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Presentation

Operator: Ladies and gentlemen, thank you for standing by. And welcome to the ICL Analyst Conference Call. Our presentation today will be followed by a question-and-answer session. I must advise you that this call is being recorded today. I’d like to hand the call over to our first speaker today, Peggy Reilly Tharp, Vice President of Global Investor Relations. Please go ahead.

Peggy Reilly Tharp: Thank you. Hello, everyone. I’m Peggy Reilly Tharp – Vice President of Global Investor Relations. I’d like to welcome you and thank you for joining us today for our quarterly earnings call. The event is being webcast live on our website at icl-group.com. Earlier today we filed our reports with the securities authorities and the stock exchanges in the US and in Israel. Those reports, as well as the press release are available on our website. There will be a replay of the webcast available after the meeting and a transcript will be available shortly thereafter. The presentation which will be reviewed today is also filed with the securities authorities and is available on our website. Please be sure to review the disclaimer on Slide 2.

Our comments today will contain forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are not guarantees of future performance. The company undertakes no obligation to update any financial information discussed on this call at any time. We will begin with the presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Aviram Lahav, our CFO. Following the presentation, we will open the line for the Q&A session. Raviv, please.

Raviv Zoller: Thanks, Peggy, and welcome, everyone. Today, we’re proud to report record annual results for 2022, with sales of more than $10 billion and EBITDA of more than $4 billion. All three of our specialty solutions businesses delivered record performance in 2022 as we benefited from the results of our long term strategy. We also saw very significant commodity upside as several macro events collide. First, the Ukraine-Russia conflict greatly impacted global agriculture in 2022 and resulted in elevated grain prices, which in turn, drove prices higher for crops and livestock. The global gray stock to use ratio ended 2022 at its lowest in more than a decade and is forecasted to remain tight into 2023. Due to global concerns, increases in fertilizer prices accelerated in the first half of 2022, but moderated in the second half.

There was an estimated 5% decline in global fertilizer consumption in 2022, and farmers who skip treatments will need to reconsider their decision in 2023. Farmer affordability and sentiment improved toward the year end, and as there is rising concern over global food crisis, fertilizer volumes are likely to trend upward in 2023. In December, the Purdue University had an autonomous barometer jump and the biggest improvement came from farmers assessment of their current conditions. Farmers were more positive about the future in December and showed improved sentiment regarding their financial conditions. Meanwhile, consumer spending patterns shifted as inflation and interest rates reduced buying power. While the effects varied regionally, they impacted some key end markets for ICL such as electronics, housing and automotive.

The recent reopening of China will influence developments in the months to come, as will the increased momentum in ESG related spending. The electric vehicle revolution remains a bright spot as countries continue to invest in competing mobility transformation technologies. Finally, supply chain issues eased in recent months and current trends indicate additional improvement in 2023. Let’s turn to ICL’s results on Slide 3, where you can see an overview of our record year, which was capped by a record fourth quarter. In addition to the annual sales and EBITDA achievements I mentioned, we also saw record annual production of more than 4 million tonnes at Dead Sea. We delivered record cash flow for the year of $1.3 billion, which was up more than 180%.

Operating cash flow for 2022 of more than $2 billion was up 90% versus the prior year. In 2022, adjusted diluted earnings per share of $1.82 was up more than 180%. We also delivered cash directly to our shareholders in 2022 as we declared $1.2 billion of dividends and $0.91 per share for 2022. Importantly, we took advantage of our record year and resolved several outstanding challenges, which Aviram will discuss in more detail later in the presentation. Now please turn to Slide 4, where you can see historical trends for some of our key financial metrics. Clearly, 2022 was a remarkable and somewhat abnormal year, just as 2020 was during COVID. While we appreciate the good fortune we experienced in 2022, we remain focused on our long term transformation.

We believe our growth trajectory going forward, especially for our specialties businesses will be more in line with the longer term trends seen on the slide. While we do not have control over commodity markets and prices, we do know that our specialty solutions provide us with the level of normalcy, amidst the external noise. This is the benefit of our strategy and we look forward to delivering stable and consistent growth over the long term by executing against our recently presented five year plan. But improving our results will not only be financial . On Slide 5, you will see that sometimes it is a good thing to report a downward trend. Sustainability remains a critical part of our mission and our future. I’m very pleased to report we have seen significant improvements across the board in the areas of safety and the reduction of GHG emissions.

For safety, our incident rate continued its downward path for the fourth straight year in a row. Going back a bit further to 2018, we have achieved an 18% reduction in GAG emissions since that time, ahead of our stated target calling for a 30% reduction by 2030. Slide 6 goes into more detail about our substantial year over year financial improvement. Throughout 2022, we continue to drive growth and cash flow generation. Notably, I’m pleased we were able to share our record year with all our stakeholders, including the communities where we live and work. I’m proud to include this data, as well as point out that we managed to keep our overall expenses flat. Please notice that we incorporated some other non-financial matrix and track regularly.

On Slide 7, there’s a seller overview of our fourth quarter results. We saw returns more traditional fourth quarter seasonality in 2022 with many of our suppliers and customers also seeing similar trends at year end. I would now like to begin our segment review with Industrial Products on Slide 8. Record annual sales of $1.766 billion were up nearly 10%, while record annual EBITDA of $689 million was up nearly 40% year over year. We continue to achieve margin expansion as EBITDA margin improved to 39% for the full year and 32% for the fourth quarter. Fourth quarter sales and EBITDA were down year over year as the fourth quarter of 2021 did not experience more traditional seasonality due to an out of the ordinary abundance of mid-COVID demand in the electronics and construction end markets, as well as out of the ordinary production constraints of competitors.

Throughout 2022, higher prices helped offset higher raw material costs as industrial products maintained its strategic focus on value over volume. As 2022 progressed, end market demand diverged. Weakness in electronics accelerated in the second half of the year as consumers struggle with inflation, while the construction market suffered from both inflation and higher interest rates. As a result, our customers ended 2022 with increased inventory. The oil and gas industry saw significant demand since the Ukraine-Russia conflict, which benefited our clear brine fluids business. Our specialty minerals business remained stable throughout 2022. Turning to Slide 9 in our phosphate solutions division where we reported record annual sales and EBITDA of $3.106 billion and $966 million, respectively, with record specialty sales and EBITDA for both our food and industrial solution.

For 2022, specialties made up nearly 60% of sales and 45% of EBITDA. We also saw record annual sales and EBITDA for our phosphate commodities business and had another record year at our YPH joint venture in China. Throughout 2022, higher prices and demand help offset significant increases in the prices of raw materials. Another trend for 2022 included the persistent supply chain challenges, which did not ease in the fourth quarter and are expected to linger into 2023. Finally, the big news for prostate specialties in 2022 was when the US Department of Energy awarded ICL $197 million to invest the developing cathode acting materials plant for high quality LFP batteries. This is part of a new sustainable supply chain for energy storage solutions.

On Slide 10, you will see our potash results where annual sales of $3.313 billion were up nearly 90% year over year, while EBITDA of nearly $2 million was up significant. Clearly, we benefited from commodity upside in our potash business, but we also maximized our opportunities throughout 2022 and added long term contracts. As I previously mentioned, our operations at Dead Sea delivered record production for 2022 of more than 4 million tonnes as our team overachieved in terms of operational excellence and we also saw improvement in our Spanish operations. Our average potash realized price per ton came in at $643 in 2022, which was up more than 90% over 2021. For the fourth quarter, we achieved $564 per ton, which was up 16% or more than $75 versus the fourth quarter of 2021.

Our metal magnesium operations delivered record sales and profit as this business like the rest of ICL shifted to more long term contracts and also benefited from higher prices. Turning to Slide 11, in growing solutions, which delivered record annual sales of $2.422 billion and EBITDA of $448 million. These results were achieved in part as we successfully integrated our Brazilian acquisitions. Our FertilizerpluS products, which are based on organic polysulfate, delivered on all fronts, record annual production, sales and profit. We are pleased to see all of the hard work of this team over the past few years come to flourishing. Throughout 2022, our growing solutions division introduced multiple sustainable new products and these efforts helped us increase our sales in Brazil and Asia.

Nevertheless, EBITDA was lower in the fourth quarter due to a decrease in fertilizer demand during the latter part of 2022. Now if you will turn to Slide 12, I would like to quickly remind you about the progress we made in the areas of sustainability, innovation and leadership during 2022. This was an amazing year with an array of new products, third party recognition and achievements. I cannot say enough about our team at ICL, possibly working towards the next level and their efforts do not go over it. Finally, I would like to draw your attention to Slide 13 and our outlook for 2023. For our industrial products business, which covers a vast varied number of end markets, we expect to see a stronger second half of the year. For Phosphate Solutions, we expect to leverage our LFP expansion in St. Louis to build partnership with some of the premier automotive names in the world.

In our potash business, we expect to see improving affordability benefit both farmers and suppliers. This will extend to our growing solutions business where we plan to continue growing our market share in more diverse end markets. As we formally wrap up 2022, I want to thank the entire ICL family of employees all around the world for their hard work and contributions. While I’m proud of this record year, I’m also very excited about the challenges and opportunities ahead in 2023. I would now like to turn the call over to Aviram.

Aviram Lahav: Thank you, Raviv and all of you for joining us today. Let us get started on Slide 15. While Raviv already addressed, some market trends and our outlook. I would like to call out certain macro highlights impacting ICL, our peers, suppliers and customers. While inflation has moderated somewhat, it remains high, the cost of living slowed in 2022 and consumers ended the year paying more for food and energy, especially in Europe. Across the many regions and end markets where we do business, trends diverge in 2022 and the variances became more pronounced as the year progressed. In general, growth has tempered on a worldwide basis with conditions expected to continue in the first half 2023. While commodity prices are moderating from the peaks we saw in the first half of 2022, fertilizer prices remain elevated when compared to recent history.

Farmer sentiment recovered at 2022 came to a close and affordability also began to improve. Supply chain disruption appear to be easing for the most part, but there are some remaining constraints. Our phosphate specialist business is still facing challenges, and these are expected to continue in the near term. Finally, the geopolitical situation remains uncertain with no resolution to the Ukraine-Russia conflict inside after nearly one year. Meanwhile, as Raviv discussed, the recent reopening of China is going to influence developments in the months to come and how this will evolve is yet to be seen. On Slide 16, you can see the Chinese commodity trends with prices moderating, but still ahead of previous levels. Potash prices are back in line with the third quarter of 2021 as our prices for phosphoric acid.

Rate continued to stabilize and has returned to pre-COVID rates. Sulphur prices returned to levels not seen since early 2021. Throughout 2022, we were able to offset higher prices for raw materials. However, like many of our peers, we are now working through higher priced inventory and this trend is expected to continue into early 2023. Turning to Slide 17, where you can see that while crop prices declined somewhat from recent highs, they remain ahead of pre-COVID levels. The gray price index was somewhat stable throughout 2022, while the fertilizer price index rose sharply in the first half and declined rapidly in the second half of the year. As Raviv already mentioned, the global grain stock to use ratio ended 2022 at its lowest in more than a decade.

Finally, while still elevated energy prices came down at year end. On the left side of Slide 18, you can see the improvement in annual sales came from all four of our segments. And we delivered more than $10 billion in total sales, a record breaking year. On the right side of the slide, you can see the impact of higher prices from a year over year sales, thus offset a negative $353 million change rate impact. While potash benefited from significantly higher prices, our specialties businesses also delivered improvement versus the prior year. Turning to Slide 19, and our annual adjusted EBITDA, which was more than $4 billion, also record. Once again, you can see the impact of higher potash prices on the left side of the slide and higher prices overall on the right side.

On a segment basis, all four of our businesses contributed to the year over year improvement. Turning to our fourth quarter results on Slide 20, where the picture is a little different. On the left side, you can see industrial products experienced year over year decline in sales, when compared to an extraordinary quarter in 2021. Some end markets, such as consumer electronics and housing were impacted by inflation and higher interest rates. For 2022, we also saw a return to more traditional fourth quarter seasonality here and in other businesses as many of our suppliers and customers also returned to more historical trends at year end. Let’s take a look at our fourth quarter EBITDA on Slide 21, which demonstrate the trends similar to (ph) Specifically, on the right side, I would like to call out the pricing was able to offset not only the low volume, but also increases in raw materials, energy and trucks notation and a negative exchange rate impact.

I would now like to review a few highlights on Slide 22. At year end, our net debt to EBITDA ratio remained at 0.5 times, as Raviv mentioned, we saw substantial improvement in operating and free cash flow both for the year and the quarter. We also continued to deliver sustainable shareholder value with our annual dividend yield at nearly 10%, at the high end of our peer group. Additionally, we took advantage of the favorable market conditions in 2022 to set an outstanding dispute concerning the Israeli law for taxation of profits from natural resources. As we’ve previously discussed, we expect our annual tax rate to be in the 30% range going forward. Finally, turning to Slide 23. I would like to call your attention to our 2023 guidance. We are targeting adjusted EBITDA of between $2.2 billion to $2.4 billion in total and for our specialty business to contribute approximately $11 billion of that amount.

And with that operator, we can begin the Q&A.

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Operator: Thank you. Our first question today comes from the line of Alexander Jones from Bank of America. Please go ahead.

Alexander Jones: Hi. Thanks very much for taking my questions. Two if I may. The first on the balance sheet, I guess, is you mentioned net debt to EBITDA at 0.5 times. Have you thought about using that to create additional shareholder distributions either in the form of extra dividends or even share buybacks? And then the second question on Industrial Products. I guess volume is down 30% year on year this quarter. Was there any element there of you sort of somewhat curtailing volumes to give support to the market prices as we might have seen in the past? And if so, how long do you think that might last and what does that tell us about sort of the price outlook for your industrial products business in 2023? Thank you.

Raviv Zoller: All right. So I’ll start — Hey, Alex. I’ll start from second question and then go back to the first because Aviram want to add to that. In terms of industrial products, the seasonality is — the usual seasonality that we see every end of year. Last year in the fourth quarter of 2021, we had an out of the ordinary quarter for a few reasons. One reason was, it was the peak of the hike of buying TVs and other home appliances that require certain flame retardants. Building — and our customers building inventory to get through supply chain challenges. So there was an extraordinary demand even beyond our annual contracts. At the same time, our competitors had some production issues, everything from hurricane, bad weather effect and force majeure on chlorine production.

And the result was an outstanding quarter. If you look at the previous years, you’ll see that every year there was seasonality in the fourth quarter. Coming back to the curtailments, I wouldn’t call it curtailments, I would call it value over volume strategy. Our strategy is that, at a certain price makes more sense for us to keep our product, because we feel that we can sell at a higher price later. So we don’t — we’re not looking to increase our market share, we’re looking for maximum value creation. And what we expect is that, in the first few months of next year we’ll see some softness around flame retardants for electronics and construction somewhat balanced by peak in demand for clear brine fluids. And some flame retardants that have to do with electric vehicles.

And that’s why we’re saying that after a few months in the first half of the year, we expect that the normal cyclicality will bring a stronger second half. Second half, not like 2022, which was an exceptional year, but a second half that will bring this year’s industrial products division performance to somewhere around the 2021 performance. So that’s on industrial products. In terms of capital allocation, dividend and buyback, we said on the last conference call that we came to a conclusion that 50% to 60% is what we feel that we can distribute safely in a way that will allow us to execute on our five year plan, with the resources we need for M&A and other needs, capital expenditures, et cetera. Every end of year we debate in our Board of Directors about what the right kind of distribution is and we are debating the issue of a buyback and whether to bring that into potential 60% distribution.

So as soon as we’ll have news that we can formally communicate, then we will communicate, either way, of course. You want to add to that?

Aviram Lahav: Just one thing. It’s perfect. We checked ourselves as — we constantly look at the market and we find ourselves that it’s really the upper part of the companies that pay back to shareholders already at 50%. If we had to stretch that beyond that, that could be something quite exquisite. But we are constantly monitoring this and it’s not off the table for sure.

Raviv Zoller: And maybe one more thing I would add is that, you see we created free cash flow of $1.3 billion this year and we just distributed about $1.2 billion. The realistic free cash flow was a little more than that because we used over $250 million to take care of some previous year items, namely the tax dispute that we had for many years, the (ph) profit levy in Israel, as well as we closed some environmental issues that we had from 2017 and before. So we had some other use for cash in 2022. And at the same time, we’re starting 2023 in a much better place, very, very strong balance sheet and also clean slate with some challenges that we had in the past. Hope that answers.

Alexander Jones: Thanks, Raviv. Just maybe to follow-up on the buyback discussions you’re having, do you have any timeline that we should bear in mind for hearing about that either way? Thank you.

Raviv Zoller: Yes. The timeline is before we report — well, let me put it another way. Latest we will report back to you on this when we report our first quarter results. Latest.

Alexander Jones: Thank you.

Operator: Thank you. Our next question today comes from the line of Ben Theurer from Barclays. Please go ahead.

Ben Theurer: Yes. Good morning. Good afternoon. Can you hear me?

Raviv Zoller: Yes.

Aviram Lahav: Yes. Hi, Ben.

Ben Theurer: Okay. Perfect. Well, thank you very much. And first of all, congrats on a record year in 2022. As well, two questions, if I may. First, just looking into 2023 and some of the demand drivers you’re seeing out there and what you’re seeing on the contracting side. Can you share a few insights or maybe anecdotes what you’re seeing for demand in the different segments. You’ve laid out a little bit of a trajectory on the industrial side, but also more on the commodity piece, but also just the seasonality you used to have, how should we think about the cadence into 2023 from a demand perspective? That would be my first question.

Raviv Zoller: Okay. Thanks for the question. Since I discussed industrial products, I’ll say that on phosphate specialties and growing solutions, we’ll see the same kind of seasonality that we have every year, which means pretty flat all through the year with a little bit of softness on the fertilizer side in the fourth quarter of next year. In terms of commodities, lately I would say since November, we see healthy demand in some markets, namely in Brazil, there’s very strong demand. And even now, which is the 15 of February, we already sold over half of the annual allocation of potash to Brazil to be delivered in the first half of the year, which means that there’s ample room to sell a lot of commodity. We’re pretty sold out for first quarter, we’re sold out on potash for the first quarter, we’re sold out on phosphate until the end of the second quarter.

If we look back to previous years, that’s more robust than in the past. The lowest price in the world right now is in the US, which is why we’re not selling in the US. I think we sold only a few thousand tons that we had the commitments to the US, but we have no reason to sell in the U.S. at this point. Brazil very healthy. India needs product. China, there’s still inventory. Contract in India is going to be soon. Contract in China, I honestly don’t know. I don’t think anybody is in a rush at this point since like I said, there are healthy markets to sell in. In terms of India, even though I said, it’s very soon. We’re in no rush because we don’t have any product left for the first quarter. So we don’t mind if it takes a few more weeks. But I think that it will be relatively soon, because I think India needs products.

I hope that gives a little color

Aviram Lahav: I would maybe — maybe Ben, just to add one thing, if you look at few things, first of all the price of commodities, agricultural commodities, they are high and they remain high. You couple it with the reduction that happened in fertilizer prices. Both the sentiment that’s being tracked by Purdue among others and also the affordability for the farmers is much better and if you couple it with the fact that some of them in certain areas have omitted to commit fertilizers, then it — you have the ingredients that will make quantity wise 2023 maybe significantly more robust than 2022. So, you have more quantity, somewhat lower prices that we’ve used before and ultimately this should pick up closer to the agricultural season, to the height of the agricultural seasons if it makes sense to you.

Ben Theurer: That’s perfect. Thank you very much for that clarification. And then the other question really just more long-term strategic and if we take a look at the cadence and if we were to just exclude the 2022 for a moment, it’s a very abnormal year as it’s been described. When we take a look at the cadence of growth of EBITDA over the last couple of years from what we had pre-pandemic particularly the specialty business basically expect it to be close to double where it was prior to the pandemic, if we think about what you need to achieve your 2027 targets you’ve laid out just a few months ago. Is it fair to assume that just as markets continue to work out that with the assets you have and the focus you have and the investments you do organically that’s enough to achieve the targets or should we think of the need to add on a little bit on the M&A side to really drive this business to the profile you’re looking for in about three, four years’ time.

Raviv Zoller: Well, thanks for that question. I think the way to model it and again we gave the numbers in our five year plan that we presented, like we doubled in the last five months, we’re looking to double in the last five years, sorry. We’re looking to double in the next five years. In terms of profit margin, the profit margins that are reflective of the long term business or more like the profit margins in 2021 than they are in 2022, but the double digit growth in specialty sales will continue and there will be some margin incremental increase every year, of course, there will be some movements that are not controllable, but over the long run there’ll be some margin expansion in the specialties businesses. So if you model special — if you model specialty phosphates and the growing solutions based on middle double-digit margins with the sales growth that we’ve seen in the past, you will get to the numbers.

If you add to them M&A that will account for about 30% of the revenue growth in growing solutions and about 15% and the growth of phosphate specialties. I hope that’s not too much information. As far as industrial products is concerned, the growth will be organic, unless there is some unexpected development. We don’t need M&A to hit our targets. We have relatively aggressive target for industrial products, but we have a very detailed outline plan that we feel confident about. So our R&D is in place, our operations in place, the plants that need to be built are either in planning are being built, we have tremendous new opportunities in specialties because of what’s happening in the electric vehicle space. And other than commodities, which will be cyclical and we’ll be happy to get — we’ll be happy to get same conditions as 2022, but we’re definitely not counting on them.

So long-term margins will go back to 2021 margins for now, they will incrementally increase every year until 2027 and the growth will be organic, other than 30% M&A in growing solutions and 20% in phosphates specialties.

Ben Theurer: Thank you very much.

Aviram Lahav: When you think about M&As, especially in the agricultural side, it can come by one of two ways, it’s either portfolio or geographies or both of them. So we speak a lot about portfolio, but we also have massive plans about geographies, and it might be that we will opt to shortcut and do some M&As in order to support geographies as well. So, bear it in mind, with the new five year plan we are definitely looking and we’re looking in all directions as long as it’s synergetic, as long as we can add value to the acquisition not an acquisition per se. Thank you

Ben Theurer: Perfect. Thank you very much.

Raviv Zoller: Thank you.

Operator: Thank you. Our next question comes from the line of Kyle Caunt from Citi. Please go ahead. Go ahead, Kyle

Kyle Caunt: Hi. Sorry I’m on mute. Firstly on your specialties guidance $1.6 billion this year, $1.1 billion next year. Can you give us an idea on the bridge break down between the different Specialties divisions that would be great? And then my second question on the flip side, obviously, that implies a commodities contribution of $1.1 billion to $1.3 billion. What is your potash ASP that you’re baking in to arrive at that guidance? Thank you.

Raviv Zoller: Okay. So, like I said before, when you look at industrial products, then we’re looking at numbers that are almost identical to 2021 with the exception that behave — the seasonality will be different, given that we’re starting the year with a slow start, second half to be higher. On specialty phosphates and growing solutions will see a growing trajectory through the year, but we’ll go back to the 2021 margins for the year. So that’s the way to think about specialties and that’s how we got to the $1.1 billion, which is a conservative estimate for the modeling that I just talked about. And, again, some of the upside will be in the second half of the year, because of industrial products. On commodities, the way to maybe look at it is that, if you look at — if you look at the fourth quarter, $700 million of EBITDA and you multiply that by four and get to $2.8 billion for the year and given that we expect a couple of $100 million upside on specialties and that means that we get to the upper side of our guidance, you need to take out about $600 million, $600 million would reflect the downside on commodities and, of course, about 80% of that comes from potash.

So you get to close to the $500 million number for sales price of potash

Kyle Caunt: That’s great. Thank you.

Raviv Zoller: Thank you.

Operator: Thank you. Our next question comes from the line of Joel Jackson from BMO Capital. Please go ahead.

Raviv Zoller: Joel, you want to go ahead?

Joel Jackson: Do you hear me?

Raviv Zoller: Now, we hear you.

Aviram Lahav: Yes.

Joel Jackson: Okay. I have few questions. The first one is technical. I’m confused by your specialties’ guidance for 2023. So, you — sorry, if I look at Slide 23 and Slide 19, but Slide 23, so I meant 2022, so you say that specialties was $1.6 billion EBITDA for 2022, correct, Slide 23?

Raviv Zoller: Yes. $1,573 million, if I remember correctly.

Joel Jackson: But when I add up the three segments, right, growing solutions, phosphate solutions and IP, I get to $2.1 billion EBITDA, which is what you’re saying in several places is specialties. Is there some part of those three businesses, like, are you excluding phosphate commodities?

Raviv Zoller: You’re adding the phosphate commodities. You have all the details in our press release.

Joel Jackson: I do. So, what — can you just bridge me the $2.1 billion to the $1.6 billion, why is the $500 million coming out of? Can you bridge that to me, please?

Raviv Zoller: Phosphate commodities. It’s in the phosphate —

Joel Jackson: So, $500 million in phosphate commodities.

Raviv Zoller: In the phosphate solutions business. Yeah, it’s just, phosphate commodities.

Aviram Lahav: I can do that for 2022, if you want to or we can do this offline.

Joel Jackson: Okay. That’s fine. I just want to make sure I understood. Okay. And then the other question, the potash segments, you talk about maybe averaging about $500 pricing in 2023, which is what you’re saying for — is implied, what about volume for the potash segment? So, what should we expect in 2023? What kind of production can you do from the different assets?

Raviv Zoller: We’re expecting production of about 4.8 million tonnes and we’re assuming sales of 4.8 million tonnes. We do have some capability to go down on inventory and go up to 4.9, but in terms of modeling we modeled 4.8.

Joel Jackson: And then you get over — you get to what 5.1, 5.2 by 2024?

Raviv Zoller: Not by 2024. We get to 5.1 by 2026.

Joel Jackson: 2026. Okay. And then I know that you are — you always say — you are typically followers in some of these larger potash contracts mixes get settled by the buying consortium in China and IFFCO, IPL, et cetera, in India, and you typically follow, we’re getting into — we are approaching contract season. Anything that you can talk about from what you and your team hears about the Indian contract? Is it going to be — do you think it’s going to be Belarussian settling something, then the other suppliers coming at a different tier pricing, do you think it’s going to be Canpotex leading? I understand it’s all conjecture and you’re just sort of hearing what you’re here, but how do you think the next couple of months are going to play out for these potash contracts?

Raviv Zoller: I think, it’s going to be settled soon.

Joel Jackson: And that’s your

Raviv Zoller: That’s all I can say at this point.

Joel Jackson: Okay. Okay. I’ll pass it on. Thanks a lot.

Raviv Zoller: Thank you, Joel.

Operator: Thank you. Our next question, one second please, comes from the line of Vincent Andrews from Jefferies. Please go ahead.

Will Tang: Hey, guys. This is Will Tang on for Vincent. Can you hear me?

Raviv Zoller: Yes.

Will Tang: Okay. Yeah. This is Will Tang on for Vince. Just one quick question, you guys called out an elevated inventory levels at the end of 2022 in industrial products. Was that a comment specific to kind of the flame retardants business or something broadly characteristic across all your end markets there, all your product categories.

Raviv Zoller: Are you talking about our inventory?

Will Tang: Yes. I think all I heard was, elevated inventories at the end of 2022.

Raviv Zoller: Okay. So our inventory levels in recent years have been tracking between 26% to 28% of sales. And we finished the year with 27.1%. In terms of where we see a higher inventory at this point, we see a higher inventory in industrial products, and again, because some of the flame retardants, some of our customers are stocking down, there’s always a balance when you go down on production and reach lower efficiencies versus how much it costs to hold inventory. And in our case, it’s better to not stop production or produce the inventory that we’re sure we can sell. So In industrial products, the level of inventory we have is higher than we would probably like, but it’s not unusual given the circumstances. And our other businesses were pretty much where we need to be in the phosphate specialties, a major supplier had a force majeure situation, so that also caused us to have inventory a little higher than we’d like at the end of the year.

So we have two divisions that have higher inventory at the end of the year than we would have liked. But at the same time, we’re well within our range, which again is 26% to 28%, actually 26% to 28.5% we had in 2018, we’re 27.1% now, so we’re still in a healthy place.

Aviram Lahav: Just to add if I may that we have delivered plans in place to reduce that actively in every place where we have excess inventory, it probably take us anywhere from one to two quarters, maybe a little bit more than that. But we’ll get it back in line. I think the typical phenomena that stems from what happened in 2022 and the sharp differences that we are seeing these days.

Will Tang: Got you. And then I guess just a quick follow-up, if I may. Going back to an earlier question on your value over buying strategy there, buying down 30% industrial products. Is that what’s characteristic of kind of, I guess, the sell through of the entire bromine market? Or is there somebody there who’s kind of taking share from you guys on the back half?

Raviv Zoller: Our position in the market is that, we have no problem increasing market share for one, two, but the price we pay is the price level. So we try to be disciplined about the way we make decisions And in some of the products, there’s very, very healthy demand. So I mentioned the clear brine fluids. There’s even some products that usually we don’t sell very well that are suddenly a hit like we have a product that treats mercury emissions coming from coal. That’s a product that actually was not very successful in recent years given that coal was almost outlawed. But now given the energy crisis suddenly, there’s new demand. There’s always some business that’s doing well. And fundamentally, the most significant influencer in the foreseeable future is the electric vehicle industry, and we’re very confident of the positive trajectory there.

So seasonally, we always increase inventory in the fourth quarter other than maybe the one time last year because of the reasons I mentioned. So it’s not out of the ordinary to have higher inventory at the end of the year in the bromine related product.

Aviram Lahav: And looking forward to a rebound on the electronic side, which we believe according to our discussions —

Raviv Zoller: And according to our experience.

Aviram Lahav: And our experience that it’s coming and some more inventory around the phosphorus side which would see a rebound in housing as interest rates start coming gradually down. So basically, this is an issue that we are totally aware of working through it and should sort itself out. That’s the bottom line.

Raviv Zoller: But on electronics, it’s going to take a couple more months on construction. It will take much longer because the cycle there is longer. Hope that answers.

Will Tang: Yep. That’s perfect. Thank you.

Raviv Zoller: Thank you.

Operator: Thank you. You have no further questions. Please proceed.

Raviv Zoller: Okay. So it’s the end of the year for all of you guys as well. So thanks for being with us this year. Thanks for sharing your questions and listening to us. Thanks for allowing us to report. Thanks for believing in what we’re doing, when you believe in what we’re doing, we’re very confident about the long term plan that we took upon ourselves a few years ago. We’ve been successful in executing in the recent five years and we’re even more confident about the next five years. We kept even in the fate of lots of luck that we had this year. We kept our expenses intact. We were disciplined. We continue to be disciplined. We don’t take ourselves too seriously and we execute, execute, execute and we’re looking forward to reporting back to you our first quarter results. Thank you very much for being with us and have a great rest of the day.

Aviram Lahav: Thank you.