Itafos Inc. press release

Itafos Reports Q2 2026 Financial Results and Operational Highlights

2026-08-05

TSXV - TSX Venture Exchange · Phosphate · Sulfur · United States · Corporate Finance

HOUSTON, Aug. 05, 2026 (GLOBE NEWSWIRE) -- Itafos Inc. (TSX-V: IFOS) (OTCQX: ITFS) (the “Company”) today reported its Q2 2026 financial results and provided a corporate update. The Company’s financial statements and management’s discussion and analysis for the three and six months ended June 30, 2026 are available under the Company’s profile atwww.sedarplus.caand on the Company’s website at www.itafos.com. All figures are in thousands of US Dollars except as otherwise noted. A recorded webcast of management’s commentary reviewing the Q2 2026 financial results and an update on the business will be available on the Company’s website on Friday, August 7, 2026 (see details below).

CEO Commentary

Chief Executive Officer David Delaney commented, “we are pleased to report another quarter of continued execution for the Company, especially given the unprecedented challenges facing the global phosphate industry. The Company recorded consolidated revenues for the quarter of $144.0 million, an increase of 14% compared to the same period last year, driven by higher product prices and higher fertilizer and sulfuric acid sales volumes in Brazil. Our safety performance during the quarter was indicative of our high standards and the Company’s Total Recordable Incident Frequency Rate declined to 0.53 as of the end of the quarter.

Our solid relationships with the long-term suppliers of our primary raw materials allowed the Company to continue to maximize output at both Conda and Arraias in an economic environment that has seen a series of shutdowns or production deferrals from domestic and global producers of phosphate. Conda produced fertilizer volumes that were comparable with year-ago levels while completing its scheduled turnaround during June and Arraias increased fertilizer production by 62% on a P2O5basis compared to the same period last year. I am proud that our team was able to execute so well and supply farmers in the United States, Canada, and Brazil with these critical crop inputs at a time when the industry was experiencing unprecedented turmoil.

Global supply chains for phosphates, sulfur, ammonia, and other commodities continue to be disrupted by the ongoing conflict in Iran, and operating margins across the industry have suffered. Despite this, our net leverage ratio remains at 0.3 times trailing 12 months Adjusted EBITDA1and we maintain ample liquidity to maintain industry-leading operating rates and to execute our planned growth projects.

It is unclear when tensions will fall in the Middle East, what the ‘new normal’ will look like, or how long it may take for that to be achieved. That said, the Company continues to excel at executing our day-to-day operations and is fortunate to have well established relationships with key customers and suppliers that allow for us to efficiently run our businesses and deliver vital products to the domestic and global agriculture industry. I remain confident of the long-term opportunities in our industry and in the ability of the Company to continue to prosper as we move forward.”

Q2 2026 Financial Highlights

For Q2 2026, the Company’s financial highlights were as follows:

Revenues of $144.0 million in Q2 2026 compared to $126.8 million in Q2 2025; Adjusted EBITDA1of $17.8 million in Q2 2026 compared to $31.8 million in Q2 2025; Net income (loss) of $(5.6) million in Q2 2026 compared to $24.8 million in Q2 2025; Basic earnings (loss)1of C$(0.04)/share in Q2 2026 compared to C$0.18/share in Q2 2025; and Free cash flow1of $10.7 million in Q2 2026 compared to $10.8 million in Q2 2025.

The decrease in the Company’s Q2 2026 Adjusted EBITDA compared to Q1 2025 was primarily due to materially higher sulfur and sulfuric acid costs at Conda and Arraias, which were partially offset by higher revenues.

The decrease in the Company’s Q2 2026 net income compared to Q2 2025 was primarily due to lower gross margin coupled with the fair value gain on investments recorded in Q2 2025 and higher finance expense, which were partially offset by lower income tax expense in Q2 2026.

The Company’s total capex2spend in Q2 2026 was $30.6 million compared to $28.8 million in Q2 2025 with the increase due to a planned sulfuric acid plant turnaround and preventive maintenance activities related to the acidulation and granulation plants at Arraias and MgO reduction development activities at Conda.

H1 2026 Financial Highlights

For H1 2026, the Company’s financial highlights were as follows:

Revenues of $286.2 million in H1 2026 compared to $262.5 million in H1 2025; Adjusted EBITDA2of $36.2 million in H1 2026 compared to $71.1 million in H1 2025; Net income (loss) of $(3.9) million in H1 2026 compared to $60.7 million in H1 2025; Basic earnings (loss)2of C$(0.03)/share in H1 2026 compared to C$0.44/share in H1 2025; and Free cash flow2of $(6.1) million in H1 2026 compared to $42.1 million in H1 2025.

The decrease in the Company’s H1 2026 Adjusted EBITDA compared to H1 2025 was primarily due to higher sulfur and sulfuric acid costs at Conda and Arraias and higher selling, general, and administrative expenses.

The decrease in the Company’s H1 2026 net income compared to H1 2025 was primarily due to lower gross margin, the gain on the sale of the Araxá project recorded in H1 2025, the fair value gain on investments recorded in H1 2025 and higher finance expense, which were partially offset by lower income tax expense

The Company’s total capex spend in H1 2026 was $43.2 million compared to $38.7 million in H1 2025 with the increase due to the planned sulfuric acid plant turnaround and preventive maintenance activities related to the acidulation and granulation plants at Arraias and MgO reduction development activities at Conda.

As of June 30, 2026, the Company’s financial highlights were as follows:

Trailing 12 months Adjusted EBITDA2of $123.8 million; Net debt2of $31.2 million; and Net leverage ratio2of 0.3x.

FY 2026 Market and Financial Outlook

Market Outlook

Phosphate fertilizer prices increased during Q2 2026 primarily driven by supply constraints stemming from the ongoing hostilities in Iran and the broader Middle East and the associated disruption in global trade resulting from the shutdown of the Strait of Hormuz. MAP NOLA prices exceeded $800 per short ton during Q2 2026, slightly above the highest levels seen during 2025 that had been influenced primarily by the U.S. import tariff policies.

Raw material prices have increased at materially higher rates and remained at higher levels relative to finished product prices, negatively impacting operating margins across the industry. Spot sulfur prices in Vancouver, Canada were approximately $500 per ton before the start of the conflict in Iran and the Middle East, having increased to levels above those seen during the Russia/Ukraine war in 2022 on increased demand in Asia for metals processing. Following the closure of the Strait of Hormuz, where approximately 45% of global supply passes, prices spiked above $1,000 per ton during Q2 2026 and have remained at these peak levels. Tampa, Florida Ammonia prices were approximately $625 per ton prior to the start of the conflict, up about 25% versus the prior year and then rose to $775 - $825 per ton during Q2 2026.

Higher input prices and the lack of availability of raw materials have driven a number of production curtailments, even among the largest phosphate producers in the world. According to public reports, OCP pulled forward maintenance operations at its facilities during the quarter and indications were that production rates were as low as 50% of operating capacity exiting Q2 2026. The Mosaic Company announced temporary curtailments of production at its Brazil and Louisiana facilities during the quarter and indicated that there would be further cutbacks in rate at sites in Florida, Louisiana and Brazil due to high sulfur prices.

China had announced that it will restrict phosphate fertilizer exports through August 2026. Total exports on a P2O5basis were down approximately 54% through May 2026 on a year-over-year basis. The consensus among industry analysts is moving toward an expectation that China will extend the phosphate export ban through the end of 2026 which, if realized, will further negatively impact global supply.

The Trump administration issued an executive order in late Q2 2026 temporarily suspending the countervailing duties (“CVD”) on phosphate imports from Morocco that have been in place since 2021. The latest CVD rates were 16.8%. Subsequently during the ongoing sunset review, the Department of Commerce announced a preliminary determination that a revocation of the CVD would likely lead to a recurrence of a subsidy and proposed an updated rate of 20.04% on phosphate imports from Morocco. In addition, the Trump administration imposed tariffs of 10 to 12.5 percent on goods from over 80 countries under Section 301 of the Trade Act of 1974 to replace duties that had been struck down by the Supreme Court but provided broad exemptions for various products and raw materials. Netbacks to producers for phosphate exports to the US are more than $100 per ton less than many alternative international markets, so it is unclear how much, if any, this change in policy will impact phosphate supplies in the US.

Multiple ceasefires between US and Iranian forces have been announced since early Q2 2026, with varying degrees of temporary success. Following a ceasefire announced in June 2026, certain cargoes of phosphate and sulfur that had been bottlenecked in the Strait of Hormuz were able to make passage to international ports. However, the flow of trade remained well below historical levels, and the ceasefire was subsequently abandoned in July 2026 in response to attacks on vessels transiting the Strait of Hormuz.

The Company expects that supply chains will be disrupted, global supplies of fertilizers and associated raw material inputs will be limited, and commodity prices will be elevated in 2026 and potentially beyond.

Fertilizer affordability indexes continue to point towards lower demand from domestic farmers based on the relative cost of inputs versus prices received for crops. However, that ratio has begun to improve with corn, wheat and soybean prices increasing at the end of Q2 2026. In addition, an incremental $12 billion in farmer assistance spending passed the US House of Representatives in July 2026, potentially helping farmer income through the end of the year.

Looking ahead, the Company anticipates phosphate prices to remain at elevated levels through the remainder of 2026 primarily due to:

continued supply chain and production issues related to the hostilities in Iran and other parts of the Middle East; ongoing phosphate fertilizer export restrictions from China; and phosphate supply curtailments from major global suppliers due to elevated cost and lack of supply of raw materials.

Financial Outlook

The Company revised its guidance for 2026 as follows from that previously announced in the Company news release dated February 11, 2026:

| (in millions of US Dollars | | | | Projected | | except as otherwise noted) | | | | FY 2026 | | Sales Volumes (thousands of tonnes P2O5)3 | | | | 340-355 | | Corporate selling, general and administrative expenses4 | | | | $16-20 | | Maintenance capex4 | | | | $23-28 | | Growth capex4 | | | | $63-83 | | Environmental and asset retirement obligations payments | | | | $25-30 | | | | | | |

The Company’s revised guidance for FY 2026 is explained as follows:

increased the low end of sales volumes from 335 thousand tonnes P2O5to 340 thousand tonnes P2O5based on actual sales through the first half of the year; and lowered the high end of maintenance capex from $33 million to $28 million as we prudently review cash expenditures given the current market dynamics.

Q2 and H1 2026 Market Highlights

MAP New Orleans (“NOLA”) prices averaged $778/st in Q2 2026 compared to $690/st in Q2 2025, up 13% year-over-year, and averaged $721/st in H1 2026 compared to $643/st in H1 2025, up 12% year-over-year.

Specific factors driving the year-over-year increase in MAP NOLA prices were as follows:

global supply chain disruptions affecting fertilizers and associated raw materials resulting from the conflict in Iran; significantly reduced Chinese exports of Diammonium Phosphate (“DAP”), MAP and Nitrogen, Phosphorus, Potassium (“NPK”) fertilizers due to expanded government-induced export restrictions; global phosphate production curtailments, particularly notable in Morrocco, the US and Russia, due to high priced or scarce raw sulfur inputs and the ongoing conflicts in Iran and Ukraine; and moderately stronger global demand, particularly from Africa and India, and decreased US retail demand due to the relative price of fertilizer inputs costs versus crop prices.

June 30, 2026, Highlights

As of June 30, 2026, the Company had trailing 12 months Adjusted EBITDA4of $123.8 million compared to $158.7 million as of December 31, 2025 with the decrease primarily due to the same factors that resulted in lower Adjusted EBITDA4during H1 2026 as compared to H1 2025 described above.

As of June 30, 2026, the Company had net debt4of $31.2 million compared to $19.5 million as of December 31, 2025, with the reduction primarily due to lower cash and cash equivalents which was partially offset by lower debt. The Company’s net debt4as of June 30, 2026 was comprised of $53.3 million in cash and $85.1 million in debt (gross of deferred financing costs). As of June 30, 2026 and December 31, 2025, the Company’s net leverage ratio4was 0.3x and 0.1x, respectively.

As of June 30, 2026, the Company had liquidity4of $133.3 million comprised of $53.3 million in cash and $80.0 million in undrawn borrowing capacity under its $80.0 million asset-based revolving credit facility (“ABL Facility”).

Operations Highlights and Mine Development

Environmental, Health, and Safety (“EHS”)

For Q2 2026, the Company sustained EHS performance, including no reportable environmental releases and one recordable incident, which resulted in a consolidated total recordable incident frequency rate (“TRIFR”) of 0.53. For H1 2026, the Company sustained EHS performance, including no reportable environmental releases and two recordable incidents, which resulted in a consolidated TRIFR of 0.53.

Conda

In Q2 2026, Conda:

Produced 79,306 tonnes P2O5compared to 79,606 tonnes P2O5in Q2 2025 which remained consistent with higher MAP production offset by lower SPA production; Generated revenues of $127.0 million compared to $116.6 million in Q2 2025 with the increase primarily due to higher MAP and Superphosphoric acid (“SPA”) realized prices; and Generated Adjusted EBITDA5of $17.6 million compared to $32.9 million in Q2 2025 with the decrease primarily due to lower cash margin per tonne P2O55driven by higher cash costs due to sulfur market dynamics.

In H1 2026, Conda:

Produced 166,882 tonnes P2O5compared to 170,806 tonnes P2O5in H1 2025 with the decrease primarily due to a shift in production mix to MAP from SPA; Generated revenues of $257.4 million compared to $244.9 million in H1 2025 with the increase primarily due to higher realized prices for MAP and SPA products, partially offset by the impact of sales volumes mix; and Generated Adjusted EBITDA5of $39.6 million compared to $73.8 million in H1 2025 with the decrease primarily due to lower cash margin per tonne P2O55, driven by higher cash costs due to sulfur market dynamics.

Mine Life Extension

For the three and six months ended June 30, 2026, the Company advanced activities related to the extension of Conda’s mine life as follows:

successfully commenced regular loading of ore trains from the H1/NDR tipple to the plant, which ensures ore continuity for the 2026 shipping and production season and beyond; and advanced engineering and construction activities for the new processing facility designed to lower the magnesium content of the ore from the H1/NDR mines to maintain P2O5production capacity at the plant (the “MgO Reduction Project”).

MgO Reduction Project

Management recently completed a review of the expected timing for completion and cost of the company’s MgO Reduction Project. Following this review, the Company now expects that the MgO Reduction Project will be completed and operational during Conda’s 2028 turnaround activities. As a result of the change in timing of the MgO Reduction Project, management has decided to defer the long turnaround scheduled at Conda from 2027 to 2028. Management believes that the deferral of the MgO Reduction Project completion will further de-risk the project execution providing additional time for construction and commissioning activities.

The optimization of the MgO Reduction Project has resulted in an increase in the total projected capital costs. The Company now forecasts that the total project cost from Q3 2025 to project completion to be between $95 and $110 million, compared to the original forecast of $80 to $95 million. The changes to the forecasted completion date and project costs have no impact on maintenance or growth capex guidance for 2026, which are at $23 to $28 million and $63 to $83 million, respectively as described in the Financial Outlook section above.

Exploration and Appraisal Program at Conda

As H1/NDR mining activities continue, the Company is focused on identifying and pursuing opportunities to add resources and reserves to Conda to extend mine life beyond the current Conda Technical Report estimate of mid-2037. To pursue this objective, the Company has commenced a multi-year, multi-lease exploration, resource evaluation and permitting program at Conda with an expected annual cost of approximately $6,000 to $8,000.

Activities in the first half of the year focused on planning, preparation, and initial drilling activities, which will continue to peak into Q3 2026. Drilling activities will include in-fill drilling to further define reserves at Husky 1, initial resource delineation drilling on the Dry Ridge lease to generate initial resource models, and core drilling of the Husky 3 and Husky 4 leases to identify site geology and characterize the resource. Geologic evaluation and permitting activities also advanced during the quarter.

Sulfuric Acid Amended Agreement(as announced in the Company news release dated May 14, 2026).

On May 14, 2026, the Company entered into an amendment to its long-term sulfuric acid supply agreement with Rio Tinto Kennecott, a key supplier of sulfuric acid for the Company's Conda phosphate production facility in Idaho.

Pursuant to the amended Sulfuric Acid Supply Agreement, the Company will continue to purchase sulfuric acid from the Kennecott mine in Utah. Under the amended agreement, the reference index price will change from the Vancouver Index to the Tampa Index from May 1, 2026 through December 31, 2029. To promote long-term value for both U.S. farming and mining industries, the parties have agreed to an adjusted sulfuric acid price until December 31, 2029 to help address significant price volatility of sulfur over the last four years. Additional modifications to the Sulfuric Acid Supply Agreement around delivered volumes have been negotiated to provide greater flexibility for incremental supply (subject to availability). Conda has historically sourced approximately 60% of its sulfuric acid requirements from Rio Tinto, and it is expected that it will purchase similar volumes under the amended Sulfuric Acid Supply Agreement. After December 31, 2029, it is expected that the Company will continue to purchase sulfuric acid from Rio Tinto.

Planned Turnaround

In June 2026, the Company completed a planned turnaround at Conda. The underlying maintenance activities were completed on schedule and within budget, with one recordable injury and no environmental incidents. Production has resumed as of June 30, 2026.

Arraias

In Q2 2026, Arraias:

Produced 15,494 tonnes of excess sulfuric acid compared to 29,658 tonnes in Q2 2025 with the decrease due to a planned sulfuric acid plant turnaround and higher internal sulfuric acid consumption in the acidulation process, which reduced excess volumes available for sale compared to prior year; Produced 16,494 tonnes P2O5, compared to 10,194 tonnes P2O5in Q2 2025, with the increase due to higher demand for fertilizer products and a full quarter of Granulated Partially Acidulated Rock (“G-PAPR”) production compared to the prior year; and Generated Adjusted EBITDA6of $4.7 million compared to $3.4 million in Q2 2025 with the increase primarily due to higher realized prices and higher sales volumes in tonnes P2O5, which were partially offset by higher sulfur costs.