Weather-related challenges in Brazil delayed ICL Growing Solutions segment's fourth quarter orders, impacting both quarter and full year results

ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company,  reported its financial results for the fourth quarter and full year ended December 31, 2023. Consolidated annual sales were $7,536 million versus a record $10,015 million in 2022. Net income was $647 million versus $2,159 million, while adjusted net income was $715 million versus $2,350 million. Annual adjusted EBITDA was $1,754 million versus $4,007 million in 2022. Diluted earnings per share for 2023 were $0.50, while adjusted diluted EPS was $0.55. Operating cash flow was $1,595 million in 2023, while free cash flow was $818 million. For 2023, the Company paid out more than $350 million in dividends.

For the fourth quarter of 2023, consolidated sales were $1,690 million versus $2,091 million. Net income was $67 million, with adjusted net income of $123 million, versus $331 million and $358 million, respectively, for fourth quarter 2022. Adjusted EBITDA in the fourth quarter was $357 million versus $698 million. Fourth quarter diluted earnings per share were $0.05, with adjusted diluted EPS of $0.10, versus $0.25 and $0.28, respectively. Operating cash flow was $415 million in the fourth quarter, while free cash flow was $160 million.

″ICL delivered adjusted EBITDA of $1.8 billion and operating cash flow of $1.6 billion, on the backdrop of a record 2022. During 2023, we expanded into additional new end-markets, with the groundbreaking of new advanced facilities and the launch of new innovative products, which will have a long-term impact on growth. We executed against our cost reduction plan and launched further efficiency measures in the fourth quarter, as we continued to respond to challenging market conditions and remained resilient in the face of war,″ said Raviv Zoller, president and CEO of ICL. ″For the year, ICL delivered significant value to shareholders, with $818 million of free cash flow and more than $350 million in dividend payments, as we diligently managed the areas under our control, swiftly reacting to changing external conditions. We currently see improving demand in our key end-markets and, while we expect there will be new and continued challenges in 2024, we are looking forward to achieving our goals for the year, including inorganic growth.″

The Company also announced it is making a change to guidance practices, in order to provide greater transparency for its shareholders. Going forward, the Company will be providing guidance for expected potash sales volumes and EBITDA guidance for all of its business segments other than potash, which will be referred to as specialties-driven business segments.

For 2024, the Company expects the specialties-driven segments adjusted EBITDA to be between $0.7 billion to $0.9 billion. For potash, the Company expects 2024 sales volumes to be between 4.6 million metric tons and 4.9 million metric tons. The Company’s fourth quarter 2023 Potash segment EBITDA should give a good indication of EBITDA at current prices, and ICL expects every $20 change in the average potash CIF price from current levels to result in a $100 million annual impact to EBITDA (1a).

Financial Figures and non-GAAP Financial Measures

Growing Solutions Segment Information

The Growing Solutions segment aims to achieve global leadership in plant nutrition by enhancing its position in its core markets of specialty agriculture, ornamental horticulture, turf and landscaping, fertilizers and FertilizerpluS, 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, phosphate and polysulphate and its chemistry know-how, as well as its ability to integrate and generate synergies from acquired businesses. ICL continuously works to expand its broad portfolio of specialty plant nutrition, plant stimulation and plant health solutions, which consist of enhanced efficiency and controlled release fertilizers (CRF), water-soluble fertilizers (WSF), liquid fertilizers and straights (MKP/MAP/PeKacid), FertilizerpluS, soil and foliar micronutrients, secondary nutrients, biostimulants, soil conditioners, seed treatment products, and adjuvants.

Results of operations

Significant highlights

• Specialty agriculture: Sales slightly decreased year-over-year, due to lower prices, partially offset by an increase in volumes, mainly in micronutrients, controlled released fertilizers and straight fertilizers.

• Turf and ornamental: Sales decreased year-over-year, with turf sales decreasing, while ornamental horticulture sales remained stable.

• Brazil: Weather-related challenges delayed fourth quarter orders, impacting both quarter and full year results.

• ICL Boulby: Production of Polysulphate decreased by 6% year-over-year for the fourth quarter, declining to 238 thousand tonnes. For 2023 production reached 1,009 thousand tonnes, an annual production record.

• FertilizerpluS: sales decreased year-over-year, as higher volumes only partially offset lower prices.

• Planned maintenance in certain facilities was shifted from the first quarter of 2024 to the fourth quarter of 2023, as a response to application delays in Europe, mainly due to weather, and Israel, mainly due to the war.

• In the beginning of 2024, the Company completed the acquisition of Nitro 1000, a manufacturer, developer and provider of biological crop inputs in Brazil, for a consideration of $30 million. Nitro 1000’s products mainly target soybean, corn and sugar cane crops, and their application replaces or optimizes the use of fertilizers. These products help farmers increase profitability, as well as offer more sustainable options.

Results analysis for the period October – December 2023

• Quantity – The positive impact on operating income was primarily due to higher sales volumes of specialty agriculture and FertilizerpluS products.

• Price – The negative impact on operating income was primarily due to lower selling prices across most product lines, mainly specialty agriculture and FertilizerpluS products.

• Exchange rates – The favorable impact on operating income was primarily due to the positive impact on sales resulting from the appreciation of the average exchange rate of the Brazilian real and the euro against the US dollar, which exceeded their negative impact on operational costs.

• Raw materials – The positive impact on operating income was primarily related to lower costs of commodity fertilizers, potassium hydroxide (KOH) and ammonia.

• Operating and other expenses – The negative impact on operating income was primarily related to higher maintenance and operational costs, as well as sales commissions.

Learn more on ICL's webiste.