Q4 2022 ICL Group Ltd Earnings Call
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.
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. Raviv 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, Becky and welcome everyone.
Today, we're proud to report record annual results for 2022 with sales of more than $10 billion and EBITDA of more than $4 billion.
All three of our specialty solutions businesses delivered record performance in 2022, as we benefited from the results of our long term strategy. We also saw very significant commodity upside of several macro events glide.
Birth, Ukraine, Russia conflict greatly impacted global agriculture in 2022 and resulted in elevated RIN prices, which in turn drove prices higher for crops and livestock.
The global grain stocks to use ratio ended its what each week through at its lowest in more than a decade and is forecasted to remain tight into 2023.
Due to global concerns increases and fertilizer prices accelerated in the first half of 2022, but moderated in the second half.
There was an estimated 5% decline in global fertilizer consumption in 2022 and farmers for skip treatments will need to reconsider their decision in 2023.
Farmer affordability and sentiment improved toward year end and Asbury as rising concern over global food crisis fertilizer volumes are likely to trend upward in 2023.
In December the Purdue University, and autonomy Barometer Jones and the biggest improvement came from farmers assessment of their current conditions.
Farmers were more positive about the future in December and showed improved sentiment regarding their financial conditions.
Meanwhile, consumer spending patterns shifted as inflation and interest rates reduced buying power.
While the effects vary regionally the impact in some key end markets for ico, such as electronics housing and automotive.
The recent reopening of China will therefore ones developments in the months to come as will the increased momentum in ESG related spending.
The electric vehicle Revolution remains a bright spot as countries continue to invest and compete in mobility transformation technologies.
Finally supply chain issues ease in recent months and current trends indicate additional improvement in 2020.
Let's turn to Icl's results on slide three where you can see an overview of a record year, which was capped by record fourth quarter.
In addition to the annual sales and EBITDA achievements I mentioned, we also saw a record annual production of more than 4 million tons of Betsy.
We delivered record cash flow for the year of $1 3 billion, which was up more than a 180%.
Operating cash flow for 2022 of more than 2 billion was up 90% versus the prior year.
In 2022, adjusted diluted earnings per share of $1 82.
Was up more than 180%.
We also delivered cash directly to our shareholders in 2022, as we declared $1 2 billion in dividends and 91 per share for 2022.
Importantly, and took advantage of a record year and resolve several outstanding challenges.
Ron will discuss in more detail later in the presentation.
Now please turn to slide four where you can see historical trends for some of our key financial metrics.
Clearly 2022 was a remarkable and somewhat abnormal year, just as 2020 was during COVID-19.
While we appreciate the good Fortunately experienced in 2022, we remain focused on our long term transformation.
We believe our growth trajectory going forward, especially for our specialties businesses will be more in line with the longer term trends seen on the slide.
While we do not have control over commodity markets and prices, we do know that our specialty solutions provide us with a level of normalcy amidst the external noise.
This is the benefit of our strategy and look forward to delivering stable and consistent growth over the long term by executing against our recently presented five year plan.
But improving our results will not only be financial and leadership.
On slide five you will see that sometimes it is a good thing to report a downward trend.
Sustainability remains a critical part of our mission and our future.
I am very pleased to report we've seen significant improvements across the board in the areas of safety and the reduction of <unk> emissions.
Where safety our incident rate continued its downward path for the fourth straight year in a row.
Going back a bit further to 2018, we have achieved an 18% reduction in <unk> emissions since that time ahead of our stated target calling for 30% reduction by 2030.
Slide six goes into more detail about our substantial year over year financial improvement.
Throughout 2022, we continue to drive growth and cash flow generation.
Notably I'm pleased we were able to share a record year with all our stakeholders, including the communities, where we live and work.
I am proud to include this data as well as point out that we managed to keep our overall expenses flat.
Please notice that we incorporated some other non financial matrix and track regularly.
On slide seven there's a seller overview of our fourth quarter results. We saw return to more traditional fourth quarter seasonality in 2022 with many of our suppliers and customers also seeing similar trends at year end.
I would now like to begin our segment review with industrial products on slide eight.
Record annual sales of $1.766 billion were up nearly 10% while record annual EBITDA of $689 million was up nearly 40% year over year.
We continued to achieve margin expansion as EBITDA margin improved to 39% for the full year and 32% from the fourth quarter.
Fourth quarter sales and EBITDA were down year over year as the fourth quarter of 2021 did not experience more traditional seasonality due to an out of the ordinary abundance of mid COVID-19 demand in the electronics and construction end markets as well as out of the ordinary production constraints of competitors.
Throughout 2020 to higher prices helped offset higher raw material costs as industrial products maintained its strategic focus on value over volume.
As 2022 progressed and market demand diverged.
Weakness in electronics accelerated in the second half of the year as consumers struggled with inflation, while the construction market suffered from both inflation and higher interest rates.
As a result, our customers ended 2022 with increased demand.
The oil and gas industry saw significant demand since Ukraine, Russia conflict, which benefited our clear brine fluids business.
Our specialty minerals business remained stable throughout 2022.
Turning to slide nine and our phosphate solutions Division, where we reported record annual sales and EBITDA of $3 billion $106 million and $966 million, respectively with record specialty sales and EBITDA for both our food and industrial solutions.
For 2022 specialties made up nearly 60% of sales and 45% of EBIT.
We also saw record annual sales and EBITDA for our phosphate commodities business and had another record year at our <unk> joint venture in China.
Throughout 2022, higher priced and demand helped offset significant increases in the prices of raw materials.
Another trend for 2022 included the persistent supply chain challenges, which did not ease in the fourth quarter and are expected to linger into 2023.
Finally, the big news for phosphate specialties, and 2022 was when the U S Department of energy awarded ICL $197 million to invest in developing a cathode active materials plan for high quality LLP batteries.
This is part of the new sustainable supply chain for energy storage solutions.
On Slide 10, you will see our potash results, where annual sales of $3.313 billion were up nearly 90% year over year, while EBITDA of nearly $2 billion was up significant.
Clearly, we benefited from commodity upside in our potash business, but we also maximize their opportunities throughout 2022 and added long term contracts.
As I previously mentioned our operations with the dead Sea delivered record production for 2022 of more than 4 million tons as our team overachieve in terms of operational excellence and we also saw improvements in our standards operations.
Our average put us realized price per ton came in at $643 for 2022, which was up more than 90% over 2021.
For the fourth quarter, we achieved $564 per tonne, which was up 16% or more than $75 versus the fourth quarter of 2021.
Our metal magnesium operations delivered record sales and profit as this business like the rest of ICL shifted to more long term contracts and also benefited from higher prices.
Turning to slide 11, and growing solutions, which delivered record annual sales of $2.422 billion and EBITDA of $448 million.
These results were achieved in part as we successfully integrated our Brazilian acquisitions.
Our fertilizer plus products, which are based on organic probably sulfate delivered on all fronts.
Record annual production sales and profit.
We are pleased to see all of the hard work of this team over the past few years come to fruition.
Throughout 2022 are growing solutions division introduced multiple sustainable new products and these efforts helped us increase our sales in Brazil and Asia.
Nevertheless, EBITDA was lower in the fourth quarter due to a decrease in fertilizer demand during the latter part of 2022 now if you'll turn to slide 12, I would like to quickly remind you about the progress you've made in the areas of sustainability innovation and leadership during 2022.
This was an amazing year with an array of new products third party recognition and achievements.
I cannot say enough about our team at ICL.
Possibly working towards the next level and their efforts do not go over.
Finally, I would like to draw your attention to slide 13, and our outlook for 2023.
For our industrial products business, which covers a vast and varied number of end markets. We expect to see a stronger second half of the year.
For phosphate solutions, we expect to leverage our LSD expansion in St. Louis to build partnerships with some of the Premier automotive names in the world.
In our <unk> business, we expect to see improving affordability benefit both farmers and suppliers.
This will extend to our growing solutions business, where we plan to continue growing our market share and more diverse end markets.
As we formally wrap up 2022 I want to thank the entire ICL family of employees all around the world for their hard work and contributions.
While I'm proud of this record year I'm also very excited about the challenges and opportunities ahead in 2023, I would now like to turn the call over to Iraq.
Thank you Aviv and to all of you for joining us today.
Let us get started on slide 15.
While <unk> already addressed the market trends and our outlook I would like to call out certain macro highlights impacting ICL, our appeal to players and customers while inflation has moderated somewhat it remains high the cost of living sold in 2022 and consumers ended the year bank more.
Our food and LNG, especially in Europe across the many regions and end markets, where we do business trends diverged in 2022 and the balance is became more pronounced as the year progressed and general growth of stem cells on a worldwide basis with conditions is expected to continue in the first half of 2023.
While commodity prices are moderating from the peaks we saw in the first half of 2020 to 30 laser prices remained elevated when compared to recent history.
The sentiment recovered a plenty plenty do came to a close and affordability also began to improve.
Supply chain disruptions appear to be easing for the most about but there are some remaining constraints our phosphate specialties business is data facing challenges and these are expected to continue in the near term.
Finally, the geopolitical situation remains uncertain with no resolution to the Ukraine, Russia consistent site after nearly one year. Meanwhile, as Rob has discussed the recent reopening of China is light influence developments the months to come and how this will evolve is yet to be seen.
On slide 16, you can see the Chinese commodity trends with prices moderating, but still ahead of previous levels potash prices are back in line with the third quarter of 2021 as our prices for phosphoric acid.
<unk> continued to stabilize it has returned to pre COVID-19 rates.
Sulfur prices return to levels not seen since early 2021.
<unk> 2022, we were able to offset higher prices for raw materials. However, like many of our build we're now working through higher priced inventory and this trend is expected to continue into early Wednesday 23.
Turning to slide 17, we can see that while crop prices declined somewhat from recent ice. They remain ahead of pre COVID-19 levels.
Great price index was somewhat stable throughout 2020 do while the fertilizer price index rose sharply in the first half and declined rapidly in the second half of the year as Raviv already mentioned the global grain stocks to use ratio at the 2020 due at its lowest in more than a decade.
Finally, while still elevated energy prices came down at year end.
On the left side of Slide 18, you can see the improvement in annual sales came from all four of our segments and we delivered more than $10 billion in total sales a record breaking deal.
On the right side of the slide you can see the impact of higher prices, while year over year phase.
Thus offset the negative $353 million change rating, but.
While potash benefited from significantly higher prices, our specialty businesses also delivered improvement both of the prior year.
Turning to slide 19, and our annual adjusted EBITDA, which was more than $4 billion also a record. Once again you can see the impact of higher voltage prices on the left side of the slide and higher prices overall on the right side on.
On a segment basis, all four of our businesses contributed to the year over year improvement.
Turning to our fourth quarter results on slide 24, the picture is a little different on the left side you can see industrial products experienced a year over year decline in sales when compared to an extraordinary quarter in 2021.
Some end markets, such as consumer electronics, and housing were impacted by inflation and high interest rates or 'twenty 'twenty. Two we also saw a return to more traditional for what the seasonality here and in other businesses as many of our suppliers and customers have also returned to more historical trends.
At yearend.
Let's take a look at our fourth quarter EBITDA on slide 21, which demonstrate the trends similar to say specifically on the right side I would like to call out the pricing was able to offset not only below volume, but also increases in raw materials energy and transportation and a negative exchange rate impact.
I would now like to review a few highlights on slide 22 at year end, our net debt to EBITDA ratio remained at one five times as Raviv mentioned, we saw substantial improvement in operating or free cash flow both of the year and the quarter. We also continued to deliver sustainable shareholder value without annual.
Dividend deemed at nearly 10% at the high end of our peer group.
Additionally, we took advantage of the favorable market conditions in 2020 do certain outstanding dispute concerning the Israeli law, but taxation of profits from lateral yourselves.
As we've previously discussed we expect our annual tax rate be in the 30% range going forward.
Finally, turning to slide 23, I would like to call your attention to our 2023 guidance.
We are targeting adjusted EBITDA of between $2 to $2 $4 billion in total and <unk> specialty business to contribute approximately $1 $1 billion of that amount and with that operator, we can begin the Q&A.
Thank you.
If you wish to ask a question you'll need to raise your hand, using your mobile or desktop application.
<unk> on your telephone keypad and wait for your name to VNS. Once again, we will need to raise your hand, using your mobile and desktop application.
And your telephone keypad and wait for your name to be announced.
Our first question today comes from.
Alexander Jones from Bank.
Of America. Please go ahead.
Alright, thanks, very much for taking my questions.
Two if I may the first on the balance sheets I guess.
You mentioned net debt EBITDA at five times have you thought about using that too.
Additional shareholder distributions either in the falloff.
Extra dividends or even share buybacks.
And then the second question on industrial products.
Again volume is down 30% year on year. This quarter was there any element.
Of you sort of somewhat curtailing volumes to give support to the market prices as we might have seen in the past.
And if so how long do you think that might last and what does that tell us about sort of the price outlook feel industrial products business increased 23. Thank you.
Alright.
Hi, Alex I'll start.
The second question.
And then go back to the first because.
Rob you want to add to that.
In terms of industrial products.
The seasonality as usual seasonality that we see every end of the year.
Last year in the fourth.
Quarter of 2021, we had.
And out of the ordinary quarter for a few reasons. One reason was it was.
The peak of the hike of.
Of buying Tvs and other home appliances that require certain flame retardants.
Building.
And our customers are building inventory to get through the supply chain challenges.
So there was an extra ordinary demand even beyond our annual contracts at the same time, our competitors had some.
Some production issues.
Everything from.
Hurricane bad weather effect enforced the zoro.
Chlorine production and the result was that it was an outstanding quarter. If you look.
At the previous years Youll see that every year there was seasonality in the fourth quarter.
<unk> back to the curtailments I wouldn't call it curtailments I would call it the.
<unk> over volume strategy.
Our strategy is that at a certain price.
It makes more sense for us too.
Keep our product because we feel that we can sell at a higher price later so.
We don't.
We're not looking to increase our market share we're looking for maximum value creation.
We expect is that in the first few months of next year, we will see some softness around.
Flame retardants for electronics and construction.
Somewhat.
A somewhat balanced by.
Peak in demand for clear brine fluids.
And.
Some flame retardants that has to do with electric vehicles.
And Thats why were saying that after a few months in the first half of the year, we expect that.
The normal cyclicality will bring.
A stronger second half.
Second half not not like 2022, which was an exceptional year, but our second half that.
That will bring this year's industrial products division performance to somewhere around the 2021 performance.
So that's on that as an industrial product in terms of <unk>.
Capital allocation and dividend and buyback, we said on our last conference call.
We came to a conclusion that $50 to 60% is what we feel that we can distribute safely.
In a way that will allow us to execute on our five year plan with the resources, we need for M&A and other needs.
Capital expenditures et cetera.
Every end of the year, we debated our board of directors about.
What the right kind of distribution is and we are debating.
The issue of the buyback and whether to bring that into the.
Potential 60% distribution. So as soon as we will have news that we can formally communicate then we will communicate either way for us.
You want to add to that is just lumpy its perfect.
We checked ourselves we constantly look at the market.
And we find ourselves that it's really up about.
<unk> of the companies that back to shareholders already at 50%.
So thats a stretch that beyond that that could be something quite exquisite solar but we are constantly monitoring this and it's not of the data.
And maybe one more thing I would add is that you see.
Created free cash of $1 3 billion this year and we distributed about one two.
The realistic free cash flow was a little more than that because we used over $250 million to take care of some of the previous.
Previous year items, namely the tax dispute that we had for many years.
<unk> profit Levy in Israel as well as we.
We closed.
Environmental issues that we had from 2017 and before.
So we had some other use for cash in 2022 and at the same time, we're starting 2023 and a much better place very very very strong balance sheet and also clean slate with some challenges that we had in the past.
That answers that.
So maybe just maybe to follow up on the buyback discussions you are having do you have any timeline that we should bear in mind for hearing about that either way. Thank you.
Yes, the timeline is before we report.
Well, let me, let me put another way.
Latest we will report back to you on this when we report our first quarter results latest.
Thank you.
Thank you our next.
Question today comes from the line Ben <unk> from Barclays. Please go ahead.
Yes. Good morning, Good afternoon can you hear me.
Yes.
Okay perfect. Thank you very much and first of all congrats on a record year in 2022.
As well two questions two questions. If I may 1st just looking into 2023 and some of the demand drivers youre seeing out there and what youre seeing on the contracting side.
Can you share a few insights or maybe anecdotally, what you're seeing for demand in the different segments.
Laid out a little bit.
<unk> on the on the industrial side, but.
Also on the on the commodity piece, but also.
Just the seasonality you used to have how should we think about the cadence into 2023 from a from a demand perspective that would be my first question.
Okay. Thanks for the question since I discussed industrial product I will say that on foster.
Phosphate specialties and growing solutions will see the same kind of seasonality.
We have every year, which means.
Pretty flat all through the year with a little bit.
A little bit of softness on the fertilizer side in the fourth quarter of next year.
In terms of.
In terms of commodities.
Lately I would say since November we see healthy demand in some markets.
Namely in.
In Brazil, there's very strong demand and even now which is the 15th of February we already sold over half of the annual allocation of put us to Brazil to be delivered in the first half of the year.
Which means that.
There is ample room to sell a lot of commodity.
We're pretty sold out for.
First quarter.
Sold out on put us for the first quarter were sold out on phosphate until the end of the second quarter.
If we look back to previous years.
More robust than in the past.
The lowest price in the world right now has been.
In the U S, which is why we're not selling in the U S.
I think we sold only a few thousand tons that we had.
Commitments to the U S. But we have no reason to sell in the U S. At this point, Brazil very healthy.
India needs product.
China, Theres still inventory contract in India.
Is going to be soon.
Contract in China, I honestly don't know I don't think anybody is in a rush at this point.
Like I said theyre healthy markets to sell in.
In terms of.
India, even though I said, it's very soon.
We're in no rush, because we don't have any product lift for the first quarter. So we don't mind, if it takes a few more weeks but.
I think that it will be relatively soon because I think india needs product.
I hope that gives a little color.
<unk>.
Thank you Ben.
Just to add one thing if you look at a few things first of all of the price of commodities agricultural commodities.
Hi, and they remain high.
With the reduction that happened in fertilizer prices.
Both the sentiment that's been.
<unk> tracked by Purdue.
And also the affordability.
<unk> is much better and if you couple it with the fact that some of them certain areas of omitted.
To commit fertilizer then you have the ingredients that will make quantity wise two.
2023, so you can may be significantly more robust than 2022. So you will have more quantity somewhat lower prices that were used to before.
And ultimately this should pick up closed sale.
To the agricultural season to the height of the construction season.
It makes sense to you.
Yes, that's perfect. Thank you. Thank you very much for that clarification and then.
The other question really just a more.
Long term strategic.
We take a look at the.
The cadence and if we weren't to just exclude 22 for a moment as well as the very abnormal year as it's been described but we take a look at the cadence of the growth of EBITDA over the last couple of years from what we had pre pandemic.
Particularly the specialty business basically expected to be close to double where it was prior to the pandemic.
If we think about what you need to achieve your 2007 targets you've laid out just a few months ago.
Is it fair to assume that just as markets continue to work out at.
With the assets you have and the focus you have the investments you do organically that's enough to achieve the targets or should we think of the need to add on the level a bit on the M&A side to really drive this business.
The profile you are looking for.
And about three four years' time.
Well thanks for that question I think the way to model it and again, we gave the numbers in our.
Our five year plan that we presented.
Likely doubled in the last five months, we're looking to double in the last five years. So we're looking to double in the next five years.
In terms of the profit margin the profit margins.
That are reflective of the long term business or more like the profit margins in 2021 2022.
The double digit growth.
<unk>.
And specialty sales will continue and there will be.
Some margin incremental increased every year of course, there will be some.
So the movements are not controllable, but over the long run there'll be some margin expansion in our specialties businesses.
So if you model.
Special if you model specialty phosphates and the growing solutions based on.
Based on.
Middle double digit margins.
Margins.
With the sales with the sales growth that we've seen in the past.
You will get to the numbers.
If you add to them.
That will account for about 30% of the revenue growth and growing our solutions and about.
15% and the growth of.
Phosphate specialties.
Too much information as far as the.
Industrial product is concerned.
The growth will be organic.
Unless there is some.
Unexpected development, we don't need M&A to hit our targets, we have relatively aggressive target for industrial products, but we have a very detailed outlined plan that.
We feel confident about so.
Our R&D is in place our operations in place.
<unk> that need to be built or either in planning or being built.
We have tremendous new opportunities of specialties because of what's happening.
Electric vehicle space and.
Other than commodities, which will be cyclical.
We will be happy to get.
We'll be happy to get the same conditions as 2022, but we're definitely not counting on them. So long term margins will go back to 2021 margins for now they will increase.
Incrementally increase every year until 2027, and the growth will be organic other than 30%.
M&A and growing solutions and 20%.
In phosphate specialties.
Alright. Thank you very much then to think about.
About M&A.
Firstly in the agricultural side it can come by one of two ways either portfolio.
Yoga feasible for them. So we speak a lot about portfolio, but we also have plans about geographies.
And it might be that we will opt to shortcut.
Do some M&A in order to support geographies as well so those in mind with a new five year plan, but definitely looking and we're looking to know directions as long as it's in logistics.
Long as we can add value.
Additionally, the acquisition process.
Perfect. Thank you very much. Thank you. Thank.
Thank you. Our next question comes from the line of Carlos <unk> from Citi. Please go ahead.
Yes.
Go ahead Kyle.
Hi, sorry on me.
Firstly on your specialties guidance.
One six this year $1. One next year can you give us an idea on the bridge breakdown between the different specialties divisions that would be great.
And then my second question on the flip side, obviously that implies a commodities contribution of one one to one 3 billion.
What is your potash Asps do you <unk>.
And to.
To arrive at that guidance. Thank you.
Okay. So like I like I said before when.
When you look at industrial products, then we're looking at numbers that are almost identical to 2021 with the exception that.
The seasonality will be different given that we're starting the year with.
With a slow start.
Second half to be.
<unk> to be higher.
On specialty phosphates and growing solution that we will see a growing trajectory through the year, but we'll go back to the 2021.
<unk> for the year. So that's the way to think about it.
Specialties and Thats, how we got to the $1, one which is a conservative estimate for the.
The modeling that I, just that I just talked about.
And again some of the upside will be in the second half of the year because of industrial products.
On commodities the way to maybe look at it is that if you look at the.
If you look at the fourth quarter $700 million of EBITDA.
Multiply that by four and get to $2 8 billion for the year.
And given that we expect.
A couple of hundred million dollars upside on <unk>.
Specialties and that means that we get to the upper side of.
All of our guidance.
You need to take out about $600 million $600 million would reflect.
The downside on commodities and of course about 80% of that comes through from put ash.
So you get to.
You get to close to <unk>.
Close to the 500 number four.
For sales prices put us.
That's great. Thank you.
Thank you.
Thank you. Our next question comes from the line of Joel Jackson from BMO Capital. Please go ahead.
Joe you want to go ahead.
Can you hear me now.
Now we hear you yes.
Okay I have a few questions. The first one is technical.
I'm confused by your specialties guidance for 2023.
So you.
Okay.
Sorry, if I look at slide 23.
And slide 19 for 523, so I meant 2022. So you say the specialties was $1 6 billion EBITDA for 2020 to crack slide 23.
One slide 17, if I remember correctly, but when I add up to three segments or a growing solution phosphate solutions in IP I get to $2 1 billion EBITDA, which is what you are seeing in several places if specialties is there some part of those three businesses like urea excluding loss high youre, adding the commodities you are adding the phosphate commodities you have all the detail.
In our press release.
So what can you just bridge me the two one to $1 six why is the 500 million coming out of can you bridge that phosphate commodities.
Great.
So you did $500 million in NFL commodities, our solutions because it just helps us.
Provider can do that for 2022, if you want to or we can do this.
That's why I just want to make sure it's understood perfect. So okay. Okay and then the other question in the potash segment can you talk about maybe averaging about 500 dollar pricing in 'twenty, three which is wet.
What youre, saying for as implied what about volume for the potash segment. So what should we expect in 'twenty three what kind of production can you do from the different assets.
We're expecting we're expecting production of about four eight and we're assuming sales of $4 eight.
We do have.
Some capability to go down on inventory and go up to $4 nine but in terms of modeling remodeled four eight.
And then you get over you get to what five one or five 2% by 2024.
Not by 2024.
We get two five.
We get to five point.
<unk>.
By 'twenty 'twenty six.
226, okay.
<unk>.
And then.
I know that you are you always say you typically followers in some of these larger potash contract.
Makes it get settled by the buying consortium in China, and if go IPO et cetera in India and you typically follow.
We're getting into we are approaching contract season.
Anything that you can talk about what you and your team hears about the Indian contract is it going to be do you think it can be belorussian settling something than the other suppliers coming at a different tier pricing do you think it's going to be canpotex, leading.
I understand all conjecture and you're just sort of hearing what you're here, but how do you think the next couple of months ago play out for the potash contracts.
I think it is going to be settled soon.
I'm not sure that that's all I can say at this point, okay. Okay I'll pass it on thanks a lot.
Thank you Bill.
Thank you.
Our next question.
Yeah.
And players.
Comes from the line of Vincent Andrews from Jefferies. Please go ahead.
Hey, guys.
<unk> on for Vincent.
Can you hear me yes.
Okay, Yes, maybe one thing Andrew Benson just one quick question you guys called out.
Elevated inventory levels.
At the end of 2022 industrial product was that a comment specific to kind of and flame retardant business or something that.
Broadly characteristic across all your all your end markets, they're all your product categories.
Are you talking about our inventory.
Yes, yes.
All I heard was elevated inventories at the end of 2022.
Okay. So.
Our inventory levels in recent years have been tracking between 26% to 28% of sales.
Finished the year with $27 one in terms of where we see a higher inventory at this point, we see a higher inventory in industrial products and.
And again, because some of the flame retardants.
Some of our customers are stocking down there's always a balance when you go down on production and reach.
Lower efficiencies.
Versus how much it cost to hold inventory and in our case.
It's better too.
Not stop not stopped production to produce.
Produce the inventory that were sure. We can we can sell so in industrial products. The level of inventory have is higher than we would probably like.
But it is not unusual.
Given the circumstances in our other businesses were pretty much.
Where we need to be in the phosphate specialties, a major supplier had a force majeure situations. So that also caused us to have.
Inventory, a little higher than we'd like at the end of the year.
So we have two divisions that have higher inventory at the end of the year than we would have liked but at the same time, we're well within our range, which again is 26% to 28% actually 26 to 28, 5%. We had in 2018, our 27, 1% now so we're still in the.
A healthy place.
Just to add if I may that we have delivered plans in place.
We'll reduce debt exit leanne.
<unk>, we have to our liking excess inventory would probably take us anywhere from one to two.
Quarters, maybe a little bit more than that but we'll get it back in line with the typical phenomena.
Stems from what happened in 2022.
The sharp differences that we're seeing these days.
Gotcha, and then I guess, just a quick follow up if I may going back to the earlier question on your value over volume strategy there.
Volume is down 30% in industrial products does that whats characteristic of kind of I guess the sell through of the entire.
Bromine market or is there somebody there to kind of taking share from you guys.
Our position in the market is that we have no problem increasing market share for one two but the price we pay is.
The price level, so we try to be disciplined about the way we make decisions.
And in some of the products. There is very very healthy demand. So I mentioned, the clear brine fluids, there's even some products.
But usually we don't sell very well that are suddenly a hit like we have.
We have a product that treats mercury emissions coming from coal that's a product that actually.
Was not very successful in recent years given that coal was.
Was almost outlawed.
But now given the energy crisis suddenly there is new demand Theres always.
Some business, that's doing well and fundamentally the most significant influencer in the foreseeable future is the electric vehicle industry.
We're very confident of the positive trajectory there so.
Seasonally we always increase inventory in the fourth quarter other than maybe the one time last year because of the reasons I mentioned, so it's not out of the ordinary to have higher a higher inventory at the end of the year.
Bromine related products and looking forward to a rebound in the electronic side.
Which we believe according to our discussions.
And according to our experience there is that it's coming in some more inventory.
The first suicide, which would see a rebound.
Housing as interest rates start coming gradually down. So basically this is this is an issue that we are totally aware of working through it and should focus us out.
The bottom line.
But on electronics, it's going to take.
Couple of more months on construction that will take much longer because of the cycle that is longer.
Hope that answers part of it.
Yes, that's perfect. Thank you.
You.
Thank you you have no further questions. Please proceed.
Okay. So that's the end of the year for all of you guys as well so thanks for being with US. This year. Thanks for sharing your questions and listening to us thanks for allowing us to report.
Thanks for believing in.
And what we're doing when you believe in what we're doing.
We're very confident about.
The long term plan that we took upon ourselves a few years ago.
We've been successful in executing in the recent five years and we're even more confident about the next five years.
We kept.
Even in the face of.
Lots of luck that we have this year, we kept our expenses.
Tax.
We were disciplined we continue to be disciplined we don't take ourselves too seriously and we execute execute execute and we're looking forward to reporting back to you. Our first quarter results. Thank you very much for being with us and have a great rest of the day. Thank you.
Okay.