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Mosaic (MOS) Misses Q2 Earnings and Revenue Estimates
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Mosaic (MOS - Free Report) reported a loss of $10 million or 3 cents per share in the second quarter of 2016, as against a profit of $391 million or $1.08 per share recorded a year ago. Earnings, barring one-time items, were 6 cents per share that missed the Zacks Consensus Estimate of 18 cents.
The Minnesota-based company’s revenues fell roughly 32.7% year over year to $1,674.6 million in the reported quarter due to lower volumes and prices. The figure also lagged the Zacks Consensus Estimate of $1,712 million.
Revenues from Mosaic’s Phosphates segment declined roughly 30.3% year over year to $976 million in the quarter owing to reduced product prices and lower sales volume. The segment’s gross margin shrunk around 66.2% to $100 million due to lower product prices and operating rate, partly offset by lower costs.
Segment sales volumes fell roughly 14.3% year over year to 2.4 million tons. Average selling price plunged around 23.8% to $343 per ton in the reported quarter from $450 per ton in the prior-year quarter.
Potash division sales tumbled around 37.4% year over year to $457 million in the quarter, hurt by reduced volumes and lower prices. Sales volumes fell roughly 13% year over year to 2 million tons, while selling price declined roughly 36.4% to $178 per ton from $280 per ton a year ago. Gross margin tumbled 82% year over year to $53 million, hurt by lower prices and operating rate, partially offset by lower Canadian resource taxes (“CRT”).
Revenues from the International Distribution segment went down around 16.2% year over year to $534 million owing to lower selling prices. Gross margin decreased around 82.8% to $5 million. Selling price declined around 12.4% to $374 per ton, while volumes fell 6.7% to 1.4 million tons.
Financials
Mosaic ended second-quarter 2016 with cash and cash equivalents of $1,059.3 million, down around 52.1% year over year. Long-term debt rose roughly 0.2% year over year to $3,772.6 million. Mosaic’s capital expenditures and investments were $353 million in the reported quarter. Operating cash flow was $583.2 million in the quarter, down around 3.3% year over year.
The company also paid $96.2 million in dividends during the quarter.
Outlook
Going forward, Mosaic expects potash prices to rise moderately in the back half of 2016.
The company anticipates phosphates sales volumes in the band of 2.4–2.7 million tons for the third quarter of 2016 versus 2 million tons in third-quarter 2015. Average selling price for the third quarter is projected to be in the band of $310-$340 per ton. The segment’s gross margin for the quarter is expected to be roughly 10%, while operating rate is estimated to be around 85%.
Potash sales volumes have been projected in the range of 1.8–2.1 million tons for the third quarter versus 1.6 million tons a year ago. Average selling price for the quarter is expected in the range of $160-$175 per ton. The segment’s gross margin is expected to be in the mid single digits in the third quarter. Operating rate is estimated to be 65%.
Sales volumes for the International Distribution segment are expected in the band of 2.1–2.4 million tons for the third quarter compared with 2 million tons a year ago. Segment gross margin is anticipated to be in the range of $15−$20 per ton for the quarter.
For full-year 2016, the company reiterated its volume guidance. Phosphates sales volumes are expected in the range of 9–9.75 million tons while potash sales volumes are anticipated in the band of 7.5–8 million tons. Sales volumes for the International Distribution segment are expected in the range of 6–7 million tons.
For 2016, capital expenditures are estimated to be $0.75–$0.85 billion, down from $0.8−$0.9 billion guided earlier. CRT is anticipated to range from $95−$110 million and the company will no longer provide a guidance for the same. Effective tax rate is expected to be 10%, down from the previous guidance of upper teens.
Mosaic currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked companies in the basic materials space include Chemical & Mining Co. of Chile Inc. (SQM - Free Report) , E. I. du Pont de Nemours and Company (DD - Free Report) and FMC Corp. (FMC - Free Report) , all holding a Zacks Rank #2 (Buy).
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Mosaic (MOS) Misses Q2 Earnings and Revenue Estimates
Mosaic (MOS - Free Report) reported a loss of $10 million or 3 cents per share in the second quarter of 2016, as against a profit of $391 million or $1.08 per share recorded a year ago. Earnings, barring one-time items, were 6 cents per share that missed the Zacks Consensus Estimate of 18 cents.
The Minnesota-based company’s revenues fell roughly 32.7% year over year to $1,674.6 million in the reported quarter due to lower volumes and prices. The figure also lagged the Zacks Consensus Estimate of $1,712 million.
Segment Highlights
Revenues from Mosaic’s Phosphates segment declined roughly 30.3% year over year to $976 million in the quarter owing to reduced product prices and lower sales volume. The segment’s gross margin shrunk around 66.2% to $100 million due to lower product prices and operating rate, partly offset by lower costs.
Segment sales volumes fell roughly 14.3% year over year to 2.4 million tons. Average selling price plunged around 23.8% to $343 per ton in the reported quarter from $450 per ton in the prior-year quarter.
Potash division sales tumbled around 37.4% year over year to $457 million in the quarter, hurt by reduced volumes and lower prices. Sales volumes fell roughly 13% year over year to 2 million tons, while selling price declined roughly 36.4% to $178 per ton from $280 per ton a year ago. Gross margin tumbled 82% year over year to $53 million, hurt by lower prices and operating rate, partially offset by lower Canadian resource taxes (“CRT”).
Revenues from the International Distribution segment went down around 16.2% year over year to $534 million owing to lower selling prices. Gross margin decreased around 82.8% to $5 million. Selling price declined around 12.4% to $374 per ton, while volumes fell 6.7% to 1.4 million tons.
Financials
Mosaic ended second-quarter 2016 with cash and cash equivalents of $1,059.3 million, down around 52.1% year over year. Long-term debt rose roughly 0.2% year over year to $3,772.6 million. Mosaic’s capital expenditures and investments were $353 million in the reported quarter. Operating cash flow was $583.2 million in the quarter, down around 3.3% year over year.
The company also paid $96.2 million in dividends during the quarter.
Outlook
Going forward, Mosaic expects potash prices to rise moderately in the back half of 2016.
The company anticipates phosphates sales volumes in the band of 2.4–2.7 million tons for the third quarter of 2016 versus 2 million tons in third-quarter 2015. Average selling price for the third quarter is projected to be in the band of $310-$340 per ton. The segment’s gross margin for the quarter is expected to be roughly 10%, while operating rate is estimated to be around 85%.
Potash sales volumes have been projected in the range of 1.8–2.1 million tons for the third quarter versus 1.6 million tons a year ago. Average selling price for the quarter is expected in the range of $160-$175 per ton. The segment’s gross margin is expected to be in the mid single digits in the third quarter. Operating rate is estimated to be 65%.
Sales volumes for the International Distribution segment are expected in the band of 2.1–2.4 million tons for the third quarter compared with 2 million tons a year ago. Segment gross margin is anticipated to be in the range of $15−$20 per ton for the quarter.
For full-year 2016, the company reiterated its volume guidance. Phosphates sales volumes are expected in the range of 9–9.75 million tons while potash sales volumes are anticipated in the band of 7.5–8 million tons. Sales volumes for the International Distribution segment are expected in the range of 6–7 million tons.
For 2016, capital expenditures are estimated to be $0.75–$0.85 billion, down from $0.8−$0.9 billion guided earlier. CRT is anticipated to range from $95−$110 million and the company will no longer provide a guidance for the same. Effective tax rate is expected to be 10%, down from the previous guidance of upper teens.
MOSAIC CO/THE Price, Consensus and EPS Surprise
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Zacks Rank
Mosaic currently has a Zacks Rank #5 (Strong Sell).
Some better-ranked companies in the basic materials space include Chemical & Mining Co. of Chile Inc. (SQM - Free Report) , E. I. du Pont de Nemours and Company (DD - Free Report) and FMC Corp. (FMC - Free Report) , all holding a Zacks Rank #2 (Buy).
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report >>