ICL Group Ltd

Ladies and gentlemen, thank you for standing by and welcome to the ICL Analyst Conference call. Our presentation today will be followed by a question and answer session, at which time, if you wish to ask a question, you'll need to press star 1 on your telephone. I must advise you this call is being recorded today. If you experience any technical difficulties, please press star 0 on your telephone. I'd like to hand the call over to the first speaker today, Ms. Peggy Riley-Tharp, Vice President of Global Investor Relations. Please go ahead, ma'am.

Thank you. Hello, everyone. I'm Peggy Riley-Tharp, Vice President of Global Investor Relations. I'd like to welcome you and thank you for joining us today for our quarterly earnings conference call. The event is being webcast live on our website at icl-group.com. Earlier today, we filed our reports with the securities authorities and the stock exchanges in both the U.S. and in Israel. Those reports, as well as the press release, are available on our website at There will be a replay of this webcast available after the meeting and a transcript shortly thereafter. The presentation, which will be reviewed today, was also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on slide two. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Kobi Altman, our CFO. After the presentation, we will open the line for Q&A session. Raviv, please.

Thank you, Peggy, and welcome, everyone. I'm pleased to report yet another quarter of strong results, driven by our specialty businesses, which reported record results again and represented 53% of total EBITDA. This exceptional performance was augmented by commodity price upside, as our sales in the quarter were equally supported by increased demand and higher prices. We are currently well on track to achieve our strategic goals. On slide three, you can see some highlights from each division. Industrial Products' record quarter was driven by increased demand for our specialty product offerings and supported by long-term contracts, as some of our customers would rather purchase bromine compounds from us versus producing their own. For PUDASH, during the quarter we successfully completed both our one-week annual maintenance shutdown at the Dead Sea and the RAMP project in Spain. Phosphate Solutions delivered a record-breaking quarter across the board with strength in both specialty food phosphates and industrial salts, combined with higher commodity prices. Innovative Ag Solutions showed sales growth across all product lines with higher prices and volumes. We also completed the acquisition of Compass Minerals South American Plant Nutrition business. And while I'll talk more about this exciting news a bit later, I'd like to turn to slide four, where you can see just how important this acquisition is to our leadership strategy. While our acquisitions in Brazil will help to provide seasonal balance between the northern and southern hemispheres, and provide opportunities to expand our product reach, they will also firmly establish our agriculture business as a leader in the specialty plant nutrition and move us even closer to our 2025 targets. Our food business is also expanding as we continue to focus on food specialties. In the second quarter, alternative protein sales were up significantly as we are seeing organic growth from existing customers and also have a strong pipeline of new customers we are working with. Our new alternative protein plant in St. Louis, which we expect to become operational in the fourth quarter of this year, will help provide the means to meet this increased customer demand for our innovative products, which is yet another part of our 2025 leadership strategy. For our industrial business, which is more than just industrial products, while we continue to benefit from long-term contracts in that division, we are also investing in innovative new products and looking to grow our capacity to meet existing demand. Our research and development efforts are targeting the creation of new sustainability applications, which will help us reach the 2025 targets I shared with you at our investor day last September. Turning to slide five, you can see our progress over the past four quarters with sales of $1.6 billion in the second quarter, up more than 30% year over year. Adjusted EBITDA of $351 million was up more than 40% over the prior year. In total, we have already delivered more than $3 billion of sales this year with adjusted EBITDA of well over $600 million, and we expect to be ahead of our pre-COVID profitability for this year. In the second quarter, we continue to report strong cash generation with operating cash flow of $242 million, up $65 million year over year. Free cash flow of $94 million was also very strong and up more than 350% with all divisions contributing. Our complete second quarter results are on slide six, where, once again, you can see growth in every single financial matrix. This continued improvement is a reflection of the success we are seeing as we focus on providing specialty solutions while benefiting from a strong upcycle in commodities post-COVID-19. Moving on to slide seven, let's begin our segment review with industrial products. where we had an all-time quarterly sales record of $410 million, up 44% versus the second quarter of 2020, and record EBITDA of $128 million, which was up 45%. The business delivered record results for both bromine and phosphorus-based products, with continued strong demand for flame retardants driven by the electronics, automotive, textiles, and construction end markets. Other end markets, also showed resilience, including the supplements in pharmaceuticals and markets, which resulted in record results for our magnesia-based products. We also saw improvement in some oil and gas markets, which resulted in year-over-year sales growth in clear brine fluids. But however, overall demand trends remain under pressure and have not returned to pre-COVID levels, and such is unlikely to occur in 2021. Elemental bromine prices continued to rise hitting record spot prices in China, where higher demand for flame retardants is facing limited local supply. While we are benefiting from the exuberance in the market, we expect prices to stabilize going forward. Nonetheless, we are currently facing higher input and logistics costs, as well as some raw material constraints. With TBBA production at capacity, we are pursuing expansion opportunities and planning to bring on additional capacity through de-bottlenecking and other efforts. However, this will take a few more months. This is in addition to the TVBA capacity we added last year, which, as you know, is already sold out. Turning now to slide eight and a review of Putash. We successfully finished our annual one-week maintenance shutdown at the Dead Sea in early April and completed approximately 80 projects during that time. As I mentioned during our first quarter call, The ramp project in Spain, which connects our Cabanases mine and Surya plant, was also completed in April and is now operational and ramping up to capacity. This mine is expected to reach a production run rate of approximately 1 million tons by the beginning of 2022. The positive put ash environment continued in the second quarter, with prices increasing across all key markets. Sales of $412 million were up 21% over the prior year's second quarter, while EBITDA of $85 million was up 6%. Grain prices continued to increase due to strong global demand and supply remained tight with pressure from higher freight rates. We now expect to see significantly more benefit from recent price increases in the second half of this year, with improvement also driven by the expected increase in production in Spain. Turning to slide nine and our phosphate solutions division, which reported record sales for specialties, commodities, and our YPH joint venture. In total, sales of $623 million were up more than 40% year over year. Phosphate solutions recorded EBITDA of $134 million, which was up nearly 125% and was the highest of all of our divisions. For specialties, both food phosphates and industrial salts sought strong demand, with higher prices across most regions and industries. Food specialties saw strong momentum in North America, with product innovation contributing as food service demand began to recover. Industrial salts benefited from the institutional cleaning solutions and market, showing signs of improvement. For commodities, price improvement continued in the second quarter, along with increased prices for raw materials, mainly sulfur, and higher freight rates, combined with supply chain challenges. YPH sales were up on higher prices and volumes with continued improvement in efficiency. Growth in our white phosphoric acid business was universal across all regions, but with a particular significant increase in South America. Finally, turning to slide 10 in our innovative ag solutions where all product lines showed sales growth and total sales reached $237 million, up 20% year over year. Record second quarter EBITDA of $27 million was also up more than 20% on strong performance. Specialty agriculture sales were up on increased volumes of straights, liquid, and controlled release fertilizers with growth in all key regions. Our turf and ornamental business is having a great year and once again delivered record sales as all geographies showed improvement, but with new markets doing especially well. New categories also performed well, specifically liquids, biostimulants, water conservation, and grass seeds. Of course, the big news, which I already mentioned, is the completion of our acquisition of the specialty plant nutrition business of Compass Minerals, which was finalized on July 1st. We're delighted to have this business join our plant nutrition portfolio and to welcome its team and its customers to ICL. As I mentioned, this important step delivers on our stated strategy of achieving leadership positions in high-growth specialty plant nutrition markets and accelerates our progress towards long-term global leadership of our innovative Ag Solutions division. This acquisition will significantly expand our product portfolio and profitability and allow us to deliver the critical mass we've been seeking in Brazil. It will also provide further seasonal balance between northern and southern hemispheres and make us the leading specialty plant nutrition company in Brazil, one of the world's fastest growing agriculture markets. If you turn to slide 11, I'd like to walk through just a few key highlights before turning the call over to Kobi for a review of our financials. To achieve balanced long-term growth, we will continue to expand the profit contribution from our specialty businesses while taking advantage, when possible, of commodity upside. This approach has benefited us in 2021 as we have seen consistent strength in all our businesses with each contributing to our improvement in EBITDA. We will also remain focused on value over volume in our industrial products business by partnering with our customers to supply specialty products based on long-term partnerships. We will maintain and optimize our potash operations so we can continue to benefit from this very foundational part of our business. We will target long-term phosphate specialties growth through our focus on food products. And in innovative ag solutions, we will look forward to new opportunities in Brazil as we expand our product offerings and take on a leadership position in specialty plant nutrition. Finally, we remain committed to meeting our 2025 goals in our focus markets of sustainable agriculture, food, and industrial solutions by means of expansion, innovation, and plain old hard work. Once again, this has been a fantastic quarter for ICO. And as always, I would like to thank the truly talented family of employees we have across the globe and also extend a very warm welcome to our newest members in Brazil. We're glad to have you join us. With that, I'll turn the call over to Colby.