Delivers sales of $2.1 billion, net income of $280 million, adjusted EBITDA of $610 million and adjusted diluted EPS of $0.23

ICL (NYSE: ICL) (TASE: ICL), a leading global specialty minerals company, today reported its financial results for the first quarter ended March 31, 2023. Consolidated sales were $2.1 billion versus $2.5 billion. Operating income was $465 million versus $902 million, while adjusted operating income was $480 million versus $880 million in the first quarter of last year. Adjusted EBITDA was $610 million versus $1,002 million. Earnings per share were $0.22 versus $0.49, and adjusted diluted EPS was $0.23 versus $0.48.

“ICL delivered another solid first quarter, even as prices pulled back significantly from last year’s peak levels. We are working to leverage opportunities created by geopolitical developments, global sustainability challenges and the current capital markets backdrop, to strengthen long-term value creation through innovative food security and battery materials solutions, while maintaining our focus on consistent cash generation and on driving cost efficiencies,” said Raviv Zoller, president and CEO of ICL. “For the first quarter, we continued to return value to shareholders, as we delivered record operating cash flow of $382 million and announced a dividend of $0.11 per share.”

The company also reiterated its guidance for full year adjusted EBITDA of between $2.2 billion to $2.4 billion, with approximately $1.1 billion of this amount estimated to come from the company’s specialties focused businesses. (1a)

Key Financials

First Quarter 2023

Industrial Products

First quarter 2023

• Sales of $361 million vs. $494 million.
• EBITDA of $105 million vs. $203 million.
• Recent growth in the Chinese economy and EV markets is not expected to create significant new demand for flame retardants before the second half of 2023.

Key developments

• Flame retardants: Product sales declined year-over-year, as electronics and construction end-market demand remained weak.
• Industrial solutions: Elemental bromine sales were impacted by lower volumes and declining bromine prices. Strong global demand for clear brine fluids drove sales higher year-over-year, as the oil and gas markets remained robust.
• Specialty minerals: Sales were higher versus the prior year, with increased deliveries to the deicing, food, pharmaceutical and industrial end-markets.

Potash

First quarter 2023

• Sales of $583 million vs. $795 million.
• EBITDA of $298 million vs. $450 million.
• Grain Price Index increased 3.6% year-over-year, with rice up 14.8%, while corn, soybeans and wheat were down 1.4%, 2.9% and 0.3%, respectively.
• Potash price (CIF) per ton of $541 was down 16% year-over-year, as prices moderated versus 2022.
• Global stocks-to-use ratio remains low and farmer affordability remains above average.

Key developments

• ICL Dead Sea

- Production in-line with last year, as annual maintenance shutdown took place in March of both years.

- 100,000 metric tons of potash shipments to India delayed to the second quarter.

- Successfully completed sealing project for the Dead Sea feeder canal.

• ICL Iberia

- A fatal accident at the Cabanasses mine, in the beginning of March, was followed by gradual ramp-up, due to extraordinary safety measures. The resulting production loss is estimated to be approximately 30,000 metric tons.

• Metal Magnesium

- Lower quantities were offset by higher selling prices.

Phosphate Solutions

First quarter 2023

• Sales of $714 million vs. $798 million.

- Phosphate specialties: Sales of $425 million vs. $437 million.

- Phosphate commodities: Sales of $289 million vs. $361 million.

• EBITDA of $170 million vs. $247 million.

- Phosphate specialties: EBITDA of $84 million vs. $115 million.

- Phosphate commodities: EBITDA of $86 million vs. $132 million.

• Phosphate prices leveled off, as the quarter progressed, while raw material remained elevated year-over-year.

Key developments

• White phosphoric acid: Sales declined year-over-year, as higher prices in both North and South America, as well as Europe, were offset by lower volumes, mainly in Europe and China.
• Industrial phosphates: Higher prices in the U.S. and Europe were offset by lower volumes in all regions.
• Food phosphates: Sales increased on higher prices, mainly in North America, while volumes remained stable in the quarter.
• Battery materials: LFP cathode active material expansion in St. Louis remains on-track, with groundbreaking expected later this year.

Growing Solutions

First quarter 2023

• Sales of $564 million vs. $566 million.
• EBITDA of $45 million vs. $110 million.
• Margin decreased, due to destocking during a declining price environment.

Key developments

• Specialty agriculture: Sales declined versus the prior year, as lower volumes offset higher prices achieved through new product launches.
• Turf and ornamental: Results softened year-over-year, as higher prices from new product launches were unable to offset weaker ornamental and horticulture sales volumes.
• Brazil: Sales increased versus the prior year, while profit was impacted by higher-cost inventory.
• Polysulphate: Sales and profit increased year-over-year, with record production at Boulby of 259,000 metric tons.

Financial Items

Financing Expenses

Net financing expenses for the first quarter of 2023 were $44 million, up versus $34 million in the corresponding quarter of last year.

Tax Expenses

Tax expenses in the first quarter of 2023 were $127 million, reflecting an effective tax rate of 30%, compared to $211 million in the corresponding quarter of last year, reflecting an effective tax rate of 24%.

Liquidity and Capital Resources

ICL had long-term credit facilities of $1,000 million, of which $587 million were utilized as of March 31, 2023.

On April 24, the company announced it had entered into a $1.55 billion sustainability linked revolving credit facility agreement, with an initial term of five years and a two-year extension option. The agreement, with a consortium of 12 international banks, replaced the previous $1.2 billion revolving credit facility, which was entered into in 2018.

Outstanding Net Debt

As of March 31, 2023, ICL’s net financial liabilities amounted to $2,301 million, a decrease of $15 million compared to December 31, 2022.

Dividend Distribution

In connection with ICL’s first quarter 2023 results, the Board of Directors declared a dividend of 11.32 cents per share, or approximately $146 million, versus 23.83 cents per share, or approximately $306.5 million, in the first quarter of last year. The dividend will be payable on June 14, 2023, to shareholders of record as of May 31, 2023.

About ICL

ICL Group Ltd. is a leading global specialty minerals company, which creates impactful solutions for humanity's sustainability challenges in the food, agriculture and industrial markets. ICL leverages its unique bromine, potash and phosphate resources, its global professional workforce, and its sustainability focused R&D and technological innovation capabilities, to drive the company's growth across its end markets. ICL shares are dual listed on the New York Stock Exchange and the Tel Aviv Stock Exchange (NYSE and TASE: ICL). The company employs more than 12,500 people worldwide, and its 2022 revenue totaled approximately $10 billion.

For more information, visit ICL's website at icl-group.com.

To access ICL's interactive CSR report, visit icl-group-sustainability.com.

You can also learn more about ICL on Facebook, LinkedIn, YouTube and Instagram.

Guidance

(1a) The company only provides guidance on a non-GAAP basis. The company does not provide a reconciliation of forward-looking adjusted EBITDA (non-GAAP) to GAAP net income (loss), due to the inherent difficulty in forecasting, and quantifying certain amounts that are necessary for such reconciliation, in particular, because special items such as restructuring, litigation, and other matters, used to calculate projected net income (loss) vary dramatically based on actual events, the company is not able to forecast on a GAAP basis with reasonable certainty all deductions needed in order to provide a GAAP calculation of projected net income (loss) at this time. The amount of these deductions may be material, and therefore could result in projected GAAP net income (loss) being materially less than projected adjusted EBITDA (non-GAAP). The guidance speaks only as of the date hereof. We undertake no obligation to update any of these forward-looking statements to reflect events or circumstances after the date of this news release or to reflect actual outcomes, unless required by law. Specialties focused businesses are represented by the Industrial Products, and Growing Solutions segments, and the specialties part of the Phosphate Solutions segment. We present EBITDA from the phosphate specialties part of the Phosphate Solutions segment as we believe this information is useful to investors in reflecting the specialty portion of our business.

Non-GAAP Statement

The company discloses in this quarterly announcement non-IFRS financial measures titled adjusted operating income, adjusted net income attributable to the company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA. The management uses adjusted operating income, adjusted net income attributable to the company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA to facilitate operating performance comparisons from period to period. The company calculates adjusted operating income by adjusting operating income to add certain items, as set forth in the reconciliation table under "adjustments to reported operating and net income (non-GAAP)", in the appendix below. Certain of these items may recur. The company calculates adjusted net income attributable to the company’s shareholders by adjusting net income attributable to the company’s shareholders to add certain items, as set forth in the reconciliation table under "adjustments to reported operating and net income (non-GAAP)", in the appendix below, excluding the total tax impact of such adjustments. The company calculates diluted adjusted earnings per share by dividing adjusted net income by the weighted-average number of diluted ordinary shares outstanding. The company calculates adjusted EBITDA as net income before financing expenses, net, taxes on income, share in earnings of equity-accounted investees, depreciation and amortization and adjust items presented in the reconciliation table under "consolidated adjusted EBITDA and diluted adjusted earnings per share for the periods of activity" in the appendix below, which were adjusted for in calculating the adjusted operating income. Commencing with the year 2022, the company’s adjusted EBITDA calculation is no longer adding back minority and equity income, net. While minority and equity income, net reflects the share of an equity investor in one of the company’s owned operations, since adjusted EBITDA measures the company’s performance as a whole, its operations and its ability to satisfy cash needs before profit is allocated to the equity investor, management believes that adjusted EBITDA before deduction of such item is more reflective.

You should not view adjusted operating income, adjusted net income attributable to the company’s shareholders, diluted adjusted earnings per share or adjusted EBITDA as a substitute for operating income or net income attributable to the company’s shareholders determined in accordance with IFRS, and you should note that the definitions of adjusted operating income, adjusted net income attributable to the company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA may differ from those used by other companies. Additionally, other companies may use other measures to evaluate their performance, which may reduce the usefulness of ICL’s non-IFRS financial measures as tools for comparison. However, the company believes adjusted operating income, adjusted net income attributable to the company’s shareholders, diluted adjusted earnings per share and adjusted EBITDA provide useful information to both management and investors by excluding certain items management believes are not indicative of ongoing operations. Management uses these non-IFRS measures to evaluate the company's business strategies and management's performance. The company believes these non‑IFRS measures provide useful information to investors because they improve the comparability of financial results between periods and provide for greater transparency of key measures used to evaluate performance.

The company presents a discussion in the period-to-period comparisons of the primary drivers of changes in the results of operations. This discussion is based in part on management’s best estimates of the impact of the main trends on its businesses. The company has based the following discussion on its financial statements. You should read such discussion together with the financial statements.

Forward Looking Statements

This announcement contains statements that constitute forward‑looking statements, many of which can be identified by the use of forward‑looking words such as anticipate, believe, could, expect, should, plan, intend, estimate, strive, forecast, targets, and potential, among others. The company is relying on the safe harbor provided in Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, in making such forward-looking statements.

Forward‑looking statements appear in a number of places in this announcement and include, but are not limited to statements regarding our intent, belief or current expectations. Forward‑looking statements are based on our management’s beliefs and assumptions and on information currently available to our management. Such statements are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward‑looking statements due to various factors, including, but not limited to:

Loss or impairment of business licenses or mineral extractions permits or concessions; volatility of supply and demand and the impact of competition; the difference between actual reserves and our reserve estimates; natural disasters and cost of compliance with environmental regulatory legislative and licensing restrictions including laws and regulation related to, and physical impacts of climate change and greenhouse gas emissions; failure to "harvest" salt which could lead to accumulation of salt at the bottom of the evaporation Pond 5 in the Dead Sea; litigation, arbitration and regulatory proceedings; disruptions at our seaport shipping facilities or regulatory restrictions affecting our ability to export our products overseas; changes in exchange rates or prices compared to those we are currently experiencing; general market, political or economic conditions in the countries in which we operate; price increases or shortages with respect to our principal raw materials; pandemics may create disruptions, impacting our sales, operations, supply chain and customers; delays in termination of engagements with contractors and/or governmental obligations; the inflow of significant amounts of water into the Dead Sea which could adversely affect production at our plants; labor disputes, slowdowns and strikes involving our employees; pension and health insurance liabilities; changes to governmental incentive programs or tax benefits, creation of new fiscal or tax related legislation; and/or higher tax liabilities; changes in our evaluations and estimates, which serve as a basis for the recognition and manner of measurement of assets and liabilities; failure to integrate or realize expected benefits from mergers and acquisitions, organizational restructuring and joint ventures; currency rate fluctuations; rising interest rates; government examinations or investigations; information technology systems or breaches of our, or our service providers', data security; failure to retain and/or recruit key personnel; inability to realize expected benefits from our cost reduction program according to the expected timetable; inability to access capital markets on favorable terms; cyclicality of our businesses; The company is exposed to risks relating to its current and future activity in emerging markets; changes in demand for our fertilizer products due to a decline in agricultural product prices, lack of available credit, weather conditions, government policies or other factors beyond our control; disruption of our, or our service providers', sales of our magnesium products being affected by various factors that are not within our control; our ability to secure approvals and permits from the authorities in Israel to continue our phosphate mining operations in Rotem Amfert Israel; volatility or crises in the financial markets; hazards inherent to mining and chemical manufacturing; the failure to ensure the safety of our workers and processes; exposure to third party and product liability claims; product recalls or other liability claims as a result of food safety and food-borne illness concerns; insufficiency of insurance coverage; war or acts of terror and/or political, economic and military instability in Israel and its region; filing of class actions and derivative actions against the company, its executives and Board members; closing of transactions, mergers and acquisitions; and other risk factors discussed under ”Item 3 - Key Information— D. Risk Factors" in the company's Annual Report on Form 20-F for the year ended December 31, 2022, filed with the U.S. Securities and Exchange Commission (the “SEC”) on February 28, 2023 (the “Annual Report”).

Forward looking statements speak only as of the date they are made, and, except as otherwise required by law, we do not undertake any obligation to update them in light of new information or future developments or to release publicly any revisions to these statements, targets or goals in order to reflect later events or circumstances or to reflect the occurrence of unanticipated events. Investors are cautioned to consider these risk and uncertainties and to not place undue reliance on such information. Forward-looking statements should not be read as a guarantee of future performance or results and are subject to risks and uncertainties, and the actual results may differ materially from those expressed or implied in the forward-looking statements

This announcement for the first quarter of 2023 (herein after the quarterly announcement) should be read in conjunction with the Annual Report, including the description of the events occurring subsequent to the date of the statement of financial position, as filed with the SEC.

Appendix

Condensed Consolidated Statements of Income (Unaudited)

Condensed Consolidated Statements of Financial Position as of (Unaudited)

Condensed Consolidated Statements of Cash Flows (Unaudited)

Adjustments to Reported Operating and Net Income (non-GAAP)

Consolidated EBITDA for the Periods of Activity

Calculation of Segment EBITDA

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