Phosphate producer Itafos Inc. reported second-quarter net income of $20.4 million on revenues of $116.1 million, compared to the year-ago $44.3 million and $155 million, respectively. Adjusted EBITDA was $39.7 million, down from $63.6 million.
“We are pleased to report solid financial results and continuation of our strong safety and operational performance in second-quarter 2023,” said G. David Delaney, CEO of Itafos. However, he noted that the company has lowered its full-year adjusted EBITDA guidance, due to the sharp decline in commodity prices during the quarter.
“The impact of this price decline will also be seen in the company’s third-quarter performance due to the pricing formula of our MAP sales contract,” Delaney said “Following the sharp decline in the second quarter, commodity prices have partially rebounded in early third-quarter, driven by demand improvement and tighter US supply fundamentals.”
Itafos attributed the lower prices to weaker demand in response to historically high 2022 phosphate prices; softer ammonia and sulfur prices; softening of historically high crop prices; and increased phosphate exports from Russia and China.
Itafos is now projecting a drop in full-year 2023 adjusted EBITDA guidance of $115-$135 million versus the earlier estimate of $140-$180 million. However, net income is now put at $45-$60 million versus $35-$65 million.
Delaney reiterated the Record of Decision issued on April 24 (GM April 28, p. 1) and subsequent Notice to Proceed on May 8 (GM May 12, p. 29) for the Husky 1/North Dry Ridge mine project, saying they represent a significant milestone for the company.
“The approvals provide the path for the company to achieve our strategic goal of extending Conda’s mine life,” he said. “The permit allows us to work to continue to serve the North American fertilizer market through 2037 with potential to further extend the resource life through leases and third-party arrangements.”
Delaney said the process announced by its Board in first-quarter 2023 (GM March 17, p. 1) to explore and evaluate various strategic alternatives to enhance value for shareholders is ongoing. “At the same time, we remained focused on running the company to support our customers, maintaining our safety performance, and delivering on our operational and financial results,” he said.
Six-month net income was $48.6 million on revenues of $235.7 million, down from the year-ago $77.3 million and $304.9 million, respectively. Adjusted EBITDA was $82.6 million, down from $124 million.
The Conda plant produced 83,190 mt of P205 during the second quarter, up from the year-ago 80,297 mt, with the company citing operational efficiencies and reduced downtime. It generated adjusted EBITDA of $44.6 million on revenues of $112.9 million, compared to the year-ago $66.7 million and $148.9 million, respectively.
Six-month Conda P205 production was 165,336 mt, down from the year-ago 169,393 mt, with the drop attributed to extreme winter weather and unplanned downtime in the first quarter, mostly offset by stronger throughput in the second quarter. Adjusted EBITDA was $92 million on revenues of $228.9 million, down from $131.1 million and $296.5 million, respectively.
Itafos expects relatively stable global agriculture and phosphate fertilizer fundamentals moving forward. While it expects some price volatility in the short term, it said consistent volume fundamentals in the phosphate fertilizer markets should stabilize pricing in the long term.
The Arraias sulfuric acid plant in Brazil produced 8,523 mt of product in the second quarter compared to the year-ago 20,549 mt. Itafos said the decrease was due to a shutdown and maintenance required in June 2023. Second-quarter adjusted EBITDA was a loss of $800,000 compared to a year-ago gain of $400,000.
During the first six months the plant produced 29,137 mt, down from the year-ago 30,200 mt. The plant did not restart until February 2022. The plant had a six-month adjusted EBITDA loss of $600,000 versus a year-ago loss of $300,000.