Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Investor Day (February 2020)
24 slides from Mosaic Company (the)'s investor day presentation, Feb 21, 2020
Slide 1: Modeling with New Disclosures
The Mosaic Company Modeling with New Disclosures Linking Price & Drivers to Financial Results Laura Gagnon, Vice President Investor Relations Presenters: Lucy Terrill, Senior Manager Investor Relations Date: February 2020
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 proposed or pending future transactions or stra
Slide 3: Contents
Contents Overview of approach Outlook based on Prior Year Actuals To get to adjusted EBITDA To get to EPS Managing quarterly expectations Potash Segment Phosphate Segment Mosaic Fertilizantes Corporate & Other 3
Slide 4: Overview of Approach
Overview of Approach At their simplest, the fundamental drivers of our financial performance are volumes, prices, and costs. Complexities arise primarily in understanding the delay between the market prices you see and prices realized in our financial results. • For revenues, sales may be priced a q
Slide 5: Understanding the lag between market pricing and financial results
Understanding the lag between market pricing and financial results For Finished Products Customer agrees Order is planned for production Product delivered to to transaction or shipment from inventory customer and recognized Time lines varies with finished goods inventory levels, seasonality and logi
Slide 6: 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 $.225 bn 2019 Sensitivity Full year adj. EBITDA impact Actuals Average MOP Price / tonne (fob mine) $10/mt price change = $55 million(2) $237 Average DAP Price / tonne (fob
Slide 7: Mosaic's Posted Price Dashboard
Mosaic’s Posted Price Dashboard http://www.mosaicco.com/documents/20200214_Price_Dashboard___External.pdf 7
Slide 8: Operating Driver Targets
Operating Driver Targets 2018 2019 2021 actual actual target Cash cost of U.S. mined rock ($/tonne) $38 $41 $39 Phosphates Cash costs of conversion ($/tonne) $63 $65 $56 Sales of MicroEssentials (mm tonnes) 2.9 2.7 3.7 Average MicroEssentials margin, premium to MAP ($/tonne)(1) $43 $45 $40 - $50 Cas
Slide 9: Volumes Ranges
Volumes Ranges Potash Volumes Phosphates Volumes Mosaic Fert Volumes 10.0 10.0 10.0 9.0 9.0 9.0 8.0 8.0 8.0 7.0 7.0 7.0 6.0 6.0 6.0 5.0 5.0 5.0 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Range: 7.8 - 9.0 million tonnes Range: 8.1 - 9.8 million tonnes Tw
Slide 10: Expected Non-market Growth 2019 to 2020
Expected Non-market Growth 2019 to 2020 Non-Market Growth 2019 to 2020 Mosaic expects ~ $225 million of adjusted EBITDA (1) Adjusted EBITDA(1) growth, all else equal, due to the following: 250 • The Brazilian phosphate mines resumed full operations in September, with the outages in 2019 200 expected
Slide 11: Additional Modeling Assistance
Additional Modeling Assistance Estimated reconciling items EBITDA to EPS $ in millions Adjusted Depreciation, Depletion & Amortization $915 Net Interest Expense $180 - $190 Non-Notable Adjustments $80 - $90 Effective Tax Rate Low 30’s% Capital Expenditure Expectations $ in billions Sustaining Capita
Slide 12: Aligning Seasonality to Quarterly Expectations
Aligning Seasonality to Quarterly Expectations We plan to provide incremental monthly data on sales revenues and volumes to provide better transparency of the lag between market prices and realized prices, and the seasonality of volumes, which can vary significantly from year to year. This is expect
Slide 13: By Segment Considerations
By Segment Considerations 13
Slide 14: Potash
Potash ▪ Product mix: • Standard product is the primary product sold under China and Indian contracts. • Granular product is the primary product sold into North America and Brazil. • Granular product is generally priced at a premium to standard, covering the slightly higher costs associated with the
Slide 15: Phosphates – finished products
Phosphates – finished products ▪ Product mix • DAP/MAP product relative prices can vary based on geographic supply / demand considerations. • India is primarily a DAP market, while Brazil is primarily a MAP market. • MicroEssentials is a MAP based product, with finished product prices closely tied t
Slide 16: Phosphates – ammonia
Phosphates – ammonia ▪ Ammonia is used to granulate phosphate products used in agriculture (DAP, MAP, & MicroEssentials) ▪ The Company has three sources of ammonia: 1. Contract with CF Industries for a minimum of 540,000 tonnes annually, and up for renewal in 2025 − These tonnes are generally taken
Slide 17: Phosphates – sulfur
Phosphates – sulfur ▪ The company uses sulfur to create sulfuric acid. The process is exothermic, and cogenerates electricity for the company’s chemical plants and phosphate mines. ▪ The sulfuric acid is used to create phosphoric acid from the phosphate rock. ▪ At the plant, it takes approximately 1
Slide 18: Mosaic Fertilizantes – finished product production
Mosaic Fertilizantes – finished product production ▪ Mosaic refers to this portion of Mosaic Fertilizantes as the B2B business ▪ The costs in this business are primarily BRL based, with 25% in USD related to raw materials of sulfur and ammonia. As a result the segment is short BRL for months longer
Slide 19: Mosaic Fertilizantes – distribution
Mosaic Fertilizantes – distribution ▪ Mosaic refers to this portion of Mosaic Fertilizantes as the B2C business. ▪ Costs and finished product are generally tied to the USD price of the global product. However, with margins, the business is actually long BRL in months 0-4, and the company hedges net
Slide 20: Corporate & Other
Corporate & Other* There are four primary categories of revenues and expenses in this segment 1. Profit in inventory (PII) • This offsets intersegment profit before sales to final third party customers. For example: Phosphates segment will recognize sales and profits for MicroEssential products sold
Slide 21: Demand Growth vs. Mosaic's Volumes
Demand Growth vs. Mosaic’s Volumes Mm tonnes 2015 2016 2017 2018 2019e 2020f Global K shipments 61.7 60.8 65.0 67.0 65.2 67.3 Mosaic tonnes sold 7.93 7.78 8.60 8.78 7.84 Note (4) Percent share 12.85 12.80 13.23 13.10 12.02(3) Global P shipments 67.6 70.3 71.6 72.2 70.7 73.2 Mosaic tonnes sold(1) 9.3
Slide 22: Finished Product Tonnes
Finished Product Tonnes Distribution of Sales by Quarter 2016 2017 2018 2019 Average Phosphates Segment Q1 23% 24% 23% 22% 23% Q2 25% 27% 28% 27% 27% Q3 26% 22% 27% 27% 25% Q4 26% 26% 22% 25% 25% Potash Segment Q1 20% 23% 19% 24% 21% Q2 26% 25% 27% 28% 27% Q3 28% 26% 28% 30% 28% Q4 26% 26% 26% 19% 2
Slide 23: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (February 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) Modest demand growth is expected to be offset by some drawdown of channel inventories, resul
Slide 24: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (February 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 We have rebased our China figures higher to be more comprehensive in our counting