Q4 2024 ICL Group Ltd Earnings Call
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Speaker Change: Good morning ladies and gentlemen and welcome to the ICL fourth quarter 2024 earnings international conference call. At this time all lines are in listen-only mode.
Following the presentation, we will conduct a question and answer session.
Speaker Change: If at any time during this call you require mated assistance, please press star zero for the operator. This call is being recorded on Wednesday, February 26, 2025. I would now like to turn the conference over to Peggy Riley-Tharp, Vice President of Investor Relations. Please go ahead.
Speaker Change: Thank you, Jewel. Hello, everyone. I'm Peggy Riley-Tharp, Vice President of Global Investor Relations for ICO. I'd like to welcome you and thank you for joining us today for our earnings conference call.
Speaker Change: This event is being webcast live on our website at icl-group.com, and there will be a replay available a few hours after the live call, and a transcript will be available shortly thereafter.
Speaker Change: Earlier today, we filed our reports and our presentation with the securities authorities and the stock exchanges in Israel and the U.S.
Speaker Change: Those reports, as well as the press release and our presentation, are available on our website.
Speaker Change: Please be sure to review the disclaimer on slide 2 of the presentation.
Our comments today will contain forward-looking statements.
Speaker Change: This panel is assembled into three components, that will be critical for managing the future performance of password protection within the meaning of the Private Security Litigation Reform Act of 1995. These statements are based on management's current expectations and are not guaranteed to future performance.
Speaker Change: The company undertakes no obligation to update any information discussed on this call at any time.
Speaker Change: We will begin today with a presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Aviram Lahav, our CFO.
Speaker Change: Also joining us today is Elad Aronson, our incoming President and CEO.
Speaker Change: Following the presentation, we will open the line for a Q&A session.
Raviv Zoller: I would now like to turn the call over to Raviv.
Thanks, Peggy, and welcome, everyone.
Speaker Change: Thank you all for joining us for our 2024 Annual Earnings Class.
Speaker Change: This will be my final call as ICLCO, and I am pleased to reflect on the past 28 quarters and to share our results with you once again today.
Speaker Change: While there are still some challenges related to the situation in Israel, we successfully managed to minimize the impact of war-related disruptions throughout 2024, and the situation is getting better now.
Speaker Change: Please turn to slide 3 for a brief overview of 2024, which wrapped up the year of continued market share gains for our specialties-driven businesses.
Speaker Change: Sales were $6,841,000,000 while adjusted EBITDA was $1,469,000,000, representing a margin of 21%.
Adjusted diluted earnings per share was 38 cents for 2024.
Speaker Change: Throughout the year, we maintained our overall momentum despite persistent put-ash pricing headwinds.
For 2024, put-ask prices decreased 24% versus the prior year.
Speaker Change: However, our sustained focus on our specialties-driven businesses helped drive annual EBITDA up 8% for these three segments, industrial products, phosphate solutions, and growing solutions.
Speaker Change: In total, our specialties businesses represented 70% of 2024 EBITDA and 73% of fourth quarter EBITDA.
Speaker Change: As always, we continue to focus on strong cash generation, which resulted in free cash flow of $758 million for the full year.
Speaker Change: Additionally, we wrapped up the year by delivering a total of $242 million dividend distribution.
with an industry-leading dividend yield of 3.8%.
Speaker Change: Once again, even in a very challenging year, we delivered a total return ahead of our peers in 2024. We had a number of big wins in 2024 as we expanded strategic relationships and accelerated the launch of innovative new products across all of our specialties-driven businesses.
Speaker Change: We also delivered on our efficiency plans for targeted cost savings.
Speaker Change: Finally, as I mentioned, we contained war-related disruptions in 2024 and maintained good production levels.
And for 2025, we expect a smoother path overall.
Speaker Change: I would ask you to turn now to slide 4 and to look at some key fourth quarter and full year financial metrics.
Speaker Change: As you can see, we ended the year close to the high end of our upgraded guidance with fourth-quarter specialties-driven EBITDA of $253 million, up 20% year-over-year.
Speaker Change: We also delivered an increase in consolidated adjusted EBITDA margin for the fourth quarter, which came in at 22%, even as EBITDA decreased by $7 million a year over the year.
Speaker Change: Meanwhile, operating cash flow in the fourth quarter for this year was in line with the fourth quarter of 2023, and in my view, our balance sheet as we head to 2024 was the strongest in recent years.
Speaker Change: Let's start with the review of our divisions and begin with our industrial products business on slide 5.
Speaker Change: For 2024, sales of $1,239,000,000 were up slightly versus 2023, as was EBITDA of $281,000,000.
Speaker Change: For the traditionally soft fourth quarter, sales were down versus the prior year. However, EBITDA of $70 million improved significantly, up 25% on cost efficiency.
Speaker Change: Well EBITDA margin also showed a dramatic increase and moved up from 19% to 25%.
Speaker Change: For 2024, we continue to strengthen our partnerships and customer relationships as these long-term alliances contribute to our market share gains when it counts.
Speaker Change: We had another solid year for specialty minerals, as sales increased year over year. Annual sales of clear barring fluids, which are used in the oil and gas industry, decreased versus the prior year due to drilling cycles. However, these may begin to vary in a positive way due to recent policy shifts.
Speaker Change: Importantly, industrial products delivered a gain in sales for its phosphorus-based flame retardants in the fourth quarter.
Speaker Change: This business has begun to benefit from new anti-dumping measures implemented in the EU in 2024, and U.S. customers are also expected to be influenced by anti-dumping proceedings now pending in the U.S.
Speaker Change: As a result of this, we saw good customer uptake for our sustainable, very-well phosphorus-based flame retardant, with some key partners already transitioning production lines to this innovative product.
Speaker Change: In other new product news, Industrial Products recently unveiled a revolutionary sustainable solution for the treatment of biofuel.
Speaker Change: On slide 6, you will see our PODASH division results for 2024, with sales of $1,656,000,000 and EBITDA of $492,000,000.
Speaker Change: Our average put-ash price was down nearly $100 CIF per ton versus $23, while total sales volume was down approximately 127,000 metric tons for the same type.
Speaker Change: In total, we sold 4.6 million metric tons of flood ash in 2024, and we expect to benefit from our decision to defer some fourth quarter sales into 2025.
Speaker Change: In Spain, we had record-put-out production at our Suria site, delivering more than 800,000 liter of tonnes.
Speaker Change: Despite the war, and while somewhat short-staffed, we were able to maintain fairly normal production levels in Israel.
Speaker Change: And while we still continue to face operational and logistical challenges at our Dead Sea operations, we adopted some long-term risk mitigation measures for war-related infrastructure issues.
Speaker Change: In 2024, we saw significant improvement in annual cost per ton at our Spanish operations and in total. For Portage overall, we benefited from our ongoing operational and efficiency efforts in 2024, and we expect to see continued improvements in 2025.
Speaker Change: Turning to slide 7 in our Phosphate Solutions Division, where 2024 sales were $2,215,000,000.
Speaker Change: Results, in general, were ahead of our expectations, despite lower white phosphoric acid prices, as we benefited from favorable volume and mix, as well as lower raw material costs.
Speaker Change: Commodity prices were also higher than expected in 2024, but lower versus the prior year.
Speaker Change: For the fourth quarter, we saw a slight year-over-year decrease in phosphate solution sales, as an increase in external sales did not offset lower internal sales.
Speaker Change: Annual EBITDA of $569 million also slightly decreased on a year-over-year basis. However, EBITDA margin expanded to 25%.
Speaker Change: We were able to improve this rate as we prioritized cost savings and production efficiencies through 2024.
Speaker Change: We also significantly benefited from higher volumes and lower raw material costs.
Speaker Change: Our phosphate specialties results were aligned with market dynamics as expected. North America and Europe were relatively stable, but remained competitive, while South America was influenced by significant influence from China.
Speaker Change: Overall, we maintained our focus on market share and volume gains while delivering new products and expanding our reach, including into cosmetics.
Speaker Change: We're also looking into additional food specialty opportunities, including geographic expansion. And in 2024, we introduced a new alternative dairy switch.
Speaker Change: Our white page joint venture in China delivered multiple production records, including another overall record year of continued strong demand for battery-grade phosphates.
Speaker Change: One of the strengths of our YPH facility is the ability to flex between customer demand for battery and agriculture solutions, and our team there does an excellent job of optimizing between the two.
Speaker Change: In North America, we've been hosting customer meetings at our Battery Materials Innovation and Qualification Center in St. Louis, which became operational in less than one year.
Speaker Change: To our commercial LSP plant in the U.S., we are now finalizing the detailed engineering process.
Speaker Change: As mentioned in previous earnings calls, we continue to align this capital spend to match anticipated customer demand time.
Speaker Change: For Europe, in January of this year, we signed a strategic agreement with Dynanonik, currently number two in the world in cathode material capacity, to produce lithium-ion phosphate at our existing site in Siena, Spain.
Speaker Change: While this project is currently only in its planning stages, it demonstrates our commitment to developing high-quality solutions for sustainable supply chain.
Speaker Change: Turning now to slide 8 in our Growing Solutions Business Division, with 2024 sales of $1,950,000,000, we're down year-over-year.
Speaker Change: EBITDA of $202 million increased 70% for the same time frame, while EBITDA margin of 10% expanded significantly versus the prior year.
Speaker Change: For the fourth quarter, we saw similar improvement in EBITDA, which was up significantly, and margin rate, which improved 12% from 3% in the fourth quarter of 2023.
Speaker Change: Overall growth and profitability was driven by efficiency efforts and improved product mix, as well as lower raw material costs.
Speaker Change: In 2024, the business continued to target market share growth via both M&A and new product innovation.
Speaker Change: In the UK, we completed a bolt-on acquisition toward the end of the year to strengthen our position in the turf and landscape market.
Speaker Change: While based in the UK, Green Best is renowned for its specialty granular and liquid nutrition products serving all global markets.
Speaker Change: In North America, we had record sales volumes in 2024, with strong growth in Mexico and Canada.
Speaker Change: In Asia, we achieved record-breaking annual sales volumes for specialty agriculture fertilizers.
Speaker Change: Fourth quarter sales in Brazil were lower than expected due to significant currency fluctuation, tight liquidity, and soft soybean crop economics, given lower commodity prices and margins.
Speaker Change: However, for the full year, we saw improved profitability and further market share growth in Brazil.
Speaker Change: In 2024, Growing Solutions entered the biological fertilizer business, delivered new product sales of more than $250 million, and expanded its R&D efforts and innovation partnerships.
Speaker Change: I would now like to wrap up with a few highlights on slide 9.
Speaker Change: Once again, solid execution from across the entire company helped deliver winning results for ICO.
Speaker Change: We continue to drive long-term growth in specialty-driven EBITDA, which meaningfully sets us apart from our commodity-based peers.
Speaker Change: We enhanced our partnerships across three of our specialty-driven businesses, industrial products, flaxseed solutions, and growing solutions, as we strive to work with the best to achieve our goals and expand our presence globally.
Speaker Change: In some instances, this means extending customer relationships over the long term, so we can both benefit during the good times and weather the bad times together.
Speaker Change: In other situations, we bring our expertise to our customers to help them succeed.
Speaker Change: And of course, we are always working to find the best partners to help get our products to market in every region.
Speaker Change: We made three complementary acquisitions while also driving new product innovation.
Speaker Change: We will continue to innovate as it is an inherent part of ICL's DNA and one of the key areas that helps distinguish us.
Speaker Change: We advanced our battery of material aspirations into Europe and received partnership support as well as government funding.
Speaker Change: and we remain on track to strengthen our leadership positions in 2025. We are already leaders in bromine and specialty phosphates, and we are now moving to the top in bromine solutions by consistently improving our market share and position.
As you can see on slide 10,
Speaker Change: We deliver shareholder value ahead of our peers once again in a very challenging year for our industry and in spite of geopolitical challenges well beyond our control.
Speaker Change: In 2024, we also actively managed various concession renewal efforts, and for the Dead Sea specifically, we provided feedback on a draft government report and participated in commissive committee meetings.
Speaker Change: During 2024, we also successfully settled a large portion of outstanding legal items.
Speaker Change: We also continued to advance our sustainability efforts and improved our rankings across multiple key global metrics.
Speaker Change: And finally, on the occasion of my final earnings call with ICO, I want to thank my hardworking and dedicated team spread across the globe.
Speaker Change: Together, we share in the achievements of the past seven years, and I would not have been able to reach this point without the support from each and every ICL employee.
Thank you.
I also want to congratulate Elad Aronson, our new CEO.
Speaker Change: Elad has earned his promotion by delivering proven business performance and clear demonstration of leadership skills.
Speaker Change: He is passionate about ICL's future opportunities, and he will join us today for a Q&A session so that you can get to know him.
Good luck a lot from all of your ICO colleagues.
Aviram Lahav: 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 12 and take a look at some key Markov metrics.
Aviram Lahav: is a truly global company serving a variety of end markets. We look beyond fertilizer prices to a wider array of macro indicators.
Aviram Lahav: Starting with inflation, where rates were fairly stable, with the exception of Brazil, which saw a 40 basis points increase in inflation in the fourth quarter.
Aviram Lahav: Looking into January, inflation rates picked up in the US, EU and Israel, while China was flat and Brazil decreased slightly versus year-end rates.
Interest rates.
Aviram Lahav: increasing Brazil in the fourth quarter up approximately 150 basis points while rates in the US, Israel and India were flat as rates in the EU and UK declined.
Aviram Lahav: For 2025, Q2 interest rates are flat to declining for all countries with the exception of Brazil, which saw a 100-basis-point increase since Q4.
Aviram Lahav: Global industrial production growth of 2.4 percent was up approximately 70 basis points in the first quarter.
Aviram Lahav: with quarterly rates expected to be in the 2.9 to 3.3 percent range throughout 2025. On a sequential basis, fourth quarter housing stocks in the U.S. were up 11 percent. However, they trended back down to third quarter territory in January.
Turning to slide 13 in Key Fertilizer Market Metrics.
Aviram Lahav: Grain prices were mixed in the fourth quarter with corn up 7% on a quarterly basis while other crop prices fell versus the third quarter. However, all crops have improved quarter-to-date in 2025 versus the year-end with the exception of rice.
Aviram Lahav: Farmer sentiment in the 4th quarter improved dramatically over the 3rd quarter, up more than 50%.
Aviram Lahav: The positive trend continued into 2025 as U.S. farmers retained their post-election optimism and sentiment rose another 5 points in January.
Aviram Lahav: Potash and Phosphate prices continue to diverge, as Potash prices declined again in the fourth quarter, while Phosphate prices increased versus the third quarter. Potash prices stabilized in January, while Phosphate prices continued to climb up 4% since year-end.
Aviram Lahav: Like others in the industry, we expect global quota shipments for 2025 to be roughly in line with 2024, with a range of 71 to 75 million metric tons.
Aviram Lahav: While there is a lot of global chatter in the industry, overall dynamics look good for 2025 and Polish prices have gone up since the beginning of the year.
Aviram Lahav: Ocean freight rates decreased significantly in the fourth quarter, down approximately 22% versus the third quarter. In January, this dropped even further, and for the month, daily rates hit lows not seen since early in COVID.
Aviram Lahav: On slide 14, you can see some key market metrics for energy storage and electric vehicles, and also overall demand trends for technical MAP and LFP phosphate, which continue to grow.
Aviram Lahav: For North America, we see expected future demand continue to shift more towards ESS users.
Aviram Lahav: For this quarter, we are also highlighting demand in Europe following the announcement of our joint venture agreement with Dynanonics to establish LFP production at our existing site in Spain, where we are receiving government funding for our efforts.
Aviram Lahav: If you will now turn to slide 15 for a look at our full-year sales bridges, on the left side you can see the year-over-year change for each of our business divisions with Potash once again having an outside impact on the year-over-year decrease in sales. However,
Aviram Lahav: I would like to point out the positive impact industrial products had on overall annual sales.
Aviram Lahav: Turning to the right side of the slide, you can see the benefits received from higher quantities and also the impact of lower prices. Once again, especially for Potash and the effect exchange rate has on sales.
Aviram Lahav: On slide 16, you can see the impact lower potter prices had on our 2024 EBITDA of $1,469,000,000. We were, however, able to offset some of this impact to higher quantities, lower raw material costs, and improve production efficiencies.
Aviram Lahav: Slide 17 provides a look at our fourth quarter sales bridges, with Potash once again having the biggest impact. In total, sales for the fourth quarter came in at $1,601,000,000.
Aviram Lahav: On the right side of the slide, you can see the impact from prices and exchange rates.
Aviram Lahav: On the left side of slide 18, you can see the year-over-year change in quarterly EBITDA by segments. On the right side, the impact from lower prices is apparent, with increased quantities and lower raw material costs unable to offset the decline in pricing.
Aviram Lahav: All told, the fourth quarter of 2024 EBITDA came in at $347 million, quite similar to the fourth quarter of 2023.
Aviram Lahav: Turning to slide 19, once again ICL remained the leader in terms of average realized potash price as we continue to maximize the profitability of our cost efficient resources.
Aviram Lahav: On slide 20, I would like to remind you of ICF's leadership position in the global bromine market. While bromine prices remain under pressure, the DEXC continues to be the most cost-competitive source of bromine and accounts for approximately two-thirds of global supply capacity.
Aviram Lahav: If you turn to slide 21, you can see how our business breaks down on both a regional basis and by division. For the fourth quarter, Asia and Europe were equally represented at 27% of sales, while North and South America were both around 20%.
Aviram Lahav: Before we wrap up, I would like to share a few highlights on slide 22.
Aviram Lahav: As Raviv mentioned, our balance sheet is strong and we ended the year with available resources of approximately 1.6 billion dollars. Our net debt to adjusted EBITDA rate at quarter end remained at 1.2 times.
Aviram Lahav: Once again, we are distributing 50% of adjusted net income to our shareholders, which translates to a total dividend of $52 million this quarter, resulting in a trailing 12-month dividend yield of 3.8%.
Aviram Lahav: During the fourth quarter, we continue to prioritize cash generation as we do consistently. Throughout 2024, we also remain focused on cost savings and efficiency efforts with results ahead of our expectations.
Aviram Lahav: Importantly, we maintain a consistent and disciplined approach to capital allocation, which you can see demonstrated on slide 23.
which is a view I do not typically present.
Aviram Lahav: As you can see, we have been able to deliver more consistent performance versus our peers during the VISTA MU, thanks to our focus on specialties and cash generation, which has resulted in more predictable growth and fewer surprises.
Aviram Lahav: Finally, if you will turn to slide 24, I would like to update you on our 2025 guidance.
Aviram Lahav: For our specialties-driven business divisions, which include industrial products, growing solutions and phosphate solutions, we expect EBITDA to be between $0.95 billion to $1.15 billion in 2025.
Aviram Lahav: We expect potash sales volumes to be between 4.5 million and 4.7 million metric tons. And we expect our effective annual tax rate for 2025 to be approximately 30% in anticipation of higher potash prices.
Aviram Lahav: I would, however, remind everyone that in the first quarter, our quota sales will be more heavily weighted toward our annual contracts with China and India, which are at lower prices than current market rates.
Speaker Change: Now, before we begin the Q&A, I want to thank Raviv for his leadership over the past seven years. I am proud to have served with him, and I look forward to partnering with Elad in 2025 and beyond.
Aviram Lahav: And with that, I would like to turn the call back over to the operator for Q&A.
Speaker Change: Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press star followed by the 1 on your touchtone phone.
Speaker Change: You will hear a prompt that your hand has been raised.
Speaker Change: Should you wish to decline from the polling process, please press star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys.
Speaker Change: Your first question comes from Ben Therer with Barclays. Your line is now open.
Speaker Change: Good evening to you, good morning to the ones in the U.S., and thank you very much for taking my questions. First of all, Raviv, all the best for your upcoming retirement in a few weeks. It was a pleasure working with you. All the best and a lot of welcome on your new expanded role from growing solution into CEO. I wanted to get that off first.
Thank you, Ben. We appreciate it.
Douglas Goldstein: The opinions rendered herein are those of the guests, and not necessarily those of Douglas Goldstein, Profile Investment Services, Ltd., or Israel National News. Readers should consult with a professional financial advisor before making any financial decisions.
Speaker Change: 2024 and was like one of the more commoditized still exposed ones but holding in fairly well over a year-by-year basis. So I just wanted to understand like the underlying demand be it what goes into food, what goes into fertilizer, what goes into battery materials, if you could share some incremental thoughts as to how you think about 2025 in phosphate solutions in particular.
Speaker Change: That would be my first question. I have a quick one.
Speaker Change: We had headwinds coming from WPA prices trending down, but at the same time we overcame that by increasing volumes.
This product has come primarily from expansion with additional innovation.
Speaker Change: Innovative products would be food products in China, where we set up a new production facility for specialties.
Speaker Change: new products and pharmaceuticals and for cement applications. We had a good pipeline of products and we still have a great pipeline going forward in 2025.
Speaker Change: The overall market hasn't grown very much, probably by 2 or 3%, but we've grown our market share.
True point.
Okay, got it. And then...
Speaker Change: You've got better volumes, particularly in Europe, because of certain duties on TCPP from China. So just wanted to understand what's behind that and how do you think about the ...
Speaker Change: The general setup on trade disputes, be it between Europe and China, U.S. and China, how you think this is going to play out, and just given your global footprint, how you're positioned in a market that seems to be more exposed to certain tariff or duty risks going forward.
Speaker Change: Okay, so thanks for that question. We have local production facilities in Europe and in the States that suffered injury from
dumping prices from China.
Speaker Change: The product, the Chinese product, is also under threat, meaning that within the next three to four years...
Speaker Change: You won't be able to use that product anyway because of sustainability issues. And we have a new line product that meets all the sustainability requirements.
Speaker Change: and the injury and the anti-dumping taxation that comes with it allows us to replace the Chinese product currently in Europe because the anti-dumping has already ruled.
Speaker Change: and there's an ongoing process in the U.S. which at least our customers are pretty confident that that will end our way because some of them are already considering turning their production lines into
Speaker Change: with adaptations to using our products. So, the nice thing is that typically, anti-dumping processes are good for the short term, for a year, or two years, or three years. Here, it's a whole new family of products that we call VariQuil.
Speaker Change: that will replace the Chinese product and because they meet the sustainability requirements
Speaker Change: They will stay for the long run, so this is a new market opportunity for us that has short term implications for 2025 and more beyond that. This is mainly for construction applications.
and it's a good development for us.
Speaker Change: Actually the P4 based products have been suffering for the past year and a half or so. Construction is also, as you know, has been
Speaker Change: has seen a very moderate demand. So overall, gaining market share in the construction application with a sustainable product that will give us long-term sales with very nice profitability is a very good development for us.
Okay, perfect. Thank you very much.
Thank you.
Speaker Change: Your next question comes from Kevin Esbrock with Jeffreys. Your line is now open.
Hi, thank you for taking my question. I
Speaker Change: We haven't seen the bankruptcies in the past three or four quarters. We saw one bankruptcy before that, but we have seen significant reductions of
of Youth of Capacity.
both in China and also in Djibouti.
Speaker Change: And of course, we've replaced a lot of that capacity that's coming out of the market. So again, reductions in production, not any significant bankruptcies yet.
Speaker Change: Okay, understood. Thank you. And you touched on some war-related issues and then also sort of tariff impacts on trade flows because of more local production, but I guess just I just wanted to get a sense of how you were thinking about the potentially rapid changes in the, I guess, situation in Eastern Europe geopolitically for you guys as it relates to fertilizers.
So from the perspective of demand
Speaker Change: The demand is very solid for all types of major fertilizers. We expect, as Debram said before, we expect above 70 million dollars... 70 million dollars, I'm sorry. 70 million tons of...
Speaker Change: Podash, anywhere between 70 to 75 this year, which correlates with 2024.
Speaker Change: And in terms of what's happening in Eastern Europe, we don't expect that changes in the war situation are going to have a significant impact.
Speaker Change: things going forward because Belarussian and Russian products are entering into the market. All their volume is entering in the market and actually they have made supply-side decisions to limit some of that production coming into
into global trade, the Belarussians announced
Speaker Change: million tons that are not coming into the market this year and just recently a few days ago.
Russians also said that they were going to go through
Speaker Change: That and the potential tariffs in the U.S. are much more significant than the change in the war situation in the East.
Speaker Change: As far as the war in Israel, as you know, it's a...
We're in a much better situation now.
Speaker Change: Some of the issues we've had had to do with people being on reserve duty and that means getting out of our maintenance routines and getting back to our maintenance routines is quite a challenge and it'll take us a
Speaker Change: a little more time to be completely back to normal probably until April when we have our annual shutdown and then we can actually...
Speaker Change: finalize some of the processes. So that's a very significant thing. The other thing is, of course, transporting through the Red Sea, which has been a real...
A real problem to solve during the past recent months.
Speaker Change: I was trying not to say problems, to say challenge, but it's been a problem and of course things look a lot better now.
Speaker Change: Supply chain, maintenance, production, Red Sea, all those things are looking much brighter for next year and of course potash prices are down.
Speaker Change: are trending up like we expected at the end of the year. And coming back to the beginning of the question, the Ukraine-Russian conflict is not going to be a major issue for global supplies. I'll just ask my colleagues if they want to add in if I missed something.
I don't think there's an issue there.
Okay.
Hope that answers. Thank you.
Thank you.
Thank you.
Speaker Change: Your next question comes from Joel Jackson with BMO Capital Markets. Your line is now open.
Joel Jackson: Hi, good evening. Raviv, it's a pleasure to work with you all these years. Good luck in your next chapter.
Joel Jackson: A couple questions for me, you obviously reiterated your specialties guidance, EBITDA guidance for the year and we're talking about of course higher potter's prices lately. Can you talk about
We have a better outlook on pricing.
I think that was the question.
He was. He was. Advising and demand. Yeah.
Joel Jackson: Look, what we have now is that prices are trending up and they've actually gone up about 15% in the U.S. in the past month and a bit and it looks like Chinese and Indian contracts are going to happen very soon and of course they're going to, at least it looks like they're going to show a nice increase in price.
Joel Jackson: To give you exact numbers would be, it would be too early for that at this point.
Speaker Change: Maybe to add, or maybe if I may, please go ahead and join us, Aviram.
Just to add that we need to.
Speaker Change: clear out of the way existing conflicts that we have. So, the average price which will be obtained in Q1 is not necessarily indicative.
Speaker Change: of the better effective prices that we have going forward. That you always need to take into account that there's a pipeline that we need to clear itself.
Speaker Change: And to give more flavor, typically at this point, which is the end of February, we'd be sold out at least until the end of June. And we're not even sold out until the end of May, and not because we don't have orders or demand, we have plenty.
Speaker Change: But every time we close a deal, we feel sorry that we didn't wait another week. So, we're trying to manage that carefully and maximize our price opportunity.
Would you say your lag is...
Speaker Change: Three months in the price book versus what we're seeing in the benchmark in the market, two months, four months, what would you say is kind of a lag?
Speaker Change: It's hard to say, it's mixed because in some geographies it's way more than two or three months like in China because it's annual contract and in the US it's probably less than a month.
So I would say mix probably less than a quarter.
Speaker Change: Okay, and then finally, you know, we're obviously seeing, it seems like we're seeing a lot of
Speaker Change: like incremental interest in ESS even than what a lot of
Speaker Change: battery industry people might have thought six months ago, 12 months ago, I think we're seeing
Speaker Change: ESS related, lithium demand for example up 40-50% CAGR. Can you talk about what's going on in secondary storage, things you're seeing versus three months ago, six months ago, like is this churning, at what rate and how fast is it going?
Speaker Change: I think there's a lag between government will and the futuristic needs of major suppliers and the ability of the supply chain to adjust.
to the western....
the Western incentives, plans, governmental decisions, there's a lot of
uncertainty around future policy etc so
Speaker Change: I think what we're seeing is that everybody's looking to see an inflection point in ESS.
Speaker Change: Sometime in the next two or three years and everybody's trying to find themselves. We ourselves are in the same
Speaker Change: our large capital investments around LFP and not to make them too early before the market is ready to consume our product on the one hand and on the other hand not to make mistakes.
Speaker Change: These are the potential policy changes that can hurt us. So, if we didn't have those uncertainties, we would have acted sooner as well. We understand.
Speaker Change: The reason that the inflection point is not touchable yet, nobody knows if it's going to be in two years, or two and a half years, or three years, but ultimately, EVs and storage...
The revolution has happened.
Speaker Change: The threshold of 30% market share, or what has been crossed in enough countries, so it's clear that things are happening.
And the question is, how dominant will the Chinese be?
Speaker Change: How dominant will government regulation be and I think there's a lot of there are a lot of different opinions but ultimately it's a matter of it's all a matter of timing. The demand is there so it's just a matter of the timing and behavior of commodity markets.
Speaker Change: If I may follow up on that with one more on the same topic, would you say, if you look at LFP demand for EVs versus LFP demand for ESS, would you say the transparency of the EV situation, the EV dynamic is much more transparent and it's much less transparent in ESS? Would you characterize it that way?
Speaker Change: Maybe the insight that I can bring into the picture, and you can see it on one of the Ron's slides, was that the U.S. is more dominated by non-EV storage.
Speaker Change: and Europe is much more EV storage and easy also there's no united policy for all of Europe
So, maybe things...
will happen faster at the country level.
But that's the main difference between EV and non-EV storage.
Speaker Change: Very high demand in the U.S. and more easy in Europe. Just one thing, George, you need to...
Speaker Change: We need to also understand that the end market for ESS, the static one, and EVs, which is basically private citizens, is quite different.
Speaker Change: So, on the ESS side, I think it's more, let's put it this way, it should be more of a straight line in EVs. There are many questions, by the way, geographies can be quite different.
Speaker Change: And, you know, I've been told in certain meetings, not internally, externally, that the golden number is that in Europe, for instance, they need to get a car below the €25,000.
Thank you very much.
So the EV market...
The regression line is, as Raviv said, it's very clear.
Speaker Change: But around me there can be quite a lot of bumps, that's the way we see it right now.
Speaker Change: I mean, as a raw material provider for metal material, we're actually selling a lot more this year than we sold last year.
due to the, and it's not because of the overall...
Speaker Change: market for CAM material has grown much. It's because the market share for LFP has increased considerably and that's also a factor in everybody else's.
Thank you very much.
Thank you, Joe.
Speaker Change: Your next question comes from Lorente Alexander from Jeffreys. Your line is now open.
Lorente Alexander: So, good morning. I wanted to touch on the battery market from a different angle, which is to what degree do you think, do you see you need to pull forward investments?
Lorente Alexander: in the LFP downstream in order to hit your market share goals? I mean, in other words, to what extent are you seeing competitors ramp up capacity in response to the market opportunity?
Speaker Change: It's a great question. We see things are happening very slowly in the U.S.
Speaker Change: We don't see too many competitors moving forward, although everybody knows where the market is going. Because it requires significant CapEx, it requires committed customers.
So, we've pulled up our plans. I guess...
Speaker Change: So far by 14 or 15 months and it could be it could be more because we're not going to supply cathode material before the cell cell factories are ready to produce
Speaker Change: So that is the timing that is necessary. Some of that in the U.S. has to do with the adaptation to non-Chinese technology, which is not trivial. There are not a lot of competitors out there that are able to do that at this point.
Speaker Change: I think in Europe they actually started slower, but things may move faster.
because Europe is keen on allowing the Chinese to...
to be involved, and they're not excluding Chinese technology, so...
Speaker Change: For us, for example, the safest way is to partner with the number two player in the world, Beninani.
Speaker Change: and go after the European market. So we may end up going after the European market faster than we originally expected and the U.S. market moves slower than we
And if I may just, um, can you, go ahead.
Speaker Change: No, no, Lawrence, go ahead, Saviram, if you have another follow-up on the LFP side and ask it and then I'll try to answer it.
Speaker Change: So it was just I just wanted to touch on kind of the investment cycle for you, if you know for you from going from the decision to go ahead with a new
Speaker Change: Trash of LFP capacity to being fully qualified and commercial. Can you give a sense for what that time frame is? Compared to the time frame it takes for the customer
Speaker Change: to convert their capacity to be able to use your non-Chinese supply? And in other words, is your investment loop short or longer than the customer's decision, qualification, warranty loop?
Do you see what I'm getting at?
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Speaker Change: Yes I do and I think the answer is that for customers that are already in the market and producing cells
Speaker Change: The cycle is much shorter than some of the very large OEMs that have not done that yet. So the question is, who is the customer? The timing, once you have the technology and you have a qualified...
You have a qualified product.
Speaker Change: It takes anywhere between 18 to 36 months in order to have a
Speaker Change: production set up after after all the testing and the ramp up and everything else.
Speaker Change: And it may be shorter with an experienced customer and longer with a non-experienced customer.
Speaker Change: and also longer if you're using new technology versus proven technology. So obviously to set up a new plant based on most advanced technology, partnering with Dynanonik is...
Speaker Change: is less complicated than setting up a new plant with new technology that's working for the first time in the world.
Thank you.
some degree more complicated, because currently...
the non-Chinese car manufacturers
Speaker Change: are not having a great success, you know, one after the other. And there are many reasons. First of all, it is obviously the cost point, the points that they can sell. Second is they're still trying to retrofit.
Speaker Change: existing gasoline or diesel cars into electric, whereas the Chinese basically built a car around a computer and battery. And I believe, if you look at the whole ecosystem,
of the non-Chinese car manufacturers.
what they would have to do in order to survive.
Please take a fresh look at the full design.
Speaker Change: And therefore, I believe that now it's up to Raviv to look left and right.
Speaker Change: What we need to do is obviously do all the preparatory steps in order to have the shortest way once we decide to go to manufacture, but other than that be very watchful, what is our entry point when we start putting in the big dollars, and this is exactly what we're
Speaker Change: And as far as the U.S. is concerned, just so we don't get fixated on EVs, stationary storage is our primary opportunity and also from the perspective of the expected timetable.
Perfect. Thank you. Thank you for the extra detail.
Thank you.
Speaker Change: There are no further questions at this time. I will now turn the call over to Raviv Zoller for closing remarks.
Okay, so...
Raviv Zoller: I want to thank you for joining us again for our conference call and ICL is entering 2025 in a good way. Some of our markets are stabilized and some of our markets are looking up.
Raviv Zoller: The war situation is more or less behind us and we're getting back to normal.
Raviv Zoller: We're going through a management transition and it looks like we've managed through it in a good way.
Speaker Change: I'm very proud to give the reigns over to our very talented Elad Aronson, and I suggest that in order to start your tradition, maybe you'll finish this conference call thanking our employees and, of course, introducing yourself.
Elad Aronson: saying a few words. So please Elad and thanks to all of you for it was it's been great working with you and ICO is a great company. It's a privilege to be part of it and it's a privilege to launch yours.
Elad Aronson: Thank you, Raviv, and hello everyone. I'm happy to be here, happy and excited to be here. I'm with ICL for the last four years, mainly main focus on fertilizer.
Those days I'm in my learning phase, on-boarding process.
Elad Aronson: which will be completed soon. I'd like to take this opportunity to thank Raviv for the significant transformation ICL has undergone under his leadership.
and specifically for the support you provided to me
also in this onboarding phase.
Elad Aronson: And my last comment is to say thank you very much for the entire ICL employees all across the globe which are responsible for those results and I'll be with you in the next quarter. Thank you.
Thank you very much.
Speaker Change: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.
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