Phosphate producer Itafos Inc. reported first-quarter net income of $28.2 million on revenues of $119.6 million, down from the year-ago $33 million and $149.9 million, respectively. Adjusted EBITDA $43 million, down from $60.4 million.
The company said the decrease was primarily due to lower realized prices off the commodity highs of the prior year, coupled with lower sales volumes at Conda, which were partially offset by higher sulfuric acid sales at its Arraias facility in Brazil.
“We are pleased to report strong financial results and a continuation of our record safety performance in Q1 2023,” said G. David Delaney, Itafos CEO. “In Q1 2023 our reported revenues of $119.6 million and adjusted EBITDA of $43.0 million reflected lower phosphate prices compared with 2022 but remain well above the historical norms. We remain optimistic about the fundamentals of the agriculture sector and fertilizer demand in the North American markets we serve.”
Conda produced 82,145 mt of P205 in the first quarter, compared to the year-ago 89,096 mt. The company attributed the lower output primarily due to extreme winter conditions and unplanned downtime. Conda generated adjusted EBITDA of $47.5 million on revenues of $116 million, down from the year-ago $64.4 million and $147.5 million, respectively.
Arraias produced 20,614 mt of sulfuric acid during the first quarter, up from the year-ago 9,651 mt, with the increase reflecting a full quarter of production and sales as year-ago production did not restart until February 2022. Arraias generated $200,000 of adjusted EBITDA during the first quarter, up from a year-ago loss of $700,000.
“The Record of Decision issued on April 24th for the Husky 1/North Dry Ridge (H1/NDR) mine project (GM April 28, p. 1), followed by the receipt of the Notice to Proceed for H1/NDR, were the final steps to allow us to achieve our strategic goal of extending Conda’s mine life,” added Delaney. “The permit will allow 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. The Itafos team at Conda is quickly mobilizing resources and operations to begin the development of H1/NDR.
“The process to explore and evaluate various strategic alternatives to enhance value for all Itafos shareholders announced by our Board in Q1 2023 (GM March 17, p. 1) is ongoing. At the same time, we remained focused on running the company to support our customers, maintain our safety performance and deliver on our financial results,” he added.
Although 2023 prices have moderated off the historically high 2022 prices, Itafos expects relatively stable market fundamentals and global agriculture and phosphate fertilizer fundamentals to continue. It noted no significant phosphate supply capacity additions, sustained crop prices, improved phosphate application following lower demand associated with historically high pricing, and ongoing phosphate export restrictions from China.
The company expects the sulfur and sulfuric acid market to remain under pressure globally through 2023 due to increased refinery activity and softer demand from phosphate producers and metals consumers.
Itafos is maintaining its 2023 guidance of adjusted EBITDA of $140-$180 million and net income of $35-$65 million.