Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Q1 2020 Earnings Presentation
31 slides from Mosaic Company (the)'s earnings presentation, May 6, 2020
Slide 1: The Mosaic Company Earnings Slides First Quarter 2020
The Mosaic Company Earnings Slides First Quarter 2020 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: May 4, 2020
Slide 2: Forward Looking Statements & Non-GAAP Financial Measures
Forward Looking Statements & Non-GAAP Financial Measures This release 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 proposed or pending future transactions or strategic
Slide 3: Agenda
Agenda Strengthening Markets Strong Operational Performance Strategic Progress 3
Slide 4: Strengthening Markets Into Spring
Strengthening Markets Into Spring Midwest Prices 2020 Brazil Prices May 1 MOS Barge Inventory as of April 1 vs 2019 DAP MOP MOP After $36/mt $(19)/mt $20/mt China Contract 80% Non-Chinese Production Estimated Chinese exports Phosphate NOLA imports Curtailments YTD 2020 YTD April vs 2019 YTD April vs
Slide 5: Potash Momentum Following Contract Settlements
Potash Momentum Following Contract Settlements $ per tonne 2016 Analog to 2019 Published Potash Prices 500 450 Downward price trends incented 400 contract deferral Downward price trends incented 2.5 years of price improvement contract deferral 350 *average reported spot pricing for prompt delivery 3
Slide 6: COVID-19
COVID-19 While we continue to monitor the effects of COVID 19 on our markets and on our business, we’ve seen little negative impact Risks Opportunities Government Mandated Closures Increased Logistic Availability Bio Fuel Prices Lower Fuel / Freight Costs Supply Chain Interruptions Lower T&E Sulfur
Slide 7: Strong Operational Performance
Strong Operational Performance Average Weekly Shipments End of Curtailments (000) Tonnes Drives Phosphates Operating Rate 250 Jan Feb Mar April 200 68% 65% 91% 87%e 150 100 Consistent Potash Operating Rate 50 Jan Feb Mar April 0 January February March April 82% 82% 92% 88%e Potash Phosphates Mosaic
Slide 8: Advancing Strategic Priorities
Advancing Strategic Priorities North America Drive Functional Transformation Collaboration and Efficiency Named North America leadership team, actively planning integration Retooled organization to work remote, including business processing Esterhazy K3: Potash cash costs / tonne excluding brine bel
Slide 9: External Forces Impacting Results
External Forces Impacting Results Sales Volumes BRL:USD Finished Product Q1 change: $1.18; 22% 7 6 6 5.5 5 5 4 Phosphate 4.5 3 +14% Potash 2 Mosaic Fert 4 1 12/31 1/31 2/29 3/31 0 Sensitivity: $0.10 change, unhedged = $21 million Q1 2019 Q1 2020 CAD:USD FX Impacts ($ in mm) Q1 Change: $0.11; 8% 1.49
Slide 10: Results
Results $ in million, except per share 1Q 2020 1Q 2019 Diluted Earnings Per Share (EPS) $(0.54) $0.34 Adjusted diluted EPS(1) $(0.06) $0.25 Net Earnings (Loss) $(203) $131 Adjusted EBITDA(1) $214 $430 Cash from Operations $190 $(176) Capital Expenditures $264 $314 POTASH 1Q 2020 PHOSPHATES 1Q 2020 F
Slide 11: Realized $58M of Non-Market Improvements in Q1
Realized $58M of Non-Market Improvements in Q1 Non Market Growth 2019 to 2020 Mosaic is on track to achieve ~ $225 million of Adjusted EBITDA(1) adjusted EBITDA (1) growth over 2019: 250 • Brazilian dam remediation work began in the second quarter of 2019. 200 • Costs to hold Plant City idle were pr
Slide 12: Balance Sheet Strength & Liquidity
Balance Sheet Strength & Liquidity Mosaic continues to target investment grade metrics and $2.5 – $3.0 billion in available liquidity Liquidity Debt Covenants ~$1.1 billion cash on the balance sheet EBITDA / Interest of > 3.0x, 3/31/2020 at 3.9x ~$1.6 billion available, committed line of Debt / Tota
Slide 13: We help the world grow the food it needs.
We help the world grow the food it needs.
Slide 14: Modeling Assistance
Modeling Assistance Presenter: Date:
Slide 15: Operating Driver Targets
Operating Driver Targets TTM 2021 2018 3/31/20 target Cash cost of U.S. mined rock ($/tonne) $38 $39 $39 Phosphates Cash costs of conversion ($/tonne) $63 $66 $56 Sales of MicroEssentials (mm tonnes) 2.9 2.8 3.7 Average MicroEssentials margin, premium to MAP ($/tonne)(1) $43 $40 $40 - $50 Cash costs
Slide 16: Sensitivities using 2019 Cost Structure
Sensitivities using 2019 Cost Structure Based on 2019 Actuals Adjusted EBITDA(1) $1.35 bn Known non-market growth 2020 vs 2019 $0.225 bn Sensitivity Full year adj. EBITDA impact 2019 Actuals Average MOP Price / tonne (fob mine) $10/mt price change = $55 million(2) $237 Average DAP Price / tonne (fob
Slide 17: Additional Modeling Assistance
Additional Modeling Assistance Estimated reconciling items EBITDA(1) to EPS $ in millions Adjusted Depreciation, Depletion & Amortization $910 - $920 Net Interest Expense $180 - $190 Non-Notable Adjustments $80 - $90 Effective Tax Rate(2) Mid - High 30’s% Capital Expenditure Expectations $ in billio
Slide 18: Realized Price Lags Positive Market Momentum
Realized Price Lags Positive Market Momentum Mosaic Fert Nov Dec Jan Feb March Tonnes (000) 644 660 752 737 588 Revenues ($mm) $253 $260 $281 $255 $195 Revenue / tonne $393 $395 $374 $346 $332 Potash Nov Dec Jan Feb March April Tonnes (000) 356 536 728 489 682 Price Trends Revenues ($mm) $92 $145 $1
Slide 19: Appendix
Appendix 19
Slide 20: Strong H1 2020 Demand Driven by Still Constructive Ag Commodity Prices & Acreage Increase
Strong H1 2020 Demand Driven by Still Constructive Ag Commodity Prices & Acreage Increase in North America Corn and Soybean Prices $ / Bu Soy Daily Close of the Front Month Contract $ / Bu Corn • Strong rebound in North American demand (and 11.00 5.00 Beans -13% YTD, but could elsewhere) in H1 after
Slide 21: 2020 Demand Growth: Potash
2020 Demand Growth: Potash North American MOP China MOP Shipments Shipments A build in China’s MMT, KCl North America sees strong MMT, KCl 12 recovery during spring 20 inventory in 2019 allowed 10 season, though we are time to delay a new 8 15 contract settlement into taking a more cautious view 6 o
Slide 22: 2020 Demand Growth: Phosphate
2020 Demand Growth: Phosphate MMT North America MMT China Product DAP/MAP/NPS/TSP Shipments Product DAP/MAP/NPS/TSP Shipments North America recovers 12 20 Spring phosphate on normal weather and 10 pent-up demand after 15 demand appears to have 8 three consecutive poor now stabilized, following 6 app
Slide 23: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (May 2020) Muriate of Potash Low High Source: IFA, CRU and Mosaic Mil Tonnes KCl 2018 2019E 2020F 2020F Comments (Numbers may not sum to total due to rounding) Transportation constraints at the start of the season, owing to the COVID-19 outbreak, have resul
Slide 24: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (May 2020) Source: IFA, CRU and Mosaic DAP / MAP / NPS* / TSP Low High (Numbers may not sum to total due to rounding) (Million Tonnes) 2018 2019E 2020F 2020F Comments Preliminary indications on the spring season show that phosphate demand is stabilizing,
Slide 25: Non GAAP Reconciliations
Non GAAP Reconciliations 25
Slide 26: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Consolidated Earnings (in millions) 1Q 2020 1Q 2019 Consolidated net (loss) earnings attributable to Mosaic $(203) $131 Less: Consolidated interest expense, net (41) (47) Plus: Consolidated depreciation, depletion and amortization 217 218 Plus: Accretion expense 1
Slide 27: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 1Q 2020 1Q 2019 Operating earnings (loss) $(107) $44 Plus: Depreciation, depletion and amortization 114 103 Plus: Accretion expense 13 12 Plus: Foreign exchange gain (loss) 14 2 Plus: Other income (expense) 5 1 Plus: Equity in net
Slide 28: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 1Q 2020 4Q 2019 1Q 2019 Gross Margin $(83) $(106) $55 Notable items in gross margin 5 16 9 Adjusted gross margin $(78) $(90) $64
Slide 29: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 1Q 2020 1Q 2019 Operating earnings $94 $176 Plus: Depreciation, depletion and amortization 70 78 Plus: Accretion expense 2 1 Plus: Foreign exchange gain (loss) (150) 37 Plus: Other income (expense) 1 1 Plus: Notable items 158 (37) Adj
Slide 30: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 1Q 2020 4Q 2019 1Q 2019 Gross Margin $109 $92 $186 Notable items in gross margin 22 22 0 Adjusted gross margin $131 $114 $186
Slide 31: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Mosaic Fertilizantes Earnings (in millions) 1Q 2020 1Q 2019 Operating earnings (loss) $29 $27 Plus: Depreciation, depletion and amortization 28 32 Plus: Accretion expense 3 2 Plus: Foreign exchange gain (loss) (81) (9) Plus: Other income (expense) (1) (2) Less: Ea