Q2 2024 ICL Group Ltd Earnings Call

August 14, 2024

This meeting is being recorded.

In the next episode, we'll see you in the next episode.

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the ICL Analyst Conference. Our presentation today will be followed by a question and answer session. At which time, if you wish to ask a question, you'll need to raise your hand using your mobile or desktop application or press star nine on your telephone keypad and wait for your name to be announced.

Operator: Ladies and gentlemen, thank you for standing by and welcome to the I Feel analyst conference call. Our presentation today will be followed by a question-and-answer session. At which time, if you wish to ask a question, you'll need to raise your hand using your mobile or desktop application or press star nine on your telephone keypad and wait for your name to be announced. I must advise you that this call is being recorded today.

Speaker Change: Ladies and gentlemen, thank you for standing by and welcome to the ICL Analyst Conference Call. Our presentation today will be followed by a question and answer session.

Speaker Change: At which time, if you wish to ask a question, you'll need to raise your hand using your mobile or desktop application or press star 9 on your telephone keypad and wait for your name to be announced.

Operator: I must advise you that this call is being recorded. I'd like to hand the call over to our first speaker today, Peggy Riley-Tharp, Vice President of Global Investor Relations. Please go ahead.

Speaker Change: I must advise you that this call is being recorded today.

Speaker Change: I'd like to hand the call over to our first speaker today, Peggy Riley-Tharp, Vice President of Global Investor Relations. Please, go ahead.

Peggy Riley Tharp: Thank you. Hello everyone. I'm Peggy Riley Tharp, Vice President of Global Investor Relations. I'd like to welcome you and thank you for joining us today for our quarterly earnings. The event is being webcast live on our website at icl-group.com. Earlier today, we filed our reports with the securities authorities and the stock exchanges in the U.S. and 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.

Speaker Change: Thank you. Hello, everyone. I'm Peggy Riley 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-group.com.

Peggy Tharp: I'd like to welcome you and thank you for joining us today for our quarterly earnings call. The event is being broadcast live on our website at icl-group.com. Earlier today, we filed our reports with the securities authorities and the stock exchanges in the US 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.

Speaker Change: 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.

Speaker Change: There will be a replay of the webcast available after the meeting and a transcript will be available shortly thereafter.

Peggy Riley Tharp: 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.

Speaker Change: 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 2. Our comments today will contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Peggy Tharp: 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.

Speaker Change: 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.

Raviv Zoller: We will begin with the presentation by our CEO, Mr. Revives-Zolder, followed by Mr. Avian Amlahav, our CFO.

Peggy Riley Tharp: We will begin with a presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Aviram Lahav, our CFO. Following the presentation, we will open the line for the Q&A. Mr. Zoller, please.

Speaker Change: We will begin with a presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Aviram Lahav, our CFO. Following the presentation, we will open the line for the Q&A session. Raviv, please.

Operator: Following the presentation, we will open the line to the Q&A session.

Raviv Zoller: Vaveeth, please. Thanks, Vaveeth, and welcome everyone. As I have in the past few quarters, I would like to provide a brief update on the situation in Israel. Although we still face challenges caused by the war, we once again executed against our plan in the second quarter and delivered solid results. While the geopolitical situation remains tense, our teams have done an excellent job of managing existing risks while planning and preparing for different potential scenarios.

Raviv Zoller: Thanks, Peggy, and welcome, everyone. As I have in the past few quarters, I would like to provide a brief update on the situation in Israel. Although we still face challenges caused by the war, we once again executed against our plan in the second quarter and delivered solid results. While the geopolitical situation remains tense, our teams have done an excellent job of managing existing risks while planning and preparing for different potential scenarios.

Raviv Zoller: Thanks, Peggy, and welcome, everyone.

Raviv Zoller: As I have in the past few quarters, I would like to provide a brief update on the situation in Israel.

Aviram Lahav: Although we still face challenges caused by the war, we once again executed against our plan in the second quarter and delivered solid results.

Aviram Lahav: While the geopolitical situation remains tense, our teams have done an excellent job of managing existing risk while planning and preparing for different potential scenarios.

Raviv Zoller: Now, if you please turn to slide three for a brief overview of second quarter results, which were down versus the prior year, as expected. However, sales of $1,752 million were up for the second consecutive quarter. While adjusted EBITDA of $377 million was up to the third consecutive quarter, with EBITDA margin increasing to 22%. For the second quarter, adjusted earnings per share were 10 cents, up 11% on a sequential basis. Next month, we will distribute a dividend of about $0.50 per share as we continue to return value to our shareholders. All three of our specialties-driven business divisions, industrial products, phosphate solutions, and growing solutions delivered consecutive quarterly and year-over-year growth in EBITDA.

Raviv Zoller: Now, if you please turn to slide three for a brief overview of second quarter results, which were down versus the prior year as expected. However, sales of $1,752,000,000 were up for the second consecutive quarter, while adjusted EBITDA of $377,000,000 was up for the third consecutive quarter, with EBITDA margin increasing to 22% For the second quarter, adjusted earnings per share were 10 cents, up 11% on a sequential basis. Next month, we will distribute a dividend of about five cents per share as we continue to return value to our shareholders. All three of our specialty-driven business divisions, industrial products, phosphate solutions, and growing solutions, deliver consecutive quarterly and year over year growth in EBITDA. For put ash, we saw fertilizer prices stabilize during the second quarter.

Aviram Lahav: Now, if you would please turn to slide 3 for a brief overview of second quarter results, which were down versus the prior year, as expected.

Aviram Lahav: However, sales of $1,752,000,000 were up for the second consecutive quarter, while adjusted EBITDA of $377,000,000 was up for the third consecutive quarter, with EBITDA margin increasing to 22%.

Aviram Lahav: For the second quarter, adjusted earnings per share were $0.10, up 11% on a sequential basis.

Aviram Lahav: Next month, we will distribute a dividend of about five cents per share as we continue to return value to our shareholders.

Aviram Lahav: All three of our specialties driven business divisions, industrial products, phosphate solutions, and growing solutions, deliver consecutive quarterly and year-over-year growth in EBITDA.

Raviv Zoller: For put ash, we saw fertilizer prices stabilized during the second quarter. We continue to drive efficiency efforts in cash generation in the second quarter, and Aviram will provide some more detail later in the call. We also continue to gain market share across our specialties-driven business divisions, both organically and by acquisition.

Aviram Lahav: For PUT-ASK, we saw fertilizer prices stabilize during the second quarter.

Raviv Zoller: We continue to drive efficiency efforts and cash generation in the second quarter, and Aviram will provide some more detail later in the call. We also continue to gain market share across our specialty-driven business divisions, both organically and by acquisition. I would ask you to turn now to slide four and to look at both year-over-year and quarter-over-quarter trends for some key financial.

Aviram Lahav: We continue to drive efficiency efforts in cash generation in the second quarter, and Aviram will provide some more detail later in the call.

Aviram Lahav: We also continue to gain market share across our specialties-driven business divisions, both organically and by acquisition.

Raviv Zoller: I would ask you to turn out the slide for and to look at both year-over-year and quarter-over-quarter trends for some key financial matrix. As you can see, we delivered quarter-over-quarter improvement across the board. Our specialty driven business divisions also achieved year-over-year improvement in margin expansion versus both prior periods. In the second quarter, we delivered quarterly sequential improvement in operating cash flow of $360 million and free cash flow of $175 million, up 8% and 19%, respectively.

Speaker Change: I would ask you to turn now to slide four and to look at both year-over-year and quarter-over-quarter trends for some key financial metrics.

Raviv Zoller: As you can see, we delivered quarter-over-quarter improvement across the board. Our specialty-driven business divisions also achieved year-over-year improvement and margin expansion versus both prior periods. In the second quarter, we delivered quarterly sequential improvement in operating cash flow of $316 million and free cash flow of $175 million, up 8% and 19%, respectively. Let's start with a review of our divisions and begin with our industrial products business on slide five. For the second quarter of 2024, sales were $315 million, with EBITDA of $74 million. While sales were up 5% year over year, they declined slightly as expected versus a seasonally strong first quarter.

Aviram Lahav: As you can see, we delivered quarter-over-quarter improvement across the board.

Aviram Lahav: Our specialties-driven business division has also achieved year-over-year improvement and margin expansion versus both prior periods.

Aviram Lahav: In the second quarter, we delivered quarterly sequential improvement in operating cash flow of $316 million and free cash flow of $175 million, up 8% and 19% respectively.

Raviv Zoller: Let's start with the review of our divisions and begin with our industrial products business on slide five. For the second quarter of 2024, sales were $350 million with EBITDA of $74 million. While sales were up 5% year-over-year, they declined slightly, as expected, versus a seasonally strong first quarter. Industrial product EBITDA improves sequentially for the third consecutive quarter. During the quarter, we continued to prioritize cost savings and efficiency efforts. We achieved a higher capacity utilization and were able to increase market share despite end-market demand remaining mixed, with softness in electronics and building and construction lingering. Sales of clear-boring fluids for use in the oil and gas industry declined year-over-year due to weather and a shift in oil rig schedules.

Aviram Lahav: Let's start with the review of our divisions and begin with our industrial products business on slide 5.

Aviram Lahav: For the second quarter of 2024, sales were $315 million, with EBITDA of $74 million.

Aviram Lahav: While sales were up 5% year-over-year, they declined slightly, as expected, versus a seasonally strong first quarter.

Raviv Zoller: Industrial product EBITDA improved sequentially for the third consecutive quarter. During the quarter, we continued to prioritize cost savings and efficiency. We achieved higher capacity utilization and were able to increase market share, despite in-market demand remaining mixed, with softness in electronics and building and construction lingering. Sales of clear-pronged fluids for use in the oil and gas industry declined year-over-year due to weather and a shift in oil rig schedules

Aviram Lahav: Industrial product EBITDA improved sequentially for the third consecutive quarter.

Aviram Lahav: During the quarter, we continued to prioritize cost savings and efficiency efforts. We achieved higher capacity utilization and were able to increase market share, despite in-market demand remaining mixed, with softness in electronics and building and construction lingering.

Aviram Lahav: Sales of clear brine fluids for use in the oil and gas industry declined year over year due to weather and a shift in oil rig schedules.

Raviv Zoller: We maintained our focus on expanding customer relationships and long-term partnerships, and we are now introducing new phosphorus-based solutions in North America and Europe. We are also expanding customer trials for Fruit Map, our specialty mineral solution proposed harvest citrus fruit treatment into China, one of the world's top citrus producers.

Raviv Zoller: We maintained our focus on expanding customer relationships and long-term partnerships, and we are now introducing new phosphorus-based solutions in North America and Europe. We are also expanding customer trials for Fruitman, our specialty mineral solution for post-harvest citrus fruit treatment into China, one of the world's top citrus producers.

Aviram Lahav: We maintained our focus on expanding customer relationships and long-term partnerships.

Aviram Lahav: and we are now introducing new phosphorus-based solutions in North America and Europe. We are also expanding customer trials for FruitMab, our specialty minerals solution for post-harvest citrus fruit treatment, into China, one of the world's top citrus producers.

Raviv Zoller: On slide six, you will see our Kodash division results for the second quarter of 2024, with sales of $422 million and EBITDA of $118 million, both relatively in line with the first quarter. Total sales volume was down 108,000 times year-over-year, but up sequentially due to annual maintenance into Dead Sea in the first quarter of this year. We also experienced some shipping-related issues, as the events in the Red Sea present a challenge for ICL, as well as for other global companies. Regardless, we have been able to deliver our quantities by adjusting delivery destinations to some extent, and when necessary, our shipping routes.

Raviv Zoller: On slide six, you will see our Kodatch division results for the second quarter of 2024, with sales of $422 million and EBITDA of $118 million, both relatively in line with the first quarter. Toral Sales Volume was down 108,000 times year over year, but up sequentially due to annual maintenance in the Dead Sea in the first quarter of this year. We also experienced some shipping-related issues as the events in the Red Sea presented a challenge for ICL as well as for other companies in the Dead Sea, in the Dead Sea in the Dead Sea in the Dead Sea in the Dead Sea in the Dead Sea.

Aviram Lahav: On slide 6, you will see our Kodatch Division results for the second quarter of 2024, with sales of $422 million and EBITDA of $118 million, both relatively in line with the first quarter.

Aviram Lahav: Total sales volume was down 108,000 tons year-over-year, but up sequentially, due to annual maintenance in the Dead Sea in the first quarter of this year. We also experienced some shipping-related issues, as the events in the Red Sea present a challenge for ICL, as well as for other global companies.

Raviv Zoller: Regardless, we have been able to deliver our quantities by adjusting delivery destinations to some extent and, when necessary, our shipping. In Spain, we saw continued improvement and remain on track to meet our 2024 production and cost savings goals. Cost per ton has improved, and we are also seeing benefits from shifting our efforts to a higher-grade mineral location. In total, the average put-out price declined in the second quarter to $300 CIF per ton, down approximately 26% year-over-year and 7% sequentially.

Aviram Lahav: Regardless, we have been able to deliver our quantities by adjusting delivery destinations to some extent, and when necessary, our shipping routes.

Raviv Zoller: In Spain, we saw continued improvement and remain on track to meet our 2024 production and cost savings goals. Cost per ton has improved, and we are also seeing benefits from shifting our efforts to a higher grade mineral location. In total, the average put-as price declined in the second quarter to $300 CIF per ton, down approximately 26% year-over-year and 7% sequentially.

Aviram Lahav: In Spain, we saw continued improvement and remain on track to meet our 2024 production and cost savings goals.

Aviram Lahav: Cost per ton is improved and we are also seeing benefit from shifting our efforts to a higher grade mineral location.

Aviram Lahav: In total, the average put-ask price declined in the second quarter to $300 CIF per ton, down approximately 26% year-over-year and 7% sequentially.

Raviv Zoller: 30 to slide 7 in our phosphate solutions division, where second quarter sales of $572 million and EBITDA of $146 million, both increased on a year-over-year and quarter-over-quarter basis. EBITDA margin increased 26% and improved versus both prior periods. Our phosphate specialties are ahead of plan for 2024, with sequential quarterly improvement as our food strategy continued to deliver strong results. With the second quarter, we saw exciting double-digit year-over-year growth in our alternative dairy-based beverages. We also expanded our capacity in China to meet growing customer demand for our food specialty solutions, with our new food ingredients. Plant. Also in China, we continue to reach new production records and to improve efficiencies as we strive to meet customer demand.

Raviv Zoller: Turning to slide 7 in our Phosphate Solutions Division, where second quarter sales of $572 million and EBITDA of $146 million both increased on a year-over-year and quarter-over-quarter basis. EBITDA margin increased 26% and improved versus both prior periods. Our phosphate specialties are ahead of plan for 2024, with sequential quarterly improvement, as our food strategy continued to deliver strong results. For the second quarter, we saw exciting double-digit year-over-year growth in our alternative dairy-based beverages.

Aviram Lahav: Turning to slide 7 in our Phosphate Solutions Division, where second quarter sales of $572 million and EBITDA of $146 million, both increased on a year-over-year and quarter-over-quarter basis.

Aviram Lahav: EBITDA margin increased 26% and improved versus both prior periods. Our phosphate specialties are ahead of plan for 2024 with sequential quarterly improvement as our food strategy continues to deliver strong results.

Aviram Lahav: For the second quarter, we saw exciting double-digit year-over-year growth in our alternative dairy-based beverages. We also expanded our capacity in China to meet growing customer demand for our food specialty solutions with our new food ingredients plan.

Raviv Zoller: We also expanded our capacity in China to meet growing customer demand for our food specialty solutions with our new food ingredients. In China, we continue to reach new production records and improve efficiencies as we strive to meet customer demand. Our growth trend in that country continued with higher battery materials volumes in the second quarter. For our North American Battery Materials expansion, we expect our Customer Innovation and Qualification Center to be operational in St. Louis by year end.

Aviram Lahav: Also in China, we continue to reach new production records and to improve efficiencies as we strive to meet customer demand. Our growth trend in that country continued with higher batter materials volumes in the second quarter.

Raviv Zoller: Our growth trend in that country continued with higher batter materials volumes in the second course. And we will be able to qualify new products at our Customer Innovation Qualification Center by the end of the year.

Aviram Lahav: For our North American Battery Materials expansion, we expect our Customer Innovation and Qualification Center to be operational in St. Louis by year-end. We already have customer interest in recent R&D advancements we have made, including the use of rapidly developing process technology with improved pellet density and high-performance electrochemical properties.

Raviv Zoller: We already have customer interest in recent R&D advancements we have made, including the use of rapidly developing process technology with improved pellet density and high performance electrochemical properties. And we will be able to qualify new products at our Customer Innovation and Qualification Center by the end of the year.

Aviram Lahav: And we will be able to qualify new products at our Customer Innovation and Qualification Center by the end of the year.

Raviv Zoller: For commercial LSD plant in North America, we are evaluating alternative and sensitive opportunities and also more actively and conservatively managing our construction schedule and capital expenditures to match anticipated customer demand timelines. This is expected to push commercial production to a later start, more in line with most of our customers' requirements.

Raviv Zoller: For our commercial LFP plant in North America, we are evaluating alternative incentive opportunities and also more actively and conservatively managing our construction schedule and capital expenditures to match anticipated customer demand timelines. This is expected to push commercial production to a later start, more in line with most of our customers' requirements. Turning to slide 8 in our Growing Solutions Business Division, where second quarter 2024 sales of $494 million were up both sequentially and year-over-year.

Aviram Lahav: For our commercial LSP plant in North America, we are evaluating alternative incentive opportunities and also more actively and conservatively managing our construction schedule and capital expenditures to match anticipated customer demand timelines.

Aviram Lahav: This is expected to push commercial production to a later start, more in line with most of our customers' requirements.

Raviv Zoller: 30 to slide eight in our going solutions business division, where second quarter 2024 sale with $494 million were up both sequentially and year over year. Even though $45 million also improved versus both prior periods, we continue to target the very specific needs that growers have in different regions and respond with innovative new products, which were designed for each individual market. On a regional basis, we were able to increase market share in the key and growing markets of Brazil, China, and India by expanding specialty fertilizer distribution. In North America, we continued growing our specialty plant nutrition footprint with the acquisition of Customer Ad Formulators, a provider of liquid adjuvants and enhanced nutrients, as well as various other specialty products.

Aviram Lahav: Turning to slide 8 in our Growing Solutions Business Division, where second quarter 2024 sales of $494 million were up both sequentially and year-over-year.

Raviv Zoller: Even though $45 million also improved versus both prior periods, we continue to target the very specific needs that growers have in different regions and respond with innovative new products designed for each individual market. On a regional basis, we were able to increase market share in the key and growing markets in Brazil, China, and India by expanding specialty fertilizer distribution. In North America, we continued growing our specialty plant nutrition footprint with the acquisition of customer ad formulators, a provider of liquid adjuvants and enhanced nutrients, as well as various other specialty products.

Speaker Change: Even though $45 million also improved versus both prior periods. We continue to target the very specific needs that growers have in different regions and respond with innovative new products, which were designed for each individual market.

Speaker Change: On a regional basis, we were able to increase market share in the key and growing markets of Brazil, China, and India by expanding specialty fertilizer distribution.

Speaker Change: In North America, we continued growing our specialty plant nutrition footprint with the acquisition of customer ad formulators, a provider of liquid adjuvants and enhanced nutrients, as well as various other specialty products.

Raviv Zoller: This latest acquisition advances our goal of targeting opportunities to expand our growing solutions product offerings and to position the business for further growth in you and adjacent markets.

Speaker Change: This latest acquisition advances our goal of targeting opportunities to expand our growing solutions product offerings and to position the business for further growth in new and adjacent end markets.

Raviv Zoller: I would like to wrap up with a few highlights on slide nine, and please, we were able to deliver our third quarter sequentially the dime improvement as we continue to build momentum by focusing on the areas under our control and achieving against our strategy. To that end, we were able to increase market share for our specialty driven business divisions and key regions as we remain committed to growing our leadership position for these three businesses. One way of achieving this goal is the acquisition, as we do with growing solutions this quarter. The acquisition of customer ad formulators was our second for 2024 and look forward to additional opportunities for a possible solutions business division.

Speaker Change: I would like to wrap up with a few highlights on slide 9.

Raviv Zoller: I'm pleased we were able to deliver our third quarter of sequential EBITDA improvement, as we continue to build momentum by focusing on the areas under our control and achieving against our strategy. To that end, we were able to increase market share for our specialty-driven business divisions in key regions, as we remain committed to growing our leadership position for these three businesses. One way of achieving this goal is through acquisition, as we did with growing solutions for the future. The acquisition of Custom Ad Formulators was our second for 2024, and we look forward to additional opportunities.

Speaker Change: I'm pleased we were able to deliver our third quarter of sequential EBITDA improvement as we continue to build momentum by focusing on the areas under our control and achieving against our strategy.

Speaker Change: To that end, we were able to increase market share for our specialties-driven business divisions in key regions, as we remain committed to growing our leadership position for these three businesses.

Speaker Change: One way of achieving this goal is via acquisition, as we did with Growing Solutions this quarter.

Speaker Change: The acquisition of custom ad formulators was our second for 2024, and we look forward to additional opportunities.

Raviv Zoller: For our Phosphate Solutions business division, we have already discussed the expansion of our food phosphate capacity in China, and we are eager to further advance our food strategy in China. We're also looking at new global battery materials partnerships and phosphate solutions as we seek to leverage the proficiency we have built in China and expand to other parts of our global footprint. We expect to harness our phosphate expertise and work with our global partners and customers to introduce new products as we look to become a global leader in battery materials, and we expect to begin qualifying some of this technology by year end in North America.

Raviv Zoller: We already discussed the expansion of our food philosophy in China, and we are eager to further advance our food strategy in China for China. We're also looking at new global battery materials partnerships and phosphate solutions as we seek to leverage the proficiency we have built in China and expand to other parts of our global footprint. We expect to harness our phosphate expertise and work with our global partners and customers to introduce new products as we look to become a global leader in battery materials, and we expect to begin qualifying some of this technology by year end in North America.

Speaker Change: For our Phosphate Solutions Business Division, we already discussed the expansion of our food phosphate capacity in China, and we are eager to further advance our food strategy in China for China.

Speaker Change: We're also looking at new global battery materials partnerships and phosphate solutions as we see to leverage the proficiency we have built in China and expand to other parts of our global footprint.

Speaker Change: We expect to harness our phosphate expertise and work with our global partners and customers to introduce new products.

Speaker Change: As we look to become a global leader in battery materials, and we expect to begin qualifying some of this technology by year-end in North America. Along with our investments in innovation for battery materials and other areas, we continue to drive cash generation in the border and to target efficiency efforts.

Raviv Zoller: Along with our investments in innovation for battery materials and other areas, we continue to drive cast generation in the quarter and to target efficiency efforts. Our pipeline of innovative new products and solutions is robust, and AI is allowing us to both accelerate new product development for future growth and to achieve industrial efficiencies in the areas of cost, safety, and quality optimization.

Raviv Zoller: Along with our investments in innovation for battery materials and other areas, we continue to drive cash generation at the border and to target efficiency efforts. Our pipeline of innovative new products and solutions is robust, and AI is allowing us to both accelerate new product development for future growth and to achieve industrial efficiencies in the areas of cost safety and quality optimization. Finally, I would like to call out that ICL has once again been voted one of the best places to work in Israel, Brazil, and St. Louis by our employees.

Speaker Change: Our pipeline of innovative new products and solutions is robust, and AI is allowing us to both accelerate new product development for future growth and to achieve industrial efficiencies in the areas of cost, safety, and quality optimization.

Raviv Zoller: Finally, I would like to call out that ICL has once again been voted one of the best places to work in Israel, Brazil, and St. Louis, via Employees. It's an honor to work with the entire ICL family of employees around the world and to experience their outstanding work, dedication, and support firsthand.

Speaker Change: Finally, I would like to call out that ICL has once again been voted one of the best places to work in Israel, Brazil, and St. Louis by our employees. It's an honor to work with the entire ICL family of employees around the world and to experience their outstanding work, dedication, and support firsthand.

Raviv Zoller: It's an honor to work with the entire ICO family of employees around the world and to experience their outstanding work, dedication, and support. And with that, I would now like to turn the call over to Raviv. Thank you, Raviv, and to all of you for joining us today.

Aviram Lahav: And with that, I would now like to turn the call over to Aviram. Thank you, Aviv, and to all of you for joining us today. Let us get started on Friday 11 and take a look at some key microphone indicators. We are seeing signs of stabilization in terms of inflation and interest rates. Industrial production continues to gradually improve, and this trend is expected to continue into the second half of the year. In the U.S., housing starts moderated in the second quarter, small African June after week main. Turning to slide 12 and key fertilizer market metrics, rain prices stabilized in quarter two versus quarter one, and farmer sentiment moderated.

Operator: Ladies and gentlemen, thank you for standing by and welcome to the I feel analyst conference call. Our presentation today will be followed by a question and answer session. At which time, if you wish to ask a question, you'll need to raise your hand using your mobile or desktop application or press star nine on your telephone keypad and wait for your name to be announced. I must advise you at this call is being recorded today.

Speaker Change: And with that, I would now like to turn the call over to Aviram.

Aviram Lahav: Thank you, Raviv, and to all of you for joining us today. Let us get started on slide 11 and take a look at some key macro indicators. We are seeing signs of stabilization in terms of inflation and interest rates.

Aviram Lahav: Let us get started on slide 11 and take a look at some key macro indicators. We are seeing signs of stabilization in terms of inflation and interest rates. Industrial production continues to gradually improve, and this trend is expected to continue into the second half of the year. In the US, housing starts moderated in the second quarter, with a small uptick in June after week May.

Aviram Lahav: Industrial production continues to gradually improve and this trend is expected to continue into the second half of the year. In the U.S. housing starts moderated in the second quarter, small uptick in June after weak May.

Peggy Tharp: I'd like to hand the call over to our first speaker today, Peggy Riley Tharp, Vice President of Global Investor Relations. We go ahead. Thank you. Hello, everyone. I'm Peggy Riley 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 broadcast live on our website at icl-group.com. Earlier today, we filed our reports with the securities authorities and the stock exchanges in the US and in Israel.

Aviram Lahav: Turning to slide 12 and key fertilizer market metrics, grain prices stabilized in quarter two versus quarter one, and farmer sentiment moderated. Concerns about higher interest rates and expectations of farm income to continue to fall this year after reaching record highs in 2022 weighed on farmer sentiment. While prices for potash and phosphate declined year over year, circulated prices in general have stabilized. However, freight rates remain elevated as global container operators have been forced to send vessels around southern Africa's Cape of Good Hope to avoid the Red Sea, creating a shortage of vessels and port bottlenecks.

Aviram Lahav: Turning to slide 12 in Key Fertilizer Market Metrics, Grain Prices Stabilized in Q2 vs Q1 and Farmer Sentiment Moderated.

Peggy Tharp: 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.

Aviram Lahav: Concerns about higher interest rates and expectations of palm income to continue to fall this year after reaching record highs in 2022, way down farmer sentiment. While prices for quarter cents for state declined year over year, circulated prices in general have stabilized. Freight rates remain elevated as global container operators have been forced to send vessels around southern Africa's Cape of Good Hope to avoid the Red Sea, creating a shortage of vessels and port bottlenecks.

Aviram Lahav: Concerns about higher interest rates and expectations of farm income to continue to fall this year after reaching record highs in 2022 weighed on farmer sentiment.

Aviram Lahav: While prices for potash and phosphate declined year-over-year, circulated prices in general have stabilized.

Speaker Change: Freight rates remain elevated as global container operators have been forced to send vessels around southern Africa's Cape of Good Hope to avoid the Red Sea creating a shortage of vessels and port bottlenecks.

Aviram Lahav: On slide 13, you can see key energy storage market metrics. There has been no fundamental change from the past quarter, as more rapid growth is still expected in the latter part of the year, with more gradual growth in the near term. As Raviv mentioned, we are being conservative in our capital spend to achieve higher certainty, aligning with our customers' product qualification and commercial production time. If you do not turn to tax for teams in our second quarter of sales bridges, on the left side, you can see year-over-year improvement for each of our specialty-driven business divisions, resulting in a second quarter of 2020 per sale of $1.8 billion. On the fourth of the sequential base.

Aviram Lahav: On slide 13, you can see key energy storage market metrics. There has been no fundamental change from past quarter because more rapid growth is still expected in the outer year, with more gradual growth in the near term. As we have mentioned, we are being conservative in our capital spend to achieve higher certainty aligning with our customers' product qualification and commercial production time. If you will not turn to slide 14 in our second quarter sales bridges, on the left side, you can see year-over-year improvement for each of our specialties revenue business division, resulting in second quarter of 2024 sales of $1.8 billion.

Speaker Change: On slide 13, you can see key energy storage market metrics.

Speaker Change: There has been no fundamental change from past quarter, as more rapid growth is still expected in the outer year, with more gradual growth in the near term.

Speaker Change: As Raviv mentioned, we are being conservative in our capital spend to achieve higher certainty aligning with our customers' product qualification and commercial production timelines.

Raviv Zoller: We will begin with the presentation by our CEO, Mr. Revives-Zolder, followed by Mr. Avian Amlahav, our CFO. Following the presentation, we will open the line to the Q&A session. Vaveeth, please. Thanks, Vaveeth, and welcome everyone. As I have in the past few quarters, I would like to provide a brief update on the situation in Israel. Although we still face challenges caused by the war, we once again executed against our plan in the second quarter and delivered solid results.

Speaker Change: If you will now turn to slide 14 in our second quarter sales bridges, on the left side you can see year-over-year improvement for each of our specialties-driven business divisions.

Speaker Change: resulting in second quarter of 2024 sales of 1.8 billion dollars.

Aviram Lahav: On a quarter of sequential basis, specialty sales also increase. Turning to the right side of the slide, you can see year-over-year increase in quantity, which was offset by lower prices, especially for quarters. On slide 15, you can see the impact lower quarter prices had on our second quarter. On a quarter of sequential basis, EBIDA was up 4% with a roughly 65 basis points improvement in margins. I would like to note that while the year-over-year impact on transportation costs looks roughly flat on the slide, this excludes amounts related to the war in interest. Even as purchase prices continue to decline in the second quarter, IT will remain the leader in terms of average realized price.

Aviram Lahav: Specialty stays also in. Turning to the right side of the slide, you can see a year-over-year increase in quantity, which was offset by lower prices, especially for potash. On slide 15, you can see the impact lower potash prices had on our second quarter 2024 EBITDA of $377 million. And this is evident on both sides of the slide.

Speaker Change: on a quarterly, sequential basis.

Speaker Change: Specialty sales also increased.

Raviv Zoller: While the geopolitical situation remains tense, our teams have done an excellent job of managing existing risks while planning and preparing for different potential scenarios. Now, if you please turn to slide three for a brief overview of second quarter results, which were down versus the prior year as expected. However, sales of $1,752 million were up for the second consecutive quarter. While adjusted EBITDA of $377 million was up to the third consecutive quarter, with EBITDA margin increasing to 22%.

Speaker Change: Turning to the right side of the slide, you can see year-over-year increase in quantity, which was offset by lower prices, especially for potash.

Speaker Change: On slide 15 you can see the impact lower potash prices had on our second quarter 2024 EBITDA of $377 million, and this is evident on both sides of the slide.

Aviram Lahav: On a quarterly sequential basis, EBITDA was up 4% with a roughly 65 basis points improvement in margin. I would like to note that while the year-over-year impact on transportation costs looks roughly flat on the slide, this excludes amounts related to raw energy. Even as potash prices continue to decline in the second quarter, ICL remains the leader in terms of average realized price.

Speaker Change: On a quarterly sequential basis, EBIDA was up 4% with a roughly 65 basis points improvement in margins. I would like to note that while the year of the year impact on transportation costs looks roughly flat on the slide, this excludes amounts related to the war in Israel.

Raviv Zoller: For the second quarter, adjusted earnings per share were 10 cents, up 11% on a sequential basis. Next month, we will distribute a dividend of about $0.5 per share as we continue to return value to our shareholders. All three of our specialties driven business divisions, industrial products, phosphate solutions, and growing solutions delivered consecutive quarterly and year over year growth in EBITDA. For put ash, we saw fertilizer prices stabilized during the second quarter.

Speaker Change: Even as potash prices continue to decline in the second quarter, ICL remains the leader in terms of average real-life price, as you can see on slide 16.

Aviram Lahav: As you can see on slide 16, we continue to maintain the flexibility that allows us to rapidly shift in and out of markets based on profitability and to maximize our cost-efficient resource. Once again, I would like to point out ISIL's position in the global bromine market, which you can see on slide 17. The Dead Sea is the premier and most cost competitive source of bromine and accounts for approximately two-thirds of global supply capacity.

Speaker Change: We continue to maintain the flexibility that allows us to rapidly shift in and out of markets based on profitability and to maximize our cost-efficient resources.

Aviram Lahav: Joseph. Once again, I would like to point out Isaac's position in the global bromine market, which you can see on slide 17. The Dead Sea is the premier and most cost competitive source of bromine and accounts for approximately to serve a global supply capacity. Like China and Brazil. We are also diversified in terms of our business division and markets. Some say this makes the ICS story more complicated than it might, but it also means ICS is not automatically impacted by swings in commodity prices. Our specialty is driven businesses are either global leader or one of the ways to becoming one, which is the case for a growing solutions business.

Raviv Zoller: We continue to drive efficiency efforts in cash generation in the second quarter, and Aviram will provide some more detail later in the call. We also continue to gain market share across our specialties driven business divisions, both organically and by acquisition. I would ask you to turn out the slide for and to look at both year-over-year and quarter-over-quarter trends for some key financial matrix. As you can see, we delivered quarter-over-quarter improvement across the board.

Speaker Change: Once again, I would like to point out ISIL's position in the global bromine market, which you can see on slide 17. The DETC is the premier and most cost-competitive source of bromine and accounts for approximately two-thirds of global supply capacity.

Aviram Lahav: If you turn to slide 18, you can get an idea of how global ICL is as a company, and we have diversified on a regional basis and continue to grow market share in hard-growth countries like China and Brazil. We are also diversified in terms of our business divisions and in the mouth. Some say this makes the ICL story more complicated than it might be, but it also means ICL is not as dramatically impacted by swings in commodity prices.

Speaker Change: If you turn to slide 18, you can get an idea of how global ICL is as a company, and we have diversified on a regional basis and continue to grow market share in hard-won countries like China and Brazil.

Raviv Zoller: Our specialty driven business divisions also achieved year-over-year improvement in margin expansion versus both prior periods. In the second quarter, we delivered quarterly sequential improvement in operating cash flow of $360 million and free cash flow of $175 million, up 8% and 19% respectively.

Speaker Change: We are also diversified in terms of our business division and end markets. Some say this makes the ICL story more complicated than it might, but it also means ICL is not as dramatically impacted by swings in commodity prices.

Aviram Lahav: Our specialty-driven businesses are either global leaders or well on the way to becoming one, which is the case for our growing solutions. Across our specialty-driven business divisions, we have been benefiting from increasing market share. And this is just one of the highlights on slide 19.

Speaker Change: Our specialties-driven businesses are either global leaders or well on the way to becoming one, which is the case for our Growing Solutions business.

Unknown Executive: Let's start with the review of our divisions and begin with our industrial products business on slide five. For the second quarter of 2024, sales were $350 million with EBITDA of $74 million. While sales were up 5% year-over-year, they declined slightly as expected versus a seasonally strong first quarter.

Aviram Lahav: Across our specialty is driven business divisions, we have been benefiting from increasing market share, and this is just one of the highlights on slide 19. We have also maintained our focus on cost savings and efficiencies both across our business divisions and on a corporate wide basis, and our year-to-date results in this area online without 2024 plans. We continue to prioritize cash generation, and we ended the quarter with available resources of approximately 1.7 billion dollars. Our net debt to adjusted EBDA rate at the quarter end was 1.3 times. We also maintained our commitment to distributing up to 50% of adjusted net income to our shareholders.

Speaker Change: Across our specialties-driven business divisions, we have been benefiting from increasing market share and this is just one of the highlights on slide 19.

Aviram Lahav: We have also maintained our focus on cost savings and efficiencies both across our business divisions and on a corporate level. Now, the years to take results in this area are in line with our 2024. We continue to prioritize cash generation, and we ended the quarter with available resources of approximately $1.7 billion. Our method to adjust the divider rate at the quarter end was 1.3 times.

Speaker Change: We have also maintained our focus on cost savings and efficiencies both across our business divisions and on a corporate-wide basis, and our year-to-date results in this area are in line with our 2024 plans.

Unknown Executive: Industrial product EBITDA improves sequentially for the third consecutive quarter. During the quarter, we continued to prioritize cost savings and efficiency efforts. We achieved a higher capacity utilization and were able to increase market share despite end-market demand remaining mixed with softness and electronics and building and construction lingering. Sales of clear-boring fluids for use in the oil and gas industry declined year-over-year due to weather and a shift in oil rig schedules. We maintained our focus on expanding customer relationships and long-term partnerships, and we are now introducing new phosphorus-based solutions in North America and Europe. We are also expanding customer trials for fruit map, our specialty mineral solution proposed harvest citrus fruit treatment into China, one of the world's top citrus producers.

Speaker Change: We continue to prioritize cash generation and we ended the quarter with available resources of approximately 1.7 billion dollars. Our net debt to adjusted EBITDA rate at the quarter end was 1.3 times.

Aviram Lahav: We also maintain our commitment to this, up to 50% of adjusted net income to our shareholders. And in September, we will pay out $63 million as a dividend to our shareholders, bringing up my dividend yield to 4.6%. Finally, if you turn to slide 20, I would like to update you on our 2024 guidelines for the Specialties Driven Business Division, which includes industrial products, growing solutions, and oil and phosphate solutions.

Speaker Change: We also maintained our commitment to distributing up to 50% of adjusted net income to our shareholders. And in September , we will pay out $63 million as a dividend to our shareholders.

Aviram Lahav: In September, we will pay our 63 million dollars as a dividend to our shareholders, bringing our trailing towards my dividend yield to 4.6%.

Speaker Change: bringing up trailing it was my dividend yield to 4.6%

Aviram Lahav: Finally, if it turns to slide 20, I would like to update you on our 2024 guidance. Our specialty is driven business division which includes industrial products, growing solutions, and all of our social solutions. We now expect EBDA to be between 800 million to 1 billion dollars in 2024. This is up from previous guidance of 700 to 900 million dollars. There is no change to our previous author's guidance. Our effective tax rate for 2024 is now expected to be approximately 28%. For the second quarter, our effective tax rate was 27%, which declined versus the prior year and reflected in lower surplus profit Levi, mainly due to a decrease in profit prices.

Speaker Change: Finally, if you turn to slide 20, I would like to update you on our 2024 guidance.

Speaker Change: for Specialties Driven Business Division.

Aviram Lahav: We now expect EBITDA to be between $800 million and $1 billion in 2024. This is up from previous guidance of $700 to $900 million. There is no change to our previous potash guidance. Our effective tax rate for 2024 is now expected to be approximately 28%. For the second quarter, our effective tax rate was 27%, which declined versus the prior year and reflected a lower surplus profit, Levi, mainly due to a decrease in product pricing.

Speaker Change: which include industrial products, growing solutions, and all of the possible solutions.

Unknown Executive: On slide six, you will see our Kodash division results for the second quarter of 2024 with sales of $422 million and EBITDA of $118 million, both relatively in line with the first quarter. Total sales volume was down 108,000 times year-over-year, but up sequentially due to annual maintenance into Dead Sea in the first quarter of this year. We also experienced some shipping-related issues as the events in the Red Sea present a challenge for ICL, as well as for other global companies. Regardless, we have been able to deliver our quantities by adjusting delivery destinations to some extent, and when necessary, our shipping routes.

Speaker Change: We now expect EBITDA to be between $800 million to $1 billion in 2024.

Speaker Change: This is up from previous guidance of $700 to $900 million. There is no change to our previous POTUS guidance. Our effective tax rate for 2024 is now expected to be approximately 28%.

Speaker Change: For the second quarter our effective tax rate was 27% which declined versus the prior year and reflected a lower surplus profit Levi, mainly due to a decrease in product prices.

Operator: And with that, we can begin the Q&A. Thank you. In order to ask a question, please raise your hand using your mobile for desktop application or press star nine on your telephone keypad and wait for your name to be announced. Once again, please raise your hand using your mobile for desktop application or press star nine on your telephone keypad and waiting for your name to be announced.

Operator: And with that, we can begin the Q&A. Thank you. In order to ask a question, please raise your hand using your mobile or desktop application or press star nine on your telephone keypad and wait for your name to be announced.

Speaker Change: And with that, we can begin the Q&A.

Unknown Executive: In Spain, we saw continued improvement and remain on track to meet our 2024 production and cost savings goals. Cost per ton has improved, and we are also seeing benefits from shifting our efforts to a higher grade mineral location. In total, the average put-as price declined in the second quarter to $300 CIF per ton, down approximately 26% year-over-year and 7% sequentially.

Operator: Once again, please raise your hand using your mobile or desktop application. We'll press star 9 on your telephone keypad and wait for your name to be announced. Our first question today will come from the line of Ben Theurer of Barclays. Please go ahead. Hi, good afternoon to you. Can you hear me?

Speaker Change: Thank you.

Speaker Change: In order to ask a question, please raise your hand using your mobile or desktop application or press star 9 on your telephone keypad and wait for your name to be announced. Once again, please raise your hand using your mobile or desktop application.

Speaker Change: We'll press star 9 on your telephone keypad and waiting for your name to be announced. Our first question today...

Ben Stewart: Our first question today will come from the line of Ben Stewart of Barclays. Please go ahead. Hi, good afternoon to you. Can you hear me? Yes, I, perfect.

Unknown Executive: 30 to slide 7 in our phosphate solutions division, where second quarter sales of $572 million and EBITDA of $146 million, both increased on a year-over-year and quarter-over-quarter basis. EBITDA margin increased 26% and improved versus both prior periods.

Speaker Change: will come from the line of Ben Thieler of Barclays. Please go ahead.

Benjamin Theurer: Yeah, it's right there. Yes, I... Perfect. Thank you very much for taking my questions. Congratulations on those very strong results. Two quick ones.

Speaker Change: Hi, good afternoon to you. Can you hear me? Yes, hi Ben.

Unknown Executive: Our phosphate specialties are ahead of plan for 2024, with sequential quarterly improvement as our food strategy continued to deliver strong results. With the second quarter, we saw exciting double-digit year-over-year growth in our alternative dairy-based beverages. We also expanded our capacity in China to meet growing customer demand for our food specialty solutions, with our new food ingredients. Plant. Also in China, we continue to reach new production records and to improve efficiencies as we strive to meet customer demand. Our growth trend in that country continued with higher batter materials volumes in the second course.

Raviv Zoller: So number one, just wanted to understand and maybe maybe help us frame a little bit what you're seeing in terms of demand, particularly in the industrial products segment. Clearly, I guess the improvement and also the profitability, the sequential improvement here is clearly, clearly, a good sign. Just wanted to see if you could talk a little bit about just general economic activity and what your expectations are within industrial products for the second half and then into 2025 as we move maybe into a little less easy coming than what we're having now in the short term. So that would be my first question. I have a quick follow-up.

Ben Stewart: Thank you very much for to take my questions, concretes on those very strong results. Two quick ones. So number one, just wanted to understand and maybe help us frame a little bit what you're seeing in terms of demand, particularly in the industrial products segment. Clearly, I guess the improvement and also the profitability, the sequential improvement here is clearly a good sign. Just wanted to see if you could talk a little bit about just general economic activity and what your expectations are within industrial products for the second half and then into 2025 as we move maybe into a little less easier comes than we're having now in the short term.

Ben Thieler: Perfect. Thank you very much for taking my questions. Congrats on those very strong results.

Ben Thieler: Two quick ones. So number one, just wanted to understand and maybe maybe help us frame a little bit what you're seeing in terms of demand, particularly in the in the industrial products segment.

Speaker Change: Clearly, I guess the improvement and also the profitability, the sequential improvement here is clearly a good sign. Just wanted to see if you could talk a little bit about just general economic activity and what your expectations are within industrial products for the second half and then...

Speaker Change: into 2025 as we move maybe into a little less easier comms than what we're having now in the short term. So that would be my first question. I'll have a quick follow-up.

Raviv Zoller: So that would be my first question, and I have a quick follow-up. So, in terms of demand, what we're seeing is that the electronics are coming back, but slower than we expected at this point. There's a lot of room for improvement. And of course, we're waiting for the effect of the new AI boom and Microsoft pilot success and Microsoft Co-pilot success, etc. And of course, EVs, which are moving slower than expected this year, but ultimately are going to move as fast as anybody expected. And construction, of course, also not really any change these months, but that was expected.

Raviv Zoller: So in terms of demand, what we're seeing is that electronics are coming back, but slower than we expected at this point. There's a lot of room for improvement. And, of course, we're waiting for the effects of the new AI boom and Microsoft pilot success and Microsoft co-pilot success, etc. And, of course, EVs, which are moving slow slower than they could be.

Unknown Executive: And we will be able to qualify new products at our customer innovation qualification center by the end of the year.

Speaker Change: Thank you.

Speaker Change: So, in terms of demand, what we're seeing is that electronics are coming back, but slower than we expected at this point.

Unknown Executive: For commercial LSD plant in North America, we are evaluating alternative and sensitive opportunities and also more actively and conservatively managing our construction schedule and capital expenditures to match anticipated customer demand timelines. This is expected to push commercial production to a later start more in line with most of our customers requirements.

Speaker Change: There's a lot of room for improvement, and of course we're waiting for the effects of the new AI boom and Microsoft pilot success and Microsoft co-pilot success, etc.

Unknown Executive: 30 to slide eight in our going solutions business division, where second quarter 2024 sale with $494 million were up both sequentially and year over year. Even though $45 million also improved versus both prior periods, we continue to target the very specific needs that growers have in different regions and respond with innovative new products, which were designed for each individual market. On a regional basis, we were able to increase market share in the key and growing markets of Brazil, China and India by expanding specialty fertilizer distribution.

Speaker Change: And of course, EVs, which are moving slower than expected this year, but ultimately are going to move as fast as anybody expected.

Raviv Zoller: It's expected this year, but ultimately, it's not going to move as fast as anybody expected. And construction, of course, also not really any change these months, but that was expected; the construction cycle is always longer. So I would say that in most other industries, demand is very healthy; electronics is still below normal but improving; construction is below normal and not improving yet. Otherwise, there's nothing to report.

Speaker Change: And construction, of course, also not really any change these months, but that was expected. The construction cycle is always longer.

Raviv Zoller: The construction cycle is always longer. So I would say that in most other industries, demand is very healthy. Electronics is still below normal, but improving. Construction is below normal and not improving yet.

Speaker Change: So I would say that in, you know, most other in, in most other industries, demand is very healthy, electronics is still below normal, but improving, construction is below normal and not improving yet.

Raviv Zoller: First quarter clear buying fluids were a little higher than expected and second quarter a little lower than expected. That has to do, among other things, with weather issues and rig schedules, but nothing important. If I may, hi Ben, just a moment before we move on to the next question. With regard to IP profitability or profits, I also want to suggest that the fact that we are aggressively pursuing sales of quantities to our customers and are running at next to full yield means that we are collecting on the way a much better absorption of our costs, which translates into tens of millions of improvements in dollars.

Raviv Zoller: Otherwise, there's nothing to, nothing to report. First quarter, clear Brian fluids were a little higher than expected, and second quarter a little lower than expected. That has to do, among other things, with weather issues and rig schedules, but nothing, nothing important there.

Unknown Executive: In North America, we continued growing our specialty plant nutrition footprint with the acquisition of customer ad formulators, a provider of liquid adjuvants and enhanced nutrients as well as various other specialty products. This latest acquisition advances our goal of targeting opportunities to expand our growing solutions product offerings and to position the business for further growth in you and adjacent and markets.

Speaker Change: Otherwise, there's nothing to report. First quarter, clear brine fluids were a little.

Speaker Change: Higher than expected, and second quarter a little lower than expected. That has to do, among other things, with weather issues and rig schedules. But nothing important there.

Aviram Lahav: If I may, hi, Ben, just a moment before you move on to your next question. With regards to IP profitability or profits, I also want to suggest that the fact that we are pursuing aggressively sales of quantities to our customers and are running at the next full yield means that we are collecting on the way a much better absorption of our cost, which translates into tens of millions of improvement in dollars. And this is something that the decision that we've taken, and we're pursuing it to the maximum. So you can imagine what will happen when the demand picks up and we can basically translate also a positive price variance.

Unknown Executive: I would like to wrap up with a few highlights on slide nine and please we were able to deliver our third quarter sequentially the dime improvement as we continue to build momentum by focusing on the areas under our control and achieving against our strategy. To that end, we were able to increase market share for our specialty driven business divisions and key regions as we remain committed to growing our leadership position for these three businesses.

Speaker Change: If I may, hi Ben, just a moment before you move on to your next question. With regards to IP profitability or profits, I also want to suggest

Ben Thieler: that the fact that we are pursuing

Ben Thieler: aggressively sales of quantities to our customers and are running at next to full yield.

Unknown Executive: One way of achieving this goal is the acquisition as we do with growing solutions this quarter. The acquisition of customer ad formulators was our second for 2024 and look forward to additional opportunities for a possible solutions business division. We already discussed the expansion of our food philosophy in China and we are eager to further advance our food strategy in China for China. We're also looking at new global battery materials partnerships and phosphate solutions as we see to leverage the proficiency we have built in China and expand to other parts of our global footprint.

Ben Thieler: means that we are collecting on the way a much better absorption of our cost which translates into tens of millions of improvement.

Raviv Zoller: And this is something that the decision that we've taken, and we're pursuing it to the maximum. So you can imagine what will happen when demand picks up, and we can basically translate a positive price variance. It'll be very, very good.

Doloph: and Donald.

Doloph: and this is something that the decision that we've taken and we're pursuing it.

Doloph: to the maximum. So you can imagine what will happen when the demand picks up and we can basically translate also a positive price.

Aviram Lahav: It will be very, very good. But in the meantime, we're not waiting, and it's quarter after quarter, and you're seeing the results of the IP decision are being very similar in Q2 to Q1, and that is inter alia because of what I just described. Thank you.

Raviv Zoller: But in the meantime, we're not waiting, and it's quarter after quarter, and you see the results of the IP division being very similar in Q2 to Q1, and that is, inter alia, because of what I just described. Okay, and then just on phosphate solutions, there was obviously a very strong result here on growth with what's called stable sales, but EBITDA actually improving. So first of all, on the top line, could you help us understand how much was volume related, how much was price related, and then in order to understand a little bit that margin expansion and that strong EBITDA growth, could you give us a couple of examples where the more specialty piece of phosphate solutions really comes in and kicks in from a margin potential driving that EBITDA growth to that 13% level year over year. So commodities are the easy part There was a little bit of price appreciation in the second quarter, and it's also continuing in the third quarter.

Doloph: variants. It'll be it'll be very, very good. But in the meantime, we're not waiting and it's quarter after quarter and you're seeing the results of the IP division being very similar in Q2 to Q1 and that is inter alia because of what I just described. Thank you.

Unknown Executive: We expect to harness our phosphate expertise and work with our global partners and customers to introduce new products as we look to become a global leader in battery materials and we expect to begin qualifying some of this technology by year end in North America. Along with our investments in innovation for battery materials and other areas, we continue to drive cast generation in the quarter and to target efficiency efforts. Our pipeline of innovative new products and solutions is robust and AI is allowing us to both accelerate new product development for future growth and to achieve industrial efficiencies in the areas of cost, safety and quality optimization.

unknown: Okay.

Ben Stewart: And then just to go on phosphate solutions that was obviously a very strong result here on the growth with what's called its stable sales buddy, but actually improving.

Speaker Change: Okay, and then just to, on phosphate solutions, there was obviously a very strong result here on the growth.

Speaker Change: with what's, let's call it stable sales, but EBITDA actually improving. So first of all, on the top line, could you help us understand how much was volume related, how much was price related, and then in order to understand a little bit that margin expansion and that strong EBITDA growth, if you could give us a couple of examples where like the more specialty piece of phosphate solutions really comes in and kicks in from a margin potential driving that EBITDA growth to that 13% level year over year.

Aviram Lahav: So first of all, on the top line, could you help us understand how much was volume related, how much was priced related, and then in order to understand a little bit that margin expansion and that strongly big growth. If you could give us a couple of examples, we're like the more specialty piece of phosphate solutions really comes in and kicks in from a margin potential driving, driving that deep a dog growth to that 13% level year or year.

Unknown Executive: Finally, I would like to call out that ICL has once again been voted one of the best places to work in Israel, Brazil and St. Louis, via employees. It's an honor to work with the entire ICL family of employees around the world and to experience their outstanding work, dedication and support firsthand.

Aviram Lahav: So on commodities is the easy part. There's a little bit of price appreciation in the second quarter. It's also continuing in the third quarter. So we see a little bit of price appreciation on commodities, phosphate in the third quarter as well.

Raviv Zoller: So we see a little bit of price appreciation on commodities, phosphates, in the third quarter as well. On specialties, it's really all about volume. It's the introduction of new products and increase in sales in certain markets, including additional capacity that we added in China for the food business and also strong sales in North America and South America. The tailwinds here are from the fact that when commodity prices are not under pressure, and WPA is not coming in from China to Europe and Brazil, then there's less pressure on prices, and prices are relatively stable as we increase volume. So on specialties, it's mostly volume, and on commodities, it's mostly price. Got it. Thank you very much.

Speaker Change: So on commodities is the easy part. There's a little bit of price appreciation in the second quarter. It's also continuing in the third quarter. So we see a little bit of price appreciation on commodities, phosphates in the third quarter as well. On specialties, it's really all about volume.

Aviram Lahav: And with that, I would now like to turn the call over to Aviram. Thank you Aviv and to all of you for joining us today. Let us get started on Friday 11 and take a look at some key microphone indicators. We are seeing signs of stabilization in terms of inflation and interest rates. Industrial production continues to gradually improve and this trend is expected to continue into the second half of the year.

Aviram Lahav: On specialties, it's really all about volume. It's introduction of new products and increase of sales in certain markets, including additional capacity that we added in China on the food business and also strong sales in North America and South America. The tailwinds here are from the fact that when commodity prices are not under pressure and WPA is not coming in from China to Europe and Brazil, then there's less pressure on price and prices are relatively stable as we increase volume. So on specialties, it's mostly volume, and on commodity, it's mostly price.

Speaker Change: It's an introduction of new products and increase of sales in certain markets.

Speaker Change: including additional capacity that we added in in China on the food business.

Aviram Lahav: In the U.S., housing starts moderated in the second quarter, small aprican June after week main. Turning to slide 12 and key fertilizer market metrics, rain prices stabilized in quarter two versus quarter one and farmer sentiment moderated. Concerns about higher interest rates and expectations of palm income to continue to fall this year after reaching record highs in 2022, way down farmer sentiment. While prices for quarter cents for state declined year over year, circulated prices in general have stabilized.

Speaker Change: and also strong sales in North America and South America.

Speaker Change: The tailwinds here are from the fact that when commodity prices are not under pressure and

Speaker Change: WPA is not coming in from China to Europe and Brazil, then there's less pressure on price and prices are relatively stable as we increase volume. So on specialties, it's mostly volume and on commodities, it's mostly price.

Aviram Lahav: Freight rates remain elevated as global container operators have been forced to send vessels around southern Africa's Cape of Good Hope to avoid the Red Sea, creating a shortage of vessels and port bottlenecks.

Ben Stewart: Thank you very much.

Speaker Change: Okay, got it. Thank you very much.

unknown: Thank you.

Raviv Zoller: Our next question comes from the line of Joel Jackson, BMO Capital. Please go ahead. Hi Joe. Good afternoon. Okay, a few questions. I'll do them one by one.

Joe Jackson: Our next question comes from the line of Joe Jackson, Female Capital. Please go ahead. Hi, Joe. Hello. Good afternoon. Okay, a few questions. I'll do one by one. I thought maybe a high level question to start, if you don't mind. LFP materials. It feels like when looking at some of the industry data lately, that LFP inventories are extremely high in China. Certainly more than what electric vehicle demand would suggest is required right now. You're delaying your plant in St. Louis.

Speaker Change: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Joel Jackson, BMO Capital. Please go ahead.

Speaker Change: [inaudible]

Speaker Change: C'mon!

Speaker Change: Thanks for watching, see you in the next video!

Joel Jackson: Hi, Joel. Hello. Good afternoon. Okay, a few questions. I'll do one by one. I thought maybe a high level question to start if you don't mind.

Joel Jackson: I thought maybe a high-level question to start, if you don't mind. LFP material. It feels like when looking at some of the industry data lately that LFP inventories are extremely high in China, certainly more than what electric vehicle demand would suggest is required right now. You're delaying your plant in St. Louis. Um, would you comment on the LFP kind of dynamic right now and how that affects your business with high purity acid and things you're thinking about that business to adjust to the tougher dynamic wave? Sure.

Speaker Change: LFP materials. It feels like when looking at some of the industry data lately, that

Aviram Lahav: If you will not turn to slide 14 in our second quarter sales bridges, on the left side, you can see year over year improvement for each of our specialties revenue business division, resulting in second quarter of 2024 sales of $1.8 billion. On a quarter of sequential basis, specialty sales also increase. Turning to the right side of the slide, you can see year over year increase in quantity, which was offset by lower prices, especially for quarters.

Speaker Change: LFP inventories are extremely high in China, certainly more than what electric vehicle to man would suggest is required right now, you're delaying your plant in St. Louis.

Raviv Zoller: Would you comment on the LFP kind of dynamic right now and how that affects your business with high purity asset and things you're thinking about that business to adjust to the tougher dynamic lately? Sure. So LFP is increasing in market share in China. So well, the EFD market is not exactly moving as fast as anybody expected. LFP is gaining market share significantly this year. So it's going up from less than 40% to expected about 70% within the next year. And as a result, our sales of raw material for LFP are actually at an all-time high in terms of volume.

Speaker Change: Would you comment on the LFP kind of dynamic right now and how that affects your business with high purity acid and things you're thinking about that business to adjust to the tougher dynamic lately?

Raviv Zoller: LSP is increasing its market share in China. So, while the e-market is not exactly moving as fast as anybody expected, LSP is gaining market share significantly this year, so it's going up from less than 40% to expected about 70% within the next year. And as a result, our sales of raw materials for LSP are actually at an all-time high in terms of volume.

Aviram Lahav: On slide 15, you can see the impact lower quarter prices had on our second quarter. On a quarter of sequential basis, EBIDA was up 4% with a roughly 65 basis points improvement in margins. I would like to note that while the year over year impact on transportation costs looks roughly flat on the slide, this excludes amounts related to the war in interest. Even as purchase prices continue to decline in the second quarter, IT will remain the leader in terms of average realized price.

Speaker Change: Sure, so LSD is is increasing in market share in China, so well

Speaker Change: The e-market is not exactly moving as fast as anybody expected. LFP is gaining market share significantly this year, so it's going up from

Speaker Change: Less than 40% to expected about 70% within the next year.

Speaker Change: And as a result, our sales of raw material for LST are actually at an all-time high in terms of volume.

Raviv Zoller: And we expect that although EVs are moving slowly globally, what is moving very fast both in China and globally is LSP for storage. And since there's very little capacity for LSP in the Western world, it's just a matter of time that the demand turns into actual deliveries. But it will take time because the infrastructure for the production does not exist in the Western world as yet. So, on the one hand, if we look globally, EVs are moving much slower than expected. Stationary storage is moving faster than expected.

Raviv Zoller: And we expect that, although EVs are moving slowly globally, what is moving very fast both in China and globally is the LFP for storage. And since there's very little capacity for LFP in the Western world, it's just a matter of time that the demand turns into actual deliveries, but it will take time because the infrastructure for the production does not exist. And the Western world as of yet. So, on the one hand, if we look globally, EVs are moving much slower than expected; stationary storage is moving faster than expected. LFP is penetrating and increasing its market share much faster than expected.

Speaker Change: And we expect that although EVs are moving slowly globally, what is moving very fast both in China and globally is the LFP for storage.

Speaker Change: And since there's very little capacity for LFP in the Western world, it's just a matter of time that the demand turns into actual deliveries. But it will take time because the infrastructure for the production does not exist in the Western world as of yet.

Aviram Lahav: Joseph. Once again, I would like to point out Isaac's position in the global bromine market which you can see on slide 17. The Dead Sea is the premier and most cost competitive source of bromine and accounts for approximately to serve a global supply capacity. Like China and Brazil. We are also diversified in terms of our business division and markets. Some say this makes the ICS story more complicated than it might, but it also means ICS is not automatically impacted by swings in commodity prices.

Speaker Change: So, on the one hand, if we look globally, EVs are moving much slower than expected. Stationary storage is moving faster than expected. LSP is penetrating and increasing its market share much faster than expected.

Raviv Zoller: LSP is penetrating and increasing its market share much faster than expected. So, Raviv, you're not worried about an oversupply of LFP cathodes right now in China that would require some sort of rationalization over the short term to write as inventories and maybe require you to sell less in the end terms to keep the markets more balanced. We're not worried because in China, we're not producing the LFP cathode; we're producing raw materials for the LFP cathode.

Raviv Zoller: So, Raviv, you're not worried about an oversupply of LFP cathodes right now in China that would require some sort of rationalization over the short term to write as inventories and maybe require you to sell less in the end terms to the markets more balanced. We're not worried because in China, we're not producing LFP cathode; we're producing raw material for LFP cathodes. So we have excess demand for MAP and other fertilizer-type products in China. So if we have to sell less cathode for battery raw materials, then we would just sell more specialty fertilizers in China. It's not a concern for us in the short term.

Raviv Zoller: So Raviv, you're not worried about an oversupply of LLP cathodes right now in China that would require some sort of rationalization over the short term to write those inventories and maybe require you to sell less in the end terms the markets more balanced.

Aviram Lahav: Our specialty is driven businesses are either global leader or one of the ways to becoming one which is the case for a growing solutions business. Across our specialty is driven business divisions, we have been benefiting from increasing market share and this is just one of the highlights on slide 19. We have also maintained our focus on cost savings and efficiencies both across our business divisions and on a corporate wide basis and our year-to-date results in this area online without 2024 plans.

Raviv Zoller: So we have excess demand for MAP and other fertilizer-type products in China. So if we have to sell less cathode for battery raw materials, then we would just sell more specialty fertilizers in China. It's not a concern for us in the short term. In the long term, if you look at the Western part of the world, it's really not relevant for us in 2024, 2025, or even the first half of 20

Raviv Zoller: We're not worried because in China we're not producing LFP cathode, we're producing raw material for LFP cathode, so we have excess demand for MAP and other fertilizer type products in China, so if we have to sell less

Raviv Zoller: catalog for battery raw materials. And we would just sell more specialty fertilizers in China. It's not a concern for us in the short term.

Raviv Zoller: In the long term, if you look at the western part of the world, it's really not relevant for us for 24, 25, or even the first half of 26. We need to look at what's going to happen in the market, 26 and 27, visa V, what are customers in North America and hopefully Europe because we have other ideas for Europe, what they need and when they need it. We're not going to put the capital to build capacity for customers that are not going to be ready to produce their batteries before 27 or 28.

Aviram Lahav: We continue to prioritize cash generation and we ended the quarter with available resources of approximately 1.7 billion dollars. Our net debt to adjusted EBDA rate at the quarter end was 1.3 times. We also maintained our commitment to distributing up to 50% of adjusted net income to our shareholders. In September, we will pay our 63 million dollars as a dividend to our shareholders, bringing our trailing towards my dividend yield to 4.6%.

Raviv Zoller: In the long term, if you look at the western part of the world, it's really not relevant for us for 2024, 2025, or even the first half of 2026. We need to look at what's going to happen in the market.

Raviv Zoller: We need to look at what's going to happen in the market in 2026 and 2027 vis-a-vis our customers in North America and, hopefully, Europe, because we have other ideas for Europe, what they need and when they need it, because we're not going to invest the capital to build capacity for customers that are not going to be ready to produce their batteries before 2027 or 2028. So what we're doing is building an innovation qualification center in St. Louis that will be up and running by the end of the year, and we are going to qualify products with multiple customers, by the way, many of them in the stationary part of the business, and we expect that we will optimize whatever production capacity that we can create with long-term agreements with these qualified customers. And so most of the news is going to be coming out next. Okay, thank you for that.

Raviv Zoller: 26 and 27 vis-a-vis what our customers in North America and hopefully Europe because we have other ideas for Europe

Raviv Zoller: what they need and when they need it because we're not going to put the capital to build capacity for customers that are not going to be ready to produce their batteries before 27 or 28.

Aviram Lahav: Finally, if it turns to slide 20, I would like to update you on our 2024 guidance. Our specialty is driven business division which includes industrial products, growing solutions and all of our social solutions. We now expect EBDA to be between 800 million to 1 billion dollars in 2024. This is up from previous guidance of 700 to 900 million dollars. There is no change to our previous author's guidance. Our effective tax rate for 2024 is now expected to be approximately 28%. For the second quarter, our effective tax rate was 27%, which declined versus the prior year and reflected in lower surplus profit Levi, mainly due to a decrease in profit prices.

Raviv Zoller: We're building an innovation qualification center in St. Louis that will be up and running by the end of the year, and we are going to qualify products with multiple customers. By the way, many of them in the stationary part of the business. We expect that we will optimize whatever production capacity that we can create with long-term agreements with these qualified customers, and so most of the news is going to be coming out next year. Okay, thank you for that.

Raviv Zoller: So what we're doing is we're building

Raviv Zoller: An Innovation and Qualification Center in St. Louis that will be up and running by the end of the year.

Raviv Zoller: and we are going to qualify product.

Raviv Zoller: with multiple customers, by the way, many of them in the stationary, in the stationary part of the business.

Raviv Zoller: And we expect that we will optimize whatever production capacity that we can create with long-term agreements with these qualified customers. And so most of the news is going to be coming out next year.

Aviram Lahav: Turning to IP, Aviram, you talked about how Q1 earnings were similar to Q1, clearly showing in the results. How do you think, second half IP operating results earnings wise will look versus the first half again for IP? I'll give you my take and then, obviously, Raviv will add his, hopefully, agree. I think it's going to be quite similar, and I think we are on a positive track. Although I would say that the market, from the demand side, is not there yet with prices. That should go further, but I believe we'll continue the positive trajectory that we're on. And my guesstimate, as I said, for the IP second half would be quite similar to the third half.

Joe Jackson: Turning to IP, Avaram, you talked about how Q1 earnings were similar to Q1, clearly showing in the results.

Raviv Zoller: Okay, thank you for that. Turning to IP, Aviram, you talked about how Q1 earnings were similar to Q1, clearly showing in the results. How do you think...

Aviram Lahav: How do you think that can have IP operating results earnings wise will look versus the first half again for IP? I'll give you my take, and then obviously we'll add, hopefully agree. I think it's going to be quite similar. I think we are on a positive track. Although I would say that the market from the demand side is not very yet with the prices. That should come further. But I believe will continue the positive trajectory that we're on, and my estimate, as I said, for the IP second half would be quite similar to the first half.

Raviv Zoller: second half IP operating results earnings-wise will look versus the first half again for IP. I'll give you my take and then obviously Raviv will add, hopefully agree, I think it's going to be quite similar.

Speaker Change: I think we are on a positive track.

Speaker Change: Although, I would say that the market from the demand side

Raviv Zoller: is not there yet with the prices. That should come further.

Ben Stewart: Our first question today will come from the line of Ben Stewart of Barclays. Please go ahead. Hi, good afternoon to you. Can you hear me? Yes, I, perfect. Thank you very much for to take my questions, concretes on those very strong results. Two quick ones.

Raviv Zoller: But I believe we'll continue the positive trajectory that we're on. And my guesstimate, as I said, for the IP second half would be quite similar to the first half.

Joe Jackson: Okay, just one more question if I may sneak it in.

Aviram Lahav: Okay, just one more question if I may sneak it in. So when you raised your guidance this year for 100 million more dollars in EBITDA from specialties, could you break that down? How much of that extra hundred million dollars is coming from commodity phosphate, specialty phosphate, growing solutions, and IP? No, no, no.

Aviram Lahav: So when you raised your guidance this year for 100 million more of EBITDA from the specialties, could you break that down? How much of that extra hundred million dollars is coming from commodity phosphate, specialty phosphate, growing solutions and IP? No, no, no. I think that we we did our math joys and without getting into the particular each of them, by the way, it's arranged. We put your right at the midpoint has been raised by 100 million. But we're now giving the range of 800 to one billion, which is quite wide. I think we are in a good spot there.

Speaker Change: Okay, just one more question if I may sneak it in.

Speaker Change: So when you raise your guidance this year for 100 million more of EBITDA from specialty use

Speaker Change: Could you break that down, how much of that extra hundred million dollars is coming from commodity phosphate, specialty phosphate, growing solutions, and IP? No, no, no. I think that we...

Ben Stewart: So number one, just wanted to understand and maybe maybe help us frame a little bit what you're seeing in terms of demand, particularly in the industrial products segment. Clearly, I guess the improvement and also the profitability, the sequential improvement here is clearly a good sign. Just wanted to see if you could talk a little bit about just general economic activity and what your expectations are within industrial products for the second half and then into 2025 as we move maybe into a little less easier comes than we're having now in the short term.

Aviram Lahav: I think that we did our math, Joel, and without getting into the particulars, each of them is a range. You're right that the midpoint has been raised by 100 million, but we're now giving a range of 800 to 1 billion, which is quite wide. I think we are in a good spot there, and what I can say is that it is, and this is very good news because it's coming across the board from all our specialty units. The breakdown, it's much, much more fluid, and I don't want to get into that.

Serene: We did our math, Joel, and without getting into the particulars, each of them, by the way, it's a range. We put, you're right, that the midpoint has been raised by 100 million, but we're now given the range of 800 to 1 billion, which is quite wide.

Raviv Zoller: And what I can say that it is, and this is very good news because it's coming across the board from all our specialty units. It breaks down; it's much, much more fluid than I don't want to get.

Speaker Change: I think we are in a good spot there and what I can say that it is and this is very good news because it's coming across the board from all our specialty units. The breakdown it's much much more fluid and I don't want to get into that.

Raviv Zoller: Why didn't you narrow the range? We're already happy to the year. Why is the range still 200 million dollars? It's a good question, and I think the reason for that, and I agree with Aviram's take, all three of our specialty businesses are above budget and above expectations. I think the reason for that is that, you know, we're in the middle of the war and it would be unconservative of us to give investors the field that the risk doesn't exist anymore. There's still a risk on our business, and we need to be more careful this year.

Raviv Zoller: Why didn't you narrow the range? We're already halfway through the year. Why is the range still $200 million? It's a good question. And I think the reason for that, and I agree with Aviram's take, all three of our specialty businesses are above budget and above expectations. I think the reason for that is that, you know, we're in the middle of the war. And it would be unconservative of us to give investors the feeling that the risk doesn't exist anymore.

Speaker Change: Why didn't you narrow the range? We're already halfway through the year. Why is the range still $200 million?

Raviv Zoller: So that would be my first question and I have a quick follow up. So in terms of demand, what we're seeing is that the electronics are coming back, but slower than we expected at this point. There's a lot of room for improvement. And of course, we're waiting for the effect of the new AI boom and Microsoft pilot success and Microsoft co-pilot success, etc. And of course, EVs, which are moving slower than expected this year, but ultimately are going to move as fast as anybody expected.

Speaker Change: It's a good question and I think the reason for that, and I agree with Aviram's take, all three of our specialty businesses are above budget and above expectations. I think the reason for that is that, you know, we're in the middle of the war.

Raviv Zoller: And construction, of course, also not really any change these months, but that was expected. The construction cycle is always longer. So I would say that in most other industries, demand is very healthy. Electronics is still below normal, but improving. Construction is below normal and not improving yet.

Speaker Change: and it would be...

Speaker Change: Unconservative of us to give investors the feel that the risk doesn't exist anymore.

Raviv Zoller: There's still risk in our business, and we need to be more careful this year. But other than that, we're a lot more optimistic than we were at the beginning of the last quarter. And we take care never to deceive. So we'd rather go that way, yeah. Okay, thanks for answering all my questions. You're welcome.

Speaker Change: There's still risk on our business and we need to be more careful this year. But other than that, we're a lot more optimistic than we were at the beginning of the last quarter.

Raviv Zoller: But other than that, we're a lot more optimistic than we were at the beginning of last quarter.

Raviv Zoller: And we take it to the level to disappoint.

Joe Jackson: Okay, thanks for answering all my questions. Welcome. Thank you, Joel. Thank you.

Speaker Change: So we'd rather go that way.

Operator: Thank you, Joel. Thank you, Joel. As a reminder, in order to ask a question, please raise your hand using your mobile or desktop application or press star nine on your telephone keypad and wait for your name to be announced.

Speaker Change: Okay, thanks for answering all my questions. You're welcome. Thank you, Joel.

Operator: As a reminder, in order to ask the question, please raise your hand using your mobile project application, press star nine on your telephone keypad, and wait for your name to be announced.

Speaker Change: Thank you. As a reminder, in order to ask a question, please raise your hand using your mobile or desktop application, press star 9 on your telephone keypad, and wait for your name to be announced.

Lisa Nevec: You have an incoming question, which I will read out that comes from the line of Lisa the Nevec Morgan family. Can you please share the dynamics you're seeing in the bromine market and provide an update on your commercial strategy? How are you managing values versus value? Can you also share how the EU duties on top of a lane retardant in China has impacted the EU market?

Raviv Zoller: Otherwise, there's nothing to, nothing to report. First quarter, clear Brian fluids were a little higher than expected and second quarter a little lower than expected that has to do among other things with weather issues and rig schedules, but nothing, nothing important there.

Operator: We have an incoming question, which I will read out. It comes from the line of Lisa Deneve of Morgan Stanley. Can you please share the dynamics you're seeing in the bromine market and provide an update on your commercial strategy? How are you managing value versus value?

Speaker Change: We have an incoming question, which I will read out. It comes from the line of Lisa Deneve from Morgan Stanley . Can you please share the dynamics you're seeing in the bromine market and provide an update on your commercial strategy?

Speaker Change: [inaudible]

Raviv Zoller: Can you also share how the EU duties on phosphate-based flame retardants from China have impacted the EU market? Okay, so I think we answered that question earlier. I think Aviram made a key point. Maybe I would add on phosphorus that because of the new situation, that actually allows us to bring in new innovative solutions that are suddenly competitive because we couldn't introduce some products because of the low prices of phosphorus coming out of China into Europe. And we have some unique products that are a lot more sustainable and safer. But they demand a premium, so they have suddenly become economical.

Raviv Zoller: Okay, so I think we answered that question earlier. I think of Iran gave a key point. Maybe I would add on phosphorus that, because of the new situation, that actually allows us to bring in new innovative solutions. That are suddenly competitive because we couldn't introduce some products because of low prices of phosphorus coming out of China in Europe. And we have some unique products that are a lot more sustainable and safer. But they demand a premium, so they suddenly have become economic, and that means that we have the opportunity to grow our phosphorus business in Europe.

Speaker Change: Okay, so I think we answered that question earlier. I think Aviram gave a key point.

Speaker Change: Maybe, maybe I would add on phosphorus that because of the new...

Speaker Change: because of the new situation that actually allows us to bring in new innovative solutions that are suddenly competitive because

Aviram Lahav: And this is something that the decision that we've taken and we're pursuing it to the maximum. So you can imagine what will happen when the demand picks up and we can basically translate also a positive price variance. It will be very, very good. But in the meantime, we're not waiting and it's quarter after quarter and you're seeing the results of the IP decision are being very similar in Q2 to Q1 and that is interalya because of what I just described. Thank you.

Speaker Change: We couldn't introduce some products because of low prices of phosphorus coming out of China in in Europe.

Unknown Executive: Okay.

Speaker Change: And we have some unique products that are a lot more sustainable and safer.

Speaker Change: But they demand a premium so they suddenly have become economic and that means that we have the opportunity to grow our phosphorus business in Europe .

Raviv Zoller: And that means that we have the opportunity to grow our phosphorus business in Europe. We estimate that the same is going to happen in the US. And as a result, we have two mature products that will be pretty significant flame retardant products that are coming into the market and show potential for additional business for our IP divisions. So it's good news for us. Otherwise, I think the dynamics have been described.

Raviv Zoller: We estimate that the same is going to happen in the US. And as a result, we have to mature products that will be pretty significant flame retardant products that are coming into the market and show potential for additional business for our IP divisions. So it's good news for us.

Speaker Change: We estimate that the same is going to happen in the U.S., and as a result, we have two

Speaker Change: mature products that will be pretty significant, flame retardant products that are coming into the market and show potential for additional business for our IP divisions. So it's good news for us.

Ben Stewart: And then just to on on phosphate solutions that was obviously a very strong result here on on the growth with what's called its stable sales buddy, but actually improving.

Raviv Zoller: It is important to note that in the bromine business, most of our business is contracted for quantities for the long term, and that gives us the flexibility when we want to sell more quantities to deliver more on these contracts. And as a result, it's easier for us to take additional market share when we feel that it's in our interest. And right now, it's in our interest.

Aviram Lahav: Otherwise, I think the dynamics were described. It is important to note that in the bromine business, most of our business is contracted for quantities for the long term. And that gives us the flexibility when we want to sell more quantity to deliver more on these contracts. And as a result, it's easier for us to take additional market share when we feel that it's in our interest. And right now, it's in our interest, and that's what we're doing. So we're taking the market share until prices start going the other direction, and then we'll be back to more valuable volume play stress.

Aviram Lahav: So first of all, on the top line, could you help us understand how much was volume related, how much was how much was priced related and then in order to understand a little bit that margin expansion and that strongly big growth. If you could give us a couple of examples, we're like the more specialty piece of phosphate solutions really comes in and kicks in from a margin potential driving, driving that deep a dog growth to to that 13% level year or year.

Speaker Change: Otherwise, I think the dynamics were described. It is important to note that in the bromine business, most of our business is contracted for quantities for the long term.

Speaker Change: And that gives us the flexibility when we want to sell more quantities to deliver more on these contracts.

Speaker Change: And as a result, it's easier for us to take additional market share when we feel that it's in our interest.

Aviram Lahav: And that's what we're doing. So we're taking market share until prices start going the other direction, and then we'll be back to more value over volume type strategy. Hope that answers your question. Maybe just to the grandest by she watch our quantity variance.

Speaker Change: And right now it's in our interest, and that's what we're doing. So we're taking market share until prices start going the other direction, and then we'll be back to more value-over-volume type strategies.

Aviram Lahav: from Penance. Maybe just to grandest by see watch our quantity variance. It's very significant. It's a positive significant in the quarter if you benchmark it is a either respective period of last year, and that's obviously a direct decision to commercially to go after opportunities that we have, and it's working, and I think it's a very positive one.

Aviram Lahav: On specialties, it's really all about volume. It's introduction of new products and increase of sales in certain markets, including additional capacity that we added in in China on the food business and also strong sales in North America and South America. The tailwinds here are from the fact that when commodity prices are not under pressure and WPA is not coming in from China to Europe and Brazil, then there's less pressure on price and prices are relatively stable as we increase volume. So on specialties, it's mostly volume and on commodity, it's mostly price.

Speaker Change: Hope that answers. Maybe just to augment this, if you watch our quantity variance.

Unknown Executive: Thank you very much.

Aviram Lahav: It's very significant. It's a positive sign in the quarter if you benchmark it with the respective period of last year. And that's obviously a direct decision to commercially go after opportunities that we have. And it's working, and I think it's very positive. Thank you. We have another question from Erica Eve.

Speaker Change: It's very significant. It's a positive significant in the quarter if you benchmark it vis-a-vis the respective period of last year and that's obviously

Speaker Change: A direct decision to commercially to go after opportunities that we have and it's working and I think it's a very positive one.

Unknown Executive: Thank you.

unknown: Thank you.

unknown: We have another incoming question in line of Erica is which ports are you using in Israel for export, which issues are you basing in the recipe? How much operating income, you generate from exports from Israel. So, first of all, we're using the same ports. We're using the port of a lot, which is which goes to the to the red sea, which is an outlet to the red sea less than before. So, we're taking some of our shipments around some more of our shipments around Africa. So, it has some additional cost, even though we have been compensated to some extent from our customers. But the same amount of export is coming out as was before; there's been no change.

Speaker Change: Thank you. We have another incoming question in the line of Erika Eve. Which ports are you using in Israel for export? Which issues are you facing in the Red Sea? How much operating income, slash EBITDA, do you generate from exports from Israel?

Unknown Attendee: Which ports are you using in Israel for export? Which issues are you facing in the Red Sea? How much operating income slash EBITDA do you generate from exports from Israel? So, first of all, we're using the same ports.

Speaker Change: So, first of all,

Raviv Zoller: We're using the port of Eilat, which goes to the Red Sea, which is an outlet for the Red Sea, less than before. So we're taking some of our shipments around, some more of our shipments around Africa. It has some additional costs. Unknown Speaker Even though we have been compensated to some extent from our customers, the same amount of export is coming out as before. There's been no change.

Speaker Change: We're using the same ports. We're using the port of Eilat, which goes to the Red Sea, which is an outlet to the Red Sea, less than before.

Joe Jackson: Our next question comes from the line of Joe Jackson, female capital. Please go ahead. Hi, Joe. Hello. Good afternoon. Okay, a few questions. I'll do one by one. I thought maybe a high level question to start if you don't mind. LFP materials. It feels like when looking at some of the industry data lately, that LFP inventories are extremely high in China. Certainly more than what electric vehicle demand would suggest is required right now. You're delaying your plant in St. Louis.

Speaker Change: So we're taking some of our shipments around, some more of our shipments around Africa. It has some additional cost.

Speaker Change: Even though we have been compensated to some extent from our customers, but the same amount of export is coming out as was before. There's been no change.

Raviv Zoller: Obviously, any export that has done through the Red Sea is under danger of attack, and many of our ships were in danger of being attacked during the past 10 months. We have only to thank those shipping companies that have worked diligently with us and done everything possible with us to keep staff safe, and we've been lucky enough to stay safe until now, and hopefully that will continue. But in the interest of safety, not because we can't, in the interest of safety, we are delivering less through the Dead Sea, and we're hoping very much that the overall security situation will improve soon, and we're very hopeful that that will be the case.

Raviv Zoller: Obviously, any export that is done through the Red Sea is in danger of attack, and many of our ships have been in danger of being attacked during the past 10 months. And we have only to thank those shipping companies that have worked diligently with us and done everything possible with us to keep staff safe. And we've been lucky enough to stay safe until now, and hopefully, that will continue. But in the interest of safety, not because we can't, but in the interest of safety, we are delivering less through the Dead Sea. And we're hoping very much that the overall security situation will improve soon. And we're very hopeful that that will be the case. The long-term effect, of course, could be additional costs.

Speaker Change: Obviously, any export that is done through the Red Sea is under danger of attack and many of our ships were in danger of being attacked during the past 10 months.

Speaker Change: and uh... we have only uh...

Speaker Change: to thank those shipping companies that have worked diligently with us.

Speaker Change: and done everything possible with us to keep staff safe and we've been lucky enough to stay safe until now and hopefully that will continue.

Speaker Change: But in the interest of safety, not because we can't, in the interest of safety,

Raviv Zoller: And as a result, our sales of raw material for LFP are actually in all time high in terms of volume. And we expect that although EVs are moving slowly globally, what is moving very fast both in China and globally is the LFP for storage. And since there's very little capacity for LFP in the Western world, it's just a matter of time that the demand turns into actual deliveries, but it will take time because the infrastructure for the production does not exist.

Speaker Change: We are delivering less through the Dead Sea and we're hoping very much that the overall

Raviv Zoller: And the Western world as of yet. So on the one hand, if we look globally, EVs are moving much slower than expected stationary storage is moving faster than expected. LFP is penetrating and increasing its market share much faster than expected.

Speaker Change: Security situation will improve soon, and we're very hopeful that that will be the case. The long-term effect, of course, could be additional cost.

Raviv Zoller: The long term, the long term effect, of course, could be additional cost. It's not very material, but it's still millions of dollars that, of course, we would like to avoid.

Raviv Zoller: It's not very material, but it's still millions of dollars that, of course, we would like to avoid. I hope that helps. There was another question on operating income; how much of it is derived from Israel? If you want to address it, then I'll say a bit more if you want. Yeah, I guess the relevant question is because a lot of the export income comes from Israel; it's about two-thirds of the overall.

Speaker Change: It's not very material, but it's still millions of dollars that, of course, we would like to avoid.

unknown: I hope that answers.

Aviram Lahav: That was another question of even the operating income, how much of it is the rise from Israel as you want to address and then I'll say it's more if you want. Yeah, I guess the relevant question is because a lot of the export income comes from Israel; it's about two thirds of the overall, and the part that is concession related is about one third of overall profitability of the company.

Speaker Change: There was another question on the operating income, how much of it is derived from Israel? If you want to address it, then I'll say a bit more if you want.

Speaker Change: Yeah, I guess the relevant question is because a lot of the export income comes from Israel, it's about two-thirds of the overall.

Aviram Lahav: And the part that is concession related is about one third of overall profitability of the company. Hope that answers your question. Thank you. It was, by the way, it was about two-thirds, just five years ago. Two-thirds was concession related, and now it's about a little more than one-third.

Speaker Change: and the part that is concession related is about one-third of overall profitability of the company. I hope that answers.

Aviram Lahav: I hope that answers. Thank you. By the way, it was about two thirds just five years ago. Two thirds was concession related, and now it's about a little more than one third. Thank you.

Speaker Change: Thank you. It was, by the way, it was about two-thirds just five years ago. Two-thirds was concession related and now it's about a little more than one-third.

Operator: Thank you. You have no further questions. Please proceed. Okay, so thanks again for joining our call and reviewing the quarter with us. We look forward to coming back to you with the next quarter's results and I want to thank all ICL employees and everybody.

Operator: You have no further questions. Please proceed.

Speaker Change: Thank you. You have no further questions. Please proceed.

Operator: Okay, so thanks again for joining our call and reviewing the quarter with us. We look forward to coming back to you with the next quarter with Q3 results, and I want to thank all ICL employees and to everybody that made this call possible. Thank you very much, and have a great rest of your day. Thank you.

Speaker Change: Okay, so thanks again for joining our call and reviewing the quarter with us. We look forward to coming back to you with the next quarter with Q3 results.

Raviv Zoller: So, Raviv, you're not worried about an oversupply of LFP cathodes right now in China that would require some sort of rationalization over the short term to write as inventories and maybe require you to sell less in the end terms to the markets more balanced. We're not worried because in China, we're not producing LFP cathode, we're producing raw material for LFP cathodes so we have excess demand for MAP and other fertilizer-type products in China so if we have to sell less cathode for battery raw materials then we would just sell more specialty fertilizers in China.

Operator: Good Bye.

Raviv Zoller: It's not a concern for us in the short term. In the long term, if you look at the western part of the world, it's really not relevant for us for 24, 25 or even the first half of 26. We need to look at what's going to happen in the market, 26 and 27, visa V, what are customers in North America and hopefully Europe because we have other ideas for Europe, what they need and when they need it.

Raviv Zoller: We're not going to put the capital to build capacity for customers that are not going to be ready to produce their batteries before 27 or 28. We're building an innovation qualification center in St. Louis that will be up and running by the end of the year and we are going to qualify products with multiple customers, by the way, many of them in the stationary part of the business. We expect that we will optimize whatever production capacity that we can create with long-term agreements with these qualified customers and so most of the news is going to be coming out next year.

Aviram Lahav: Okay, thank you for that. Turning to IP, Avaram, you talked about how Q1 earnings were similar to Q1 clearly showing in the results. How do you think that can have IP operating results earnings wise will look versus the first half again for IP? I'll give you my take and then obviously we'll add hopefully agree. I think it's going to be quite similar. I think we are on a positive track. Although I would say that the market from the demand side is not very yet with the prices. That should come further. But I believe will continue the positive trajectory that we're on and my estimate as I said for the IP second half would be quite similar to the first half.

Raviv Zoller: Okay, just one more question if I may sneak it in. So when you raised your guidance this year for 100 million more of EBITDA from the specialties, could you break that down? How much of that extra hundred million dollars is coming from commodity phosphate, specialty phosphate, growing solutions and IP? No, no, no. I think that we we did our math joys and without getting into the particular each of them, by the way, it's arranged.

Raviv Zoller: We put your right at the midpoint has been raised by 100 million. But we're now giving the range of 800 to one billion, which is quite white. I think we are in a good spot there. And what I can say that it is and this is very good news because it's coming across the board from all our specialty units. It breaks down, it's much much more fluid than I don't want to get.

Raviv Zoller: Why didn't you narrow the range? We're already happy to the year. Why is the range still 200 million dollars? It's a good question and I think the reason for that and I agree with Aviram's take all three of our specialty businesses are above budget and above expectations. I think the reason for that is that, you know, we're in the middle of the war and it would be unconservative of us to to give investors the field that the risk doesn't exist anymore.

Raviv Zoller: There's still a risk on our business and we need to be more careful this year. But other than that, we're a lot more optimistic than we were at the beginning of last quarter. And we take it to the level to disappoint.

Joe Jackson: Okay, thanks for answering all my questions. Welcome. Thank you, Joel.

Operator: Thank you. As a reminder, in order to ask the question, please raise your hand using your mobile project application, press star nine on your telephone keypad and wait for your name to be announced.

Raviv Zoller: Okay, so I think we answered that question earlier, I think of Iran gave a key point. Maybe I would add on phosphorus that because of the new situation that actually allows us to bring in new innovative solutions. That are suddenly competitive because we couldn't introduce some products because of low prices of phosphorus coming out of China in Europe. And we have some unique products that are a lot more sustainable and safer.

Raviv Zoller: But they demand a premium so they suddenly have become economic and that means that we have the opportunity to grow our phosphorus business in Europe. We estimate that the same is going to happen in the US. And as a result, we have to mature products that will be pretty significant flame retardant products that are coming into the market and show potential for additional business for our for IP divisions. So it's good news for us.

Raviv Zoller: Otherwise, I think the dynamics were described. It is important to note that in the bromine business, most of our business is contracted for quantities for the long term. And that gives us the flexibility when we want to sell more quantity to deliver more on these contracts. And as a result, it's easier for us to take additional market share when we feel that it's in our interest. And right now, it's in our interest and that's what we're doing.

Raviv Zoller: So we're taking the market share until prices start going the other direction and then we'll be back to more valuable volume play stress, from Penance. Maybe just to to grandest by see watch our quantity variance. It's very significant. It's a positive significant in the quarter if you benchmark it is a either respective period of last year and that's obviously a direct decision to commercially to go after opportunities that we have and it's working and I think it's a very positive one.

Unknown Executive: Thank you.

Raviv Zoller: We have another incoming question in line of Erica is which ports are you using in Israel for export, which issues are you basing in the recipe? How much operating income, you generate from exports from Israel. So, first of all, we're using the same ports. We're using the port of a lot, which is which goes to the to the red sea, which is an outlet to the red sea less than before. So, we're taking some of our shipments around some more of our shipments around Africa.

Raviv Zoller: So, it has some additional cost, even though we have been compensated to some extent from our customers, but the same amount of export is coming out as was before there's been no change. Obviously any any export that has done through the red sea is under danger of attack and many of our ships were in danger of being attacked during the past 10 months and we have only to thank those shipping companies that have worked diligently with us and done everything possible with us to keep staff safe and we've been lucky enough to stay safe until now and hopefully that will continue.

Raviv Zoller: But in the interest of safety, not because we can't in the interest of safety, we are delivering less through the Dead Sea and we're hoping very much that the overall security situation will improve soon and we're very hopeful that that will be the case. The long term, the long term effect, of course, could be additional cost. It's not very material, but it's still millions of dollars that of course we would like to avoid.

Aviram Lahav: I hope that answers. That was another question of even the operating income, how much of it is the rise from Israel as you want to address and then I'll say it's more if you want. Yeah, I guess the relevant question is because a lot of the export income comes from Israel, it's about two thirds of the overall and the part that is concession related is about one third of overall profitability of the company.

Aviram Lahav: I hope that answers. Thank you. By the way, it was about two thirds just five years ago. Two thirds was concession related and now it's about a little more than one third. Thank you.

Unknown Executive: You have no further questions. Please proceed.

Unknown Executive: Okay, so thanks again for joining our call and reviewing the quarter with us. We look forward to coming back to you with the next quarter with Q3 results and I want to thank all ICL employees and to everybody that made this call possible. Thank you very much and have a great rest of your day.

Unknown Executive: Thank you.

Unknown Executive: Good Bye.

Q2 2024 ICL Group Ltd Earnings Call

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