Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q1 2016 Earnings Presentation
27 slides from Mosaic Company (the)'s earnings presentation, May 4, 2016
Slide 1: Earnings Conference Call – First Quarter 2016
The Mosaic Company Earnings Conference Call – First Quarter 2016 May 4, 2016 Joc O’Rourke, President and Chief Executive Officer Rich Mack, Executive Vice President and Chief Financial Officer Laura Gagnon, Vice President Investor Relations
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 Mosaic External Environment Balance sheet and operational Strong US Dollar flexibility Elevated channel inventories Expect robust demand for both Declining farm incomes P&K in 2016 Lower raw materials costs Not the first cycle Perception of oversupply Mosaic is Well Positione
Slide 4: Confident in Second Half Outlook
Confident in Second Half Outlook Plant Nutrient Affordability Plant Nutrient Price Index / Crop Price Index 1.75 Source: Weekly Price Publications, CME, USDA, AAPFCO, Mosaic 1.50 1.25 1.00 0.75 0.50 05 06 07 08 09 10 11 12 13 14 15 16 Affordability Metric Average 2 4 4
Slide 5: Yet Taking Specific Actions
Yet Taking Specific Actions Original Additional Target Actions ~$75m reduction in Operating $500m Cost Savings operating & support Expenses function expenses $900m ‐ $1.1b in 2016 $800m ‐ $900m in 2016 Capital + + Expenditures $300m for MWSPC $220m for MWSPC Ongoing Work to Optimize Assets 5
Slide 6: Financial Results Review
Financial Results Review
Slide 7: Potash: Optimizing Value
Potash: Optimizing Value $300 $291 $295 $288 $280 $267 $267 $265 $254 $250 $207 $200 $150 $122 $89 $100 $50 $‐ Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 1 Realized Average MOP Price MOP Cash Cost Per Production Tonne 1 Excluding realized mark‐to‐market gains and losses
Slide 8: Potash Guidance
Potash Guidance Potash 2016 Q2 Sales Volumes 1.9 to 2.2 million tonnes Q2 MOP Selling Price $180 to $200 per tonne Q2 Gross Margin Rate, excluding resource taxes Mid to high teens Q2 Operating Rate Around 70 percent Full Year Sales Volumes 7.5 to 8.0 million tonnes Global Shipments 59 to 60 million
Slide 9: Phosphates: Improving Profitability in H2
Phosphates: Improving Profitability in H2 Gross margin improving to 15 ‐ 20% in H2 of 2016 $500 25% $450 $400 20% $350 $300 15% $250 $200 10% $150 $100 5% $50 $‐ 0% Q1 2014 Q2 2014 Q3 2014 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Q1 2016 Q2 2016F Q3‐Q4 2016F Avg. GM % GM % Range Realized DAP Average
Slide 10: Phosphates Guidance
Phosphates Guidance Phosphates 2016 Q2 Sales Volumes 2.3 to 2.6 million tonnes Q2 DAP Selling Price $335 to $355 per tonne Q2 Gross Margin Rate Around 10 percent Q2 Operating Rate Around 80 percent Full Year Sales Volumes 9.0 to 9.75 million tonnes Global Shipments 65 to 66 million tonnes 10
Slide 11: International Distribution Guidance
International Distribution Guidance International Distribution 2016 Q2 Sales Volumes 1.4 to 1.6 million tonnes Q2 Gross Margin per Tonne Low single dollar per tonne range Full Year Sales Volumes 6 to 7 million tonnes 11
Slide 12: Full-Year Guidance Summary
Full-Year Guidance Summary Potash 2016 21 to 25 percent of Potash gross Full-Year Canadian Resources Taxes (CRT) profit excluding CRT Full-Year Brine Management Costs $160 to $180 million Consolidated Full-Year 2016 Total SG&A $340 to $360 million Capital Expenditures and Equity Investments $1.0 to
Slide 13: Closing Commentary
Closing Commentary
Slide 14: Thank You
Thank You The Mosaic Company Earnings Conference Call – First Quarter 2016 May 4, 2016
Slide 15: Appendix
Appendix
Slide 16: Phosphates Segment Highlights
Phosphates Segment Highlights $ In millions, except DAP price Q1 2016 Q4 2015 Q1 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $909 $1,031 $1,172 300 Gross margin $65 $121 $222 250 Percent of net sales 7% 12% 19% 200 Operating earnings $18 $47 $190 150 Sales volumes 2.2 2.2 2.3 100 Producti
Slide 17: Potash Segment Highlights
Potash Segment Highlights $ In millions, except MOP price Q1 2016 Q4 2015 Q1 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $394 $572 $653 250 Gross margin $98 $155 $242 200 Percent of net sales 25% 27% 37% 150 Gross margin (excluding CRT)* $116 $211 $320 100 Percent of net sales* 30% 37% 49
Slide 18: International Distribution Segment Highlights
International Distribution Segment Highlights $ In millions, except Blends price Q1 2016 Q4 2015 Q1 2015 OPERATING EARNINGS BRIDGE $ IN MILLIONS Net sales $467 $605 $439 Gross margin $12 $38 $21 110 Percent of net sales 3% 6% 5% Operating earnings $(4) $14 $3 50 Sales volumes 1.3 1.5 1.0 Margin per
Slide 19: Raw Material Cost Detail
Raw Material Cost Detail Q1 2016 Percent Ammonia ($/tonnes) Realized in COGS $370 Average Purchase Price $322 Sulfur ($/ton) Realized in COGS $130 Average Purchase Price $113 Phosphate rock (realized in COGS) ('000 tonnes) U.S. mined rock 3,660 92% Purchased Miski Mayo Rock 324 8% Other Purchased Ro
Slide 20: Earnings Sensitivity to Key Drivers
Earnings Sensitivity to Key Drivers(a) 2016 Q1 % Impact on 2016 Q1 Pre-Tax Change Margin % Segment EPS Impact Actual Impact Actual Margin Marketing MOP Price ($/tonne)(b) $207 $50 30% 18% $72 $0.17 Potash Volume (thousand tonnes) 1,546 500 30% 20% $80 $0.19 DAP Price ($/tonne) $355 $50 7% 12% $110 $
Slide 21: P&K Shipments: Brazil
P&K Shipments: Brazil Brazil Plant Nutrient Shipments Brazil Potash Shipments Mil Tonnes Mil Tonnes (MOP) 30 8 7 25 6 20 5 15 4 3 10 2 5 1 0 0 Q1 Actual Q2-Q4 Actual/Forecast Q1 Actual Q2-Q4 Actual/Forecast 2015 2016 2015 2016 Brazil Phosphate Shipments Mil Tonnes (DAP/MAP/NPS/TSP) 8 7 6 5 4 3 2 1 0
Slide 22: P&K Shipments: India
P&K Shipments: India India DAP Imports India Potash Imports Mil Tonnes Mil Tonnes (Implied MOP Shipments) 7 4 6 3 5 4 2 3 2 1 1 0 0 Q1 Actual Q2-Q4 Actual/Forecast Q1 Actual Q2-Q4 Actual/Forecast 2015 2016 2015 2016 Source: CRU and Mosaic 22
Slide 23: P&K Shipments: China
P&K Shipments: China China DAP/MAP/TSP Shipments China Potash Shipments Mil Tonnes Mil Tonnes 16 11 10 14 9 12 8 10 7 6 8 5 6 4 4 3 2 2 1 0 0 Q1 Actual Q2-Q4 Actual/Forecast Q1 Actual Q2-Q4 Actual/Forecast 2015 2016 2015 2016 China Potash Imports China DAP/MAP/TSP Exports Mil Tonnes Mil Tonnes 8 12
Slide 24: Global Potash Shipment Forecasts by Region (May 4, 2016)
Global Potash Shipment Forecasts by Region (May 4, 2016) Feb Feb May May Source: CRU and Mosaic. Numbers may not sum to total due to rounding. Muriate of Potash Low High Low High Million Tonnes (KCl) 2014R 2015R 2016F 2016F 2016F 2016F Comments The demand outlook remains positive, but shipments are
Slide 25: Global Phosphate Shipment Forecasts by Region (May 4, 2016)
Global Phosphate Shipment Forecasts by Region (May 4, 2016) Feb Feb May May Source: CRU and Mosaic. Million Tonnes Low High Low High Numbers may not sum to total due to rounding. DAP/MAP/NPS*/TSP 2014 2015E 2016F 2016F 2016F 2016F Comments We have tempered expectations for a large rebound in shipmen
Slide 26: 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 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2014 2014 2014 2015 2015 2015 2015 2016 2016F 2014 2014 2014 2015 2015 2015 2015 2016 2016F 2 Realized Costs Market Prices 1
Slide 27: Reconciliations: Adjusted EPS and Potash Gross Margin, Excluding CRT
Reconciliations: Adjusted EPS and Potash Gross Margin, Excluding CRT In addition to financial measures prepared in accordance with U.S. generally accepted accounting principles ("GAAP"), the Company has presented gross margin, excluding Canadian resource taxes ("CRT") for Potash and adjusted diluted