Slide 1: Earnings Conference Call – Third Quarter 2019
The Mosaic Company Earnings Conference Call – Third Quarter 2019 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: November 5, 2019
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 the anticipated benefits and synergies of our acquis
Slide 3: Strong Market Demand
Strong Market Demand Soybean Prices Corn Prices $ / Bu Daily Close of the Front Month Contract $ / Bu Daily Close of the Front Month Contract 11.00 5.00 10.50 Dec-20 contract Farm-gate prices 10.00 4.50 range bound improving faster $4.00 - $4.20 9.50 9.00 4.00 8.50 8.00 3.50 7.50 Source: CME Source:
Slide 4: Long-term market outlook remains positive
Long-term market outlook remains positive High-Analysis Phosphate Global Net Price (1) $ per Tonne Calculated from Published Weekly Spot Prices Potash Prices 475 350 450 425 325 400 375 300 350 325 275 300 275 250 250 225 225 200 Source: Argus, Mosaic 10/24/19 175 200 Jan-14 Jan-15 Jan-16 Jan-17 Jan
Slide 5: Strong Execution: Controlling What We Can
Strong Execution: Controlling What We Can ADDITIONAL • Expect to be fully ramped up by mid 2022 • Saves an additional ~$115 million in brine management costs ACCELERATION • Lowers production costs 30 months ahead of 2018 expectations OF ESTERHAZY K3 • Accelerates capital deployment and depreciation
Slide 6: Season Update
Season Update Corrine Ricard and Andy Jung Presenter: Date: 6
Slide 7: Third Quarter Results
Third Quarter Results $ in million, except per share 3Q 2019 YTD 2019 Diluted Earnings Per Share (EPS) $(0.11) $(0.38) Adjusted diluted EPS(1) $0.08 $0.45 Net Income $(44) $(146) Adjusted EBITDA(1) $366 $1,145 Cash from Operations $486 $818 Capital Expenditures $322 $931 (1)See Non-GAAP Financial Me
Slide 8: Strong Execution: Mosaic Fertilizantes
Strong Execution: Mosaic Fertilizantes Cumulative Synergy Capture $ in millions By Quarter 2018-2019 $600 New target of $500 $14M $200 million $200 incremental $400 $6M $7 annual EBITDA $300 $50 growth from $10M $7 2019 $200 $7M $29 $7 $275 $100 $26 $230 $4 $22M $158 $102 $121 $23 $66 $16 $34 $0 Q1
Slide 9: Potash K3 Acceleration 2.0
Potash K3 Acceleration 2.0 First miner in service date: September 24 Second miner in service date: Mid December 9
Slide 10: Esterhazy Acceleration Implications
Esterhazy Acceleration Implications ~$225 million of Expected ~$75 million of Expected Brine Management Savings Esterhazy Production Savings $ in millions Esterhazy $ / tonne Esterhazy Cash Brine Management Spend Cash Production Cost / Tonne $160 $80 $120 $70 $80 $60 $40 $50 $0 $40 2018 2019 2020 20
Slide 11: Guidance Assumptions
Guidance Assumptions Fourth Quarter Assumptions Volumes (mm tonnes) Adjusted GM(1) Potash 1.7 to 1.9 $60 - $70 / tonne Phosphates 2.1 to 2.3 $(10) - $0 / tonne Mosaic Fertilizantes 2.2 to 2.4 $40 - $50 / tonne Corporate & Other ----- $10 - $20 mm Assumptions – Full year Potash Volumes 8.0 – 8.2 mmt
Slide 12: Driving Growth 2019 to 2020
Driving Growth 2019 to 2020 Non Market Growth 2019 to 2020 Mosaic expects ~ $225 million of adjusted EBITDA (1) Adjusted EBITDA(1) growth, all else equal, due to the following: 250 • The Brazilian phosphate mines resumed full operations in September, with the outages in 2019 200 expected to cost an
Slide 13: Conclusions
Conclusions 13
Slide 14: Appendix
Appendix 14
Slide 15: Operating Driver Targets
Operating Driver Targets 2018 3Q 19 2021 actual 4Qtr Ave target Cash cost of U.S. mined rock ($/tonne) $38 $42 $39 Phosphates Cash costs of conversion ($/tonne) $63 $64 $56 Sales of MicroEssentials (mm tonnes) 2.9 2.8 3.7 Average MicroEssentials margin, premium to MAP ($/tonne)(1) $43 $48 $40 - $50
Slide 16: Adjusted 2019 EBITDA to Adjusted EPS
Adjusted 2019 EBITDA to Adjusted EPS Estimated reconciling items $ in millions Adjusted EBITDA(1) $1,400 to $1,500 Adjusted Depreciation, Depletion & Amortization $875 Interest Expense $205 Non-Notable Adjustments $80 Estimated Pretax Earnings ~$240 to ~$340 Tax Expense (assumed mid-30% full year ef
Slide 17: Modeling Assumptions
Modeling Assumptions Modeling Assumptions for Full year DD&A ~$875 million SG&A ~$340 million Brine Management Costs ~$140 million BRL to USD Average Exchange Rate 3.8 Updated Assumptions for Full year Ma’aden Equity Earnings ~$(55) million Effective Tax Rate Mid 30’s Total Capital Expenditures ~$1.
Slide 18: Sensitivity Table: Estimated Full Year Impacts
Sensitivity Table: Estimated Full Year Impacts Impacts to PL: ($ in millions) Adjusted EBITDA Δ(1) Adjusted EPS Δ(1) Average MOP Price --> $10/mt $82 $0.12 Average DAP Stripping Margin --> $10/mt $86 $0.17 Potash Sales Volume --> 100k mt $15 $0.02 Phosphates Sales Volume --> 100k mt $5 $0.01 Canadia
Slide 19: Global Potash Shipment Forecasts by Region
Global Potash Shipment Forecasts by Region (November 2019) Muriate of Potash Low High Source: IFA, CRU and Mosaic (Numbers may not sum to total due to rounding) Million Tonnes (KCl) 2018 2019F 2020F 2020F Comments We expect the delayed China contract settlement, higher domestic production from QSL a
Slide 20: Global Phosphate Shipment Forecasts by Region
Global Phosphate Shipment Forecasts by Region (November 2019) Source: IFA, CRU and Mosaic DAP / MAP / NPS* / TSP Low High (Numbers may not sum to total due to rounding) (Million Tonnes) 2018 2019F 2020F 2020F Comments Our estimate of 2019 shipments now shows a decline of over 1mmt y-o-y. We continue
Slide 21: Potash
Potash (in millions except per tonne) 2018 2017 9mo 2019 9mo 2018 Sales Volumes (tonnes) 8.8* 8.6 6.35 6.48 Operating Earnings $511 $344 $498 $362 Adjusted EBITDA(1) $866 $648 $725 $596 Gross Margin $ / Tonne $68 $45 $84 $61 Adjusted Gross Margin $ / Tonne(1) $69 $47 $86 $63 • Gross Margin per tonne
Slide 22: Phosphates
Phosphates (in millions except per tonne) 2018 2017 9mo 2019 9mo 2018 Sales Volumes (tonnes) 8.4* 9.5 6.17 6.48 Operating Earnings $473 $256 $(419) $389 Adjusted EBITDA(1) $966 $640 $287 $726 Gross Margin $ / Tonne $69 $35 $5 $65 Adjusted Gross Margin $ / Tonne(1) $72 $35 $8 $69 • Realized finished
Slide 23: Mosaic Fertilizantes
Mosaic Fertilizantes (in millions except per tonne) 2018 2017* 9mo 2019 9mo 2018 Sales Volumes (tonnes) 9.13 9.35 7.05 7.03 Operating Earnings $238 $(35) $128 $154 Adjusted EBITDA(1) $429 $81 $226 $291 Gross Margin $ / Tonne $41 $8 $30 $36 Adjusted Gross Margin $ / Tonne(1) $41 $8 $30 $36 • Operatin
Slide 24: Non GAAP Reconciliations
Non GAAP Reconciliations 24
Slide 25: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Consolidated Earnings (in millions) 3Q 2019 3Q 2018 9M 2019 9M 2018 Consolidated net (loss) earnings attributable to Mosaic $(44) $247 $(146) $358 Less: Consolidated interest expense, net $(43) $(41) $(136) $(135) Plus: Consolidated depreciation, depletion and $21
Slide 26: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 2018 2017 9M 9M 3Q 3Q 2019 2018 2019 2018 Operating earnings (loss) $473 $256 $(419) $389 $(70) $170 Plus: Depreciation, depletion and $403 $338 $317 $302 $109 $101 amortization Plus: Accretion expense $37 $21 $34 $29 $12 $10 Plus
Slide 27: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Phosphates Earnings (in millions) 3Q 2019 3Q 2018 2Q 2019 Gross Margin $(19) $180 $(12) Notable items in gross margin $7 $0 $5 Adjusted gross margin $(12) $180 $(7)
Slide 28: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 2018 2017 9M 9M 3Q 3Q 2019 2018 2019 2018 Operating earnings $511 $344 $498 $362 $148 $149 Plus: Depreciation, depletion and $302 $287 $220 $222 $63 $73 amortization Plus: Accretion expense $4 $4 $5 $3 $3 $1 Plus: Foreign exchange gai
Slide 29: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Potash Earnings (in millions) 3Q 2019 3Q 2018 2Q 2019 Gross Margin $158 $161 $181 Notable items in gross margin $12 $0 $0 Adjusted gross margin $170 $161 $181
Slide 30: Reconciliation of non GAAP measures
Reconciliation of non GAAP measures Mosaic Fertilizantes Earnings (in 2018 2017* 9M 9M 3Q 3Q millions) 2019 2018 2019 2018 Operating earnings (loss) $238 $(35) $128 $154 $98 $123 Plus: Depreciation, depletion and $159 $137 $98 $110 $34 $36 amortization Plus: Accretion expense $7 $0 $5 $5 $1 $2 Plus: