Mosaic Reports Fiscal Year 2009 Third Quarter Results
KEY ITEMS
- The average diammonium phosphate (DAP) selling price was
$413 per tonne and total phosphate sales volumes were 1.1 million tonnes - The average muriate of potash (MOP) selling price was
$565 per tonne and total potash sales volumes were 0.8 million tonnes - Foreign currency transaction gains were
$47.1 million , or$0.07 per share, compared to a gain of$1.5 million a year ago - Net unrealized mark-to-market derivative losses impacted gross margin by
$30.5 million , or$0.05 per share, compared to net unrealized derivative gains of$40.0 million a year ago - An inventory valuation write-down of
$28.3 million , or$0.05 per share, was recorded primarily in the Offshore segment - The Company has increased its phosphate production in the fiscal fourth quarter while maintaining reduced production levels in potash
- Fiscal fourth quarter results are expected to improve from third quarter levels while remaining weak compared to the recent past
Mosaic had net sales in the third quarter of fiscal 2009 of
Mosaic’s gross margin for the third quarter of fiscal 2009 was
“Despite the turmoil in commodity markets, we remain confident that long-term agricultural fundamentals are excellent. This is a self-correcting cycle because demand for crop nutrients can only be deferred for so long,” said
Potash
Net sales in the Potash segment were
Net unrealized mark-to-market derivative losses were
The average third quarter MOP selling price, FOB plant, was
The Potash segment’s total sales volume was 0.8 million tonnes for the third quarter compared to 2.1 million tonnes a year ago. The decline in sales volumes was primarily due to lower customer demand as a result of the factors noted above. Because of slow demand and in order to more effectively manage inventories, Mosaic reduced potash production in the third quarter of fiscal 2009 and will continue to do so until demand improves. In total, Mosaic anticipates a reduction of potash production of approximately 2.0 million tonnes during fiscal 2009. Potash sales volumes in the fourth quarter of fiscal 2009 are expected to be roughly comparable with third quarter levels. Gross margins will continue to be impacted by the effects of significantly lower operating rates on fixed cost absorption and lower volumes.
Phosphates
Net sales in the Phosphates segment were
The average third quarter DAP selling price, FOB plant, was
The Phosphates segment’s total sales volume was 1.1 million tonnes for the third quarter compared to 2.2 million tonnes a year ago. Mosaic reduced third quarter phosphate production in response to a build-up of inventories in crop nutrient distribution channels and a decline in overall demand. Recently, the Company increased production closer to normal levels due to increased demand and sales orders. Phosphate sales volumes in the fourth quarter of fiscal 2009 are expected to be above third quarter levels, but below the prior year level. With DAP selling prices currently in the mid-
Net unrealized mark-to-market derivative gains were
Offshore
The Offshore segment’s net sales totaled
Other
Selling, general, and administrative expenses (SG&A) were
Net interest expense totaled
A foreign currency transaction gain of
Income tax expense was
Total equity earnings in non-consolidated subsidiaries were
Mosaic ended the third quarter with
Year-to-Date
For the nine months ended
Outlook
The global phosphate market appears to have stabilized with a number of customers returning to the market in recent weeks. Potash customers, however, continue to be cautious and the Company expects fourth quarter potash sales to remain weak.
Longer-term, world grain and oilseed use is expected to continue to increase at a faster pace than historical trends resulting from steady population growth, higher per capita incomes and further increases in biofuels production. This will require additional harvested area and steady increases in yields, which can be accomplished through more intensive and balanced crop nutrient use and improved crop genetics. In addition, the combination of strong grain prices and declining crop input costs is keeping farm economics attractive and underpinning strong crop nutrient demand prospects.
About The Mosaic Company
The Mosaic Company is one of the world’s leading producers and marketers of concentrated phosphate and potash crop nutrients. Mosaic is a single source provider of phosphates and potash fertilizers and feed ingredients for the global agriculture industry. More information on the company is available at www.mosaicco.com.
Mosaic will conduct a conference call on
This press 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 future financial and operating results. Such statements are based upon the current beliefs and expectations of The Mosaic Company’s management and are subject to significant risks and uncertainties. These risks and uncertainties include but are not limited to the predictability and volatility of, and customer expectations about, agriculture, fertilizer, raw material, energy and transportation markets that are subject to competitive and other pressures and the effects of the current economic and financial turmoil; the build-up of inventories in the distribution channels for crop nutrients; changes in foreign currency and exchange rates; international trade risks; changes in government policy; changes in environmental and other governmental regulation; adverse weather conditions affecting operations in
Condensed Consolidated Statements of Earnings
(in millions, except per share amounts)
The Mosaic Company (unaudited)
------------------ ----------
Three months ended Nine months ended
February 28 February 29 February 28 February 29
----------- ----------- ----------- -----------
2009 2008 2009 2008
---- ---- ---- ----
Net sales $1,375.5 $2,147.2 $8,704.5 $6,345.9
Cost of goods sold 1,206.9 1,419.3 5,820.1 4,473.1
Lower of cost or
market write-down 28.3 - 321.8 -
---- --- ----- ---
Gross margin 140.3 727.9 2,562.6 1,872.8
Selling, general and
administrative expenses 71.3 81.2 238.1 227.6
Restructuring loss (gain) 0.6 (0.8) 0.6 9.5
Other operating expense 24.7 0.1 49.3 9.1
---- --- ---- ---
Operating earnings 43.7 647.4 2,274.6 1,626.6
Interest expense, net 8.2 24.7 27.1 84.2
Foreign currency
transaction (gain) loss (47.1) (1.5) (166.1) 70.3
Gain on sale of equity
investment - - (673.4) -
Other income (0.2) (26.5) (6.1) (27.7)
---- ----- ---- -----
Earnings from
consolidated companies
before income taxes 82.8 650.7 3,093.1 1,499.8
Provision for income taxes 30.7 159.2 979.6 360.9
---- ----- ----- -----
Earnings from consolidated
companies 52.1 491.5 2,113.5 1,138.9
Equity in net earnings of
nonconsolidated companies 6.0 30.9 94.5 88.2
Minority interests in
net loss (earnings) of
consolidated companies 0.7 (1.6) (4.7) (6.8)
--- ---- ---- ----
Net earnings $58.8 $520.8 $2,203.3 $1,220.3
===== ====== ======== ========
Diluted earnings per share $0.13 $1.17 $4.94 $2.74
===== ===== ===== =====
Diluted weighted
average number of shares
outstanding 445.8 446.1 446.2 445.1
Condensed Consolidated Balance Sheets
(In millions, except share and per share amounts)
The Mosaic Company (unaudited)
------------------ ----------
February 28 May 31
2009 2008
---- ----
Assets
Current assets:
Cash and cash equivalents $2,529.0 $1,960.7
Receivables, net 633.4 1,039.2
Inventories 1,434.7 1,350.9
Deferred income taxes 209.3 256.9
Other current assets 413.2 201.8
----- -----
Total current assets 5,219.6 4,809.5
Property, plant and equipment, net 4,379.9 4,648.0
Investments in nonconsolidated companies 300.5 353.8
Goodwill 1,660.4 1,875.2
Other assets 212.9 133.3
----- -----
Total assets $11,773.3 $11,819.8
========= =========
Liabilities and Stockholders' Equity
Current liabilities:
Short-term debt $90.0 $133.1
Current maturities of long-term debt 29.8 43.3
Accounts payable and accrued liabilities 1,070.2 1,843.0
Accrued income taxes - 131.9
Deferred income taxes 38.8 34.8
---- ----
Total current liabilities 1,228.8 2,186.1
Long-term debt, less current maturities 1,268.1 1,375.0
Deferred income taxes 619.9 516.2
Other noncurrent liabilities 861.2 987.9
Minority interest in consolidated subsidiaries 20.4 23.4
Stockholders' equity:
Preferred stock, $0.01 par value,
15,000,000 shares authorized, none issued and
outstanding as of February 28, 2009 and
May 31, 2008 - -
Common stock, $0.01 par value, 700,000,000
shares authorized:
Class B common stock, none issued and
outstanding as of February 28, 2009
and May 31, 2008 - -
Common stock, 444,403,349 and 443,925,006
shares issued and outstanding as
of February 28, 2009 and May 31, 2008,
respectively 4.4 4.4
Capital in excess of par value 2,476.6 2,450.8
Retained earnings 5,621.6 3,485.4
Accumulated other comprehensive (expense)
income (327.7) 790.6
------ -----
Total stockholders' equity 7,774.9 6,731.2
------- -------
Total liabilities and stockholders' equity $11,773.3 $11,819.8
========= =========
Condensed Consolidated Statements of Cash Flows
(In millions, except share and per share amounts)
The Mosaic Company (unaudited)
------------------ ----------
Three months ended Nine months ended
February February February February
28 29 28 29
2009 2008 2009 2008
------- ------- ------- -------
Cash Flows from Operating
Activities
Net cash (used in)
provided by operating
activities $(11.2) $528.0 $936.8 $1,508.9
Cash Flows from Investing
Activities
Capital expenditures (196.7) (86.6) (606.8) (247.8)
Proceeds from sale of
equity method investment - 24.6 745.7 24.6
Proceeds from sale of
business - 0.4 - 7.9
Restricted cash 3.7 (1.0) (28.6) (1.0)
Other 0.1 5.7 0.4 6.6
--- --- --- ---
Net cash (used in)
provided by investing
activities (192.9) (56.9) 110.7 (209.7)
Cash Flows from Financing
Activities
Payments of short-term debt (116.7) (134.2) (310.0) (411.2)
Proceeds from
issuance of short-term debt 95.1 258.1 267.1 501.0
Payments of long-term debt (3.8) (158.8) (104.9) (796.3)
Proceeds from issuance of
long-term debt - - 0.1 -
Proceeds from stock options
exercised 0.2 11.2 4.3 48.8
Contributions from
Cargill, Inc. - 2.2 - 3.7
Excess tax benefits related to
stock option exercises - 40.2 4.8 40.2
Dividend to minority
shareholder (0.3) (1.6) (2.1) (5.1)
Cash dividends paid (22.2) - (66.6) -
----- --- ----- ---
Net cash (used in)
provided by financing
activities (47.7) 17.1 (207.3) (618.9)
Effect of exchange rate changes
on cash (30.8) 3.8 (271.9) 33.3
----- --- ------ ----
Net change in cash and cash
equivalents (282.6) 492.0 568.3 713.6
Cash and cash equivalents
- beginning of period 2,811.6 642.2 1,960.7 420.6
------- ----- ------- -----
Cash and cash equivalents
- end of period $2,529.0 $1,134.2 $2,529.0 $1,134.2
======== ======== ======== ========
Supplemental Disclosure
of Cash Flow Information:
Cash paid during
the period for:
Interest (net of amount
capitalized) $43.6 $55.6 $91.5 $135.0
Income taxes 155.4 104.8 915.9 201.8
Condensed Consolidated Financial Highlights
(dollars in millions)
The Mosaic Company (unaudited)
------------------ ----------
Three months ended Increase/
February 28 February 29 (Decrease)
----------- ----------- ----------
2009 2008 Amount %
---- ---- ------ ---
Net sales:
Phosphates $552.4 (b) $1,257.8 (b) $(705.4) (56%)
Potash 480.8 547.3 (66.5) (12%)
Offshore 344.7 387.0 (42.3) (11%)
Corporate/Other (a) (2.4) (44.9) 42.5 95%
---- ----- ---- ---
$1,375.5 (b) $2,147.2 (b) $(771.7) (36%)
======== ======== ======= ===
Gross margin:
Phosphates $(63.2) $478.4 $(541.6) (113%)
Potash 206.6 209.1 (2.5) (1%)
Offshore (c) (81.5) 43.2 (124.7) NM
Corporate/Other (a)(c) 78.4 (2.8) 81.2 NM
---- ---- ---- ---
$140.3 $727.9 $(587.6) (81%)
====== ====== ======= ===
Operating earnings (loss):
Phosphates $(123.9) $442.7 $(566.6) (128%)
Potash 186.0 195.9 (9.9) (5%)
Offshore (c) (103.6) 18.1 (121.7) NM
Corporate/Other (a)(c) 85.2 (9.3) 94.5 NM
---- ---- ---- ---
$43.7 $647.4 $(603.7) (93%)
===== ====== ======= ===
Depreciation, depletion
and amortization:
Phosphates $57.1 $46.0 $11.1 24%
Potash 27.1 33.7 (6.6) (20%)
Offshore 3.7 4.6 (0.9) (20%)
Corporate/Other 2.5 2.4 0.1 4%
--- --- --- ---
$90.4 $86.7 $3.7 4%
===== ===== ==== ===
Nine months ended Increase/
February 28 February 29 (Decrease)
----------- ----------- ----------
2009 2008 Amount %
---- ---- ------ ---
Net sales:
Phosphates $4,896.1 (b) $3,671.1 (b) $1,225.0 33%
Potash 2,430.4 1,390.7 1,039.7 75%
Offshore 1,955.1 1,528.8 426.3 28%
Corporate/Other (a) (577.1) (244.7) (332.4) (136%)
------ ------ ------ ----
$8,704.5 (b) $6,345.9 (b) $2,358.6 37%
======== ======== ======== ===
Gross margin:
Phosphates $1,240.7 $1,229.5 $11.2 1%
Potash 1,284.7 510.9 773.8 151%
Offshore (c) 3.9 144.4 (140.5) (97%)
Corporate/Other (a)(c) 33.3 (12.0) 45.3 NM
---- ----- ---- ---
$2,562.6 $1,872.8 $689.8 37%
======== ======== ====== ===
Operating earnings (loss):
Phosphates $1,085.7 $1,099.7 $(14.0) (1%)
Potash 1,211.3 467.3 744.0 159%
Offshore (c) (64.7) 73.9 (138.6) NM
Corporate/Other (a)(c) 42.3 (14.3) 56.6 NM
---- ----- ---- ---
$2,274.6 $1,626.6 $648.0 40%
======== ======== ====== ===
Depreciation, depletion
and amortization:
Phosphates $158.2 $140.7 $17.5 12%
Potash 89.2 92.5 (3.3) (4%)
Offshore 12.5 13.1 (0.6) (5%)
Corporate/Other 7.6 7.1 0.5 7%
--- --- --- ---
$267.5 $253.4 $14.1 6%
====== ====== ===== ===
(a) Includes elimination of intercompany sales.
(b) Includes PhosChem sales for its other members of $1.4 million and
$69.0 million for the three months ended February 28, 2009 and
February 29, 2008, and $614.0 million and $351.1 million for the nine
months ended February 28, 2009 and February 29, 2008, respectively.
PhosChem is a consolidated subsidiary of Mosaic.
(c) The Offshore segment impact of lower of cost or market inventory
write-downs was $32.5 million and $181.8 million for the three and
nine months ended February 28, 2009, respectively; however, the
consolidated impact was $28.3 million and $102.8 million for the
three and nine months ended February 28, 2009, respectively, as some
of the product was purchased from the Phosphates segment. The $4.2
million and $79.0 million intercompany amounts for the three and nine
months ended February 28, 2009, respectively, were eliminated and
included in our Corporate, Eliminations, and Other segment. In
addition, the Corporate, Eliminations and Other segment includes a
$5.8 million lower of cost or market inventory write-down related to
nitrogen products for the nine months ended February 28, 2009.
Key Statistics
The Mosaic Company (unaudited)
------------------ ----------
Three months ended Increase/
February 28 February 29 (Decrease)
----------- ----------- ----------
2009 2008 Amount %
---- ---- ------ ---
Sales volumes
(000 metric tonnes):
Phosphates (a)
Crop Nutrients:
North America 482 979 (497) (51%)
International 500 980 (480) (49%)
Phosphate Feeds 115 249 (134) (54%)
--- --- ---- ---
1,097 2,208 (1,111) (50%)
===== ===== ====== ===
Potash (b)
Crop Nutrients:
North America 201 825 (624) (76%)
International 317 1,028 (711) (69%)
Non agricultural 266 249 17 7%
--- --- --- ---
784 (c) 2,102 (c) (1,318) (63%)
=== ===== ====== ===
Average selling price per
metric tonne:
DAP (d) $413 $487 $(74) (15%)
MOP (d) 565 221 344 156%
K-Mag (d) 354 145 209 144%
Average price for key raw
materials:
Ammonia (metric ton)
(Central Florida) (e) $496 $399 $97 24%
Sulfur (long ton) 228 175 53 30%
Canadian resource taxes and
royalties (f) $78 $82 $(4) (5%)
Nine months ended Increase/
February 28 February 29 (Decrease)
----------- ----------- ----------
2009 2008 Amount %
---- ---- ------ ---
Sales volumes
(000 metric tonnes):
Phosphates (a)
Crop Nutrients:
North America 1,627 2,727 (1,100) (40%)
International 2,378 3,321 (943) (28%)
Phosphate Feeds 415 683 (268) (39%)
--- --- ---- ---
4,420 6,731 (2,311) (34%)
===== ===== ====== ===
Potash (b)
Crop Nutrients:
North America 1,271 2,404 (1,133) (47%)
International 2,328 3,046 (718) (24%)
Non agricultural 804 753 51 7%
--- --- --- ---
4,403 (c) 6,203 (c) (1,800) (29%)
===== ===== ====== ===
Average selling price per
metric tonne:
DAP (d) $886 $435 $451 104%
MOP (d) 518 185 333 180%
K-Mag (d) 309 133 176 132%
Average price for key raw
materials:
Ammonia (metric ton)
(Central Florida) (e) $631 $345 $286 83%
Sulfur (long ton) 483 115 368 320%
Canadian resource taxes and
royalties (f) $390 $153 $237 155%
(a) Phosphates volumes represent dry product tonnes, primarily DAP and
MAP. Excludes tonnes sold by PhosChem for its other members.
(b) Potash volumes exclude tonnes mined under a third party tolling
arrangement.
(c) Includes sales volumes (in thousands of metric tonnes) of 75 tonnes
and 409 tonnes of K-Mag(R) for the three and nine months ended
February 28, 2009, respectively, and 246 tonnes and 600 tonnes
of K-Mag(R) for the three and nine months ended February 29, 2008,
respectively.
(d) FOB plant/mine
(e) Delivered Tampa
(f) Amounts in millions of U.S. dollars
SOURCE The Mosaic Company