11 May2023, Israel: ICL (NYSE: ICL) (TASE: ICL) , a leading global specialty minerals company, today reported its financial results for the first quarter ended March 31, 2023. Consolidated sales were $2.1 billion versus $2.5 billion. Operating income was $465 million versus $902 million, while adjusted operating income was $480 million versus $880 million in the first quarter of last year. Adjusted EBITDA was $610 million versus $1,002 million. Earnings per share were $0.22 versus $0.49, and adjusted diluted EPS was $0.23 versus $0.48.
“ICL delivered another solid first quarter, even as prices pulled back significantly from last year’s peak levels. We are working to leverage opportunities created by geopolitical developments, global sustainability challenges and the current capital markets backdrop, to strengthen long-term value creation through innovative food security and battery materials solutions, while maintaining our focus on consistent cash generation and on driving cost efficiencies,” said Raviv Zoller, president and CEO of ICL. “For the first quarter, we continued to return value to shareholders, as we delivered record operating cash flow of $382 million and announced a dividend of $0.11 per share.”
The company also reiterated its guidance for full year adjusted EBITDA of between $2.2 billion to $2.4 billion, with approximately $1.1 billion of this amount estimated to come from the company’s specialties focused businesses. (1a)
Key Financials
First Quarter 2023
US$M Ex. per share data
1Q’23
1Q’22
Sales
$2,098
$2,525
Gross profit
$828
$1,245
Gross margin
39%
49%
Operating income
$465
$902
Adjusted operating income (1)
$480
$880
Operating margin
22%
36%
Adjusted operating margin (1)
23%
35%
Net income attributable to shareholders
$280
$632
Adjusted net income attributable to shareholders (1)
$292
$613
Adjusted EBITDA (1)
$610
$1,002
Adjusted EBITDA margin (1)
29%
40%
Diluted earnings per share
$0.22
$0.49
Cash flows from operating activities
$382
$325
Adjusted operating income and margin, adjusted net income attributable to shareholders, and adjusted EBITDA and margin are non-GAAP financial measures. Please refer to the adjustments table and disclaimer.
Industrial Products
First quarter 2023
Sales of $361 million vs. $494 million.
EBITDA of $105 million vs. $203 million.
Recent growth in the Chinese economy and EV markets is not expected to create significant new demand for flame retardants before the second half of 2023.
Key developments
Flame retardants: Product sales declined year-over-year, as electronics and construction end-market demand remained weak.
Industrial solutions: Elemental bromine sales were impacted by lower volumes and declining bromine prices. Strong global demand for clear brine fluids drove sales higher year-over-year, as the oil and gas markets remained robust.
Specialty minerals: Sales were higher versus the prior year, with increased deliveries to the deicing, food, pharmaceutical and industrial end-markets.
Potash
First quarter 2023
Sales of $583 million vs. $795 million.
EBITDA of $298 million vs. $450 million.
Grain Price Index increased 3.6% year-over-year, with rice up 14.8%, while corn, soybeans and wheat were down 1.4%, 2.9% and 0.3%, respectively.
Potash price (CIF) per ton of $541 was down 16% year-over-year, as prices moderated versus 2022.
Global stocks-to-use ratio remains low and farmer affordability remains above average.
Key developments
ICL Dead Sea
– Production in-line with last year, as annual maintenance shutdown took place in March of both years.
– 100,000 metric tons of potash shipments to India delayed to the second quarter.
– Successfully completed sealing project for the Dead Sea feeder canal.
ICL Iberia
– A fatal accident at the Cabanasses mine, in the beginning of March, was followed by gradual ramp-up, due to extraordinary safety measures. The resulting production loss is estimated to be approximately 30,000 metric tons.
Metal Magnesium
– Lower quantities were offset by higher selling prices.
Phosphate Solutions
First quarter 2023
Sales of $714 million vs. $798 million.
– Phosphate specialties: Sales of $425 million vs. $437 million.
– Phosphate commodities: Sales of $289 million vs. $361 million.
EBITDA of $170 million vs. $247 million.
– Phosphate specialties: EBITDA of $84 million vs. $115 million.
– Phosphate commodities: EBITDA of $86 million vs. $132 million.
Phosphate prices leveled off, as the quarter progressed, while raw material remained elevated year-over-year.
Key developments
White phosphoric acid: Sales declined year-over-year, as higher prices in both North and South America, as well as Europe, were offset by lower volumes, mainly in Europe and China.
Industrial phosphates: Higher prices in the U.S. and Europe were offset by lower volumes in all regions.
Food phosphates: Sales increased on higher prices, mainly in North America, while volumes remained stable in the quarter.
Battery materials: LFP cathode active material expansion in St. Louis remains on-track, with groundbreaking expected later this year.
Growing Solutions
First quarter 2023
Sales of $564 million vs. $566 million.
EBITDA of $45 million vs. $110 million.
Margin decreased, due to destocking during a declining price environment.
Key developments
Specialty agriculture: Sales declined versus the prior year, as lower volumes offset higher prices achieved through new product launches.
Turf and ornamental: Results softened year-over-year, as higher prices from new product launches were unable to offset weaker ornamental and horticulture sales volumes.
Brazil: Sales increased versus the prior year, while profit was impacted by higher-cost inventory.
Polysulphate: Sales and profit increased year-over-year, with record production at Boulby of 259,000 metric tons.
Financial Items
Financing Expenses
Net financing expenses for the first quarter of 2023 were $44 million, up versus $34 million in the corresponding quarter of last year.
Tax Expenses
Tax expenses in the first quarter of 2023 were $127 million, reflecting an effective tax rate of 30%, compared to $211 million in the corresponding quarter of last year, reflecting an effective tax rate of 24%.
Liquidity and Capital Resources
ICL had long-term credit facilities of $1,000 million, of which $587 million were utilized as of March 31, 2023.
On April 24, the company announced it had entered into a $1.55 billion sustainability linked revolving credit facility agreement, with an initial term of five years and a two-year extension option. The agreement, with a consortium of 12 international banks, replaced the previous $1.2 billion revolving credit facility, which was entered into in 2018.
Outstanding Net Debt
As of March 31, 2023, ICL’s net financial liabilities amounted to $2,301 million, a decrease of $15 million compared to December 31, 2022.
Dividend Distribution
In connection with ICL’s first quarter 2023 results, the Board of Directors declared a dividend of 11.32 cents per share, or approximately $146 million, versus 23.83 cents per share, or approximately $306.5 million, in the first quarter of last year. The dividend will be payable on June 14, 2023, to shareholders of record as of May 31, 2023.
