Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q4 2019 Earnings Presentation
33 slides from Mosaic Company (the)'s earnings presentation, Feb 20, 2020
Slide 1: Earnings Conference Call – Full Year and Fourth Quarter 2019
The Mosaic Company Earnings Conference Call – Full Year and Fourth Quarter 2019 Joc O’Rourke, President and Chief Executive Officer Presenters: Clint Freeland, Senior Vice President and Chief Financial Officer Laura Gagnon, Vice President Investor Relations Date: February 19/20, 2020
Slide 2: Forward Looking Statements & Non-GAAP Financial Measures
Forward Looking Statements & Non-GAAP Financial Measures This presentation 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 proposed or pending future transactions or stra
Slide 3: 2019 Actions Fuel 2020 Optimism
2019 Actions Fuel 2020 Optimism Extreme weather conditions led to challenging conditions through out the year • Wettest year in North America in ~50 years Mosaic executed well and made significant progress • K3 acceleration • Mosaic Fertilizantes synergies • NextGen Phosphates We created substantial
Slide 4: Mosaic Executed Well and Delivered Record Safety Performance
In This Environment, Mosaic Executed Well and Delivered Record Safety Performance Potash Segment Accelerated capital allocation to realize brine management cost Acceleration of Esterhazy K3 savings 30 months ahead of original plan, lowers cash cost of production driving total cash savings of $300 mi
Slide 5: Results
Results $ in million, except per share 4Q 2019 FY 2019 Diluted Earnings Per Share (EPS) $(2.43) $(2.78) Adjusted diluted EPS(1) $(0.29) $0.16 Net Earnings (Loss) $(921) $(1,067) Adjusted EBITDA(1) $202 $1,347 Cash from Operations $276 $1094 Capital Expenditures $340 $1,271 Fourth quarter results inc
Slide 6: 2020 Expectations
2020 Expectations Presenter: Date:
Slide 7: Sensitivities using 2019 Cost Structure
Sensitivities using 2019 Cost Structure Based on 2019 Actuals Adjusted EBITDA(1) $1.35 bn Known non-market growth 2020 vs 2019 $0.225 bn 2019 Sensitivity Full year adj. EBITDA impact Actuals Average MOP Price / tonne (fob mine) $10/mt price change = $55 million(2) $237 Average DAP Price / tonne (fob
Slide 8: Volumes Ranges
Volumes Ranges Potash Volumes Phosphates Volumes Mosaic Fert Volumes 10.0 10.0 10.0 9.0 9.0 9.0 8.0 8.0 8.0 7.0 7.0 7.0 6.0 6.0 6.0 5.0 5.0 5.0 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Range: 7.8 - 9.0 million tonnes Range: 8.1 - 9.8 million tonnes Tw
Slide 9: Additional Modeling Assistance
Additional Modeling Assistance Estimated reconciling items EBITDA(1) to EPS $ in millions Adjusted Depreciation, Depletion & Amortization $910 - $920 Net Interest Expense $180 - $190 Non-Notable Adjustments $80 - $90 Effective Tax Rate Low 30’s% Capital Expenditure Expectations $ in billions Sustain
Slide 10: Improved Transparency
Improved Transparency New disclosures in our quarterly performance data: − Realized pricing f.o.b. plant or mine − Product or geographic mix detail − Raw material mix and costs New monthly disclosures to help model quarterly earnings: − Segment revenues and tonnes sold based on our revenue recogniti
Slide 11: Coronavirus Impact on China P & K
Coronavirus Impact on China P & K Q1 China DAP & MAP China’s production loss in Q1 2020 Production Loss Estimate could exceed two million tonnes The lost production may be recovered in H2, but only if economics work Others 22% In-country channel inventories are significantly lower year over ye
Slide 12: Mosaic's Strategic Priorities
Mosaic’s Strategic Priorities North America Drive Functional Transformation Collaboration and Efficiency Esterhazy K3 Development Rethink and re-engineer to reduce structural costs Next Gen Phosphates Look for new ways to improve South America Optimize Operating Assets Growth Engine and Capital Mana
Slide 13: We help the world grow the food it needs.
We help the world grow the food it needs. 13
Slide 14: Appendix
Appendix 14
Slide 15: Operating Driver Targets
Operating Driver Targets 2018 2019 2021 actual actual target Cash cost of U.S. mined rock ($/tonne) $38 $41 $39 Phosphates Cash costs of conversion ($/tonne) $63 $65 $56 Sales of MicroEssentials (mm tonnes) 2.9 2.7 3.7 Average MicroEssentials margin, premium to MAP ($/tonne)(1) $43 $45 $40 - $50 Cas
Slide 16: Strong Execution Driving Growth into 2020
Strong Execution Driving Growth into 2020 Non Market Growth 2019 to 2020 Mosaic expects ~ $225 million of adjusted EBITDA (1) Adjusted EBITDA(1) growth, all else equal, due to the following: 250 • The Brazilian phosphate mines resumed full operations in September, with the outages in 2019 200 expect
Slide 17: New Monthly Information
New Monthly Information We plan to provide incremental monthly data on sales revenues and volumes to provide better transparency of the lag between market prices and realized prices, and the seasonality of volumes, which can vary significantly from year to year. This is expected to aid analysts in d
Slide 18: Improving Phosphate Pricing Trends
Improving Phosphate Pricing Trends Published DAP Price $ per tonne $ per ton 450 425 425 400 400 375 Since December pricing* low: 375 350 • fob NOLA up ~$40/ton 350 325 • fob Tampa up ~$30/tonne 325 300 300 275 *average reported spot pricing for prompt delivery 275 250 Source: Argus 250 225 Jan-17 J
Slide 19: 2020 Strong Market Demand Driven by Constructive Ag Commodity Prices
2020 Strong Market Demand Driven by Constructive Ag Commodity Prices & Acreage Increase in North America Soybean Prices $ / Bu • Weather challenges have resulted in 11.00 Daily Close of the Front Month Contract underapplication of fertilizer in North America for 10.50 three seasons in a row. 10.00 S
Slide 20: 2020 Demand Growth: Potash
2020 Demand Growth: Potash North American MOP China MOP Shipments Shipments MMT, KCl MMT, KCl ▪ A potash inventory build in 12 ▪ North America recovers 20 2019 allows time to delay 10 on normal weather and 15 a new contract settlement 8 6 pent-up demand after – potentially through Q1 – 10 4 10.0 thr
Slide 21: 2020 Demand Growth: Phosphate
2020 Demand Growth: Phosphate North America China MMT, DAP/MAP/NPS/TSP DAP/MAP/NPS/TSP MMT Product Shipments Product Shipments ▪ There remains 12 ▪ North America recovers 18 significant uncertainty 10 on normal weather and 16 14 regarding China’s 8 pent-up demand after 12 10 coronavirus – our base 6
Slide 22: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (February 2020) Muriate of Potash Low High Source: IFA, CRU and Mosaic Mil Tonnes KCl 2018 2019E 2020F 2020F Comments (Numbers may not sum to total due to rounding) Modest demand growth is expected to be offset by some drawdown of channel inventories, resul
Slide 23: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (February 2020) Source: IFA, CRU and Mosaic DAP / MAP / NPS* / TSP Low High (Numbers may not sum to total due to rounding) (Million Tonnes) 2018 2019E 2020F 2020F Comments We have rebased our China figures higher to be more comprehensive in our counting
Slide 24: Potash
Potash (in millions except per tonne) 2019 2018 2017 Sales Volumes (tonnes) 7.8* 8.8* 8.6 Operating Earnings $46 $511 $344 Adjusted EBITDA(1) $884 $866 $648 Gross Margin $ / Tonne $79 $68 $45 Adjusted Gross Margin $ / Tonne(1) $83 $69 $47 • Gross Margin per tonne improved over the prior year as a re
Slide 25: Mosaic Fertilizantes
Mosaic Fertilizantes (in millions except per tonne) 2019 2018 2017* Sales Volumes (tonnes) 9.2 9.1 9.35 Operating Earnings $133 $241 $63 Adjusted EBITDA(1) $304 $429 $73 Gross Margin $ / Tonne $31 $42 $8 Adjusted Gross Margin $ / Tonne(1) $31 $42 $8 • The company achieved approximately $330 million
Slide 26: Phosphates
Phosphates (in millions except per tonne) 2019 2018 2017 Sales Volumes (tonnes) 8.2* 8.4* 9.5 Operating Earnings $(1,131) $473 $256 Adjusted EBITDA(1) $295 $966 $648 Gross Margin $ / Tonne $(10) $69 $35 Adjusted Gross Margin $ / Tonne(1) $(5) $72 $35 • Realized finished phosphates prices remained pr
Slide 27: Non GAAP Reconciliations
Non GAAP Reconciliations 27
Slide 28: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Consolidated Earnings (in millions) 4Q 2019 4Q 2018 2019 2018 Consolidated net (loss) earnings attributable to Mosaic $(921) $112 $(1,067) $470 Less: Consolidated interest expense, net $(47) $(31) $(183) $(166) Plus: Consolidated depreciation, depletion and $233 $
Slide 29: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 4Q 2019 4Q 2018 2019 2018 Operating earnings (loss) $(712) $83 $(1,131) $473 Plus: Depreciation, depletion and amortization $113 $101 $430 $403 Plus: Accretion expense $12 $8 $46 $37 Plus: Foreign exchange gain (loss) $(2) $7 $2 $
Slide 30: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 4Q 2019 4Q 2018 3Q 2019 Gross Margin $(106) $151 $(19) Notable items in gross margin $16 $0 $7 Adjusted gross margin $(90) $151 $(12)
Slide 31: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 4Q 2019 4Q 2018 2019 2018 Operating earnings $(452) $149 $46 $511 Plus: Depreciation, depletion and amortization $76 $80 $296 $301 Plus: Accretion expense $2 $1 $7 $5 Plus: Foreign exchange gain (loss) $27 $(86) $70 $(117) Plus: Other
Slide 32: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 4Q 2019 4Q 2018 3Q 2019 Gross Margin $92 $202 $158 Notable items in gross margin $22 $0 $12 Adjusted gross margin $114 $202 $170
Slide 33: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Mosaic Fertilizantes Earnings (in millions) 4Q 2019 4Q 2018 2019 2018 Operating earnings (loss) $5 $85 $133 $241 Plus: Depreciation, depletion and amortization $38 $49 $136 $159 Plus: Accretion expense $3 $2 $7 $4 Plus: Foreign exchange gain (loss) $7 $(2) $(44) $