Phosphoric Acid, Phosphates & Fertilizers Experts

The Mosaic Company Reports Third Quarter 2017 Results

PLYMOUTH, Minn., Oct. 31, 2017 /PRNewswire/ — The Mosaic Company (NYSE: MOS) today reported third quarter 2017 net income of $227 million, compared to net income of $39 million in the third quarter of 2016. Third quarter earnings per diluted share were $0.65, which included a positive impact of $0.22 from notable items. The Company also provided a strategic update identifying cumulative cash flow improvements in excess of $1 billion by the end of 2020.

“Mosaic is taking proactive steps to accelerate business performance,” said Joc O’Rourke, President and Chief Executive Officer. “While these decisions are difficult and have impacts on our employees, today’s actions put Mosaic in a strong position to benefit as market dynamics improve.”

Key Actions:

Mosaic announced the idling of its Plant City, Florida concentrates plant for an indefinite period of at least one year. The move is expected to ensure minimal market disruption from new capacity additions, including Mosaic’s Saudi Arabian joint venture, and is expected to result in higher phosphate margins and lower capital requirements.
The Company expects to serve a significant portion of its distribution business and other Indian customers more effectively with phosphate production from its Saudi Arabian joint venture and will focus U.S. production on the North and South American markets where it has logistical advantages.
The Company has identified additional value creation opportunities ahead of the pending acquisition of Vale Fertilizantes, which are expected to result in $275 million of annualized improved cash flow by the end of 2020. The $275 million target is comprised of $125 million in updated expectations for pre-tax synergies and $150 million of anticipated business transformation benefits relating to Mosaic’s consolidated business in Brazil. This guidance replaces the previously announced target of $75 million in annual operating synergies.
Mosaic approved a reduction in the annual dividend target to $0.10 per share and declared a quarterly dividend of $0.025 per share to be paid on December 21, 2017 to stockholders of record as of close of business on December 7, 2017.

Mosaic’s net sales in the third quarter of 2017 were $2.0 billion, flat with last year, with lower phosphate sales volumes offset by higher international distribution volumes and higher realized potash prices. Operating earnings during the quarter were $214 million, up from $70 million a year ago, despite a $26 million negative impact in Phosphates from Hurricane Irma.

Cash flow provided by operating activities in the third quarter of 2017 was $136 million compared to $88 million in the prior year. Capital expenditures totaled $198 million in the quarter. Mosaic’s total cash and cash equivalents, excluding restricted cash, were $686 million and long-term debt was $3.8 billion as of September 30, 2017. Subsequent to quarter end, the Company completed a lease finance transaction for an ammonia tug and barge and received approximately $200 million in cash.

“We delivered solid operational performance across our three businesses during the third quarter, and demand for our products continues to be strong,” said Rich Mack, Mosaic’s Executive Vice President and Chief Financial Officer. “Once the pending Vale Fertilizantes acquisition closes, we intend to prioritize our excess cash flow toward debt repayment so that we can return to our targeted leverage ratios. The comprehensive set of actions announced today is an important part of our deleveraging plan and protecting our balance sheet.”

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