Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q3 2017 Earnings Presentation
25 slides from Mosaic Company (the)'s earnings presentation, Oct 31, 2017
Slide 1: Earnings Conference Call – Third Quarter 2017
The Mosaic Company Earnings Conference Call – Third Quarter 2017 Joc O’Rourke, President and Chief Executive Officer Presenters: Rich Mack, Executive Vice President and Chief Financial Officer Laura Gagnon, Vice President Investor Relations Date: October 31, 2017
Slide 2: Forward Looking Statements
Forward Looking Statements 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 our proposed acquisition of the global phosphate and potash operations of Vale S.
Slide 3: Executive Summary
Executive Summary Transforming Targeting Brazil Accelerate Business Phosphates Performance Potash Expect to Achieve Targeted Balance Sheet Metrics by ~2020 3
Slide 4: Comprehensive Transformational Agenda
Comprehensive Transformational Agenda Idle Plant City Concentrates Plant for at Least One Year: Phosphate ▪ Lower operating costs and improve system-wide margins Asset ▪ Reduce CAPEX requirements Optimization ▪ Serve own distribution business and other India customers with logistically advantaged, l
Slide 5: Phosphates: Expect Positive Gross Margin Impact
Phosphates: Expect Positive Gross Margin Impact Estimated Cash Conversion Costs/Tonne* - 2017 $100 $95 Conversion Costs ($USD / Tonne) Existing $90 Footprint $85 Excluding Plant City $80 $75 $70 $60 $65 $70 $75 $80 Conversion Cash Costs ($USD / Tonne) size of bubble = production volume * Phosphate c
Slide 6: Proactive Actions: Balanced S&D
Proactive Actions: Balanced S&D Million Tonnes DAP/MAP/NPS Global Phosphate Capacity vs. Shipments 7 Cumulative Change 2017-2020 6 Cumulative Net Capacity Growth 5 Cumulative Demand Growth 4 3 2 1 0 17E 18F 19F 20F Source: CRU and Mosaic Even Without Expected China Capacity Rationalization 6
Slide 7: Esterhazy K3 Update
Esterhazy K3 Update 7
Slide 8: Brazil Business Transformation
Brazil Business Transformation $275 million Value Capture Target 12% Meaningful Opportunity 20% Based on 56% Benchmarks of Prior 12% Performance Commercial Procurement Raw Materials Operations 8
Slide 9: Brazil Business Transformation: Expected Benefits through 2020
Brazil Business Transformation: Expected Benefits through 2020 Benefits of Synergy and Operational Improvements $300 $250 Dollars in Millions $200 $150 $100 $50 $- 2018E 2019E 2020E
Slide 10: Capital Deployment: Committed to Balance Sheet Targets
Capital Deployment: Committed to Balance Sheet Targets 1 ▪ Ahead of Schedule on Meaningful Cost Reduction Program: Cost • Q3’17 MOP cash production costs per tonne of $101, including $15 per tonne of cash brine management expenses and $21 per tonne impact of expected royalty settlement* Reduction •
Slide 11: Financial Results Review
Financial Results Review 11
Slide 12: Gross Margin Percentage: Hurricane Irma Impact
Hurricane Irma Impact 14% 12% 12% Gross Margin Percentage 10% 8% 9% 6% 4% 4% 2% 0% July and August September Phosphates Margin lost to Hurricane Irma Phosphates Margin as reported
Slide 13: Phosphates Results and Guidance
Phosphates Results and Guidance Third Quarter 2017 Results Guidance Phosphates Q4 2017 2.1M 2.2M 2.5M Volumes Q4 Sales Volumes 2.3 to 2.6 million tonnes Q4 DAP Selling Price $320 to $350 per tonne Price $310 $329 $330 Q4 Gross Margin Rate Upper Single Digits Q4 Operating Rate Low to Mid 80 percent 7
Slide 14: Potash Results and Guidance
Potash Results and Guidance Third Quarter 2017 Results Guidance 1.9M 2.2M 2.2M Potash Q4 2017 Volumes Q4 Sales Volumes 1.9 to 2.2 million tonnes Q4 MOP Selling Price $175 to $195 per tonne Price $165 $180 $182 Q4 Gross Margin Rate Upper Teens Q4 Operating Rate Low 80 percent* 15% 18% 21% Margin Guid
Slide 15: International Distribution Results and Guidance
International Distribution Results and Guidance Third Quarter 2017 Results Guidance International Distribution Q4 2017 2.3M 2.5M 2.6M Volumes Q4 Sales Volumes 1.5 to 1.8 million tonnes Q3 Gross Margin per Tonne Approximately $20* Margin/Tonne ~$20 $25 Guidance Range Actuals 15 *Based on the current
Slide 16: Other Full-Year Guidance
Other Full-Year Guidance Consolidated Full-Year 2017 Total SG&A $290 to $300 million Capital Expenditures $800 to $850 million Effective Tax Rate Approximately Zero Potash 2017 Full Year Canadian Resources Taxes $85 to $100 million Full Year Brine Management Costs $150 to $160 million 16
Slide 17: Vale Fertilizantes: 2017 Context
Vale Fertilizantes: 2017 Context Items Impacting VF Q3 YTD 2017 results 1. Miski Mayo flood • Starting Point Higher than 2. Vale S.A. incentive compensation Reported Numbers 3. A plant fire at Uberaba • Plans to Achieve 4. Transition to new mining areas Meaningful 5. Impact of the Brazilian Real str
Slide 18: Closing Remarks and Appendix
Closing Remarks and Appendix 18
Slide 19: China Phosphates: Continue to Expect Capacity Rationalization
China Phosphates: Continue to Expect Capacity Rationalization Million Tonnes DAP/MAP/TSP China Phosphate Exports 12 10 Source: China Customs, Mosaic 8 6 4 2 0 10 11 12 13 14 15 16 17E 19
Slide 20: Raw Material Cost Detail
Raw Material Cost Detail Third Quarter Percent 2017 Ammonia Realized in COGS $283 ($/Tonne) Average Purchase Price $275 Sulfur Realized in COGS $88 ($/Tonne) Average Purchase Price $89 U.S. Mined Rock 3,208 85% Phosphate Purchased Miski Mayo Rock 379 10% Rock Other Purchased Rock 172 5% (realized in
Slide 21: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (October, 2017) Muriate of Potash Low High Million Tonnes (KCl) 2015 2016 2017E 2018F 2018F Comments Shipments are projected to recover to 15.3 mmt in 2017 (7.2 mmt production plus 8.1 mmt net imports). After spiking to 9.2 mmt in 2015, imports plunged to 6
Slide 22: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (October, 2017) Mil Tonnes Low High DAP/MAP/NPS/TSP 2015 2016 2017F 2018F 2018F Comments Shipments are expected to stabilize at a little over 18 mmt in 2017, with a strong domestic pull expected this fall, helped in part by more supportive policy comment
Slide 23: Earnings Sensitivity to Key Drivers
Earnings Sensitivity to Key Drivers(a) 2017 Q3 % Impact on 2017 Q3 Pre-Tax Quarterly Change Margin % Segment Actual Impact EPS Impact Actual Margin Marketing MOP Price ($/tonne)(b) $182 $50 21% 23% $111 $0.30 Potash Volume (thousand tonnes) 2,220 500 21% 10% $45 $0.12 DAP Price ($/tonne) $329 $50 9%
Slide 24: Phosphate Raw Material Trends
Phosphate Raw Material Trends Ammonia Sulfur ($/tonne) ($/tonne) 175 500 450 150 400 125 350 300 100 250 75 200 150 50 100 25 50 0 0 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sulfur Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017F (long 2015 2015 2016 2016 2016 2016 2017 2017 201
Slide 25: Definition of Adjusted Net Debt/Adjusted EBITDA
Definition of Adjusted Net Debt/Adjusted EBITDA The company targets adjusted net debt to adjusted EBITDA as a proxy for how the rating agencies assess leverage metrics: Adjusted net debt is defined as long‐term debt plus short‐term debt less cash and cash equivalents, all from the balance sheet. N