Mosaic Company (the) · NYSE:MOS
Mosaic Company (the) — The Mosaic Company — Investor Day (March 2019)
112 slides from Mosaic Company (the)'s investor day presentation, Mar 28, 2019
Slide 1: Mosaic Analyst Day 2019
Vision Performance Results Mosaic Analyst Day 2019 Joc O’Rourke President and CEO
Slide 2: Forward Looking Statements
Forward Looking Statements 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 the anticipated benefits and synergies of our acquisition of the global phosp
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures, including EBITDA and adjusted EBITDA. For important information and quantitative reconciliation of the non-GAAP measures we present, see “Non-GAAP Financial Measures” in the appendix to this presentation. We
Slide 4: Vision Performance Results
Vision Performance Results Mosaic Analyst Day 2019 Joc O’Rourke, Clint Freeland and Walt Precourt 1
Slide 5: Mosaic today and looking to the future
• Mosaic today – our mission, vision, strategy and results • Looking to the future 2
Slide 6: We help the world grow the food it needs
WeWe help helpthethe world world grow thethe grow food it food it needs needs 3
Slide 7: High Quality Asset Portfolio
High Quality Asset Portfolio Largest global finished phosphate and potash producer #1 Phosphate capacity of 16 million tonnes #4 Potash capacity of 11 million tonnes #1 Premium fertilizer producer Distribution assets in key markets Global potash sales through Canpotex Phosphate Production Potash Pro
Slide 8: Focused on The Americas
Focused on The Americas Home base in North America: 74% of 2017 North American phosphate production In a 10 million tonnes phosphate market: MicroEssentials sales of 1.6 million tonnes Total phosphate fertilizer sales of 4.5 million tonnes 39% of 2017 North America MOP production Leading position in
Slide 9: Our Strategy: Win and Grow
Our Strategy: Win and Grow We are responsible, innovative, collaborative and driven WIN GROW in our core businesses in new ways « Develop, engage, empower our people « Grow and strengthen our business « Create value for our stakeholders
Slide 10: Our Strategy: Win in Our Core Businesses
Our Strategy: Win in Our Core Businesses Competitiveness • Actively manage the asset portfolio • Right-size the cost structure • Strengthen the balance sheet 7
Slide 11: Phosphates: Increasing Our Competitiveness
Phosphates: Increasing Our Competitiveness $/Tonne $/Tonne U.S. Mined Rock Costs(1) Conversion Costs(2) 45 100 40 75 35 50 30 25 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 Cash Production Costs Cash Conversion Costs (1) U.S. Mined Rock Costs are at the mine, and exclude transportation to the
Slide 12: Potash: Increasing Our Competitiveness
Potash: Increasing Our Competitiveness $/Tonne 140 120 100 80 60 40 20 0 2013 2014 2015 2016 2017 2018 MOP Cash Production Costs* Brine Cash Costs *MOP cash production costs are reflective of actual costs during the quarter, excluding CRT and realized mark-to-market gains and losses. These costs are
Slide 13: Mosaic: Visible Cost Controls
Mosaic: Visible Cost Controls $/Tonne Selling, General & Administrative Expenses 20 18 16 14 12 Without Plant City idling 10 8 2013 2014 2015 2016 2017 2018 Tonnes do not include the intra-segment volume eliminations, which are negative impacting SG&A/tonne metric starting in 2018 as a result of the
Slide 14: Esterhazy: Mosaic's Premier Potash Mine
Esterhazy: Mosaic’s Premier Potash Mine K2 Primary Mining Stops K1 Primary K3-K2 Mining Stops Belt/North Q4 Hoist/Shaft 2023 Operating Operational Permit Q1 2021 K3 Fully Dec Operational K3-K1 Belt Q3 First 4-Rotor 2018 Operational 2018 Operational Dec 2023 Q4 Q3 2020 2019 2018 2019 2020 2021 2022 2
Slide 15: Our Strategy: Grow Value
Our Strategy: Grow Value Growing Margin with Million tonnes MicroEssentials Sales Volumes* 3.0 2.0 1.0 0.0 2014 2015 2016 2017 2018 *Includes intercompany sales Brazil Other Sales 12
Slide 16: Our Strategy: Grow Value
Our Strategy: Grow Value Mosaic “ay Fertilizantes 13
Slide 17: Logistically Advantaged to Key Areas in Brazil
Logistically Advantaged to Key Areas in Brazil • Exposure to the Cerrado region • Just-in-time deliveries • Long-term relationship with customers • Integrated logistics 14
Slide 18: Mosaic Fertilizantes Transformation Progress
Mosaic Fertilizantes Transformation Progress $ in millions Cumulative Synergy Capture By Quarter 2018-2019 300 $3 $14M 250 $6M 200 $10M $29 150 $275 $7M $26 100 $22M $158 $2 50 $23 $102 $34 $47 $16 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 -50 Net Synergies Cost to Achieve 15
Slide 19: Performance Drives Results
Performance Drives Results Transformations are delivering value Costs are down; productivity is up New production and shipping records Reached record premium product sales Exceeded Brazil synergy targets Reached major K3 milestones Achieved 2020 leverage targets in 2018 16
Slide 20: Capital Allocation Priorities
Capital Allocation Priorities 17
Slide 21: Successful Capital Allocation Record
Successful Capital Allocation Record • Avoided over $1 billion of capital spending and increased rock reserves • Further consolidated global market • 50% increase to Brazil distribution capacity • Enhanced position in one of fastest growing regions in the world • Eliminates brine inflow costs and ri
Slide 22: Looking to the Future
Looking to the Future A highly resilient, profitable and responsible company that is focused on growing value for the long term 19
Slide 23: Continue to improve competitiveness and profitability of our core businesses
Continue to improve competitiveness and profitability of our core businesses 20
Slide 24: New Avenues for Growth
New Avenues for Growth Crop Nutrient Focus Potential Opportunities Improved Emerging nutrient Soil health agricultural delivery Potash mechanisms technologies N, P & K Phosphate Emerging operational Complementary related partnerships, adjacencies technologies mergers and acquisitions 21
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Slide 26: Mosaic's Financial Strategy
Mosaic’s Financial Strategy: Supporting Our Strategy and Vision 23
Slide 27: Financial Strategy
Financial Strategy A Balanced Approach Strengthen the Support the Return to Business Strategy Shareholders 24
Slide 28: Strengthen the Business: Balance Sheet
Strengthen the Business: Balance Sheet Financial Targets Maintain Investment Leverage targets based on Grade Ratings trough EBITDA: Cash: • Previous trough prices Up to $1 billion • Current business model Cash to fund seasonal working Total Liquidity: capital and enhance flexibility Up to $3 billion
Slide 29: Supporting Our Strategic Initiatives
Supporting Our Strategic Initiatives EV EBITDA $ in millions Enterprise Value and EBITDA $ in millions 40,000 4,000 Enterprise Value EBITDA 35,000 3,500 30,000 Announced acquisition 3,000 of ADM Brazil distribution 25,000 04/15/2014 2,500 20,000 2,000 15,000 1,500 Announced acquisition of CF Phospha
Slide 30: Strengthen the Business: Asset Portfolio
Strengthen the Business: Asset Portfolio Safety, reliability, environmental Sustaining Capital: $700 - $750 million compliance and competitiveness of current assets ensures reliability and safety K3 mitigates brine inflow risk, lowers Prudently prepare for the cost of production future Mine extensio
Slide 31: Returning Capital to Shareholders
Returning Capital to Shareholders Dividend Policy: Share Repurchases: • Affordable at the trough • A tool to return excess capital • At 20 cents per share • Threshold for capital allocation annually, there is additional decisions room to revalue over time Mosaic is committed to prudently managing ca
Slide 32: Strategy and Growth Team
Strategy and Growth Team 29
Slide 33: Strategy and Growth Team
Strategy and Growth Team • Emerging trends and impact • Prioritize opportunities • Agile and effective strategy GROW VALUE 30
Slide 34: Areas of Responsibility
Areas of Responsibility Strategic Business Planning and Development Analysis Strategy and Growth Team Operational Ag Technology Technology and Innovation and Innovation 31
Slide 35: Innovation
Innovation Vision. Execution. Value. 32
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Slide 37: Phosphates
Phosphates Bruce Bodine 34
Slide 38: Phosphates Asset Base
Phosphates Asset Base Phosphates Business Unit • Maintained low cost position • Expanded reserve base • Avoided over $1 billion of capital spending 35
Slide 39: Strategic Moves: Maintaining Cost Position
Strategic Moves: Maintaining Cost Position… $/Tonne U.S. Mined Rock Costs 45 40 35 30 2011 2012 2013 2014 2015 2016 2017 2018 U.S. Mined Rock Costs are at the mine, and exclude transportation to the chemical plant 36
Slide 40: While Expanding Reserve Base
…While Expanding Reserve Base… Phosphates Reserve Tonnes* Million tonnes 700 600 Planned Since 2015 we have permitted 500 over 200 million tonnes of 400 300 Active reserves 200 100 0 2011 2014 2018 *Reserves as disclosed in the Company’s 10Ks 37
Slide 41: And Avoided Over $1 Billion of Capital Spending
…And Avoided Over $1 Billion of Capital Spending 2010 2014 2019 • Ona mine planned • CF Acquisition • Acquired Vale’s stake in for 2019 ($1.0 billion) • Ona plant cancelled Miski Mayo • DeSoto mine planned ($0.5 billion) • South Pasture mine idled for 2020 ($1.0 billion) • DeSoto mine deferred Proje
Slide 42: Rock Strategy: What's Next?
Rock Strategy: What’s Next? POLK • South Fort Meade Extension Mine site • South Pasture Restart Timing Mosaic holdings Permitted and active • DeSoto Mine Development • Pioneer Reserve Development • Miski Mayo Optimization 39
Slide 43: Phosphates: Operating Costs
Phosphates: Operating Costs $/tonne Cash Conversion Costs 100 95 2015 Full Production Costs 90 85 2018 80 2019- 75 2021 70 65 60 55 40 45 50 55 60 65 70 size of bubble = production volume Direct Cash Costs Phosphate cash conversion costs are reflective of actual costs, excluding realized mark-to-mar
Slide 44: Phosphates: Growing Margin with MicroEssentials
Phosphates: Growing Margin MicroEssentials with MicroEssentials® Capacity: 3.5 million tonnes Million MicroEssentials Sales Volumes* Debottlenecking Tonnes potential: 3.0 0.5 million tonnes 2.0 Total before new investment: 1.0 4.0 million tonnes 0.0 2014 2015 2016 2017 2018 Cost per tonne of * Inclu
Slide 45: Transformation: 2018 Achievements
Transformation: 2018 Achievements Record safety levels reached Highest P2O5 operating rate since 2011 5 consecutive quarters of concentrate production operating factor increases >15 miles pumping distance achieved at Four Corners 42
Slide 46: Transformation: Technological Enablement
Transformation: Technological Enablement Remote mine pit operations center User-centric agile design Automated process control Advanced and predictive analytics Integrated remote operations centers 43
Slide 47: 2021 Targets
2021 Targets Phosphates: ($ in millions) Cash costs of mined rock: $39 / tonne1 Estimated 2019 2020 2021 capital spending Cash costs of conversion: $56 / tonne2 Sustaining 400 400 350 Specialty Products: Mine Expansions 130 60 50 Sales of MicroEssentials: 3.7 million tonnes Total 530 460 400 Average
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Slide 49: Potash
Potash Presenter:Swager Karen Date: 46
Slide 50: Potash Business Unit Map
Map Slide Potash Business Unit 47
Slide 51: Cost Reduction and Asset Optimization
Cost Reduction and Asset Optimization $/Tonne 140 2014 – Carlsbad Mine transitioned to K-Mag production only 120 – Hersey Mine sold 100 2018 – Commissioned first hoist at Esterhazy K3 80 60 40 20 0 2013 2014 2015 2016 2017 2018 MOP Cash Production Costs* Brine Cash Costs *MOP cash production costs a
Slide 52: Production Costs
2018 Cost Profile $/Tonne MOP Production Costs by Mine: 2018 250 200 Enterprise Production Costs Belle Plaine 150 Colonsay 100 Esterhazy with brine Esterhazy 50 less brine 0 50 60 70 80 90 100 110 120 size of bubble = production volume Cash Costs 49
Slide 53: Where We Are Going
Where We Are Going Esterhazy Path to K3 Zero Brine Milestone Low Cost Producer Positioned to deliver strong Business results in any market Transformation 50
Slide 54: Automation: Innovation in Action
Automation: Innovation in Action Asset Safety Utilization Highly Operational Trained Productivity Reliability Workforce 51
Slide 55: Esterhazy K3 Spend and Impact
Esterhazy K3 Spend and Impact Gross Capital Brine Inflow Tax Net Cash Capital Offsets Offset Benefits Outlay Outlay $2.9B $~550M $~780M $~630M = $~940M Project Overview Complete NPV IRR • Development of 19 million ore tonne mine Project • Over-land conveyance to K1 and K2 mills • 2023 $0.8 - $1.2 bi
Slide 56: K3 Acceleration
K3 Acceleration Million $ in Cash Cost of tonnes Transition to Mining K3 millions Brine Management 18 150 16 14 12 100 10 8 6 50 4 2 0 0 2018 2019 2020 2021 2022 2023 2024 2025 2018 2019 2020 2021 2022 2023 2024 2025 K1/K2 Ore K3 Ore K3 Acceleration Prior Spend • K3 is being accelerated and is now e
Slide 57: 2024 Forecast
2024 Forecast Production costs/tonne $300 $250 $200 2013 $150 2018 $100 2024 $50 $- $- $20 $40 $60 $80 $100 $120 $140 $160 $180 MOP cash costs/tonne – including royalties; excluding resource taxes • Projecting to be the lowest cost North American producer • 1st quartile or low 2nd quartile globally
Slide 58: 2021 Targets
2021 Targets ($ in millions) Estimated capital 2019 2020 2021 spending Cash production costs: $62 / tonne Sustaining 180 160 160 K3 development 300 230 190 Cash brine Approved opportunity 20 0 0 management costs: $85 million Total 500 390 350 55
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Slide 60: Mosaic Fertilizantes
Mosaic Fertilizantes Rick McLellan Presenter: Date: 57
Slide 61: Mosaic Fertilizantes
Mosaic Fertilizantes • Attractive Brazil market • Competitive advantages • High quality, long-life assets • Transformation success • Strategy and 2021 targets 58
Slide 62: Large, Growing Agricultural Market
INDEX 1976/77 = 100 0 100 200 300 400 500 600 INDEX 1976/77 1977/78 1978/79 1979/80 1980/81 INDEX: 1976/77 = 100 1981/82 1982/83 1983/84 1984/85 1985/86 1986/87 1987/88 1988/89 Source: CONAB, IBGE – Prepared by: MB Agro 1989/90 1990/91 1991/92 1992/93 1993/94 1994/95 1995/96 Production 1996/97 1997/
Slide 63: Strong Fertilizer Demand Driven by Naturally Poor Soil Fertility
Strong Fertilizer Demand Driven by Naturally Poor Soil Fertility The majority of Brazilian soils are poor in terms of fertility Soil fertility Very low It is necessary to build Low Medium the fertility Medium to high High High yields require more fertilizer Source: IBGE Prepared by MBAgro 60
Slide 64: Brazilian Fertilizer Market
Brazilian Fertilizer Market 40 Historical Brazilian Fertilizer Demand 35.8 35 Million tonnes 34.1 34.4 32.2 30.7 30.2 29.3 30 28.3 25 24.6 24.5 22.8 22.8 22.4 22.4 20.2 21.0 20 19.1 16.4 17.1 14.7 15 13.8 13.7 11.9 12.2 5.26% 10.5 10.8 CAGR 9.3 10 8.2 8.5 5 0 1990 1992 1994 1996 1998 2000 2002 2004
Slide 65: Brazil is Attractive to Mosaic
Brazil is Attractive to Mosaic • Fast growing market • Excellent climate for agriculture • Poor soils require crop nutrients • Diverse agricultural economy • Product demand aligned with Mosaic’s focus 62
Slide 66: Acquired Assets
Acquired Assets Taquari-Vassouras Potash Mine KCL – 0.5 Cajati Mining and Chemical Complex Phosphate concentrate – 0.6 Uberaba Chemical Complex Sulfuric acid – 0.7 Sulfuric acid – 2.6 Phosphoric acid – 0.2 Phosphoric acid – 0.9 DCP– 0.6 SSP/TSP GR / NPK – 1.2 DCP – 0.1 MAP GR– 0.9 Tapira Mining Comp
Slide 67: Mosaic Fertilizantes Overview
Mosaic Mosaic Brazil Combined footprint Fertilizantes Overview The combination of the two businesses created one of the largest fertilizer companies in Brazil 64
Slide 68: Competitive Position
Competitive Position • Production assets strategically located to provide freight advantages • Complementary relationship of production and owned distribution business • Dedicated rail and storage facilities • Logistical advantage to key growing areas Mosaic’s (Fospar) port at Paranagua 65
Slide 69: Transformation Progress
Transformation Progress $ in millions 300 Cumulative Synergy Capture By Quarter 2018-2019 250 200 29 150 275 26 100 158 50 23 102 34 47 16 0 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Net Synergies Cost to Achieve *Not considering the $21 million of benefit from executing our bu
Slide 70: Transformation in Rock Mining
Transformation in Rock Mining Tapira Mine 2018 Successes R$/Tonne 2018 Cash Cost of Rock in BRL 400 350 300 250 200 150 100 50 0 1Q 2018 2Q 2018 3Q 2018 4Q 2018 2021 Target 2021 Target Total phosphates Tapira R$ 320 USD $ 83 Tapira, our largest mine, decreased mining truck and loader fleet by 18%, d
Slide 71: Transformation in Chemical Conversion
Transformation in Chemical Conversion Uberaba 2018 Successes 2018 Cash Cost of R$/Tonne Conversion in BRL 400 350 300 250 200 150 100 50 0 1Q 2018 2Q 2018 3Q 2018 4Q 2018 2021 Target 2021 Target Total phosphates Uberaba R$ 275 USD $ 72 Uberaba had best annual results ever in sulfuric acid production
Slide 72: Mosaic Fertilizantes Adjusted EBITDA Growth
Mosaic Fertilizantes Adjusted EBITDA* Growth $ in millions Year to Date Results 450 Earnings are seasonal, with year-over-year growth reflecting transformational success. 400 350 300 Transformation Success: 250 Expect to achieve net annual 200 synergy target of $275 million 150 one year early, in 20
Slide 73: What's Next: Focus Areas
What’s Next: Focus Areas • Continuing transformation initiatives • Focus on improving rock costs and ramping up at Patrocinio • Garner second round of supply chain efficiencies • Continue to grow premium and differentiated products • Growing co-product sales: gypsum, RTL, excess sulfuric acid All wh
Slide 74: 2021 Targets
2021 Targets (US$ in millions) Cash costs of rock: Estimated capital 2019 2020 2021 R$320 / tonne spending US$83 / tonne Sustaining 135 165 135 Approved Cash costs of 30 20 5 Opportunity conversion: R$275 / tonne Total 165 185 140 US$71 / tonne Potential incremental capital for dam regulatory compli
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Slide 76: Markets
Markets Corrine Ricard and Andy Jung Presenter: Date: 73
Slide 77: Overview
Overview • Potash and phosphate markets appear balanced through 2021 • Phosphates experiencing seasonal pressures • Expect normal seasonal recovery • China remains wild card for phosphates supply and demand 74
Slide 78: Balanced Market in 2019
Balanced Market in 2019 (Assuming a modest China export decline) 2019 Expected Phosphate Supply and Demand Changes Demand Growth -0.84 -0.838374811 Nutrien Closures -0.43 -0.429 OCP Ramp 0.75 MWSPC Ramp 0.9 Other Changes -0.02 China High Exports 0 China Medium Exports -0.79 -0.79145 China Low Export
Slide 79: Seasonal Weakness
Seasonal Weakness Benchmark DAP Stripping Margin $/Tonne Calculated from Published Weekly Spot Prices 350 325 300 275 250 225 200 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-19 Source: Argus, Mosaic 76
Slide 80: Phosphate Market Remains Constructive Post-2019
Phosphate Market Remains Constructive Post-2019 Mil Tonnes Global Phosphate Capacity* vs. Shipments DAP/MAP/NPS/TSP Cumulative Change 2018-23 8.0 Source: IFA, CRU and Mosaic 7.0 *Product tonne equivalent of net new phosacid capacity 6.0 5.0 4.0 3.0 2.0 1.0 0.0 2018E 2019F 2020F 2021F 2022F 2023F Net
Slide 81: China Production Down; Offset by Lower Demand
China Production Down; Offset by Lower Demand China DAP/MAP/NPS/TSP 2014 2015 2016 2017 2018 2019 (million tonnes) scenario Production 28.1 31.7 30.2 27.3 25.4 25.4 Domestic demand 21.8 19.5 18.3 17.5 15.9 15.6 Exports 7.8 11.9 9.5 10.1 11.1 9.8 Implied inventory change* -1.6 0.3 2.3 -0.3 -1.6 0.0 *
Slide 82: The Potash Market Remains Constructive
The Potash Market Remains Constructive 2019 Expected Potash Supply and Demand Changes Demand Growth -0.770126555 -0.77 Sigmundshall Closure -0.45 Changes/Outages -0.68 -0.682008 Bethune Ramp 0.3 Usolskiy/Volgakaliy Ramp 0.74 0.7447 Other Changes 0.53 -2.00 -1.75 -1.50 -1.25 -1.00 -0.75 -0.50 -0.25 0
Slide 83: Potash Market Remains Constructive Post-2019
Potash Market Remains Constructive Post-2019 Global Potash Capacity vs. Shipments Million tonnes KCl Cumulative Change 2018-23 14 Source: IFA, CRU and Mosaic 12 10 8 6 4 2 0 2018E 2019F 2020F 2021F 2022F 2023F Net New Capacity Likely Low CRU 80
Slide 84: Financial Implications
Financial Implications Clint Freeland Presenter: Date: 81
Slide 85: Review of 2021 Operating Targets
Review of 2021 Operating Targets Phosphates: Specialty Products: Potash: Cash costs of production: Cash costs of mined rock: Sales of MicroEssentials: $62 / tonne $39 / tonne 3.7 million tonnes Cash brine management Cash costs of conversion: Average margin premium: costs: $56 / tonne $40 - $50 / ton
Slide 86: Growing Adjusted EBITDA
Growing Adjusted EBITDA* $ in millions Adjusted EBITDA 3,500 Sensitivity to MOP price 3,000 +/-$10 / tonne = +/- $70 to $80 million 2,500 EBITDA 2,000 1,500 Sensitivity to Stripping Margin 1,000 +/-$10 / tonne = +/- $90 to $95 million 500 EBITDA 0 2017 2018 2019 2021F Actual Guidance No Market Chang
Slide 87: Capital Expenditures
Capital Expenditures 2019 2020 2021 Sustaining capital ~$720 million ~$730 million ~700 million Esterhazy K3 $300 million $230 million $190 million Florida mine life extension $130 million $65 million $50 million Opportunity investments $50 million $50 million $50 million Total capital expenditures
Slide 88: Allocable Cash Estimate
Allocable Cash Estimate Allocation of Adjusted EBITDA 2019 - 2021 With an estimated $8 billion in Cash taxes Adjusted EBITDA* over the next Cash interest three years, we expect to generate over $3 billion in Allocable allocable cash. cash The deployment of this cash is Sustaining capital expected to
Slide 89: Financial Management Through the Cycle
Financial Management Through the Cycle $ in millions EBITDA 4,000 3,500 3,000 2,500 Net Net Debt/EBITDA Debt*/EBITDA 2,000 ~1.2 ~1.3 times times Net Net Debt/EBITDA Debt*/EBITDA ~5.0 ~5.5 times times 1,500 1,000 500 EBITDA Source: Bloomberg 0 2009 2011 2016 2017 2018 Using current net debt of $4.8 b
Slide 90: Strengthening the Foundation
Strengthening the Foundation Leverage and dividend policies developed to retain strength and flexibility in all parts of the cycle, with trough adjusted EBITDA* estimated at $1.5 - $1.6 billion Current Targets Long-term debt $4.5 billion “BBB/Baa” metrics through cycle: Lease obligations $0.6 billio
Slide 91: Allocating Available Cash
Allocating Available Cash Investments Returns to Returns exceed cost Shareholders of equity Components of returns: Competition Return hurdles adjusted • Stable for risk: For capital • Variable • Country Risk Mindful of the cycle • Technology Risk • Market Risk 88
Slide 92: Relative Value
Relative Value March 2017 Share Price March 2017 EBITDA (1) $29 1.3 billion 2016 year end long-term debt: $3.8 billion Mosaic Fertilizantes announced, not closed March 2019 Share Price $28 March 2019 EBITDA (1) $2.3 billion ? 2018 year end Long-term debt: $4.5 billion Mosaic Fertilizantes generated
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Slide 94: Assumptions and Reconciliations
Assumptions and Reconciliations 91
Slide 95: Adjusted EBITDA Base Assumptions in 2021
Adjusted EBITDA Base Assumptions in 2021 The assumptions below, combined with the 2021 business unit financial targets, form the base of the adjusted EBITDA forecast and allocable cash estimate PHOSPHATES 2021f POTASH 2021f DAP Stripping Margin* ($/tonne) ~$300 MOP - Average ($/tonne) ~$180 US Produ
Slide 96: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures Consolidated Earnings (in millions) 2018 2017 Consolidated net earnings attributable to Mosaic $470 $(107) Less: Consolidated net interest expense, net (166) (138) Plus: Consolidated depreciation, depletion and amortization 884 665 Plus: Consolidated provision for
Slide 97: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2017 Q1 2017 Q2 2017 Q3 2017 Q4 Mosaic Fertilizantes Pro Forma (in millions) YTD YTD YTD YTD Operating earnings $(21) $(49) $(37) $(35) Plus: Depreciation, depletion and amortization 35 69 103 137 Plus: Foreign exchange gain (loss) 2 (21) (4) (27) Plus: Other inco
Slide 98: Reconciliation of Non-GAAP Measures
Reconciliation of Non-GAAP Measures 2018 Q1 2018 Q2 2018 Q3 2018 Q4 Mosaic Fertilizantes Earnings (in millions) YTD YTD YTD YTD Operating earnings $9 $23 $144 $227 Plus: Depreciation, depletion and amortization 37 74 110 158 Plus: Foreign exchange gain (loss) (5) (62) (83) (85) Plus: Other income (e
Slide 99: Markets: supplemental data
Markets supplemental data 96
Slide 100: China Added To Market Length in Q4 2018
China Added To Market Length in Q4 2018 1000 Tonnes Mil Tonnes China Phosphate Exports China DAP/MAP/TSP Exports 12 4000 Source: China Customs Source: China Customs 3500 10 3000 8 2500 6 2000 1500 4 1000 2 500 0 0 10 11 12 13 14 15 16 17 18 Q1 Q2 Q3 Q4 DAP MAP TSP 2016 2017 2018 97
Slide 101: Will China be Satisfied with Flat Food Production?
Will China be Satisfied with Flat Food Production? Mil Tonnes China Phosphate Shipments & DAP/MAP/NPS/TSP Mil Tonnes G&O Grain and Oilseed Production 25 650 Source: CRU, Mosaic, USDA 20 600 15 550 10 500 5 450 0 400 05 06 07 08 09 10 11 12 13 14 15 16 17 18E 98
Slide 102: Phosphate Supply & Demand Changes: 2019-20
Phosphate Supply & Demand Changes: 2019-20 Potential Phosphate Supply Potential Phosphate Supply and Demand Changes and Demand Changes (cont’d) Mil Tonnes DAP/MAP/NPS/TSP 2019 2020 MWSPC Ramp-Up 0.90 0.40 Projected Shipment Changes 0.84 1.54 Nutrien Redwater Closure -0.26 -0.13 Potential Supply Chan
Slide 103: Potash Supply & Demand Changes: 2019-20
Potash Supply & Demand Changes: 2019-20 Potential Potash Supply and Demand Changes Excluding Canpotex Mil Tonnes KCl 2018 2019 2020 Projected Shipment Changes 1.03 0.77 1.56 Percent Change 1.6% 1.1% 2.3% Potential Supply Changes 0.48 0.44 1.64 Producer Inventory Draw (+) or Build (-) 0.25 0.50 0.00
Slide 104: Potash: supplemental data
Potash supplemental data 101
Slide 105: Esterhazy K3 Net Capital Details
Esterhazy K3 Net Capital Details Gross • Two shafts, headframes and hoists Capital $2.9 B • Two overland conveyors Outlay • Mine development, infrastructure & equipment • Site infrastructure • Mine development at K1 and K2 Capital • Miner rebuilds at K1 and K2 Offsets $550 MM • Inflow pipeline and p
Slide 106: Mosaic Fertilizantes: supplemental data
Mosaic Fertilizantes supplemental data 103
Slide 107: What Makes Brazil Attractive to Mosaic
What Makes Brazil Attractive to Mosaic N P2O5 K20 Percent P&K Brazil 4.4 5.0 5.7 71 China 26.1 11.9 9.9 46 U.S.A 11.8 4.2 4.8 43 India 16.7 6.7 2.5 36 Brazil Import vs. Production Import Domestic Import Domestic Import Domestic Source: IFA, ADA 2017 104
Slide 108: Excellent Growing Conditions: Sun + Water
Excellent Growing Conditions: Sun + Water Measures the total annual freshwater withdrawals (municipal, industrial, and agricultural use) expressed as a percentage of total annual freshwater renewable supply. (Water withdrawal / renewable supply) Source: World Resourses Institute Prepared by MBAgro 1
Slide 109: Agricultural Trade Important to GDP
Agricultural Trade Important to GDP (billion US$, WTO data) 1990 -34 19 -47 EU27 2 -7 China South Korea USA -6 Japan Middle East 5 Thailand 2 7 Indonesia Brazil 9 7 Australia Argentina 2017 -4 Russia -5 -57 -105 0,07 EU 28 -68 USA Middle East China Japan 25 -23 76 25 Thailand Indonesia Coreia do Sul
Slide 110: Mosaic Logistics Network: A Competitive Advantage
Mosaic Logistics Network: A Competitive Advantage Production Sites VILA DO CONDE SÃO LUÍS 6 mines MIRITITUBA 4 industrial units 15 blender facilities Ports ~ 8 MM tpy ARATU 14 port terminals 320 vessels/year RONDONÓPOLIS ARAGUARI CATALÃO PATROCÍNIO Rail ~8 MM tpy UBERABA ARAXÁ VITÓRIA ~ 700 trucks/d
Slide 111: Currency
Currency Cost structure Hedging • 88% of all costs are BRL denominated meaning • Derivatives and forward purchase contracts exposed to USD currency fluctuation to mitigate currency risks • Before hedge activities • Based on forecasted cashflow Fx sensitivity Each 0.10 cents Outlook / Risks Distribut
Slide 112: Brazilian Tailings Dams
Brazilian Tailings Dams Height CRI(1) Our Mosaic Fertilizantes operations in Brazil include 11 tailings dams. Mine Site Dam ID Construction Method* (m) (Risk) With the exception of the B1B4 dam at our Araxá mine, all have current certificates of stability issued by external consultants and are in B1