Ladies and gentlemen, thank you for standing by, and welcome to the ICL Group Analyst and Investor Conference Call. [Operator Instructions] I would now like to hand the conference over to your first speaker today, Mr. Dudi Musler, Investor Relations, Manager. Please go ahead.

Thank you. Hello everyone, welcome and thank you for joining us today to our first quarter 2020 conference call. The event is being webcast live on our website at www.icl-group.com. Earlier today, we filed our reports to the Securities authorities and the Stock Exchanges in the U.S. and in Israel. A report is what is the press release are available on our website. There will be a replay of the webcast available a few hours after the meeting, and a transcript will be available shortly after. The presentation that will be reviewed today was also filed to the Securities authorities and is available on our website. Please don’t forget to review the disclaimer on Slide 2. Our comments today may 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. We will begin with the presentation by our CEO, Mr. Raviv Zoller, followed by Mr. Kobi Altman, our CFO. Following the presentation, we will open the line for the Q&A session. Raviv, please?

Thank you, Dudi, and hello, everyone. Before discussing ICL's highlights for the first quarter on Slide 3, I would like to take a moment to acknowledge ICL's employees globally for their perseverance in light of the challenging conditions brought about by the COVID-19 pandemic that is reflected all personally and professionally. ICL responded swiftly to make sure measures were in place to ensure the health the safety of our employees, and are very grateful for the efforts and commitment our team has put forth in order to maintain continuity of our business globally with a zero disruptions to our customers. Now turning to the highlights, our results in the first quarter provide a snapshot of some of the factors that helped make ICL so unique. Despite the current Ag inputs market environment, in which potash and phosphate commodity prices fell to what we believe are cyclically low levels, we achieved operating income of $132 million, EBITDA of $250 million, and operating cash flow of $166 million. These results reflect the diversity and resilience of ICL’s business portfolio, as well as the effectiveness of our strategic focus on value based specialty products. In particular, the strong performance and phosphate specialty stands out, as this helped to mitigate some of the sharp year-over-year decline in commodity phosphate prices. We believe our phosphate specialties business is an important differentiator, contributing to our overall resilience. We also achieved record performance in our industrial products division, driven by strong sales in most products, including record sales of clear brine fluids. The successful Dead Sea facility upgrade in the previous quarter lead to record first quarter potash production at the Dead Sea, offsetting the COVID-19 related decline in production in Spain. The COVID-19 pandemic had a limited impact on ICL's results in the first quarter, although…

Thank you, Raviv and good day everyone. As Raviv already mentioned, we entered the abnormal economic environment in a solid financial strength that enables us the latest flexibility at times like this, and the ability to capture opportunities. The summary of our financial results shown in the table of Slide 13, reflects the year-over-year decline in the financial metrics due to the negative impact of commodity prices. The sequential performance is compared to the fourth quarter of 2019 has improved. Improvements came despite the continued decline in potash and phosphate commodity prices. As Raviv mentioned earlier, the difference in our results compared to the first quarter of 2019 stems from the sharp decline in commodity prices. Our results for the first quarter of this year, very clearly demonstrate the underlying value of our specialty businesses and the effectiveness of our value-based approach. Looking forward after the recent signing of potash supply contract with China, we believe that both potash and phosphate commodity prices have fallen to cyclically low levels. As we can see on Slide 14, commodity prices have recently reached very low levels, while our business is significantly less commodity price exposure than a pure play producer. We still manage for commodity cycles and maintain and conservative financial profile as a result of this exposure. Raviv mentioned earlier that the new supply contract signed in China and the expected contracts to be signed in India should help to reverse the downturn trend in potash prices, as we saw in mid 2016. Slide 15, will only be found in the appendix, but we bought it forward this quarter, given the impact to the quarter. Net financing expenses in the first quarter amounted to $52 million, compared to $75 million in the same period last year, an increase of $70 million.…

[Operator Instructions] Our first question we have today comes from the line of Joel Jackson of BMO Capital Markets. Please go ahead.

Good morning Raviv and Kobi. Maybe I'll ask a few questions one by one. Just higher level, the last couple of years we've seen a really strong bromine and IP business, it's maybe offset some challenges in the other commodity other businesses. With the oil price environment and the lower economic activity environment, you know bromine is going to take a step down here. And hopefully, we'll see some potash and phosphate price recovery, hopefully I’m not sure. My question is, if bromines are doing the heavy lifting, and now that's coming down, and the other businesses might not come back to offset that, how does that strain change your strategy, what you want to acquire, what you want to do in your cap allocation? Thanks.

Actually, for the past couple of years, every quarter we look at sales of clear brine fluids and we always tell ourselves say, when is this going to end, when is this going to go lower. And actually a year ago in the first quarter of last year, we had a record quarter and what - all the stars were in the right place. And we thought hey, probably it's going to take a really long time until we see that happen again. And here we are in the first quarter of 2020 and we have another record, including clear brine fluids. The bromine business as a whole is very, very solid. We have the most significant market share. And our strategy has been to protect the future growth of that business by signing long-term contracts, which we started to achieve last year. And you can see that that strategy is already paying off as the first quarter of this year was not necessarily a growth quarter for the bromine market. You can see that some of our competitors actually went down in the market. So we think that we've secured a huge part of the business and the prospects going forward look very positive. On clear brine fluids, clearly there will be an influence of oil prices. But at the same time, most of our product goes to deepwater drilling. And those drillings are usually state regulated. They're not short-term. They don't stop the drilling from one day to the next. They require government permit. So typically, it's a cycle of almost a year until there's actual real change in the deepwater drilling. At the same time, once you know prices go down so significantly, obviously there's an immediate response. And that means that inventories at our customers are…

Okay that's helpful. I have been following in potash so last year you had said, you had some downtime in the fourth quarter at Dead Sea works for some improvements turnaround work. This year is interesting you have some potash because demand growth that can be up hopefully, but you have a lot of new capacity from other players and inventory from other players? A lot of companies like yourself that have lower production last year, seeking volume gains this year everybody can't get what they want? Do you expect that your potash volume to be down this year when you consider all that or will you grow?

No, absolutely not, we're going to grow significantly because but not only are we not losing the product that we had to lose last year to make a one-time capacity increase, but we're also producing more this year. So we will be a 400,000 or more of additional production this year relative to last year, and that's based on our capacity upgrade last year. So actually, if everything works out well it will be more than 0.5 million. So we're going to be up this year remember we are a price taker in this market. So we are going to sell all of our products, there's no question we're going to sell the product. We're going to sell the product where the price makes more sense. We are not selling any product in Brazil at this point. Obviously, we will keep our relations with Chinese and Indian customers which are our foundation and rest of the product will go to those markets that pay a premium. At this point, the highest premium is in Europe.

Just finally, doesn't that concern you that a lot of your peers and potash because you do, as you have your volume objectives this year, you're going to sell it where it makes sense. Is that not concerned you that the price can't recover, like how do you reconcile price recovery if you're all want to have big volume growth?

It's very simple. The market is basically an oversupplied market which means that there is more capacity than there is demand on the base. And if the excess demand $7 million or $8 million or $9 million, it doesn't matter that much. The reason is that the excess capacity is controlled by two or three players. And the amount of discipline that they exercise will determine what the price levels will be. I think that last year they planned. They made a certain plan. But unfortunately, that didn't meet reality, because the actual demand was much lower due to the conditions in the U.S. the weather conditions and also the swine flu, the swine flu in India, which also caused a significant decrease of demand for last year. And what happened is that they were going to supply in a way that would be more supportive of the market. But what happened is that there wasn't enough buying in the U.S. There wasn't enough buying in China, and the dynamics of the market to control. Also even towards the negotiation with China, there was a lot of product in bonded waiting in China, and that didn't do too much good for the negotiation with the Chinese. I think, probably in the future it won't happen in this way. But what happens is that as soon as there are markets that can absorb the product, the regular product that everybody is producing. Then those players that have the excess capacities and can exercise discipline have an opportunity to do their job or to get their results to a better place. Once the fundamental assumptions don't work, then you start to chase after finding the places to place products. The smaller players in the market and we consider ourselves a smaller player with the number six producer in the world currently. The smaller players will place their product. We do not look at total demand and total supply because we don't have the means to control that. In the bromine market, we're the largest player, so we're in a different situation that would be my answer. So you should ask our nutrient and they would give you a much better answer than me about what is going to happen in the market.

Thank you very much. The next question today comes from the line of Vincent Andrews from Morgan Stanley. Please go ahead.

This is Jeremy Rosenberg on for Vincent. I want to start out on industrial products. I saw in the press release and I heard your comments on the lower clear brine fluid sales expected as well as the flame retardant sales. I'm just wondering is that mainly concentrated in the second quarter or do you expect to see those impacts in the back half of the year as well and maybe just a little more color as to kind of the magnitude of the declines you expect?

The honest truth is that we don't know - because we know that the car industry has shut down for a while, it has come back in China. It's coming back in Europe now, but it's still not really coming back in the U.S. So the car industry is shutdown, obviously electronic stores and distributing is slowed down. So we look at the final market demand, and we understand that that's going to translate down the supply chain. So we're seeing a little bit lower levels of demand in certain types of products. It's still not to a point that we can really work at in the future. Currently, we estimate that most of the effect is going to be over the next few months because we see electronics coming back and car production coming back. And construction is coming back and we'll come back. Oil is a little bit of mystery, because we don't really understand the dynamics of the market, and we don't know how long stub $40 oil prices are going to stay. If oil goes back to $40 or $45 within the next month or two, then we don't really expect too much of an effect. If oil prices stay below $40 for more than five or six months then it could be longer. I was afraid to give an estimate. We really want to give as much transparency as possible that's why we gave an estimate of $10 million to $20 million, the effect on our potash division from lower capacity in Spain and UK et cetera. And we would love to give a good estimate. The only thing I can say is that our bromine competitors gave an expectation of 20% lower in the second quarter. If I had to base my forecast on April, it would be less than that. But to be safe, I would say that given that April is too close to the actual event, then what my competitors gave is as good as anything I can give at this point. We don't really see, we don't really forecast a significant effect beyond the second quarter. But it's too early to put us in a position to feel confident about any kind of forecast.

Okay, got it that’s helpful. Maybe I'll just ask one more on the potash side of things. Looking at the China contract, I know there has been a lot of discussion on the price side. But I wanted to focus on volumes, if I looked at the contract volumes this year versus the last contract, it seems like - the amount of tonnage is pretty similar. And I'm just wondering just given how late trying to find how much tonnage that you’ve I guess signed on for until the end of the year? And where bonded warehouse inventories were and things like that. Is there any concern that we're going to get into a similar situation where they're basically going to be stockpile, if they don't need all the potash they've contracted for? Thank you.

I don't really see that. The quantities are actually until the end of the year. It's not, no it’s not until the next April, it’s until December. So that’s a lot until December is going to be a significant challenge to supply all those quantities until the end of December, at least for us.

Thank you very much. The next question today comes from the line of Patrick Rafaisz from UBS. Please go ahead.

Thank you and good afternoon, everyone. I have three questions, please. And the first one will be a follow-up on the question just now on the contract with China. And how should we think about the quarterly shipments here for the 900,000 or 910,000 tonnes. And since you mentioned that it will already be a challenge to fulfill this, how should we think about that optionality you mentioned in the release?

Right now what I can say is that we haven't supplied any product to China in the first quarter. Actually we provided I think it was 29,000 tonnes just an emergency product, but that's negligible. So it's close to zero in the first quarter. So all this needs to be supplied in nine months if you know take an average per quarter, it's about 300,000 per quarter. In terms of the options right now, it doesn't look like we're going to want to use those options and our customers aren't going to either. But it gives us - the flexibility to help each other out if necessary. So I would say that my best guesstimate is that we will be shipping a little less than 910,000 just because the placement of our product to other regions put us pretty much at the limit. It's also about half of our non-granulated productions. So that's quite a lot. So I would say that my best, I'll repeat that my best guesstimate is that we will get close to 910,000, maybe a little less.

Okay, thanks that's very helpful. And then also a follow-up I guess, on industrial products and bromine. And one of your competitors was also talking about some pull forward demands, especially for flame retardants from the auto industry. And is that something you would confirm, so was the strong performance in Q1 maybe also helped by some stockpiling of customers. I’m worried about potential supply bottlenecks or supply chain disruptions due to the Corona outbreak, and if so - anyway of quantifying this?

No, I can't speak of any kind of substantial loading of stock. There are some dynamic - such as for example, the lockdown in India has caused some disruption in bromine production and some pressure on the bromine market. In China also - the competitors facilities in Jordan were either shutdown or producing at less than full capacity for a while because of the lockdown in Jordan. So that also may create some apprehension of customers in China. And maybe in the U.S. and maybe they needed to protect themselves, but we don't really see that it affected us in any meaningful way - at least not in the first quarter. Maybe April looks better to us than to our competitors, because we didn't have that.

Okay, thanks. And the last question will be on cash flow. And your working capital outflow was significantly lower than last year. And there were some big swings right in receivables and payables versus last year, and also in other payables. And how should we think about the working capital in the next one or two quarters and for the year? Do you expect - the performance as a ratio to sales to be in line with last year or maybe improved further, and any extraordinary items in there that are worth highlighted?

Well first of all, typically our working capital is at its highest levels in March. Just because of the dynamics of the fertilizer season. This year was a little bit different in a sense that fourth quarter we sold less because of the production shutdown and strong for the capacity increase. So we had less receivables at December 31. So that affected our cash flow in the first quarter, maybe even a little more than the first quarter in a bad way, but despite that, the cash flow was really, really good. The improvement in working capital is going to continue, it's not going to be as significant as last year because last year, we put in place a new program to really discipline us on cash flow management, and we've improved the cash flow management in the company significantly. And obviously, it's easier to create significant improvement in the first stages. And after that becomes harder and harder to get to the same levels of improvement so we will see working our capital continue to improve. It's not going to improve as much as it did last year, and it still would have been more significantly - had we started the year with higher receivables. We started this year with a lower receivable because of a one-time event, which was less sales because of our capacity, upgrading the Dead Sea in the fourth quarter if that answers?

Thank you very much. The next question today comes from the line of W. Fisher [ph] from Barclays. Please go ahead.

This is [inaudible]. Thanks for taking the question. First off, I was just curious if there was any consternation I guess on your part on in the China contract at the 220 price point. And secondarily now that the contract is signed, how quickly can we get the Spanish operations up and running to full capacity? Thank you.

Okay. Obviously the two things are not related. No, I can tell you the marketing story or the true story or the true story. The true story on China is that we were disappointed with the price. But we're not in a position to do anything to change it. So I'd like it to be different, but that's the honest truth. As far as Spain is concerned, we have pretty much confidence that we will be at full capacity by the end of the quarter. Just to make things clear, what the issue is. The issue is social distancing. So going down - the shaft to the mine, you can have more than a certain number of people in an elevator and things like that. That's what's holding us up. So as the authorities grant us a little bit more flexibility and we do want to be, we want to stay safe and want to adhere to all the requirements as soon as the authorities give us a little bit more flexibility, then we'll be able to return to full capacity. There are no other issues there. The other issue we have in Spain has to do with the ramp project. We have a very long-term project that should have been finished quite a long time ago because we really needed to complete our efficiency plan in Spain. And because of sickness of employees of a subcontractor, they declared force majeure and basically stopped working also on the ramp project. We have been back working since two weeks ago on the essential things that have to be done in order for us not to create another problem for ourselves. So we need that to get back online. It's at a point where we're past the critical, the critical parts of the project. So we basically could decide to finish the project on our own. We'd rather not, but if until the end of the quarter, we won't be back 100% on the ramp project, and we'll probably take it on our own and finish it ourselves. We are finishing the consolidation of the two mines in Spain this year, one way or another.

Got it.

I'm not sure. if you asked about the UK, UK is also not at full capacity, but it's not potash, in any case.

Right.

That also will be full capacity by the end of the quarter, same kind of issue.

Excellent, thank you and then just a quick follow up. Capital Expenditure expectations for you guys this year, has there been any adjustments with the uncertain backdrop?

Yes, we have some delays in project. So in terms of cash flow, the delay of I would say between $30 million to $50 million will be delayed into next year. That's about the effect it’s not a major effect - that's another effect of COVID-19.

Got it. Thank you very much.

The only delay we're concerned about is the delay of the ramp in Spain otherwise I would have mentioned.

Thank you very much. The next question today comes from the line of Laurence Alexander from Jefferies. Please go ahead.

This is [inaudible] on for Laurence. I was just wondering how you guys expect higher cost inventories to impact your decremental margins in the second quarter?

Can you repeat please?

Sure, yes basically how you expect higher cost inventory impacts your decremental margins in the second quarter, if at all?

I'm not sure I understand the question, what is the higher cost inventory?

Basically, can you just really talk about the dynamics behind your margins a bit - and basically in the second quarter and sort of what we expect to see there?

Sure, in potash we expect increasing margin because we had one-time price adjustment in the first quarter and also the other non-potash businesses are improving in result. Our bromine we already mentioned that we expect to see lower sales in the second quarter. We're not sure at this point what the effect will be. But obviously, if you take sales off the top and your average margin goes down. So, we expect the 28 margin, 28% margin we saw operating margin we saw this quarter to come down by how much too soon to say. On phosphate, it really depends on commodity prices. In terms of specialties, we expect another strong quarter in the second quarter as the dynamics of the market are good. We had a good product launch, the demand for food phosphate product, non-fresh foods is very high so that works in our favor. So the phosphate margins are dependent on commodity prices. The most important signal to phosphate - commodity price market, commodity prices sorry, was a few days ago when OCP Morocco concluded its new quarterly contract with India at about 3.5% price increase. That hasn't happened in a very long time and very strong signal to the market. So we hope to see commodity prices going up. If they go up, it'll improve our margins. If not, then our margins will suffer. On our specialty fertilizers business, we expect results to be pretty much in line with the first quarter results. So no big change in - no big surprises in any of the divisions, probably improving results in potash and little softer results in bromine.

Thank you. And my last question just has to do with your sales process. I guess that's been affected at all by social distancing at all?

It's interesting because a lot of unique things happening. I mean, the product launch that I mentioned was launched in multiple webinars. Our sales in China to the agriculture sector in March, we're concentrated on WeChat which has never happened before. Of course sales meetings were happening on zoom all the time. Also, training is happening, training I mean no randomness customers is happening on zoom. No travel really. We just we just approved internal domestic travel in China yesterday, I believe. So it'll take time until our salespeople start visiting their customers again, but a lot has been achieved by digital means. And I think it’s good news because I think the agriculture industry is learning that there's a lot more room for digital and we're investing heavily in our digital future and we think it'll be a positive for us in the long run.

Thank you very much. The next question today comes from the line of Mark Connelly from Stephens. Please go ahead.

Thank you. Just two things, you mentioned lower sulphur prices. Have you seen any significant shifts in sulphur availability? And how are you thinking about the risk to other availability or pricing if crude does stay down?

It's a great question. I'm not sure that I have a great answer. We're not seeing any kind of pressure at this moment from the market and we've sourced for the next quarter. So, we're pretty much hedged against what we know where the price is today in the phosphate commodity market. So my assumption is that any sharp change and sulphur prices will also be reflected in the commodity phosphate price.

Okay, that's fair. And just one more question on bromine. You saw flat elemental and overtime, we're expecting that number to come down. Do you have any sense yet of whether this downturn would tend to accelerate or slowdown that mixture?

The mixture between what compounds of what?

Between elemental and compound downturn in bromine business, I'm just curious whether your Chinese customers are more likely to accelerate or more likely to slowdown and if you have any sense there?

Our percentage of compounds is gone up. It's inherent in long-term contracts. The long-term contracts are related more to final products into elemental bromine. So in our case, the mix is shifting towards the compounds and again, our contracts - the long-term contracts that are like long term orders, if you will.

Okay right.

Also, it's in our interest to sell compounds because we’re more profitable on the compounds.

Thank you very much. The last question comes today from the line of Rahul Bhat from JPMorgan. Please go ahead.

I just have a quick small question actually on CapEx of 2019. You said $30 million to $50 million sorry for 2020 you said CapEx it will be delayed by $30 million to $50 million but could you give a guide on where you see full year CapEx coming and I missed it earlier during the call. And also on M&A you said you could use your liquidity to - if we don’t do some M&A. Could you give any kind of guide on what kind of ballpark numbers is this going to be in the small double-digit millions or are we looking at something visibility [inaudible]?

Okay, I'll start from M&A and then probably you'll have to remind me the question, the first question. But in any case on the M&A side other than, types of know-how technology digital where we did a transaction like Growers, which was $27 million. All the acquisitions that we're looking at are significant $100 million of revenues. Plus, I don't want to give any kind of projections, but I'm trying to trying to reflect that there would be meaningful. The focus is on the specialty fertilizers business where we need in order to build leadership like in all our other business divisions. We need some more geographical - diversification as well as product diversification. So our targets are on certain products. As well as biostimulants, micronutrients, emphasis on the growing market as Brazil, you know the others. And as soon as we have any information we can share then obviously we’ll share. In terms of guidance topic I don't remember our guidance but Kobi was fair to say it will be a little over 500 for the year

550.

Yes so Kobi says it will be anywhere between 500 to 550 our original assumption was a little bit more than that. And that will reflect delays of $30 million to $50 million due to COVID-19 related issues. We are we are looking at the industry as a whole, especially fertilizer companies. I'm very proud that we're the profitable company in the fertilizer industry with positive cash flow, with positive momentum in the business. And also high liquidity and all of those give us comfort that it's good that we were careful in terms of valuations in the past on acquisitions. And in some cases, those potential opportunities that we looked at in the past are coming back to us. We'll be able to be more selective and make sure that we retain our position as the most profitable fertilizer company around.

Understood thank you, that was very helpful. On the M&A bit can I just probe a bit more and in terms of when you do a transaction, how do you think of where do want, what’s the maximum level that you are okay to take leverage to? Because I think as leverage this year is going to increase and how do you think about your ratings in that aspect. I think - is remaining IG one of the key things in your strategy as well. And how would you look to fund such an enemy?

Yes I think it's too early to talk about that. But the way to look at it is any kind of acquisition that we're looking at is a accretive to earnings and has EBITDA and can basically finance itself. So the only reason we would use our balance sheet is if we want to make the financing cheaper than using external financing for the acquisition based on EBITDA. So we don't think that the size of the acquisitions that we're looking for are going to put any strain on our balance sheet.

Understood, perfect. And in terms of the license renewal with the Dead Sea works, is that something that you think we can expect some use on this year or is that still somewhere down the horizon?

We have a very good relationship now with the Israeli government. It's a good basis for discussion I know that they're interested in discussing with us. We just had a round of negotiations about rules of engagement regarding how we invest and how we look at 2030 between the year 2020 to 2030 it’s a process that we needed to go through. And I think we have a strong foundation at this point. Also there may be an opportunity in the future where for fiscal reasons, the government will decide to expedite the process and give both the government and us more uncertainty. But we're in no rush. We're in very, very good position. We have a right of first refusal. We have a right to get the full value of our assets in case we don't continue with a concession asset 2030. So right now, all the options are on the table and all the options are good options. So we have good options. We have very good option. No bad options, really.

Thank you very much. We do have a follow-up question here from the line of Joel Jackson from BMO Capital. Please go ahead.

Hi Raviv, I'm sorry, coming one more time I thought I'd ask a polysulphate. What was the contribution margin of polysulphate in the first quarter? I know there is a lot going on with product sample lock in Q1 demand is only a little you got some restriction regarding social distancing. So what will the earnings contribution be for the full year for Q1 and the full year? Thanks.

Well, you got me there. The sales were relatively low in the first quarter. They were just marginally above first quarter last year. And the reason is that - we had some sales scheduled to go to China and because of the COVID-19, the sales actually happened in April. So I think, the contribution was, some kind of a ridiculous number like a 15% or something like that. But it's not the normal contribution. The normal gross profit that is supposed to come out of the sales of the polysulphate need to be close to 40% on the annual level.

Thank you.

And I'm looking forward to see you tomorrow at the BMO Conference. I'm curious to see you.

You won't be sick with me by tomorrow I hope? Thanks.

Be nice to us tomorrow.

I’ll try.

Okay, thank you, everyone for joining us today. Feel free to reach out anytime and have a great day. Thank you.

Thank you very much. That does conclude the conference for today. Thank you for participating. You may all disconnect.