ITAFOS REPORTS RECORD 2021 RESULTS, EXPECTS CONTINUED STRENGTH IN 2022 Q4 2021 Key Highlights revenues of $116.8 million adjusted EBITDA of $47.9 million net income of $24.3 million basic earnings of C$0.16/share
News Release
ITAFOS REPORTS RECORD 2021 RESULTS, EXPECTS CONTINUED STRENGTH IN 2022
Q4 2021 Key Highlights
revenues of $116.8 million
adjusted EBITDA of $47.9 million
net income of $24.3 million
basic earnings of C$0.16/share
free cash flow of $28.8 million
FY 2021 Key Highlights
revenues of $413.2 million
adjusted EBITDA of $143.4 million
net income of $51.4 million
basic earnings of C$0.35/share
free cash flow of $71.3 million
FY 2022 Guidance
adjusted EBITDA of $190-230 million
net income of $65-95 million
basic earnings of C$0.44-0.65/share
maintenance capex of $13-23 million
growth capex of $12-22 million
free cash flow of $135-165 million
CEO Commentary
“We made great progress in reshaping the fundamentals of our company during 2021, which resulted in record operational
and financial performance, including full year revenues of $413.2 million, adjusted EBITDA of $143.4 million and world class
safety metrics. We are looking to continue to build upon t he foundation laid in 2021 with further improved financial and
operational performance in 2022, aided by rising prices and solid volume demand in the markets in which we participate,”
said G. David Delaney, CEO of Itafos.
“Our full-year guidance for 2022 reflects the continued strength of the business and our expectations of increasingly strong
fundamentals in the agriculture and phosphate fertilizer markets. In 2022, we will cont inue to focus on our key priorities of
deleveraging the balance sheet with cash flows from the business, extending Conda’s current mine life through permitting
and development of H1/NDR and evaluating strategic alternatives for our non-North American assets.”
HOUSTON, TX – March 24, 2022 – Itafos Inc. (TSX-V: IFOS) (the “Company”) reported today its Q4 and full year (“FY”)
2021 financial and operational highlights. The Company’s financial statements, management’s discussion and analysis and
annual information form for the year ended December 31, 2021 are available under the Company’s profile at
www.sedar.com and on the Company’s website at www.itafos.com. All figures are in thousands of US Dollars except as
otherwise noted.
Q4 and FY 2021 Market Highlights
DAP NOLA prices averaged $715/st in Q4 2021 compared to $368/st in Q4 2020, up 94% year-over-year driven by strong
agriculture and phosphate fertilizer market supply and demand dynamics. Similarly, DAP NOLA prices averaged $602/st in
FY 2021 compared to $312/st in FY 2020, up 93% year-over-year. Specific factors driving the year-over-year improvements
in DAP NOLA were as follows:
no significant phosphate fertilizer supply capacity additions in co mbination with lower pr oduction from existing
capacity (due to both planned maintenance and unplanned di sruptions), which resulted in continued drawdown of
TSX-V: IFOS
global phosphate fertilizer inventory levels;
strong phosphate fertilizer demand underpinned by global co arse grains and oilseeds at multi-year low stocks-to-
use ratios and the highest prices in nearly a decade, supporting demand and fertilizer relative affordability; and
increased restrictions and controls on exports of phosphates fertilizers from China and Russia.
Q4 2021 Financial Highlights
The Company’s revenues, adjusted EBITDA, net income, basic earnings per share and free cash flow were all up in Q4
2021 compared to Q4 2020 as follows:
revenues of $116.8 million in Q4 2021 compared to $75.1 million in Q4 2020;
adjusted EBITDA of $47.9 million in Q4 2021 compared to $4.8 million in Q4 2020;
net income (loss) of $24.3 million in Q4 2021 compared to $(9.4) million in Q4 2020;
basic earnings (loss) of C$0.16/share in Q4 2021 compared to C$(0.07) in Q4 2020; and
free cash flow of $28.8 million in Q4 2021 compared to $5.6 million in Q4 2020.
The Company’s total capex spend in Q4 2021 was $6.3 million compared to $3.9 million in Q4 2020 with the increase
reflecting activities related to the initiative to produce and sell HFSA at Conda, timing of maintenance projects at Conda and
the sulfuric acid restart at Arraias.
FY 2021 Financial Highlights
The Company’s revenues, adjusted EBITDA, net income, basic ear nings per share and free cash flow were all up in FY
2021 compared to FY 2020 as follows:
revenues of $413.2 million in FY 2021 compared to $260.2 million in FY 2020;
adjusted EBITDA of $143.4 million in FY 2021 compared to $15.0 million in FY 2020;
net income (loss) of $51.4 million in FY 2021 compared to $(62.3) million in FY 2020;
basic earnings (loss) of C$0.35/share in FY 2021 compared to C$(0.46)/share in FY 2020; and
free cash flow of $71.3 million in FY 2021 compared to $(10.3) million in FY 2020.
The Company’s total capex spend in FY 2021 was $34.8 million compared to $15.2 million in FY 2020 with the increase
reflecting the completion of a full scope plant turnar ound at Conda during June 2021 (compared to a reduced scope
turnaround in 2020), activities related to the initiative to pr oduce and sell HFSA at Conda and the sulfuric acid restart at
Arraias.
Debt Refinancing
On August 25, 2021, the Company announced that it closed a three-year $205 million secured term loan (the “Term Loan”).
The proceeds of the Term Loan were used to repay the Company’s existing secured term credit facility (the “Credit Facility”)
and to pay related transaction costs and fees. In connection with the closing of the Term Loan, the Company also completed
an amendment to its existing secured working capital facilit y at Conda (the “Conda ABL”) to increase the commitment
amount from $20 million to $40 million and extend the term, among other modifications as detailed below. Also in connection
with the closing of the Term Loan, the Company complet ed an amendment to its existing unsecured and subordinated
promissory note (the “Promissory Note”) to cancel the remaining availability and extend the term, among other modifications.
December 31, 2021 Net Debt and Liquidity Highlights
As at December 31, 2021, the Company had net debt of $217.7 million compared to $233.9 million at the end of 2020 with
the decrease primarily due to higher cash and cash equival ents. The Company’s net debt as at December 31, 2021 was
comprised of $31.6 million in cash and $249.3 million in debt (gross of deferred financing costs).
As at December 31, 2021, the Company had liquidity of $37.4 million comprised of $31.6 million in cash and $5.9 million in
Conda ABL undrawn borrowing capacity.
Q4 2021 Operational Highlights
EHS
continued corporate-wide risk mitigation measures to address potential impacts to employees, contractors and
operations as a result of the COVID-19 pandemic resulting in no material impact on operations;
sustained EHS excellence, including no reportable en vironmental releases or recordable incidents; and
published the inaugural ESG report.
Conda
experienced a disruption in sulfuric acid supply from it s primary supplier from the end of September 2021 to mid-
November 2021;
produced 137,628 tonnes in Q4 2021 compared to 145,665 tonn es in Q4 2020 with the increase primarily due to a
disruption in sulfuric acid supply;
generated revenues of $116,784 in Q4 2021 compared to $75, 055 in Q4 2020 with the increase primarily due to
higher realized prices, which were partially offset by lower sales volumes due to a disruption in sulfuric acid supply;
generated adjusted EBITDA of $52,849 in Q4 2021 compared to $7,322 in Q4 2020 with the increase primarily due
to the same factors that resulted in higher revenues and lower input costs (due to lower sales volumes);
recorded net income of $34,914 in Q4 2021 compared to $1 90 in Q4 2020 with the increase primarily due to the
same factors that resulted in higher adjusted EBITDA and lower depreciation and depletion, which were partially
offset by higher finance and income tax expenses;
realized a reduction in guarantee requirements from $85, 080 to $77,739 as part of standard regulatory reviews by
the respective governmental agencies;
placed incremental surety bonds of $10,191 to guarantee obligations under existing operating and environmental
permits;
posted incremental letters of credit of $4,560 under the Conda ABL as collateral for surety bonds that guarantee
obligations under existing operating and environmental permits;
advanced activities related to the extension of Con da’s mine life through permitting and development of H1/NDR,
including progression of the NEPA EIS preparation and public engagement process; and
advanced activities related to the opt imization of Conda’s EBITDA generation.
FY 2021 Operational Highlights
EHS
continued corporate-wide risk mitigation measures to address potential impacts to employees, contractors and
operations as a result of the COVID-19 pandemic resulting in no material impact on operations;
sustained EHS excellence, including no reportable envir onmental releases and three recordable incidents, which
resulted in a consolidated TRIFR of 0.41; and
published the inaugural ESG report.
Conda
completed a full scope plant turnaround at Conda during June 2021, including certain activities that had been
deferred following the Company’s decision to conduct a reduced scope plant turnaround in 2020 as part of
Company’s COVID-19 risk mitigation measures;
experienced a disruption in sulfuric acid supply from it s primary supplier from the end of September 2021 to mid-
November 2021;
produced 536,603 tonnes in FY 2021 com pared to 516,480 tonnes in FY 2020 with the increase primarily due to a
longer disruption in sulfuric acid supply in 2020 than in 2021, which was partially offset by the completion of a full
scope plant turnaround at Conda during June 2021 compared to a reduced scope plant turnaround in 2020;
generated revenues of $413,247 in FY 2021 compared to $255, 524 in FY 2020 with the increase primarily due to
higher realized prices, which were partially offset by lower sales volumes;
generated adjusted EBITDA of $160,582 in FY 2021 compar ed to $34,336 in FY 2020 with the increase primarily
due to the same factors that resulted in higher revenues, which were partially offset by higher input costs;
recorded net income of $102,794 in FY 2021 compared to $2,818 in FY 2020 with the increase primarily due to the
same factors that resulted in higher adjusted EBITDA and lower depreciation and depletion, which were partially
offset by higher finance and income tax expenses;
realized an increase in guarantee requirements from $39,75 7 to $77,739 as part of standard regulatory reviews by
the respective governmental agencies;
placed incremental surety bonds of $37,982 to guarantee obligations under existing operating and environmental
permits;
amended the Conda ABL to increase the commitment amount from $20,000 to $40,000 and extend the term;
posted incremental letters of credit of $21,179 under t he Conda ABL as collateral for surety bonds that guarantee
obligations under existing operating and environmental permits;
advanced activities related to the extension of Con da’s mine life through permitting and development of H1/NDR,
including progression of the NEPA EIS preparation and public engagement process; and
advanced activities related to the opt imization of Conda’s EBITDA generation.
FY 2021 Other Highlights
Also during FY 2021, the Company:
completed a redomiciliation from the Cayman Islands to the US;
advanced the recommissioning of the previously idled sulfuric acid plant at Arraias; and
continued evaluation of strategic alte rnative for non-North American assets.
Subsequent Events
Subsequent to December 31, 2021, the Company:
announced the resumption of sulfuric acid production and sales at Arraias during February 2022. Subsequent to
the restart, the Company decided in March 2022 to conduct further maintenance activities at the sulfuric acid plant,
which are expected to be completed in April 2022;
reached a settlement with insurers on a business interrupti on claim related to the 2020 disruption in sulfuric acid
supply to Conda, which resulted in receipt of net insurance proceeds of $8,675;
received national recognition during the 87th North Amer ican Wildlife and Natural Resources Conference as the
Bureau of Land Management awarded the Conversation Leadership Partner Award to the Southeast Idaho Habitat
Mitigation Fund, which was developed and funded by Conda;
posted incremental letters of credit of $3,663 under the Conda ABL as collateral for Conda’s surety bonds that
guarantee obligations under existing operating and environmental permits; and
granted 1,251,799 restricted share units (“RSUs”) under its RSU plan, including 105,724 RSUs granted to directors,
466,251 RSUs granted to management and 679,824 RSUs granted to employees and contractors.
Market Outlook
The Company expects the current strength in the global agr iculture and phosphate fertilizer fundamentals to continue in
2022. Accordingly, the Company expects continued strength in pricing and volume fundamentals in the phosphate fertilizer
markets during H1 2022, followed by a moderate softening of prices during H2 2022.
Specific factors the Company expects to influence the continue d strength in the global phosphate fertilizer markets during
H1 2022 are as follows:
low global inventory levels at the start of 2022;
no significant phosphate fertilizer supply capacity additions;
stable phosphate fertilizer demand;
reduced supply from Russia and glob al disruption of fertilizer raw materi als supply chains following Russia’s
invasion of Ukraine; and
China’s decision to severely restrict phosphate fertilizer exports through at least June 2022.
Specific factors the Company expects to influence the moderate softening of the global phosphate fertilizer markets during
H2 2022 are as follows:
return of global inventory to historical levels;
increase of phosphate fertilizer supply from existing capacity maximizing run-rates; and
increase of phosphate fertilizer exports fr om China upon easing of export restrictions.
The Company expects sulfur and sulfuric acid prices to remain at high levels globally due to solid demand from phosphates
and metals consumers. The Company expects ammonia prices to also remain at high levels during H1 2022 (due to supply
disruption from Ukraine and production shutdowns linked to hi gher natural gas prices in Europe), followed by a moderate
softening during H2 2022.
Financial Outlook
The Company’s guidance for 2022 is as follows:
(in millions of US Dollars
except as otherwise noted) H1 2022 H2 2022 FY 2022
Adjusted EBITDA $ 110‐120 $ 80‐110 $ 190‐230
Net income 50‐60 15‐35 65‐95
Basic earnings (C$/share) 0.34‐0.41 0.10‐0.23 0.44‐0.65
Maintenance capex 9‐14 4‐9 13‐23
Growth capex 8‐13 4‐9 12‐22
Free cash flow 95‐105 40‐60 135‐165
In developing its guidance for 2022, the Company considered the following:
Conda production and sales at capacity with plann ed maintenance during June 2022 (short turnaround) and
advancement of growth activities, including extendi ng Conda’s mine life through permitting and development of
H1/NDR and advancing EBITDA optimization initiatives;
Arraias production and sales of sulfuric acid with a base load capacity of 10.5kt per month (remainder of operations
remain idled);
development and exploration segment activities, includi ng maintaining Farim at construction ready state,
maintaining the integrity of the concessions of Santana and Araxá and advancing the wind down of Paris Hills and
Mantaro; and
corporate segment activities, including selling, general and administrative expenses and debt service.
The assumptions considered by the Company in preparing its guidance for 2022 are as follows:
latest market outlook for pricing and key input s, including expected average DAP NOLA during 2022 of
approximately $690-750/st;
Canadian Dollar to US Dollar exchange rate of C$1.3 to $1; and
vesting of shares in accordance with the Company’s restricted share unit plan (the “RSU Plan”), which is expected
to result in approximately 190 million basic shares outstanding as at December 31, 2022.
Business Outlook
The Company continues to focus on the following key objectives to drive long-term value and shareholder returns:
improving financial and operational performance;
deleveraging the balance sheet;
extending Conda’s current mine life through permitting and development of H1/NDR;
evaluating strategic alternatives for non-North American assets; and
maintaining capital-lite investment approach.
About Itafos
The Company is a phosphate and specialty fertilizer company. The Company’s businesses and projects are as follows:
Conda – a vertically integrated phosphate fertilizer busi ness with production capacity of approximately 550kt per
year of monoammonium phosphate (“MAP”), MAP with micr onutrients (“MAP+”), superphosphoric acid (“SPA”),
merchant grade phosphoric acid (“MGA”) and ammonium polyphosphate (“APP”) located in Idaho, US;
Arraias – a vertically integrated phosphate fertilizer bu siness with production capacity of approximately 500kt per
year of single superphosphate (“SSP”), SSP with micronutrients (“SSP+”) and approximately 40kt per year of excess
sulfuric acid (220kt per year gross sulfuric acid production capacity) located in Tocantins, Brazil;
Farim – a high-grade phosphate mine project located in Farim, Guinea-Bissau;
Santana – a vertically integrated high-grade phosphate mi ne and fertilizer plant project located in Pará, Brazil;
Araxá – a vertically integrated rare earth elements and niobium mine and extraction plant project located in Minas
Gerais, Brazil;
Paris Hills – a phosphate mine project located in Idaho, US (wind down in process); and
Mantaro – a phosphate mine project located in Junin, Peru (wind down in process).
The Company is a Delaware corporation that is headquartere d in Houston, TX. The Company’s shares trade on the TSX
Venture Exchange (“TSX-V”) under the ticker symbol “IFOS”. The Company’s principal shareholder is CL Fertilizers Holding
LLC (“CLF”). CLF is an affiliate of Castlelake, L.P., a global private investment firm.
For more information, or to join the Company’s mailing list to receive notification of future news releases, please visit the
Company’s website at www.itafos.com.
Non-IFRS Financial Measures
The Company considers both IFRS and certain non-IFRS me asures to assess performance. Non-IFRS measures are a
numerical measure of a company’s performance, that either include or exclude am ounts that are not normally included or
excluded from the most directly comparable IFRS measures. In evaluating non-IFRS measures, investors, analysts, lenders
and others should consider that non-IFRS measures do not have any standardized meaning under IFRS and that the
methodology applied by the Company in calculating such non-IFRS measures may differ among companies and analysts.
The Company believes the non-IFRS measures provide useful supplemental information to investors, analysts, lenders and
others in order to evaluate the Company’s operational and fi nancial performance. These non-IFRS financial measures
should not be considered as a substitute for, nor superior to , measures of financial performance prepared in accordance
with IFRS.
Non-IFRS measures included in this news release are defined as follows:
“EBITDA” as earnings before interest, ta xes, depreciation, depletion and amortization;
“Adjusted EBITDA” as EBITDA adjusted for non-cash, extr aordinary, non-recurring and other items unrelated to the
Company’s core operating activities;
“Total capex” as additions to property, plant, and equipment and mineral properties adjusted for additions to asset
retirement obligations, additions to right of use assets, capitalized interest and technical studies;
“Maintenance capex” as portion of total capex re lating to the maintenance of ongoing operations;
“Growth capex” as portion of total capex rela ting to development of growth opportunities;
“Cash growth capex” as growth capex less accrued growth capex;
“Free cash flow” as cash flows from operating activities , which excludes payment of interest expense, plus cash
flows from investing activities less cash growth capex;
“Net debt” as debt less cash and cash equivalents plus deferred financing costs; and
“Liquidity” as cash and cash equivalent s plus undrawn committed borrowing capacity.
Reconciliations of non-IFRS meas ures to the most directly comparable IF RS measures are included in the Company’s
management’s discussion and analysis available under the Company’s profile at www.sedar.com and on the Company’s
website at www.itafos.com.
Other Defined Terms
Other defined terms included in this news release are as follows:
Coronavirus disease 2019 (“COVID-19”);
Diammonium phosphate (“DAP”) New Orleans (“NOLA”); and
Environmental, Health and Safety (“EHS”)
Environmental Impact Statement (“EIS”);
Environmental, social and governance (“ESG”)
Husky 1/North Dry Ridge (“H1/NDR”);
Hydrofluorosilicic acid (“HFSA”);
Magnesium oxide (“MgO”);
National Environmental Policy Act (“NEPA”);
Total recordable incident frequency rate (“TRIFR”).
Forward-Looking Information
Certain information contained in this news release constitute s forward-looking information. All information other than
information of historical fact is forward-looking information. Statements that address activities, events or developments that
the Company believes, expects or anticipates will or may occu r in the future include, but are not limited to, statements
regarding estimates and/or assumptions in respect of t he Company’s financial and business outlook are forward-looking
information. The use of any of the words “intend”, “anticipate”, “plan”, “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 ri sks, uncertainties and other fa ctors that may cause actual
results or events to differ materially from those anticipated in such forward-looking information. No assurance can be given
that this information 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 materially from that anticipated by such forward-looking information. Although the Company has attempted to identify
important factors that could cause actual results to differ ma terially from those contained in forward-looking statements,
there may be other factors that cause results not to be as anticipated, estimated or intended. Factors that may cause actual
results to differ materially from expected results described in forward-looking statements include, but are not limited to, the
duration and spread of the COVID-19 pandemic and its severity; uncertainties of estimates of capital and operating costs
and production estimates; the ability of the Company to m eet its financial obligations and minimum commitments, fund
capital expenditures and comply with covenants contained in the agreements that govern in debtedness; fluctuations in
foreign exchange or interest rates and stock market volatility; the continued supply of sulfuric acid to Conda from its primary
supplier and those risk factors set out in the Company’s annual information form and other disclosure documents available
under the Company’s profile at www.sedar.com and on the Company’s website at www.itafos.com. Readers are cautioned
that the foregoing list of risks, uncertainties and assumptions are not exhaustive. The forward-looking information included
in this news release is expressly qualified by this cautionary statement and is made as of the date of this news release. The
Company undertakes no obligation to publicly update or revise any forward-looking information except as required by
applicable securities laws.
This news release contains future oriented financial inform ation and financial outlook information (together, “FOFI”) about
the Company’s prospective results of operations, including statements regarding expected adjusted EBITDA, net income,
basic earnings per share, maintenance capex, growth capex and free cash flow. FOFI is subject to the same assumptions,
risk factors, limitations and qualificatio ns as set forth in the above paragraph. The Company has included the FOFI to
provide an outlook of management’s expectations regarding anticipated activities and results, and such information may
not be appropriate for other pur poses. The Company and management believe that the FOFI has been prepared on a
reasonable basis, reflecting management’s reasonable estimates and judgements; however, ac tual results of operations
and the resulting financial results may vary from the amounts set forth herein. Any financial outlook information speaks only
as of the date on which it is made and the Company underta kes no obligation to publicly update or revise any financial
outlook information except as required by applicable securities laws.
NEITHER THE TSX-V NOR ITS REGULATION SERVICES PROVIDER (AS THAT TERM IS DEFINED IN THE POLICIES
OF THE TSX-V) ACCEPTS RESPONSIBILITY FOR THE ADEQUACY OR ACCURACY OF THIS NEWS RELEASE.
For further information, please contact:
Itafos Investor Relations
www.itafos.com