ICL Delivers solid sequential quarterly improvement in sales of $1.7 billion and adjusted EBITDA of $362 million
09 May 2024, Israel: ICL (NYSE: ICL) (TASE: ICL) , a leading global specialty minerals company, reported its financial results for the first quarter ended March 31, 2024. Consolidated sales were $1.7 billion versus $2.1 billion in the first quarter of last year. Operating income was $203 million versus $465 million, while adjusted operating income was $215 million versus $480 million. Adjusted EBITDA was $362 million versus $610 million in the first quarter of last year. Diluted earnings per share were $0.08 versus $0.22, and adjusted diluted EPS was $0.09 versus $0.23.
“ICL delivered solid first quarter results, with sequential improvement in quarterly sales and adjusted EBITDA, as global demand stabilized and the majority of our end-markets began to show signs of recovery. Additionally, we have been able to limit the impact for most of the war-related disruptions,” said Raviv Zoller, president and CEO of ICL. “During the first quarter, we continued to focus on innovation, expanding our specialties product portfolio and entering into new strategic partnerships, while executing consistently on our efficiency program and achieving further cost reductions. These efforts help us to provide consistent strong cash generation and industry leading dividend distributions to our shareholders.”
The company reiterated its guidance for full year 2024, which calls for the specialties-driven segments adjusted EBITDA to be between $0.7 billion to $0.9 billion. For potash, the company continues to expect 2024 sales volumes to be between 4.6 million metric tons and 4.9 million metric tons. (1a)
Key Financials
First Quarter 2024
| US$M Ex. per share data | 1Q’24 | 4Q’23 | 1Q’23 |
| Sales | $1,735 | $1,690 | $2,116 |
| Gross profit | $557 | $560 | $846 |
| Gross margin | 32% | 33% | 40% |
| Operating income | $203 | $149 | $465 |
| Adjusted operating income (1) | $215 | $211 | $480 |
| Operating margin | 12% | 9% | 22% |
| Adjusted operating margin (1) | 12% | 12% | 23% |
| Net income attributable to shareholders | $109 | $67 | $280 |
| Adjusted net income attributable to shareholders (1) | $118 | $123 | $292 |
| Adjusted EBITDA (1,2) | $362 | $357 | $610 |
| Adjusted EBITDA margin (1,2) | 21% | 21% | 29% |
| Diluted earnings per share | $0.08 | $0.05 | $0.22 |
| Diluted adjusted earnings per share (1) | $0.09 | $0.10 | $0.23 |
| Cash flows from operating activities | $279 | $415 | $382 |
| (1) | Adjusted operating income and margin, adjusted net income attributable to shareholders, adjusted EBITDA and margin, and diluted adjusted earnings per share are non-GAAP financial measures. Please refer to the adjustments table and disclaimer. |
| (2) | In 1Q’24, the company’s adjusted EBITDA was positively impacted by an immaterial accounting reclassification. Please refer to the 6-K filing for additional details. |
Industrial Products
First quarter 2024
- Sales of $335 million vs. $361 million.
- EBITDA of $72 million vs. $105 million.
- Sequential quarterly improvement, with sales up more than 10% and EBITDA up approximately 30%. Provisional anti-dumping measures were imposed by EU Commission on imports of certain alkyl phosphate esters from China, beginning mid-April.
Key developments
- Flame retardants: Sales increased year-over-year, as higher volumes for brominated solutions were partially offset by lower sales of phosphorous-related solutions and lower prices overall. While the electronics and construction end-markets remained challenging, key customer demand was maintained.
- Industrial solutions: Elemental bromine sales decreased year-over-year, as lower prices offset higher volumes.
- Oil and gas: Despite continued stable global demand for clear brine fluids, sales were lower year-over-year, due to a peak in the market at the beginning of 2023.
- Specialty minerals: Sales declined versus the prior year, but were up sequentially, with stable demand for pharmaceutical uses.
Potash
First quarter 2024
- Sales of $423 million vs. $600 million.
- EBITDA of $124 million vs. $298 million.
- Grain Price Index decreased 19.0% year-over-year, with rice up 1.4%, while corn, soybeans and wheat were down 35.3%, 21.4% and 29.5%, respectively. On a sequential basis, the Grain Price Index declined 2.2%, with rice up 6.8%, while corn, soybeans and wheat were down 9.7%, 8.2% and 6.3%, respectively.
Key developments
- Potash price: $324 per ton (CIF).
- Down 6% sequentially and approximately 40% year-over-year.
- Potash sales volumes: 1,084 thousand metric tons.
- Increased more than 120 thousand metric tons year-over-year and were down approximately 95 thousand metric tons on a sequential basis.
- ICL Dead Sea
- Completed successful annual maintenance in March.
- ICL Iberia
- Strong production execution, with significant year-over-year improvement.
- Metal Magnesium
- Increase in production versus the first quarter of 2023.
Phosphate Solutions
First quarter 2024
- Sales of $559 million vs. $675 million.
- EBITDA of $131 million vs. $171 million.
- Sequential quarterly improvement in sales, even as phosphate prices were at a crossroad. While pricing remained stable in the first quarter, supply dynamics are expected to influence future quarters.
Key developments
- White phosphoric acid: Sales declined year-over-year, as prices were lower globally and volumes were mixed by region.
- Industrial phosphates: Sales decreased, as prices and volumes both declined year-over-year. Productivity was good overall, with consistent demand from the cleaning supply and water treatment end-markets. European demand was positive, while North America was weaker.
- Food phosphates: Sales decreased with lower prices and volumes. Demand in Europe was up slightly, on an annual basis, while South America was softer and North American customers faced competitive challenges.
- Battery materials: Construction of customer innovation and qualification center (CIQC) in St. Louis remained on-track.
- Commodity phosphates: Sequential sales improvement, on higher fertilizer sales, volumes and prices.
- Regions: Increased competition for most markets, as expected, including North and South America, China and Europe.
Growing Solutions
First quarter 2024
- Sales of $479 million vs. $564 million.
- EBITDA of $42 million vs. $45 million.
- Sequential quarterly improvement in EBITDA, up approximately 180%, with improved inventory position and continued efficiency efforts.
Key developments
- Brazil: Sales decreased versus the prior year, but product optimization helped deliver higher gross margin.
- Europe: Sales ahead of expectations and higher year-over-year, while profit was negatively impacted by lower prices and higher logistics costs.
- North America: Sales improved year-over-year on higher volumes, while profits were softer, due to lower prices and some logistics challenges.
- Asia: Due to challenging market conditions, sales declined year-over-year, with weaker volumes and lower prices contributing to lower profitability.
- Product trends: Specialty agriculture sales decreased versus the prior year, as stronger volumes were offset by lower prices. Turf and ornamental saw a recovery in ornamental horticulture, with good demand throughout the quarter, while turf saw some impact from a wet spring in Europe. The polysulphate market remained challenging, as lower prices impacted profitability in Europe and North America, due to lower overall volumes and higher logistics costs.
Financial Items
Financing Expenses
Net financing expenses for the first quarter of 2024 were $35 million, down versus $44 million in the corresponding quarter of last year.
Tax Expenses
Reported tax expenses in the first quarter of 2024 were $42 million, reflecting an effective tax rate of 25%, compared to $127 million in the corresponding quarter of last year, reflecting an effective tax rate of 30%. The lower tax rate reflected a lower surplus profit levy and increased profits in regions with lower effective tax rates.
Available Liquidity
ICL’s available cash resources, which are comprised of cash and deposits, unutilized revolving credit facility, and unutilized securitization, totaled $1,704 million, as of March 31, 2024.
Outstanding Net Debt
As of March 31, 2024, ICL’s net financial liabilities amounted to $2,022 million, a decrease of $73 million compared to December 31, 2023. In January of 2024, the company repaid $145 million in a private placement bond, and in March, it repaid approximately $108 million of its Series E Bond – both as scheduled.
Dividend Distribution
In connection with ICL’s first quarter 2024 results, the Board of Directors declared a dividend of 4.57 cents per share, or approximately $59 million, versus 11.32 cents per share, or approximately $146 million, in the first quarter of last year. The dividend will be payable on June 20, 2024, to shareholders of record as of June 6, 2024.
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