Itafos (TSX-V: IFOS) (the “Company”) reported today its Q4 2020 and
full year 2020 financial results and operational highlights. The
Company’s financial statements and management’s discussion and
analysis for the three months and year ended December 31, 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.
“Despite many challenges throughout 2020, we delivered financial
results in line with our expectations,” said G. David Delaney, CEO
of Itafos. “During the fourth quarter we began to see improvements
in both the agricultural and phosphate fundamentals, which we
expect to benefit our 2021 performance.”
“In addition to the improved phosphate fundamentals, we put
plans in place during the fourth quarter to optimize the cash
returns of the business by looking at capital-lite alternatives to
capital spending and our continuation of the company wide cost
savings plans,” added Mr. Delaney.
Highlights
For the year ended December 31, 2020:
- Revenue of $260,185 in 2020 compared to $339,430 in 2019; the
decrease in 2020 was attributed to lost revenue resulting from
product shortages due a sulfuric acid supply disruption and the
idling of Arraias;
- Adjusted EBITDA of $15,047 in 2020 compared to 2019 adjusted
EBITDA of $(3,203); the increase in 2020 was primarily due to cost
savings following the idling of Arraias and implementation of
corporate wide cost savings initiatives;
- Net loss of $(62,306) in 2020 compared to a net loss of
$(144,171) in 2019, primarily related to lower impairments of
non-current assets, lower depreciation and depletion and the same
factors that resulted in improved adjusted EBITDA, which were
partially offset by a write-off of mineral properties at Paris
Hills;
- Sustained environmental, health and
safety excellence at Conda and Arraias, including implementation of
corporate-wide risk mitigation measures to address potential
impacts to employees, contractors and operations as a result of the
COVID-19 pandemic resulting in no significant impacts to
operations;
- Completed a reduced scope plant
turnaround at Conda during July 2020 as part of its risk mitigation
measures during the COVID-19 pandemic with no environmental
releases or recordable incidents;
- Significant disruption in sulfuric
acid supply at Conda from its primary supplier through October 30,
2020;
- Total 2020 production volumes at Conda
were 516,480t, representing a 10% decrease year-over-year primarily
due to the disruption in sulfuric acid supply;
- Adjusted 2020 EBITDA at Conda of
$34,336, a 2% decrease year-over-year primarily due to lower
production volumes related to the disruption in sulfuric acid
supply and lower realized prices, partially offset by lower cash
costs;
- Significant progress in extending the
Conda’s mine life through permitting and development of H1/NDR,
including:
- achieved a key permitting milestone following the submittal of
the Mine and Reclamation Plan to the BLM,
- achieved a key permitting milestone following the submittal of
the IAN by the BLM,
- achieved a key permitting milestone following the publication
of the NOI to prepare an EIS, which formally commences the NEPA EIS
preparation and public engagement process by the BLM and the U.S.
Department of Agriculture Forest Service, and
- secured 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.
For the three months ended December 31, 2020:
- Revenue of $75,075 in 2020 compared to $81,431 in 2019; the
decrease in 2020 was attributed to lost revenue resulting from
product shortages due to the disruption in sulfuric acid supply and
the idling of Arraias;
- Adjusted EBITDA of $4,803 in 2020 compared to 2019 adjusted
EBITDA of $(1,622), primarily a result of cost savings following
the idling of Arraias;
- Net loss of $(2,489) in 2020 compared to a net loss in 2019 of
$(88,465), primarily due to lower impairments of non-current
assets, lower costs resulting from idling of Arraias and lower
corporate-wide selling, general and administrative expenses due to
implementation of corporate wide cost savings initiatives;
- Total 2020 production volumes at Conda
of 145,665t, representing a 4% increase year-over-year primarily
due to timing of the MAP+ production and higher APP production;
and
- Adjusted EBITDA at Conda of $7,323 in
2020 compared to $8,213 in 2019, representing a 11% decrease
year-over-year primarily due lower cash margin per tonne P2O5 due
to higher input costs, which was partially offset by higher
realized prices.
Financial Outlook
The Company is closely monitoring potential risks to its
operations as a result of the COVID-19 pandemic, 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 the COVID-19 pandemic. 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. Definitions
and reconciliations of non-IFRS measures to the most directly
comparable IFRS measures are included in Section 8 of the Company’s
management’s discussion and analysis available under the Company’s
profile at www.sedar.com and on the Company’s website at
www.itafos.com.
The Company’s guidance for 2021 is as
follows:
(in millions of US Dollars) |
|
|
|
|
|
H1 2021 |
|
|
H2 2021 |
|
|
FY 2021 |
Adjusted EBITDA |
|
|
|
|
$ |
43-48 |
|
$ |
37-42 |
|
$ |
80-90 |
Maintenance capex |
|
|
|
|
|
16-20 |
|
|
4-5 |
|
|
20-25 |
Growth capex |
|
|
|
|
|
4-6 |
|
|
4-7 |
|
|
8-13 |
Free cash flow |
|
|
|
|
|
15-21 |
|
|
10-14 |
|
|
25-35 |
The assumptions considered by the Company in
preparing its guidance for 2021 are explained as follows:
- adjusted EBITDA considers latest
outlook for pricing and key inputs at Conda, maintaining the idling
of Arraias, maintaining Farim at construction ready state and costs
related to other development and exploration projects and
corporate;
- maintenance capex considers planned
plant maintenance at Conda;
- growth capex considers activities
related to extending Conda’s mine life through permitting and
development of H1/NDR and EBITDA optimization initiatives at Conda;
and
- free cash flow considers cash from
operating activities and cash from investing activities less cash
growth capex.
Business Outlook
The Company is executing its strategy by focusing on:
- advancing capital raising initiatives;
- extending Conda’s current mine life through advancing
permitting and development of H1/NDR;
- optimizing Conda’s EBITDA generation capability;
- maintaining the idling of Arraias following best practices
while evaluating strategic alternatives;
- maintaining Farim at construction ready state while evaluating
strategic alternatives;
- advancing the wind down of Paris Hills following the Company’s
decision to wind down the concession following completion of the
Conda Technical Report, which defined H1/NDR as the Company’s path
forward for mine life extension at Conda; and
- advancing corporate-wide cost savings and capital-lite spending
initiatives.
About Itafos
The Company is a phosphate and specialty fertilizer
platform with strategic businesses and projects located in key
fertilizer markets.
The Company’s businesses and projects are as follows:
- Conda – a vertically integrated phosphate fertilizer business
with production capacity of approximately 550kt per year of
monoammonium phosphate (“MAP”), MAP with micronutrients (“MAP+”),
superphosphoric acid (“SPA”), merchant grade phosphoric acid
(“MGA”) and ammonium polyphosphate (“APP”) located in Idaho,
US;
- Arraias – a vertically integrated phosphate fertilizer business
with production capacity of approximately 500kt per year of single
superphosphate (“SSP”), SSP with micronutrients (“SSP+”) and
approximately 40kt per year of excess sulfuric acid located in
Tocantins, Brazil;
- Farim – a high-grade phosphate mine project located in Farim,
Guinea-Bissau;
- Santana – a vertically integrated high-grade phosphate mine and
fertilizer plant project located in Pará, Brazil;
- Araxá – a vertically integrated rare earth elements and niobium
mine and extraction plant project located in Minas Gerais,
Brazil;
- Paris Hills – a high-grade phosphate mine project located in
Idaho, US; and
- Mantaro – a phosphate mine project located in Junin, Peru.
The Company’s principal shareholder is CL Fertilizers Holding
LLC (“CLF”). CLF is an affiliate of Castlelake, L.P., a global
private investment firm.
The Company’s shares trade on the TSX Venture Exchange (“TSX-V”)
under the trading symbol “IFOS”. The Company’s registered office is
at Ugland House, Grand Cayman, Cayman Islands KY1-1104.
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:
- “EBITDA” as earnings before interest, taxes, depreciation,
depletion and amortization;
- “Adjusted EBITDA” as EBITDA adjusted for non-cash,
extraordinary, non-recurring and other items unrelated to the
Company’s core operating activities;
- “Total capex” as additions to property, plant and equipment and
mineral properties adjusted for additions to asset retirement
obligations, additions to right of use assets and capitalized
interest;
- “Maintenance capex” as that portion of total capex relating to
maintenance of ongoing operations of the Company;
- “Growth capex” as that portion of total capex relating to
development of growth opportunities of the Company;
- “Realized price” as revenues divided by sales volumes;
- “Revenues per tonne P2O5” as revenues divided by sales volumes
presented on P2O5 basis;
- “Cash costs” as cost of goods sold less net realizable value
adjustments, depreciation, depletion and amortization;
- “Cash cost per tonne P2O5” as cash costs divided by sales
volumes presented on P2O5 basis.
- “Cash margin” as revenues less cash costs; and
- “Cash margin per tonne P2O5” as revenues per tonne P2O5 less
cash costs per tonne P2O5.
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. Statements that
address activities, events or developments that the Company
believes, expects or anticipates will or may occur in the future
include, but are not limited to, statements regarding estimates
and/or assumptions in respect of the Company’s financial and
business outlook are 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, the
duration and spread of the COVID-19 pandemic and its severity;
uncertainties of estimates of capital and operating costs and
production estimates; the ability of the Company to meet its
financial obligations and minimum commitments, fund capital
expenditures and comply with covenants contained in the agreements
that govern indebtedness; the Company’s ability to advance capital
raising objectives; fluctuations in foreign exchange or interest
rates and stock market volatility; the continued supply of sulfuric
acid supply at Conda from its primary supplier and 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.
This news release contains future oriented financial information
and financial outlook information (together, “FOFI”) about the
Company’s prospective results of operations, including statements
regarding expected adjusted EBITDA, maintenance capex, growth capex
and free cash flow. FOFI is subject to the same assumptions, risk
factors, limitations and qualifications as set forth in the above
paragraph. The Company has included the FOFI to provide an outlook
of management’s expectations regarding anticipated activities and
results, and such information may not be appropriate for other
purposes. The Company and management believe that the FOFI has been
prepared on a reasonable basis, reflecting management’s reasonable
estimates and judgements; however, actual results of operations and
the resulting financial results may vary from the amounts set forth
herein. Any financial outlook information speaks only as of the
date on which it is made and the Company undertakes no obligation
to publicly update or revise any financial outlook 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 Relationsinvestor@itafos.comwww.itafos.com
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