Itafos Reports Q3 2018 Financial Results and Operational Highlights
ITAFOS REPORTS Q3 2018 FINANCIAL RESULTS AND OPERATIONAL HIGHLIGHTS
TORONTO, ON – November 15, 2018 – Itafos (TSX VENTURE: IFOS) (the “ Company”) reported
today its Q3 2018 financial results and operati onal highlights. The Financial Statements and
Management Discussion and Analysis for the quarte r ended September 30, 2018 are available
under the Company’s profile at www.sedar.com and under the Investors – Financial Statements
page of the Company’s website, www.itafos.com. All dollar values are in US Dollars.
“Our Q3 2018 results were anchored by t he continued solid operational and commercial
performance at Itafos Conda and strengthening p hosphate fertilizer prices . Itafos Conda generated
Adjusted EBITDA of $12.9 million in Q3 2018 and has generated $45.9 million since we acquired the
business on January 12, 2018. Despit e having achieved commercial production in Q3 2018, Itafos
Arraias experienced operational c hallenges resulting in lower t han optimal levels of capacity
utilization. As is typical in t he ramp-up of new phosphat e fertilizer production, we continue to focus
on improving Itafos Arraias’ operations with particular focus on improving mass yield, P 2O5 recovery
and overall product quality. Finally, we remain focused on advancing our key development initiatives,
including extending the mine life of Itafos Conda and developing our near-term pipeline, which
includes Itafos Paris Hills, Itafo s Husky 1/North Dry Ridge and Itafos Farim.” said Brian Zatarain,
CEO of Itafos.
With Itafos Arraias having achieved commercial production and contributing to revenues in Q3 2018,
the Company generated total reve nues of $76.3 million in Q3 2018, up from $67.2 million in Q2
2018, and $0.0 million in Q3 2017. Q3 2018 net income was $(9.1) million ($(0.06) per fully-diluted
share), compared to $1.4 million in Q2 2018 ($0.01 per fully-diluted share) and $(9.0) million in Q3
2017 ($(0.11) per fully-diluted share). Adjusted EBITDA was $5.4 million in Q3 2018 versus $6.1
million in Q2 2018 and ($6.1 million) in Q3 2017.
Q3 2018 Highlights
Itafos Conda sales included: (i) 64,335 t monoammonium phosphate (“MAP”) at $448/t
average price, (ii) 28,793 t s uperphosphoric acid (“SPA”) at $927/t average price, (iii) 281 t
merchant grade phosphoric acid (“MGA”) at $936/t average price and (iv) 5,988 t ammonium
polyphosphate (“APP”) at $429/t average price.
Itafos Arraias sales included: (i) 89,695 t single superphosphate (“SSP”) at $161/t average
price and (ii) 24,142 t sulfuric acid at $144/t average price.
On July 3, 2018, Itafos Arraias achiev ed commercial production as it completed 30
consecutive days of sustainable production at 75% capacity utilization.
Despite having achieved commercial producti on, Itafos Arraias experienced operational
challenges resulting in lower than optimal le vels of capacity utilizat ion. The Company has
developed and is implementing an efficiency im provement plan (the “Efficiency Improvement
Plan”) at Itafos Arraias, which is intended to address the technical issues underlying such
operational challenges.
Q3 2018 Segment Summary
Itafos Conda
The Company acquired Itafos Conda on January 12, 2018. Q3 2018 revenues were $58.3 million,
down 13% from $67.2 million in Q2 2018 and com pared to $0.0 million in Q3 2017. Revenues
declined quarter-over-quarter primarily driven by $7.2 million in SPA shipments that had not yet been
received by customers as at quarter end, which w ill be recognized in future periods. Operating
income was $11.2 million in Q3 2018, down from $14. 7 million in Q2 2018, ow ing to lower revenues
and resulting lower gross margins; Q3 2017 oper ating income was $0.0 million. Adjusted EBITDA
was $12.9 million in Q3 2018, compared to $17.3 million in Q2 2018 and $0.0 million in Q3 2017.
Itafos Arraias
Itafos Arraias achieved commercial production on July 3, 2018. Q3 2018 revenues were $18.0
million versus $0.0 million in each of Q2 2018 and Q3 2017. Operating income was $(8.5) million in
Q3 2018, compared to $(1.5) million in Q2 2018 and $(2.6) million in Q3 2017. Adjusted EBITDA
was $(4.7) million in Q3 2018, compared to $(1.5) million in Q2 2018 and ($4.0) million in Q3 2017.
Corporate
Corporate SG&A was $2.1 million in Q3 2018, down from $5.9 million in Q2 2018, which included
$3.0 million of advisory fees related to the Itafos Conda acquisition, and slightly above $2.0 million in
Q3 2017.
Liquidity
Cash at September 30, 2018 was $27.2 million, down from $63.7 m illion at December 31, 2017.
Current debt was $0.3 million and l ong-term debt rose to $157. 9 million as compared to $25.5
million, and $0.0 million, respectively, at Dece mber 31, 2017. The incr eased debt is due to the
closing of the $165.0 million secured term credit fa cility in June 2018. The ne t proceeds of the credit
facility are being used to fund wo rking capital and other cash r equirements of Itafos Conda and
Itafos Arraias, as well as continued implement ation of the Company’s business development
initiatives.
Outlook
Currently, the Company is executing its strategy by focusing on the following:
Extending Itafos Conda’s current mine life thr ough finalizing permitting of Itafos Paris Hills
and Itafos Husky 1/North Dry Ridge and pursuing other alternatives;
Integrating and optimizing Itafos Conda;
Implementing the Efficiency Improvement Plan to improve Itafos Arraias’ mass yield, P 2O5
recovery and overall product quality; and
Finalizing permitting, pursuing off-take alter natives, selecting key project contractors and
securing project financing for Itafos Farim.
Additional details are available under the Company’s profile at www.sedar.com and on the
Company’s website, www.itafos.com.
About Itafos
Itafos is a vertically integrated phosphate based fe rtilizers and specialty products company with an
attractive portfolio of long-term strategic businesses located in key fertilizer markets worldwide.
Itafos is managed by an experienced and diverse team with extensive operations, commercial and
financial expertise. Itafos owns and operates Itafos Conda, a vertically integrated phosphate fertilizer
business with production and sales capacity of 550,000 t per year of monoammonium phosphate,
superphosphoric acid, merchant grade phosphoric acid and specialty produc ts including ammonium
polyphosphate located in Idaho, U.S. and Itafos Arraias, a vert ically integrated phosphate fertilizer
business with production and sales capacity of approximately 500,000 t per year of single
superphosphate located in Tocantins, Brazil. Itafos owns and is developing Itafos Paris Hills, a high-
grade phosphate mine project loca ted in Idaho, U.S., Itafos Fari m, a high-grade phosphate mine
project located in Farim, Guinea Bissau, Itafos Santana, a vertically integrated high-grade phosphate
fertilizer project located in Pará , Brazil, Itafos Araxá, a phosphat e and rare earth oxide mine project
located in Minas Gerais, Brazil and Itafos Mantaro, a high-grade phosphate mine project located in
Junin, Peru.
For more information, please visit the Company’s website, www.itafos.com.
Non-IFRS Financial Measures
The Company believes Adjusted EBITDA provides us eful supplemental information to investors,
analysts, lenders and others in order to eval uate the Company’s operational and financial
performance. Adjusted EBITDA does not have any standardized meaning under IFRS and may be
calculated differently by other issuers. The Comp any defines “Adjusted EBITDA” as earnings before
interest, taxes, depreciation and amortization adj usted for non-cash, extraordinary, non-recurring
and other items unrelated to the Company’s core operating activities. T he Company calculates
Adjusted EBITDA from both net income (loss) and operating income (loss). Non-IFRS financial
measures should not be considered as a substitute for, nor s uperior to, measures of financial
performance prepared in accordance with IFRS.
Forward-Looking Statements
Certain information contained in this news releas e constitutes forward l ooking information. All
information other than inform ation of historical fact is forward looking informat ion. The use of any of
the words “intend”, “anticipate”, “p lan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”,
“should”, “would”, “believe”, “predict” and “potential” and similar expressions are intended to identify
forward looking information. This information involves known and unknown risks, uncertainties and
other factors that may cause actual results or events to differ mate rially from thos e anticipated in
such forward looking information. No assurance c an be given that this info rmation will prove to be
correct and such forward looking information included in this news release should not be unduly
relied upon.
Forward looking information is subject to a number of risks and other factors that could cause actual
results and events to vary materia lly from that anticipated by such forward looking information.
Although the Company has attempted to identify import ant factors that could c ause actual results to
differ materially from those contained in forward-l ooking statements, there ma y be other factors that
cause results not to be as antici pated, estimated or int ended. Factors that may cause actual results
to differ materially from expected results described in forward-looking statements include, but are not
limited to, those risk factors set out in t he Company’s Management Discussion and Analysis and
other disclosure documents availabl e under the Company’s profile at www.sedar.com. Readers are
cautioned that the foregoing list of risks, uncertainties and assump tions are not exhaustive. The
forward looking information included in this news re lease is expressly qualifi ed by this cautionary
statement and is made as of the date of this news release. Itafos undertakes no obligation to publicly
update or revise any forward looking information except as required by applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR IT S REGULATION SERVICES PROVIDER (AS
THAT TERM IS DEFINED IN THE POLICIES OF THE TSX VENTURE EXCHANGE) ACCEPTS
RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS RELEASE.
For further information, please contact:
Itafos
Robert Winslow
www.itafos.com
The Blueshirt Group
Gary Dvorchak, CFA
Managing Director
+1 (323) 240-5796