Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q2 2016 Earnings Presentation
27 slides from Mosaic Company (the)'s earnings presentation, Aug 2, 2016
Slide 1: Earnings Conference Call – Second Quarter 2016
The Mosaic Company Earnings Conference Call – Second Quarter 2016 August 2, 2016 Joc O’Rourke, President and Chief Executive Officer Rich Mack, Executive Vice President and Chief Financial Officer Dr. Mike Rahm, Vice President Market and Strategic Analysis Laura Gagnon, Vice President Investor Relat
Slide 2: Safe Harbor Statement
Safe Harbor Statement This document contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the Wa’ad Al Shamal Phosphate Company (also known as MWSPC) and other proposed or pend
Slide 3: Summary
Summary Market Mosaic’s Actions Environment Capital Stewardship Mosaic is Well Positioned to Weather the Cycle 3
Slide 4: Market Update
Market Update
Slide 5: Good Demand Fundamentals
Good Demand Fundamentals Mil Tonnes Global Phosphate Shipments Mil Tonnes KCl Global PotashShipments 61‐63 DAP/MAP/NPS/TSP 66‐68 70 65 59‐60 Source: CRU and Mosaic 65‐66 Source: CRU and Mosaic 65 60 60 55 55 50 50 45 45 40 40 35 35 30 30 25 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16F17F 00 0
Slide 6: Good Demand Fundamentals
Good Demand Fundamentals US$ Sugar Prices US$ Cotton Prices CWT Daily Close of Nearby Option CWT Daily Close of Nearby Option 21 75 20 Source: NYMEX 73 19 Source: NYMEX 18 70 17 68 16 65 15 14 63 13 60 12 11 58 Corn, soybeans and wheat prices 10 55 are making headlines Sep-15 Dec-15 Mar-16 Jun-16 Se
Slide 7: Good Demand Fundamentals
Good Demand Fundamentals Brazil Phosphate Imports Mil Tonnes Brazil Potash Imports Mil Tonnes 3.5 5.0 Source: ANDA and Mosaic Source: ANDA and Mosaic 4.5 3.0 4.0 2.5 3.5 2.0 3.0 1.5 2.5 1.0 2.0 First Half Acutal Second Half Actual/Forecast First Half Acutal Second Half Actual/Forecast 2014 2015 2016
Slide 8: Good Demand Fundamentals
Good Demand Fundamentals Mil Tonnes India DAP Imports India Potash Imports Mil Tonnes 4.0 3.0 Source: FAI and Mosaic Source: FAI and Mosaic 3.5 2.5 3.0 2.0 2.5 1.5 2.0 1.5 1.0 1.0 0.5 0.5 0.0 First Half Acutal Second Half Actual/Forecast First Half Acutal Second Half Actual/Forecast 2014 2015 2016 2
Slide 9: FX Impact on Supply
FX Impact on Supply Index Key Potash Exporter Exchange Rates US$ MOP Price 1000 Belarus 2014 Q1=100 Tonne c&f Brazil Port Rubles Tonne 110 600 6000 100 550 5250 90 500 4500 80 450 3750 400 3000 70 350 2250 60 300 1500 50 250 750 Source: CRB Source: Argus FMB and CRB 40 200 0 Jan-14 Jul-14 Jan-15 Jul
Slide 10: Managing Costs and Capital
Managing Costs and Capital • $500 million Expense Reduction • +$75 million from Support Functions • Asset Optimization • Lower Capital Spending 10
Slide 11: Multiple Actions to Reduce Costs
Multiple Actions to Reduce Costs Cash Costs by Mine H1 2016 $120 Cash costs including royalties, excluding resource taxes and $100 realized derivative gains/(losses) $36 $19 $80 average $60 $100 $40 $73 $74 $67 $20 $‐ Esterhazy Belle Plaine Colonsay Enterprise Brine Cash costs including royalites, e
Slide 12: Low Cash Cost Opportunity
Low Cash Cost Opportunity Cash Costs by Mine (95% Operating Rate) $90 Cash costs including royalties, excluding resource taxes and $80 $18 average $70 $26 realized derivative gains/(losses) $60 $50 $40 $71 $66 $30 $53 $20 $10 $‐ Esterhazy Belle Plaine Enterprise Brine Cash costs including royalties,
Slide 13: Financial Results Review
Financial Results Review
Slide 14: Potash Guidance
Potash Guidance Potash 2016 Q3 Sales Volumes 1.8 to 2.1 million tonnes Q3 MOP Selling Price $160 to $175 per tonne Q3 Gross Margin Rate Mid-single digits Q3 Operating Rate Around 65 percent Full Year Sales Volumes 7.5 to 8.0 million tonnes Global Shipments 59 to 60 million tonnes 14
Slide 15: Phosphates Guidance
Phosphates Guidance Phosphates 2016 Q3 Sales Volumes 2.4 to 2.7 million tonnes Q3 DAP Selling Price $310 to $340 per tonne Q3 Gross Margin Rate Around 10 percent Q3 Operating Rate Around 85 percent Full Year Sales Volumes 9.0 to 9.75 million tonnes Global Shipments 65 to 66 million tonnes 15
Slide 16: International Distribution Guidance
International Distribution Guidance International Distribution 2016 Q3 Sales Volumes 2.1 to 2.4 million tonnes Q3 Gross Margin per Tonne $15 to $20 per tonne Full Year Sales Volumes 6 to 7 million tonnes 16
Slide 17: Full-Year Guidance Summary
Full-Year Guidance Summary Consolidated Full-Year 2016 Total SG&A $330 to $350 million Capital Expenditures and Equity Investments $1.0 to $1.1 billion Effective Tax Rate Approximately 10 percent Potash 2016 Full-Year Canadian Resources Taxes (CRT) $95 to $110 million Full-Year Brine Management Cost
Slide 18: Closing Commentary
Closing Commentary
Slide 19: Appendix
Appendix
Slide 20: Phosphates Segment Highlights
Phosphates Segment Highlights $ In millions, except DAP price Q2 2016 Q1 2016 Q2 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $976 $909 $1,385 350 Gross margin $100 $65 $296 300 Percent of net sales 10% 7% 21% 250 Operating earnings $12 $18 $259 200 150 Sales volumes 2.4 2.2 2.8 100 Produc
Slide 21: Potash Segment Highlights
Potash Segment Highlights $ In millions, except MOP price Q2 2016 Q1 2016 Q2 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $457 $394 $730 250 Gross margin $53 $98 $295 200 Percent of net sales 12% 25% 40% 150 Canadian resource taxes (CRT) $38 $18 $55 100 Gross margin (excluding CRT) $91 $11
Slide 22: International Distribution Segment Highlights
International Distribution Segment Highlights $ In millions, except Blends price Q2 2016 Q1 2016 Q2 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $534 $467 $637 Gross margin $5 $12 $29 100 Percent of net sales 1% 3% 4% Operating earnings (loss) $(11) $(4) $8 40 Sales volumes 1.4 1.3 1.5 Mar
Slide 23: Raw Material Cost Detail
Raw Material Cost Detail Q2 2016 Percent Ammonia ($/tonnes) Realized in COGS $320 Average Purchase Price $304 Sulfur ($/ton) Realized in COGS $112 Average Purchase Price $98 Phosphate rock (realized in COGS) ('000 tonnes) U.S. mined rock 4,013 92% Purchased Miski Mayo Rock 349 8% Other Purchased Roc
Slide 24: Earnings Sensitivity to Key Drivers
Earnings Sensitivity to Key Drivers(a) 2016 Q2 % Impact on 2016 Q2 Pre-Tax Change Margin % Segment EPS Impact Actual Impact Actual Margin Marketing MOP Price ($/tonne)(b) $178 $50 12% 21% $97 $0.24 Potash Volume (thousand tonnes) 2,040 500 12% 12% $55 $0.14 DAP Price ($/tonne) $343 $50 10% 13% $122
Slide 25: Phosphate Raw Material Trends
Phosphate Raw Material Trends Ammonia Sulfur ($/tonne) ($/tonne) 700 175 600 150 500 125 400 100 300 75 200 50 100 25 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 2014 2014 2015 2015 2015 2015 2016 2016 2016F 2014 2014 2015 2015 2015 2015 2016 2016 2016F 1 2 Realized Costs Market Prices
Slide 26: Global Phosphate Shipment Forecasts by Region (August 2, 2016)
Global Phosphate Shipment Forecasts by Region (August 2, 2016) Source: CRU and Mosaic. Source: Aug Aug Aug Aug Numbers may maynot notsum sum to to total total due due to to rounding. rounding. Numbers Million Tonnes Low High Low High DAP/MAP/NPS*/TSP 2015R 2016F 2016F 2017F 2017F Comments We again h
Slide 27: Global Potash Shipment Forecasts by Region (August 2, 2016)
Global Potash Shipment Forecasts by Region (August 2, 2016) Aug Aug Aug Aug Source: CRU and Mosaic. Numbers may not sum to total due to rounding. Muriate of Potash Low High Low High Million Tonnes (KCl) 2015 2016F 2016F 2017F 2017F Comments Shipments this year are projected to drop more than previou