Itafos posts 5% revenue gain as sulfur and downtime pressure margins

By Sophie Lindqvist

Itafos reported third-quarter revenue of $161 million, up 5% year over year. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) reached $14.4 million, but the adjusted margin fell 350 basis points to 8.9% from the preceding quarter.

Higher realized prices at Conda and Arraias offset elevated raw-material costs. Delaney said on the company’s Nov. 5 update call that costs remained historically high in the United States and Brazil. With revenue up 5%, higher prices must do more work in any margin recovery.

What tightened the fertilizer market?

Phosphate fertilizer markets remain tight because high sulfur costs have prompted production cuts worldwide, Delaney said. Sulfur prices have eased from their recent peak but stay well above year-earlier levels. He warned: "farmer affordability continues to be a concern."

Supply is tighter than demand, but farmer affordability remains the counterweight. High sulfur prices have made production uneconomic for some manufacturers; Delaney cited curtailments in China and the United States and lower output at OCP.

How did Conda recover?

Conda produced just over 134,000 tons, 6% more than in the preceding quarter but approximately 8% below the year-earlier period and below its forecast. The June turnaround, meaning a scheduled maintenance shutdown, weighed on the sequential comparison.

About one week of unplanned downtime at Conda’s sulfuric acid plant near quarter-end caused the shortfall. Delaney said the issues "had been resolved and production returned to historical rates in October." Conda operated at approximately 97% of nameplate capacity, its maximum rated output, during the quarter.

What changed at Arraias?

At Arraias in Brazil, production and sales of granulated partially acidulated phosphate rock rose 28% and 39%, respectively, from a year earlier. High sulfur prices weighed on adjusted EBITDA margins, and Itafos operated the sulfuric acid plant opportunistically.

Brazilian fertilizer demand remains under pressure. Delaney said total nitrogen, phosphorus and potassium usage could fall to as low as 40 million tons in 2026 from about 49 million tons in 2025, with phosphate accounting for most of the difference.

What did the refinancing change?

Itafos refinanced its credit facilities at quarter-end. The new structure comprises:

• $80 million revolving credit facility, a reusable credit line, unchanged and maturing at the end of the third quarter of 2029.
• $140 million term loan, increased from $100 million and carrying the same maturity.

Delaney said the transaction reduced the term loan’s margin by 75 basis points while leaving its structure and covenants, or lender-imposed limits, consistent. The additional liquidity comes as the company expects another year of high capital spending in 2027. Liquidity improved, but the spending burden remains.

Where do sulfur and fertilizer prices stand?

The fourth-quarter Tampa sulfur index settled at $615 per ton in mid-October, down from a record $705 in the third quarter. It remained almost twice the $310 recorded in the fourth quarter of 2025, so the easing has not restored the earlier economics.

Itafos’s second-quarter renegotiation of its sulfuric acid contract with Rio Tinto supplies about 60% of company needs and provides some protection against extreme prices. Conda priced most of its remaining third-quarter sulfur needs against Tampa, which sat about $400 below the Vancouver market.

NOLA monoammonium phosphate, or MAP, priced at $823 per ton and stayed above $800 from mid-September. Delaney cited third-party analyst sampling that expected firm prices through year-end and an average near $800 per ton in 2027.

Argus estimated that global imports of diammonium phosphate, or DAP, MAP and triple superphosphate, or TSP, would reach about 25 million tons in 2026. That figure sat nearly 7 million tons below Argus’s estimate at the beginning of the year.

Farmer affordability remains a risk. Delaney noted that a late-quarter rally in corn, soybean and wheat prices had largely reversed, while an $8 billion U.S. fuel-relief package announced in October offered support to farmers facing higher costs.

Which projects target 2027 and 2028?

At Conda, Itafos aims to mechanically complete its magnesium oxide reduction project by the end of 2027. The company previously moved the project’s planned tie-in, meaning connection to the production system, and a long plant turnaround to 2028. Delaney said the change provides more scheduling flexibility amid supply-chain disruptions. Integration and startup will follow the second-quarter 2028 turnaround.

At Arraias, Itafos is refurbishing its beneficiation circuit, or processing line, to support a return to single superphosphate production. Delaney said the project remains positioned for production in 2027, although Itafos will evaluate capital spending against liquidity requirements and the leverage ratio, a measure of debt relative to equity.

What does Itafos make?

Itafos, previously known as MBAC Fertilizer Corp., is a phosphate-focused fertilizer and specialty products company. Its Conda site in Idaho processes phosphate rock for agricultural and industrial markets; the portfolio includes MAP, ammonium polyphosphate, merchant-grade phosphoric acid and other phosphate-based products. The company serves North America and other markets and trades on OTC Markets under MBCF.