ICL Group Ltd

Good day everyone and welcome to the ICL third quarter 2024 earnings call. At this time all participants are in a listen only mode. Later you will have the opportunity to ask questions during the question and answer session. You may register to ask questions by pressing the star and one on your telephone keypad. You may withdraw your question by pressing star two. Please note this call is being recorded and I will be standing by should you need any assistance. It is now my pleasure to turn the conference over to Peggy Riley-Sarp.

Please go ahead. Peggy, thank you. Hello, everyone. I'm Peggy Riley-Sarp, Vice President of Global Investor Relations for ICL Group. I'd like to welcome you and thank you for joining us today for our earnings conference call. This event is being webcast live on our website at icl-group.com, and there will be a replay available a few hours after the live call and a transcript shortly thereafter. Earlier today, we filed our reports and presentation with the securities authorities and the Stock Exchange in Israel, and tomorrow, once the SEC Edgar website reopens, we will do so in the U.S. Those reports, as well as the press release and our presentation, are available on our website as of this morning. 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 Zeller, followed by Mr. Rappaham Navarro, our CFO. After the presentation, we will open the line for the Q&A session. And I would now like to turn the call over to Raviv.

Thanks, Peggy, and welcome, everyone. I would like to begin by providing a brief update on the situation in Israel, which is now in its 14th month. We have continued to address the challenges caused by the war, including fluctuations in the number of reservists called to service and ongoing logistics related issues. We remain committed to delivering against our 2024 plan while continuing to manage all areas under our control and preparing for potential external risks and scenarios. Now, if you'll please turn to slide three for a brief overview of third quarter results, which continued the positive trends we saw in the first half of the year. Sales of $1,753,000,000 were up for the third consecutive quarter, while adjusted EBITDA of $383 million was up for the fourth consecutive quarter. EBITDA was also up 11% on a year-over-year basis, as EBITDA margin expanded from 19% to 22%. Throughout the first nine months of 2024, as always, we maintained our focus on cash generation, As a result, our free cash flow strengthened throughout the year, with a year-to-date free cash flow of $572 million. Adjusted earnings per share has also improved every quarter this year, and for the third quarter, we delivered adjusted EPS of 11 cents, up 10% on a sequential basis. In the third quarter, our specialty-driven business divisions, industrial products, phosphate solutions, and growing solutions reported a 37% year-over-year increase in EBITDA. For the third quarter, our Putash business division represented approximately 30% of total EBITDA versus nearly 50% in the same quarter last year. We continue to return value to our shareholders via our industry-leading dividend, and next month, we will distribute another dividend payment of approximately 5 cents per share. We also maintained our focus on expanding ICO's innovative product pipeline across all of our specialties-driven businesses during the quarter. In addition to our focus on strong cash generation, we continue to target cost savings and efficiency efforts as well. I would ask you to turn now to slide four and to look at both year-over-year and quarter-over-quarter trends for some key financial metrics. As you can see, we once again delivered quarter-over-quarter improvement across the board, consolidated adjusted EBITDA was up on both a quarterly and annual basis, and our specialties-driven business divisions achieved improvement in both sales and EBITDA versus both prior periods. Let's start with a review of our divisions and begin with our industrial products business on slide five. For the third quarter of 2024, sales of $309 million were up 16% year over year. Over the same timeframe, EBITDA increased 55% to $65 million. Even the margin of 21% improved versus 16% in the prior year when the bromine market reached its bottom, driven by scale and efficiencies. In the third quarter, we continue to reap benefits from our efforts to gain market share in flame retardants with higher volumes for both brominated and phosphorus-based solutions. Sales of clear brine fluids for use in the oil and gas industry decreased year over year due to a normal shift in the oil and gas drilling cycles in Europe and the Eastern Hemisphere. Specialty mineral sales increased year over year, driven by higher volumes for industrial applications and steady demand from the food and pharma end markets. The new product pipeline, which spans from apparel to construction and into battery materials, is expected to benefit from an expansion into the North American energy storage supply chain through a phosphorus compound for use in the production of LIPF6, a critical raw material for lithium-ion batteries. On slide six, you will see our put-ash division results for the third quarter of 2024, with sales of $389 million and EBITDA of $120 million. Our average put-ash price was down $45 CIF per ton year over year, while total sales volume was down approximately 220,000 metric tons for the same time frame. As I mentioned earlier, at our Dead Sea operations, we continue to face intermittent challenges related to the war. We have continued to adapt to fluctuations in staffing and remain flexible in the face of shipping constraints, which presents a challenge for ICL and other global companies. In Spain, we are benefiting from ongoing operational and efficiency efforts, which have driven record third-quarter production. For 2024, we intend to limit our total annual put-out sales volumes to the 4.6 million metric tons, which have already been committed. This is similar to 2023 volumes, and in anticipation of improving conditions in 2025. Turning to slide seven in our phosphate solutions division, where third quarter sales were $577 million. EBITDA $140 million increased on a year-over-year basis, while EBITDA margin expanded to 24% from 20%. In the quarter, growth in specialties market share more than offset lower prices related to a decrease in cost inputs. On a portfolio basis, we continue to expand into new and adjacent products in the food, industrial, and pharma end markets. On a regional basis, we saw continued growth at YPH, our joint venture in China, with increased demand for battery-grade phosphate. We are two months away from completing our customer innovation and qualification center in St. Louis, which will allow us to begin qualifying battery materials products for customers. This big step forward puts us in an optimal position for growth in the Western Hemisphere, as it will allow us to prove our products at scale and strengthen our customer relationships. For our commercial LFP plant in North America, we continue to align our construction timeline and capital spend to match anticipated customer demand. Looking more globally, we are now selling specialty phosphate solutions to a battery customer in Argentina, and we're also looking at battery material partnership opportunities in Europe. In terms of commodity phosphates, prices firmed in the third quarter with tight stock positions in key markets. Turning to slide eight and a growing solutions business division, where third quarter 2024 sales of $538 million were somewhat down year over year, while EBITDA of $64 million increased more than 70% for the same time frame. EBITDA margin of 12% expanded significantly versus the prior year, driven by efficiency efforts and improved product mix. Our strategy of offering innovative products targeted to meet regional needs continued to prove itself as we delivered our third sequential quarter of sales and EBITDA growth. In China, we recently signed a five-year agreement with one of the top agricultural distribution companies. The agreement valued at approximately $170 million is for specialty water-soluble fertilizers, which have seen a substantial increase in demand in China. In North America, we have made good progress on the integration of custom ag formulators, a provider of liquid adjuvants and enhanced nutrients, as well as various other specialty products. I would now like to wrap up with a few highlights on slide nine. While I'm pleased that we delivered sequential EBITDA improvement for the fourth consecutive quarter, Our future growth relies on our passion to strive forward and to disrupt our own markets when necessary. This attitude has enabled us to continuously enhance our already robust product pipeline with innovative new solutions. Simultaneously, we have worked to manage costs and drive efficiency efforts. There are no sacred cows at ICO, and two additional small sites will close this quarter for efficiency considerations. We have also worked together to leverage opportunities across business segments, and we will continue to do so as we look to target new and adjacent end markets through innovative product solutions. One example of this is our battery materials business. We have the potential to leverage our expertise in a variety of ways and to expand our presence as a global leader in this space through new products and offerings. In North America, our customer innovation qualification center is nearing completion, and we currently expect commercial production to begin in 2027. Another example of our dedication to innovation is Agmatics, our ad tech digital startup, which was recently recognized by Fortune as one of the 10 companies that are changing the world and was featured in an important scientific publication in Nature on regenerative agriculture. The new Region IQ platform helps agronomists and suppliers implement environmentally friendly crop strategies and enables them to tailor regenerative practices to specific crops and conditions. These are just two examples that demonstrate how ICO is working to improve lives and protect the planet, and neither would be possible without the hard work, dedication, and support of each and every ICO employee. To all of our team, I say thank you. And with that, I would now like to turn the call over to Aviram.