Mr. G. David Delaney reports

ITAFOS REPORTS Q3 2023 RESULTS

Itafos Inc. has released its third quarter 2023 financial and operational highlights. The company's financial statements and management's discussion and analysis for the three and nine months ended Sept. 30, 2023, are available under the company's profile at SEDAR+ and on the company's website. All figures are in U.S. dollars except as otherwise noted.

Chief executive officer commentary

"We are pleased to report solid financial results and the continuation of our strong safety and operational performance in Q3 2023. For the nine months ending Sept. 30, 2023, we reported revenues of $346.5-million and adjusted [earnings before interest, taxes, depreciation and amortization] of $102.3-million.

"During the third quarter, we continued to successfully execute our business plan and made significant progress on a number of key company objectives. Work intensified and continues on our Husky 1/North Dry Ridge capital project with the project remaining on budget and on schedule for 2026 operations. Additionally, the company entered into a new five-year monoammonium phosphate sales agreement with J.R. Simplot Company, an international food and agriculture company. The agreement, which commences on Jan. 1, 2024, provides visibility around our MAP sales volumes over the medium term.

"During Q3 2023, we saw prices rebound and moderate off the lows of [second quarter] 2023, reflective of demand improvement and tighter U.S. supply fundamentals. We expect to see these conditions continue into [first half] of 2024. The company has maintained its full-year EBITDA guidance (narrowing the bottom of the range), based off these improved market conditions.

"Finally, the process to explore and evaluate various strategic alternatives to enhance value for all Itafos shareholders announced by our board in [first quarter] 2023 continues," said G. David Delaney, chief executive officer of Itafos.

Q3 2023 key highlights:

• Revenues of $110.8-million;
• Adjusted EBITDA of $19.7-million;
• Net income of $3.1-million;
• Basic earnings of two Canadian cents per share;
• Free cash flow of ($9.7-million).

Nine months 2023 key highlights:

• Revenues of $346.5-million;
• Adjusted EBITDA of $102.3-million;
• Net income of $51.7-million;
• Basic earnings of 37 Canadian cents per share;
• Free cash flow of $54.2-million.

Sept. 30, 2023, key highlights:

• Trailing 12-month adjusted EBITDA of $152.4-million;
• Net debt of $62.9-million;
• Net leverage ratio of 0.4 times.

Narrowed fiscal 2023 guidance:

• Adjusted EBITDA guidance of $125-million to $135-million;
• Net income guidance of $50-million to $60-million;
• Basic earnings guidance of 34 Canadian cents to 41 Canadian cents per share;
• Maintenance capital expenditure guidance of $15-million to $25-million;
• Growth capex guidance of $35-million to $45-million;
• Free cash flow guidance of $65-million to $85-million.

Third quarter and nine months 2023 market highlights

Diammonium phosphate New Orleans prices averaged $507 per st in Q3 2023 compared with $761 per st in Q3 2022, down 33 per cent year over year, and averaged $550 per st in nine months 2023 compared with $805 per st in nine months 2022, down 32 per cent year over year. Specific factors driving the year-over-year decline in DAP NOLA were as follows:

• Weakened demand in response to historically high 2022 phosphate prices;
• The softening of global ammonia and sulphur prices;
• The softening of historically high crop prices;
• Increased phosphate exports out of Russia and China.

Market outlook

Prices in 2023 have moderated off the historically high prices in 2022, which continued to drive a reduction in Q3 2023 prices. Due to the nature of its MAP sales contract, with sales price determined by a three-month lagging average, the impact of this decrease, coupled with lower SPA reset pricing, impacted the company's performance in Q3 2023. Through third quarter and into fourth quarter 2023, the company has seen robust demand return to the market, resulting in improved pricing and tightened North American phosphate fertilizer supply, which are expected to remain through the first half of next year.

Specific factors the company expects will support strength in the global phosphate fertilizer markets through the end of 2023 are as follows:

• No significant phosphate supply capacity additions;
• Strong demand for phosphates in North America following years of underapplication;
• Exceptional farmer affordability due to higher crop prices;
• Continuing phosphate export restrictions from China and reduced exports from Morocco.

Financial outlook

The company narrowed its guidance for 2023.

Business outlook

The company continues to focus on the following key objectives to drive long-term value and shareholder returns:

• Improving financial and operational performance;
• Deleveraging its balance sheet;
• Executing on the requisite infrastructure and civil works required for the mine development for H1/NDR;
• Conducting the strategic review process (including evaluating potential strategic alternatives for the company as outlined in the news release dated March 13, 2023).

About Itafos Inc.

The company is a phosphate and specialty fertilizer company. The company's businesses and projects are as follows:

• Conda: a vertically integrated phosphate fertilizer business located in Idaho, United States, with production capacity as follows:
  • Approximately 550,000 tonnes per year of monoammonium phosphate, MAP with micronutrients, superphosphoric acid, merchant-grade phosphoric acid and ammonium polyphosphate;
  • Approximately 27,000 tonnes per year of hydrofluorosilicic acid;
• Arraias: a vertically integrated phosphate fertilizer business located in Tocantins, Brazil, with production capacity as follows:
  • Approximately 500,000 tonnes per year of single superphosphate and SSP with micronutrients;
  • Approximately 40,000 tonnes per year of excess sulphuric acid (220,000 tonnes per year gross sulphuric acid production capacity);
• 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 Para, Brazil;
• Araxa: a vertically integrated rare earth element and niobium mine and extraction plant project located in Minas Gerais, Brazil.

As at Sept. 30, 2023, the company has completed the wind-down process of the Mantaro mine project (located in Junin, Peru).

The company is a Delaware corporation that is headquartered in Houston, Tex. The company's shares trade on the TSX Venture Exchange under the ticker symbol IFOS. The company's principal shareholder is CL Fertilizers Holding LLC. CLF is an affiliate of Castlelake LP, a global private investment firm.

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