PLYMOUTH, Minn., Oct 5 /PRNewswire-FirstCall/ -- The Mosaic Company
(NYSE: MOS) announced today net earnings of $100.6 million, or
$0.23 per diluted share, for the first quarter ended August 31,
2009. These results compare with net earnings of $1.2 billion, or
$2.65 per share, for the first quarter ended August 31, 2008. The
Company maintained a strong financial position, with cash and cash
equivalents of $2.6 billion as of August 31, 2009. KEY ITEMS -- The
average diammonium phosphate (DAP) selling price was $276 per tonne
and total phosphate sales volumes were 2.1 million tonnes -- The
average muriate of potash (MOP) selling price was $382 per tonne
and total potash sales volumes were 0.8 million tonnes -- Cash flow
provided by operating activities was $172.4 million -- Long-term
agricultural fundamentals remain highly attractive Mosaic had net
sales in the first quarter of fiscal 2010 of $1.5 billion, a
decrease of $2.9 billion, or 66%, compared to the same period a
year ago. Mosaic's gross margin for the first quarter of fiscal
2010 was $222.2 million, or 15% of net sales, compared with $1.6
billion, or 38% of net sales, a year ago. First quarter operating
earnings were $134.2 million compared with $1.5 billion a year ago.
Mosaic's first quarter results in fiscal 2010 were impacted by
significant declines in market selling prices for phosphate and
potash sales volumes combined with lower potash selling prices,
compared with the prior year quarter. Phosphate sales volumes in
the first quarter were comparable to levels a year ago. The decline
in potash sales volumes and selling prices continues to be related
to cautious purchasing by customers due to volatile grain and
oilseed prices and the lack of normal contracting activity compared
with a year ago. "Phosphate fundamentals have improved. The potash
market is evolving and we expect strong demand in calendar year
2010 for both nutrients," said Jim Prokopanko, Mosaic's President
and Chief Executive Officer. "Our long-term outlook for crop
nutrients remains positive and we continue to execute our strategic
plans designed to drive strong cash flow and shareholder value."
Phosphates Net sales in the Phosphates segment were $814.4 million
for the first quarter, a decline from $2.6 billion a year ago.
Phosphates' first quarter gross margin was $111.4 million, or 14%
of net sales, compared with $1.0 billion, or 39% of net sales, for
the same period a year ago. Operating earnings were $61.2 million,
a decline from $950.8 million in the same period last year. The
decline in operating earnings was primarily due to the effects of
significantly lower selling prices partially offset by
significantly lower raw material costs for sulfur and ammonia. Net
unrealized mark-to-market derivative gains were $4.6 million in the
first quarter of fiscal 2010 compared with net losses of $74.6
million for the same period a year ago. The average first quarter
DAP selling price, FOB plant, was $276 per tonne, compared to
$1,013 a year ago and $345 per tonne in the fourth quarter of
fiscal 2009. The market DAP selling price began to decline sharply
toward the end of the second quarter of fiscal 2009 before
appearing to bottom out in the first quarter of fiscal 2010.
Phosphates sales volumes were comparable with a year ago at 2.1
million tonnes. Mosaic's phosphate inventory levels were down
significantly as of August 31, 2009 due to increased demand and
modestly reduced production levels. Phosphates production levels
declined 13% to 1.8 million tonnes from year ago levels in response
to a build-up of inventories and a decline in demand. Toward the
end of the first quarter of fiscal 2010, production was increased
to more normal levels due to increased sales orders and demand.
"Phosphate sales volumes are returning to near normal levels," said
Prokopanko. "Gross margin has improved from the fourth quarter of
fiscal 2009 and we look for further modest improvement in fiscal
2010." Potash Net sales in the Potash segment totaled $333.3
million for the first quarter, compared to net sales of $976.4
million a year ago. The Potash segment's gross margin decreased to
$124.6 million in the first quarter, or 37% of net sales, compared
with $503.2 million a year ago, or 52% of net sales. Operating
earnings were $99.3 million for the first quarter, compared to
$477.8 million a year ago. Operating earnings were impacted by a
sharp decline in sales volumes, the effects of significantly lower
operating rates on fixed cost absorption and a decrease in the
average MOP selling price. These factors were partly offset by
lower net unrealized mark-to-market derivative losses and lower
Canadian resource taxes and royalties. Net unrealized
mark-to-market derivative losses were $1.6 million in the first
quarter of fiscal 2010 compared with losses of $41.7 million a year
ago. The average first quarter MOP selling price, FOB plant, was
$382 per tonne compared to $488 a year ago and $540 per tonne in
the fourth quarter of fiscal 2009. The lower average MOP selling
price was primarily the result of a decline in the average export
price for MOP and a shift in sales volume mix. The shift in mix to
a greater percentage of non-agricultural sales was primarily driven
by lower sales volumes of crop nutrients. The average
non-agricultural selling price is lower than crop nutrient selling
prices but the gap is narrowing on pricing. Reflecting the lower
demand, the Potash segment's total sales volume was 0.8 million
tonnes for the first quarter which was lower compared with year-ago
first quarter volume of 1.9 million tonnes, but up from 0.6 million
tonnes for the fourth quarter of fiscal 2009. Potash production
declined 59% to 0.8 million tonnes from year ago levels due to slow
demand and in order to more effectively manage inventories. Mosaic
continues to operate at lower production rates and will do so until
demand improves. "Even at current low selling volumes the Potash
segment generated a healthy gross margin and is poised to generate
substantially improved profits when demand fully returns," stated
Prokopanko. Offshore The Offshore segment's net sales totaled
$468.1 million during the first quarter, compared to net sales of
$1.0 billion a year ago. This decline in net sales was mainly due
to lower selling prices. Gross margin decreased to $11.2 million in
the first quarter, or 2% of net sales, compared to $180.6 million,
or 17% of net sales, for the same period last year. Offshore had an
operating loss in the first quarter of fiscal 2010 of $8.0 million,
compared to operating earnings of $159.0 million a year ago. Strong
Offshore results a year ago reflected the benefit of positioning
lower cost inventories in a period of rising selling prices. Other
A foreign currency transaction gain of $13.1 million was recorded
for the first quarter compared to a gain of $86.7 million for the
same period a year ago. This non-cash gain is the result of the
effect of a weakening Canadian dollar on significant U.S. dollar
denominated intercompany receivables and cash held by Mosaic's
Canadian subsidiaries. Income tax expense was $32.8 million in the
first quarter resulting in an effective tax rate of 25% compared to
$497.7 million, or an effective tax rate of 31% for the same period
last year. Total equity earnings in non-consolidated subsidiaries
were $2.5 million in the first quarter, compared with $59.8 million
for the same period a year ago. The reduction in equity earnings is
primarily the result of the sale of Mosaic's interest in Saskferco
Products ULC in October 2008 along with weak results from Fertifos
S.A. during the first quarter of fiscal 2010. Mosaic ended the
first quarter with $2.6 billion in cash and cash equivalents. Cash
flow provided by operating activities in the first quarter of
fiscal 2010 was $172.4 million compared with cash flow provided by
operating activities of $561.5 million a year ago. The decline in
cash flow from operations was primarily due to lower net earnings
and significant working capital changes. Mosaic's total debt as of
August 31, 2009 was $1.4 billion compared to $1.5 billion as of
August 31, 2008. Market Outlook Several important signs of a global
economic recovery have emerged in recent months as an impetus to
crop nutrient recovery, including gains in key Asian economies and
improved outlooks in developed economies. Concurrently, grain and
oilseed consumption is steadily increasing as the world's appetite
continues to swell due to steady population growth and increases in
income in developing countries, inevitably leading to increased
investments in agriculture, including a balance of crop nutrients.
Longer term, annual global real gross domestic product growth is
estimated by a leading economic forecasting firm to trend upward
from 2.5% in 2010 to 3.8% in 2012, and with it, more prosperity and
the desire to improve diets. Inventories for North American
phosphate producers declined again in August 2009 and are at the
lowest levels since May 2006. Inventories for North American potash
producers are working down from elevated levels earlier this
calendar year. The distribution pipeline has been largely emptied,
although buyers remain cautious about re-stocking. "Farmers around
the world have reduced crop nutrient applications in their most
recent growing season, drawing down the nutrient levels banked in
their soils," said Prokopanko. "We believe farmers will increase
application rates in response to high 2010 new crop prices and the
need to replenish the large amount of nutrients withdrawn by the
record crop this year." Financial Guidance Sales volumes for the
Phosphates segment are expected to range from 1.8 to 2.2 million
tonnes for the second quarter of fiscal 2010. Mosaic's realized DAP
price, FOB plant, for the second quarter of fiscal 2010 is
estimated to be $265 to $305 per tonne. Mosaic is not providing
financial guidance on potash sales volumes or MOP selling price
until market conditions normalize. Capital spending for fiscal 2010
is expected to grow to a range of $1.0 billion to $1.2 billion.
Mosaic is executing its multi-year potash expansion plan as well as
investing substantial funds to further improve operating
performance of its existing plants and mines. SG&A is estimated
to range from $350 million to $370 million in fiscal 2010 and the
effective income tax rate is estimated in the high 20% range for
the year. 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 http://www.mosaicco.com/. Mosaic will conduct a
conference call on Tuesday, October 6, 2009 at 9:00 a.m. EDT to
discuss first quarter earnings results. Presentation slides and a
simultaneous audio webcast of the conference call may be accessed
through Mosaic's website at http://www.mosaicco.com/investors.
Additionally, the conference call-in number is 888-679-8034 and the
passcode is 41404673. This webcast will be available up to one year
from the time of the earnings call. 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, including greenhouse gas regulation;
difficulties or delays in receiving, or increased costs of,
necessary governmental permits or approvals; the effectiveness of
our processes for managing our strategic priorities; adverse
weather conditions affecting operations in Central Florida or the
Gulf Coast of the United States, including potential hurricanes or
excess rainfall; actual costs of asset retirement, environmental
remediation, reclamation or other environmental regulation
differing from management's current estimates; accidents and other
disruptions involving Mosaic's operations, including brine inflows
at its Esterhazy, Saskatchewan potash mine and other potential mine
fires, floods, explosions, seismic events or releases of hazardous
or volatile chemicals, as well as other risks and uncertainties
reported from time to time in The Mosaic Company's reports filed
with the Securities and Exchange Commission. Actual results may
differ from those set forth in the forward-looking statements.
Condensed Consolidated Statements of Earnings (in millions, except
per share amounts) The Mosaic Company (unaudited)
----------------------------------------------------------------------
Three months ended August 31 --------- 2009 2008 ---- ---- Net
sales $1,457.2 $4,322.5 Cost of goods sold 1,235.0 2,673.9 -------
------- Gross margin 222.2 1,648.6 Selling, general and
administrative expenses 81.4 90.0 Other operating expenses 6.6 9.7
--- --- Operating earnings 134.2 1,548.9 Interest expense, net 14.9
10.6 Foreign currency transaction (gain) (13.1) (86.7) Other
(income) (0.4) (1.5) ---- ---- Earnings from consolidated companies
before income taxes 132.8 1,626.5 Provision for income taxes 32.8
497.7 ---- ----- Earnings from consolidated companies 100.0 1,128.8
Equity in net earnings of nonconsolidated companies 2.5 59.8 ---
---- Net earnings including non-controlling interests 102.5 1,188.6
Less: Net earnings attributable to non-controlling interests (1.9)
(3.9) ---- ---- Net earnings attributable to Mosaic (a) $100.6
$1,184.7 ====== ======== Diluted net earnings per share
attributable to Mosaic (a) $0.23 $2.65 ===== ===== Diluted weighted
average number of shares outstanding 446.3 446.5 (a) Mosaic adopted
SFAS No. 160 "Noncontrolling Interest in Consolidated Financial
Statements," effective June 1, 2009, which, among other things,
changed the presentation format and certain captions of the
Consolidated Statement of Earnings and Consolidated Balance Sheet.
Mosaic uses the captions recommended by this standard in its
Condensed Consolidated Financial Statements, such as "Net earnings
attributable to Mosaic" and "Diluted net earnings per share
attributable to Mosaic." However, in the preceding release Mosaic
has shortened this language to "net earnings" and "earnings per
share," respectively. Condensed Consolidated Balance Sheets (in
millions, except share and per share amounts) The Mosaic Company
(unaudited)
---------------------------------------------------------------------
August 31 May 31 Assets 2009 2009 ---- ---- Current assets: Cash
and cash equivalents $2,598.7 $2,703.2 Receivables, net 485.5 597.6
Inventories 1,046.7 1,125.9 Deferred income taxes 199.3 205.4 Other
current assets 672.0 675.7 ----- ----- Total current assets 5,002.2
5,307.8 Property, plant and equipment, net 5,007.7 4,899.3
Investments in nonconsolidated companies 375.5 357.8 Goodwill
1,733.1 1,734.1 Other assets 360.4 377.2 ----- ----- Total assets
$12,478.9 $12,676.2 ========= ========= Liabilities and
Stockholders' Equity Current liabilities: Short-term debt $107.1
$92.7 Current maturities of long-term debt 29.7 43.3 Accounts
payable and accrued liabilities 1,101.5 1,093.4 Accrued income
taxes 11.2 327.6 Deferred income taxes 65.8 64.8 ---- ---- Total
current liabilities 1,315.3 1,621.8 Long-term debt, less current
maturities 1,253.2 1,256.5 Deferred income taxes 456.0 456.6 Other
noncurrent liabilities 839.8 826.1 The Mosaic Company's
Stockholders' equity: Preferred stock, $0.01 par value, 15,000,000
shares authorized, none issued and outstanding as of August 31,
2009 and May 31, 2009 - - Common stock, $0.01 par value,
700,000,000 shares authorized: Class B common stock, none issued
and outstanding as of August 31, 2009 and May 31, 2009 - - Common
stock, 444,917,995 and 444,513,300 shares issued and outstanding as
of August 31, 2009 and May 31, 2009, respectively 4.5 4.4 Capital
in excess of par value 2,500.5 2,483.8 Retained earnings 5,824.6
5,746.2 Accumulated other comprehensive income 260.2 258.6 -----
----- Total Mosaic stockholders' equity 8,589.8 8,493.0
Non-controlling interests 24.8 22.2 ---- ---- Total stockholders'
equity 8,614.6 8,515.2 ------- ------- Total liabilities and
stockholders' equity $12,478.9 $12,676.2 ========= =========
Condensed Consolidated Statements of Cash Flows (in millions,
except per share amounts) The Mosaic Company (unaudited)
-----------------------------------------------------------------------
Three months ended August 31 --------- 2009 2008 ---- ---- Cash
Flows from Operating Activities Net earnings including
non-controlling interests $102.5 $1,188.6 Adjustments to reconcile
net earnings including non-controlling interests to net cash
provided by operating activities: Depreciation, depletion and
amortization 92.1 87.7 Deferred income taxes 11.6 15.3 Equity in
net earnings of nonconsolidated companies, net of dividends (2.5)
(27.7) Accretion expense for asset retirement obligations 7.9 8.8
Stock-based compensation expense 14.2 10.1 Unrealized loss (gain)
on derivatives (38.4) 117.2 Excess tax benefits related to stock
option exercises (0.4) (2.8) Other (0.7) (1.0) Changes in assets
and liabilities: Receivables, net 111.5 (521.0) Inventories, net
78.9 (590.2) Other current assets 8.9 (55.1) Accounts payable 77.0
273.9 Accrued liabilities (299.8) 138.2 Other noncurrent
liabilities 9.6 (80.5) ----- ----- Net cash provided by operating
activities 172.4 561.5 Cash Flows from Investing Activities Capital
expenditures (236.2) (186.9) Restricted cash - (1.2) Other 0.1 0.3
----- ----- Net cash used in investing activities (236.1) (187.8)
Cash Flows from Financing Activities Payments of short-term debt
(63.2) (141.5) Proceeds from issuance of short-term debt 77.7 118.6
Payments of long-term debt (17.4) (33.8) Proceeds from issuance of
long-term debt 0.6 0.1 Payment of tender premium on debt (5.5)
(0.2) Proceeds from stock options exercised 2.2 1.1 Dividend paid
to minority shareholder (0.1) (1.4) Excess tax benefits related to
stock option exercises 0.4 2.8 Cash dividends paid (22.2) (22.2)
----- ----- Net cash used in financing activities (27.5) (76.5)
Effect of exchange rate changes on cash (13.3) (68.2) ----- -----
Net change in cash and cash equivalents (104.5) 229.0 Cash and cash
equivalents - beginning of period 2,703.2 1,960.7 ------- -------
Cash and cash equivalents - end of period $2,598.7 $2,189.7
======== ======== Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for: Interest (net of amount
capitalized) $39.6 $47.4 Income taxes (net of refunds) 271.0 192.7
Condensed Consolidated Financial Highlights (dollars in millions)
The Mosaic Company (unaudited)
----------------------------------------------------------------------
Three months ended Increase/ August 31 (Decrease) ---------
---------- 2009 2008 Amount % ---- ---- ------ --- Net sales:
Phosphates $814.4 (b) $2,592.8 (b) $(1,778.4) (69%) Potash 333.3
976.4 (643.1) (66%) Offshore 468.1 1,048.0 (579.9) (55%)
Corporate/Other(a) (158.6) (294.7) 136.1 (46%) ------ ------ -----
--- $1,457.2 (b) $4,322.5 (b) $(2,865.3) (66%) ======== ========
========= === Gross margin: Phosphates $111.4 $1,005.7 $(894.3)
(89%) Potash 124.6 503.2 (378.6) (75%) Offshore 11.2 180.6 (169.4)
(94%) Corporate/Other(a) (25.0) (40.9) 15.9 (39%) ----- ----- ----
--- $222.2 $1,648.6 $(1,426.4) (87%) ====== ======== ========= ===
Operating earnings (loss): Phosphates $61.2 $950.8 $(889.6) (94%)
Potash 99.3 477.8 (378.5) (79%) Offshore (8.0) 159.0 (167.0) NM
Corporate/Other(a) (18.3) (38.7) 20.4 (53%) ----- ----- ---- ---
$134.2 $1,548.9 $(1,414.7) (91%) ====== ======== ========= ===
Depreciation, depletion and amortization: Phosphates $55.6 $48.4
$7.2 15% Potash 29.7 31.9 (2.2) (7%) Offshore 4.3 4.9 (0.6) (12%)
Corporate/Other 2.5 2.5 - 0% --- --- --- --- $92.1 $87.7 $4.4 5%
===== ===== ==== === (a) Includes elimination of intercompany
sales. (b) Includes PhosChem sales for its other member of $111.6
million and $288.9 million for the three months ended August 31,
2009 and 2008. PhosChem is a consolidated subsidiary of Mosaic. Key
Statistics The Mosaic Company (unaudited)
-----------------------------------------------------------------------
Three months ended Increase/ August 31 (Decrease) ---------
---------- 2009 2008 Amount % ---- ---- ------ --- Sales volumes
(000 tonnes): Phosphates (a) Crop Nutrients: North America 683 779
(96) (12%) International 1,244 1,138 106 9% Feed Phosphates 135 174
(39) (22%) --- --- --- --- 2,062 2,091 (29) (1%) ===== ===== === ==
Potash (b) Crop Nutrients: North America 109 546 (437) (80%)
International 508 1,090 (582) (53%) Non agricultural 178 261 (83)
(32%) --- --- --- --- 795 (c) 1,897 (c) (1,102) (58%) === =====
====== === Production volumes (000 tonnes): Phosphates 1,817 2,084
(267) (13%) Potash 816 1,974 (1,158) (59%) Average selling price
per metric tonne: DAP (d) $276 $1,013 $(737) (73%) MOP (d) 382 488
(106) (22%) K-Mag(R) (d) 301 288 13 5% Average price for key raw
materials: Ammonia (tonnes) (Central Florida) (e) $233 $572 $(339)
(59%) Sulfur (long ton) 43 573 (530) (92%) Canadian resource taxes
and royalties (f) $17 $169 $(152) (90%) (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 tonnes) of 103 tonnes and
209 tonnes of K-Mag(R) for the three months ended August 31, 2009
and 2008, respectively. (d) FOB plant/mine (e) Delivered Tampa (f)
Amounts in millions of U.S. dollars
http://www.newscom.com/cgi-bin/prnh/20060331/MOSAICLOGO
http://photoarchive.ap.org/ DATASOURCE: The Mosaic Company CONTACT:
Media, Rob Litt, +1-763-577-6187, or Investors, Christine Battist,
+1-763-577-2828, both for The Mosaic Company Web Site:
http://www.mosaicco.com/
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