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 will need to press star and 1 on your telephone. I must advise you that 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 your first speaker today, Peggy Riley-Sarp, Vice President of Global Investor Relations. Please go ahead, ma'am.

Peggy Riley- Thank you. Hello, everyone. I'm Peggy Riley-Sarp, Vice President of Global Investor Relations. I'd like to welcome you and thank you for joining us today for our quarterly earnings 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 the US and in Israel. Those reports as well as the press release are available on our website. There will be a replay of the webcast available after the meeting and a transcript will be available 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 financial information discussed on this call at any time. We will begin with a presentation by our CEO, Mr. Raviv Zolder, followed by Mr. Avi Ramlehov, our CFO. Following the presentation, we will open the line for the Q&A session. Raviv, please.

Thank you, Peggy, and welcome everyone. In the fourth quarter, ICL delivered significant growth in both sales and EBITDA as we benefited from our continued strategic focus on growing our long-term specialty solutions and from commodity upside momentum. In fact, all three of our specialty businesses delivered all-time record fourth quarter and annual results. Fourth quarter sales came in at more than $2 billion, up more than 50%. while adjusted EBITDA of $575 million increased by more than 100% and was an all-time fourth quarter record. This was a remarkable end to 2021, and for the full year, we delivered $7 billion of sales, our second highest ever, as well as $1.6 billion of adjusted EBITDA. As you know, the fourth quarter is traditionally one of our slower quarters. However, as you can see on slide three, we delivered our fifth consecutive quarter of bottom line improvement. All four of our businesses contributed with double-digit growth in sales and EBITDA, and this includes Innovative Ag Solutions, which delivered on both an organic basis and via our recent Brazilian acquisitions. Performance in the quarter was supported by increased demand and higher prices in most markets, which helped us deliver record free cash flow of $166 million in the fourth quarter, a nine-year record and free cash flow of $465 million for 2021. For the fourth quarter, we also delivered a dividend distribution of 13.18 cents per share, up more than 10 cents per share over the fourth quarter of last year. While we saw continued success in the quarter, we also faced many of the same challenges we had throughout 2021. Once again, the teams worked tirelessly to overcome higher overall costs and global supply chain challenges. Most importantly, the global relationships our supply chain procurement and logistics teams have built over the years served us well during the past 18 months. The teams recognized imbalances in prices and supplies well in advance and worked to ensure consistent quality and quantity of supply. They strengthened partnerships across the supply chain, managed through the tough times, and help keep ICL on track almost seamlessly for the benefit of our extensive global customer base. Now, please turn to slide four for a snapshot of our fourth quarter results. As you can see, once again, we demonstrated improvement in each key financial parameter. On slide five, you can see year-over-year sales were up more than 50%, while adjusted EBITDA was up more than 100%, and margin increased by more than 780 basis points. We also added nearly $90 million of operating cash flow. I would now like to begin our segment review with industrial products on slide six. Quarterly sales were a record $422 million, while EBITDA was $129 million, and both were up approximately 25% year-over-year. This business benefited from strong product demand across key regions and from continued strategic shifts to long-term contracts. Our customers place a premium on knowing they will consistently receive the quality and quantity of product they need to meet their requirements, and this is across all of our end markets. The electronics market remained undersupplied, and the construction industry also remained very healthy in the quarter as the market took advantage of unseasonal weather, which has since turned. Clearbriar fluid sales returned to more normalized pre-COVID levels in the fourth quarter as higher oil prices were maintained. We also saw significant contribution from our phosphorus-based flame retardants and our specialty minerals businesses, as the latter benefited from the higher demand from the supplement, pharmaceutical, deicing, and oil drilling end markets. Our ongoing capacity expansions remain on track and are expected to be operational in the second half of 2022. In addition, Industrial Products is about to launch a growth acceleration investment plan, which is expected to expand capacity and deliver additional improvements in sales and profit. We will provide more details on this initiative when we update you on our progress toward achieving 2025 targets later this year. For fiscal 2021, industrial products delivered record sales and profit for the division, with significant contribution from its bromine and phosphorus-based flame retardants, as well as from its specialty minerals product, allowing us to achieve record cash flow for this business in 2021. Turning to slide seven and our potash business where sales of $698 million were up more than 80% year over year and EBITDA of $288 million was up nearly 250%. For the quarter, our average realized price per ton of $487 was up nearly 115% year over year, driven by strong global crop demand and allocation optimization. Corn, soybean, wheat, and rice prices were all up double digits year over year as supply remained tight and countries remained concerned about food security. For our potash production sites, work was completed on our P9 pumping station in the Dead Sea during the fourth quarter, and operations commenced early this year. In both the Dead Sea and in Spain, we maximized our granular potash production through de-bottlenecking efforts, which resulted in higher realized prices. The shift not only meant granular comprised approximately 50% of our production, but it also added roughly $35 million to operating income in 2021. At ICL Bowlby, we saw an increase in both polysulfate production and sales volume in the fourth quarter, up 36% and 42% respectively. During the quarter, we also announced the approval of Bowlby's application to continue mining and production through 2048. Beginning in 2022, our BOLBI operations will be moving from the put-out segment to our innovative ag solutions segment, and this change will better align BOLBI's specialty products as we continue to focus on targeting long-term growth through specialty solutions. Turning to slide 8 and our phosphate solutions division, where reported fourth quarter sales of $609 million were up more than 20% year over year, while EBITDA of $146 million was up nearly 100%. Of note, December, traditionally one of our slower months, was our strongest for 2021 as we were able to supply new and existing customers at higher market prices. Phosphate specialties delivered record quarterly sales and profit as both food and industrial sales increased with higher demand across all regions. Also, as we mentioned last quarter, we inaugurated our new alternative protein plant in St. Louis in December. Our food specialties business saw mixed impact from the resurgence of COVID, with food service weakening as it had during COVID peaks. However, retail was able to offset this decline once again. Industrial customers also provided strong demand, and this business saw continued improvement in volumes across all end markets at higher prices in the quarter. Our YPH subsidiary capped off record 2021 sales and profit with a great fourth quarter, driven by higher volumes and prices, as well as improved efficiency. This business also continued to supply increasing demand from the lithium iron phosphate battery market, which drove higher specialty monoammonium phosphate sales. Overall, we saw a significant increase in phosphate fertilizer sales and profitability driven by record production and continued healthy demand. Throughout the quarter, supply remained tight due to export restrictions in China and Russia and other shifting global dynamics. Just before the end of the year, we announced the extension of our phosphate mining concession in Rotem, which has been approved for an additional three years through the end of 2024. For fiscal 2021, our phosphate specialties business delivered record sales and profit and also reported production records spanning multiple sites across three continents as the team worked to meet higher new and existing global customer demand. This business saw strong volume increases in higher prices across food and industrial specialty phosphates and for specialty acids. Turning to slide nine and innovative ag solutions. In total, fourth quarter innovative ag sales of $380 million were up more than 130%, while EBITDA of $48 million was up more than 330%. This segment saw record organic growth in addition to outstanding performance from both of our recent Brazilian acquisitions. For the quarter, organic sales and EBITDA were up 37% and 82% respectively. Positive momentum continued across IAS due to its strong demand and higher volumes across most regions and product lines. Our turf and ornamental business saw robust growth as this business benefited from a global increase in sales volumes and higher prices as distributors stocked up in advance of the spring gardening season in the northern hemisphere. Specialty fertilizer sales reached record levels for both the fourth quarter and full year. with increases across all regions led by higher volumes of straights, liquid and controlled release fertilizers, and strong performance in Brazil. For overall 2021, our innovative ag solutions of business reported record organic and total sales and profit. Now, if you will turn to slide 10, I would like to walk you through some of our recent impactful events before turning the call over to Aviram for a review of our financials. Throughout the year, we've targeted innovation, sustainability, and service excellence through valuable partnerships, and we expect this to continue into 2022. You've heard me discuss our internal innovation efforts, and in 2021, these efforts delivered approximately $40 million in annual efficiencies. In addition, Our internal accelerator continued to deliver and achieve a run rate of more than $100 million of additional annual operating income. This program succeeds by challenging employees to be creative and innovative in finding all types of solutions from the everyday to the next big product. Our employees have really made a difference. While America DeSoul is still very new to ICO, they're already blazing a trail when it comes to innovation. The team in Brazil was ranked as one of the five most innovative agribusiness companies in the country by the business newspaper Valor Economico as part of its annual Valor Innovation Awards. We're proud of their efforts, especially since innovation is such an integral part of our identity and our future growth. At ICL, innovation is happening every day. It's part of our DNA, and I would be remiss if I did not point out two other 2021 efforts. First, our expansion into the electric vehicle and energy storage space through our production of specialty MAP for the LFP battery market, and second, the launch of our ICL Planet Startup external innovation hub. I mentioned sustainability a great deal in the past couple of years, and you'll be hearing more of the same in 2022 as we are beginning our year of sustainability within ICL. I'm looking forward to what is to come this year and would like to mention a few fourth quarter milestones. At the end of this year, we launched what we are calling our Greenstone Project. This is an innovative effort designed to leverage renewable energy for our largest production site. It will help us reach our goal of being carbon neutral by 2050, and we will be sharing more about this exciting initiative in the coming months. Also in the fourth quarter, we were awarded the prestigious gold medal rating by EcoVedas for the first time. This means ICO is ranked in the top 5% out of 75,000 rated suppliers and we are thrilled to be recognized as a global supplier that demonstrates sustainability standards aligned with our customers. As I discussed earlier, we opened our alternative protein plant in St. Louis in the fourth quarter and this investment represents just one part of our efforts to develop healthier and more sustainable food products. We're excited about the consumer trend toward more sustainable lifestyle and diet choices and look forward to offering additional sustainable, functional, and nutritional alternative food solutions going forward. I would like to mention our commitment to developing and driving a more circular economy, which we are doing through new and innovative products like Fibagro Advance. This unique and superior peat alternative is made from a byproduct of the timber industries and allows a much lower carbon footprint compared with use of peat and other peat alternatives. a true sustainable step forward. Like innovation, ESG is an integral part of our day-to-day work at ICO, and I would like to highlight two additional achievements in 2021. We set in place measurable environment targets through a sustainability link loan, and we established a new climate and sustainability committee to help direct and guide our progress. In terms of partnership, once again, the positive developments in Israel's foreign relations have opened up the opportunity for us to build new relationships and create new collaborations. As a result, for the first time, we shipped Israeli clear brine fluids to the United Arab Emirates this past December. We welcome the opportunity to supply our product and are proud to be part of this historically significant moment. Earlier this year, we announced a number of other partnerships, including our collaborative efforts with Columbia University's Electrochemical Energy Center to jointly explore strategies to address energy storage and conversion via next-generation batteries. We are also teaming up with PlantArcBio, an Israeli ag biocompany, and have filed a joint patent to develop a novel biostimulant technology platform for improving crop yields while having a minimal impact on the environment. If you will turn to slide 11, I would like to wrap up by reviewing some of the key takeaways from 2021. Our strategic long-term focus on specialty solutions, which continues as commodity upside persists, benefited us through the year as we delivered all-time record profitability from all of our specialty businesses with a year-over-year increase of more than 50%. In 2021, we benefited from some of the additional production capacity we continued to bring online in our industrial products and phosphate solutions businesses. The agriculture portion of our business was strengthened by our strategic acquisitions in Brazil, which provided additional sales, profitability, and a seasonal balance between the northern and southern hemispheres. Our food strategy was executed according to plan, as we added alternative protein capacity and invested in a food tech startup through our ICL Planet Hub, and you can expect to see more of these types of investments in 2022. Our industrial businesses, specifically our industrial product segment, benefited from its commitment to focusing on long-term customer partnerships and on delivering in reliable fashion. And we also added capacity to meet new commitments. From a financial perspective, there were many achievements which Aviram will review. Still, I would like to highlight the significant acquisitions we made in 2021 while maintaining our net cash position as we continue to strengthen our solid cash flow generation. On slide 12, you can see our outlook for 2022. We expect commodity prices to remain firm through at least the first half of the year and supported by strong demand relating to food security concerns, higher food and crop prices, and supply constraints. For our specialty businesses, we will maintain our strategic focus and we expect overall good visibility for the year due to our emphasis on long-term contracts and a very healthy demand pipeline. We will continue to invest in additional capacity to help support our continued growth with higher growth capex in 2022, focused on supplying our long-term contracts through additional infrastructure. We will also maintain our company-wide focus on innovation as we look to generate new opportunities and efficiencies. Our sustainability plan is on track, and we are gaining momentum as we continue to receive third-party accolades for our efforts. Finally, we expect to maintain our disciplined approach to cost management to support our strong cash flow and increase dividend payouts. And of course, we will continue to execute on our strategic leadership goals in the areas of sustainable agriculture, food, and industrial solutions. As always, I want to thank the entire ICL family of employees spread out across the globe for all their hard work and contributions in 2021. We appreciate that our record profitability is a result of your tremendous efforts. And with that, I will turn the call over to Avi Rahm.