Sociedad Quimica y Minera S.A. (NYSE:SQM) Q3 2022 Earnings Call Transcript

Sociedad Quimica y Minera S.A. (NYSE:SQM) Q3 2022 Earnings Call Transcript November 17, 2022

Operator: Good morning, and welcome to the SQM Third Quarter 2022 Earnings Conference Call. All participants will be in a listen-only mode. After today's presentation, there will be an opportunity to ask questions. Please note, this event is being recorded. I would now like to turn the conference over to Kelly O'Brien, Head of Investor Relations. Please, go ahead.

Kelly O'Brien: Good morning. Thank you for joining SQM's earnings conference call for the nine months ended September 30, 2022. This conference call will be recorded and is being webcast live. Our earnings press release and our presentation with a summary of the results have been uploaded to our website where you can also find a link to this webcast. Speaking on the call today will be Ricardo Ramos, CEO; and Gerardo Illanes, CFO; Felipe Smith, Senior Commercial Vice President of Lithium and Pablo Altimiras, Executive Vice President of Iodine and Nitrates, will be available to answer any questions. Before we begin, let me remind you that, statements in this conference concerning the company's business outlook, future economic performances, anticipated profitability, revenues, expenses or other financial items, anticipated cost synergies and product or service line growth, together with other statements that are not historical facts are forward-looking statements, as that term is defined under federal securities laws.

Any forward-looking statements are estimates, reflecting the best judgment of SQM based on currently available information and involves a number of risks, uncertainties and other factors that could cause actual results to differ materially from those stated in such statements, including our ability to successfully implement the sustainable development plan, risks, uncertainties and factors that could affect the accuracy of such forward-looking statements are identified in our public filings made with the United States Securities and Exchange Commission and in our earnings release issued last night. And these forward-looking statements should be considered in light of those factors. We assume no obligation to update such statements, whether as a result of our new information, future developments or otherwise, except, as required by law.

I now leave you with our Chief Executive Officer, Ricardo Ramos.

Countries With Highest Medical Research Spending

eldar nurkovic/Shutterstock.com

Ricardo Ramos: Thank you, Kelly. Good morning, and thank you for joining the call today. We are very pleased with the results we published. These results were influenced by positive market conditions in iodine and lithium, where we saw record high prices. During the first nine months of the year, lithium represented 77% of our gross profit. This success did not happen overnight. For decades, we have a belief in the lithium market and that enthusiasm has only grown in recent years. We have invested heavily in R&D and have been able to bring on more capacity faster than any other player in the world. The successful public-private alliance between SQM and CORFO has benefited both parties, as well as the neighboring communities and Chile to an unprecedented level.

See also Top Buy Now Pay Later Companies in the US and 10 Near Monopoly Stocks in the US.

We look forward to keeping this momentum going in the future, formalized through our Salar Futuro announcement. This momentum has driven us to continue investing and growing our lithium production around the world. We recently announced the purchase of a plant in China, which has been overhauled to allow us to process lithium sulfate from our operations in Chile to lithium hydroxide. Yesterday, we announced that we will begin the expansion of our lithium hydroxide capacity in Chile from 40,000 metric tons to 100,000 metric tons in Chile. We have the necessary permits and look forward to completing this project by 2025. In the lithium industry, we see strong indicators relating to demand growth, particularly in China, where we are seeing that electric vehicle sales units are doubling compared to last year.

While China is leading the lithium demand growth today, we also believe in the electric vehicle markets in Europe and the United States. Electric vehicle sales in the US could grow up to 60% this year compared to last year, and while starting at a lower base, these numbers are still a positive indicator of the continued momentum globally of the lithium market in the future. Given a lot of this, it seems likely that prices will remain at this historically high levels for the remainder of 2022 and into 2023. These strong growth fundamentals are incentivizing us to keep on growing beyond what we have announced in Chile and abroad. We will continue to invest in R&D, innovation and new projects and opportunities that will allow produce lithium in a cost-effective and sustainable way to meet the green energy transition of the future.

While we have announced significant investment in the lithium business in the recent years, our long-term views in -- or all the business remain strong. We continue to invest in expansion projects related to iodine and nitrates as well. During the past few months, we have assigned long-term contract for both lithium and iodine, proving our commitment to our business and the mutual trust and collaboration that we have with the main players in the industries where we operate.

Kelly O'Brien: Operator, we can now turn it over to questions.

To continue reading the Q&A session, please click here.