ICL outlines renewed strategy and maintains $0.95B–$1.15B specialty EBITDA target amid Dead Sea concession clarity

Earnings Call Insights: ICL Group Ltd (ICL) Q3 2025

MANAGEMENT VIEW

* CEO Elad Aharonson reported, "Sales were $1.853 billion, up 6% year-over-year. For our specialties-driven businesses, sales of $1.461 billion were up 3%. Consolidated adjusted EBITDA was $398 million. This amount improved 4% year-over-year and was up 13% on a sequential basis." He also highlighted operating cash flow of $308 million and adjusted diluted earnings per share of $0.10 for the quarter.
* Aharonson announced a strategic shift: "We will expand in the markets that are within our core and where we have significant growth potential... we plan to examine businesses that are either not synergetic or have low potential."
* The CEO addressed the recent Memorandum of Understanding (MOU) with the State of Israel regarding the Dead Sea concession, emphasizing, "We view this MOU as a positive and proactive step. It is expected to provide long-term regulatory clarity and business certainty... we secured compensation of approximately $2.54 billion plus sold harvesting costs amounting to hundreds of millions of dollars if we were not to win the concession."
* The company is discontinuing its planned global LFP battery materials expansion, with Aharonson stating, "While we will remain a provider of raw materials to battery customers, we will not be moving further downstream into cathode active materials. This means we will be discontinuing our planned global LFP expansion."
* CFO Aviram Lahav stated, "Our balance sheet remains strong with available resources of $1.6 billion. Our net debt to adjusted EBITDA rate is at 1.4x, and we delivered operating cash flow of $308 million. Once again, we're distributing 50% of adjusted net income to our shareholders. This translates to a total dividend of $62 million and results in a trailing 12-month dividend yield of 2.8%."

OUTLOOK

* Aharonson reiterated guidance: "For our specialties-driven businesses, we continue to expect EBITDA to be between $0.95 billion to $1.15 billion in 2025. For potash sales volumes, we continue to expect this amount to be between 4.3 million and 4.5 million metric tons."
* Management confirmed ongoing focus on specialty crop nutrition and specialty food solutions as growth engines, with specific plans for expansion in high-growth geographies and through targeted acquisitions.

FINANCIAL RESULTS

* Third quarter sales reached $1.853 billion, with consolidated adjusted EBITDA at $398 million. Operating cash flow was $308 million and adjusted diluted earnings per share were $0.10.
* Potash division sales were $453 million, with an average price of $353 per ton and sales volume of 1,046,000 metric tons; potash EBITDA was $169 million.
* The Phosphate Solutions division delivered sales of $605 million and EBITDA of $134 million.
* Growing Solutions sales reached $561 million, with year-over-year improvement; however, profit in Brazil was impacted by lower volumes and rising raw material costs.

Q&A

* Benjamin Theurer, Barclays: Questioned future margin development in Specialty Crop Nutrition and expansion plans in Food Solutions. Aharonson responded that the company will "switch the mix of the portfolio to more profitable products" and is targeting "mid-double digit" EBITDA margins, with growth driven by both organic initiatives and M&A. Expansion in food ingredients will involve both organic and acquisitive strategies beyond phosphate-based solutions.
* Theurer asked about South America challenges. Lahav explained, "The credit side is significant, credit available to farmers and the chain... is tight," with interest rates and soy prices affecting the market, particularly in Brazil.
* Kevin Estok, Jefferies: Inquired about pipeline developments and competitive positioning. Aharonson highlighted ongoing acquisitions in specialty fertilizers and a shift toward more profitable segments like biostimulants and nutrient use efficiency.
* Estok also queried weaker end markets. Lahav noted improved electronics trends but continued challenges in housing, especially in China.
* Joel Jackson, BMO: Asked about Q4 outlook and milestone expectations for the new strategy. Aharonson confirmed stable pricing across major segments, with sulfur costs impacting margins in phosphates, and restated commitment to delivering tangible results in specialty food solutions expansion and portfolio optimization. The new strategy includes discontinuing downstream LFP battery material projects.
* Jackson questioned market reaction to the Dead Sea concession news. Aharonson clarified, "We have 2 dimensions here. One is the MOU itself. Is it good or bad?... I think it's good and positive step to ICL, more certainty, more clarity."

SENTIMENT ANALYSIS

* Analysts focused on details of strategic execution, especially margin potential, competitive positioning, and regional challenges, displaying a tone of curiosity and cautious optimism. Questions reflected concern over market perception and operational risks in Brazil.
* Management's tone was confident and assertive in prepared remarks, with Aharonson stating, "We are confident that we have the assets and the capabilities to expand deeper into the robust food ingredients market." During Q&A, management remained forthcoming but acknowledged market headwinds, especially in Brazil and construction end markets.
* Compared to the previous quarter, management's tone shifted from steady execution to proactive strategic realignment, while analysts continued to probe for clarity on fundamental initiatives and risk factors.

QUARTER-OVER-QUARTER COMPARISON

* Guidance for specialties-driven EBITDA and potash volumes was reiterated, with no material updates.
* Strategic focus sharpened: the current quarter introduced a comprehensive review resulting in portfolio optimization and discontinuation of downstream battery expansion, not present in the prior quarter.
* Current quarter discussions placed more emphasis on specialty food solutions as a new growth engine, whereas the previous quarter maintained a broader focus on maintaining and growing specialty businesses.
* Analysts consistently scrutinized margin development and regional performance, but this quarter’s Q&A centered more on strategic execution and the Dead Sea concession’s impact.
* Management’s confidence increased regarding strategic direction, supported by explicit plans and clear rationale for portfolio changes.

RISKS AND CONCERNS

* Management flagged ongoing challenges in Brazil due to tight farmer credit and high interest rates, with farmer sentiment under pressure and deferred purchasing decisions.
* Softness in the construction end market, particularly affecting bromine-based sales, is expected to linger.
* Rising raw material costs, especially for sulfur, are impacting margins in Phosphate Solutions and are expected to continue into the next quarter.
* Uncertainty remains over the outcome of the Dead Sea concession tender beyond 2030, though management believes ICL is well positioned.

FINAL TAKEAWAY

ICL’s third quarter was marked by solid financial performance, clarity on the Dead Sea concession, and a decisive shift in strategic direction. The company reaffirmed its full-year specialty EBITDA and potash volume guidance, outlined concrete plans to prioritize higher-margin specialty businesses, and discontinued its downstream battery initiative. Management sees profitable growth in both specialty crop nutrition and food solutions as core drivers, while maintaining operational and financial discipline. The new strategic approach, coupled with proactive risk mitigation and a sharpened portfolio focus, positions ICL to address evolving market trends and deliver long-term value.

Read the full Earnings Call Transcript [https://seekingalpha.com/symbol/icl/earnings/transcripts]

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