Q3 2022 ICL Group Ltd Earnings Call
ICL impact for a sustainable future.
[music].
Yes.
Ladies and gentlemen, thank you for span.
And by and welcome to the ICL Analyst Conference call. Our presentation today will be followed by a question and answer session at which time. If you wish to ask the question you will need to raise your hand, using your mobile or desktop application press star nine on your telephone keypad and wait for your name to the Enel.
I must advise you that this call is being recorded today.
I'd like to hand, the call over to our first speaker today, Peggy Reilly Tharp, Vice President of Global Investor Relations.
Please go ahead.
Thank you Hello, everyone I'm, Peggy Reilly Tharp, Vice President of Global Investor Relations I'd like to welcome you and thank you for joining us today for our quarterly earnings call.
The event is being webcast live on our website at ICL dashed group dotcom.
Earlier today, we filed our reports with the securities authorities and the stock exchanges in the U S and in Israel those reports as well as the press release are available on our website.
There will be a replay of the webcast available after the meeting and a transcript will be available shortly thereafter.
The presentation, which will be reviewed today was also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on slide two.
Our comments today will contain forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations and are not guarantees of future performance. The company undertakes no obligation to update any financial information discussed on this call at any time.
We will begin with a presentation by our CEO Mr. Rajiv Zoller, followed by Mr. Avi on them to have our CFO .
Following the presentation, we will open the line for the Q&A session Raviv. Please.
Thanks, Peggy and welcome everyone.
In the third quarter, we once again saw benefits from our strategic focus on our differentiated long term specialty solutions, which was in addition to upside from commodity prices. We delivered record third quarter results on a consolidated basis with sales operating income and EBITDA as did all three of our specialties businesses.
This quarter's strong performance reinforces our recent Investor day message as it reflects the significant contribution from our specialty businesses, which are expected to help us deliver long term sustainable shareholder value.
While we expect the ROE to get a bit rougher in the future. We know we have the right fundamentals in place to build on our strong momentum and to leverage the significant opportunities ahead of us.
On slide three you can see an overview of the quarter, which includes the records I just mentioned and also highlights one war as our dead Sea operations achieved production records for the third quarter and on a year to date basis.
In addition, we've had a record year to date operating cash flow totaling $1 6 billion.
And our focus on long term cash generation resulted in very strong quarterly free cash flow of $429 million, which was up nearly 200%.
Our year to date adjusted net income was a record $1 9 billion.
And our adjusted earnings per share for the quarter was 49 cents was up nearly 200% year over year, resulting in record year to date EPS of $1 65.
We continued to return value to our shareholders through our policy to pay out 50% of annual adjusted net income, which resulted in a third quarter dividend from approximately 24 cents per share.
In total ICL will pay off $314 million dividend for the quarter.
Now please turn to slide four.
Where you can see once again significant year over year improvement.
Sales of $2 $5 billion were up more than 40%, while adjusted EBITDA of $1 billion was up nearly 140%.
EBITDA margin for the quarter increased to approximately 42% up from approximately 24% in the third quarter of last year.
We also generated more than $600 million of operating cash flow during the third quarter of 2022.
Here's an overview of our third quarter results on slide five which really speaks for itself and as Ron will discuss in more detail later in the call.
I would now like to begin our segment review with industrial products on slide six.
Record third quarter sales were $437 million and up 13%, while record third quarter EBITDA of $170 million was up 40% year over year.
We continued to achieve margin expansion as EBITDA margin improved to 39% from 31% in the third quarter of last year.
This business continued to benefit from our strategic focus on value over volume, especially as end market demand remains mixed.
As a reminder, our bromine and phosphorus based solutions going to almost everything from computers appliances and cell phones to automotives textiles and pharmaceuticals.
Our products also represent a key component installation for homes and offices and our use of solutions for the oil and gas industry.
It's difficult to find an end market, where we don't make up a piece of the final puzzle.
And this helps diversify our overall exposure.
During the quarter, we saw some softness in consumer electronics as we've discussed on our previous call and from the construction industry as well as interest rates have continued to rise.
We expect both of these markets to continue to moderate in the fourth quarter.
Conversely, the oil and gas and specialty minerals end markets or expect to stay healthy in the fourth quarter.
Brian fluids remain in demand, especially in the Middle East, which is a region that has become more significant for us following the signing of the Abrahamic coins.
In the U S is expected to be strong demand for magnesium chloride for deicing inventories there are low and winter is approaching.
Overall, our industrial products business saw higher prices, which helped offset higher raw material costs while.
While bromine prices in China have declined from the peaks we saw at the end of last year and the higher prices. We saw in the first half of this year third quarter prices were relatively in line with the third quarter of last year and have risen somewhat in recent weeks.
Okay.
Turning to slide seven in our potash business, where sales of $864 million were up more than 100% year over year.
EBITDA of $537 million was up nearly 350% and EBITDA margin of 63% was up significantly over 30% margin we reported in the third quarter of last year.
As I just mentioned our operations in the dead Sea delivered record production for both the third quarter and the first nine months of the year and as expected our average put us price in the third quarter moderated from the second quarter. However, average put us realized price per ton came at $652 four nearly $700.
Cif, which was up $335 year over year.
During the third quarter, we signed a long term agreement with a customer in Europe to supply 300000 metric tons annually.
We're also shifting our metal magnesium business to long term supply agreements and we already have approximately 50% of our production under contracts for the years 2023 and 2024.
This business delivered record third quarter and year to date profits as we enjoyed both higher prices and increased production.
We have firmly established our position as a global partner of choice for Middle of Museum as our customers for this business have been looking for reliable and consistent supplier.
We strive to leverage across all of ICL.
Turning to slide eight and our phosphate solutions division, where third quarter sales of $766 million were up nearly 30% year over year, while EBITDA of $239 million was up 70%.
Once again this business saw record quarterly results for both commodities and specialties.
We continue to maintain our strategic long term focus on driving specialty sales and profitability and are shifting to more long term supply agreements.
For the third quarter specialties made up nearly 60% of sales and more than 45% the EBIT.
Overall significant EBITDA margin expansion was achieved.
Proving to 31% from 24% in the third quarter of last year as phosphate specialties margin increased from 15% to 24%.
For the quarter higher prices helped offset significant increases in raw materials.
Food solutions had a record quarter as we saw both higher prices and strong demand across all regions.
Phosphate specialties for industrial applications were mixed by region with lower demand in the EU and China, while paints and coatings did very well in the U S.
The Big news for phosphate specialties came after the quarter ended in.
In late October we were awarded $197 million by the U S Department of energy to invest in our efforts to develop a sustainable supply chain for energy storage solutions.
In total we're building a $400 million plant in St. Louis, where we will produce high quality lithium iron phosphate material for the energy storage industry.
This plant is expected to be operational by 2024 and to have two production lines with each capable of producing 15000 metric tons of pellets the material per year.
This represents a significant expansion of our energy storage storage portfolio and demonstrates our commitment to being a key participant in the electric vehicles and energy storage solution markets.
Okay.
We made our first entry into these markets in China through our white ph joint venture.
While this business was somewhat challenged during the quarter due to a planned overhaul and unexpected export limitations demand for our food solutions and MSP battery materials remained strong.
Turning to slide nine and growing solutions, formerly known as innovative AD solutions.
This new name reflects how the business has changed over the past few years and how we expect it to continue to expand and grow.
It better represents our growing portfolio of solutions and the fact that our business encompasses many different specialty categories as well as services.
Our new identity also appears as with our ultimate customers the farmers, who use our specialty products.
Growing solutions delivered a record third quarter with sales of $629 million up 25% over the prior year and EBITDA of $127 million, which was up 90%.
EBITDA margin expanded to 20% an improvement of over 13% rate in the third quarter of last year.
This record quarter also demonstrates the strong performance of our Brazilian acquisitions.
We're very pleased with the seamless integration we've seen over the past few years and are looking forward to driving additional synergies as we continue to expand our product offerings, both to and from this region.
Third quarter results also reflect a record setting quarter for our fertilizer plus products, which are based on our organic Aliso Street.
ICL will be set new daily production records and has exceeded its 21. Its 2021 production quantities. The site remains on track to achieve its 1 million tonne target in 2022.
Our turf and ornamental results were slightly ahead of last year with both businesses showing positive improvement in most regions.
And like Olive Garden solutions. This business had to contend with both higher costs and lower build the availability of raw materials in the quarter. However.
However, we have been able to offset these increases across growing solutions with premium pricing.
During the quarter. We also made some announcements in Europe in the area of new products R&D and for our digital ad offerings.
Our investment in La <unk> bio a leading AD biologicals company focused on microbial based products aggressive all three of these aspects.
Okay.
<unk> unique approach Leverages big data and advanced artificial intelligence and our collaboration with them focuses on developing novel bio stimulant products to enrich fertilizer efficiency.
Combining levine levee bio's added biologicals experience and cutting edge technology with our advanced knowledge of fertilizer use and farmers' needs will help facilitate the development of new and innovative products to the agricultural industry.
Now if you'll turn to slide 10, I would like to update you on additional progress we've made in the areas of sustainability innovation and leadership.
For sustainability, you will once again sighted for our human resources efforts.
In Israel. We were included in the economy ministries diversity and inclusion index and in Brazil, We were recognized by the great place to work global consultancy.
While it is always a pleasure to be acknowledged for our efforts. It is especially gratifying when it comes to our own employees.
During the quarter. We also became an early adopter of the United Nations Global compact communication on Providence.
We're pleased to show our commitment to the U S 10 principles of sustainable development goals and to be able to receive insights to help us identify any gaps in our sustainability efforts and improve our performance.
We also once again improved our sustained <unk> and MSCI scores.
Finally, just this week, we formally launched fruit Matt.
Our food grade Magnesia products, which replaces the toxic fungicides currently used to protect citrus fruits from Takeda.
This product will help with post harvest citrus preservation and the natural in a safe manner.
<unk> is also the innovative solution and have joined several other products. We have recently developed.
This includes our exciting Echo X product, which is a groundbreaking rapidly biodegradable release technology designed for open field agriculture.
It not only increases nutrient use efficiency. It also allows for similar or increased yields with reduced realized rates.
Echo acts as the first offering of its kind in the market to provide a controlled release fertilizer, which biodegrade rapidly.
And was specifically designed to meet future European fertilizer standards set to go into effect in 2026.
This brought our joins keep green.
Our first buy fertilizer, which was developed in Brazil.
He bring provides protection from coffee tea leaves against excessive solar radiation and its use has been shown to result in a 9% increase in coffee III productivity.
Also in Brazil, We recently received accreditation for our second Research Institute from the Ministry of Agriculture.
This accreditation is unique as it is exclusively in the area of plant nutrition and allows us to expand our innovation efforts for new fertilizers and for the production and buy fertilizers among others.
We are pleased to be working with the ministry to promote sustainable development and competitive message agribusiness for the benefit of the Brazilian Society.
We also announced several digital innovations over the past few months, including ICL lease.
This revolutionary diagnostic to rapidly provide farmers with the personal prescription for maximizing yields and allows us to make quick and data driven decisions with immediate and season improvements.
Dramatic digital startup partnered with the consortium with precision proppant attrition to.
To launch a unique global platform designed to drive International research collaboration and expand open access to crop nutrient data to farmers their advisors and global possibilities.
This platform serves as a critical open data resource for agriculture researches and professionals to conduct field trials on our soil fertility and property attrition and will enable users to both contribute to and benefit from the data center.
As we discussed during our Investor day, we continue to focus on strengthening our leadership position across our specialties businesses.
Foremost was our expansion into the energy storage solutions supply chain in the U S which are discussed.
However, this opportunity goes beyond our expansion in St. Louis to include one of the most significant innovation, we're working on the development of solid state electric <unk> based on volume.
We've already partnered with some of the world's leading technology companies and research institutions to try to bring this vision to fruition.
In the meantime, we see new potential in liquid electrolyte, which are currently produced in China and based on buses.
As Europe and the U S are looking to expand their supply chains. In this area. We have been presented with a unique opportunity as a leader in phosphorus based specialty solutions in both regions.
We have production capacity available in Europe and are building additional capacity in United States in order to produce <unk> III and PCL five for Allied PFS six electric lines.
We believe we are well positioned to become a leader in this space as we have the knowhow the capacity and the capability to develop the solution necessary.
This puts us in a unique position, where we have the potential to be a significant part of the liquid electrolyte market in Europe and the U S. At the same time and also work as a disruptor in the area of solid state electric.
So in the short and midterm, we're working on liquid electrolyte and raw materials for batteries and in the long term an electrolyzed based on bromine solutions.
In China, we inaugurated our new water soluble and BK plant, which was completed in August after only eight months.
The plant was designed to produce 30000 tons of subtle fertilizers annually of which approximately 5000 tons with liquid fertilizers, representing a new product for a white paper joint venture.
During the quarter, we gather are pleased together to celebrate the 100th anniversary of ICL.
The story of our humble beginnings as a remarkable one with more chapters distribute it.
That would include the story of what ICL will look like as a company five years somewhat and this brings us to slide 11, and a summary of our recent Investor day, and an overview of our updated five year plan, which we believe puts us firmly on track to become a global leader across all three of our specialty businesses.
Towards 2027, we are targeting sustainable double digit growth and continuous margin expansion.
As you know we executed on our 2020 plan and delivered results much sooner than expected and the strong momentum.
We plan to use this momentum to leverage and significant opportunities, we see arising from the global sustainability challenges, which impact each and every one of us.
We have the right fundamentals in place and are well positioned to achieve our growth margin expansion plans.
Finally, I would like to draw your attention once again this quarter to slide 12.
We remain focused on the future and are committed to growing our specialties impact to the next level.
I recognize that can become repetitive to say the same thing each quarter, but there are three areas I would like to reinforce.
First we will continue to focus on the future and our long term specialty strategy. As this allows ICL to strengthen its leadership position in comparison to its more commodity based peers.
Second our performance in the quarter once again reaffirms, our specialty strategy and we expect to leverage our strong balance sheet to focus on the right business expansion opportunities.
Finally, as we have passed the peak of the current commodity cycle, we now more than ever need to continue to keep our eye on the ball remained focused on the future of long term cash generation and value creation for our shareholders.
Now as always I want to thank the entire ICL family of employees all around the world for their hard work and contributions as we delivered record results once again.
Yeah.
On a very sad note the day after our last earnings call. The ICL family lost two members when they're not dial in its annual share died in a tragic car accidents in southern Israel.
Okay.
And that was president of the industrial products Division and Nissan was our EVP of operations.
Beyond their invaluable contributions to the company and not in the plan with first and foremost our friends and we're always there to help and support us managers and employees alike.
They contributed significantly to building our strong foundations and will be sorely missed forever part of ICL Sandwich may.
The rest in peace.
I would now like to turn the call over to remodel.
Thank you Ravi <unk> at all of you for joining us today.
While we have already seen slide 14, I would like to call out a few additional highlights first.
Third quarter, adjusted operating income of $928 million.
Was up nearly 200%.
Okay.
You can see the impact of higher prices on our year over year sales for.
For quantities, we saw a decline as we continued to focus on value over volume for our specialty businesses. We have actively worked to expand our long term agreements and maintain a premium positioning while offering consistent and reliable supply to our global customer.
One example of this strategy at work is apparent in our phosphate solutions business. Once again, we maintain our focus on specialty sales, which represented 59% of total postpaid solution sales in the third quarter.
Turning to slide 19 higher prices also made a significant contribution to adjusted EBITDA and once again on a segment basis. All four of our businesses contributed to the year over year improvement with significant margin expansion and cash generation across the board.
Our phosphate solutions phosphate specialties comprised 46% of the EBITDA for this segment.
I would now like to review a few highlights on slide 20.
For the third quarter, our net debt to EBITDA ratio improved to five from two times in the third quarter of last year.
As Robin mentioned, we saw substantial improvement in both operating and free cash flow. We also continue to deliver sustainable shareholder value for the third quarter, our annual dividend yield was nine 2%.
At the high end of our peer group.
One final note our effective tax rate for the third quarter was 30%.
And as we mentioned last quarter following our settlement with the Israeli tax authorities, we expect our tax rate to be in the 30% range.
Turning to slide 21.
I'd like to call your attention to our 2022 guidance as we now expect our results to be at the upper end of our previous ranges, which calls for adjusted EBITDA of between $3.800 billion and $4 billion in total and for specialty business to contribute approximately 1 billion.
$500 million $1.600 billion of that amount and.
And with that operator, we can begin the Q&A.
Thank you.
Order to ask a question. Please raise your hand, using your mobile or desktop application for present star nine on your telephone keypad and wait for your name to be announced once again. Please raise your hand, using your mobile or desktop application and wait for your name to be announced.
Our first question.
Today will come from the line of Joel Jackson from BMO capital. Please go ahead.
Okay.
Yes.
Joe.
Can you hear me, Yes go ahead, great. Thanks.
Got a few questions Altra awesome, one by one first question with multiple parts.
In the potash segment can you talk about where you see potash prices you realized potash price shaping up in Q4.
Would you comment on potash inventories.
Around the world, including Brazil yourself, you've been building inventory in potash now for.
A couple of quarters would you expect you would also build potash inventory across Q4 at the ICL level things.
Okay. Good morning Joel.
First on the potash prices we see.
We see in the U S.
The market is leveling out and it seems that.
Healthy demand is emerging now.
With the price being about.
About $600 currently.
We see in Brazil that deep.
Stocking as happened in the stock levels are returning to close to normal.
Theres still not abundant.
Demand, but.
But we see shipping lines gone down from 11 to 12 weeks to one to two weeks.
We see things are normalizing there again around the same price level currently.
Currently our Brazil, and the U S are the lowest the lowest price.
Destinations, which would put us in the end as we know around the world things tend to level out over time.
All in all all in all the deliveries this year are going to go down.
By about.
Eight to 9 million tonnes.
Relative to last year.
We expect next year that they'll go up by about 5% relative to this year.
In terms of so I talked about.
Price and inventory we are not we are not growing our inventory levels and an icos.
It's relatively marginal if we ended the quarter with.
With operating levels.
Uh huh.
<unk> put our stocks.
I would say transitional it's nothing that we're not building up inventory.
As you know, we're a price taker.
So we place replace our product where the best opportunity is the best opportunity in the first half of the year was Brazil. So we placed about 90% of our annual allocation in Brazil in the first half of the year. So.
So we continue to be opportunistic and we will sell where the price opportunity as the best we don't intend to build up stock.
Hope that answers.
And then.
<unk> be able to give an idea of you must have your booked for Q4 for potash would you.
Average selling price be.
<unk> south of $600 a ton maybe.
It'll be close to 600.
Okay. That's helpful.
<unk>.
Can you talk about the magnesium business, which you know no one ever talks about in the last couple of years, when it's already kind of at a loss leader, but now it's going to be.
In Mexico kicker.
Looking into 'twenty three in the way Youre different contracts work do you have an idea.
What magnesium earnings might be in 'twenty, three versus 22 and versus what we'll call mid cycle.
Right now we've contracted about.
50% of our.
Quantities for 'twenty.
<unk> 23 in 2024, it's a little more than 50%, it's around 60% for 2023, and it's less than 50% from 2024 dose 60% are at a higher average price in this year.
Lithium business in the first nine months of the year has made $56 million or operating income.
Used to it.
It used to during.
I mean, the year before it made a loss of over $30 million.
Okay.
Okay, that's really helpful.
I think if it goes to my questions. Thank you very much.
Thanks, Joe.
Thank you our next call will come from the line of Alexander Jones from Bank of America. Please go ahead.
Great. Thanks, very much for taking my questions. Two if I may maybe around the LSP investment I guess the first question is that you are already making.
Raw materials for LLP cathodes in China can you give us some details on the profitability and returns of your activities specifically in <unk> in China.
And then the second question is sort of translating that to the U S. I suppose that the difference.
Moment in the U S News, you don't have captive sourcing raw material domestically.
Do you see a risk that some of the domestic U S phosphate players move into this space and what barriers to entry due you see to protect Youll return in that scenario. Thank you.
It's a very it's a very good question I'll start from from the basics.
Profitability in.
In China is around 20% in this business.
Looking forward the opportunity is higher because we're leveraging the situation now.
New supply chains are being built and were going further downstream getting close to the customer and getting more value on our side.
We have the right partnerships lined up both on the raw material side and on the customer side. So.
Sort of a closed loop.
Operation, where when we go into it.
No the the input and the output and that takes into account.
The plans of some of our competitors ultimately some of our competitors are going to go into this business because it's a relatively huge business and it increases significantly.
Everything Thats everything Thats based on white phosphoric acid so.
Our competitors are also going to get into this business, we have not only a first mover advantage, but we're also at the next level were downstream so.
It wouldn't be a surprise as we partner with <unk> with.
With one or more of our suppliers.
Today also for our current specialty phosphate business.
A huge chunk of our product comes from nutrient.
Just to add that for China in China for China, Yes.
Textbook.
Two local.
Battery manufacturers yet.
<unk> manufactures actually.
Okay.
Thank you just a follow up on your comment review Bryan to huge chunk coming from Ukraine, you're able to give us a split for the specialty phosphate business or what share of your raw material is internally versus externally sourced.
The internal the overall internal is.
55%, but in North America, it's much less than that over 50% of our supply in North America is based on third party and a huge chunk of that is neutral.
Alright, thank you.
Thank you.
Thank you our next call comes from the line of them. They were from Barclays. Please go ahead.
Okay.
Hey, good afternoon can you hear me, yes, yes, okay perfect. Thank you very much for taking my question I wanted to follow up a little bit on the outlook you presented.
The challenges to overcome in the price environment.
And obviously with <unk>.
Light of what you are talking about some of the long term contracts youre targeting for with your customers.
Can you talk us through how you think about 2023, maybe early stages, just given what we're seeing on the crop economics being very favorable but then at the same time, we're seeing some of the prices coming down so how.
How flexible are or what does that mean for some of your long term contracts and relationships with your customers.
Okay.
<unk>.
You ask.
I think quite a.
White question the answer to that is I have to go by the different markets, South, Florida thinking the agriculture World.
One picture going into 'twenty, three and again in the agricultural it's I think there will be.
Might some difference between let's say our be a stimulant side.
Water side too.
All sorts of things that make up that and the other markets. It's a different story now the way we look at it.
Is is the following first of all when.
When we look at 2023 four now generally speaking the issues that <unk> talked about the world.
In late 2022.
Don't seem to find a solution.
Can be the I would say the sticky inflation.
Energy prices the geopolitical issues.
Going all the way to currencies I think the macro side would suggest that for now for lack of more clarity or any change in direction it'll be similar to what is with us and the let's say the second half of 'twenty two.
What can be different and again going by the market is I think generally the world is.
Learning to cope with the new reality it was a novelty in the first half of 2022, leading to a lot of.
I would say exaggerations.
On multi Sims and later on came the second half in a way, which you can look at it is some correction to the first half 2023 should be at least analytically less volatile going by end market on the agricultural side.
There were some things that were not done in 2022, and it would have to be done in 'twenty three.
We'll have to wait and see how the years behave.
Generally speaking there is a.
I believe that they will be impacted which means that quantity wise.
There will be some return to higher quantities of price.
Should be I think you've answered this to previously.
To linger around let's say the 600000 brokers now which means that as commodities are high the agricultural commodities and purpose is more affordable usage. It should be higher I think this is the general opinion of the big companies that make up the space.
When you look at the this is the agriculture side when you look at the.
Industrial product side again, as we as we reported now.
Some areas, which are doing extremely well and some still are impacted by high interest rates and all.
Lower demand I think that for the electronics side that it is best to continue for quite some time.
For the building side.
Again high interest rates will lead to a tapering del.
So I don't think there'll be much change on that front.
Moving over to the phosphate specialty side I think with a very good story and this continues in most things.
That we do I would say above from the things that has to do with it.
The more let's say a novel proteins.
Both in the et cetera, which it seems that in this environment the appetite of our big customers to go into new things.
We'll be somewhat diminished and put it all together I can go basically on and on we are seeing.
A year or a 2023 as a solid year. However.
With not not as extensive.
At the beginning of this year and with less hopefully volatility.
Next next year that of course can change.
Bye.
Quickly.
The external factors, especially the geopolitical one.
Affecting us.
On China by the way one last thing the restrictions.
That being imposed.
From what I basically read.
Generally there is no nothing to suggest that this will be sort of relax. The next deal. So I hope I did the total result of defense.
We believe either.
So maybe just to sum it up by by minerals I think that.
On potash and phosphate we expect our markets to continue to be tight next year.
With basically the bell.
Bella Russian product missing on put us and some of the Chinese product missed on on phosphate.
On the bromine side of things since we're a significant doses we're market leader, we don't expect a significant fluctuation of prices on the renewals of contracts next year.
Okay.
Perfect.
And then just one last one and thank you very much for all that.
Clearly, it's a strong year and you showed us on the cash flow side in the specialty business been growing a lot.
Do you still consider and would you would you think of looking into opportunities maybe to accelerate the growth by focusing maybe some M&A capital into and to the specialty business just taking advantage of the commodity environment, good cash flow and we've seen it in the quarter to just reinvest step maybe into into growing.
Pieces within specialties that that's something on the table for next year. You think there are some opportunities of course, then there is a growing amount of opportunities given the two things that are happening. One is the very high level of liquidity, even though we already returned $1 billion to shareholders. This year.
We are growing our liquidity and strengthening of the balance sheet and at the same time the world is going a little nuts and.
Opportunities are coming.
Coming by by the day, so that doesn't mean that.
We're going to buy everything that comes by but.
But we want to be very focused and.
And go through the right accretive acquisitions, just like we did.
When we took advantage of an opportunity during COVID-19 and acquired two excellent Brazilian companies that have become.
A significant part of our growing solutions G&A and we.
We want to have that made us even that made us our appetite even.
Even.
Bigger and we definitely are looking at M&A and hopefully it's in the cards.
Perfect perfect Ben just to add that.
If you think about this.
Analytically whats going on the story of the of the very much tightening.
The capabilities and the abilities and the financial side is im not sure it is yet.
Stuart, but by a lot of bodies that tend to think that times in the past is as time passes and Thats why for US it's critical and produced a very strong balance sheet with very very focused strategy.
Analytically it would seem that there would be more opportunities in the near future rather than less because I think Stan multiples. The things people are not exactly a realistic on valuation and I think this is coming.
More and more clear and becoming the periods.
Okay. Thank you very much.
Thank you. Thank you as a reminder, if you wish to ask a question. Please raise your hand, using your mobile or desktop application.
<unk> on your telephone keypad and wait for your name to BNS.
Our next question today will come from the line of my Posher, Sean Gray from Citi. Please go ahead.
Hi, Thank you for taking my questions.
The first one is on the potash side of things can.
Can you please talk about the India than the Chinese potash contract.
I assume you've been part of the discussions.
Adjusted and what level those contract prices are coming in.
We should be expecting for 2023.
Yes.
Go ahead, Sir sorry. The second question is on the on the third quarter volume decline third quarter of volume declines in IP I think it's from <unk> to <unk>.
Volume declines every quarter.
Just wanted to check up on the the outlook.
Both from an icos owned production side of things and then how demand is progressing as we head into the fourth quarter and then in 2023.
Okay, so with contract prices.
There have been.
No.
Initial discussions.
We are not the major players in these discussions so I have a limited amount of information I don't think that there has been.
Significant exchanges regarding pricing yet.
But.
The schedule is seems to be clear to everybody that.
Shaping into first quarter contracts.
The the Indian situation is a little is a little.
It's a little more urgency, meaning that India doesn't have the required inventory that is needed for the next season. So that may accelerate things somewhat there have been situations like last year when indeed.
India signed contracts before China and also got.
A better a better price to.
To an extent.
So that may happen, if if not if it's a <unk>.
<unk> contract first and we're looking at around new year.
Around the Chinese new year.
And if it is India led contract it'll be beforehand.
That was on.
That was on.
Put ash contract.
Regarding <unk>.
Regarding.
Quantities.
So first of all put us quantities went up.
So that.
So did phosphate quantities, possibly specialty quantities went up significantly in the quarter where.
Where we see.
Where we see the lowering of quantities there too.
Two places that I would call out one is.
Around bromine compounds, where first of all.
Our view of the world is value over volume and second where in annual contracts.
When there is a significant.
Over demand in the first in the first parts of the year than Theres less quantity is left for the.
For the backside of the year and also seasonally fourth quarter third quarter to fourth quarter, a weaker fourth quarter expected to be fourth quarter expected to be even less than the third quarter, but it's perfectly normal cycle again value over volume.
In.
In phosphates the quantity decline this quarter has to do with the situation and our joint venture <unk> because of.
An overhaul of two weeks.
Also export restrictions, which caused us to accumulate inventory, but that's temporary I can tell you that.
We worked through the <unk>.
Export limitations.
It looks totally different than.
In October .
So overall, if you look at the nine months over the nine months, we've had a significant increase in volumes in specialty phosphates, and we havent accumulated any.
Any phosphate commodity inventory in potash.
Again.
Joey transitional if there is a little bit of.
Operational inventory and in bromine compounds like I said, it's a value over volume.
So.
Overall.
Overall, we see quantity is increasing in all of our businesses and growing solutions. We've said in the past that part of our results improvement is it we're selling less third third party products. So we're selling more of our own products and less third party products and the result is that you can't really see the quant the quantity inquiry.
So the quantity is increasing so it is increasing in three of our four businesses. The only place where there is no increase in.
The only place where there is no increase in quantities this years.
In bromine compounds and our industrial products Division again.
<unk> volume.
That's very helpful.
Just to come back come back on the potash contracts.
Any kind of expectation on your side for what the pricing could be coming out of that I mean I've seen headlines.
Contract prices, starting with a four.
I don't think it would be prudent but of course.
We don't even think of anything that starts with a four we won't have that in our mind.
Mine process.
Understood that's very helpful. Thank you.
Thank you.
Thank you that concludes our question and answer session for today. Please proceed.
Alright, Thanks, all for joining US we appreciate your attention and look forward to reporting back to you next quarter. Thank you very much have a great day. Thank you.
Okay.