Slide 1: Earnings Conference Call – Second Quarter 2014
The Mosaic Company Earnings Conference Call – Second Quarter 2014 July 31, 2014 Jim Prokopanko, President and Chief Executive Officer Larry Stranghoener, Interim Chief Executive Officer Rich Mack, Executive Vice President and Chief Financial Officer Laura Gagnon, Vice President Investor Relations Ex
Slide 2: Safe Harbor Statement
Safe Harbor Statement 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 Northern Promise Joint Venture, the acquisition and assumption of certain related
Slide 3: Key Messages
Key Messages 1. Strong global phosphate and potash demand. 2. Farmers continue to be incented to maximize yield. 3. Mosaic executing well against strategic priorities to create shareholder value.
Slide 4: Volume First, Then Price and Margin As Expected: Phosphates
Volume First, Then Price and Margin As Expected: Market Conditions Tightened • Seasonal price weakness shorter and less pronounced. • Well positioned into Q3. • Expect 2014 shipments to be at high end of 65-66 million tonnes. * Excluding impact of CF phosphate acquisition accounting. See reconciliat
Slide 5: Volume First, Then Price and Margin As Expected: Potash
Expect producer inventories to decline further in H2 2014 Volume First, Then Price and Margin Potash • As expected, volume momentum came first , pricing followed. • Good demand at current $390/short ton warehouse price. • On track to achieve 2014 shipments of 57-58 million tonnes Source: Mosaic
Slide 6: Second Quarter Financial Highlights
Second Quarter Financial Highlights $0.64 diluted earnings per share Includes $0.06 negative impact of notable items $796 million in cash from operations $2.4 billion $403 million $206 $213 Operating Earnings $1,672 $762 Net Sales Phosphates Potash
Slide 7: Strategic Accomplishments
Strategic Accomplishments Potash expansions continue to be on time and on budget. Received Brazil antitrust clearance for ADM acquisition. Made significant progress on CF Industries phosphates integration: High confidence in announced $40-50 million in annual pre-tax synergies Executing well on Micr
Slide 8: Financial Results Review
Financial Results Review
Slide 9: Phosphates Segment Highlights
Phosphates Segment Highlights $ In millions, except DAP price Q2 2014 Q1 2014 Q2 2013 Net sales $1,672 $1,254 $1,646 Gross Margin $284 $207 $279 Percent of net sales 17% 17% 17% Operating earnings $206 $138 $191 Sales volumes 3.4 2.7 2.9 NA production volume (a) 2.5 2.0 2.1 Finished product operatin
Slide 10: Potash Segment Highlights
Potash Segment Highlights $ In millions, except MOP price Q2 2014 Q1 2014 Q2 2013 Net sales $762 $733 $974 Gross Margin $250 $212 $389 Percent of net sales 33% 29% 40% Operating earnings $213 $166 $346 Sales volumes 2.5 2.4 2.5 Production volume 2.0 1.9 2.2 Production operating rate 76% 70% 81% Avg
Slide 11: Capital and Balance Sheet Update
Capital and Balance Sheet Update A balanced approach to capital allocation *June – June 2014. **Includes full 51.6 million share repurchase, and assumes dividends of $1/share annually. Total: $8.5 Billion 16% 14% 32% 38% Capital Allocation: 2 Year Summary* Maintenance Organic Growth Investment Commi
Slide 12: Current Capital Resources
Current Capital Resources Targeted Leverage of 1.5 to 2.0 times $ in millions Available Resources $ in millions July 30 completed $2.4 billion share repurchase commitment; $600 million in remaining share repurchase authorization Annual dividend of $1 / share Adjusted Debt $ 3,636 5 year average EBIT
Slide 13: Financial Guidance Summary: Phosphates and Potash 2014
Financial Guidance Summary Phosphates Guidance – 2014 Potash Guidance – 2014 Q3 Sales volume 3.3 – 3.6 million tonnes Q3 DAP selling price $440 - $470 per tonne Q3 Gross margin rate in the mid to high teens Q3 Operating rate approaching 90 percent Q3 Sales volume 1.8 – 2.0 million tonnes Q3 MOP sell
Slide 14: Financial Guidance Summary: Corporate Guidance 2014
Financial Guidance Summary Corporate Guidance – 2014 Total SG&A - $390 - $410 million Capital Expenditures and Equity Investments - $1.0 - $1.2 billion Effective Tax Rate - Mid to high 20 percent range
Slide 15: Near Term Outlook
Near Term Outlook Constructive P&K fundamentals Factors to watch: India monsoon China phosphate exports Geopolitical conflicts Logistical problems Near term soft commodity prices
Slide 16: Helping the World Grow the Food it Needs
Helping the World Grow the Food it Needs
Slide 17: Raw Material Cost Detail
Q2 2014 Percent 17 Ammonia ($/MT) Realized in COGS $473 Average Purchase Price $553 Sulfur ($/LT) Realized in COGS $128 Average Purchase Price $146 Phosphate rock (realized in COGS) ('000 metric tonnes) US mined rock 4,159 92% Purchased Miski Mayo rock 6% Other purchased rock 2% Total 4,522 100% Ave
Slide 18: Phosphate Raw Material Trends: Ammonia and Sulfur
Phosphate Raw Material Trends Ammonia Sulfur ($/tonne) ($/tonne) 1. Market ammonia prices are average prices based upon Tampa C&F as reported by Fertecon 2. Market sulfur prices are average prices based upon Tampa C&F as reported by Green Markets 3. Realized raw material costs include: ~$20/tonne of
Slide 19: Earnings Sensitivity to Key Drivers
(a) These factors do not change in isolation; actual results could vary from the above estimates (b) Assumes no change to KMAG pricing 2014 Q2 Actual Change 2014 Q2 Margin % Actual % Impact on Segment Margin Pre-Tax Impact EPS Impact 19 Marketing MOP Price ($/tonne) (b) $267 $50 33% 16% $125 $0.24 P
Slide 20: CF phosphate acquisition accounting impact reconciliation
CF phosphate acquisition accounting impact Q2 2014 $ in millions Mosaic CF Mosaic (Excluding CF) Sales 1,672 $ $ 1,474 $ COGS 1,388 $ $ 1,186 $ Gross Margin $ (4) $ $ Gross Margin % 17% 20% CF phosphate acquisition accounting impact reconciliation
Slide 21: EBITDA Reconciliation
EBITDA Reconciliation Est. 16* Est. 15* Est. 14* CY 13 CY 12 (1) EBITDA is earnings before interest, taxes, depreciation and amortization. (1) US$ Millions Net earnings 1,063 $ 1,852 $ + Interest (income) expense, net (20) + Income tax expense + Depreciation, depletion & amortization EBITDA 2,688 $