Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — Investor Day (March 2015)
115 slides from Mosaic Company (the)'s investor day presentation, Mar 31, 2015
Slide 1: Mosaic Analyst Day March 31, 2015
Mosaic Analyst Day March 31, 2015
Slide 2: Safe Harbor
2 Safe Harbor 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 the Wa’ad Al Shamal Phosphate Company (also known as the Ma’aden joint venture), the acquisiti
Slide 3: Mosaic's Strategic Momentum
Mosaic’s Strategic Momentum Jim Prokopanko President and CEO
Slide 4: Mosaic's vision: world's leading crop nutrition company
Mosaic’s vision… To be the world’s leading crop nutrition company Since our last analyst day, 18 months ago, a lot has changed in our industry and at Mosaic—and those changes have put Mosaic in leadership positions
Slide 5: A Transformative 18 Months: Progress Since Last Analyst Day
5 A Transformative 18 Months 2013 K Capacity: 11.5 million tonnes P Capacity: 9.7 million tonnes Cash on B/S: $3.7 billion Long-term Debt: $1 billion Share Count: 427 million 2015 K Capacity: 12.5 million tonnes P Capacity: 11.7 million tonnes Cash on B/S: $2.4 billion Long-term Debt: $3.8 billion S
Slide 6: Cargill Shares Repurchased
6 A Transformative 18 Months Cargill Shares Repurchased
Slide 7: Balance Sheet Targets Reached
7 A Transformative 18 Months $2.5 Billion Liquidity: $1Billion Cash + $1.5 Billion Credit Line 1.5 to 2.0 Leverage Targets: Adjusted Debt to EBITDA Balance Sheet Targets Reached Source: Mosaic
Slide 8: $2.8B Shares Repurchased in 2014
A Transformative 18 Months $2.8B SHARES REPURCHASED in 2014 Magee
Slide 9: CF Industries Phosphate Business Acquisition
9 A Transformative 18 Months CF Industries Phosphate Business Acquisition
Slide 10: ADM Distribution Acquisition in Brazil and Paraguay
10 A Transformative 18 Months ADM Day 1 ADM Distribution Acquisition in Brazil and Paraguay
Slide 11: Rebalanced Portfolio, Exited Underperforming Businesses
11 A Transformative 18 Months Rebalanced Portfolio, Exited Underperforming Businesses
Slide 12: Successful Proving Runs at Colonsay and Esterhazy K2
12 A Transformative 18 Months Successful Proving Runs at Colonsay and Esterhazy K2
Slide 13: Continued New Product Innovation
13 A Transformative 18 Months Continued New Product Innovation
Slide 14: Increased Transparency
14 A Transformative 18 Months Increased Transparency
Slide 15: Esterhazy K3 Expansion On Schedule and On Budget
15 A Transformative 18 Months Esterhazy K3 Expansion On Schedule and On Budget
Slide 16: Ma'aden Joint Venture - Rapidly Advancing
16 A Transformative 18 Months Ma'aden Joint Venture - Rapidly Advancing
Slide 17: MicroEssentials Capacity Expansion On Schedule
17 A Transformative 18 Months MicroEssentials® Capacity Expansion On Schedule and On Budget
Slide 18: Committed To Low-cost Operation; Cost-saving Initiatives
18 A Transformative 18 Months Committed To Low-cost Operation; Cost-saving Initiatives Ahead of Schedule
Slide 19: Asset Optimization: Faustina Debottlenecking, Sulfur Melter
19 A Transformative 18 Months Asset Optimization: Faustina Debottlenecking, Sulfur Melter, Transportation Assets
Slide 20: Many Moves, Providing Earnings Benefits
20 Many Moves, Providing Earnings Benefits EBITDA Earnings Leverage Without P&K Price Increases *Reconciliation in the appendix. EBITDA for future years is calculated based on expected earnings before interest, taxes, depreciation and amortization. $1,500 $2,000 $2,500 $3,000 $3,500 2014 2015E 2016E
Slide 21: Leading with Purpose
21 Leading with Purpose S u s t a i n a b i l i t y Products Emissions Co-Products Manufacturing Energy Waste M ining Raw Material Sourcing S h i p p i n g Nutrient Stewardship Innovation
Slide 22: Valuable, Deep Customer Relationships
22 Leading with Purpose Valuable, Deep Customer Relationships
Slide 23: Record Safety Performance
23 Leading with Purpose Improved RIFR by 8% 14% Improvement over 2013 for Environmental Index Improved LTIFR by more than 17% Record Safety Performance Source: Mosaic
Slide 24: Sustainability Performance and Reporting
24 Leading with Purpose Sustainability Performance and Reporting
Slide 25: A Talented Workforce
25 Leading with Purpose A Talented Workforce
Slide 26: Contributing to Global Food Security
26 Leading with Purpose Contributing to Global Food Security
Slide 27: Leading in Phosphates
27 Achieving Mosaic’s Promise 64.5-66.5 30 35 40 45 50 55 60 65 70 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14E15F Global Phosphate ShipmentsMMT Product DAP/ MAP/ MES/TSP Source: CRU and Mosaic Top 10 Phosphate Producers in 2013 Based on 2013 production M osaic's P2 O 5 production includes CF Indus
Slide 28: Delivering Value Through Innovation
28 Achieving Mosaic’s Promise Delivering Value Through Innovation
Slide 29: Optimizing Potash
29 Achieving Mosaic’s Promise 2013 Actuals: $133/tonne 2014 Actuals: $112/tonne Q4’14 Actuals: $91/tonne Q4’14 Excluding Brine: $74/tonne Potash Production Cash Costs • Three world-class mines • Rationalized assets • Belle Plaine and Colonsay expansions completed • Esterhazy K3 on track Optimizing P
Slide 30: Distribution Strength
30 Achieving Mosaic’s Promise Distribution Strength
Slide 31: Delivering for Shareholders: Operating Cash Flow Per Share
31 Delivering for Shareholders $5.32 $4.76 $6.11 2012 2013 2014 Operating Cash Flow Per Share Maintain Strong Financial Foundation Sustain Assets & Dividend Grow Business Return Generating Cash; Using Capital to Optimum Benefit ($ / Share) Source: Mosaic
Slide 32: Delivering for Shareholders: Free Cash Flow
32 Delivering for Shareholders $437 $680 $552 $1,025 $1,139 $814 $0 $500 $1,000 $1,500 $2,000 $2,500 2014 2015F 2016F 2017F 2018F Free Cash Flow Scenario: P&K Prices up $50 347% ($ Millions) * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor State
Slide 33: Leading with Execution
Leading with Execution Joc O’Rourke Chief Operating Officer
Slide 34: Mosaic's Operations Strategy
34 Mosaic’s Operations Strategy Focus Intent Grow Free Cash Flow Grow Sustainable Value Flexibility Productivity Reliability Capital Efficiency 1 2 3 4
Slide 35: Indicators of Progress: Cost Savings
35 Indicators of Progress: Cost Savings $600 $1,000 $1,400 $1,800 $2,200 $2,600 2012 Actual 2013=(2012+3%) 2014=(2013+3%) 2014 Actual ($ in millions) Fixed Costs Potash Phosphates CF -$120 million, or 5.0% +$18 million, or 0.8%
Slide 36: Indicators of Progress: Operating Excellence
36 Indicators of Progress: Operating Excellence 0.8 0.9 1.0 1.1 1.2 1.3 1.4 1.5 1.6 1.7 FY 2010 CY 2011 CY 2012 CY 2013 CY 2014 Recordable Injury Frequency Rate Safety: Leading Indicator of Operational Excellence
Slide 37: Phosphates in Depth
Phosphates in Depth
Slide 38: Phosphates: Cost Curve
38 Phosphates: Cost Curve M o s a i c - F L M o s a i c - U n c l e S a m & F a u s t i n a 0 100 200 300 400 500 600 700 800 900 1000 0 5 10 15 20 25 30 35 40 45 ($/Tonne) Million Tonnes 2014 Phosphoric Acid Industry FOB Plant Source: CRU and Mosaic
Slide 39: Phosphates: Volume & Product Mix
39 0.0 2.0 4.0 6.0 8.0 10.0 12.0 2010 2011 2012 2013 2014 2018F Phosphate Sales Volumes DAP/MAP CF MicroEssentials® Other Phosphates: Volume & Product Mix 20% 32% (Million Tonnes) Source: Mosaic
Slide 40: Phosphates: MicroEssentials Expansion
40 Phosphates: MicroEssentials® Expansion Assumptions: • Selling prices are considered flat with 2014 • MicroEssentials® production starts to ramp up in 2017 Project Details Expected Additional Capacity 1.3 million tonnes Project Cost $225 million Cost/Tonne $173/tonne Timeframe Mid-2016 Expected Re
Slide 41: Phosphates: Raw Material Management
41 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2013 2014 … 2018F Purchased Produced Henry Hub - Contract Phosphates: Raw Material Management (Million Tonnes) 81% Henry Hub Economics vs. 26% Today Source: Mosaic
Slide 42: Phosphates: On Track to Achieve 2018 Targets
42 $41 $43 $38 $38 $41 $35 $20 $30 $40 $50 CY2010 CY2011 CY2012 CY2013 CY2014 2018F Cash Cost Total Cost ($/Tonne) Phosphates: On Track to Achieve 2018 Targets Mined Rock Cost Trends Conversion Cost Trends Per Production Tonne $55 $54 $64 $61 $68 $61 $0 $20 $40 $60 $80 CY2010 CY2011 CY2012 CY2013 CY
Slide 43: CF Phosphate Integration Completed
43 CF Phosphate Integration Completed CF Phosphates Integration Supply Chain Operations Commercial & Other Total Expected 2015 Run Rate P r e - T a x S y n e r g i e s 2017 Run Rate $26M $10M $10M $46M >$50M $40-50M Source: Mosaic
Slide 44: Phosphates: On Track to Achieve 2018 Targets
44 Phosphates: On Track to Achieve 2018 Targets $0 $50 $100 $150 $200 $250 $300 $350 $400 2010 2011 2012 2013 2014 2018F Sustaining CAPEX Depreciation Expense Step up as a result of CF acquisition Source: Mosaic ($ in millions)
Slide 45: Potash in Depth
Potash in Depth
Slide 46: Potash: Expansion Successes
46 Potash: Expansion Successes Expansion Esterhazy K2 Colonsay Belle Plaine Expected Tonnes 800,000 544,000 570,000 Proved Tonnes* 1,057,842 784,045 TBD Estimated Costs/Tonne $807 $1,331 $932 Actual Costs/Tonne $577 $927 TBD IRR 20% 13% TBD IRR Assumptions 1. $300 per metric tonne netback 2. 85% ope
Slide 47: Expected Outcome of Optimization: MOP Production Costs by Mine
47 Esterhazy Belle Plaine Colonsay Carlsbad Enterprise $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 Expected Outcome of Optimization MOP Production Costs by Mine Our 2013 Cost Predictions • Down 10% from 2013 actuals Cash Costs Including Ro
Slide 48: 2014: Ahead of Plan
48 Esterhazy Belle Plaine Colonsay Carlsbad Enterprise $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 P r o d u c t i o n C o s t s Actual Outcome of Optimization Production Costs by Mine • Down 16% from 2013 actuals • $7/tonne better than ex
Slide 49: Fourth Quarter 2014 Snapshot
49 Esterhazy Belle Plaine Colonsay Carlsbad Enterprise $0 $50 $100 $150 $200 $250 $300 $350 $400 $450 $60 $80 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 Actual Outcome of Optimization Production Costs by Mine • Down 18% from best quarter in 2013 • Includes brine management cost of $17/mt Cash
Slide 50: On Track to Achieve 2018 Targets
50 On Track to Achieve 2018 Targets $0 $100 $200 $300 $400 $500 2010 2011 2012 2013 2014 2018F Farfield CapEx Inflow Sustaining CapEx Depreciation Expense Source: Mosaic ($ in millions)
Slide 51: K3 Optionality
K3 Optionality
Slide 52: Esterhazy K3 Optionality: Spend & Scope
52 Esterhazy K3 Optionality: Spend & Scope Gross Capital Outlay Incremental Capital Outlay Brine Inflow Offset NPV Tax Benefits NPV Total Scope Timeframe NPV IRR Project Details • Conveyor System • Second Headframe and Hoist • Mine Development and Other Mid 2020s >$500 million >20% *Assumes decision
Slide 53: Potash: K3 Optionality
53 Potash: K3 Optionality
Slide 54: Potash: K3 Optionality
54 Potash: K3 Optionality
Slide 55: K3 Optionality Milestones & Capacity Ramp-up
55 Overland Conveyor K1 0 1 2 3 4 5 6 7 2014F 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F K3 Mine Capacity Estimate Additional Mine Development Overland Conveyor K2 South Headframe Hoist K3 Optionality Milestones & Capacity Ramp-up Source: Mosaic (Million Tonnes)
Slide 56: Timing of Incremental Capital Spending
56 Timing of Incremental Capital Spending $0 $50 $100 $150 $200 $250 2014 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F A n n u a l S p e n d i n g K3 Expansion Acceleration Incremental Capital Spending by Year($ in millions) Source: Mosaic
Slide 57: Potash: Cost Curve Position Post K3
57 Potash: Cost Curve Position Post K3 Mosaic Saskatchewan 0 50 100 150 200 250 300 0 10 20 30 40 50 60 70 ($/Tonne) Million Tonnes Migration of Production to K3 is a Transformational Move Future MOP FOB Port Potash Corporation Belaruskali Source: CRU and Mosaic *Excludes Resource Taxes
Slide 58: Summary
58 Summary • Consistent Execution • Low-Cost Producer • Positioned to Deliver Value
Slide 59: Secure Distribution
Rick McLellan Senior Vice President, Commercial Secure Distribution
Slide 60: Agenda
60 Agenda 1. Go to Market Strategy 2. Beyond Distribution 3. Value from Leadership
Slide 61: Mosaic's Commercial Strategy
61 Mosaic’s Commercial Strategy Optimize Net Backs Higher Value Product Mix Earn Attractive Returns Help Optimize Operations Sell 20+ Million Tonnes of Product/Year
Slide 62: A Global Market
62 A Global Market 12% % of World P Consumption P205 2014 Mature Fast Growing Policy Driven Steady Growth Brazil India China 11% 14% 30% 16% 16% 7% 25%F i n i s h e d F e r t i l i z e r BIG FOUR 66% 63% % of World K Consumption K20 2014 Dynamics North America Source: CRU
Slide 63: Evolving International Distribution
63 Evolving International Distribution Distribute Blends Sell to Dealers Sell to Dealers Sell to Dealers Mosaic P&K Mosaic P Canpotex K Mosaic P Canpotex K Canpotex K Market Leader Growing Presence Will grow w/Ma’aden JV Canpotex Customer Mosaic’s Role Brazil India China Products Characteristics Nor
Slide 64: Portfolio Approach
64 Portfolio Approach 0 100,000 200,000 300,000 400,000 500,000 600,000 700,000 With Premium Products Without Premium Products Top 5 Customers in North America 2.5x higher Tonnes Source: Mosaic
Slide 65: North America: Potash
65Source: Mosaic Estimates North America: Potash 20% 30% 40% 50% 60% 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F Mosaic Potash Percent of Sales Range % of sales Little change historically
Slide 66: North America: Phosphates
66 20% 30% 40% 50% 60% 70% 2010 2011 2012 2013 2014 2015F 2016F 2017F 2018F Mosaic North America Phosphate Percent of Sales Range % of Sales North America: Phosphates CF Industries Phosphates effect +4 points MicroEssentials® effect Source: Mosaic Estimates
Slide 67: Brazil: Major Opportunity
67 Brazil: Major Opportunity 0.8 0.8 0.8 0.8 1.9 2.6 2012 2018F Corn Sugar Cane Soybeans 0.9 0.9 0.4 0.4 1.8 2.5 2012 2018F Corn Sugar Cane Soybeans M i l l i o n T o n n e s K2O Use +30% P2O5 Use +26% Source: Mosaic Estimates
Slide 68: Mosaic's Presence in Brazil & Paraguay
68 Fospar Expansion North Entrance Projects Ahead Mosaic’s Presence in Brazil & Paraguay North Entrance Fospar
Slide 69: Trucking Issues in Brazil
69 Trucking Issues in Brazil
Slide 70: India: A Growing Market
70 India: A Growing Market M i l l i o n T o n n e s 4 8 6 0 2 4 6 8 10 12 14 16 18 20 2004 2006 2008 2010 2012 2014 2016F 2018F Indian Crop Nutrient Shipments Phosphate (Domestic) Phosphate (Import) Potash +50% Expected Source: Mosaic Estimates
Slide 71: The Mosaic Brand
The Mosaic Brand
Slide 72: China: An Evolving Marketplace for Potash
72 China: An Evolving Marketplace for Potash Industrial Producers NPK Producers Bulk Blenders Now: + Before: Canpotex Exclusive
Slide 73: Direct and Third-Party Distribution
73 Direct and Third-Party Distribution Mosaic’s In-Country Presence
Slide 74: Mosaic International Distribution Segment
74 $0 $5 $10 $15 $20 $25 $30 $35 $40 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 9.0 FY 2011 FY 2012 CY 2013 CY 2014 CY 2018F G r o s s M a r g i n p e r T o n n e S a l e s v o l u m e s DAP/MAP MicroEssentials® Potash Nitrogen SSP/Other Gross Margin per Tonne Mosaic International Distribution Segment (Mil
Slide 75: Mosaic: A Leader in Global Markets
75 • Scale • Low Cost Profile • Diversity of Customers and Production Flexibility • Market Access • Intellectual Capital Production Discipline Innovation Lead Margin Leadership Mosaic: A Leader in Global Markets Mosaic’s Advantages:
Slide 76: Mosaic Analyst Day March 31, 2015
Mosaic Analyst Day March 31, 2015
Slide 77: Driving Value
Rich Mack Executive Vice President and Chief Financial Officer Driving Value
Slide 78: Driving Value
78 Driving Value Mosaic’s Phosphates Business Valuation Considerations Brine Management Costs and Risk Mosaic’s Current Valuation Growth Outlook Free Cash Flow Growth Levers to Grow Value
Slide 79: The Investment Perspective
79 Brine Management Costs and Risk Mosaic’s Current Valuation Growth Outlook Free Cash Flow Growth Levers to Grow Value The Investment Perspective Industry Valuation Mosaic’s Position Mosaic’s Phosphates Business Valuation Considerations +
Slide 80: Attractive Industry Structure: Supply & Demand
80 55.0 57.5 1.9 1.5 1.0 1.9 50 51 52 53 54 55 56 57 58 59 60 2014 OCP Ma'aden Other China 2019 MMT P2O5 Source: CRU, January 2015. Global Phosphoric Acid Capacity Attractive Industry Structure: Supply & Demand F 60% 65% 70% 75% 80% 85% 90% 0 10 20 30 40 50 60 00 02 04 06 08 10 12 14 16F 18F 20F Op
Slide 81: Attractive Industry Structure: North America Consolidation
81 Attractive Industry Structure: Cost Curve, Consolidation & More Source: Mosaic Significantly Improved Structure: North America 1990 18 Firms / 21 Plants 10.9 mmt P2O5 2000 12 Firms / 20 Plants 12.3 mmt P2O5 2015 4 Firms / 12 Plants 8.8 mmt P2O5 61 % of capacity
Slide 82: Significantly Improved Structure: Rest of the World
82 Attractive Industry Structure: Cost Curve, Consolidation & More Significantly Improved Structure: Rest of the World +
Slide 83: Mosaic's Position
83 Mosaic’s Position Leader in Global Markets • Scale • Low Cost Profile • Diversity of Customers and Production Flexibility • Market Access • Margin Leadership • Innovation Lead • Production Discipline Mosaic’s Advantages: • Intellectual Capital
Slide 84: Phosphates Segment Valuation
84 Phosphates Segment Valuation Leadership Position Industry Structure Supply and Demand VALUATION
Slide 85: The Investment Perspective
85 The Investment Perspective Mosaic’s phosphates business Valuation Considerations Brine Management Costs and Risk Mosaic’s current valuation Growth Outlook Free Cash Flow Growth Levers to Grow Value Mosaic Current Valuation Mosaic Phosphates Business
Slide 86: Brine Management Cash Flow and Risks
86 Perceived risk of catastrophic loss of K1 and K2 Cost of brine inflow management Capital costs to mitigate brine inflow Brine Management Cash Flow and Risks
Slide 87: Esterhazy Underground Footprint
87 K2 Shaft Esterhazy Underground Footprint K1 Shaft Brine Storage Area
Slide 88: Cash Flow to Manage Brine
88 Cash Flow to Manage Brine ($ in millions) 2012 2013 2014 2015 Guidance Expenses $249 $202 $181 $180 - $200 Capital $129 $41 $20 N/A • Industry leader: effectively managing brine inflow since 1985 • Increased pumping capacity to estimated maximum inflow • “Insurance” characteristics • Brine manage
Slide 89: Diminishing Esterhazy Risk
89 Diminishing Esterhazy Risk 0% 20% 40% 60% 80% 100% 2015F 2016F 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F K1 / K2 Tonnes K3 Tonnes Loss represents less than two quarters of net income In 2018 NPV of Lost Tonnes from K1 & K2 = $1.1 Billion In 2020 NPV = $425 Million Source: Mosaic
Slide 90: The Investment Perspective
90 The Investment Perspective Mosaic’s phosphates business Valuation Considerations Brine Management Costs and Risk Mosaic’s current valuation Growth Outlook Free Cash Flow Growth Levers to Grow Value Mosaic Current Valuation Mosaic Phosphates Business
Slide 91: Phosphates: Investing for Growth
91 $800 $900 $1,000 $1,100 $1,200 $1,300 $1,400 $1,500 $1,600 2014 2015F 2016F 2017F 2018F Phosphate Gross Margin Impact $1,466$937 ($ in millions) Phosphates: Investing for Growth * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor Statement. Ma’a
Slide 92: Potash: Investing for Growth
92 Potash: Investing for Growth $923 $800 $850 $900 $950 $1,000 $1,050 $1,100 2014 2015F 2016F 2017F 2018F Potash Gross Margin Impact $1,076 ($ in millions) Volume Growth +17% * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor Statement. Source: M
Slide 93: International Distribution: Investing in Growth
93 International Distribution: Investing in Growth $147 $256 $100 $120 $140 $160 $180 $200 $220 $240 $260 $280 2014 2015F 2016F 2017F 2018F International Distribution Gross Margin ($ in millions) Incremental MicroEssentials® & Volume Growth ADM Distribution Tonnes +74% * Assumptions in Appendix. Sub
Slide 94: Aggressive Cost Reduction Targets
94 0 50 100 150 200 250 300 350 400 450 500 2014 2015F 2016F 2017F 2018F Potash Phosphates Other Net Savings Cost Avoidance and Expense Savings ~70% achieved by year 3 ($ in millions) * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor Statement. S
Slide 95: Cash Flow from Operations
95 Cash Flow from Operations $1,726 $2,633 $568 $1,500 $2,000 $2,500 $3,000 2014 2015F 2016F 2017F 2018F Adjusted Cash Flow from Ops Growth Investments Changes to Working Capital & Disclosed Notable Items ($ in millions) +53% * Assumptions in Appendix. Subject to risks and uncertainties including th
Slide 96: The Investment Perspective
96 The Investment Perspective Mosaic’s phosphates business Valuation Considerations Brine Management Costs and Risk Mosaic’s current valuation Growth Outlook Free Cash Flow Growth Levers to Grow Value Mosaic Current Valuation Mosaic Phosphates Business
Slide 97: Capital Priorities
97 Capital Priorities Maintain Strong Financial Foundation Sustain Assets Organic Growth Investments Return to Shareholders Source: Mosaic Sustain & Grow Dividend Strategic Investments Balanced Approach Strong Cash Generator Capital Management Targeting Growth Proven Track Record Dividend
Slide 98: Track Record of Dividend Growth
98 $1.10 $0.0 $0.2 $0.4 $0.6 $0.8 $1.0 $1.2 2011 2012 2013 2014 2015F A Track Record of Dividend Growth ($ per share) Dividend per Share 450% +10%
Slide 99: And Meaningful Share Repurchases
99 And Meaningful Share Repurchases $1.2 $2.8 $0.0 $0.5 $1.0 $1.5 $2.0 $2.5 $3.0 $3.5 $4.0 2011 2014 ~$190 million remaining under current share repurchase authorization as of February 6, 2015 18% of Total Shares Outstanding ($ in billions)
Slide 100: Balance Sheet Targets
100 $2.5B Liquidity: $1B Cash + $1.5B Credit Line 1.5 to 2.0 Leverage Target: Adjusted Debt to EBITDA *Assumes no change in debt balance. EBITDA for future years is calculated based on expected earnings before interest, taxes, depreciation and amortization or impact of foreign currency gains/losses.
Slide 101: Expect to Grow Dividend with Earnings Growth
101 Expect to Grow Dividend with Earnings Growth Sustain Assets and Grow Dividend $0 $200 $400 $600 $800 $1,000 $1,200 2014 2015F 2016F 2017F 2018F Sustaining Dividends Flat, excluding business growth Unchanged Commitments ($ in millions) * Assumptions in Appendix. Subject to risks and uncertainties
Slide 102: Hurdle Rates: Required Return
102 Probability of Meeting or Exceeding Required Return Business Growth Prudent Capital Management Hurdle Rates (%) Base Rate 8.9% Country/External Risk 0% - 2.0% Project Risk 0% - 9.7% Required Return 8.9% - 20.6% Source: Mosaic
Slide 103: Business Growth: A Track Record of Success
103 Business Growth A Track Record of Success Organic Capital IRR Esterhazy K2 $645/tonne 20% Colonsay $923/tonne 13% MicroEssentials® $173/tonne 20% Strategic Capital IRR CF Phosphates $630/tonne 17% Ma’aden $900/tonne Low teens ADM $175/tonne 12% Source: Mosaic
Slide 104: Return of Excess Capital
104 Return of Excess Capital $2,000 $2,100 $2,200 $2,300 $2,400 $2,500 2014 2015F 2016F 2017F 2018F Cash Flow from Operations ($ in millions) * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor Statement. Source: Mosaic
Slide 105: First Commitment: Capital Expenditures and Dividends
105 $0 $300 $600 $900 $1,200 $1,500 $1,800 2014 2015F 2016F 2017F 2018F Dividends Capital Expenditures Return of Excess Capital First Commitment: Capital Expenditures and Dividends ($ in millions) * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor
Slide 106: Meaningful Free Cash Flow
106 $437 $680 $552 $1,025 $1,139 $0 $200 $400 $600 $800 $1,000 $1,200 2014 2015F 2016F 2017F 2018F Projected Free Cash Flow (After Dividends) Return Excess Capital Meaningful Free Cash Flow 161% ($ in millions) * Assumptions in Appendix. Subject to risks and uncertainties including those stated in t
Slide 107: Smart Capital Deployment
107 Smart Capital Deployment Investment for Growth Shareholder Returns Capital Stewardship
Slide 108: Significant Free Cash Flow Leverage
108 $437 $680 $552 $1,025 $1,139 $814 $0 $500 $1,000 $1,500 $2,000 $2,500 2014 2015F 2016F 2017F 2018F Free Cash Flow Scenario: P&K Prices up $50 ($ in millions) 347% Leverage to Cyclical Improvement Significant Free Cash Flow Leverage * Assumptions in Appendix. Subject to risks and uncertainties in
Slide 109: Free Cash Flow per Share After Dividends
109 Enhanced by Capital Deployment Free Cash Flow per Share After Dividends * Assumptions in Appendix. Subject to risks and uncertainties including those stated in the Safe Harbor Statement. $1.13 $1.85 $1.53 $2.89 $3.27 $2.34 $0.00 $1.00 $2.00 $3.00 $4.00 $5.00 $6.00 2014 2015F 2016F 2017F 2018F FC
Slide 110: Summary
110 Summary • Undervalued Phosphates Business • Diminishing Brine Management Risk • Free Cash Flow Growth Potential • Balanced Capital Allocation • Positioned to Deliver Value
Slide 111: Mosaic Analyst Day March 31, 2015
111 Mosaic Analyst Day March 31, 2015 Mosaic Analyst Day March 31, 2015
Slide 112: Appendix: Phosphates Assumptions
112 Phosphates: Ma’aden JV contribution embedded in gross margin, actual reporting is as an equity investment under U.S. GAAP. ADM business includes an incremental, 2 million tonnes of blended product plus synergies. Raw material savings result of increased NH3 manufacturing from de-bottleneck
Slide 113: CY2014 EBITDA Reconciliation
113 CY2014 EBITDA Reconciliation EBITDA $2,060.5 Foreign currency gain (loss) 79.1 Gain (loss) in value of share repurchase agreement (60.2) Interest income (expense) (107.6) Non‐controlling interest (1.8) Depreciation, depletion and amortization (750.9) Provision from income taxes (184.7) Other inc
Slide 114: CY2014 Cash Flow from Operations Reconciliation
114 CY2014 Cash Flow from Operations Reconciliation Adjusted Cash flow from operations (Non‐GAAP) $1,726 Changes in working capital 300 Loss on write‐down of Carlsbad 125 Unrealized loss on derivatives 35 Change in value of share repurchase agreement 60 Amortization of acquired inventory 49 Special
Slide 115: Non-GAAP Reconciliation: EBITDA and Adjusted Debt
115 Appendix: Non-GAAP Reconciliation CY2014 EBITDA Reconciliation ($ in millions) EBITDA $2,060.5 Foreign currency gain (loss) 79.1 Gain (loss) in value of share repurchase agreement (60.2) Interest income (expense) (107.6) Non‐controlling interest (1.8) Depreciation, depletion and amortization (75