Company executed on growth strategy, which continued to result in strong performance of specialties businesses, as it also benefitted from significant market upside
TEL AVIV, Israel--(BUSINESS WIRE)-- ICL (NYSE: ICL) (TASE: ICL) , a leading global specialty minerals company, today reported its financial results for the second quarter ended June 30, 2022. Consolidated sales of $2,880 million were up 78% year-over-year versus $1,617 million. Operating income of $1,139 million was up 369% versus $243 million and up 383% versus adjusted operating income of $236 million. Net income of $563 million was up 302%, while adjusted net income of $751 million was up 456%. Adjusted EBITDA of $1,258 million was up 249% versus $360 million. EBITDA margin of 43.7% was up versus 22.3%.
ICL’s continued focus on long-term specialties solutions benefitted the company once again, with additional significant upside from commodity prices. During the quarter, the company’s strong performance was supported by increased demand and higher prices in most markets and achieved despite increased raw material costs and continued global supply chain challenges.
“In the second quarter, ICL delivered all-time record sales, operating income and EBITDA, and another consecutive quarter of profit and margin growth, with record results from all our specialty businesses and our commodity businesses. We also achieved multiple production records, as we continued to focus on efficiency and productivity,” said Raviv Zoller, president and CEO of ICL. “Our performance in the quarter reaffirms our specialties strategy, and our strong balance sheet will allow us to accelerate business expansion opportunities, including growth through investments in R&D, capacity and new products, among others.”
Due to very strong results in the first half, ICL is raising its expectations for full year adjusted EBITDA to a range of $3,800 million to $4,000 million, from previous guidance of $3,500 million to $3,750 million. Between $1,500 million to $1,600 million of 2022 EBITDA is expected to come from the company’s specialties focused businesses, up from previous expectations calling for contribution of $1,300 million to $1,400 million. (1a)
In addition, ICL has reached an understanding with the Israeli Tax Authority and settled the dispute concerning the Israeli Law for Taxation of Profits from Natural Resources. The settlement agreement provides final assessments for the tax years 2016 to 2020, as well as outlines understandings for the calculation of the levy for the years from 2021 and onwards. As a result of the settlement agreement, in the second quarter of 2022, the company recognized tax expenses for prior years in the amount of $188 million. ICL welcomes the conclusion of this dispute, which ended through a dialogue and prevented the potential for years-long legal proceedings, while providing expected business certainty for years to come.
Key Financials
Second Quarter 2022
US$M
Ex. per share data
2Q'22
2Q'21
YoY
Change
Sales
$2,880
$1,617
78%
Gross profit
$1,539
$570
170%
Gross margin
53.4%
35.3%
1,819 bps
Operating income
$1,139
$243
369%
Operating margin
39.5%
15.0%
2,452 bps
Net income attributable to shareholders
$563
$140
302%
Adjusted net income attributable to shareholders(1)
$751
$135
456%
Adjusted EBITDA(2)
$1,258
$360
249%
Adjusted EBITDA margin(2)
43.7%
22.3%
2,142 bps
Diluted earnings per share
44¢
11¢
300%
Cash flows from operating activities
$627
$242
159%
(1) Adjusted net income attributed to shareholders is a non-GAAP financial measure. Please refer to the adjustments table and the disclaimer below. (2) Adjusted EBITDA is a non-GAAP financial measure. Commencing 2022, the company’s adjusted EBITDA definition was updated, see consolidated EBITDA table and the disclaimer below.
Industrial Products
Second quarter 2022
Highlights
Potash
Phosphate Solutions
Innovative Ag Solutions
Financial Items
Financing Expenses
Net financing expenses for the second quarter of 2022 were $14 million, down versus $30 million in the corresponding quarter of last year.
Tax Expenses
Tax expenses in the second quarter of 2022 were $540 million, reflecting, in part, a settlement agreement with the Israeli Tax Authority regarding the Surplus Profit Levy. As a result, the company recorded tax expenses in respect to prior years in the amount of $188 million. Excluding this amount results in tax expense of $352 million, reflecting an effective tax rate of 31%, compared to $64 million in the corresponding quarter of last year, reflecting an effective tax rate of 30%.
Liquidity and Capital Resources
ICL has long-term credit facilities of $1,200 million, of which $291 million were utilized as of June 30, 2022. As of July 2022, the total long-term credit facility stands at $1,100 million, following an early termination by one the banks.
Outstanding Net Debt
As of June 30, 2022, ICL’s net financial liabilities amounted to $2,241 million, a decrease of $208 million compared to December 31, 2021.
Dividend Distribution
In connection with ICL’s second quarter 2022 results, the Board of Directors declared a dividend of 29.18 cents per share, or approximately $375 million, up versus 5.26 cents per share, or approximately $68 million, in the second quarter of last year. The dividend will be payable on September 14, 2022, to shareholders of record as of August 31, 2022.
About ICL
ICL Group 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 passionate team of talented 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 revenues totaled approximately $7 billion.
For more information, visit ICL's website at www.icl-group.com.
To access ICL's interactive Corporate Social Responsibility report, please click here.
You can also learn more about ICL on Facebook, LinkedIn 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 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.
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, target, and potential, among others.
Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to, our 2022 adjusted EBITDA guidance, 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; 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 (the Annual Report).
Forward‑looking statements speak only as of the date they are made, and 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 in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events.
This announcement for the second quarter of 2022 (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, 2022
June 30, 2021
December 31, 2021
2,880
1,617
5,405
3,127
6,955
Cost of sales
1,341
1,047
2,621
2,062
4,344
1,539
570
2,784
1,065
2,611
Selling, transport and marketing expenses
321
246
600
475
1,067
General and administrative expenses
74
67
143
129
276
Research and development expenses
17
14
35
29
64
Other expenses
6
25
30
57
Other income
(18)
(25)
(41)
(26)
(63)
1,139
243
2,041
428
1,210
Finance expenses
138
205
62
216
Finance income
(124)
(34)
(157)
(12)
(94)
Finance expenses, net
48
50
122
Share in earnings of equity-accounted investees
-
1
4
Income before taxes on income
1,125
214
1,993
379
1,092
Taxes on income
540
751
87
260
Net income
585
150
1,242
292
832
Net income attributable to the non-controlling interests
22
10
47
49
Net income attributable to the shareholders of the Company
563
140
1,195
275
783
Earnings per share attributable to the shareholders of the Company:
Basic earnings per share (in dollars)
0.44
0.11
0.93
0.22
0.61
Diluted earnings per share (in dollars)
0.60
Weighted-average number of ordinary shares outstanding:
Basic (in thousands)
1,286,380
1,281,977
1,286,097
1,281,192
1,282,807
Diluted (in thousands)
1,291,696
1,285,658
1,291,243
1,284,873
1,287,051
Condensed Consolidated Statements of Financial Position as of (Unaudited)
June 30,
2022
2021
Current assets
Cash and cash equivalents
426
318
473
Short-term investments and deposits
90
92
91
Trade receivables
1,812
1,097
1,418
Inventories
1,857
1,207
1,570
Prepaid expenses and other receivables
572
524
357
Total current assets
4,757
3,238
3,909
Non-current assets
Deferred tax assets
132
147
Property, plant and equipment
5,749
5,601
5,754
Intangible assets
867
725
Other non-current assets
273
373
403
Total non-current assets
7,021
6,842
7,171
Total assets
11,778
10,080
11,080
Current liabilities
Short-term debt
466
630
577
Trade payables
1,132
801
1,064
Provisions
53
55
59
Other payables
1,227
659
912
Total current liabilities
2,878
2,145
2,612
Non-current liabilities
Long-term debt and debentures
2,291
2,212
2,436
Deferred tax liabilities
450
368
384
Long-term employee liabilities
435
622
564
Long-term provisions and accruals
266
278
Other
76
70
Total non-current liabilities
3,504
3,556
3,732
Total liabilities
6,382
5,701
6,344
Equity
Total shareholders’ equity
5,153
4,201
4,527
Non-controlling interests
178
209
Total equity
5,396
4,379
4,736
Total liabilities and equity
Condensed Consolidated Statements of Cash Flows (Unaudited)
Adjustments for:
Depreciation and amortization
119
124
241
490
Reversal of fixed assets impairment
(9)
(6)
Exchange rate, interest and derivative, net
75
116
99
Tax expenses
Change in provisions
12
(59)
(4)
8
(14)
(21)
699
199
1,035
818
Change in inventories
(208)
(3)
(295)
27
(267)
Change in trade receivables
21
(27)
(448)
(174)
(426)
Change in trade payables
105
36
274
Change in other receivables
(89)
(31)
(90)
(40)
9
Change in other payables
(52)
(17)
(29)
107
Net change in operating assets and liabilities
(223)
(42)
(743)
(141)
(303)
Interest paid, net
(39)
(37)
(55)
Income taxes paid, net of refund
(395)
(28)
(527)
(193)
Net cash provided by operating activities
627
242
952
448
Cash flows from investing activities
Proceeds (payments) from deposits, net
(30)
(38
98
355
Business combinations
(18
(64)
(365
Purchases of property, plant and equipment and intangible assets
(220)
(151)
(351)
(298)
(611)
Proceeds from divestiture of assets and businesses, net of transaction expenses
2
39
3
Net cash used in investing activities
(264)
(58)
(371)
(261)
(579)
Cash flows from financing activities
Dividends paid to the Company's shareholders
(307
(67)
(476)
(101)
(276)
Receipt of long-term debt
190
187
533
497
1,230
Repayments of long-term debt
(259
(144)
(615)
(455)
(1,120)
Receipts (repayments) of short-term debt, net
(72)
(16)
Receipts (payments) from transactions in derivatives
(32)
19
Net cash used in financing activities
(351
(93)
(244)
Net change in cash and cash equivalents
153
(30
94
Cash and cash equivalents as of the beginning of the period
439
157
Net effect of currency translation on cash and cash equivalents
(25
(17
Cash and cash equivalents as of the end of the period
Adjustments to Reported Operating and Net Income (non-GAAP)
Divestment related items and transaction costs from acquisitions(1)
(8)
(22)
Impairment and disposal of assets, provision for closure and restoration costs (2)
Total adjustments to operating income
(7)
Adjusted operating income
236
2,019
421
Net income attributable to the shareholders
Total tax adjustments (3)
188
191
Total adjusted net income to the shareholders
135
1,364
270
(1)
For 2022, reflects a capital gain related to the company’s divestment of a 50%-owned joint venture, Novetide. For 2021, it reflects a capital gain related to the sale of an asset in Israel and the divestment by the company’s Industrial Products segment of the Zhapu site in China, partially offset by an earnout adjustment relating to divestment in previous years, as well as transaction costs related to acquisitions in Brazil.
(2)
For 2021, reflects the disposal of a pilot investment in Spain that did not materialize and an increase in restoration costs, offset by a reversal of impairment due to the strengthening of phosphate prices.
For 2022, reflects tax expenses in respect of prior years following a settlement with the Israeli Tax Authority regarding Israel's Surplus Profit Levy, which outlines understandings for the calculation of the levy, including for the measurement of fixed assets and the tax impact of adjustments made to operational income. For additional information see Note 6 to the company’s interim financial statements. For 2021, the amount includes tax expenses related to the release of trapped earnings of the company and certain Israeli subsidiaries and the tax impact of adjustments made to operational income.
Consolidated EBITDA for the Periods of Activity
Financing expenses, net
Less: Share in earnings of equity-accounted investees
Adjustments (1)
Total adjusted EBITDA (2)
1,258
360
2,260
662
See "Adjustments to Reported Operating and Net income (non-GAAP)" above.
Commencing 2022, the company’s adjusted EBITDA definition was updated. See the statement above.
Calculation of Segment EBITDA
Segment operating income
114
576
42
268
77
141
15
40
38
56
13
Segment EBITDA
206
128
616
80
315
133
155
34
Investor Relations Contact Peggy Reilly Tharp VP, Global Investor Relations +1-314-983-7665 Peggy.ReillyTharp@icl-group.com
Press Contact Adi Bajayo External Communications Director +972-3-6844459 Adi.Bajayo@icl-group.com
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