Delivers sales of $1.8 billion, adjusted EBITDA
of $441 million, adjusted EBITDA margin of 24% and diluted earnings
per share of $0.13
ICL (NYSE: ICL) (TASE: ICL), a leading global specialty
minerals company, today reported its financial results for the
second quarter ended June 30, 2023. Consolidated sales were $1.8
billion versus $2.9 billion, while operating income was $300
million versus $1,139 million in the second quarter of last year.
Operating cash flow was $391 million vs. $627 million. Adjusted
EBITDA was $441 million versus $1,258 million, and diluted earnings
per share were $0.13 versus $0.44.
“ICL delivered another solid quarter, as we reacted swiftly to
challenging market conditions, while executing with resolve against
our long-term strategy. For the second quarter, results declined
year-over-year, as expected, following an all-time record quarter
in 2022, which reflected peak commodity prices,” said Raviv Zoller,
president and CEO of ICL. “The deterioration in market conditions
witnessed in the second quarter of this year was more rapid than
expected, until fertilizer prices stabilized at the end of the
quarter. Our efforts focused on enhancing efficiencies and
competitiveness helped drive continued strong cash generation in
the quarter. ICL remains committed to its long-term strategy of
growing its specialties product portfolio, while targeting M&A
and strategic partnership opportunities.”
As indicated on June 22, 2023, the company's guidance for full
year adjusted EBITDA is between $1.6 billion to $1.8 billion, with
$0.8 billion to $0.9 billion of this amount estimated to come from
the company’s specialties focused businesses. (1a)
Key Financials
Second Quarter 2023
US$M
Ex. per share data
2Q'23
2Q'22
1H'23
1H'22
Sales
$1,834
$2,880
$3,932
$5,405
Gross profit
$645
$1,539
$1,473
$2,784
Gross margin
35%
53%
37%
52%
Operating income
$300
$1,139
$765
$2,041
Adjusted operating income (1)
$300
$1,139
$780
$2,019
Operating margin
16%
40%
19%
38%
Adjusted operating margin (1)
16%
40%
20%
37%
Net income attributable to
shareholders
$163
$563
$443
$1,195
Adjusted net income attributable to
shareholders (1)
$163
$751
$455
$1,364
Adjusted EBITDA (1)
$441
$1,258
$1,051
$2,260
Adjusted EBITDA margin (1)
24%
44%
27%
42%
Diluted earnings per share
$0.13
$0.44
$0.34
$0.93
Diluted adjusted earnings per share
(1)
$0.13
$0.58
$0.35
$1.06
Cash flows from operating activities
$391
$627
$773
$952
(1)
Adjusted operating income and margin,
adjusted net income attributable to shareholders, adjusted EBITDA,
diluted adjusted earnings per share and margin are non-GAAP
financial measures. Please refer to the adjustments table and
disclaimer.
Industrial Products
Second quarter 2023
- Sales of $300 million vs. $486 million.
- EBITDA of $74 million vs. $206 million.
- Delayed recovery in flame retardant demand, as the Chinese
economic rebound has abated and certain end-markets remain
challenged.
Key developments
- Flame retardants: Experienced lower volumes and prices versus
the prior year, as the weakness in the electronics and construction
end-markets was extended.
- Industrial solutions: Chinese spot bromine price continued to
decline.
- Specialty minerals: Higher prices combined with mixed product
demand to drive EBITDA higher year-over-year.
Potash
Second quarter 2023
- Sales of $546 million vs. $951 million.
- EBITDA of $213 million vs. $616 million.
- Grain Price Index decreased 12.8% year-over-year, with rice up
5.5%, while corn, soybeans and wheat were down 19.0%, 15.8% and
23.2%, respectively.
- Potash price (CIF) per ton of $403 was down 50% year-over-year,
as prices declined versus the peaks reached in the second quarter
of 2022.
- Fertilizer affordability remained above average.
Key developments
- ICL Dead Sea: Production according to plan.
- ICL Iberia: Production lower than expected, as operational
challenges continued to impact ore extraction.
Phosphate Solutions
Second quarter 2023
- Sales of $605 million vs. $915 million.
- Phosphate specialties: Sales of $395
million vs. $493 million.
- Phosphate commodities: Sales of $210
million vs. $422 million.
- EBITDA of $130 million vs. $315 million.
- Phosphate specialties: EBITDA of $83
million vs. $131 million.
- Phosphate commodities: EBITDA of $47
million vs. $184 million.
- Lower prices and volumes were partially offset by lower raw
material and transportation costs.
Key developments
- White phosphoric acid: Sales declined year-over-year, as higher
prices in both North and South America were offset by lower prices,
mainly in Europe and China, while volumes were lower for most
regions.
- Industrial phosphates: Slightly higher prices in North and
South America were offset by lower volumes in all regions except
South America.
- Food phosphates: Sales increased on higher prices in North and
South America and in Europe, while volumes were lower in all three
regions.
- Battery materials: Broke ground in St. Louis for LFP cathode
active material facility.
Growing Solutions
Second quarter 2023
- Sales of $481 million vs. $700 million.
- EBITDA of $22 million vs. $155 million.
- Margin decreased, due to destocking in a declining price
environment.
Key developments
- Specialty agriculture: Sales declined versus the prior year,
due to lower quantities and prices, primarily for micronutrients
and straight fertilizers.
- Turf and ornamental: Ornamental and horticulture sales volumes
were weaker, while turf sales remained good.
- Brazil: Sales decreased versus the prior year, as quantities
and prices both declined year-over-year.
- Polysulphate: Record second quarter production at Boulby of 267
thousand metric tons.
Financial Items
Financing Expenses
Net financing expenses for the second quarter of 2023 were $49
million, up versus $14 million in the corresponding quarter of last
year.
Tax Expenses
Tax expenses in the second quarter of 2023 were $84 million,
reflecting an effective tax rate of 33%, compared to $540 million
in the corresponding quarter of last year. For this year, the
effective tax rate was slightly higher than usual, due to a
withholding tax on dividends of $8 million. For last year, the tax
expense included an adjustment of $188 million, and excluding this
amount resulted in an effective tax rate of 31%.
Available Liquidity
ICL’s available cash resources, which are comprised of cash and
deposits, unutilized revolving credit facility, and unutilized
securitization, totaled $1,659 million, as of June 30, 2023.
Outstanding Net Debt
As of June 30, 2023, ICL’s net financial liabilities amounted to
$2,253 million, a decrease of $63 million compared to December 31,
2022.
Dividend Distribution
In connection with ICL’s second quarter 2023 results, the Board
of Directors declared a dividend of 6.32 cents per share, or
approximately $81 million, versus 29.18 cents per share, or
approximately $375 million, in the second quarter of last year. The
dividend will be payable on September 13, 2023, to shareholders of
record as of August 30, 2023.
About ICL
ICL Group Ltd. is a leading global specialty minerals company,
which creates impactful solutions for humanity's sustainability
challenges in the food, agriculture and industrial markets. ICL
leverages its unique bromine, potash and phosphate resources, its
global professional workforce, and its sustainability focused
R&D and technological innovation capabilities, to drive the
company's growth across its end markets. ICL shares are dual listed
on the New York Stock Exchange and the Tel Aviv Stock Exchange
(NYSE and TASE: ICL). The company employs more than 12,500 people
worldwide, and its 2022 revenue totaled approximately $10
billion.
For more information, visit ICL's website at icl-group.com.
To access ICL's interactive CSR report, visit
icl-group-sustainability.com.
You can also learn more about ICL on Facebook, LinkedIn, YouTube
and Instagram.
Guidance
(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
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 Statement
The company discloses in this quarterly announcement 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.
Forward-Looking Statements
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. The Company is relying on the safe
harbor provided in Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended, in making such forward-looking statements.
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:
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 and cost of compliance
with environmental regulatory legislative and licensing
restrictions including laws and regulation related to, and physical
impacts of climate change and greenhouse gas emissions; failure to
"harvest" salt which could lead to accumulation of salt at the
bottom of the evaporation Pond 5 in the Dead Sea; litigation,
arbitration and regulatory proceedings; disruptions at our seaport
shipping facilities or regulatory restrictions affecting our
ability to export our products overseas; changes in exchange rates
or prices compared to those we are currently experiencing; general
market, political or economic conditions in the countries in which
we operate; price increases or shortages with respect to our
principal raw materials; pandemics may create disruptions,
impacting our sales, operations, supply chain and customers; delays
in termination of engagements with contractors and/or governmental
obligations; the inflow of significant amounts of water into the
Dead Sea which could adversely affect production at our plants;
labor disputes, slowdowns and strikes involving our employees;
pension and health insurance liabilities; changes to governmental
incentive programs or tax benefits, creation of new fiscal or tax
related legislation; and/or higher tax liabilities; changes in our
evaluations and estimates, which serve as a basis for the
recognition and manner of measurement of assets and 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; 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; The Company is
exposed to risks relating to its current and future activity in
emerging markets; 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; disruption of our, or our service providers',
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; hazards inherent to mining and
chemical manufacturing; the failure to ensure the safety of our
workers and processes; 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; 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; closing of transactions,
mergers and acquisitions; 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, 2022, filed
with the U.S. Securities and Exchange Commission (the “SEC”) on
February 28, 2023 (the “Annual Report”).
Forward-looking statements speak only as of the date they are
made, and, except as otherwise required by law, 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, targets or goals in order to reflect later events or
circumstances or to reflect the occurrence of unanticipated events.
Investors are cautioned to consider these risk 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.
This announcement for the first quarter of 2023 (herein after
the quarterly announcement) should be read in conjunction with the
Annual Report, including the description of the events occurring
subsequent to the date of the statement of financial position, as
filed with the SEC.
Appendix
Condensed Consolidated Statements of Income
(Unaudited)
$ millions
Three-months ended
Six-months ended
Year ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
December 31, 2022
Sales
1,834
2,880
3,932
5,405
10,015
Cost of sales
1,189
1,341
2,459
2,621
4,983
Gross profit
645
1,539
1,473
2,784
5,032
Selling, transport and marketing
expenses
279
321
543
600
1,181
General and administrative expenses
55
74
123
143
291
Research and development expenses
19
17
37
35
68
Other expenses
2
6
18
6
30
Other income
(10)
(18)
(13)
(41)
(54)
Operating income
300
1,139
765
2,041
3,516
Finance expenses
89
138
176
205
327
Finance income
(40)
(124)
(83)
(157)
(214)
Finance expenses, net
49
14
93
48
113
Share in earnings of equity-accounted
investees
-
-
-
-
1
Income before taxes on income
251
1,125
672
1,993
3,404
Taxes on income
84
540
211
751
1,185
Net income
167
585
461
1,242
2,219
Net income attributable to the
non-controlling interests
4
22
18
47
60
Net income attributable to the
shareholders of the Company
163
563
443
1,195
2,159
Earnings per share attributable to the
shareholders of the Company:
Basic earnings per share (in dollars)
0.13
0.44
0.34
0.93
1.68
Diluted earnings per share (in
dollars)
0.13
0.44
0.34
0.93
1.67
Weighted-average number of ordinary
shares outstanding:
Basic (in thousands)
1,289,347
1,286,380
1,289,293
1,286,097
1,287,304
Diluted (in thousands)
1,290,792
1,291,696
1,290,950
1,291,243
1,289,947
Condensed Consolidated Statements of Financial Position as of
(Unaudited)
$ millions
June 30,
2023
June 30,
2022
December 31, 2022
Current assets
Cash and cash equivalents
372
426
417
Short-term investments and deposits
166
90
91
Trade receivables
1,380
1,812
1,583
Inventories
2,006
1,857
2,134
Prepaid expenses and other receivables
333
572
323
Total current assets
4,257
4,757
4,548
Non-current assets
Deferred tax assets
149
132
150
Property, plant and equipment
6,097
5,749
5,969
Intangible assets
872
867
852
Other non-current assets
209
273
231
Total non-current assets
7,327
7,021
7,202
Total assets
11,584
11,778
11,750
Current liabilities
Short-term debt
674
466
512
Trade payables
893
1,132
1,006
Provisions
75
53
81
Other payables
789
1,227
1,007
Total current liabilities
2,431
2,878
2,606
Non-current liabilities
Long-term debt and debentures
2,117
2,291
2,312
Deferred tax liabilities
467
450
423
Long-term employee liabilities
362
435
402
Long-term provisions and accruals
236
266
234
Other
61
62
60
Total non-current liabilities
3,243
3,504
3,431
Total liabilities
5,674
6,382
6,037
Equity
Total shareholders’ equity
5,670
5,153
5,464
Non-controlling interests
240
243
249
Total equity
5,910
5,396
5,713
Total liabilities and equity
11,584
11,778
11,750
Condensed Consolidated Statements of Cash Flows
(Unaudited)
$ millions
Three-months ended
Six-months ended
Year ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
December 31,
2022
Cash flows from operating
activities
Net income
167
585
461
1,242
2,219
Adjustments for:
Depreciation and amortization
141
119
271
241
498
Exchange rate, interest and derivative,
net
30
75
48
116
157
Tax expenses
84
540
211
751
1,185
Change in provisions
(13)
(41)
(28)
(59)
(83)
Other
2
6
6
(14)
(15)
244
699
508
1,035
1,742
Change in inventories
113
(208)
164
(295)
(527)
Change in trade receivables
268
21
233
(448)
(215)
Change in trade payables
(71)
105
(108)
99
(42)
Change in other receivables
1
(89)
(5)
(90)
(46)
Change in other payables
(184)
(52)
(207)
(9)
107
Net change in operating assets and
liabilities
127
(223)
77
(743)
(723)
Interest paid, net
(42)
(39)
(59)
(55)
(106)
Income taxes paid, net of refund
(105)
(395)
(214)
(527)
(1,107)
Net cash provided by operating
activities
391
627
773
952
2,025
Cash flows from investing
activities
Payments for deposits, net
(35)
(30)
(79)
(38)
(36)
Business combinations
-
(18)
-
(18)
(18)
Purchases of property, plant and equipment
and intangible assets
(170)
(220)
(334)
(351)
(747)
Proceeds from divestiture of assets and
businesses, net of transaction expenses
-
2
3
22
33
Other
-
2
1
14
14
Net cash used in investing
activities
(205)
(264)
(409)
(371)
(754)
Cash flows from financing
activities
Dividends paid to the Company's
shareholders
(146)
(307)
(324)
(476)
(1,166)
Receipt of long-term debt
95
190
353
533
1,045
Repayments of long-term debt
(228)
(259)
(398)
(615)
(1,181)
Receipts (repayments) of short-term
debt
(54)
25
(17)
(72)
(21)
Receipts from transactions in
derivatives
-
-
6
19
20
Dividend paid to the non-controlling
interests
(15)
-
(15)
-
-
Net cash used in financing
activities
(348)
(351)
(395)
(611)
(1,303)
Net change in cash and cash
equivalents
(162)
12
(31)
(30)
(32)
Cash and cash equivalents as of the
beginning of the period
552
439
417
473
473
Net effect of currency translation on cash
and cash equivalents
(18)
(25)
(14)
(17)
(24)
Cash and cash equivalents as of the end
of the period
372
426
372
426
417
Adjustments to Reported Operating and Net Income
(non-GAAP)
$ millions
Three-months ended
Six-months ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Operating income
300
1,139
765
2,041
Write-off of assets and provision for site
closure (1)
-
-
15
-
Divestment related items and transaction
costs from acquisitions (2)
-
-
-
(22)
Total adjustments to operating
income
-
-
15
(22)
Adjusted operating income
300
1,139
780
2,019
Net income attributable to the
shareholders of the Company
163
563
443
1,195
Total adjustments to operating income
-
-
15
(22)
Total tax adjustments (3)
-
188
(3)
191
Total adjusted net income -
shareholders of the Company
163
751
455
1,364
(1)
For 2023, reflects a write-off of assets
and closure costs due to the closure of the Company’s Summerville
site in the US.
(2)
For 2022, reflects a capital gain related
to the sale of an asset in Israel and the Company’s divestment of a
50%-owned joint venture, Novetide.
(3)
For 2023, reflects the tax impact of
adjustments made to operating income. For 2022, reflects tax
expenses in respect of prior years following a settlement with
Israel’s Tax Authority regarding Israel's surplus profit levy,
which outlines understandings for the calculation of the levy,
including the measurement of fixed assets, as well as the tax
impact of adjustments made to operating income.
Consolidated EBITDA for the Periods of Activity
$ millions
Three-months ended
Six-months ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Net income
167
585
461
1,242
Financing expenses, net
49
14
93
48
Taxes on income
84
540
211
751
Operating income
300
1,139
765
2,041
Depreciation and amortization
141
119
271
241
Adjustments (1)
-
-
15
(22)
Total adjusted EBITDA (2)
441
1,258
1,051
2,260
(1)
See "Adjustments to Reported Operating and
Net income (non-GAAP)" above.
(2)
Commencing 2022, the company’s adjusted
EBITDA definition was updated. See the statement above.
Calculation of Segment EBITDA
Industrial Products
Potash
Phosphate Solutions
Growing Solutions
Three-months ended
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
June 30, 2023
June 30, 2022
Segment operating income
60
191
167
576
71
268
4
141
Depreciation and amortization
14
15
46
40
59
47
18
14
Segment EBITDA
74
206
213
616
130
315
22
155
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230807203912/en/
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