Itafos (OTCMKTS:MBCF) reported second-quarter 2026 revenue of $144 million, up 14% from a year earlier, as higher product prices and increased fertilizer and sulfuric acid prices and volumes in Brazil supported results. The company generated adjusted EBITDA of just under $18 million, representing a consolidated adjusted EBITDA margin of 12.4%.
Chief Executive Officer David Delaney said the margin declined by approximately 50 basis points sequentially but remained resilient amid continued increases in raw-material costs, particularly sulfur. He characterized the period as one of the most difficult operating environments he has seen in the fertilizer industry.
Operations at Conda and Arraias
At Arraias, fertilizer production increased 62% year over year during the quarter. Sulfuric acid sales were limited by the availability of sulfur purchases, though the company was able to sell into what Delaney described as an undersupplied market, generating higher revenue and EBITDA than in the second quarter of 2025.
The Arraias sulfuric acid plant was offline for approximately 45 days for a turnaround during the quarter. Itafos also reported that its total TFIFR safety metric declined to 0.53 as of June 30.
Rio Tinto Contract Amendment
Management highlighted an amendment to Conda’s long-term sulfuric acid supply agreement with Rio Tinto as a key development during the quarter. Rio Tinto supplies roughly 60% of Conda’s sulfur requirements in the form of sulfuric acid from its Kennecott Copper Mine in Utah, according to Delaney.
Previously, the agreement’s pricing was tied to the Vancouver Sulfur Index. Under the revised terms, pricing is based on the Tampa index and includes provisions intended to protect both parties from extreme underlying commodity-price movements.
The amendment took effect in May and had an immediate favorable effect on Itafos’ second-quarter results because the Tampa Sulfur Index was below the Vancouver index throughout the period, Delaney said. He added that the Tampa index remained lower at the time of the call.
Delaney said the revised arrangement provides more certainty on sulfuric acid pricing and should help both companies operate at higher rates, improving fixed-cost absorption and operating margins. He described the agreement as an extension of a commercial relationship between Conda and Rio Tinto that has lasted about 30 years.
Sulfur Supply Constraints Expected to Persist
Itafos said global sulfur availability remains constrained, with the company expecting supply-chain disruptions involving phosphate, sulfur, ammonia and other commodities to pressure operating margins through the end of the year.
Delaney said approximately 45% of global sulfur trade had moved through the Strait of Hormuz before the conflict in Iran. Although some cargoes emerged following a June ceasefire announcement, he said those volumes had been sold before the conflict and therefore provided little new supply to the spot market.
- China eliminated sulfuric acid exports to support its domestic market, according to Delaney.
- Russia extended its suspension of sulfur exports through year-end.
- Transport from Kazakhstan also was suspended, he said.
Vancouver spot sulfur prices held at $1,100 per ton throughout June before a small decline at the beginning of the third quarter, Delaney said. Spot pricing in the Middle East, China and Brazil remained above $1,000 per ton.
While prices appeared to have plateaued and potentially begun to ease, Delaney said a substantial decline is unlikely until vessels can regularly transit the Strait of Hormuz. He said Itafos expects its supply contracts and locations to allow its Conda and Arraias facilities to continue operating at full levels and produce near nameplate capacity.
Fertilizer Prices and Farmer Economics
Management expects phosphate fertilizer prices to remain elevated through year-end amid restricted exports and production reductions across the industry. Delaney cited China’s P2O5 export restrictions through August and said the company expects little to no additional Chinese MAP or DAP exports for the remainder of 2026, potentially extending into 2027. China exported more than 5 million tons of DAP and MAP in 2025, he said.
Delaney also pointed to production reductions by OCP, Mosaic, Russian producers and producers in South Africa. Argus estimates OCP’s 2026 export volume could decline about 20%, removing approximately 1.4 million tons of DAP and MAP from global trade, according to Delaney.
He said high fertilizer prices have prompted some farmers to delay or defer applications, though lower application rates could increasingly threaten crop yields during upcoming planting seasons. The Profercy forecast cited by management projects MAP NOLA prices will remain above $800 per short ton through the end of 2026 and above earlier estimates into 2027.
Delaney said crop-price gains could provide some relief to farmers. Corn futures had recently approached $5 per bushel, wheat neared $7, and soybeans were around $12, with those combined prices increasing about 10% during July and 17% since the start of the year. He also cited a proposed $12 billion incremental U.S. farmer aid package passed by the House of Representatives, which would bring total federal farm packages above $56 billion in 2026 if approved by the Senate.
Despite near-term pressure from raw-material costs, Delaney said management remains confident in Itafos’ longer-term opportunity and its ability to continue supplying fertilizer products to farmers.
About Itafos (OTCMKTS:MBCF)
Itafos Inc is a phosphate-based fertilizer company focused on the acquisition, development and operation of phosphate mines and integrated fertilizer facilities. The company’s primary activities include the mining of phosphate rock, the production of phosphoric acid and sulfuric acid, and the manufacture of a range of phosphate-based fertilizers such as monoammonium phosphate (MAP), diammonium phosphate (DAP) and single superphosphate (SSP). Itafos aims to leverage vertically integrated assets to enhance efficiency in the supply chain and ensure consistent quality for its customers.
Headquartered in Boca Raton, Florida, Itafos maintains its core operating assets in Brazil, with key projects including the Arraias phosphate complex in the state of Tocantins and the recently acquired Catalão and Cajati fertilizer operations in Goiás and São Paulo.
