Rahi Parikh

Rahi Parikh asked if an average sulfur cost of around $400 per metric ton is reasonable for Q1, given Q4 costs and benchmark levels, and if the $50 million EBITDA for the Brazil segment (Los Andes) is a go-forward quarterly expectation if production remains curtailed.

Answer

President and CEO Bruce Bodine noted that sulfur prices will moderate later in the year, but higher Q1 negotiated costs will flow through inventory, potentially increasing COGS in Q1/Q2. He clarified that $50 million is not the new normal for Brazil's EBITDA, as Q4 was seasonally low with specific product mix and lower volumes. EVP and CFO Luciano Siani Pires added that Uberaba's normalization and expanded distribution margins should lead to much higher quarterly EBITDA, despite the $10 million/month impact from idling Araxá.

Rahi Parikh asked about the reasonable assumption for average sulfur costs in Q1 (around $400/metric ton) given Q4 costs and benchmark levels, and if $50 million EBITDA is the go-forward per quarter for Mosaic Fertilizantes if production remains curtailed.

Answer

President and CEO Bruce Bodine noted that sulfur prices flow through inventory and are expected to moderate later in the year, but Q1/Q2 COGS might increase due to higher-cost sulfur. He clarified that $50 million EBITDA is not the new normal for Fertilizantes, as Q4/Q1 are seasonally low, and product mix impacts it. EVP and CFO Luciano Siani Pires added that Uberaba's normalization will uplift EBITDA, distribution margins should expand, and performance should improve significantly. He mentioned Araxá's idle status incurs about $10 million/month in expenditures but still expects better performance.

Rahi Parikh, on behalf of Ben Theurer from Barclays PLC, asked for details on beverage category volume changes in Mexico, particularly in stills versus sparkling. She also inquired about which categories the company is prioritizing in Mexico and Brazil following recent capacity additions and operational fixes.

Answer

IR Director Jorge Collazo Pereda explained that Mexico's sparkling category was more impacted by weather due to its on-the-go consumption nature. CEO Iain Craig García added that new capacity in Brazil is being used to address availability gaps, prioritizing CSD flavors first, followed by non-carbonated beverages like teas and water, to restore the full portfolio.

Rahi Parikh, on behalf of Ben Theurer at Barclays, asked for details on beverage category volume changes in Mexico, particularly the performance of stills versus sparkling, and inquired about category focus in Mexico and Brazil following capacity additions.

Answer

IR Director Jorge Collazo Pereda explained that Mexico's sparkling category was more significantly impacted by unfavorable weather due to its link with on-the-go consumption. CEO Iain Craig García added that in Brazil, new capacity is primarily addressing gaps in CSD flavors and non-carbonated beverages, with teas and water in the South being the remaining areas for recovery.

Rahi Parikh, on for Ben Theurer, asked for the expected closing timeline for the corn milling divestiture and the potential timing for an update on the U.S. RVO.

Answer

CFO John Neppl projected the corn milling sale could close by the end of Q2 or early Q3, pending U.S. regulatory processes. Regarding the RVO, he indicated an update could come 'any day,' possibly by the end of May, but noted the EPA is not on a fixed schedule. He added that Bunge is hopeful for a thoughtful decision soon.

Rahi Parikh requested a deep dive on Brazil, asking about the progress of destocking at the distributor, retail, and farmer levels, and about the farmer credit environment.

Answer

Executive Jeff Tarsi addressed the question, stating that from Nutrien's perspective, they have aggressively driven down their own inventory in Brazil by 46% year-over-year to de-risk the business. He believes destocking has also occurred at the farm gate, making Brazil more of a just-in-time market. On credit, Tarsi affirmed that Nutrien is intensely gauging credit risk in Brazil with a strong local team, making decisions based on customer P&L opportunities.

Rahi Parikh inquired how the final fiscal 2024 T&M results compared to the initial plan, asking for specifics on the 'over-delivery,' and how the incremental $100-$150 million target for 2025 compares to the original timeline.

Answer

CEO Jim Snee responded that the company is 'on track' with its T&M initiative, emphasizing the momentum and acceleration gained. VP of Corporate Development Nathan Annis added that fiscal 2024 involved significant setup work, giving them a 'running start' for fiscal 2025 with more and bigger projects in the pipeline. They did not provide specific numbers comparing the $75 million achieved to an initial budget but expressed confidence in the trajectory.

Rahi Parikh from Barclays questioned the strategic plan for the Industrial Products (IP) segment to navigate the current downturn, beyond waiting for cyclical recovery, and sought clarification on the nature of the inventory being destocked.

Answer

President and CEO Raviv Zoller stated that while the downturn is significant, the company is maintaining market share with long-term customers and expects a more significant recovery in early 2024. He highlighted the division's resilience, noting its ability to achieve 25% EBITDA margins even in difficult conditions. CFO Aviram Lahav added that the company's revised guidance in June already factored in a $200 million reduction for the bromine business. They confirmed the inventory being worked through is high-cost stock.

Rahi Parikh from Barclays requested a specific figure on the percentage of energy costs exposed to market volatility. She also asked for an update on the company's progress toward its 2030 greenhouse gas reduction goals and on safety protocols at the Dead Sea.

Answer

CEO Raviv Zoller estimated that less than 15% of the company's energy costs are exposed to volatility. He confirmed ICL is on track to meet its 30% greenhouse gas reduction target, citing key initiatives like shifting to renewable energy in the U.S. and natural gas in Israel. Regarding safety, he stated that performance at the Dead Sea is very strong and continues to improve due to a robust safety culture and management focus.