ICL Reports Record Fourth Quarter 2021 Results

Issues 2022 guidance with focus on strategic specialties

TEL AVIV, Israel--(BUSINESS WIRE)--ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company, today reported its financial results for the fourth quarter ended December 31, 2021. Consolidated sales of $2,038 million were up 55% year-over-year versus $1,317 million. Operating income of $461 million was up 232%, while adjusted operating income of $458 million was up 220%. Net income of $283 million was up 335%, while adjusted net income of $339 million was up nearly 400%. Adjusted EBITDA of $575 million was up 115% over $268 million.

For the full year, consolidated sales of $6,955 million were up 38% year-over-year versus $5,043 million. Operating income of $1,210 million was up 499%, while adjusted operating income of $1,194 million was up 135%. Net income of $783 million was up substantially, while adjusted net income of $824 million was up 219%. Adjusted EBITDA of $1,642 million was up 66% over $990 million, and adjusted EBITDA margin of 23.6% was up approximately 398 basis points versus 19.6%.

“The fourth quarter was a remarkable end to 2021, with sales of more than $2 billion and all-time record adjusted fourth quarter EBITDA of $575 million. In fact, all three of our specialty businesses delivered all-time record fourth quarter and annual results. We continued to benefit from our strategic focus on growing our long-term specialty solutions businesses, as performance in the quarter was also supported by increased demand and higher prices in most markets and continued commodity upside momentum. All four of our businesses contributed, with double-digit growth in sales and EBITDA and, as a result, we were able to deliver yet another quarter of margin expansion and bottom-line improvement,” said Raviv Zoller, president and CEO of ICL.

ICL full year 2022 adjusted EBITDA is expected to be within a range of $1,850 million to $2,050 million, of which EBITDA of $875 million to $925 million coming from its specialties focused businesses.(1a) The company’s fourth quarter 2021 dividend of 13.18 cents per share, or approximately $169 million, will be payable on March 8, 2022, to shareholders of record as of February 23, 2022.

Financial Figures and non-GAAP Financial Measures

Segment Information

Industrial Products

The Industrial Products segment produces bromine out of a highly concentrated solution in the Dead Sea, as well as bromine‑based compounds at its facilities in Israel, the Netherlands and China. In addition, the segment produces salts, magnesium chloride, magnesia-based products, phosphorus-based flame retardants and functional fluids.

Results of operations

Fourth quarter 2021

• Sales of $422 million were up $86 million or 26% year-over-year.
• Segment operating income of $111 million was up $31 million or 39% year-over-year.
• EBITDA of $129 million was up $26 million or 25% year-over-year.
• Record high prices, combined with continued strong demand across key regions and products, drove another strong quarter.

Significant highlights

• Elemental bromine: Due to continued strong demand for flame retardants and limited local supply, market prices in China reached a record high during the fourth quarter, before beginning to moderate.
• Bromine-based flame retardants: Continued to benefit from long-term strategic agreements, as increased demand from most end markets and recently increased capacity drove higher sales.
• Clear brine fluids: Sales returned to more normalized levels, as higher oil prices resulted in renewed oil and gas drilling activities, following an extended Covid-19 impact.
• Phosphorus-based flame retardants: Demand from the construction industry remained robust during the quarter, and the production of phosphorous-based flame retardants resumed in China.
• Specialty minerals: Demand from the dietary supplements and pharmaceutical end-markets remained strong.

Results analysis for the period October – December 2021

- Quantity – The positive impact on operating income was primarily related to an increase in sales volumes of bromine-based industrial solutions, mainly clear brine fluids, as well as phosphorus-based industrial solution and specialty minerals products. This was partially offset by a decrease in the sales volumes of phosphorus-based flame retardants.

- Price – The positive impact on operating income was primarily due to a record level of elemental bromine prices in China and higher selling prices of bromine- and phosphorus-based flame retardants, as well as specialty minerals.

- Exchange rates – The unfavorable impact on operating income was primarily related to the appreciation of the average exchange rate of the Israeli shekel against the U.S. dollar, which increased operational costs.

- Raw materials –The negative impact on operating income was primarily due to an increase in prices of raw materials used in the production of bromine- and phosphorus-based flame retardants.

- Transportation - The negative impact on operating income was primarily resulted from higher marine transportation costs.

- Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs and royalties, due to higher revenue.

Potash

The Potash segment produces and sells mainly potash, using an evaporation process to extract potash from the Dead Sea in Israel and conventional mining from an underground mine in Spain. The segment also produces and sells Polysulphate® from its Boulby mine in the UK, as well as salt and magnesium produced in the Dead Sea in Israel.

Results of operations

Fourth quarter 2021

• Sales of $698 million were up $319 million or 84% year-over-year.
• Segment operating income of $244 million was up $204 million or 510% year-over-year.
• EBITDA of $288 million was up $205 million or 247% year-over-year.
• Grain Price Index increased year-over-year, with wheat up 40.9%, corn up 35.4%, rice up 16.3% and soybeans up 8.9%, due to continued strong global demand.
• Average potash realized price per ton of $487 was up 114% year-over-year, with recent price increases expected to have a continued impact into the first half of 2022.

Significant highlights

• ICL Dead Sea

- The assembly of all P-9 pumping units was completed in the fourth quarter of 2021, and operations commenced in early 2022.

• ICL Iberia

- Production increased year-over-year, mainly due to the completion of the ramp to the Cabanasses mine in the first quarter of 2021.

• ICL Boulby

- Polysulphate production was up 36% year-over-year to ~214 thousand tons, while sales volume increased 42% to ~230 thousand tons.

Additional segment information

Global potash market - average prices and imports:

Sources: CRU (Fertilizer Week Historical Price: January 2022), FAI, Brazilian and Chinese customs data.

Potash – Production and Sales

Fourth quarter 2021

- Production – Production was 20 thousand tons lower year over year, mainly due to a decrease in total production at ICL Dead Sea (in parallel with an increase in the granular potash production), partially offset by higher production at ICL Iberia, following the connection of the ramp to the Cabanasses mine.

- Sales – The quantity of potash sold was 186 thousand tons lower year-over-year, mainly due to lower sales quantities to China, India, the USA and Spain, partially offset by higher sales to Brazil, Taiwan and Morocco.

Results analysis for the period October – December 2021

- Quantity – The negative impact on operating income was primarily related to a decrease in sales volumes of potash at both ICL Dead Sea and ICL Iberia.

- Price – The positive impact on operating income resulted primarily from an increase of $259 in the average realized price per ton of potash year-over-year, as well as an increase in the selling prices of FertilizerpluS products.

- Exchange rates – The unfavorable impact on operating income was primarily related to the appreciation of the average exchange rate of the Israeli shekel and the British pound against the U.S. dollar, which led to a negative effect on operating income.

- Energy - The negative impact on operating income was primarily due to an increase in electricity prices, mainly in Europe.

- Transportation – The negative impact on operating income resulted primarily from an increase in marine transportation costs.

- Operating and other expenses - The negative impact on operating income was primarily related to higher operational cost, as well as higher payments of royalties, which are in line with the increase in revenue.

Phosphate Solutions

The Phosphate Solutions segment operates ICL's phosphate value chain and uses phosphate rock and fertilizer-grade phosphoric acid to produce phosphate-based specialty products with higher added value, as well as to produce and sell phosphate-based fertilizers.

Phosphate specialties sales of $373 million and operating income of $46 million in the fourth quarter of 2021 were approximately 28% and 92% higher, respectively, compared to the fourth quarter of 2020. The increase in operating income was driven mainly by strong sales volumes and higher prices, which offset increased raw material prices. Despite ongoing world-wide challenges in logistics, the segment’s global production footprint allowed it to provide reliable supply for its customers worldwide.

Sales of phosphate commodities amounted to $236 million, approximately 12% higher than the fourth quarter of 2020, mostly due to a significant increase in market prices. Operating income of $51 million, a year-over-year increase of $54 million, was mostly due to higher prices and strong results from YPH, partially offset by higher costs of raw materials, mainly sulphur.

Results of operations

* For Q4 2021, comprises of $13 million in phosphate specialties and $36 million in phosphate commodities. For 2021, $53 million in phosphate specialties and $162 million in phosphate commodities.

Fourth quarter 2021

• Sales of $609 million were up $108 million or 22% year-over-year.

- Phosphate specialties: Sales of $373 million, up $82 million or 28%.

- Phosphate commodities: Sales of $236 million, up $26 million or 12%.

• Segment operating income of $97 million was up $76 million or 362% year-over-year.
• EBITDA of $146 million was up $71 million or 95% year-over-year.

- Phosphate specialties: EBITDA of $59 million, up $21 million or 55%.

- Phosphate commodities: EBITDA of $87 million, up $50 million or 135%.

• ICL’s YPH joint venture in China once again delivered record results.
• Higher prices and increased demand for phosphate products drove overall improvement, despite continued supply chain, raw material and production cost pressures.

Significant highlights

• Phosphate salts: Continued increases in sales volumes, for both food and industrial.

- Food: Sales increased notably across all regions, supported by higher prices and continued retail demand, even as Covid-19 impacted food service performance.

- Industrial: Sales increased year-over-year, with higher demand in all regions and across most end-markets.

• White phosphoric acid: Sales increased on firm demand, resulting in higher sales volumes across all regions, as well as significant price increases globally.
• Dairy protein: Sales declined, due to a reduction in demand for organic products for infants in China, which was only partially offset by increased sales of other products.
• Phosphate fertilizers: Higher sales resulted from continued healthy demand and higher prices – despite lower volumes – as supply remained tight, due to export restrictions in China and Russia, as well as other shifting global dynamics.
• Specialty mono ammonium phosphate (MAP): YPH faces increasing demand from the lithium iron phosphate (LFP) battery market.

Additional segment information

Global phosphate commodities market - average prices:

Source: CRU (Fertilizer Week Historical Prices, January 2022).

Results analysis for the period October - December 2021

- Quantity – The positive impact on operating income was driven mainly by strong sales volumes of acids in all regions, which was partially offset by a decrease in the sales volumes of phosphate fertilizers.

- Price – The positive impact on operating income was primarily related to an increase in the selling prices of phosphate fertilizers, acids and salts.

- Exchange rates – The unfavorable impact on operating income was primarily related to the appreciation of the average exchange rate of the Israeli shekel against the dollar, which increased operational costs.

- Raw materials – The negative impact on operating income was due to higher prices of sulphur.

- Transportation - The negative impact on operating income was primarily related to an increase in transportation costs.

- Operating and other expenses – The positive impact on operating income was primarily related to lower operational costs.

Innovative Ag Solutions

The Innovative Ag Solutions segment aims to achieve global leadership in specialty agriculture markets by enhancing its positions in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, and by targeting high-growth markets such as Brazil, India and China. The segment also looks to leverage its unique R&D capabilities, substantial agronomic experience, global footprint, backward integration to potash and phosphate and chemistry know-how, as well as to integrate and generate synergies from acquired businesses. ICL is continuously working to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consists of enhanced efficiency and controlled release fertilizers (CRF), water soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.

Results of operations

Fourth quarter 2021

• Sales of $380 million were up $217 million or 133% year-over-year.
• Segment operating income of $33 million was up $28 million or 560% year-over-year.
• EBITDA of $48 million was up $37 million or 336% year-over-year.
• Strong organic growth, in addition to both Brazilian acquisitions, contributed to significant year-over-year improvement of results in the fourth quarter.
• Positive momentum continued, due to strong demand and increased volumes across most regions and product lines, along with higher prices, which were partially offset by higher raw material costs.

Significant highlights

• Specialty agriculture: Sales increased across all regions – particularly in Brazil, Europe, China and North America – due to higher volumes of straights, liquid and controlled-release fertilizers, as well as from strong performance from the recent Brazilian acquisitions.
• Turf and ornamental: Increased sales volumes and higher prices drove strong growth globally, as distributors stocked up in advance of gardening and turf seasons.

Results analysis for the period October – December 2021

- New Brazilian businesses' contribution - In January 2021, the Company completed the acquisition of Fertiláqua and in July 2021, the acquisition of ADS.

- Quantity – The positive impact on operating income was due to higher sales volumes across most regions and business lines, primarily in specialty agriculture and turf and ornamental products.

- Price – The positive impact on operating income was due to higher sales prices across most business lines, especially for specialty agriculture and turf and ornamental products.

- Exchange rates – The depreciation of the average exchange rate of the euro against the U.S. dollar was offset by the appreciation of the average exchange rate of the Israeli shekel against the U.S. dollar with no impact on operating income.

- Raw materials – The negative impact on operating income was primarily related to higher costs of commodity fertilizers and ammonia.

- Operating and other expenses – The negative impact on operating income was primarily related to higher operational costs, mainly selling and marketing expenses.

Financing expenses, net

Net financing expenses in the fourth quarter of 2021 amounted to $38 million, compared to $46 million in the corresponding quarter last year, a decrease of $8 million. The change derives mainly from a decrease of $13 million in long-term employee benefits provisions and lease revaluation, mainly due to higher appreciation of the Israeli shekel against the dollar in the corresponding quarter. This was partially offset by an increase of $5 million in interest expenses mainly due to an increase in average debt derived from acquisitions made in 2021.

Tax expenses

In the fourth quarter of 2021, the Company’s tax expenses amounted to $128 million compared to $24 million in the corresponding quarter last year, reflecting an effective tax rate of 30% and 26%, respectively. The Company’s relatively high effective tax rate in the current quarter is due to tax expenses recognized in respect of trapped earnings release in certain Israeli subsidiaries.

Liquidity and Capital Resources

As of December 31, 2021, the Company retained high levels of cash, cash equivalents, short-term investments and deposits in the amount of $564 million compared to $314 million as of December 31, 2020. In addition, the Company had more than $1 billion of unused credit facilities as of December 31, 2021.

Outstanding net debt

As of December 31, 2021, ICL's net financial liabilities amounted to $2,449 million, an increase of $31 million compared to December 31, 2020.

Dividend Distribution

In connection with ICL’s fourth quarter 2021 results, the Board of Directors declared a dividend of 13.18 cents per share, or approximately $169 million. The dividend will be paid on March 8, 2022. The record date is February 23, 2022.

About ICL

ICL Group Ltd. is a leading global specialty minerals company, which also benefits from commodity upside. The Company creates impactful solutions for humanity’s sustainability challenges in the global food, agriculture and industrial markets. ICL leverages its unique bromine, potash and phosphate resources, its professional employees, and its strong focus on R&D and technological innovation, to drive growth across its end markets.

Investor Relations Contacts
Peggy Reilly Tharp
VP, Global Investor Relations
+1-314-983-7665
Peggy.ReillyTharp@icl-group.com

Dudi Musler
Director, Investor Relations
+972-3-684-4448
Dudi.Musler@icl-group.com

Press Contact
Adi Bajayo
Scherf Communications
+972-52-4454789
Adi@scherfcom.com