Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q2 2019 Earnings Presentation
29 slides from Mosaic Company (the)'s earnings presentation, Aug 6, 2019
Slide 1: Earnings Conference Call – Second Quarter 2019
The Mosaic Company Earnings Conference Call – Second 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: August 6, 2019
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 the anticipated benefits and synergies of our a
Slide 3: Second Quarter 2019 Overview
Second Quarter 2019 Overview ▪ Potash and Mosaic Fertilizantes performed well, phosphates markets disappointed ▪ Challenging spring season expected to drive strong fall ▪ Mosaic is executing well and optimizing assets − Accelerated K3 development allows temporary idling of Colonsay mine − Tapira min
Slide 4: Strong Market Demand
Strong Market Demand North American Phosphates Corn Price CBOT Current Contract mm tonnes Shipments Cents/Bu. 6.5 500 450 6.0 400 350 5.5 300 5.0 ▪ Year-to-date corn prices are up 11.5% as a result of low 4.5 yield expectations in North America. ▪ These prices incent growers to plant more acres and
Slide 5: Solid Execution: Potash
Solid Execution: Potash 5
Slide 6: Potash Cost Profile
Potash Cost Profile MOP Production Costs by Mine Trailing 12 Months as of June 30, 2019 $210 Colonsay Full Production Costs per Tonne $170 Belle Plaine $130 Esterhazy with Brine Esterhazy less Brine $90 $50 $50 $60 $70 $80 $90 $100 $110 $120 Cash Costs of Production per Tonne 6
Slide 7: Strong Execution: Mosaic Fertilizantes
Strong Execution: Mosaic Fertilizantes Cumulative Synergy Capture Tailings Dam Remediation $ in millions By Quarter 2018-2019 $300 $7 Catalao • Remediation complete $250 • Full production resumed in$14M May $200 $29 Tapira $6M $150 $7 $275 • Remediation of first dam complete; production at $26 $10M
Slide 8: Phosphates: Focusing on Controllables
Phosphates: Focusing on Controllables • On track to meet 2021 targets • Executed permanent closure of Plant City • Evaluating alternative use opportunities for assets • Reduced annual idle plant costs by approximately $40 million • Safety – Recordable Injury rates • 3rd consecutive year of rate impr
Slide 9: Summary: Controlling What We Can
Summary: Controlling What We Can • Saves more than a year worth of brine management cost ACCELERATION • Allows temporary idling of Colonsay and shift to more efficient assets OF ESTERHAZY K3 • Improves 2024 expected Free Cash Flow by $400 million from 2019 SG&A expense / tonne Temporary curtailment
Slide 10: Second Quarter Results
Second Quarter Results $ in million, except per share 2Q 2019 2Q 2018 Diluted Earnings Per Share (EPS) $(0.60) $0.18 Adjusted diluted EPS(1) $0.12 $0.40 Net Income $(233) $68 Adjusted EBITDA(1) $349 $480 Potash Mosaic Fertilizantes Phosphates ($ in mm) 2Q 2019 2Q 2018 ($ in mm) 2Q 2019 2Q 2018 ($ in
Slide 11: Phosphates Gross Margin Detail
Phosphates Gross Margin Detail Second quarter phosphates cash gross margin, excluding DD&A and accretion, was $47 / tonne. Original guidance range (adjusted Gross Margin / tonne)(1) $40 to $50 / tonne Reported adjusted gross margin(1) $(5) / tonne Variance from original guidance assumptions Lower av
Slide 12: Guidance Assumptions
Guidance Assumptions Third Quarter Assumptions Volumes (mm tonnes) Adjusted GM Potash 2.2 to 2.4 $60 - $70 / tonne Phosphates 2.2 to 2.4 $5 - $15 / tonne Mosaic Fertilizantes 3.6 to 3.8 $30 - $40 / tonne Corporate & Other ----- $10 - $20 mm Assumptions – Full year Potash Volumes* 8.7 – 9.1 mmt Phosp
Slide 13: Financial Guidance
Financial Guidance Consolidated Full-Year Estimates 2019 Adjusted EBITDA(1) $1.8 to $2.0 billion Less: Cash Interest Expense ~$170 million Cash Taxes ~$50 million Sustaining Capital ~$640 million Available $0.94 to $1.14 billion 2019 Committed Capital Common Stock Dividend $0.20 / share up from $0.1
Slide 14: Conclusions
Conclusions 14
Slide 15: Appendix
Appendix 15
Slide 16: Modeling Assumptions
Modeling Assumptions Modeling Assumptions for Full year DD&A ~$910 million SG&A ~$350 million Brine Management Costs ~$140 million BRL to USD Average Exchange Rate 3.8 Updated Assumptions for Full year Pricing Assumptions – second half Flat to up ~$20 to ~$25 Ma’aden Equity Earnings ~$(50) million E
Slide 17: Sensitivity Table: Estimated Full Year Impacts
Sensitivity Table: Estimated Full Year Impacts Impacts to PL: ($ in millions) Adjusted EBITDA Δ(1) Adjusted EPS Δ(1) Average MOP Price --> $10/mt $89 $0.13 Average DAP Stripping Margin --> $10/mt $86 $0.17 Potash Sales Volume --> 100k mt $16 $0.02 Phosphates Sales Volume --> 100k mt $6 $0.01 Canadia
Slide 18: Operating Driver Targets
Operating Driver Targets 2018 2Q 19 2021 actual 4Qtr Ave target Cash cost of U.S. mined rock ($/tonne) $38 $42 $39 Phosphates Cash costs of conversion ($/tonne) $63 $64 $56 Sales of MicroEssentials (mm tonnes) 2.9 2.9 3.7 Average MicroEssentials margin, premium to MAP ($/tonne)(1) $43 $49 $40 - $50
Slide 19: Potash
Potash (in millions except per tonne) 2018 2017 1H 2019 1H 2018 Sales Volumes (tonnes) 8.8* 8.6 4.02 4.05 Operating Earnings $511 $344 $350 $213 Adjusted EBITDA(1) $866 $648 $510 $373 Gross Margin $ / Tonne $68 $45 $92 $58 Adjusted Gross Margin $ / Tonne(1) $69 $47 $92 $61 • Gross Margin per tonne i
Slide 20: Phosphates
Phosphates (in millions except per tonne) 2018 2017 1H 2019 1H 2018 Sales Volumes (tonnes) 8.4* 9.5 3.97 4.25 Operating Earnings $473 $256 $(349) $220 Adjusted EBITDA(1) $966 $640 $242 $449 Gross Margin $ / Tonne $69 $35 $12 $58 Adjusted Gross Margin $ / Tonne(1) $72 $35 $15 $63 • The company announ
Slide 21: Mosaic Fertilizantes
Mosaic Fertilizantes (in millions except per tonne) 2018 2017* 1H 2019 1H 2018 Sales Volumes (tonnes) 9.13 9.35 3.63 3.43 Operating Earnings $238 $(35) $29 $30 Adjusted EBITDA(1) $429 $81 $100 $128 Gross Margin $ / Tonne $41 $8 $25 $33 Adjusted Gross Margin $ / Tonne(1) $41 $8 $25 $33 • During the s
Slide 22: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (August 2019) Muriate of Potash Low High Source: IFA, CRU and Mosaic (Numbers may not sum to total due to rounding) Million Tonnes (KCl) 2017 2018 2019F 2019F Comments We maintain our 2019 forecast on expectations of a good fall season and depleted inland i
Slide 23: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (August 2019) Source: IFA, CRU and Mosaic DAP / MAP / NPS* / TSP Low High (Numbers may not sum to total due to rounding) (Million Tonnes) 2017 2018 2019F 2019F Comments Our 2019 estimate is revised lower by ~400,000 tonnes on the disappointing spring sea
Slide 24: Adjusted EBITDA to Adjusted EPS
Adjusted EBITDA to Adjusted EPS Estimated reconciling items $ in millions Adjusted EBITDA $1,800 to $2,000 Depreciation, Depletion & Amortization $910 Interest Expense $210 Non-Notable Adjustments $80 Estimated Pretax Earnings ~$600 to ~$800 Tax Expense $170 to $225 Estimated Net Earnings ~$430 to ~
Slide 25: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Consolidated Earnings (in millions) 2Q 2019 2Q 2018 Consolidated net (loss) earnings attributable to Mosaic $(233) $68 Less: Consolidated interest expense, net $(46) $(45) Plus: Consolidated depreciation, depletion and amortization $221 $217 Plus: Accretion expens
Slide 26: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 2018 2017 1H 2019 1H 2018 Operating earnings (loss) $473 $256 $(349) $220 Plus: Depreciation, depletion and amortization $403 $338 $208 $201 Plus: Accretion expense $37 $21 $22 $19 Plus: Foreign exchange gain (loss) $11 $(11) $0 $
Slide 27: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 2Q 2019 2Q 2018 Gross Margin $(12) $154 Notable items in gross margin $5 $6 Adjusted gross margin $(7) $160
Slide 28: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 2018 2017 1H 2019 1H 2018 Operating earnings $511 $344 $350 $213 Plus: Depreciation, depletion and $302 $287 $157 $149 amortization Plus: Accretion expense $4 $4 $2 $2 Plus: Foreign exchange gain (loss) $(117) $80 $63 $(53) Plus: Othe
Slide 29: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Mosaic Fertilizantes Earnings (in millions) 2018 2017* 1H 2019 1H 2018 Operating earnings (loss) $238 $(35) $29 $30 Plus: Depreciation, depletion and amortization $159 $137 $64 $74 Plus: Accretion expense $7 $0 $4 $3 Plus: Foreign exchange gain (loss) $(85) $(27)