TORONTO, Aug. 26, 2020 (GLOBE NEWSWIRE) -- Itafos (TSX-V: IFOS) (the “Company”) reported today its Q2 2020 financial results and operational highlights. The Company’s financial statements and management’s discussion and analysis for the three and six months ended June 30, 2020 are available under the Company’s profile at www.sedar.com and on the Company’s website at www.itafos.com. All dollar values are in thousands of US Dollars except as otherwise noted.
“We delivered strong financial and operational performance during Q2 2020, demonstrated by our adjusted EBITDA for the quarter improving $14 million year-over-year. Our focus on improving margins and corporate-wide cost savings initiatives, in addition to a disciplined approach to capital allocation and efforts to mitigate sulfuric acid supply disruptions all contributed to these results,” said Dr. Mhamed Ibnabdeljalil, CEO of Itafos. “Looking forward, we are maintaining our original guidance for full year 2020 adjusted EBITDA and we are continuing to make progress on extending Itafos Conda’s mine life, optimizing Itafos Conda’s EBITDA generation capability and advancing our newly launched stage-gate restart program for Itafos Arraias.”
Overall Highlights
For the three months ended June 30, 2020, the Company’s financial highlights were as follows:
For the three months ended June 30, 2020, the Company’s business highlights were as follows:
For the three months ended June 30, 2020, the Company’s other highlights included issuance of 11,347 shares (net of 3,653 shares withheld to pay applicable taxes) due to vesting under the Company’s restricted share unit plan (the “RSU Plan”).
Subsequent to the three months ended June 30, 2020, the Company’s overall highlights were as follows:
Financial Highlights
For the three months ended June 30, 2020 and 2019, the Company’s financial highlights were as follows:
(unaudited in thousands of US Dollars | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
except for per share amounts) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Revenues | $ | 62,111 | $ | 103,072 | $ | 137,472 | $ | 176,250 | ||||||||
Operating loss | (10,576 | ) | (14,079 | ) | (22,819 | ) | (20,089 | ) | ||||||||
Adjusted EBITDA | 11,324 | (2,347 | ) | 10,536 | (200 | ) | ||||||||||
Net loss | (20,814 | ) | (21,597 | ) | (39,103 | ) | (34,928 | ) | ||||||||
Maintenance capex | $ | 1,582 | $ | 11,861 | $ | 3,501 | $ | 17,047 | ||||||||
Growth capex | 1,463 | 3,164 | 2,869 | 6,180 | ||||||||||||
Basic loss per share | $ | (0.11 | ) | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.25 | ) | ||||
Fully diluted loss per share | $ | (0.11 | ) | $ | (0.15 | ) | $ | (0.21 | ) | $ | (0.25 | ) |
For the three months ended June 30, 2020 and 2019, the Company’s financial highlights were explained as follows:
As at June 30, 2020 and December 31, 2019, the Company’s financial highlights were as follows:
(unaudited in thousands of US Dollars) | June 30, 2020 | December 31, 2019 | ||||||||||
Total assets | $ | 450,713 | $ | 510,764 | ||||||||
Total liabilities | 345,087 | 368,505 | ||||||||||
Net debt | 212,135 | 187,319 | ||||||||||
Adjusted net debt | 153,469 | 136,900 | ||||||||||
Total equity | 105,626 | 142,259 |
As at June 30, 2020 and December 31, 2019, the Company’s financial highlights were explained as follows:
Itafos Conda Highlights
The Company is closely monitoring potential risks to Itafos Conda’s employees, contractors and operations as a result of COVID-19. Itafos Conda has been deemed an essential business as part of the fertilizer and agriculture sector and therefore has not been forced to shut down operations on account of COVID-19. The Company is not currently projecting any material impact on Itafos Conda’s operations as a result of COVID-19.
In response to COVID-19, the Company has implemented and continued risk mitigation measures at Itafos Conda to address potential impacts to its employees, contractors and operations as follows:
To date, there has been one confirmed case of COVID-19 amongst employees and two confirmed cases amongst contractors at Itafos Conda. Following such confirmed cases, Itafos Conda implemented stringent quarantine and sanitation efforts to isolate such incidents and prevent further spread.
For the three and six months ended June 30, 2020, Itafos Conda continued its strong track record of environmental, health, and safety excellence with no environmental releases and one recordable injury.
For the three months ended June 30, 2020, Itafos Conda experienced lower MAP and APP production resulting from a disruption in sulfuric acid from its primary supplier, while SPA production remained largely consistent. Margins improved due to lower input costs from improved mining rates and lower raw materials costs, which were partially offset by lower realized prices.
For the six months ended June 30, 2020, Itafos Conda achieved higher SPA throughput from improved production efficiencies and higher railcar availability, which resulted in lower MAP and APP production. The lower MAP and APP production was also impacted by a disruption in sulfuric acid from its primary supplier. Itafos Conda also completed a second successful production run of its new line of micronutrient enhanced products, MAP+. Margins were largely consistent year-over-year as lower input costs from improved mining rates and lower raw materials costs were mostly offset by lower realized prices and higher depreciation and depletion.
For the three and six months ended June 30, 2020, overall fertilizer market prices remained depressed, particularly granular products, after a sharp decline since Q1 2019 due to lower consumption resulting from unusually wet weather conditions in North America.
For the six months ended June 30, 2020, the Company advanced activities related to extending Itafos Conda’s mine life through permitting and development of H1/NDR, including securing support from the Idaho legislature via House Joint Memorial #11, which passed unanimously as well as numerous letters of support from local and state officials and preparing and submitting an updated Mine and Reclamation Plan to the BLM as part of the NEPA permitting process.
For the six months ended June 30, 2020, the Company advanced activities related to optimizing Itafos Conda’s EBITDA generation capability, including completing the micronutrient addition to granulation project to support its new line of micronutrient enhanced products, advancing development of MAP enhanced with zinc as an additional product in the new line of micronutrient enhanced products and evaluating proposals received for pilot testing and a FEED study related to AHF/PS by-product recovery and a feasibility study related to on-site ammonia production.
On July 10, 2020, the Company announced its decision to conduct a reduced scope plant turnaround at Itafos Conda during July 2020 as part of its risk mitigation measures during the COVID-19 pandemic. On August 20, 2020, the Company announced that Itafos Conda completed the reduced scope plant turnaround with no environmental releases or recordable injuries.
On August 20, 2020, the Company announced that Itafos Conda has been experiencing a significant disruption in sulfuric acid supply from Rio Tinto’s Kennecott mine. Itafos Conda fulfills approximately 40% of its sulfuric acid requirements from volumes produced internally and approximately 60% from a combination of volumes received from Rio Tinto’s Kennecott mine under a long-term supply agreement and volumes procured from other third party suppliers. On August 18, 2020, Rio Tinto announced that its Kennecott mine in Utah has experienced delays to the restart of the smelter. According to Rio Tinto’s announcement, such delays to the restart of the smelter are due to unexpected issues that appeared following planned maintenance. Rio Tinto further announced that they are working closely with their customers to limit any disruptions and expect to have the smelter fully operational in two months. The Company has been and will continue working to mitigate potential adverse effects of the disruption in sulfuric acid supply to Itafos Conda from Rio Tinto’s Kennecott mine.
On August 10, 2020, Itafos Conda closed the Revolving Facility, which refinanced the Gavilon Facility. The Revolving Facility considers a commitment to loan up to $20,000, of which $10,000 was drawn at closing. The proceeds of the Revolving Facility were initially used to repay the Gavilon Facility and thereafter will be used for working capital and general purposes. At closing, an additional 10,000 remained available to be drawn by Itafos Conda subject to certain terms and conditions.
For the three months ended June 30, 2020 and 2019, Itafos Conda’s business highlights were as follows:
(unaudited in thousands of US Dollars | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||||||||||||||||
except for volumes and prices) | 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||
Production volumes (t) | ||||||||||||||||||||||||||||||
MAP | 85,018 | 92,248 | 175,566 | 191,003 | ||||||||||||||||||||||||||
MAP+ | 1,538 | — | 6,813 | — | ||||||||||||||||||||||||||
SPA | 37,173 | 36,998 | 77,438 | 72,531 | ||||||||||||||||||||||||||
MGA | 120 | 581 | 703 | 611 | ||||||||||||||||||||||||||
APP | 10,542 | 21,107 | 12,767 | 26,534 | ||||||||||||||||||||||||||
Total production volumes | 134,391 | 150,934 | 273,287 | 290,679 | ||||||||||||||||||||||||||
Sales volumes (t) | ||||||||||||||||||||||||||||||
MAP | 70,812 | 121,886 | 178,584 | 198,763 | ||||||||||||||||||||||||||
MAP+ | 3,811 | — | 6,464 | — | ||||||||||||||||||||||||||
SPA | 33,388 | 34,195 | 72,619 | 67,639 | ||||||||||||||||||||||||||
MGA | 190 | 1,231 | 703 | 1,261 | ||||||||||||||||||||||||||
APP | 11,967 | 18,900 | 13,614 | 21,348 | ||||||||||||||||||||||||||
Total sales volumes | 120,168 | 176,212 | 271,984 | 289,011 | ||||||||||||||||||||||||||
Realized price ($/t) | ||||||||||||||||||||||||||||||
MAP | $ | 316 | $ | 394 | $ | 303 | $ | 415 | ||||||||||||||||||||||
MAP+ | $ | 360 | $ | — | $ | 362 | $ | — | ||||||||||||||||||||||
SPA | $ | 975 | $ | 997 | $ | 957 | $ | 1,001 | ||||||||||||||||||||||
MGA | $ | 1,026 | $ | 555 | $ | 967 | $ | 565 | ||||||||||||||||||||||
APP | $ | 456 | $ | 472 | $ | 456 | $ | 472 | ||||||||||||||||||||||
Revenues ($) | ||||||||||||||||||||||||||||||
MAP | $ | 22,364 | $ | 48,067 | $ | 54,196 | $ | 82,553 | ||||||||||||||||||||||
MAP+ | $ | 1,371 | $ | — | $ | 2,337 | $ | — | ||||||||||||||||||||||
SPA | $ | 32,558 | $ | 34,082 | $ | 69,464 | $ | 67,715 | ||||||||||||||||||||||
MGA | $ | 195 | $ | 683 | $ | 680 | $ | 712 | ||||||||||||||||||||||
APP | $ | 5,460 | $ | 8,925 | $ | 6,203 | $ | 10,082 | ||||||||||||||||||||||
Total revenues | $ | 61,948 | $ | 91,757 | $ | 132,880 | $ | 161,062 | ||||||||||||||||||||||
Revenues per tonne P2O5 | $ | 816 | $ | 872 | $ | 767 | $ | 897 | ||||||||||||||||||||||
Cash costs per tonne P2O5 | $ | 638 | $ | 774 | $ | 635 | $ | 768 | ||||||||||||||||||||||
Adjusted EBITDA | $ | 14,458 | $ | 11,283 | $ | 22,753 | $ | 22,739 | ||||||||||||||||||||||
Maintenance capex | $ | 1,582 | $ | 11,272 | $ | 3,501 | $ | 13,845 | ||||||||||||||||||||||
Growth capex | $ | 1,229 | $ | 1,323 | $ | 3,153 | $ | 1,811 |
For the three months ended June 30, 2020 and 2019, Itafos Conda’s business highlights were explained as follows:
Itafos Arraias Highlights
The Company continues to monitor potential risks to Itafos Arraias’ employees, contractors and operations as a result of COVID-19. Itafos Arraias has been deemed an essential business as part of the fertilizer and agriculture sector and therefore has not been forced to shut down operations or care and maintenance activities on account of COVID-19. The Company is not currently projecting any material impact on Itafos Arraias’ operations or care and maintenance activities because of COVID-19. Notwithstanding, the Company is improving the measures to mitigate the risk of contractors and employees during the in-fill drilling program expected to take place during H2 2020.
In response to COVID-19, the Company has implemented and continued risk mitigation measures at Itafos Arraias to address potential impacts to its employees, contractors and operations as follows:
Currently, there are no confirmed cases of COVID-19 amongst employees or contractors at Itafos Arraias.
For the three and six months ended June 30, 2020, Itafos Arraias continued its strong track record of environmental, health, and safety excellence with no environmental releases or recordable injuries.
On November 21, 2019, the Company announced its decision to idle Itafos Arraias and suspend the previously announced repurpose plan at Itafos Arraias as part of a disciplined approach to capital allocation considering the continued downward pressure on global fertilizer prices and the additional capital requirements to complete the Repurpose Plan.
For the three and six months ended June 30, 2020, the Company safely completed and maintained the idling of Itafos Arraias following best practices to protect and preserve the value of the underlying assets. Following receipt of approval from the labor union, the Company completed the employee layoffs and contractor terminations at Itafos Arraias associated with the idling. Notwithstanding the idling of Itafos Arraias, the Company will continue to employ personnel that are necessary for the care and maintenance of the assets and will continue to maintain all licenses and permits in good standing and compliance with existing regulations. In addition, the Company successfully monetized inventory and raw materials at Itafos Arraias to partially offset costs.
In parallel with its decision to idle Itafos Arraias, the Company engaged the services of Golder Associates Inc. (“Golder”) and Jesa Technologies LLC (“Jesa”) to conduct third party reports on Itafos Arraias’ mine and beneficiation plant, respectively. The third party reports, which were completed in January 2020, confirm that restarting Itafos Arraias’ mine and beneficiation plant is feasible and outline the respective timing and capex requirements.
For the three months ended June 30, 2020, the Company launched a stage-gate restart program for Itafos Arraias. Each stage-gate must be cleared before progressing to the next stage of the program, thereby limiting exposure, and managing the risk. The first stage-gate is the development of a revised geological model and long-term mine plan of the Domingos pit. Accordingly, the Company designed a test work campaign aimed at the metallurgical characterization of the Domingos ore as well as a detailed in-fill drilling program. The revised long-term mine plan will be developed to verify ability to deliver constant ore grade to the beneficiation process, while the beneficiation plant process design will be revised to match the geometallurgical characterization of the ore. As part of this stage-gate, the Company engaged Jesa in June 2020 to conduct the metallurgical test work that will form the basis of the revised beneficiation process. The metallurgical test work being conducted by Jesa is expected to be completed in approximately nine-months.
In February 2020, Itafos Arraias secured important long-term tax incentives. As Itafos Arraias is domiciled in Brazil, the business is subject to a federal tax rate of 34%, composed of a federal corporate income tax of 25% and other taxes of 9%. The location of Itafos Arraias’ assets makes it eligible to participate in a regional development program administered by the Superintendência do Desenvolvimento da Amazônia (“SUDAM”). Created in 1966 to promote development of the Amazon region in Brazil, SUDAM offers tax incentives that allow eligible companies to reduce the federal tax rate of 34% to 15.25% by means of a 75% discount to the federal corporate income tax of 25%. In February 2020, SUDAM accepted Itafos Arraias’ application, granting Itafos Arraias the tax incentives for a period of ten years with an opportunity to extend thereafter.
For the three months ended June 30, 2020 and 2019, Itafos Arraias’ business highlights were as follows:
(unaudited in thousands of US Dollars | For the three months ended June 30, | For the six months ended June 30, | ||||||||||||||
except for volumes and prices) | 2020 | 2019 | 2020 | 2019 | ||||||||||||
Production volumes (t) | ||||||||||||||||
SSP | — | 19,948 | 3,879 | 26,511 | ||||||||||||
SSP+ | — | 32,055 | 1,113 | 40,646 | ||||||||||||
PK compounds | — | — | — | — | ||||||||||||
Total production volumes | — | 52,003 | 4,992 | 67,157 | ||||||||||||
Excess sulfuric acid production volumes (t) | — | 10,600 | — | 19,394 | ||||||||||||
Sales volumes (t) | ||||||||||||||||
SSP | 1,886 | 14,917 | 27,315 | 22,050 | ||||||||||||
SSP+ | — | 27,310 | 2,459 | 33,213 | ||||||||||||
PK compounds | — | — | — | — | ||||||||||||
Total sales volumes | 1,886 | 42,227 | 29,774 | 55,263 | ||||||||||||
Excess sulfuric acid sales volumes (t) | — | 10,600 | 5,213 | 19,394 | ||||||||||||
Realized price ($/t) | ||||||||||||||||
SSP | $ | 86 | $ | 220 | $ | 134 | $ | 202 | ||||||||
SSP+ | $ | — | $ | 250 | $ | 184 | $ | 246 | ||||||||
PK compounds | $ | — | $ | — | $ | — | $ | — | ||||||||
Excess sulfuric acid | $ | — | $ | 113 | $ | 90 | $ | 131 | ||||||||
Revenues ($) | ||||||||||||||||
SSP, net | $ | 163 | $ | 3,290 | $ | 3,671 | $ | 4,464 | ||||||||
SSP+, net | $ | — | $ | 6,825 | $ | 453 | $ | 8,176 | ||||||||
PK compounds | $ | — | $ | — | $ | — | $ | — | ||||||||
Total revenues | $ | 163 | $ | 10,115 | $ | 4,124 | $ | 12,640 | ||||||||
Excess sulfuric acid revenues ($) | $ | — | $ | 1,200 | $ | 468 | $ | 2,548 | ||||||||
Revenues per tonne P2O5 | $ | 508 | $ | 1,379 | $ | 919 | $ | 1,324 | ||||||||
Cash costs per tonne P2O5 | $ | 2,240 | $ | 1,654 | $ | 2,163 | $ | 2,532 | ||||||||
Adjusted EBITDA | $ | (1,078 | ) | $ | (8,965 | ) | $ | (6,601 | ) | $ | (15,382 | ) | ||||
Maintenance capex | $ | — | $ | 567 | $ | — | $ | 3,169 | ||||||||
Growth capex | $ | — | $ | 416 | $ | — | $ | 1,003 |
For the three and six months ended June 30, 2020, and 2019, Itafos Arraias’ business highlights were as follows:
Financial Outlook
The Company is closely monitoring potential risks to its operations as a result of COVID-19, including factors that could impact production or demand for its products. Despite near-term uncertainties, the Company is not currently projecting any material impact on its operations or financial outlook as a result of COVID-19. In response to COVID-19, the Company has implemented working practices at its businesses and projects to address potential impacts to its employees, contractors and operations and will take further measures in the future, if required.
The Company provides guidance on certain non-IFRS measures that management considers to evaluate the Company’s operational and financial performance. Management believes that the non-IFRS measures provide useful supplemental information to investors, analysts, lenders and others.
The Company has revised its original guidance for 2020 as follows:
revised | original | ||||||||||||||||||||
(in thousands of US Dollars) | Low | High | Low | High | |||||||||||||||||
Adjusted EBITDA | $ | 10,000 | $ | 20,000 | $ | 10,000 | $ | 20,000 | |||||||||||||
Maintenance capex | 5,000 | 10,000 | 15,000 | 25,000 | |||||||||||||||||
Growth capex | 8,000 | 13,000 | 5,000 | 10,000 | |||||||||||||||||
Adjusted net debt | 170,000 | 180,000 | 170,000 | 180,000 |
The Company’s revised guidance is explained as follows:
Business Outlook
The Company is executing its strategy by focusing on:
About Itafos
The Company is a pure play phosphate and specialty fertilizer platform with an attractive portfolio of strategic businesses and projects located in key fertilizer markets, including North America, South America and Africa.
The Company’s businesses and projects are as follows:
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.
The Company define its non-IFRS measures as follows:
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. 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, 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.
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
investor@itafos.com
www.itafos.com