ICL Reports Record Fourth Quarter 2021 Results

Tel Aviv, Israel, February 9, 2022– 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.

 

 

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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.

 

 

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 ICL Group Limited Q4 2021 Results 3

 

Fourth quarter 2021

 

 

 

 

 

Significant highlights

 

 

 

 

 

 

 

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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.

 

 

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Fourth quarter 2021

 

 

 

 

 

 

Significant highlights

 

 

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

 

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

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

 

Global potash market - average prices and imports:

 

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

 

 

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Fourth quarter 2021

 

 

 

 

 

 

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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.

 

 

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* 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

 

 

 

 

 

 

Significant highlights

 

 

 

 

 

 

 

Global phosphate commodities market - average prices:

 

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

 

 

 

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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.

 

 

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Fourth quarter 2021

 

 

 

 

 

 

Significant highlights

 

 

 

 

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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. ICL shares are dually listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The Company employs more than 12,000 people worldwide, and its 2021 revenue totaled approximately $7 billion. For more information, visit the Company's website at www.icl-group.com¹.

 

We disclose in this quarterly report 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. Our 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. We calculate our adjusted operating income by adjusting our operating income to add certain items, as set forth in the reconciliation table under “Adjustments to reported operating and net income (non-GAAP)” below. Certain of these items may recur. We calculate our adjusted net income attributable to the Company’s shareholders by adjusting our 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)” below, excluding the total tax impact of such adjustments. We calculate our diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. We calculate our adjusted EBITDA by adding back to the net income attributable to the Company’s shareholders the depreciation and amortization, financing expenses, net, taxes on income and the items presented in the reconciliation table under “Consolidated adjusted EBITDA and diluted adjusted Earnings Per Share for the periods of activity” below which were adjusted for in calculating the adjusted operating income and adjusted net income attributable to the Company’s shareholders. Other companies may calculate similarly titled non‑IFRS financial measures differently than the Company.

 

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 our 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 our non-IFRS financial measures as tools for comparison. However, we believe 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 that management believes are not indicative of our ongoing operations. Our management uses these non-IFRS measures to evaluate the Company's business strategies and management's performance. We believe that these non‑IFRS measures provide useful information to investors because they improve the comparability of our financial results between periods and provide for greater transparency of key measures used to evaluate our performance.

 

(1a) 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 Innovative Ag 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.

 

We present a discussion in the period-to-period comparisons of the primary drivers of change in the Company’s results of operations. This discussion is based in part on management’s best estimates of the impact of the main trends on our businesses. We have based the following discussion on our financial statements. You should read such discussion together with our financial statements.

 

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Calculation of adjusted EBITDA was made as follows:

 

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Calculation of diluted adjusted earnings per share was made as follows:

 

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Consolidated Results Analysis

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* See "Adjustments to reported Operating and Net income (non-GAAP)" above.

 

 

 

 

 

 

 

 

 

 

 

The following table sets forth sales by geographical regions based on the location of the customers:

 

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This announcement contains statements that constitute “forward‑looking statements”, many of which can be identified by the use of forward‑looking words such as “anticipate”, “believe”, “could”, “expect”, “should”, “plan”, “intend”, “estimate”, “strive”, “forecast”, “targets” and “potential”, among others.

 

Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to, statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking 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; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the 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 Amfert Israel; 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 regulation 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, 2020, filed with the U.S. Securities and Exchange Commission (the “SEC”) on March 2, 2021 (the “Annual Report”).

 

Forward‑looking statements speak only as at the date they are made, and we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.

 

This report for the fourth quarter of 2021 (the “Quarterly Report”) should be read in conjunction with the Annual Report and the report for the first and second and third quarter of 2021 published by the Company (the “prior quarterly report”), including the description of the events occurring subsequent to the date of the statement of financial position, as filed with the U.S. SEC.

 

 

 

Statement regarding COVID-19

 

From March 2020, when the World Health Organization declared the COVID-19 a pandemic, and recommended containment and mitigation measures worldwide, the pandemic continues to create business and economic uncertainty and volatility in global markets. Many countries around the world are experiencing further outbreaks of the pandemic and governments are once again imposing various restrictions. At the same time, there is a recovery trend in the volume of economic activity around the world that has led on the one hand, to significant demand for certain products and services and on the other hand, disruptions to worldwide supply chain routes and some raw materials.

 

We continue to take measures to ensure the health and safety of our employees in all of our facilities and offices, as well as those of our suppliers, our business partners, and the communities in which we operate, to maintain the level of operations throughout our various facilities around the world, and to minimize the pandemic’s potential impact on our business.

 

In 2021, manufacturing continues at our sites around the world without interruptions. We have not experienced material delays in production or distribution. The Company continues to respond to the evolving business environment, adjusting to rapidly changing conditions, taking appropriate measures to further enhance operational efficiency and profitability.

 

However, it remains difficult to assess the future impacts of the pandemic on our operations in light of the uncertainty of its duration, the extent of its intensity, its effects on global supply chains and global markets, the extent of its impact on the markets in which we operate, especially on emerging markets and the impact of additional countermeasures that may be taken by governments and central banks.

 

 

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