Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Q1 FY2012 Earnings Presentation
29 slides from Mosaic Company (the)'s earnings presentation, Oct 5, 2011
Slide 1: Earnings Conference Call – 1st Quarter Fiscal 2012
The Mosaic Company Jim Prokopanko, President and Chief Executive Officer Larry Stranghoener, Executive Vice President and Chief Financial Officer Mike Rahm, Vice President Market and Strategic Analysis Laura Gagnon, Vice President Investor Relations Earnings Conference Call – 1 st Quarter Fiscal 201
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 future financial and operating results. Such statements are based upon the current
Slide 3: Outstanding Results
Outstanding Results Revenue $3.1 billion +41% Net income $526 million +77% EPS $1.17 +75%
Slide 4: Quarterly Highlights
Quarterly Highlights • Best in class customer relationships • Potash – grow cash flow by increasing volume – Over $200 million cap ex in Q1 – Esterhazy K2 mill construction nearing completion • Phosphates – grow cash flow by optimizing return on invested capital – Operational excellence: 20% increas
Slide 5: Mosaic included in the S&P
Mosaic included in the S&P 500
Slide 6: Earnings Conference Call – 1st Quarter Fiscal 2012
The Mosaic Company Earnings Conference Call – 1 st Quarter Fiscal 2012 Thursday, September 29, 2011
Slide 7: Accelerating Grain and Oilseed Use
Accelerating Grain and Oilseed Use Source: USDA, lighter bars indicate recession years 0.7% 2.7% 0.2% 1.7% 3.7% 2.1% 1.4% 2.5% 2.1% 2.2% 2.4% 2.2% 2.0 2.2 2.4 2.6 2.8 10/11E 11/12F CROP YEAR WORLD GRAIN AND OILSEED USE BILLION TONNES
Slide 8: Stocks Remain at Low Levels
Stocks Remain at Low Levels Source: USDA 15% 20% 25% 30% 10/11E 11/12F CROP YEAR WORLD GRAIN AND OILSEED STOCKS MILLION TONNES Stocks Percent of Use PERCENT OF USE
Slide 9: Second Lowest Corn Stock/Use Ratio
Second Lowest Corn Stock/Use Ratio Source: USDA 12% 19% 26% 33% 11/12F CROP YEAR WORLD CORN STOCKS MILLION TONNES Stocks Percent of Use PERCENT OF USE 5% 10% 15% 20% 0.4 1.0 1.6 2.2 11/12F CROP YEAR U.S. CORN STOCKS BILLION BUSHELS Stocks Percent of Use PERCENT OF USE
Slide 10: Record Phosphate and Potash Demand
Record Phosphate and Potash Demand Source: Fertecon, IFA and Mosaic 60-61 62- 11F 12F CALENDAR YEAR WORLD PHOSPHATE SHIPMENTS MILLION TONNES DAP/MAP/TSP 56- 58- 11F 12F CALENDAR YEAR WORLD POTASH SHIPMENTS MILLION TONNES KCl
Slide 11: Record U.S. Net Cash Farm Income
Record U.S. Net Cash Farm Income Source: USDA 11F CALENDAR YEAR U.S. NET CASH FARM INCOME BILLION $
Slide 12: NA Phosphate and Potash Shipments
NA Phosphate and Potash Shipments Source: TFI , USDOC, and Mosaic 4.5 4.9 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Jun-Nov Dec-May IMPLIED NORTH AMERICAN PHOSPHATE SHIPMENTS MILLION TONS DAP/MAP/MES/TSP 2011/12 2010/11 4.7 6.1 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 Jun-Nov Dec-May IMPLIED NORTH AMERICAN POTASH SHIP
Slide 13: Brazil Crop Nutrient Shipments
Brazil Crop Nutrient Shipments Source: ANDA and Mosaic 24.6 22.4 22.5 24.6 26.2-26.7 11F CALENDAR YEAR BRAZIL CROP NUTRIENT SHIPMENTS MILLION TONNES PRODUCTS
Slide 14: Brazil Phosphate and Potash Imports
Brazil Phosphate and Potash Imports Source: Fertecon and Mosaic 2.7 2.1 2.8 3.6-3.7 1.5 2.0 2.5 3.0 3.5 4.0 11F 12F CALENDAR YEAR BRAZIL PHOSPHATE IMPORTS MILLION TONNES DAP/MAP/TSP 6.5 3.4 6.0 6.8-7.0 7.0-7.2 2.5 3.5 4.5 5.5 6.5 7.5 11F 12F CALENDAR YEAR BRAZIL POTASH IMPORTS MILLION TONNES KCl
Slide 15: India Phosphate and Potash Imports
India Phosphate and Potash Imports Source: Fertecon and Mosaic 6.3 6.7 7.9 7.0 -7.2 7.7-7.9 0.0 2.0 4.0 6.0 8.0 11F 12F CALENDAR YEAR INDIA PHOSPHATE IMPORTS MILLION TONNES DAP/MAP 6.0 5.4 6.3 4.8-5.2 6.3 - 6.5 1.5 2.5 3.5 4.5 5.5 6.5 11F 12F CALENDAR YEAR INDIA POTASH IMPORTS MILLION TONNES KCl
Slide 16: China Phosphate Exports / Potash Imports
China Phosphate Exports / Potash Imports Source: Fertecon and Mosaic 2.8 3.6 6.1 5.2-5.4 5.1-5.4 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 11F 12F CALENDAR YEAR CHINA PHOSPHATE EXPORTS MILLION TONNES DAP/MAP/TSP 5.1 2.0 5.3 5.8-6.0 6.0-6.5 0.0 2.0 4.0 6.0 8.0 10.0 11F 12F CALENDAR YEAR CHINA POTASH IMPORTS MI
Slide 17: Earnings Conference Call – 1st Quarter Fiscal 2012
The Mosaic Company Earnings Conference Call – 1 st Quarter Fiscal 2012 Thursday, September 29, 2011
Slide 18: Financial Results
In millions, except per share amounts Three Months Ended 8/31/2011 8/31/2010 Net sales $3,083 $2,188 Gross margin $848 $505 % of net sales 28% 23% Net earnings attributable to Mosaic $526 $298 % of net sales 17% 14% Diluted EPS $1.17 $.67 Effective tax rate 28% 27% Net cash provided by operating act
Slide 19: Potash Segment Highlights
In millions, except MOP price Q1 FY12 Q4 FY11 Q1 FY11 Potash Segment Highlights Net sales $873 $982 $622 Gross Margin $444 $515 $257 % of net sales 51% 52% 41% Operating earnings $402 $469 $218 Sales volumes 1.8 2.2 1.7 Production volume 1.9 2.2 1.4 Avg MOP selling price $446 $404 $331 First quarter
Slide 20: Phosphates Segment Highlights
In millions, except DAP price Q1 FY12 Q4 FY11 Q1 FY11 Phosphates Segment Highlights Net sales $2,220 $1,882 $1,581 Gross Margin $410 $479 $245 % of net sales 18% 25% 15% Operating earnings $333 $370 $178 Sales volumes 3.2 2.8 3.1 NA production volume (a) 2.2 2.1 2.2 Avg DAP selling price $576 $574 $
Slide 21: Phosphates Segment Gross Margin
Phosphates Segment Gross Margin (a): Sales mix impact a result of increased international sales 0% 5% 10% 15% 20% 25% 30% Q4 FY11 Sulfur and ammonia Sales mix (a) Operating costs Purchased phosphate rock Other Q1 FY12 GROSS MARGIN PERCENT BRIDGE PERCENT
Slide 22: Financial Guidance – Fiscal Year and Category Guidance
Category Guidance Potash Q2 Sales volume 1.7 – 2.1 million tonnes Q2 MOP selling price $440 - $465 per tonne Q2 Operating rate between 80% and 90% Phosphates Q2 Sales volume 3.1 – 3.5 million tonnes Q2 DAP selling price $600 - $625 per tonne Q2 Operating rate above 85% Capital Expenditures $1.6 - $1
Slide 23: Thank you
The Mosaic Company Thank you
Slide 24: Earnings Sensitivity to Key Drivers
Change Estimated Change in Pre-Tax Earnings ($ in millions) Estimated Change in Annual EPS Earnings Sensitivity to Key Drivers MOP Price ($/tonne) $50 $368 $0.59 Potash Volume (000 tonnes) $157 $0.25 DAP Price ($/tonne) $50 $412 $0.66 Phosphates Volume (000 tonnes) $92 $0.15 Sulfur ($/lt) $25 $173 $
Slide 25: Share Ownership – Fiscal Year End 2011
Share Ownership – Fiscal Year End 2011 The company’s proxy for the shareholder meeting October 6, 2011 contains a proposal to collapse the Class B shares into Class A shares Cargill, Incorporated does not own any Mosaic shares. Mosaic is facilitating an additional secondary offering for the trusts o
Slide 26: Canadian Resource Taxes and Royalties
Canadian Resource Taxes and Royalties • Saskatchewan imposes profit taxes, royalties and a resource surcharge on all potash producers. The calculation of these taxes is complex and subject to extensive tax regulations • Canadian resource taxes and royalties (CRT) make up a meaningful portion of Pota
Slide 27: CRT Model
CRT Model • Model using actual FY 2011 year end results to illustrate: $ in millions FY 2011 Actual Potash segment gross margin , excluding CRT $ 1,763 Add back depreciation Capital expenditures Subtract 120% of capex Estimated taxable profit $ Estimate CRT between 30% and 35% of taxable profit @ 30
Slide 28: Backtesting
Backtesting • We tested the model against two time periods: 1) fiscal year end, and 2) last twelve months ended November 30 • The model using period end November 30 results in less estimate error, as the period more closely matches the Canadian tax period of calendar year • Note that FY09 and FY10 m
Slide 29: Accruals and Quarterly Estimations
Impact of changing estimates Quarter 1 Quarter 2 Accruals and Quarterly Estimations • Quarterly CRT can be volatile if the estimate of full year gross profits changes. An approximation of the quarterly accrual can be made by recognizing the following: – The company strives to have accurate year-to-d