This article first appeared on GuruFocus .
Release Date: August 07, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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Consolidated revenues increased 14% year-over-year to $144 million, driven by higher product prices and volumes in Brazil.
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Adjusted EBITDA of nearly $18 million was generated, with a resilient 12.4% margin despite rising raw material costs.
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Conda's annual turnaround was completed on time and on budget, maintaining peak utilization and comparable fertilizer volumes.
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Arias increased fertilizer production by 62% year-over-year and exceeded internal expectations.
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A mutually beneficial amendment to the long-term sulfuric acid contract with Rio Tinto was reached, shifting pricing to the Tampa Index and providing more certainty, which had an immediate positive impact on results.
Negative Points
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Adjusted EBITDA margin decreased by about 50 basis points sequentially due to continuing increases in raw material costs, particularly sulfur.
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Sulfuric acid sales at Arias were limited by the availability of sulfur purchases due to ongoing market dislocations.
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Global supply chain disruptions from the conflict in Iran are expected to negatively affect operating margins through the end of the year.
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Sulfur prices remain at record levels, with spot prices above $1,000 per ton in key regions, and no significant relief is expected until the Strait of Hormuz can be regularly transited.
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High fertilizer prices are causing demand destruction as farmers delay applications, and raw material costs are forecast to stay elevated, limiting margin recovery.
Q & A Highlights
Q: Can you provide details on the amendment to the long-term sulfuric acid contract with Rio Tinto and its impact on recent results and future expectations? A: David Delaney, CEO, explained that the amendment, effective in May, changed the pricing basis for Conda's sulfuric acid purchases from the Vancouver Sulfur Index to the Tampa Index, and includes provisions to shield both parties from extreme commodity price fluctuations. This change had an immediate positive impact on financial results as the Tampa Index was below the Vancouver Index throughout the second quarter. The new terms provide more price certainty, enabling both companies to run operations at maximum rates, optimize fixed cost absorption, and ultimately improve operating margins. This agreement underscores the long-standing partnership between Itafos and Rio Tinto, ensuring a stable domestic supply of a critical raw material for U.S. farmers.
Q: What is the outlook for sulfur prices, and can we expect any relief soon? A: David Delaney, CEO, stated that sulfur prices remain at record levels due to global supply disruptions, primarily from the conflict in Iran and the closure of the Strait of Hormuz, which previously handled about 45% of global sulfur trade. While spot prices appear to have plateaued, they remain elevated, with Vancouver spot prices at $1,100 per ton and prices in the Middle East, China, and Brazil all above $1,000 per ton. Additional supply constraints include China's elimination of sulfuric acid exports and Russia's extended suspension of sulfur exports. Itafos expects to continue operating at full levels due to its supply contracts and location, but a meaningful price decline is unlikely until vessels can regularly transit the Strait of Hormuz.
Q: What are your expectations for phosphate fertilizer prices over the next few months? A: David Delaney, CEO, indicated that phosphate fertilizer prices are expected to remain high due to ongoing supply availability issues. Global export supply has fallen, with China's P205 export restrictions and production shut-ins from major producers like OCP and Mosaic removing significant volumes from the market. The forecast calls for MAP NOLA prices to remain above $800 per short ton through the end of the year and into 2027. However, high raw material costs are likely to persist, meaning prices may not be high enough to meaningfully move operating margins back to historical levels. Demand destruction from farmers delaying applications is occurring, but this strategy will become harder to execute as planting seasons approach.
Q: Are you seeing any relief for domestic farmers who have faced a rough few years? A: David Delaney, CEO, noted that crop prices have started to move in the right direction, providing some relief for farmers. Corn futures have approached $5 per bushel, wheat is nearing $7, and soybeans are around $12, with combined prices rising about 10% in July and 17% since the start of the year. This is supported by poor global weather conditions, including a potential super El Nino, drought in Europe, and uneven U.S. weather. Additionally, the U.S. House of Representatives passed a $12 billion farmer aid package, which could bring total federal farm packages to over $56 billion in 2026 if passed by the Senate, potentially adding upside to USDA estimates for net cash farm income.
Q: How did Itafos perform operationally during the second quarter despite the challenging environment? A: David Delaney, CEO, highlighted that Itafos delivered a resilient operational performance. At Conda, the annual turnaround was completed on time and on budget, and the plant produced comparable fertilizer volumes year-over-year despite industry-wide supply chain issues. At Arias, fertilizer production increased by 62% year-over-year, and the team exceeded internal expectations. Although sulfuric acid sales were limited by sulfur availability, the company opportunistically stepped into an undersupplied market to generate higher revenues and EBITDA. This was accomplished while the sulfuric acid plant was down for about 45 days for a turnaround. The company also maintained high safety standards, with a total recordable incident rate (TRIFR) of 0.53.
Q: What were the key financial highlights for the second quarter of 2026? A: David Delaney, CEO, reported consolidated revenues of $144 million, a 14% increase compared to the same period last year, driven by higher product prices and higher fertilizer and sulfuric acid prices and volumes in Brazil. The company generated adjusted EBITDA of just under $18 million, representing an adjusted EBITDA margin of 12.4%. While this margin decreased by about 50 basis points sequentially, it was considered resilient given the continuing increases in raw material costs, particularly for sulfur.
Q: How is the ongoing conflict in Iran affecting Itafos's operations and outlook? A: David Delaney, CEO, stated that global supply chains for phosphate, sulfur, ammonia, and other commodities continue to be disrupted by the conflict in Iran. This is expected to negatively affect operating margins, most likely through the end of the year. The company is focused on controlling what it can, leveraging its well-established relationships with key customers and suppliers to efficiently run its business. Despite the near-term headwinds, Delaney expressed confidence in the long-term opportunities in the industry and Itafos's ability to prosper moving forward.
Q: Can you elaborate on the production shut-ins across the industry and their impact on global supply? A: David Delaney, CEO, detailed that production shut-ins have been widespread. China, which exported over 5 million tons of DAP and MAP in 2025, has largely been removed from the equation this year due to export restrictions and high sulfur prices. OCP shut in production during the quarter, with Argus estimating their export volumes will decline by about 20% in 2026, removing about 1.4 million tons from global trade. Production shut-ins have also been announced by Mosaic in the U.S. and Brazil, and by producers in Russia and South Africa. Saudi Arabia has tried to fill the gap but faces higher transportation costs, adding further pressure to global prices.
Q: What is the company's strategy for managing the high cost environment? A: David Delaney, CEO, emphasized that Itafos is focused on controlling the things it can control. The company's ability to operate its plants efficiently and maximize fertilizer production has been demonstrated in this challenging environment. The amended contract with Rio Tinto provides more certainty for a significant portion of its sulfuric acid needs. Itafos also continues to leverage its strong relationships with suppliers and customers to navigate the market dislocations. The company remains confident in its ability to deliver vital products to the domestic and global agriculture industry despite the difficult operating environment.
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
