Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Q1 FY2013 Earnings Presentation
25 slides from Mosaic Company (the)'s earnings presentation, Oct 9, 2012
Slide 1: The Mosaic Company Earnings Conference Call – 1st Quarter Fiscal 2013
The Mosaic Company Earnings Conference Call – 1st Quarter Fiscal 2013 October 2, 2012 Jim Prokopanko, President and Chief Executive Officer Larry Stranghoener, Executive Vice President and Chief Financial Officer Laura Gagnon, Vice President Investor Relations Exhibit 99.2
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 future financial and operating results. Such statements are based upon the current
Slide 3: Slide 3
Slide 4: First Quarter Financial Highlights
First Quarter Financial Highlights $1.01 in Earning per Share $0.02 loss from notable items $2.5 billion $610 million Revenue Phosphates Potash $1,561 $960 $208 $416 Operating Earnings
Slide 5: Grain and Oilseed Stocks at Critical Levels
Grain and Oilseed Stocks at Critical Levels 12F Actual Average Crop Year 14% 16% 18% 20% 22% 24% 26% 28% 30% 32% 34% Source: USDA Global Grain and Oilseed Stocks-To-Use Percentage
Slide 6: Crop Nutrients are Highly Affordable
Crop Nutrients are Highly Affordable 0.50 0.70 0.90 1.10 1.30 1.50 1.70 Crop Nutrient Price Index/Crop Price Index Ratio Ratio Average Our homemade Plant Nutrient Affordability metric is a ratio of a plant nutrient price index and a crop price index. The plant nutrient price index is a weighted aver
Slide 7: Global Farm Economics at Historical Highs
Global Farm Economics at Historical Highs • Increases in cash payments • Improving farmer returns, despite higher at the farm fertilizer costs North America India • Record farm cash income • ~$25B in crop insurance payouts Brazil • Record acreage expected for beans and corn 12F $ in billions U.S. Ne
Slide 8: Grain Rally and Fertilizer Pricing
Grain Rally and Fertilizer Pricing • Caution in the value chain • India P&K subsidy changes • Weaker macro environment • Greater supply certainty Why haven’t fertilizer prices followed the grain rally, like we saw in 2008?
Slide 9: Sentiment and Fundamentals
Sentiment and Fundamentals • Declining potash producer inventories • Phosphate supply uncertainties • Elimination of drought-related uncertainties Potential catalysts to changing market sentiment:
Slide 10: Potash Market Correcting: Poised for Recovery in 2013
Potash Market Correcting: Poised for Recovery in 2013 Dynamics • China/India delaying purchasing • North American inventories declined for rd month in a row 12F 13F China North Am Brazil India Indo/Malay Other Source: Fertecon and Mosaic World Muriate of Potash Shipments Million tonnes KCL
Slide 11: Head Frame at Esterhazy K3
Head Frame at Esterhazy K3
Slide 12: Potash Operating Rates
Potash Operating Rates Source: Fertecon demand assumptions, Assumes global MOP demand grows to 69 million tonnes in 2017 and effective capacity increases to 75 million tonnes in 2017. • Better than expected balance during the next five years • More capacity later in decade • Some projects more likel
Slide 13: Phosphates is a Tight Market
Phosphates is a Tight Market • Very low North American producer inventories • Drought-related, low river levels impacting timing of North American shipping • Global supply uncertainty 12F 13F Million tonnes DAP/MAP/TSP World Processed Phosphate Shipments China India North Am Brazil Europe/FSU Other
Slide 14: Phosphate Operating Rates in the Short and Near Term
Phosphate Operating Rates in the Short and Near Term Source: Fertecon demand assumptions, Mosaic estimates of capacity additions of 11 million tonnes expansion plans, including: Ma’aden on line in 2011, doubling in 2017. • Expected new capacity just keeps pace with projected demand growth • Supply u
Slide 15: Financial Results Review
Financial Results Review
Slide 16: First Quarter Financial Performance
First Quarter Financial Performance In millions, except per share amounts Three Months Ended August 31, 2012 2011 Net Sales $2,505 $3,083 Gross Margin $747 $848 % of net sales 30% 28% Net Earnings $429 $526 % of net sales 17% 17% Diluted EPS $1.01 $1.17 Effective Tax Rate 28% 28% Cash Flow Provided
Slide 17: Potash Segment Highlights
Potash Segment Highlights In millions, except MOP price Q1 FY13 Q4 FY12 Q1 FY12 Net sales $960 $1,037 $873 Gross Margin $459 $514 $444 Percent of net sales 48% 50% 51% Operating earnings $416 $464 $402 Sales volumes 1.9 2.0 1.8 Production volume 1.5 1.9 1.9 Production operating rate 65% 85% 81% Avg
Slide 18: Tolling Agreement and Canpotex Allocation Process
Tolling Agreement and Canpotex Allocation Process Tolling Agreement Impact on P&L • Effective January 1, 2013 • Canpotex allocation change: from 37% to 43% * Canpotex Allocation Process • Current rules based on peaking capacities in effect at that time • Adjusted based on proving runs • Entitlements
Slide 19: Phosphates Segment Highlights
Phosphates Segment Highlights In millions, except DAP price Q1 FY13 Q4 FY12 Q1 FY12 Net sales $1,561 $1,789 $2,220 Gross Margin $288 $322 $410 Percent of net sales 18% 18% 18% Operating earnings $208 $224 $333 Sales volumes 2.7 2.9 3.2 NA production volume (a) 2.0 2.1 2.2 Finished product operating
Slide 20: Financial Guidance Summary
Financial Guidance Summary Category Guidance – Fiscal 2013 Potash Q2 Sales volume 1.6 - 1.9 million tonnes Q2 MOP selling price $420 - $450 per tonne Q2 Operating rate above 70 percent Phosphates Q2 Sales volume 3.0 - 3.4 million tonnes Q2 DAP selling price $520 - $550 per tonne Q2 Operating rate ab
Slide 21: Fiscal Year 2013 Outlook
Fiscal Year 2013 Outlook Post drought demand River levels India and China Record farmer economics Tight grain & oilseed stocks-to-use Capital deployment
Slide 22: Progress Towards Fiscal Year 2013 Goals
Progress Towards Fiscal Year 2013 Goals Potash Expansion Innovation Operational Excellence Capital Safety Performance ROIC/Momentum Sustainability Premium Products Sustainability On Time, on Budget Capacity Timing Ammonia Investment TSR focus
Slide 23: Mosaic
Mosaic
Slide 24: Earnings Sensitivity to Key Drivers
FY13 Q1 Actual Change FY13 Q1 Margin % Actual % Impact on Segment Margin Pre-Tax Impact EPS Impact Earnings Sensitivity to Key Drivers (a) Marketing MOP Price ($/tonne) $444 $50 47.9% 9.2% $88 $0.15 Potash Volume (million tonnes) 1.9 0.5 47.9% 16.9% $162 $0.27 DAP Price ($/tonne) $529 $50 18.4% 6.3%
Slide 25: Raw Material Cost Detail
Raw Material Cost Detail The company is currently implementing a new inventory valuation system. After implementation, the company expects to include this information in its performance data disclosures. Q1 FY2013 % Ammonia Realized in COGS $ 449 Average Purchase Price $ 664 Sulfur Realized in COGS