Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q4 2016 Earnings Presentation
20 slides from Mosaic Company (the)'s earnings presentation, Feb 7, 2017
Slide 1: Earnings Conference Call – Fourth Quarter 2016
The Mosaic Company Earnings Conference Call – Fourth Quarter 2016 Joc O’Rourke, President and Chief Executive Officer Rich Mack, Executive Vice President and Chief Financial Officer Presenters: Dr. Mike Rahm, Vice President Market and Strategic Analysis Laura Gagnon, Vice President Investor Relation
Slide 2: Forward Looking Statements
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 p
Slide 3: Executive Summary
Executive Summary Confident Markets Excellent Execution Bottomed Reduced Targeted Committed to Annual Dividend by Maintaining a Strong $0.50 to $0.60 Per Financial Position Share MOSAIC CONFIDENTIAL 3
Slide 4: Q4 2016 Highlights and 2017 Outlook
Q4 2016 Highlights and 2017 Outlook Q4 2016 Highlights 2017 Outlook ▪ MOP Cash Costs of $74/tonne, including $18/tonne of 1 brine management expenses Positive Pricing Potash ▪ Belle Plaine proving run expected to exceed design Momentum capacity 2 ▪ Rock costs reverted to normalized levels Good Buyer
Slide 5: Maintaining Expense and Capital Discipline
Maintaining Expense and Capital Discipline… SG&A CAPEX $450 $1,800 $1,600 $400 $1,400 $1,200 $ Millions $350 $1,000 $310 $800 $900 $300 $394 $382 $600 $361 $295 $800 $400 $800 $800 $250 $304 $200 $- $200 2013 2014 2015 2016 2017E 2018E 2019E 2013 2014 2015 2016 2017E Sustaining Capex Growth Capex To
Slide 6: Market Update
Market Update MOSAIC CONFIDENTIAL 6
Slide 7: Potash: Very Different Dynamics vs. Last Year
Potash: Very Different Dynamics vs. Last Year Mil Tons KCl Potash Inventories Held by North American Producers 4.5 Source: IPNI and Mosaic 4.0 3.5 3.0 2.5 2.0 1.5 1.0 0.5 0.0 Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun 2015/16 2016/17 MIN-MAX Range
Slide 8: Price Momentum Reflects Fundamental Industry Changes
Price Momentum Reflects Fundamental Industry Changes Potash Prices $ Tonne 425 400 375 350 325 300 275 250 225 Source: Argus FMB 200 175 Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 fob NOLA c&f Brazil MOSAIC CONFIDENTIAL 8
Slide 9: Phosphates: China Capacity Rationalization is Key Factor to Watch
Phosphates: China Capacity Rationalization is Key Factor to Watch China DAP/MAP/TSP Exports Million Tonnes 12.0 10.0 8.0 Source: China Customs and Mosaic 6.0 4.0 2.0 0.0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16E 17F MOSAIC CONFIDENTIAL 9 Actual 2017 Low Forecast 2017 High Forecast
Slide 10: Price Momentum Bodes Well for Improving Industry Margins
Price Momentum Bodes Well for Improving Industry Margins $ Tonne DAP/MAP Prices Published Weekly Spot Prices 550 Benchmark DAP Stripping Margin $ Tonne Calculated from Published Weekly Spot Prices 525 500 475 350 450 425 400 325 375 350 Source: Argus FMB 325 300 300 Jan-14 Jul-14 Jan-15 Jul-15 Jan-1
Slide 11: Financial Results Review
Financial Results Review MOSAIC CONFIDENTIAL 11
Slide 12: Focused Execution, Cost and Capital Management
Focused Execution, Cost and Capital Management $7.00 0.32 $6.00 0.48 0.43 $5.00 0.22 Offset ~60% 0.16 1.14 of Decline in $4.00 Prices 0.30 $3.00 0.20 $2.78 $2.00 $1.00 $0.85 (5.15) (0.03) $0.00 2015 2015 Volume P - Raw SG&A Cost CRT Tax Other Price 2016 2016 Diluted Notable Materials Savings Notable
Slide 13: Potash Results and Guidance
Potash Results and Guidance Fourth Quarter 2016 Results Guidance 2.0M 2.1M Potash 2017 1.9M Volumes First Quarter Sales Volumes 2.15 to 2.3 million tonnes First Quarter MOP Selling Price $165 to $180 per tonne $160 $169 $175 First Quarter Gross Margin Rate Approximately 20 percent Price First Quarte
Slide 14: Phosphates Results and Guidance
Phosphates Results and Guidance Fourth Quarter 2016 Results Guidance Phosphates 2017 2.1M 2.4M 2.5M Volumes Q1 Sales Volumes 2.0 to 2.3 million tonnes Q1 DAP Selling Price $315 to $335 per tonne $300 $317 $330 Price Q1 Gross Margin Rate Upper single digits Q1 Operating Rate High 70 percent 9% Upper
Slide 15: International Distribution Results and Guidance
International Distribution Results and Guidance Fourth Quarter 2016 Results Guidance International Distribution 2017 1.7M 1.9M Volumes Q1 Sales Volumes 1.2 to 1.5 million tonnes Q1 Gross Margin per Tonne Approximately $20 ~$20 $31 Margin/Tonne Full Year Sales Volumes 7.0 to 7.5 million tonnes Guidan
Slide 16: Other Full-Year Guidance
Other Full-Year Guidance Consolidated Full-Year 2017 Total SG&A $295 to $310 million Capital Expenditures and Equity Investments $950 million to $1.05 billion Effective Tax Rate Upper single digits Potash 2017 Full Year Canadian Resources Taxes $85 to $135 million Full Year Brine Management Costs $1
Slide 17: Closing Remarks and Appendix
Closing Remarks and Appendix MOSAIC CONFIDENTIAL 17
Slide 18: Raw Material Cost Detail
Raw Material Cost Detail Fourth Quarter Percent 2016 Ammonia Realized in COGS $259 ($/Tonne) Average Purchase Price $241 Sulfur Realized in COGS $87 ($/Tonne) Average Purchase Price $88 U.S. mined rock 4,029 89% Phosphate Purchased Miski Mayo Rock 476 11% Rock Other Purchased Rock 3 0% (realized in
Slide 19: Earnings Sensitivity to Key Drivers
Earnings Sensitivity to Key Drivers(a) 2016 Q4 % Impact on 2016 Q4 Pre-Tax Change Margin % Segment EPS Impact Actual Impact Actual Margin Marketing MOP Price ($/tonne)(b) $169 $50 16% 24% $99 $0.31 Potash Volume (thousand tonnes) 1,984 500 16% 11% $43 $0.13 DAP Price ($/tonne) $317 $50 9% 14% $125 $
Slide 20: Phosphate Raw Material Trends
Phosphate Raw Material Trends Ammonia Sulfur ($/tonne) ($/tonne) 600 175 500 150 125 400 100 300 75 200 50 100 25 0 0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2015 2015 2015 2015 2016 2016 2016 2016 2017F 2015 2015 2015 2015 2016 2016 2016 2016 2017F Realized Costs Market Prices 1 Reali