Mr. David Delaney reports

ITAFOS REPORTS STRONG OPERATIONAL Q4 AND FY 2023 RESULTS

Itafos Inc. has released its Q4 and FY (fiscal year) 2023 financial and operational highlights. The company's financial statements and management's discussion and analysis for the year ended Dec. 31, 2023, are available under the company's profile on SEDAR+ and on the company's website. All figures are in thousands of U.S. dollars except as otherwise noted.

Chief executive officer commentary

"We are pleased to report our 2023 financial results and the continuation of our strong safety and operational performance. For 2023, we reported revenues of $465.5-million and adjusted EBITDA of $131.8-million.

"During Q4 2023, we continued to successfully execute our business plan and made significant progress on a number of key company objectives. Work continues on our Husky 1/North Dry Ridge (H1/NDR) capital project, with the project remaining on schedule and on budget. We now expect to begin mining activities in Q4 2025.

"During Q4 2023, we saw prices continue to strengthen off the lows of Q2 2023, reflective of increasing demand and tighter U.S. supply fundamentals. We expect to see these conditions continue into 2024. Going forward, the company will now provide guidance associated with our expected sales volumes, capital expenditures and other relevant financial metrics. This change is consistent with peers in the industry.

"Finally, the process to explore and evaluate various strategic alternatives to enhance value for all Itafos shareholders announced by our board in Q1 2023 continues," said G. David Delaney, CEO of Itafos.

Q4 2023 key highlights:

• Revenues of $119.0-million;
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $29.5-million;
• Impairment of $66.0-million at Arraias;
• Net loss of $48.6-million;
• Basic loss of 35 Canadian cents per share;
• Free cash flow of $23.3-million.

FY 2023 key highlights:

• Revenues of $ 465.5-million;
• Adjusted EBITDA of $131.8-million;
• Impairment of $66.0-million at Arraias;
• Net income of $3.1-million;
• Basic earnings of two Canadian cents per share;
• Free cash flow of $77.6-million.

Dec. 31, 2023, key highlights:

• Trailing-12-month adjusted EBITDA of $131.8-million (1);
• Net debt of $ 61.3-million (1);
• Net leverage ratio of 0.5 times (1).

FY 2024 guidance:

• Sales volumes guidance of 320,000 to 340,000 tonnes P2O5 (2);
• Selling, general and administrative expenses guidance of $17-million to $20-million (3);
• Maintenance capex guidance of $25-million to $35-million (1);
• Growth capex guidance of $35-million to $46-million (1).

Q4 and FY 2023 market highlights

Diammonium phosphate (DAP) New Orleans (NOLA) prices averaged $545/st in Q4 2023, compared with $672/st in Q4 2022, down 19 per cent year over year, and averaged $548/st in FY 2023 compared with $772/st in FY 2022, down 29 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.

Q4 2023 financial highlights

For Q4 2023, the company's financial highlights were as follows:

• Revenues of $119.0-million in Q4 2023, compared with $135.2-million in Q4 2022;
• Adjusted EBITDA of $29.5-million in Q4 2023, compared with $50.1-million in Q4 2022;
• Impairment of $66.0-million at Arraias in Q4 2023, compared with $0-million in Q4 2022;
• Net loss of $48.6-million in Q4 2023, compared with net income of $29.3-million in Q4 2022;
• Basic loss of 35 Canadian cents per share in Q4 2023, compared with basic earnings of 21 Canadian cents per share in Q4 2022;
• Free cash flow of $23.3-million in Q4 2023, compared with $38.6-million in Q4 2022.

The decrease in the company's Q4 2023 financial performance compared with Q4 2022 was primarily due to lower realized prices as a result of softer global market conditions and the impairment of non-current assets of Arraias, partially offset by higher sales volumes and lower input costs.

The company's total capex (2) spend in Q4 2023 was $21.2-million, compared with $9.9-million in Q4 2022, with the increase primarily due to the mine development activities at H1/NDR at Conda.

FY 2023 financial highlights

For FY 2023, the company's financial highlights were as follows:

• Revenues of $465.5-million in FY 2023, compared with $593.3-million in FY 2022;
• Adjusted EBITDA of $131.8-million in FY 2023, compared with $224.8-million in FY 2022;
• Impairment of $66.0-million at Arraias in FY 2023, compared with $0-million in FY 2022;
• Net income of $3.1-million in FY 2023, compared with $114.7-million in FY 2022;
• Basic earnings of two Canadian cents per share in FY 2023, compared with 79 Canadian cents per share in FY 2022;
• Free cash flow of $77.6-million in FY 2023, compared with $187.9-million in FY 2022.

The decrease in the company's FY 2023 financial performance compared with FY 2022 was primarily due to lower realized prices and the impairment of non-current assets of Arraias, partially offset by lower input costs.

The company's total capex (4) spend in FY 2023 was $58.4-million, compared with $39.9-million in FY 2022, with the increase primarily due to development activities at H1/NDR at Conda.

Dec. 31, 2023, highlights

As at Dec. 31, 2023, the company had trailing-12-month adjusted EBITDA of $131.8-million, compared with $224.8-million at the end of 2022, with the decrease primarily due to the same factors that resulted in lower revenues, partially offset by lower input costs at Conda.

At Dec. 31, 2023, the company had net debt of $61.3-million, compared with $88.3-million at the end of 2022, with the reduction due to the repayment of principal debt outstanding from free cash flows generated, which was partially offset by lower cash and cash equivalents. The company's net debt as at Dec. 31, 2023, comprised $30.8-million in cash and $90.5-million in debt (gross of deferred financing costs). As at Dec. 31, 2023, and the end of 2022, the company's net leverage ratio was 0.5 times.

As at Dec. 31, 2023, the company had liquidity (5) of $70.8-million, comprising $30.8-million in cash and $40.0-million in undrawn borrowing capacity under its $80-million asset-based revolving credit facility (the ABL facility).

Q4 2023 operational highlights

Environmental, health and safety (EHS):

• Sustained EHS performance, including no reportable environmental releases and one recordable incident, which resulted in a consolidated total recordable incident frequency rate (TRIFR) of 0.57.

Conda:

• Produced 95,719 tonnes P2O5 at Conda in Q4 2023, compared with 89,226 tonnes P2O5 in Q4 2022, with the increase primarily due to production efficiencies from improved uptime and better recoveries;
• Generated revenues of $112.4-million at Conda in Q4 2023, compared with $129.3-million in Q4 2022, with the decrease primarily due to lower realized selling prices, which were partially offset by higher sales volumes;
• Generated adjusted EBITDA at Conda of $32.4-million in Q4 2023, compared with $54.8-million in Q4 2022, with the decrease primarily due to the same factors that resulted in lower revenues, which were partially offset by lower input costs.

Q4 2023 other highlights:

• Produced 34,087 tonnes of sulphuric acid at Arraias in Q4 2023, compared with 35,895 tonnes in Q4 2022, with the decrease primarily due to reduced sulphuric acid and sulphur inventory management in Q4 2023;
• Successfully started the production of direct application phosphate rock (DAPR) at Arraias by producing 643 tonnes P2O5 in Q4 2023, compared with zero tonnes P2O5 in Q4 2022, with the increase due to the full quarter of DAPR production and sales per fertilizer restart program;
• Generated adjusted EBITDA at Arraias of $1.1-million in Q4 2023, compared with $0-million in Q4 2022, with the increase primarily due to higher sulfuric acid volume and lower cost of goods sold generating gross margin improvement and commencement of DAPR sales;
• Recorded an impairment of non-current assets of $66-million at Arraias.

FY 2023 operational highlights

EHS:

• Sustained EHS performance, including no reportable environmental releases and five recordable incidents, which resulted in a consolidated TRIFR of 0.57.

Conda:

• Produced 349,030 tonnes P2O5 at Conda in Q4 2023, compared with 343,526 tonnes P2O5 in Q4 2022, with the increase primarily due to better recoveries;
• Generated revenues of $448.1-million at Conda in Q4 2023, compared with $571.1-million in Q4 2022, with the decrease primarily due to lower realized selling prices. Elevated prices in the prior year driven primarily by the Russian invasion of Ukraine and the three-month lagged pricing impact on Conda's MAP contract;
• Generated adjusted EBITDA at Conda of $148.1-million in Q4 2023, compared with $240.2-million in Q4 2022, with the decrease primarily due to the same factors that resulted in lower revenues, which were partially offset by lower input costs;
• On April 24, 2023, the company announced the record of decision for the H1/NDR mine development project. The H1/NDR project consists primarily of civil activities and infrastructure development. Mineral resources from H1/NDR are expected from 20256 onward, providing an uninterrupted supply as Rasmussen Valley mine reaches the end of its useful life;
• On May 8, 2023, the company received the notice to proceed (NTP) for the H1/NDR mine development project. Upon receipt of the NTP, the company commenced capital activities associated with the mine development project;
• Advanced H1/NDR capital activities, including earthworks and related water management features for the rail loadout and haul road, improvement of the maintenance shop, and existing road relocation;
• Advanced development, including engineering of key infrastructure and progression of related magnesium oxide reduction initiatives to enhance SPA production and sales volumes, including continuation of testwork;
• On Sept. 7, 2023, the company announced that it entered into a MAP offtake agreement with The J.R. Simplot Company, an international food and agriculture company. The company will sell 100 per cent of the MAP produced by Conda to J.R. Simplot during the term of the MAP offtake agreement, which commenced on Jan. 1, 2024, with a term of five years. The MAP offtake agreement will replace the existing MAP sales agreement dated Jan. 12, 2018, between the company and Nutrien, which expired on Dec. 31, 2023;
• On Sept. 7, 2023, the company entered into a new ammonia supply contract with a subsidiary of Nutrien, which commenced on Jan. 1, 2024, with a term of two years. The new ammonia supply contract replaces the current supply contract dated Jan. 12, 2018, between the company and Nutrien, which expired on Dec. 31, 2023.

FY 2023 other highlights:

• Produced 89,075 tonnes of sulphuric acid at Arraias in FY 2023, compared with 99,030 tonnes in FY 2022, with the decrease due to the sulphuric acid plant shutdown for required maintenance in April and May;
• Produced 5,196 tonnes P2O5 of DAPR at Arraias in FY 2023, compared with zero tonnes P2O5 in FY 2022, the increase due to the full year of DAPR production and sales per fertilizer restart program;
• Generated adjusted EBITDA at Arraias of $400,000 in FY 2023, compared with a $100,000 loss in FY 2022, with the increase primarily due to higher sulphuric acid volume and lower cost of goods sold generating gross margin improvement and commencement of DAPR sales;
• On June 28, 2023, the company filed the National Instrument 43-101 technical report for the Farim phosphate project;
• Recorded an impairment of non-current assets of $66-million at Arraias.

Market outlook

Prices in 2023 have moderated off the historically high prices in 2022. The company's 2023 performance was impacted due to a very competitive summer price reset and the three-month lagging average of the MAP contract. Despite the decrease, the company has seen an extremely strong fall season, resulting in improved pricing from the summer and continued tightening of North American phosphate fertilizer supply. The company expects a relative stable market moving forward due to the continuing tight supply situation coupled with softer crop prices.

Specific factors the company expects to support moderate pricing in the global phosphate fertilizer markets through the end of 2024 are as follows:

• No significant phosphate supply capacity additions;
• Strong demand for phosphates in North America following years of under application;
• Softening of crop prices from historical highs;
• Continuing phosphate export restrictions from China and reduced exports from Morocco.

Financial outlook

The company's guidance for 2024 is detailed in an attached table.

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;
• Executing on the 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, with production capacity as follows:
  • Approximately 550,000 tonnes (t) per year of monoammonium phosphate (MAP), MAP with micronutrients (MAP plus), superphosphoric acid (SPA), merchant-grade phosphoric acid (MGA) and ammonium polyphosphate (APP);
  • Approximately 27,000 t per year of hydrofluorosilicic acid (HFSA);
• Arraias -- a vertically integrated phosphate fertilizer business located in Tocantins, Brazil, with production capacity as follows:
  • Approximately 500,000 t per year of single superphosphate (SSP) and SSP with micronutrients (SSP plus);
  • Approximately 40,000 t per year of excess sulphuric acid (220,000 t 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 elements and niobium mine and extraction plant project located in Minas Gerais, Brazil.

As at Dec. 31, 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). CLF is an affiliate of Castlelake LP, a global private investment firm.

Non-IFRS (international financial reporting standards) financial measures

This news release contains both IFRS and certain non-IFRS measures that management considers to evaluate the company's operational and financial performance. Non-IFRS measures are a numerical measure of a company's performance, that either include or exclude amounts that are not normally included or excluded from the most directly comparable IFRS measures. Management believes that the non-IFRS measures provide useful supplemental information to investors, analysts, lenders and others. In evaluating non-IFRS measures, investors, analysts, lenders and others should consider that non-IFRS measures do not have any standardized meaning under IFRS and that the methodology applied by the company in calculating such non-IFRS measures may differ among companies and analysts. Non-IFRS measures should not be considered as a substitute for, nor superior to, measures of financial performance prepared in accordance with IFRS.

(1) Adjusted EBITDA, trailing-12-month adjusted EBITDA, maintenance capex, growth capex, net debt, net leverage ratio and free cash flow are each a non-IFRS financial measure.

(2) Sales volumes reflect quantity in P2O5 of Conda sales projections.

(3) Selling, general and administrative expenses (SG&A) is corporate SG&A less share-based payment expense.

(4) Total capex is a non-IFRS financial measure.

(5) Liquidity is a non-IFRS financial measure.

We seek Safe Harbor.