Hello and welcome to ADAMA Agricultural Solutions analyst call for the fourth quarter and full year of 2025. My name is Joshua Phillipson, Global Head of Investor Relations. Joining us on the call today are Gaël Hili, our CEO, and Efrat Nagar, our CFO. Following the presentation, we'll open for Q&A. At any time during the webinar, you are welcome to submit questions using the Q&A icon at the bottom of your Zoom screen. I'd like to draw your attention to this legal statement. I'll pause for a moment for you to review it. The statements in this presentation do not constitute a recommendation or offer to take action regarding the company's securities.
The presentation may include forward-looking information as defined in the securities law, which may not materialize, among other things, due to the realization of risk factors presented in the company's annual report. The financial information presented in this call refers to 2025. The company does not undertake to update the information in the future. Some housekeeping. In the event of a siren in Central Israel, we will pause the webinar until the all clear is received. In any case, the webinar is being recorded and will be made available online via the company's website. I'd like now to turn over the call to our presenters. Please go ahead, Gaël.
Yeah. Good morning, good afternoon to everyone. I'll start, instead of going through the slide that is on screen now, by sharing a few comments that probably will answer some of the questions you have about the event of yesterday afternoon in Ne'ot Hovav. As you probably know, our site in Ne'ot Hovav has experienced what seems to be at this stage, the consequence of an indirect missile strike. Yesterday afternoon, this event resulted in a warehouse located inside our facility in Ne'ot Hovav being hit by this missile or part of a missile and which took fire, the warehouse.
The fire was extinguished by around 8:00 P.M. last night, Israel time. This is not going on anymore. Obviously, firefighter, Home Front Command, the authorities were on the site and have worked very closely with our team on site to solve this urgency. Now, as a result of this, obviously this warehouse that has been hit is very damaged, to say the least. The very good news, and I should have started there, is that nobody has been injured. Nobody died in this incident, thanks to the discipline of our employees.
There were approximately 400 employees on site at the moment of the hit, and everyone was in shelter safely, which results in me being very happy and pleased to report that nobody was injured as a result of this event. Now, in terms of industrial and business consequences, clearly, we're still assessing the consequences. The plant has been stopped as a result of this strike and will resume as soon as safely possible. The plant has been handed over back to us by Home Front Command and the firefighting departments. It's upon us now to assess the safety of operation and restart as soon as possible. This is still an assessment that is going on.
I will finish by saying that Ne'ot Hovav is obviously a very important asset for ADAMA, but it's not the only one. We have several more plants in Israel first. We have another two plants in Israel, and we have many more plants globally in China, in Brazil, in Poland. The plant itself represents probably less than 10% of our sales globally, around 10%, just to give you a rough idea. That's for the full year of production of this plant, and we're clearly not at that level of interruption yet. I wanted to start there before jumping into the presentation because I'm sure that many people are asking themselves questions about this event. Okay.
Now, moving to the 2025 full- year results in Q4, I'll start by saying that the market in our industry has been relatively similar in Q4 to the previous quarters with some key structural phenomena that have been true for our markets for at least the last 12 months, if not 18 months. First and foremost, this is an industry that is globally very much in an overcapacity situation that is putting raw materials, active ingredients, and ultimately finished goods prices under pressure. This has been the case for the last 18 months. It was still the case in Q4, and it was the case for the full year of 2025.
Now, the other important element is that the crop prices are lower than average of the previous years, but they've been stabilizing, just like, by the way, the active ingredients and raw material prices. They've been stabilizing, but at low levels, which is pressuring the revenue, in the case of the crop prices, pressuring the profitability of the growers. That's also has been a continuous phenomenon all across 2025.
Last but not least, we see now as a new normal, the fact that both the channel and the growers are purchasing just in time. Both of them, the channel and the growers, are willing to take advantage of the overcapacity in the market and are putting in competition different players and different suppliers in order to get the lower price.
This is by the way, feeding the pressure on prices. That's also a purchasing behavior that has been true all across 2025, including Q4. In terms of volumes, that's, in a way, the good news. The volumes are healthy again. They're back to pre-pandemic level. They're back to normal after having seen in 2024 for sure, and for the first part of 2025, in some markets, an impact of higher inventories that was putting pressure on the volumes. This is over. We're back to normal when it comes to volume. That's a summary of how the markets are behaving or have been behaving in 2025.
Now, in 2025, we as a company, we've been busy implementing the second year. This is a two-year program that started in 2024 of our Fight Forward turnaround. This turnaround of ADAMA was focusing on two pillars. The first pillar is to get financially fit through hundreds of thousands of initiatives on cost of goods, on cost of operation, on sales, on price. This has resulted in a significant growth in EBITDA and in cash. This program was addressing both. You will see that in a moment when we will share the results. That was the first part of the program, important pillar, the financial element.
At the same time, we've made the operating model of the company evolve in order to increase its competitiveness in a market that, as I was saying a minute ago, is and has been very competitive for the last two years, and we believe will continue to be so. The whole program was meant to make ADAMA competitive in the current challenging or competitive situation. If that gets better, well, great, it will be an upside. But we've the leadership team and myself have been busy building a company that is competitive in the current market conditions. That has led to an increased focus both geographically and from a portfolio point of view. We exited products, we exited geographies, countries that were not profitable enough.
We improved our cost competitiveness, our production cost competitiveness by taking decisions either to close some assets or to improve them through investment to bring them back into competitiveness. Then we've established a more streamlined and agile operating model with a better balance between the headquarters and the countries, and the commercial organization, to ensure smoother and more effective operation. All this in the last two years was meant to return to profitable growth. I think that with the number I will share in a second, we can say that we have achieved that mission. Next slide.
These are the Q4 and full- year results summarized on this slide. I will go through them, but I can tell you already that I'm very proud and happy of those numbers because they represent, they confirm that what we did in the last two years with Fight Forward has worked, has taken us where we need to be. In the full year 2025, the sales have declined by 2%. This is the result of stable volumes on one side and a decline of 2% in prices, which is broadly what the market has done. Not only is it in line with the market, it's putting us in a place where we believe we are actually sometimes even slightly better than the market.
The volumes have been stable. Now, why stable and not growing? Because you have to remember that we ourselves have taken the decision to walk away from lower- margin products. We did that very strongly in 2024. There were still some products that we exited in 2025. You put all that together, it gives you this -2% on the sales. But more importantly, because our focus in 2024 and 2025 was EBITDA and cash. If you look at EBITDA, Q4 and profit, generally speaking, let's start with gross profit. The Q4 gross profit and the full year were up 11% year-over-year in ADAMA. If you look at EBITDA, it was up by 17% in Q4 and by 25% for the full year.
With this increase in EBITDA, we see an improved quality of business, both in gross margin and in EBITDA margin, both in Q4 and in the full year that is attributable to our operational efficiencies and cost optimization that we've been working on the last two years. This puts us in a position with a EBITDA percent to sales. It's not on the slide, but I'm gonna tell you, which is 14.5% back into a position that for this type of industry, off-patent crop protection, industry is first standard and is sustainable. It creates a base that will allow us to grow again in the future. We also posted for the first time in three years a positive full year adjusted net profit.
We posted a reported net loss, we significantly reduced those reported net losses. Efrat will be talking about this in more detail in a moment. Last but not least, I'm very happy and proud to report that we've been achieving the performance I was mentioning a second ago around profitability, while also delivering a very strong cash performance. With free cash flow at $157 million in Q4 and $231 million in the full year, which is a consequence of better collection and business earnings, offset by slightly higher inventories, but this was a conscious decision to capture growth momentum in the second part of the year and in 2026. Strong cash performance, improved profitability, is what is making us very confident for the future of ADAMA.
Okay, I will take it. This is a P&L for Q4, supported by what was just mentioned by Gaël. You can see here that our sales down by 5% to $962 million, 6% lower volume, mainly reflected phasing and just-in-time purchase by customers, and 2% lower prices versus the previous year, aligned with the market direction. With lower sales in Q4, we are generating 11% better gross profit, reaching to gross margin above 30%, 31% versus 26.3% last year. This is supported by lower costs due to two main factors. One is improvement in operational efficiencies. Gaël described our Fight Forward plan. This was part of our Fight Forward plan.
Lower cost of inventory sales are more than compensating the lower volume, and the lower prices. With slightly higher OpEx, mainly increased from the company performance-based employee compensation due to our better results, we are generating in Q4 2025 $146 million EBITDA, 17% higher than last year. With lower financial expenses, due to improved debt structure and also lower hedging costs related to the Israeli shekel and the Turkish lira, we finished Q4 with $6 million net profit versus $58 million losses last year.
With the restructuring that we made as part of our Fight Forward plan, we finish in Q4 with $64 million reported net loss, versus $128 million last year, narrowed by 50%. In the next slide, we can see the full- year results, which are more or less telling the same story. We can see here 2% stable sales. We are reaching $3.7 billion sales in the full year. As mentioned by Gaël, this is due to our decision to pivot away from some businesses, if it's product, if it's countries, and it's also offset by some market movement.
This is resulted by flat volume and 2% decrease in prices, again, aligned with the market trend. With these 2% decrease in prices, we succeeded to generate in the full year 11% better gross profit. We are very close to the 30% gross margin. Full year, same as Q4, mainly contributed by our better costs. With higher OpEx, again, due to higher company performance-based employee compensation and some credit losses, mainly from Latin America, we are finishing.
We are proud to report that we are finishing the full year with an EBITDA of $486 million, 25% higher than last year, and reaching an EBITDA-to-sales ratio 13.3% higher than last year, representing the better quality of our business. Financial expenses for the full year also are better. Together also with better tax expenses, we are finishing the full year with $5 million net profit after two years of net losses. With some restructuring as part of our Fight Forward plan, we are narrowing our reported net loss from $407 million to $140 million, 66% lower reported net loss in 2025. Josh, next slide. Gaël.
Okay. Looking at the quick snapshot of the sales and the geographical split of the sales performance in 2025 for the full year versus 2024. Starting from the top, Europe, Africa, Middle East, you see a reduction of 3% in dollar. Actually, if we compare apples to apples and exclude Turkey, where we were allowed to sell in 2024, but not allowed to sell in 2025 anymore, because of the embargo, then the sales show a growth of 2% in Europe, Africa, Middle East, which is better than what the market did. We believe we gained share in Europe in 2025, which is a great performance. Solid performance in Europe. Sorry. In Latin America, you see a -3%.
This is a combination of actually higher volumes and much lower prices. Latin America, and especially Brazil, is the market in the world where the price pressure in 2025 has been the strongest. It was the case also in 2024, to be honest. The places where this behavior of the channel to put their different suppliers in competition until the last second has been the most intense. That resulted in the most significant price pressure globally in that market. We believe we're also there where we have not lost market share in Brazil with this -3% because the market went down much more than that. In North America, you see a strong performance, +11%.
This is all the effort that we're doing in pivoting our go-to market in North America through toward more loyal, less but more loyal customers is starting to pay off. It's just the beginning. Our market share in North America is still relatively small on the agricultural side, but it's very promising, this performance of 2025. In APAC, you see a drop of 15%. This is coming from India, which is a very strategic and important market for ADAMA, where we are one of the market leaders.
This is a market where we decided in 2025 to change our go-to-market, some of our go-to-market practices by reducing the channel load we do at the beginning of the season in order to also reduce the returns we have at the end of the season. We wanted to clean, in a way, those practices. We did it in 2025, which is, in a way, a one-off impact impacting 2025. We should see better figures in the years to come. It was a necessary change to be made in India.
The total picture shows us a -2% on a U.S. dollar- basis, which is, once again, a combination of market impact, especially on pricing, but a lso, a decision that we made in ADAMA to walk away from certain volume, certain products that were not profitable enough. This is part of the discipline we applied over the last two years as part of the Fight Forward program. Next slide.
Josh, yes. Let's focus on the EBITDA bridge just to demonstrate how we are generating 25% increase in our EBITDA during 2025. You can see here the cost component, $199 million positive cost impact, mainly due to our Fight Forward, which focus on operational excellence, more than compensated the $90 million reduction in prices and compensated also the more or less stable volumes, which bring us to $486 million, 13.3% EBITDA- to- sales ratio, again, representing our better quality of business. Josh, if we go to the next slide, we can see also our cash flow.
As Gaël said, we are very happy and proud to report that also during 2025, ADAMA generated positive operating cash flow of $350 million. The focus on collection more than offset the increase in procurement intentionally in order to capture the momentum in the market. With continued focus on ROI-based investment, we are generating free cash flow of $231 million versus $157 million in 2025. Josh, in the next slide, we can see our covenant with the banks.
The ratio should be 4, and again, we are proud to present that, following our focus on cash generation, our Fight Forward to improve our EBITDA performance, 2025 net debt- to- EBITDA ratio for covenant purposes is 1.9, which is significantly lower than the limit. Gaël.
Let me spend a few minutes now on why and how we believe that we've now created a foundation for profitable growth in ADAMA. The first element, the first pillar of that belief comes from our portfolio. We have already today a very strong portfolio. It's broad and it's balanced. It's balanced in terms of number of AIs that we sell globally, 300 of them. We sell them into more than 1,000 different mixture and formulation that are tailor-made to end users. We have a very robust global registration regulatory network, which is a very important element of this business, which allowed it to launch or to obtain 174 new registration in 2025, and this excludes all the renewals.
It's really real new registrations. We have a balanced portfolio between commodities on one side, yes, but 45% of our, what we sell is actually coming from these differentiated high-value products that represent a return on investment for the growers and that are also for the growers and for us represent a higher gross profit than the commodities. We are relevant in the market. We have a real focus on innovation. You see we launched 139 products in 2025. That's a lot. Okay. It has been, in a way, undermined because we were struggling with the financial performance of the company the last two years.
Now we're back to stability, financial stability. It becomes again the main tool, a main pillar of ADAMA, the way we do business, and the way we will grow this business in the future. On this slide, you also see two typical example of what innovation means for ADAMA. The first one is a herbicide that was sold in Brazil. It's called Apresa. It was actually launched in the end of 2022, with first actual usages for growers in 2023. It's a three-year-old product. It features a proprietary patented formulation.
That's the other thing that it's important to remember, is that ADAMA applies for several patents every year, actually north of 70 in 2024, and we obtain many of them, and this allows us to protect the value of our products in the market. This product is patented. The formulation is patented. It's two modes of action into one product, which allows the growers to better manage their crop, and it has a very strong residual effect. It's safe, it's simple to use because the two modes of action are already in one bottle. It drove the Brazil sales growth in 2025. I told you earlier that Brazil sales went down in 2025 in dollars, but in volume, it actually went significantly up.
The other one is CAZADO in Canada. It was launched in 2025, so last year, with the product that sold out the year of launch and at a margin that is much higher than the ADAMA global average. It featured a new oil- dispersed formulation with again two mode of action in a bottle. This is the first time that in that market of wild oats in wheat where anybody has launched a two mode of action type of products. It's to combat, to fight against resistant weeds. Very successful launch. These are just two nuggets to show you what is the type of innovation we bring to market. We will continue to bring to market. Next slide.
The other pillar or the other element that makes us confident that with the financial base we built in 2025, we can now grow profitably is our market access. ADAMA is the sixth player in the market globally in 2025. We have an improved and focused regional presence that is very balanced across different regions. You see it on the chart. We sell everywhere. This balance allows us to first manage the risks, which is always important, but also to have ambitions to grow in all the key global markets in our industry. Half of our sales, by the way, are in high-growth emerging markets, which also gives us belief that we can do it.
We have been working the last few years and will continue to work in the future on enhanced commercial capabilities to sell this innovation at the right price. 'Cause what is very important is that those innovation, like the one, the two products I showed on the slides before, which are differentiated product, they bring value to the grower who's gonna be using them, that we capture back some of that value through the right pricing and the right commercial capabilities in our sales and marketing teams across the globe. Next slide.
Last but not least, we have and we've been improving a very resilient and reliable supply chain that over the past two years, again, through the Fight Forward transformation, we made more competitive. We will continue to work on that aspect, which is a very fundamental aspect of any off-patent chemical company. We have a broad network of industrial assets, 21 sites in total across the globe, which gives us options and also allow us to optimize logistics. We have formulation sites which are close to our end user markets, and we've been working on our cost leadership the past two years, which has already contributed to the improved profitability of the company, as Efrat and I already shared. We run under world-class safety and sustainability standards.
I'm very pleased to report that in 2025, we had no significant environmental incidents nor significant injury or fatality, which is always very high on our agenda for a company like ADAMA with so many industrial assets. We continue to prioritize key investments in those sites with one main objective, which is to improve competitiveness of the cost of the product coming out of those sites. We also have options when it comes to sourcing. Those plants are sourcing raw materials globally, and they're supported by teams in China and India who are dedicated to making sure that we get those products at the best, the most competitive prices globally. I strongly believe that we are very competitive buyers as ADAMA. Next slide.
Now, you put all this together, what 2026 and beyond is going to be about for us is already about, huh? We are already in 2026. It is about profitable top-line growth. As we were going through this, the last two years of the Fight Forward transformation, the size of the company in terms of top line shrunk. Now, the profitability significantly improved, as we already discussed, EBITDA, and gross profit. The cash performance is strong. Now we need to grow the top line again. We need to grow the top line again without losing any of the discipline that we built around costs over the last two years. That will allow us to grow profitably, which is basically the name of the game for the years to come.
We are also strengthening our commercial capability to do so. I mentioned earlier that in order to sell those differentiated innovative products, we need the right commercial capabilities in all the key markets. We've done some work on that the last two years. We will put a lot of emphasis and focus on in the years to come. We will invest selectively where we see that growth. We are in a position financially to invest selectively where it makes sense. We will continue, as I was saying a moment ago, to optimize our manufacturing footprint to make us even more competitive than we are today in terms of cost.
Last but not least, we also, to further optimize, enhance the efficiency of our Israeli operation, we have decided to merge the two Israeli legal entities that we had into one, and this will make our operation simpler first, but also more tax effective in the future. You put all this together, makes us the performance we delivered last in 2025, where it puts us in terms of financial healthiness makes me and my leadership team strongly believe that we are ready for growth again, and we are putting the energy of the team on this as we speak in 2026 and beyond.
Thank you, Gaël and Efrat. I'd like to open up for questions. If there are any questions, you can submit them through the Q&A icon in the Zoom window. At the moment, it looks like we don't have questions.
We were very clear, Josh.
I guess so. Just received a question, a general market question about the latest developments in oil.
Yeah. What's the impact on our business? That's the question?
I assume so. Yes.
The oil prices rising, generally speaking, as it won't be a surprise for the agrochemical chemical industry. Agrochemical industry usually means an increase in cost of goods. If the oil prices remain where they are, we will see an increase of our costs, which obviously we will be passing to our markets as much as commercially possible. Now, this has not happened yet. There is not a direct link when it comes to agrochemicals. It is not like fertilizer, for example, where it is nearly immediate, because the importance of energy in the cost of fertilizers. For agrochemicals, it is not as immediate as for fertilizers. It takes other dynamics, including supply- demand balance.
As I said before, this is a market and industry that is highly oversupplied and very, very competitive. Which doesn't mean that those cost increases will not be seen, will not translate as price increase in the markets, but it will happen only if the level of competition in the market allows it. I think we should not draw any conclusion at this stage. The situation, including the situation of oil, by the way, is still very unstable with ups and downs every day and every week. We're looking at this very carefully, obviously, and we'll take the necessary action in due time related to those oil price increases.
Thank you, Gaël. We have another question to follow up, it looks like. Are the limitations on logistics because of the war? How is that impacting our business?
Until yesterday afternoon, 2:00 P.M., Israeli time, it was not impacting us at all. Our plants, the three plants we have in Israel, were fully operational. They haven't stopped, even a minute, an hour since the start of the war. We were producing, we were shipping products normally for the last three, four weeks now, since the war started. Now, obviously, with the rocket that hit Ne'ot Hovav plant yesterday, we had to stop the plant. I explained in the beginning of this meeting, I gave you an update about this. We are already looking at restarting those operations as soon as possible.
The team on the plant is busy as we speak, going plant by plant, asset by asset, assessing the safety of the asset and the possibility to restart it. We will restart this plant as soon as possible. This is where we are at this stage. Generally speaking, I have to recognize, and I have to thank also our teams in Israel for the level of resilience they've been showing in that period with no impact so far until yesterday afternoon, obviously.
Thanks, Gaël. I have a question regarding our insurance coverage related to the Ne'ot Hovav facility and business impacts.
It's a question we're getting a lot today. Obviously we have insurances. Now, saying if the type of damages, the nature of the damages, and the amount of the damages is covered and how much of it is covered by our insurances is too early to say. Because we have first to assess those damages in detail, and then we'll be able to assess that. We are obviously looking into this, but the priority of the day, of the hour is to assess in detail the damages. When the night came yesterday, we were just extinguishing the fires, so we couldn't have a detailed inspection of all the site, which is happening as we speak.
We will be able to talk about insurances. It's too early now.
Thank you. Do we feel like our customers are more hesitant in purchasing our products, because of the latest developments?
It's a good question. In a situation like the one we had to face yesterday in Ne'ot Hovav with global media coverage, it is an important mission for us now in the next few days to reassure our customers, explain to them the context, the nature of the incident, the potential impact, which once again, Ne'ot Hovav represents around 10% of the sales of ADAMA globally. Yes, it's very important to us. Frankly, the most important is nobody got injured. But this is a very important site to us, but we have options. We have a broad supply network, as I showed on the slides earlier. We'll be reassuring our customers in the days to come.
There are questions coming from them, definitely, because they're reading the news like everybody else. When you're reading the news and you're sitting in Argentina or in France or in Brazil, you may make some wrong assumption on the ability for ADAMA to deliver on its promises over the next weeks and month. We will be talking to our customers one by one over the next hours and days.
Okay. Thank you, Gaël. Efrat, we don't have any more questions. I think it's going back to the insurance. Just follow up on the insurance question. As far as we know, what is the maximum insurance coverage for events of this type?
I don't know if we can even answer that question. Efrat, do you wanna take it?
First of all, we have the coverage or the initial coverage from the country, from Israel. On ADAMA, we have insurance of up to $10 million specific for war cases.
Okay. Thank you. We'll—
Sorry, when we talk about insurance and what happened yesterday, I wanna— maybe it was not clear in my initial comments. There was no operational equipment, so the plants themselves have not been hit by the missiles, not directly. Well, of course, we will be looking at the potential indirect impact on the plants that are in the vicinity of that warehouse. But Ne'ot Hovav is a big site. They are a big site with several different production plants on the site. Many production plants are far away from the impact and will be able to restart very soon. We also have not to overestimate the potential impact of this event. It is a tragical event, definitely. The plant had to stop in an emergency mode.
We have to also take the reality of the situation into consideration when assessing the impact, including the insurance impact, the overall business impact for ADAMA. Now, I cannot give numbers today. I mean, this is fresh from yesterday midday, okay? As I said, the priority number one was our people. Priority number two was to extinguish the fire that was in that warehouse. Then today we're moving to priority number three, which is to assess the damages and the business impact.
Okay. Thank you. If you have any additional questions, feel free to reach out to us via email at IR, or Investor Relations, ir@adama.com. We appreciate your time and interest in ADAMA Agricultural Solutions. I'd like to invite you, Gaël, now to provide closing remarks.
My closing remark will not be about the tragic event of yesterday, even if it's a, as you can imagine, for a company like ADAMA, a very important event touching a lot of our employees. I will conclude by saying that we've delivered in 2025 a financial performance that bring us to a healthy and stable position that allow us to grow again in the years to come, starting in 2026. Grow in a profitable way and in a disciplined way using the discipline we learned over the last two years. We have a lot of faith and a lot of confidence in that future growth. Thank you.
Thanks, everyone.
Thank you.