Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Q4 2013 Earnings Presentation
25 slides from Mosaic Company (the)'s earnings presentation, Feb 18, 2014
Slide 1: Earnings Conference Call – Fourth Quarter 2013
Earnings Conference Call – Fourth Quarter 2013 February 11, 2014 The Mosaic Company 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 the proposed acquisition and assumption of certain related liabilities of the Flor
Slide 3: Slide 3
Slide 4: Fourth Quarter Financial Highlights
Fourth Quarter Financial Highlights $88 $96 0 $1,556 $652 $2.2 billion $179 million $0.30 diluted earnings per share Includes $0.06 negative impact of notable items Operating Earnings Net Sales Phosphates Potash
Slide 5: Volume First, Then Price and Margin: Phosphates
Volume First, Then Price and Margin Expect price/margin improvement in H1 2014 Phosphates • In December prices moved up • Expect 2014 shipments to be 64-66 million tonnes Source: Mosaic 0% 5% 10% 15% 20% 25% - 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales Volumes GM Rate
Slide 6: Volume First, Then Price and Margin: Potash
Expect price improvement in H2 2014 Volume First, Then Price and Margin Potash • Expect gap to widen in Q1, upward price momentum second half of • Expect 2014 shipments to be 57-59 million tonnes Source: Mosaic 0% 10% 20% 30% 40% 50% 60% - 1,000 1,500 2,000 2,500 3,000 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Sales
Slide 7: Strategic Accomplishments
Strategic Accomplishments Executing well against strategic priorities - since last update: DOJ closed review of CF phosphates business acquisition Completed very successful proving run at Esterhazy K2 Progressed on K3 expansion – on time, on scope, on budget Broke ground on Saudi Arabia phosphate pr
Slide 8: Strategic Accomplishments - continued
Strategic Accomplishments - continued Capital – since last update: Earlier in 2013 announced: Share repurchase authorization Signed agreement to repurchase 43.3 million Class A shares Issued $2 billion of debt and upsized revolving line of credit Intention to continue to invest in Brazil distributio
Slide 9: 2014 Priorities
2014 Priorities Growth Market Access, Innovation, People Shareholder Value Successfully close and integrate CF phosphate business acquisition Execute Saudi Arabia phosphate JV next steps Continue progress with K3 expansion Reduce SG&A and operating expenses Drive improved safety Continue premium pro
Slide 10: Financial Results Review
Financial Results Review
Slide 11: Balance Sheet Update
Balance Sheet Update 11 We continue to have substantial cash and capital to redeploy: Share repurchase authorization Plan to issue short-duration debt to finance acquisition of CF Industries phosphate business
Slide 12: Decisions Impacting Results
Decisions Impacting Results Forward share repurchase Tax items – Discrete tax items of approximately $100 million: • Tax settlement between governments changed our intention to repatriate earnings resulting in ~$100 million non cash P&L impact • Modestly higher 2014 tax rate, reverting in 2015
Slide 13: Phosphates Segment Highlights
Phosphates Segment Highlights $ In millions, except DAP price Q4 2013 Q3 2013 Q4 2012 Net sales $1,556 $1,419 $1,656 Gross Margin $188 $193 $280 Percent of net sales 12% 14% 17% Operating earnings $96 $58 $208 Sales volumes 3.4 2.7 2.8 NA production volume (a) 2.0 2.1 2.2 Finished product operating
Slide 14: Potash Segment Highlights
Potash Segment Highlights $ In millions, except MOP price Q4 2013 Q3 2013 Q4 2012 Fourth quarter highlights: 1. 2. Net sales $652 $523 $726 Gross Margin $134 $184 $300 Percent of net sales 21% 35% 41% Operating earnings $88 $92 $260 Sales volumes 1.9 1.4 1.4 Production volume 1.7 2.0 1.8 Production
Slide 15: Phosphate Raw Material Trends
Phosphate Raw Material Trends Ammonia Sulfur ($/tonne) ($/tonne) 1) Market ammonia prices are average prices based upon Tampa C&F as reported by Fertecon 2) Market sulfur prices are average prices based upon Tampa C&F as reported by Green Markets $- $50 $100 $150 $200 $250 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Re
Slide 16: Financial Guidance Summary: Phosphates and Potash 2014
Financial Guidance Summary Phosphates Guidance – 2014 Potash Guidance – 2014 Q1 Sales volume 2.3 – 2.6 million tonnes Q1 DAP selling price $390 - $420 per tonne Q1 Gross margin rate in the upper teens Q1 Operating rate in the low 80 percent range Q1 Sales volume 2.3 – 2.7 million tonnes Q1 MOP selli
Slide 17: Financial Guidance Summary: Corporate Guidance 2014
Financial Guidance Summary Corporate Guidance – 2014 Total SG&A - $350 - $400 million Capital Expenditures - $1.0 billion to $1.3 billion Effective Tax Rate - Mid to high 20 percent range
Slide 18: 2014 Outlook
2014 Outlook
Slide 19: What We're Watching
19 What we’re watching Agricultural commodity pricing: - South American crop progress - Energy, bio-fuels and livestock prices - U.S. Prospective Plantings Report – 3/31/14 India P&K demand for 2014/15 Producer and channel inventories Macro economic developments
Slide 20: Long-term Opportunity Remains Compelling
Long-term Opportunity Remains Compelling Yield growth required to keep up with demand 1.75 2.00 2.25 2.50 2.75 3.00 3.25 3.50 3.75 15 F MT Ha Mil Ha Source: USDA and Mosaic World Harvested Area and Average Yield Actual Area Forecast Area Actual Yield Required Yield 1980-10 Yield Trend F F F
Slide 21: Helping the World Grow the Food it Needs
Helping the World Grow the Food it Needs
Slide 22: Raw Material Cost Detail
Mosaic is currently implementing a new inventory valuation system. After implementation, Mosaic expects to include this information in its performance data disclosures. Q4 2013 Percent 22 Ammonia ($/MT) Realized in COGS $422 Average Purchase Price $468 Sulfur ($/LT) Realized in COGS $123 Average Pur
Slide 23: Earnings Sensitivity to Key Drivers
(a) These factors do not change in isolation; actual results could vary from the above estimates (b) Assumes no change to KMAG pricing CY13 Q4 Actual Change CY13 Q4 Margin % Actual % Impact on Segment Margin Pre-Tax Impact EPS Impact 23 Marketing MOP Price ($/tonne) (b) $303 $50 35% 13% $87 $0.17 Po
Slide 24: Stable Long-term Supply and Demand Outlook
Stable Long-term Supply and Demand Outlook Potash Production, Capacity and Operating Rate Forecast Capacity Production Operating Rate Source: Mosaic 40% 50% 60% 70% 80% 90% 100%
Slide 25: Positive Long-term Supply and Demand Outlook
Positive Long-term Supply and Demand Outlook Phosphate Production, Capacity and Operating Rate Forecast Source: Mosaic 65% 70% 75% 80% 85% 90% 95% Capacity Production Op Rate