Commodities & Metals

Mosaic Earnings Solid, Volume Guidance Softens

Paul Ausick

Published: May 4, 2016 7:55 am

Last Updated: January 13, 2020 9:54 am

Mosaic Co. (NYSE: MOS) reported first-quarter 2016 results before markets opened Wednesday. The fertilizer maker reported diluted earnings per share (EPS) of $0.73 on revenues of $1.7 billion. In the same period a year ago, Mosaic reported EPS of $0.70 on revenue of $2.1 billion. First-quarter results also compare to a consensus estimate for EPS of $0.14 and revenues of $1.56 billion.

EPS for the quarter includes $0.59 in positive impact: a gain of $0.21 on currency exchange rates, a $0.13 unrealized gain on derivatives, a gain of $0.18 on discrete tax items and a gain of $0.07 related to an insurance settlement. Excluding these items, EPS totaled $0.14. In the year-ago quarter, Mosaic reported one-time items of $0.10 per share.

Cash flow from operations in the first quarter totaled $266 million, compared to $729 million in the prior year. Capital expenditures plus investments totaled $274 million. Mosaic’s total cash and cash equivalents totaled $1.1 billion and long-term debt totaled $3.8 billion as of March 31, 2016.

Mosaic lowered its full-year guidance even though the company said it expects improved profitability in the second half of the year, driven by lower raw material costs and accelerated shipment volumes in both phosphate and potash boosting operating rates and margins.

The company guided second-quarter phosphate sales volumes in a range of 2.3 million to 2.6 million metric tons (tonnes) in the second quarter, compared with 2.8 million tonnes sold a year ago. The realized price is forecast at $335 to $355 a tonne and gross margin is forecast at around 10%. Phosphate volumes for the full year are forecast at 9.00 million to 9.75 million tonnes.

Second-quarter potash sales volumes are now forecast at 1.9 million to 2.2 million tonnes, down from 2.3 million tonnes a year ago. Mosaic forecasts a realized price of $180 to $200 per tonne and a gross margin in the mid to high teens. For the full year, the company forecast a sales volume of 7.5 million to 8.0 million tonnes.

Shares closed at $27.51 on Tuesday and were inactive in premarket trading Wednesday morning. The stock’s 52-week range is $22.02 to $47.68. The consensus price target was $28.02 before the results were announced.