AI Terminal
Israel Corporation
Investor Presentation • Nov 9, 2022
6862_rns_2022-11-09_e8e2fbb1-a7d4-4d0b-9dec-f2cdf19c6277.pdf
Investor Presentation
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Third Quarter 2022
Financial Results
Raviv Zoller | President and CEO November 9, 2022
Important legal notes Disclaimer and safe harbor for forward-looking statements
This presentation and/or other oral or written statements made by ICL Group during its presentation, or from time to time, may contain forward-looking statements within the meaning of the United States Private Securities Litigation Reform Act of 1995 and other applicable securities laws. Whenever words such as "believe," "expect," "anticipate," "intend," "plan," "estimate," "predict," "strive," "target," "up to," "expansion," or similar expressions are used, the company is making forward-looking statements. Such forward-looking statements may include, but are not limited to, those that discuss strategies, goals, targets, objectives, financial outlooks, corporate initiatives, our long-term business, financial targets and outlook, current expectations, existing or new products, existing or new markets, operating efficiencies, or other non-historical matters. In particular, this presentation includes forward-looking information about our targets and goals for 2027. Investors should be cautioned that these are not projections of our actual results, but rather targets that we are aspiring for, and investors should not assume that we are expecting to achieve those goals in 2027. Our actual results for 2027 will depend upon a number of factors, including economic conditions in our markets (which are cyclical) and other factors described in the filings set out above, and may differ materially from these targets. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the markets in which we operate or the extent to which any factor, or combination of factors, may cause actual results or outcomes to differ materially from those contained in any forward-looking statements we may make. Because such statements deal with future events and are based on ICL Group's current expectations, they could be impacted or be subject to various risks and uncertainties, including those discussed in the "Risk Factors" section and elsewhere in our Annual Report on Form 20-F for the year ended December 31, 2021 and in our current reports on Form 6-K for the results for the quarters ended March 31, 2022 and June 30, 2022, filed on May 11, 2022 and July 27, 2022, respectively, and in subsequent filings with the Tel Aviv Securities Exchange (TASE) and/or the U.S. Securities and Exchange Commission (SEC). The ICL Group's strategies, business and financial targets, goals and objectives are subject to change from time to time. Therefore actual results, performance or achievements of the company could differ materially from those described in or implied by such forwardlooking statements due to various factors, including, but not limited to :changes in exchange rates or prices compared to those we are currently experiencing; loss or impairment of business licenses or mineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters; global unrest and conflict; failure to harvest salt, which could lead to accumulation at the bottom of evaporation Pond 5 in the Dead Sea; construction of a new pumping station; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; delays in the completion of major projects by third party contractors and/or termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; the ongoing COVID-19 pandemic, which has impacted, and may continue to impact our sales, operating results and business operations by disrupting our ability to purchase raw materials, by negatively impacting the demand and pricing for some of our products, by disrupting our ability to sell and/or distribute products, impacting customers' ability to pay us for past or future purchases and/or temporarily closing our facilities or the facilities of our suppliers or customers and their contract manufacturers, or restricting our ability to travel to support our sites or our customers around the world; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; higher tax liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; disruption of our, or our service providers', information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining operations in Rotem; volatility or crises in the financial markets; uncertainties surrounding the withdrawal of the United Kingdom from the European Union; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; cost of compliance with environmental, regulatory, legislative, and licensing restrictions; laws and regulations related to, and physical impacts of climate change and greenhouse gas emissions; litigation, arbitration and regulatory proceedings; exposure to third party and product liability claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; closing of transactions, mergers and acquisitions; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the company, its executives and Board members; the company is exposed to risks relating to its current and future activity in emerging markets; and other risk factors discussed under Item 3 - Key Information - D. Risk Factors in the company's annual report on Form 20-F for the year ended December 31, 2021, filed with the U.S. Securities and Exchange Commission (SEC) on February 23, 2022. Forward-looking statements speak only as of the date they are made and, except as otherwise required by law, the company does not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements, targets or goals in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. Readers, listeners and viewers are cautioned to consider these risks and uncertainties and to not place undue reliance on such information. Forward-looking statements should not be read as a guarantee of future performance or results and are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward-looking statements.
2
Third quarter overview
Delivering sustainable shareholder value through focus on specialties solutions
- Record 3Q and YTD sales, operating income and EBITDA
- Record 3Q sales and EBITDA for all specialties businesses: Industrial Products, Phosphate Specialties and Growing Solutions
- Record Dead Sea production for 3Q and YTD
- Record YTD operating cash flow of \$1.6B
- FCF of \$429M strongest quarter for 2022
- Adjusted EPS of \$0.49 up 193% YoY
- Total 3Q dividend payout of \$314M
Key third quarter financial metrics
Significant year-over-year improvement
Third quarter 2022
Key financial highlights
| US\$M ex. per share |
3Q'22 | 3Q'21 | YoY Change |
|---|---|---|---|
| Sales | \$2,519 | \$1,790 | 41% |
| Gross profit | \$1,315 | \$689 | 91% |
| Gross margin | 52.2% | 38.5% | 1,371 bps |
| Operating income | \$935 | \$321 | 191% |
| Adjusted operating income(1) | \$928 | \$315 | 195% |
| Adjusted operating margin(1) | 36.8% | 17.6% | 1,924 bps |
| Net income, attributable | \$633 | \$225 | 181% |
| Adjusted net income, attributable(1) | \$628 | \$215 | 192% |
| Adjusted EBITDA(1) | \$1,049 | \$438 | 139% |
| Adjusted EBITDA margin(1) | 41.6% | 24.5% | 1,717 bps |
| Diluted earnings per share | \$0.49 | \$0.17 | 188% |
| Adjusted diluted EPS(1) | \$0.49 | \$0.17 | 193% |
| Operating cash flow | \$606 | \$273 | 122% |
| Free cash flow | \$429 | \$146 | 194% |
(1) Adjusted operating income and margin, adjusted net income, attributable, adjusted EBITDA and margin, adjusted EPS, and free cash flow are non-GAAP financial measures; see reconciliation tables in appendix.
Industrial Products
Focus on value over volume helped deliver another record quarter
Key highlights
- Record third quarter sales and EBITDA
- Higher pricing across portfolio, helped offset raw material increases
- Diverse end-market demand remained mixed
- Electronics soft, as expected
- Clear brine fluids very strong
- Construction impacted by rising interest rates
- Specialty minerals remained robust
(1) Segment EBITDA is a non-GAAP financial measure; see reconciliation tables in appendix.
3Q'21 3Q'22
31% 39%
Margin Margin
\$0
\$100
Potash
Operational excellence resulted in production records
Key highlights
- Third quarter and YTD Dead Sea production records
- Average realized potash price per ton increased to \$652 (\$697 CIF), up 106% vs. \$317 in 3Q'21
- Long-term contract with European customer, to supply 300,000 metric tons of potash annually
- Quarterly and YTD profit records for magnesium
(1) Segment EBITDA is a non-GAAP financial measure; see reconciliation tables in appendix. Note: ICL has consolidated its specialty agriculture businesses under Growing Solutions (formerly Innovative Ag Solutions or IAS). As a result, ICL Boulby and other European business components were allocated from the Potash and Phosphate Solutions segments, respectively, to the Growing Solutions segment. The 2021 quarterly and annual restated segment data and 2020 annual restated segment data is available in the appendix.
Phosphate Solutions
Strengthening long-term growth prospects
\$0
\$100
\$90 \$128
15%
35%
3Q'21 3Q'22
Margin Margin
41%
Key highlights
- Record third quarter sales and EBITDA
- Higher prices and strong demand for food solutions across all regions
- Received award from DOE for energy storage solutions expansion first large-scale LFP material manufacturing plant in U.S.
- YPH worked through short-term export restrictions in China
(1) Segment EBITDA is a non-GAAP financial measure; see reconciliation tables in appendix. Note: ICL has consolidated its specialty agriculture businesses under Growing Solutions (formerly Innovative Ag Solutions or IAS). As a result, ICL Boulby and other European business components were allocated from the Potash and Phosphate Solutions segments, respectively, to the Growing Solutions segment. The 2021 quarterly and annual restated segment data and 2020 annual restated segment data is available in the appendix.
Growing Solutions
Bolstering long-term growth through expanded portfolio and offerings
Key highlights
- Record third quarter sales and EBITDA
- Strong performance of Brazilian acquisitions, plus expansion of synergy potential
- Record-setting quarter for FertilizerpluS products (Boulby)
- Delivering innovative new products and extending R&D efforts
- Strengthened digital offering
(1) Segment EBITDA is a non-GAAP financial measure; see reconciliation tables in appendix. Note: ICL has consolidated its specialty agriculture businesses under Growing Solutions (formerly Innovative Ag Solutions or IAS). As a result, ICL Boulby and other European business components were allocated from the Potash and Phosphate Solutions segments, respectively, to the Growing Solutions segment. The 2021 quarterly and annual restated segment data and 2020 annual restated segment data is available in the appendix.
Making an impact
Continued momentum
Sustainability Innovation Leadership
- Included in Israeli diversity and inclusion index
- ICL Brazil cited by Great Place to Work's global consultancy
- Early adopter of UN Global Compact
- Launched FruitMag sustainable citrus preservation product
- Introduced biodegradable coated fertilizer technology eqo.x
- Developed Keep Green biofertilizer
- Received Brazilian R&D accreditation
- Expanded digital reach with ICLeaf in India
- Partnered to launch open data crop nutrition platform
- Leading U.S. efforts to develop sustainable supply chain for ESS
- Long-term metal magnesium contracts signed
- New soluble fertilizer plant inaugurated in China
- Celebrated 100 years of leadership
- Updated five-year plan
Updated five-year plan
Targeting global leadership across specialties businesses
Strong momentum 1
2 Significant opportunities
3 Well-positioned
Note: EBITDA is a non-GAAP financial measure; see appendix for further important information about targeted non-GAAP financial measures.
Continued focus on future
Growing specialties impact to the next level
Expanding long-term specialties focus, while benefitting from market upside
Targeting consistent growth in sales and EBITDA
Investing in R&D to innovate and expand specialty product portfolio
Investing in sustainability
Maintaining focus on long-term customer relationships
Focusing on business expansion opportunities via strong balance sheet
Continuing focus on cash generation
Creating and returning value to shareholders
Third Quarter 2022
Financial Results
Aviram Lahav
CFO
Third quarter 2022
Key financial highlights
| US\$M ex. per share |
3Q'22 | 3Q'21 | YoY Change |
|---|---|---|---|
| Sales | \$2,519 | \$1,790 | 41% |
| Gross profit | \$1,315 | \$689 | 91% |
| Gross margin | 52.2% | 38.5% | 1,371 bps |
| Operating income | \$935 | \$321 | 191% |
| Adjusted operating income(1) | \$928 | \$315 | 195% |
| Adjusted operating margin(1) | 36.8% | 17.6% | 1,924 bps |
| Net income, attributable | \$633 | \$225 | 181% |
| Adjusted net income, attributable(1) | \$628 | \$215 | 192% |
| Adjusted EBITDA(1) | \$1,049 | \$438 | 139% |
| Adjusted EBITDA margin(1) | 41.6% | 24.5% | 1,717 bps |
| Diluted earnings per share | \$0.49 | \$0.17 | 188% |
| Adjusted diluted EPS(1) | \$0.49 | \$0.17 | 193% |
| Operating cash flow | \$606 | \$273 | 122% |
| Free cash flow | \$429 | \$146 | 194% |
(1) Adjusted operating income and margin, adjusted net income, attributable, adjusted EBITDA and margin, adjusted EPS, and free cash flow are non-GAAP financial measures; see reconciliation tables in appendix.
Macro overview
- Inflation remains high
- Global growth forecasts being slashed
- FX fluctuations continue across currencies
- Supply chain disruptions remain
- Regions and end-markets diverging
- Geopolitical tensions persist
- Commodity prices moderating
Pricing across mineral value chain
Commodity price progression
US\$/ton
Crop economics
Prices and affordability remain high, but uncertainty remains
US\$/mmbtu(1)
Sources: Prices and indices - The World Bank, as of October 2022; Grain stock-to-use ratios - USDA, as of October 2022. (1) Brent crude per bbl; SA coal per ton.
Third quarter 2022 Sales bridges
Sales US\$M
Note: Numbers rounded to closest million; Other includes intercompany eliminations.
Third quarter 2022 Profit bridges
Adjusted EBITDA(1) by segment
US\$M
Adjusted EBITDA(1)
US\$M
(1) Adjusted EBITDA is a non-GAAP financial measure; see reconciliation tables in appendix. Note: Numbers rounded to closest million; Other includes intercompany eliminations.
19
Financial overview
Well-positioned to deliver sustainable shareholder value
Highlights for 3Q'22
- Net debt to adjusted EBITDA(1) improved to 0.5
- Operating cash flow of \$606M vs. \$273M in 3Q'21
- Substantial free cash flow(1) of \$429M vs. \$146M in 3Q'21
- Dividend of 24.35 cents per share vs. 8.37 cents in 3Q'21, for a yield of 9.2%
Guidance Full year 2022
- Expect to be at upper end of previous guidance range
- Adjusted EBITDA of \$3,800 million to \$4,000 million(1)
- EBITDA of specialties businesses to represent between \$1,500 million to \$1,600 million of total adjusted EBITDA
Thank you
Contact Peggy.ReillyTharp@icl - group.com for more information on ICL View our interactive data tool at https://investors.icl - group.com/interactive - data - tool/default.aspx
Appendix Third Quarter 2022
Financial Results
Industrial Products
Third quarter and year-to-date 2022
| Industrial Products US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Segment sales | \$437 | \$387 | \$1,417 | \$1,195 |
| Sales to external customers | \$428 | \$383 | \$1,394 | \$1,183 |
| Sales to internal customers | \$9 | \$4 | \$23 | \$12 |
| Segment operating income | \$154 | \$105 | \$533 | \$324 |
| Depreciation and amortization | \$16 | \$16 | \$46 | \$47 |
| Segment EBITDA | \$170 | \$121 | \$579 | \$371 |
| US\$M | 3Q Sales | YTD Sales |
|---|---|---|
| 2021 | \$387 | \$1,195 |
| Quantity | (\$54) | (\$146) |
| Price | \$118 | \$402 |
| Exchange rates | (\$14) | (\$34) |
| 2022 | \$437 | \$1,417 |
| US\$M | 3Q Segment EBITDA |
YTD Segment EBITDA |
| 2021 | \$121 | \$371 |
| Quantity | (\$17) | (\$43) |
| Price | \$118 | \$402 |
| Exchange rates | (\$4) | (\$15) |
| Raw materials | (\$24) | (\$68) |
| Energy | (\$4) | (\$8) |
| Transportation | (\$5) | (\$21) |
| Operating and other expenses | (\$15) | (\$39) |
| 2022 | \$170 | \$579 |
| Potash US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Segment sales | \$854 | \$400 | \$2,600 | \$1,129 |
| Sales to external customers | \$684 | \$310 | \$2,142 | \$860 |
| Sales to internal customers | \$55 | \$27 | \$148 | \$76 |
| Other and eliminations(1) | \$115 | \$63 | \$310 | \$193 |
| Gross profit | \$615 | \$209 | \$1,836 | \$498 |
| Segment operating income | \$496 | \$84 | \$1,482 | \$155 |
| Depreciation and amortization | \$41 | \$37 | \$121 | \$108 |
| Segment EBITDA | \$537 | \$121 | \$1,603 | \$263 |
| Potash production and sales 000s of tons |
3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Production | 1,163 | 1,152 | 3,467 | 3,326 |
| Total sales, including internal sales | 1,134 | 1,064 | 3,431 | 3,287 |
| Closing inventory | 391 | 314 | 391 | 314 |
| US\$M | 3Q Sales | YTD Sales |
|---|---|---|
| 2021 | \$400 | \$1,129 |
| Quantity | \$10 | \$23 |
| Price | \$471 | \$1,515 |
| Exchange rates | (\$27) | (\$67) |
| 2022 | \$854 | \$2,600 |
| US\$M | 3Q Segment EBITDA |
YTD Segment EBITDA |
| 2021 | \$121 | \$263 |
| Quantity | \$11 | \$9 |
| Price | \$471 | \$1,515 |
| Exchange rates | (\$16) | (\$43) |
| Raw materials | (\$3) | (\$6) |
| Energy | (\$25) | (\$50) |
| Transportation | \$4 | (\$17) |
| Operating and other expenses | (\$26) | (\$68) |
| 2022 | \$537 | \$1,603 |
Note: Segment EBITDA is a non-GAAP financial measure; see reconciliation tables and non-GAAP financial measures. (1) Primarily includes salt produced in Spain, metal magnesium-based products, chlorine, and sales of excess electricity produced in Israel. (2) Potash average realized price (USD per ton) is calculated by dividing total potash revenue by total sales quantities. The difference between FOB price and average realized price is primarily marine transportation costs, local market sales and internal consumption sales.
Phosphate Solutions
Third quarter and year-to-date 2022
| Phosphate Solutions US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Segment sales | \$766 | \$599 | \$2,479 | \$1,683 |
| Sales to external customers | \$697 | \$554 | \$2,277 | \$1,560 |
| Sales to internal customers | \$69 | \$45 | \$202 | \$123 |
| Segment operating income | \$193 | \$88 | \$661 | \$207 |
| Depreciation and amortization(1) | \$46 | \$53 | \$140 | \$161 |
| Segment EBITDA | \$239 | \$141 | \$801 | \$368 |
| Phosphate Solutions US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Segment sales | \$766 | \$599 | \$2,479 | \$1,683 |
| Specialty | \$455 | \$345 | \$1,385 | \$968 |
| Commodity | \$311 | \$254 | \$1,094 | \$715 |
| Segment operating income | \$193 | \$88 | \$661 | \$207 |
| Specialty | \$98 | \$38 | \$317 | \$110 |
| Commodity | \$95 | \$50 | \$344 | \$97 |
| Segment EBITDA | \$239 | \$141 | \$801 | \$368 |
| Specialty | \$111 | \$51 | \$357 | \$149 |
| Commodity | \$128 | \$90 | \$444 | \$219 |
| US\$M | 3Q Sales | YTD Sales |
|---|---|---|
| 2021 | \$599 | \$1,683 |
| Quantity | (\$37) | \$97 |
| Price | \$251 | \$795 |
| Exchange rates | (\$47) | (\$96) |
| 2022 | \$766 | \$2,479 |
| US\$M | 3Q Segment EBITDA |
YTD Segment EBITDA |
|---|---|---|
| 2021 | \$141 | \$368 |
| Quantity | (\$14) | \$28 |
| Price | \$251 | \$795 |
| Exchange rates | (\$10) | (\$24) |
| Raw materials | (\$124) | (\$325) |
| Energy | (\$3) | (\$7) |
| Transportation | - | (\$11) |
| Operating and other expenses | (\$2) | (\$23) |
| 2022 | \$239 | \$801 |
Note: Segment EBITDA is a non-GAAP financial measure; see reconciliation tables and non-GAAP financial measures. (1) For 3Q'22, specialty represented \$13M and commodity represented \$33M. For 3Q'21, specialty represented \$13M and commodity represented \$40M.
| Growing Solutions US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Segment sales | \$629 | \$504 | \$1,895 | \$1,178 |
| Sales to external customers | \$618 | \$495 | \$1,863 | \$1,163 |
| Sales to internal customers | \$11 | \$9 | \$32 | \$15 |
| Segment operating income | \$112 | \$52 | \$346 | \$93 |
| Depreciation and amortization | \$15 | \$15 | \$46 | \$41 |
| Segment EBITDA | \$127 | \$67 | \$392 | \$134 |
| US\$M | 3Q Sales | YTD Sales |
|---|---|---|
| 2021 | \$504 | \$1,178 |
| New Brazilian businesses' contribution | - | \$302 |
| Quantity | (\$69) | (\$91) |
| Price | \$225 | \$586 |
| Exchange rates | (\$31) | (\$80) |
| 2022 | \$629 | \$1,895 |
| US\$M | 3Q Segment EBITDA |
YTD Segment EBITDA |
| 2021 | \$67 | \$134 |
| New Brazilian businesses' contribution | - | \$57 |
| Quantity | (\$16) | (\$23) |
| Price | \$225 | \$586 |
| Exchange rates | (\$2) | (\$8) |
Raw materials (\$116) (\$265) Energy (\$6) (\$20) Transportation (\$9) (\$35) Operating and other expenses (\$16) (\$34) 2022 \$127 \$392
Consolidated results analysis
Third quarter 2022
| US\$M | Sales | Expenses | Operating Income |
EBITDA | |
|---|---|---|---|---|---|
| 3Q'21 | \$1,790 | (\$1,469) | \$321 | ||
| Total adjustments 3Q'21(1) | - | (\$6) | (\$6) | ||
| Adjusted 3Q'21 figures | \$1,790 | (\$1,475) | \$315 | \$438 | Notes: |
| Quantities | (\$144) | \$110 | (\$34) | (\$34) | Negative - Primarily decrease in volumes of bromine- and phosphorus-based flame retardants, phosphate fertilizers, WPA (mainly in EU and SA), and elemental bromine. Partially offset by higher sales volumes of potash from ICL Dead Sea and specialty phosphates. |
| Prices | \$992 | - | \$992 | \$992 | Positive – Primarily increase of \$335 in average realized price per ton of potash YoY, increases in selling prices of phosphate fertilizers, specialty agriculture and FertilizerpluS products, WPA, bromine-based flame retardants, phosphate-based food additives, bromine-based industrial solutions, and salts. |
| Exchange rates | (\$119) | \$88 | (\$31) | (\$31) | Negative – Primarily depreciation of Euro and Chinese yuan against U.S. dollar, which led to negative impact on sales, which exceeded positive effect on operational costs. |
| Raw materials | - | (\$208) | (\$208) | (\$208) | Negative – Primarily higher prices of sulfur consumed during quarter, commodity fertilizers, and raw materials to produce Industrial Products, caustic soda and potassium hydroxide. |
| Energy | - | (\$32) | (\$32) | (\$32) | Negative – Primarily increase in electricity and gas prices, mainly in EU. |
| Transportation | - | (\$10) | (\$10) | (\$10) | Negative – Higher marine and inland transportation costs. |
| Operating and other expenses | - | (\$64) | (\$64) | (\$66) | Negative – Higher maintenance and operational costs, sales commissions, and royalty payments. |
| Adjusted 3Q'22 figures | \$2,519 | (\$1,591) | \$928 | \$1,049 | |
| Total adjustments 3Q'22(1) | - | \$7 | \$7 | ||
| 3Q'22 | \$2,519 | (\$1,584) | \$935 |
Note: Adjusted EBITDA is a non-GAAP financial measure; see reconciliation tables and non-GAAP financial measures. (1) See detailed reconciliation table – adjustments to reported operating and net income (non-GAAP) – in corresponding quarters' earnings release.
Consolidated results analysis
Year-to-date 2022
| US\$M | Sales | Expenses | Operating Income |
EBITDA | |
|---|---|---|---|---|---|
| YTD'21 | \$4,917 | (\$4,168) | \$749 | ||
| Total adjustments YTD'21(1) | - | (\$13) | (\$13) | ||
| Adjusted YTD'21 figures | \$4,917 | (\$4,181) | \$736 | \$1,100 | Notes: |
| New Brazilian businesses' contribution |
\$302 | (\$248) | \$54 | \$57 | Positive – Includes acquisition of Compass Minerals América do Sul S.A. (ADS) in July 2021. |
| Quantities | (\$169) | \$120 | (\$49) | (\$49) | Negative - Primarily decrease in volumes of phosphorus- and bromine-based flame retardants and bromine industrial solutions. Partially offset by higher volumes of acids, potash and specialty phosphates. |
| Prices | \$3,148 | - | \$3,148 | \$3,148 | Positive – Primarily increase of \$382 in average realized price per ton of potash YoY, increases in selling prices of specialty agriculture and FertilizerpluS products, phosphate fertilizers, WPA, bromine- and phosphorus-based flame retardants, bromine-based industrial solutions and salts. |
| Exchange rates | (\$274) | \$187 | (\$87) | (\$87) | Negative – Primarily depreciation of Euro and Chinese yuan against U.S. dollar, which led to negative impact on sales, which exceeded positive effect on operational costs. |
| Raw materials | - | (\$534) | (\$534) | (\$534) | Negative – Primarily higher prices of sulfur consumed during quarter, commodity fertilizers, caustic soda, potassium hydroxide and raw materials used to produce Industrial Products. |
| Energy | - | (\$80) | (\$80) | (\$80) | Negative – Primarily increase in electricity and gas prices, mainly in EU and NA. |
| Transportation | - | (\$84) | (\$84) | (\$84) | Negative – higher marine and inland transportation costs, mainly in EU. |
| Operating and other expenses | - | (\$157) | (\$157) | (\$162) | Negative – Higher operational costs, sales commissions, and royalty payments. |
| Adjusted YTD'22 figures | \$7,924 | (\$4,977) | \$2,947 | \$3,309 | |
| Total adjustments YTD'22(1) | - | \$29 | \$29 | ||
| YTD'22 | \$7,924 | (\$4,948) | \$2,976 |
Note: Adjusted EBITDA is a non-GAAP financial measure; see reconciliation tables and non-GAAP financial measures. (1) See detailed reconciliation table – adjustments to reported operating and net income (non-GAAP) – in corresponding quarters' earnings release.
Reconciliation tables
Calculation of adjusted EBITDA and free cash flow
| Calculation of adjusted EBITDA US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Net income | \$635 | \$242 | \$1,877 | \$534 |
| Financing expenses, net | \$24 | \$34 | \$72 | \$84 |
| Taxes on income | \$276 | \$45 | \$1,027 | \$132 |
| Less: Share in earnings of equity-accounted investees | - | - | - | (\$1) |
| Operating income | \$935 | \$321 | \$2,976 | \$749 |
| Depreciation and amortization | \$121 | \$123 | \$362 | \$364 |
| Adjustments(1) | (\$7) | (\$6) | (\$29) | (\$13) |
| Adjusted EBITDA | \$1,049 | \$438 | \$3,309 | \$1,100 |
| Calculation of free cash flow US\$M | 3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
| Cash flow from operations | \$606 | \$273 | \$1,558 | \$721 |
| Additions to PP&E, intangible assets, and dividends from equity-accounted investees(2) |
(\$177) | (\$127) | (\$501) | (\$422) |
| Free cash flow | \$429 | \$146 | \$1,057 | \$299 |
Note: Numbers may not add, due to rounding and set-offs. Adjusted EBITDA is a non-GAAP financial measure; see non-GAAP financial measures. (1) See detailed reconciliation table – adjustments to reported operating and net income (non-GAAP) – in corresponding quarters' earnings release. (2) Also includes proceeds from sale of property, plants and equipment (PP&E).
Reconciliation tables
Calculation of adj. net income, attributable, adj. diluted EPS and net debt to adj. EBITDA
| Calculation of adjusted net income, attributable US\$M |
3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Net income, attributable | \$633 | \$225 | \$1,828 | \$500 |
| Adjustments(1) | (\$7) | (\$6) | (\$29) | (\$13) |
| Total tax adjustments | \$2 | (\$4) | \$193 | (\$2) |
| Adjusted net income, attributable | \$628 | \$215 | \$1,992 | \$485 |
| Calculation of adjusted diluted earnings per share US\$M, ex. per share data |
3Q'22 | 3Q'21 | YTD'22 | YTD'21 |
|---|---|---|---|---|
| Adjusted net income, attributable | \$628 | \$215 | \$1,992 | \$485 |
| Weighted-average number of diluted ordinary shares outstanding in 000s |
1,290,131 | 1,287,267 | 1,288,948 | 1,285,875 |
| Adjusted diluted earnings per share(2) |
\$0.49 | \$0.17 | \$1.55 | \$0.38 |
| Net debt to adjusted EBITDA(3) US\$M |
3Q'22 |
|---|---|
| Net debt | \$1,925 |
| Adjusted EBITDA | \$3,850 |
| Net debt to adjusted EBITDA | 0.5 |
Note: Numbers may not add, due to rounding and set-offs. Adjusted EBITDA is a non-GAAP financial measure; see non-GAAP financial measures. (1) See detailed reconciliation table – adjustments to reported operating and net income (non-GAAP) – in corresponding quarters' earnings release. (2) Adjusted diluted EPS is calculated by dividing adjusted net income attributable by weighted-average number of diluted ordinary shares outstanding. (3) Net debt to adjusted EBITDA ratio is calculated by dividing net debt by past four quarters adjusted EBITDA.
Reconciliation tables
Calculation of segment EBITDA and breakout of segment sales by region
| Calculation of segment EBITDA and margin US\$M |
Industrial Products |
Potash | Phosphate Solutions(1) |
Growing Solutions | ||||
|---|---|---|---|---|---|---|---|---|
| 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 | |
| Segment sales | \$437 | \$387 | \$854 | \$400 | \$766 | \$599 | \$629 | \$504 |
| Segment operating income | \$154 | \$105 | \$496 | \$84 | \$193 | \$88 | \$112 | \$52 |
| Depreciation and amortization | \$16 | \$16 | \$41 | \$37 | \$46 | \$53 | \$15 | \$15 |
| Segment EBITDA | \$170 | \$121 | \$537 | \$121 | \$239 | \$141 | \$127 | \$67 |
| Segment EBITDA margin | 39% | 31% | 63% | 30% | 31% | 24% | 20% | 13% |
| Sales US\$M | 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 | 3Q'22 | 3Q'21 |
|---|---|---|---|---|---|---|---|---|
| Asia | \$157 | \$149 | \$326 | \$107 | \$144 | \$177 | \$61 | \$45 |
| Europe | \$136 | \$121 | \$156 | \$89 | \$227 | \$154 | \$211 | \$174 |
| South America | \$11 | \$14 | \$180 | \$112 | \$131 | \$87 | \$264 | \$212 |
| North America | \$110 | \$86 | \$113 | \$43 | \$193 | \$132 | \$33 | \$30 |
| Rest of World | \$23 | \$17 | \$79 | \$49 | \$71 | \$49 | \$60 | \$43 |
| Total | \$437 | \$387 | \$854 | \$400 | \$766 | \$599 | \$629 | \$504 |
Note: Numbers may not add, due to rounding and set-offs. Segment EBITDA is a non-GAAP financial measure; see non-GAAP financial measures. (1) For 3Q'22 D&A, specialty represented \$13M and commodity represented \$33M. For 3Q'21 D&A, specialty represented \$13M and commodity represented \$40M.
Segment changes
Consolidated specialty agriculture businesses under Growing Solutions (GS)
| 2020 | 2021 | ||||||
|---|---|---|---|---|---|---|---|
| FY | 1Q | 2Q | 3Q | 4Q | FY | ||
| Segment sales | 1,268 349 | 380 | 400 | 647 1,776 | |||
| Sales to external customers |
979 254 | 296 | 310 | 541 1,401 | |||
| Sales to internal customers |
96 | 22 | 27 | 27 | 18 | 94 | |
| Other and eliminations(1) |
193 | 73 | 57 | 63 | 88 | 281 | |
| Gross profit | 472 | 135 | 154 | 209 | 372 | 870 | |
| Segment operating income |
121 | 29 | 42 | 84 | 244 | 399 | |
| Depreciation & amortization |
152 | 33 | 38 | 37 | 40 | 148 | |
| Segment EBITDA | 273 | 62 | 80 | 121 | 284 | 547 |
US\$M US\$M US\$M
| 2020 | ||||||
|---|---|---|---|---|---|---|
| FY | 1Q | 2Q | 3Q | 4Q | FY | |
| Segment sales | 1,816 502 | 582 | 599 | 571 2,254 | ||
| Sales to external customers |
1,663 467 | 539 | 554 | 527 2,087 | ||
| Sales to internal customers |
153 | 35 | 43 | 45 | 44 | 167 |
| Segment operating income |
88 | 42 | 77 | 88 | 87 | 294 |
| Depreciation & amortization |
204 | 52 | 56 | 53 | 46 | 207 |
| Segment EBITDA | 292 | 94 | 133 | 141 | 133 | 501 |
Potash Phosphate Solutions Growing Solutions 2020 FY 2021 1Q 2Q 3Q 4Q FY Segment sales 1,033 340 334 504 492 1,670 Sales to external customers 1,016 337 331 495 481 1,644 Sales to internal customers 17 3 3 9 11 26 Segment operating income 17 20 21 52 42 135 Depreciation & amortization 45 13 13 15 21 62 Segment EBITDA 62 33 34 67 63 197
33
Note: Segment EBITDA is a non-GAAP financial measure; see non-GAAP financial measures. (1) Primarily includes salt produced in Spain, metal magnesium-based products and sales of excess electricity produced in Israel.
Guidance and non-GAAP financial measures
Guidance: The company only provides guidance on a non-GAAP basis. The company does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, in particular because special items such as restructuring, litigation and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in projected GAAP net income (loss) being materially less than projected adjusted EBITDA (non-GAAP). The guidance speaks only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law. Specialties focused businesses are represented by the Industrial Products and Growing Solutions segments and the specialties part of the Phosphate Solutions segment. We present EBITDA from the phosphate specialties part of the Phosphate Solutions segment, as we believe this information is useful to investors in reflecting the specialty portion of our business.
Non-GAAP financial measures: The company discloses in this presentation non-IFRS financial measures titled adjusted operating income, adjusted net income attributable to the company's shareholders, diluted adjusted earnings per share and adjusted EBITDA. The management uses adjusted operating income, adjusted net income attributable to the company's shareholders, diluted adjusted earnings per share and adjusted EBITDA to facilitate operating performance comparisons from period to period. The company calculates adjusted operating income by adjusting operating income to add certain items, as set forth in the reconciliation table under "adjustments to reported operating and net income (non-GAAP)", in the appendix below. Certain of these items may recur. The company calculates adjusted net income attributable to the company's shareholders by adjusting net income attributable to the company's shareholders to add certain items, as set forth in the reconciliation table under "adjustments to reported operating and net income (non-GAAP)", in the appendix below, excluding the total tax impact of such adjustments. The company calculates diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. The company calculates adjusted EBITDA as net income before financing expenses, net, taxes on income, share in earnings of equity-accounted investees, depreciation and amortization and adjust items presented in the reconciliation table under "consolidated adjusted EBITDA and diluted adjusted earnings per share for the periods of activity" in the appendix below, which were adjusted for in calculating the adjusted operating income. Commencing with the year 2022, the company's adjusted EBITDA calculation is no longer adding back minority and equity income, net. While minority and equity income, net reflects the share of an equity investor in one of the company's owned operations, since adjusted EBITDA measures the company's performance as a whole, its operations and its ability to satisfy cash needs before profit is allocated to the equity investor, management believes that adjusted EBITDA before deduction of such item is more reflective. You should not view adjusted operating income, adjusted net income attributable to the company's shareholders, diluted adjusted earnings per share or adjusted EBITDA as a substitute for operating income or net income attributable to the company's shareholders determined in accordance with IFRS, and you should note that the definitions of adjusted operating income, adjusted net income attributable to the company's shareholders, diluted adjusted earnings per share and adjusted EBITDA may differ from those used by other companies. Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of ICL's non-IFRS financial measures as tools for comparison. However, the company believes adjusted operating income, adjusted net income attributable to the company's shareholders, diluted adjusted earnings per share and adjusted EBITDA provide useful information to both management and investors by excluding certain items management believes are not indicative of ongoing operations. Management uses these non-IFRS measures to evaluate the company's business strategies and management's performance. The company believes these non-IFRS measures provide useful information to investors because they improve the comparability of financial results between periods and provide for greater transparency of key measures used to evaluate performance. The company presents a discussion in the period-to-period comparisons of the primary drivers of changes in the results of operations. This discussion is based in part on management's best estimates of the impact of the main trends on its businesses. The company has based the following discussion on its financial statements. You should read such discussion together with the financial statements.
Long term targets: The company only provides long term targets on a non-GAAP basis. The company does not provide a reconciliation of forward-looking targeted EBITDA (non-GAAP) and targeted Margin EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting and quantifying certain amounts that are necessary for such reconciliation, in particular because special items such as restructuring, litigation and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the company is not able to provide targets on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of targeted net income (loss) at this time. The amount of these deductions may be material and, therefore, could result in targeted GAAP net income (loss) being materially less than targeted EBITDA (non-GAAP) and targeted Margin EBITDA(non-GAAP). The targets speak only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law. Specialties focused businesses are represented by the Industrial Products and Growing Solutions segments and the specialties part of the Phosphate Solutions segment. We present EBITDA from the phosphate specialties part of the Phosphate Solutions segment, as we believe this information is useful to investors in reflecting the specialty portion of our business.