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.

Thank you, Aviv, and to all of you for joining us today. Let us get started on slide 11 and take a look at some key market metrics. Since we are a truly global company serving a variety of end markets, we look beyond fertilizer prices to a wider array of macro indicators. Starting with inflation, where the US and EU saw decreases in the third quarter, while China, Brazil, and Israel also increases. which ranged from 20 to 60 basis points. Interest rates decreased versus the prior quarter in the US, EU, and UK, remained steady in Israel and India, and increased in Brazil. Global industrial production was stable in the quarter, with improving trends expected into the next few quarters. On a sequential basis, housing stocks picked up slightly in the US in both the second and third quarters this year. Turning to slide 12, the key fertilizer market metrics. Across the board, grain prices ended the third quarter lower, while farmer sentiment significantly softened. However, data for October showed a surprising pre-election bounce in sentiment as farmers expressed some optimism that the economic conditions will improve and that there will not be an extended downturn in the farm economy. Potash and phosphate prices continue to diverge. with potash prices maintaining their descent, while fossil prices increased slightly during the second quarter and significantly year over year. While ocean freight rates decreased in the quarter, reaching the lowest level since the third quarter of 2023, at ICL, we continue to see higher overall logistical costs. On slide 13, you can see some key market metrics for energy storage and electric vehicles. While both are growing at roughly the same pace over the next few years, the most significant increase in demand is still expected later in the decade. As Raviv mentioned, in addition to our current North American battery materials project, which is aligned with our customers' current expected production timelines, we are also looking at battery material expansion opportunities in other regions. If you will now turn to slide 14, For a look at our third quarter sales bridges, on the left side, you can see the year-over-year change for each of our business divisions, with Potash having an outside impact on the year-over-year decrease in sales, which came in at $1.8 billion. Turning to the right side of the slide, you can see the impact of floor prices, especially for Potash, and the effect exchange rates had on sales. In addition, due to one-time logistics adjustments, which will allow for greater flexibility of allocation between Poland and Israel going forward, we deferred approximately 120,000 metric tons of potash sales volume to China. On slide 15, you can see the impact lower potash prices had on our third quarter 2024 EBITDA of $383 million. We were able to offset lower prices in general through higher quantities and lower raw material costs in our specialty-driven businesses. Turning to slide 16, you can see that even as potash prices continue to decrease in the third quarter, ICL remains the leader in terms of average realized price. Once again, we maximize the profitability of our cost-efficient resources. Demand for potash is currently constructive due to soil replenishment needs, and we are seeing some firming in the global market. On slide 17, I would like to remind you of ICL's leadership position in the global bromine market. While bromine prices have been under pressure for more than a year, the DESI remains the most cost-competitive source of bromine and accounts for approximately two-thirds of global supply capacity. If you turn to slide 18, you can see how our business breaks out on both the regional basis and business division. As a truly global company, we maintain solid foundations in Europe and North America while participating in high growth markets like Brazil, China, and India. As a truly diverse company, our four business segments serve a wide array of end markets from automotive to food and beverage to pharma and beyond. Before we wrap up, I would like to share a few highlights on slide 19. We continue to prioritize cash generation and ended the quarter with available resources of approximately $1.7 billion. Our cost savings and efficiency efforts are ahead of our expectations. Our net debt to adjusted EBITDA rate at quarter end was 1.2 times and S&P recently reassigned our BBB minus rating with a stable outlook. And of course, we are once again distributing 50% of adjusted net we will pay out $68 million as a dividend to our shareholders, keeping our trailing 12-month dividend yield at 4.6%. Finally, if you will turn to slide 20, I would like to update you on our 2024 guidance. For our specialty-driven business divisions, which include industrial products, growing solutions, and phosphate solutions, we now expect EBITDA to be between $0.95 to $105 billion in 2024. This is up from previous guidance of 0.8 to $1 billion. As Raviv mentioned earlier, for 2024, we intend to limit our total annual potash sales volumes to 4.6 million metric tons, which is in line with 2023 volumes and in anticipation of improving conditions in 2025. We continue to expect our effective tax rate for 2024 to be approximately 28%, which was our rate in the third quarter. And with that, we can begin the Q&A.

Thank you. At this time, if you would like to ask a question, please press the star and 1 on your telephone keypad. You may withdraw your question at any time by pressing star 2. Once again, to ask a question, please press the star N1 on your telephone keypad. We'll take our first question from Rahi Parikh with Barclays. Please go ahead. Your line is open.

Hi, everyone, and congrats on the results. I'm obviously coming back to Ben. Thank you. And the first question that we have is, do you have any preliminary, especially outlook for 2025, given that 2024 is coming together? much better than initially anticipated. I have a follow-up for after that.

Okay. So as you can imagine, first of all, hi, how are you? And I hope we get to touch base. We have, yeah, we do have preliminary thoughts about 2025. It hasn't filmed up. That's what the budget for 2025. But we definitely, I mean, the ideas and the axioms for 25, if I go industry by industry, would suggest that we see basically further stabilization or firming up around the portage starting from that. Hopefully continuation of the good track record that we have on phosphate and its derivatives. On industrial products, as you know, a lot of it depends on the market side and the demand that's going to firm up. We believe that during the year, demand should be picking up. We are not waiting for the demand, as you know, we are supplying basically at full steam, but this should drive prices up. And finally, on the growing solution side, we're hopeful that we continue the very positive journey that we embarked upon and 25 is going to be a better year there. So again, we're going to work on it. We don't have a version that we're ready to share at this time, but the trends basically look okay. Anything I missed Aviv? No, it looks perfect. Okay. So that's 25. And of course, once we have a better picture, As always, we will find a way to share it, and it will culminate in the guidance that obviously we will give when we come out with Q4 and 24. We will also, of course, give the guidance for 25, as we did in the previous two years.

Okay. Thanks, Aviram. And then also just on geopolitics, Do you see, is the impact still just on increased shipping costs or is there issues getting tons out in the area? And then what's your take on the Belarus notion to cut 10% of production? Thanks so much.

Okay, so thanks for the question. Geopolitics, of course, nobody has a crystal ball, but the main issue for us is logistics and shipping. And during the third quarter, we made certain adjustments to make sure that if necessary, we could get all our product out of one port instead of two. That has a certain cost to it. We saw, if you look at the bridge of quarter versus quarter last year, there was an increase of $13 million in transportation costs. So a huge chunk of that has to do with the adjustment to move out of one port. So we're hoping, of course, that in the coming months, things will work out to the better and that we lose that problem that we don't like to face. But in terms of our abilities, we're much more flexible now because we can actually ship all of our product from one port. It means that part of the adjustment that was made this year was that we're shipping more to the Western Hemisphere than we did before. So the negative is that we have less flexibility on our shipping destinations. The positive is we actually got a better return from the Western Hemisphere. And given that the current situation is that... We see that the price for the beginning of next year, when we sell product for January, we get a better return than the spot price. Then we prefer to defer product to any product left, which is not a whole lot, to next year. So that's on geopolitics and transportation. In terms of the Bill of Russia, we don't really know. There were certain things said. There are a lot of rumors in the market that if things were said, there probably is reason for that. But we don't actually know. We do understand that the marginal price of shipping products from Belarus to China by train is at its very low, which means there isn't any profitability there, or at least that's what we understand. So If that's the case, then I guess the Belarusians have to do something. And what exactly they do is the big question. But all in all, the trends in the potash market look like prices are firming. The eastern prices are firming in all markets other than China. But inland China also looks like it's getting tightened. And Brazil, future sales are at a higher price than the spot sales. All in all, it looks like the potash market is firming. The only place where I don't know at this point is Europe. It's off-season, and we don't see any particular demand. But in all other regions, there's significant potash demand given the need for soil replenishment. So things are looking good on the potash side with or without Belarusian use.

Awesome. Thank you so much.

Thank you.

Thank you. Our next question comes from Alex Jones with the Bank of America. Please go ahead. Your line is open.

All right. Thanks very much for taking my questions. Two, if I can. The first one, the guidance for the EU and on specialties EBITDA. Could you talk about what the sensitivity is within that range, the 100 million sort of top to bottom and what would drive that to the bottom end or the top end, please? And then the second question, specifically on industrial products. If I look at the pricing this quarter, it was sequentially improved, still down 6% year on year, but much better than the double-digit declines you reported in recent quarters. Is that indicative of a trend? Should we expect pricing to return positive into next year from what you're currently seeing in the market? Or any comments you have there would be helpful.

Which part of the business, Alex, if I may? The second question. Industrial products.

Industrial, IP. OK. I'll start with the second question. I'm not sure that I heard the first question, so I'll pass it on to you. On industrial products, the price is relatively stable and there's a little bit of seasonality. Like for now, there's a little bit of price going up because of winter stoppage in China. But the prices have pretty much stabilized in the past few months, and there's no meaningful change in price in recent months. There is a little bit less of sales of clear-going fluids in the quarter. It has to do, again, with seasonal effects, nothing real. In terms of output, we're almost at full output. So I guess... As long as we're at the full output, there's no reason for too much price appreciation. Price appreciation will probably appear once demand strengthens on the electronic side. Real estate is going to take a little more, building in real estate is going to take a little longer. I didn't actually hear the whole first question.

I can do it. Hi, Alex, and thank you for the question. Basically, when we look at Q4, the way it is shaping up, in many ways it should be a similar quarter. I'm talking EBITDA-wise now to Q3 and Q4. Maybe to some extent this will be a bit seasonality will kick in. maybe a little bit lower than we saw. Obviously, a lot of the differential vis-a-vis the quarter will potentially come from the potash, which Aviv spoke about and also Aurelie spoke about. So if I zero in on the three business opportunities, the divisions that comprise the specialty side of the business, then I would say that if I look at them each, all of them should be to some degree seasonally adjusted, not as strong as Q3. The differences are not that big. And if we do the math and we compile Q4 to what we came out in the three quarters, this one that we're reporting today in hand then we should be firmly in the territory of our new guidance so uh what can drive it to the upper side is the results that that will be somewhat better uh in the different markets uh each of them with their own story which could drive it a little bit down would be obviously the the other side but we feel pretty well with the guidance that we shared with the market, which is definitely better than what we saw after Q2. That's also in the back of, obviously, the Q3, which we're coming at today, which is basically a good quarter. We normally tend to be, as you all know, quite conservative, and we take extra care to fulfill our obligations to the market. So there you have

Maybe just to add on the fourth quarter, that typically the seasonality is right to the last moment. So an industrial product, there's a real question on how December looks. And also growing solutions, typically at the end of the year, we see a drop in the strength of demand. So we see typically Q4 is a little weaker than Q3.

Also, does Brazil, if I may, just depend? quick note which just reminded me it's basically the brazilian market which obviously in the second half of the year has a lot of importance in the southern hemisphere of course and brazil is uh obviously it's so important from the agricultural point of view but it's quite volatile so i think uh you know adding to what we've said a lot will be determined How strong is the very end of the year? And that we'll know obviously only in the early days of 2025. But we seem to be well on track.

Thank you. You're welcome. Thank you. Thank you, Alex.

Thank you. Our next question comes from Joel Jackson with BMO Capital Markets. Please go ahead. Your line is open. Hi.

Hi. Good afternoon. I'm going to ask a few questions one by one. Good morning, or good afternoon. Can we talk about when you've raised the specialties guidance for the year here by about $100 million, can you break that down as much as you can between specialty phosphate, commodity phosphate, bromine, and potash, and growing solutions, how the business has improved by about 100? Yes.

So growing solutions is going to be a little weaker than third quarter, and industrial products is going to be a little weaker than third quarter, like we mentioned before, because of seasonality. We don't want to break through.

Sorry to interrupt, but what I'm saying is for the full year, over the two quarters, Q3 and Q4, you've said it's 100 more. So I'm sort of asking across the second half of the year, not repeating the question the prior person asked about Q4. Sorry.

Yeah, so again, on industrial products and growing solutions, we see fourth quarter being a little weaker than Q3. And Fosmate solutions will be relatively similar to Q3. We don't break up specialties and commodities on Fosmate for a simple reason that we leave ourselves the flexibility to sell whatever makes sense in the market. We're short on both specialties and commodities. So we look at the best alternative at the time and the year is still short. Deere still has almost two months to go, so it's too early to break them up.

Maybe I could ask it differently. Versus three months ago, between going solutions, phosphate, and IP, which business has surprised you most of the upside?

I think that the surprises that we got, some of them are surprise. Surprise was in phosphate. Phosphate is enjoying a good period. a good period versus obviously the last year and a good period versus what we internally budgeted. And I think we all understand the macro side that is contributing to that. And that is both the commodities and the specialty side without going into the breakdown there. I'm not sure it surprised us, but what we are getting more and more confident with and happy with is what's going on on the agricultural side in the company. The strategy basically has always been there to differentiate and to grow the specialty fertilizer side, grow the biostimulants, et cetera side. And it is working. And we see that we are getting a healthy margin. And that is, I'm not sure it's a surprise, Joel, but we're very happy with it. On the industrial products, basically, we also had a good quarter. And this is, as we know now, it's a fight inside the market that the demand is not healthy. So we are supplying obviously at high capacity, but the selling prices is nowhere near. But notwithstanding that, we were able to deliver a solid quarter. I'm not sure it surprised us, but we were happy with it. So there you have basically the three, if I sum up, it's the three divisions that they did better. And I think it's a highlight of the quarter itself.

That's helpful. And my final question is, you know, in your release and presentation, you use language like you intend to limit total potash sales this year to 4.6 million tons in expectation of improved conditions. Now, if I look at your last four quarters of production, you've done about 4.5 million tons. The run rate is lower. first three quarters of 2024. So it looks like you don't have the production to do more than 4.6. You said in expectation of improved conditions. What does that mean? Are you talking about, oh, you're holding back volume to get better price next year? Though we just talked about what the production's been. Is this improved conditions and logistics? I'm just trying to understand what the exact message you're putting out there today, production, sales, discipline, anything you want to talk about.

So the message is simple. Currently, we're capable of producing about 4.65 this year, and we're capable of selling about 4.75. But at this point, it doesn't make sense to sell any more than we've already committed. So the reason is twofold. One is because prices are firming for next year. So we actually have already sold for January and February. And the second is that due to the current logistic challenges, we feel that if we can defer sales, certain sales, we can get better transportation costs, hopefully if the security situation improves. If it doesn't improve, then it's only the pricing. But if it doesn't improve, then it's also the logistics, which are very significant. Just so you understand, in order to transport to the east, in some cases it costs double if we send the product out of the port that is further from the plant. So it makes sense from both of those perspectives. And at a certain point, we decided to stop. And actually, part of the fact that we're stopping means that we're actually capable of less production. We would have been capable of more production, but we added additional preventive maintenance because in the past year or so, because of a lot of people being on reserve duty, then we had to take some calculated risks and do less preventive maintenance. And you can't keep on going that way for a long time without paying a dear price. So we took some preventive preventing steps this year, this this year, this quarter. It's actually not this quarter. It's September and October. And due to that, our maximum production for this year could be a little over four point six. It was it was more than that a little while ago. But we're comfortable with what we did because we sort of cleaned up everything that needed to be done in order to minimize the risk going forward. I hope that answers. Thank you. Thank you, Joel.

Thank you. We will move next with Kevin Estock with Jefferies. Please go ahead. Your line is open.

Hi. Good morning. Good afternoon, everyone. I guess with respect to the innovation platform, I'm just curious what your guys' appetite may be for investing in white spaces. For example, like if you go forward with allowing gene editing for fruits, vegetables, et cetera, I guess could the ICL get into that space as a way to maybe hedge risk on, I mean, improvements in nutrient efficiency?

Could you repeat the question? Because it was difficult for us to hear.

Oh, apologies. Basically, just curious to know, like, more about I guess your appetite in investing in white spaces. So if you move forward in like gene editing, right, for fruits, vegetables, wheat, rice, et cetera, just wanted to know if you guys would invest in those areas basically to hedge the risk against, you know, increasing nutrient efficiency.

So, okay. I'll take that. I'll try to answer you. And I'm taking it a little bit broader maybe than you meant. So you will keep me, So basically, as you know, starting from the near setup of the growing solutions, it's our flag to be innovative and to differentiate ourselves. That's a given. Second is we are investing in areas that... that we believe that will be significant or very significant in the future of agriculture. And that obviously is the area of the biologicals, some in delivery systems, in better uptake inside the plant, et cetera. However, and as a big however, what we do is applied R&D. We are taking steps, gradual steps, to build up the portfolio. What we are not doing, is that to do leapfrogs and go into areas which today are really exploratory. And we will come into, I guess, we will come into these areas, but we are stretching the limits of the GS, but we are not going into things which are today quite remote from the core of our essence. And that's why, if I understand you correctly, you're talking about wide spaces, It's really, really going to the forefront of inter alia gene editing and things like that, which I know from my past that the companies have gone into, but it's, I would say it's in the chemical space. It's as a way to go there. I mean, it's not as advanced obviously as the pharma world. And the long answer to a short question was we are careful to build block after block in our innovation. and not jump too far ahead if you don't have the pool to get there yet.

Is that what you want? And then I guess my last... Yeah, go on. Yeah, that was helpful. Yeah, I appreciate it. Yeah. And I guess just apologies if you've covered this already, but I guess in your term, do you guys have a sense of how much Chinese bromine capacity has exited the market, if any?

We think very little has actually completely exited, but there's quite a lot of production tons that are muted now. So it could be a matter of time until some exits. So the answer is there's about, I'd say, all in all, about 60%. to 70,000 tons that's been muted so far. But in terms of bankruptcies or actually companies leaving the market, probably about 15,000 tons so far. Again, these are rough estimates. They're not accurate, but they're pretty accurate.

It's basically Chinese ownership. It's not in China. Correct, yeah.

Some of those tons are not non-Chinese.

They're high-cost tonnage. So our, let's say, assumption basically is when the prices stick around the low end, And we have such a great cost position, which is superior to everybody else. There's a limit of time and there's a limit of prices that those Chinese can sustain. That's exactly the strategy that we're deploying. And you see the results.

Thank you very much. Thank you.

Thank you. And we show no further questions at this time. I will turn the call back to Ravi Zoller for closing comments.

Okay, so thank you very much for joining us for our conference call for Q3. I want to thank ICL employees for their great contribution to fine quarter. We're very positive about the way we're positioned for future growth now with the markets looking the way they are, and hopefully when the geopolitical constraints go away, we're ready to take off. So looking forward to reporting back to you on fourth quarter results and full year results. Thank you very much for joining us today and have a great rest of the day. Thank you.

And this does conclude today's program. Thank you for your participation. You may disconnect at any time.