Itafos Reports Strong Q1 2021 Results, Raising Full-Year 2021 Guidance Q1 2021 Key Highlights
News Release
ITAFOS REPORTS STRONG Q1 2021 RESULTS, RAISING FULL-YEAR 2021 GUIDANCE
Q1 2021 Key Highlights
▪ revenues of $90.1 million
▪ adjusted EBITDA of $20.7 million
▪ net income of $1.9 million
▪ free cash flow of $14.8 million
Revised FY 2021 Guidance
▪ increased adjusted EBITDA guidance to $95-105 million
▪ maintained maintenance capex guidance at $20-25 million
▪ increased growth capex guidance to $12-17 million
▪ increased free cash flow guidance to $40-50 million
CEO Commentary
“We delivered excellent operational and financial performance during Q1 2021, generating adjusted EBITDA at Conda of
$24.2 million and $20.7 million on a consolidated basis,” said G. David Delaney, CEO of Itafos. “Our Q1 2021 results
reflect significantly improved market fundamentals and continued strong operational performance at Conda. We expect
these positive trends to continue and have increased our full year guidance for 2021 accordingly.”
“In addition, we continue to advance our plans to optimize the cash returns of the business through capital-lite spending
alternatives and evaluation of strategic alternatives for our assets outside of North America,” added Mr. Delaney.
TORONTO, ON – May 13, 2021 – Itafos (TSX-V: IFOS) (the “Company”) reported today its Q1 2021 financial results and
operational highlights. The Company’s financial statements and management’s discussion and analysis for the three
months ended March 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.
Q1 2021 Market Highlights
DAP NOLA prices averaged $500/st in Q1 2021 compared to $272/st in Q1 2020, up 84% year-over-year driven by strong
agriculture and phosphate fertilizer market supply and demand dynamics. Specific factors driving the year-over-year
improvements were as follows:
▪ no significant phosphate fertilizer supply capacity additions, which resulted in continued drawdown of global
phosphate fertilizer inventory levels;
▪ steady phosphate fertilizer demand growth underpinned by higher global crop prices; and
▪ CVD orders confirmed by the US ITC on phosphate fertilizer imports to the US from Morrocco and Russia.
Q1 2021 Financial Highlights
The Company’s revenues, adjusted EBITDA, net income and free cash flow were all up in Q1 2021 compared to Q1 2020
as follows:
▪ revenues of $90,142 in Q1 2021 compared to $75,361 in Q1 2020;
▪ adjusted EBITDA of $20,658 in Q1 2021 compared to $(788) in Q1 2020;
▪ net income of $1,901 in Q1 2021 compared to net loss of $(18,289) in Q1 2020; and
▪ free cash flow of $14,774 in Q1 2021 compared to $(7,886) in Q1 2020.
TSX-V: IFOS
The Company’s total capex spend in Q1 2021 was $2,823 compared to $3,325 in Q1 2020 with the decrease driven by
timing of activities related to extending Conda’s mine life through permitting and development of H1/NDR and gyp stack
expansion during 2020.
The Company’s net debt at the end of Q1 decreased to $228.3 million from $233.9 million at the end of 2020 with the
decrease primarily a result of higher cash and cash equivalents, which was partially offset by in-kind interest related to the
Credit Facility and Promissory Note.
Q1 2021 Business 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; and
▪ sustained environmental, health and safety excellence, including no environmental releases and one recordable
incident, which resulted in a TRIFR of 0.89.
Conda
▪ generated revenues of $90,142 in Q1 2021 compared to $70,932 in Q1 2020 with the increase primarily due to
higher realized prices, which were partially offset by lower sales volumes due to timing of MAP lifting and lower
SPA production;
▪ produced 145,191 tonnes in Q1 2021 compared to 138,896 tonnes in Q1 2020 with the increase primarily due to
ramp up of MAP+ production and higher APP production, which were partially offset by lower MAP and SPA
production;
▪ generated adjusted EBITDA at Conda of $24,164 in Q1 2021 compared to $8,295 in Q1 2020 with the increase
primarily due to higher realized prices, which were partially offset by lower sales volumes and higher input costs;
▪ recorded net income at Conda of $14,764 in Q1 2021 compared to $955 in Q1 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;
▪ advanced activities related to extending Conda’s mine life through permitting and development of H1/NDR,
including advancement of the NEPA EIS preparation and public engagement process;
▪ advanced activities related to the optimization of Conda’s EBITDA generation, including:
- continuation of the ramp up of MAP+ production and sales volumes,
- advancement of a new initiative to produce and sell HFSA, including completion of a concept study,
initiation of detailed engineering and design and advancement of a potential long-term offtake agreement
(see Financial Guidance below); and
- advancement of the MgO reduction initiative to enhance SPA production, including test work with the use
of enhanced grinding, attrition scrubbing and flotation.
Other Segments
▪ maintained the idling of Arraias following best practices;
▪ maintained Farim at construction ready state while optimizing costs; and
▪ continued corporate-wide cost savings initiatives.
Market Outlook
The Company expects the current global agriculture and phosphate fertilizer fundamentals to remain bullish throughout
the remainder of 2021. Accordingly, the Company has increased its previously provided adjusted EBITDA and free cash
flow guidance for H1, H2 and FY 2021 (see Financial Guidance below). Specific factors the Company expects to
influence the continued strength in the phosphate fertilizer markets are as follows:
▪ no significant phosphate fertilizer supply capacity additions, resulting in continued drawdown of global phosphate
fertilizer inventory levels;
▪ continued strong phosphate fertilizer demand underpinned by global coarse grains and oilseeds reaching multi-
year low stocks-to-use ratios and the highest prices in nearly a decade, the effects of which are expected to
continue beyond the current growing season; and
▪ continued strong pricing and volume fundamentals in the North American phosphate fertilizer markets reflecting
the solid demand fundamentals, depleted inventory levels and higher crop prices.
Financial Guidance
The Company has revised its guidance for 2021 as follows:
(in millions of US Dollars) H1 2021 H2 2021 FY 2021
Adjusted EBITDA $ 45-50 $ 50-55 $ 95-105
Maintenance capex 16-20 4-5 20-25
Growth capex 4-6 8-11 12-17
Free cash flow 20-25 20-25 40-50
The Company’s revised guidance for FY 2021 is explained as follows:
▪ increased adjusted EBITDA guidance to $95-105 million (previously $80-90 million) to reflect the Company’s view
of expected H2 2021 prices 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)
and higher reset prices for SPA;
▪ maintained maintenance capex guidance;
▪ increased growth capex guidance to $12-17 million (previously $8-13 million) to include the capex investment at
Conda to produce and sell HFSA; and
▪ increased free cash flow guidance to $40-50 million (previously $25-35 million) to reflect the increase in adjusted
EBITDA guidance.
Business Outlook
The Company continues to execute on its strategy, which is focused on the following:
▪ advancing capital raising initiatives;
▪ extending Conda’s current mine life through permitting and development of H1/NDR;
▪ optimizing Conda’s EBITDA generation;
▪ maintaining the idling of Arraias following best practices while evaluating strategic alternatives;
▪ maintaining Farim at construction ready state while evaluating strategic alternatives;
▪ maintaining the integrity of the concessions of Santana and Araxá while evaluating strategic alternatives;
▪ advancing the wind down of Paris Hills and Mantaro; and
▪ continuing corporate-wide cost savings initiatives.
About Itafos
The Company is a phosphate and specialty fertilizer platform with strategic businesses and projects located in key
fertilizer markets.
The Company’s businesses and projects are as follows:
▪ Conda – a vertically integrated phosphate fertilizer business with production capacity of approximately 550kt per
year of monoammonium phosphate (“MAP”), MAP with micronutrients (“MAP+”), superphosphoric acid (“SPA”),
merchant grade phosphoric acid (“MGA”) and ammonium polyphosphate (“APP”) located in Idaho, US;
▪ Arraias – a vertically integrated phosphate fertilizer business 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 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;
▪ Araxá – a vertically integrated rare earth elements and niobium mine and extraction plant project located in Minas
Gerais, Brazil;
▪ Paris Hills – a high-grade phosphate mine project located in Idaho, US; and
▪ Mantaro – a phosphate mine project located in Junin, Peru.
The Company’s principal shareholder is CL Fertilizers Holding LLC (“CLF”). CLF is an affiliate of Castlelake, L.P., a global
private investment firm.
The Company’s shares trade on the TSX Venture Exchange (“TSX-V”) under the trading symbol “IFOS”. The Company’s
registered office is at Ugland House, Grand Cayman, Cayman Islands KY1-1104.
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 measures to assess performance. Non-IFRS measures are a
numerical measure of a company’s performance, that either include or exclude amounts 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 financial 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, taxes, depreciation, depletion and amortization;
▪ “Adjusted EBITDA” as EBITDA adjusted for non-cash, extraordinary, 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 relating to the maintenance of ongoing operations;
▪ “Growth capex” as portion of total capex relating 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; and
▪ “Net debt” as debt less cash and cash equivalents plus deferred financing costs.
Reconciliations of non-IFRS measures to the most directly comparable IFRS 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:
▪ Diammonium phosphate (“DAP”) New Orleans (“NOLA”);
▪ Countervailing duty (“CVD”);
▪ International Trade Commission (“ITC”);
▪ Coronavirus disease 2019 (“COVID-19”);
▪ Total recordable incident frequency rate (“TFIFR”).
▪ Husky 1/North Dry Ridge (“H1/NDR”);
▪ National Environmental Policy Act (“NEPA”);
▪ Environmental Impact Statement (“EIS”);
▪ Magnesium oxide (“MgO”); and
▪ Hydrofluorosilicic acid (“HFSA”).
Forward-Looking Information
Certain information contained in this news release constitutes 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 occur in the future include, but are not limited to, statements
regarding estimates and/or assumptions in respect of the 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 risks, uncertainties and other factors 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 materially 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 meet its financial obligations and minimum commitments,
fund capital expenditures and comply with covenants contained in the agreements that govern indebtedness; the
Company’s ability to advance capital raising objectives; fluctuations in foreign exchange or interest rates and stock market
volatility; the continued supply of sulfuric acid supply at Conda from its primary supplier and those risk factors set out in
the Company’s management discussion and analysis 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 information and financial outlook information (together, “FOFI”) about
the Company’s prospective results of operations, including statements regarding expected adjusted EBITDA,
maintenance capex, growth capex and free cash flow. FOFI is subject to the same assumptions, risk factors, limitations
and qualifications 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 purposes. The Company and management believe that the FOFI has been prepared on a reasonable basis,
reflecting management’s reasonable estimates and judgements; however, actual 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 undertakes no obligation to publicly update or revise any financial outlook
information except as required by applicable securities laws.
NEITHER THE TSX VENTURE EXCHANGE NOR ITS 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 NEWS RELEASE.
For further information, please contact:
Itafos Investor Relations
www.itafos.com