariff and trade situation, though impact on 2025 is currently de minimis.
• Operational issues related to the war affecting potash operations.

Q: First off, congrats on the results. Just wanted to move into potash. So do you see any different trade flows with your Asian players saying that to shut down capacity in 2Q? And there are some market ideas that these players, if they produce above their normal capacity utilization, maybe 96% versus their normal high 80%. And there won't be any undersupply, but just relative tightness given the low spot availability. So just wondering what you think about that. Is it likely that they would like perform by that 96% capitalization or what do you think the tightness will be in the market in 2Q, just ideas on that in terms of pricing impact.

A: Rahi, can you repeat the first part of that question for me please? ... Peggy Reilly Tharp responded discussing uncertainty in Asian players' production actions and noting timing of potash contract fulfillment with India and China.

Q: And then just wanted to see if you have more color on the mix shift that you mentioned for Brazil and Growing Solutions.

A: Sure. Actually, yes, Brazil had obviously good B2B and B2C business. Specialties are very strong there. And I would say we saw something a little similar in North America where we added Custom Ag Formulators and in fact saw higher specialty growth for Growing Solutions there as well. So just and that's going around actually the world. We've mentioned that in the EU, we're seeing good biostimulant sales. So I hope that helps.