The Mosaic Company (MOS - Free Report) reported net income of $97.3 million or 28 cents per share in the second quarter of 2017, as against net loss of $10.2 million or 3 cents per share recorded a year ago.
Earnings, barring one-time items, were 29 cents per share that beat the Zacks Consensus Estimate of 25 cents.
The Minnesota-based company’s revenues rose roughly 4.8% year over year to $1,754.6 million in the reported quarter. The figure also topped the Zacks Consensus Estimate of $1,649.4 million. The company gained from strong global demand for phosphates and potash during the quarter.
Revenues from Mosaic’s Phosphates segment were flat year over year at $975 million in the second quarter of 2017, as lower prices of finished products offset higher sales volume. The segment’s gross margin declined to $76 million from $100 million a year ago, owing to higher ammonia costs and lower finished product selling prices, partly offset by reduced sulfur and phosphate rock costs.
Potash division’s sales rose around 2.4% year over year to $468 million in the quarter, driven by higher sales volume. Gross margin in the quarter was $110 million compared with $53 million reported a year ago. The improvement was mainly driven by lower cost of production as a result of lower plant spending and higher operating rates.
Revenues from the International Distribution segment went up around 9.2% year over year to $583 million owing to increased sales volumes, partly offset by lower selling prices. Gross margin was $39 million, compared with $5 million reported a year ago.
Mosaic’s cash and cash equivalents amounted to $660.6 million as of Jun 30, 2017, down around 37.6% year over year.
Long-term debt rose to $3,799.7 million as of Jun 30, 2017, from $3,772.6 million as of Jun 30, 2016.
Mosaic’s capital expenditures were $169 million in the reported quarter.
Operating cash flow was $243 million in the quarter, down 58.4% from $584 million in the year-ago quarter.
Mosaic expects phosphates sales volumes in the band of 2.2–2.5 million tons for the third quarter of 2017 compared with 2.5 million tons for the same quarter in 2016. Average selling price, FOB plant, is expected to be in the range of $310–$330 per ton. The segment gross margin rate is expected to be in the band of 7–9%.
Potash sales volumes have been forecast in the range of 1.9–2.2 million tons for the third quarter, compared with 2.2 million tons in the prior year quarter. Average selling price, FOB plant, is expected in the band of $165–$180 per ton and the gross margin rate is anticipated to be in the band of 15–18%.
Total sales volumes for the International Distribution segment are expected to range from 2.3–2.6 million tons for the third quarter of 2017, compared with 2.2 million tons in the prior-year quarter. The segment gross margin is estimated to be in the low $20 per ton range.
Mosaic has lost 3.2% of its value in the last three months versus the 6.8% growth of its industry.
Zacks Rank & Key Picks
Mosaic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the basic materials space are The Sherwin-Williams Company (SHW - Free Report) , Ternium S.A. (TX - Free Report) and Hitachi Chemical Company, Ltd. (HCHMY - Free Report) . All three stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.
Sherwin-Williams has expected long-term earnings growth rate of 11.4%.
Ternium has expected long-term earnings growth rate of 18.4%.
Hitachi Chemical has expected long-term earnings growth rate of 5%.
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