Phosphoric Acid, Phosphates & Fertilizers Experts

The Mosaic Company Reports Second Quarter 2019 Results

ANNOUNCES BRAZILIAN DAM REMEDIATION AHEAD OF SCHEDULE AND TEMPORARY IDLING OF COLONSAY POTASH MINE. Unprecedented North American spring weather expected to drive strong nutrient demand in fall 2019 and beyond

PLYMOUTH, Minn.–(BUSINESS WIRE)– The Mosaic Company (NYSE: MOS) today announced that the unprecedented wet weather in the Midwest United States has negatively impacted its North American spring fertilizer sales volumes and phosphates margins. These same factors have driven grain prices higher and provide significant opportunities in fall 2019 and beyond.

“We’ve experienced a North American spring season that was wetter and later than any in recorded history,” said Mosaic President and CEO Joc O’Rourke. “While our Potash and Mosaic Fertilizantes businesses continued to perform well, weakness in the phosphates market negatively impacted second quarter results. Moving forward, strong price increases in grains together with depleted soil nutrients in North America are expected to drive fertilizer applications significantly higher this fall.

“The actions we’ve taken to reshape our business, including the permanent closure of our Plant City phosphates facility and the acceleration of the development of the K3 potash mine leading to today’s announced curtailment of potash production at Colonsay, are expected to increase our operating leverage to the anticipated strong market fundamentals in the second half of 2019 and beyond.”

Mosaic reported a net loss of $233 million for the second quarter of 2019, including a $284 million noncash after-tax charge for the permanent closure of the company’s Plant City phosphate facility. The company reported diluted earnings per share (EPS) of negative $0.60, which includes a negative $0.72 per share impact for notable items, primarily the closure of the Plant City facility. For the period, adjusted EBITDA was $349 million, and adjusted EPS was $0.12.

Highlights:

Mosaic Fertilizantes plans to complete tailings dam remediation activities and return to full operations more than a month ahead of schedule:
The Catalão mine tailings dam remediation was completed, and the mine resumed full operations in May.
The Tapira mine resumed operations at 60 percent in July, and is expected to resume full operations in August.
The Araxá mine received an operating permit for tailings dam B6, and is expected to resume full operations in August.
The company expects Mosaic Fertilizantes to achieve its targeted $275 million in net synergies in 2019, despite challenges related to the new Brazilian tailings dam regulation.
The Potash segment delivered gross margin per tonne of $84 as cash costs per tonne declined sequentially, despite a lower operating rate as a result of slower sales in the quarter.
The accelerated ramp up of the low-cost Esterhazy K3 potash project is on schedule, having produced over 400,000 tonnes of ore year-to-date June 30, 2019. This production, combined with available inventory, facilitated the temporary idling of the higher cost Colonsay potash mine. These actions are expected to lower Mosaic’s cost of production, accelerate inventory depletion, avoid $40 to $50 million in cash expenditures in 2019, and increase the company’s leverage to strengthening markets into 2020.
In June, the company announced the permanent closure of the Plant City phosphates facility. The closure will result in lower idle plant costs and cash expenditures to be incurred for the care of the facility.

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