ITAFOS REPORTS RECORD Q1 2022 RESULTS, UPDATES FULL-YEAR 2022 GUIDANCE Q1 2022 Key Highlights revenues of $149.9 million adjusted EBITDA of $60.4 million net income of $33.0 million basic earnings of C$0.22/share
News Release
ITAFOS REPORTS RECORD Q1 2022 RESULTS, UPDATES FULL-YEAR 2022 GUIDANCE
Q1 2022 Key Highlights
revenues of $149.9 million
adjusted EBITDA of $60.4 million
net income of $33.0 million
basic earnings of C$0.22/share
free cash flow of $54.4 million
Revised FY 2022 Guidance
adjusted EBITDA guidance of $210-230 million
net income guidance of $80-95 million
basic earnings guidance of C$0.55-0.65/share
maintenance capex guidance of $15-23 million
growth capex guidan ce of $15-22 million
free cash flow guidance of $150-165 million
CEO Commentary
“We are pleased to report record performance during the first quarter of 2022 in terms of safety and financial results along
with continued strong operational performance. We recorded $150 million of revenues and $60 million of adjusted EBITDA
for the quarter and cont inued strong production out of our Conda facility. In addition, we made great progress toward
deleveraging our balance sheet, having paid down $40 million of debt during the quarter,” said G. David Delaney, CEO of
Itafos.
“We have updated our full-year guidance for 2022 to reflect the continued strength of the business and strong fundamentals
in the agriculture and phosphate fertilizer markets. Finally, we remain focused on 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 – May 12, 2022 – Itafos Inc. (TSX-V: IFOS) (the “Company ”) reported today its Q1 2022 financial and
operational highlights. The Company’s financial statements and management’s discussion and analysis and annual
information form for the three months ended March 31, 2022 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.
Q1 2022 Market Highlights
DAP NOLA prices averaged $794/st in Q1 2022 compared to $498/st in Q1 2021, up 60% year-over-year driven by strong
agriculture and phosp hate fertilizer market supply and demand dynamics. Specif ic factors driving the year-over-year
improvements in DAP NOLA were as follows:
limited phosphate fertilizer supply capacity additions;
strong phosphate fertilizer demand underpinned by global coarse 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;
continued drawdown of global pho sphate fertilizer inventory levels;
increased restrictions and controls on exports of phosphates fertilizers from China; and
disruptions to fertilizer and fertiliz er raw materials supply from Russia fo llowing sanctions imposed by certain
countries following the Ukraine invasion.
Q1 2022 Financial Highlights
The Company’s revenues, adjusted EBITDA, net income, basic ea rnings per share and free cash flow were all up in Q1
2022 compared to Q1 2021 as follows:
TSX-V: IFOS
revenues of $149.9 million in Q1 2022 compared to $90.1 million in Q1 2021;
adjusted EBITDA of $60.4 million in Q1 2022 compared to $20.6 million in Q1 2021;
net income of $33.0 million in Q1 2022 compared to $1.9 million in Q1 2021;
basic earnings of C$0.22/share in Q1 2022 compared to C$0.01/share in Q1 2021; and
free cash flow of $54.4 million in Q1 2022 compared to $14.7 million in Q1 2021.
The Company’s total capex spend in Q1 2022 was $5.3 million compared to $2.8 million in Q1 2021 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.
March 31, 2022 Net Debt and Liquidity Highlights
As at March 31, 2022, the Company had net debt of $174.2 million compared to $217.7 million at the end of 2021 with the
decrease primarily due to principal payments under the Co mpany’s secured term loan (the “Term Loan”) and Conda’s
secured working capital facility (the “Conda ABL”) and higher cash and cash equivalents. The Company’s net debt as at
March 31, 2022 was comprised of $37.0 million in cash and $211. 2 million in debt (gross of deferred financing costs). For
the three months ended March 31, 2022, the Company repaid $39.8 million of debt, including $34.6 million of principal under
the Term Loan and $5.0 million cash drawn under the Conda ABL.
As at March 31, 2022, the Company had liquidity of $44.2 m illion comprised of $37.0 million in cash and $7.2 million in
Conda ABL undrawn borrowing capacity.
Q1 2022 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 env ironmental releases and one recordable incident, which
resulted in a consolidated TRIFR of 0.39, representing a new Company record; and
received national recognition during the 87th North Amer ican Wildlife and Natural Resources Conference as the
Bureau of Land Management awarded the Conservation Leadership Partner Award to the Southeast Idaho Habitat
Mitigation Fund, which was developed and funded by Conda.
Conda
produced 89,096 tonnes P 2O5 in Q1 2022 compared to 89,355 tonnes P 2O5 in Q1 2021, which remained largely
consistent;
generated revenues of $147,530 in Q1 2022 compared to $90, 142 in Q1 2021 with the increase primarily due to
higher realized prices and slightly higher sales volumes;
generated adjusted EBITDA of $64,388 in Q1 2022 compared to $24,122 in Q1 2021 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 $49,735 in Q1 2022 compared to $14,764 in Q1 2021 with the increase primarily due to the
same factors that resulted in higher adjusted EBITDA and higher other income due to a settlement with insurers on
a business interruption claim related to the 2020 disruption in sulfuric acid supply, which were partially offset by
higher income tax expenses;
reached a settlement with insurers on a business interruption claim related to the 2020 disruption in sulfuric acid
supply to Conda, which resulted in receipt of net insurance proceeds of $8,675;
posted incremental letters of credit of $3,663 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.
Q1 2022 Other Highlights
Also during Q1 2022, 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 May 2022; and
continued evaluation of strategic altern atives for non-North American assets.
Subsequent Events
Subsequent to March 31, 2022, the Company:
announced the appointment of Stephen Shapiro and Isai ah Toback to the Company’s Board of Directors. Mr.
Toback replaces Rory O’Neill as a nominee to the Company’s Board of Directors by its principal shareholder, CL
Fertilizers Holding LLC (“CLF”);
purchased mining equipment at Conda in exchange for a note payable of $3,930;
reached a settlement agreement related to shared environm ental and asset retirement obligations at Conda’s Lanes
Creek mine;
granted 187,955 restricted share units (“RS Us”) to management under its RSU plan; and
received an assessment from the Dutch tax authorities of EUR 1,730 (approximately $1,834) for 2016 income taxes
related to its Dutch holding structure for the Company’s Brazilian subsidiaries. The Company intends to defend and
vigorously appeal the tax assessment.
Market Outlook
The Company expects the current strengt h in the global agriculture and phosphate fertilizer fundamentals to continue.
Accordingly, the Company expects continued strength in pricing and volume fundamentals in the phosphate fertilizer
markets during the remainder of 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 phosphate fertilizer inventory levels;
no significant phosphate fertilizer supply capacity additions;
stable phosphate fe rtilizer demand; and
reduced phosphate fertilizer exports from Russia and China.
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 phosphate fertiliz er inventory to historical levels;
moderate decrease of phosphate fertilizer demand;
increase of phosphate fertilizer supply from existing capacity maximizing run-rates; and
moderate increase of phosphate fe rtilizer exports from Russia and Chi na upon easing of sa nctions and export
restrictions, respectively.
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 2022, for as long as the
natural gas prices remain elevated and exports from Russia and Ukraine are significantly reduced.
Financial Outlook
The Company’s revised guidance for 2022 is as follows:
(in millions of US Dollars
except as otherwise noted) H1 2022 H2 2022 FY 2022
Adjusted EBITDA $ 120‐130 $ 90‐100 $ 210‐230
Net income 55‐65 25‐30 80‐95
Basic earnings (C$/share) 0.38‐0.44 0.17‐0.21 0.55‐0.65
Maintenance capex 11‐14 4‐9 15‐23
Growth capex 11‐13 4‐9 15‐22
Free cash flow 90‐95 60‐70 150‐165
The Company increased the lower end of its guidance range for FY 2022 as follows:
adjusted EBITDA guidance of $210-230 million (previously $190-230 million) to reflect the Company’s view of H2
2021 prices and input costs at Conda, including the current DAP NOLA prices (100% of Conda’s MAP is sold under
a long-term offtake agreement with pricing indexed to DAP NOLA on an average three-month trailing basis);
net income guidance of 80-95 million (previously $65-95 million) to reflect the revised adjusted EBITDA guidance;
basic earnings guidance of C$0.55-0.65/share (previous ly C$/0.44-0.65/share) to reflect the revised adjusted
EBITDA guidance;
maintenance capex guidance of $15- 23 million (previously $13-23 million);
growth capex guidance of $15-22 million (previously $12-22 million); and
free cash flow guidance of $150-165 million (previously $135-165 million) to reflect the revised adjusted EBITDA
guidance.
In preparing its revised guidance for 2022, the Company increased its assumption for expected average DAP NOLA during
2022 to $800-875/st (previously $690-750/st).
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 mine and fertilizer plant project located in Pará, Brazil; and
Araxá – a vertically integrated rare earth elements and niobium mine and extraction plant project located in Minas
Gerais, Brazil.
In addition to the businesses and projects described above, the Company also owns Paris Hills (Idaho, US) and Mantaro
(Junin, Peru), which are phosphate mine project that are in process of being wound down.
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”. Th e Company’s principal shareholder is 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 and capitalized interest;
“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 defer red financing costs (does not consider lease liabilities);
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”);
Husky 1/North Dry Ridge (“H1/NDR”);
Hydrofluorosilicic acid (“HFSA”);
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:
George Burdette
Itafos Investor Relations
713-242-8446