UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): March 13, 2015
THE MOSAIC COMPANY
(Exact name of registrant as specified in its charter)
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Delaware | | 001-32327 | | 20-1026454 |
(State or other jurisdiction of incorporation) | | (Commission File Number) | | (IRS Employer Identification No.) |
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3033 Campus Drive Suite E490 Plymouth, Minnesota | | 55441 |
(Address of principal executive offices) | | (Zip Code) |
Registrant’s telephone number, including area code: (800) 918-8270
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
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o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02. Results of Operations and Financial Condition.
The following information is being “furnished” in accordance with General Instruction B.2. of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing:
MOSAIC SEGMENT REALIGNMENT
This report should be read in conjunction with The Mosaic Company’s annual report on Form 10-K for the fiscal year ended December 31, 2014, including the Management’s Discussion and Analysis of Results of Operations and Financial Condition and the consolidated financial statements and accompanying notes.
On March 13, 2015, The Mosaic Company (“Mosaic”, and individually or in any combination with its consolidated subsidiaries, “we”, “us”, “our”, or the “Company”) announced that it was realigning its business segments (the “Realignment”) to more clearly reflect the Company’s evolving business model. Furnished herewith as Exhibit 99.1 and incorporated by reference herein is the text of Mosaic’s announcement regarding the Realignment.
Our business segments are determined by management based upon factors such as products and services, production processes, technologies, market dynamics, and for which segment financial information is readily available for our chief operating decision maker. As part of the Realignment, our international distribution activities, which had previously been reported in our Phosphates business segment, are being moved into a separate International Distribution segment, as this is how our chief operating decision maker began viewing and evaluating our operations during the first quarter. The Corporate and Other segment will now include inter-segment eliminations, mark-to-market gains/losses on derivatives that had previously been reported in our Phosphates and Potash business segments, debt expenses, and our legacy Argentina and Chile results.
The tables below provide certain performance data for our reportable segments for each of the eight quarters through the quarter ended December 31, 2014, adjusted to reflect the Realignment. The recasting of previously issued financial information does not represent a restatement of previously issued financial statements. The information contained in this Form 8-K is being furnished in order to provide the financial community with historical financial data that is presented on a basis consistent with the Company’s new reporting structure. Beginning with the quarter ending March 31, 2015, the Company’s financial statements will reflect the new reporting structure with prior periods adjusted accordingly.
The Mosaic Company
Selected Calendar Quarter Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Consolidated data (in millions, except per share) | | | | | | | | | | | | | | | | |
Diluted net earnings per share(a) | | $ | 0.89 |
| | $ | 1.01 |
| | $ | 0.29 |
| | $ | 0.30 |
| | $ | 0.54 |
| | $ | 0.64 |
| | $ | 0.54 |
| | $ | 0.97 |
|
Diluted weighted average # of shares outstanding(b) | | 427.2 |
| | 427.2 |
| | 427.1 |
| | 415.5 |
| | 379.6 |
| | 376.2 |
| | 375.9 |
| | 372.0 |
|
Total Net Sales | | $ | 2,312 |
| | $ | 2,619 |
| | $ | 1,909 |
| | $ | 2,182 |
| | $ | 1,986 |
| | $ | 2,440 |
| | $ | 2,251 |
| | $ | 2,379 |
|
Gross Margin | | $ | 642 |
| | $ | 665 |
| | $ | 387 |
| | $ | 322 |
| | $ | 412 |
| | $ | 521 |
| | $ | 415 |
| | $ | 579 |
|
As % of Sales | | 28 | % | | 25 | % | | 20 | % | | 15 | % | | 21 | % | | 21 | % | | 18 | % | | 24 | % |
SG&A | | 92 |
| | 116 |
| | 94 |
| | 91 |
| | 120 |
| | 88 |
| | 84 |
| | 91 |
|
Consolidated Foreign Currency Gain/(Loss) | | 17 |
| | 22 |
| | (30 | ) | | 25 |
| | 43 |
| | (39 | ) | | 27 |
| | 47 |
|
Effective Tax Rate(c) | | 26 | % | | 23 | % | | (6 | )% | | 51 | % | | (1 | )% | | 25 | % | | 27 | % | | 7 | % |
Net Income | | $ | 380 |
| | $ | 430 |
| | $ | 124 |
| | $ | 129 |
| | $ | 218 |
| | $ | 248 |
| | $ | 202 |
| | $ | 361 |
|
As % of Sales | | 16 | % | | 16 | % | | 7 | % | | 6 | % | | 11 | % | | 10 | % | | 9 | % | | 15 | % |
EBITDA(d) | | | | | | | | | | | | | | | | |
Potash | | $ | 392 |
| | $ | 451 |
| | $ | 155 |
| | $ | 173 |
| | $ | 257 |
| | $ | 281 |
| | $ | 158 |
| | $ | 316 |
|
Phosphate | | 271 |
| | 267 |
| | 136 |
| | 143 |
| | 221 |
| | 309 |
| | 275 |
| | 239 |
|
International Distribution | | (8 | ) | | 19 |
| | 38 |
| | 12 |
| | 10 |
| | 18 |
| | 32 |
| | 24 |
|
Corporate and Other(e) | | (7 | ) | | (38 | ) | | (16 | ) | | 23 |
| | (50 | ) | | (13 | ) | | (2 | ) | | (14 | ) |
Consolidated EBITDA(d) | | $ | 648 |
| | $ | 699 |
| | $ | 313 |
| | $ | 351 |
| | $ | 438 |
| | $ | 595 |
| | $ | 463 |
| | $ | 565 |
|
Total Debt | | $ | 1,081 |
| | $ | 1,033 |
| | $ | 1,027 |
| | $ | 3,032 |
| | $ | 3,051 |
| | $ | 3,026 |
| | $ | 3,816 |
| | $ | 3,833 |
|
Cash & cash equivalents | | 3,511 |
| | 3,916 |
| | 3,339 |
| | 5,293 |
| | 2,491 |
| | 2,367 |
| | 2,971 |
| | 2,375 |
|
Net debt | | $ | (2,430 | ) | | $ | (2,883 | ) | | $ | (2,312 | ) | | $ | (2,261 | ) | | $ | 560 |
| | $ | 659 |
| | $ | 845 |
| | $ | 1,458 |
|
Cash flow from operations | | $ | 579 |
| | $ | 982 |
| | $ | (45 | ) | | $ | 503 |
| | $ | 627 |
| | $ | 796 |
| | $ | 489 |
| | $ | 382 |
|
Cash flow from investments | | (378 | ) | | (381 | ) | | (466 | ) | | (370 | ) | | (1,634 | ) | | (360 | ) | | (158 | ) | | (586 | ) |
Cash flow from financing | | (85 | ) | | (152 | ) | | (89 | ) | | 1,842 |
| | (1,770 | ) | | (575 | ) | | 323 |
| | (319 | ) |
Effect of exchange rate changes on cash | | (10 | ) | | (45 | ) | | 23 |
| | (20 | ) | | (25 | ) | | 15 |
| | (50 | ) | | (73 | ) |
Net cash flow | | $ | 106 |
| | $ | 404 |
| | $ | (577 | ) | | $ | 1,955 |
| | $ | (2,802 | ) | | $ | (124 | ) | | $ | 604 |
| | $ | (596 | ) |
Cash dividends paid | | $ | (106 | ) | | $ | (107 | ) | | $ | (107 | ) | | $ | (107 | ) | | $ | (100 | ) | | $ | (95 | ) | | $ | (94 | ) | | $ | (94 | ) |
Operating Earnings | | | | | | | | | | | | | | | | |
Potash | | $ | 313 |
| | $ | 362 |
| | $ | 69 |
| | $ | 89 |
| | $ | 170 |
| | $ | 189 |
| | $ | 69 |
| | $ | 229 |
|
Phosphates | | 201 |
| | 191 |
| | 61 |
| | 64 |
| | 146 |
| | 219 |
| | 188 |
| | 135 |
|
International Distribution | | (10 | ) | | 17 |
| | 36 |
| | 10 |
| | 8 |
| | 16 |
| | 30 |
| | 22 |
|
Corporate and Other(e) | | (13 | ) | | (44 | ) | | (22 | ) | | 16 |
| | (57 | ) | | (21 | ) | | (10 | ) | | (21 | ) |
Consolidated Operating Earnings | | $ | 491 |
| | $ | 526 |
| | $ | 144 |
| | $ | 179 |
| | $ | 267 |
| | $ | 403 |
| | $ | 277 |
| | $ | 365 |
|
Segment data (in millions, except per tonne) | | | | | | | | | | | | | | | | |
Phosphates | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes)(f)(g) | | 2,065 |
| | 2,077 |
| | 1,754 |
| | 2,395 |
| | 2,051 |
| | 2,637 |
| | 2,176 |
| | 2,392 |
|
Realized average DAP price/tonne(h) | | $ | 486 |
| | $ | 476 |
| | $ | 436 |
| | $ | 370 |
| | $ | 413 |
| | $ | 465 |
| | $ | 463 |
| | $ | 447 |
|
Revenue | | $ | 1,143 |
| | $ | 1,182 |
| | $ | 893 |
| | $ | 1,072 |
| | $ | 959 |
| | $ | 1,333 |
| | $ | 1,133 |
| | $ | 1,212 |
|
Segment Gross Margin | | $ | 252 |
| | $ | 257 |
| | $ | 129 |
| | $ | 134 |
| | $ | 200 |
| | $ | 271 |
| | $ | 236 |
| | $ | 231 |
|
As % of Sales | | 22 | % | | 22 | % | | 14 | % | | 13 | % | | 21 | % | | 20 | % | | 21 | % | | 19 | % |
Potash | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes)(g) | | 2,007 |
| | 2,448 |
| | 1,380 |
| | 1,862 |
| | 2,355 |
| | 2,500 |
| | 1,808 |
| | 2,309 |
|
Realized average MOP price/tonne(h) | | $ | 376 |
| | $ | 366 |
| | $ | 342 |
| | $ | 303 |
| | $ | 267 |
| | $ | 267 |
| | $ | 291 |
| | $ | 295 |
|
Revenue | | $ | 825 |
| | $ | 974 |
| | $ | 523 |
| | $ | 652 |
| | $ | 733 |
| | $ | 762 |
| | $ | 593 |
| | $ | 763 |
|
Segment Gross Margin | | $ | 404 |
| | $ | 405 |
| | $ | 162 |
| | $ | 135 |
| | $ | 216 |
| | $ | 226 |
| | $ | 154 |
| | $ | 327 |
|
As % of Sales | | 49 | % | | 42 | % | | 31 | % | | 21 | % | | 29 | % | | 30 | % | | 26 | % | | 43 | % |
International Distribution | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes) | | 792 |
| | 1,102 |
| | 1,282 |
| | 1,133 |
| | 870 |
| | 1,185 |
| | 1,398 |
| | 1,113 |
|
Realized average Blend price/tonne(h) | | $ | 557 |
| | $ | 557 |
| | $ | 504 |
| | $ | 455 |
| | $ | 449 |
| | $ | 454 |
| | $ | 469 |
| | $ | 427 |
|
Revenue | | $ | 456 |
| | $ | 615 |
| | $ | 665 |
| | $ | 549 |
| | $ | 393 |
| | $ | 542 |
| | $ | 684 |
| | $ | 516 |
|
Segment Gross Margin | | $ | 6 |
| | $ | 36 |
| | $ | 50 |
| | $ | 29 |
| | $ | 22 |
| | $ | 34 |
| | $ | 51 |
| | $ | 41 |
|
As % of Sales | | 1 | % | | 6 | % | | 8 | % | | 5 | % | | 6 | % | | 6 | % | | 7 | % | | 8 | % |
The Mosaic Company - Potash Segment
Selected Calendar Quarter Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Net Sales and Gross Margin (in millions, except per tonne) | | | | | | | | | | | | | | | | |
Segment income statement | | | | | | | | | | | | | | | | |
North America | | $ | 440 |
| | $ | 480 |
| | $ | 279 |
| | $ | 470 |
| | $ | 515 |
| | $ | 447 |
| | $ | 396 |
| | $ | 494 |
|
International | | 385 |
| | 494 |
| | 244 |
| | 182 |
| | 218 |
| | 315 |
| | 197 |
| | 269 |
|
Net Sales | | $ | 825 |
| | $ | 974 |
| | $ | 523 |
| | $ | 652 |
| | $ | 733 |
| | $ | 762 |
| | $ | 593 |
| | $ | 763 |
|
Cost of Goods Sold | | 421 |
| | 569 |
| | 361 |
| | 517 |
| | 517 |
| | 536 |
| | 439 |
| | 436 |
|
Gross Margin | | $ | 404 |
| | $ | 405 |
| | $ | 162 |
| | $ | 135 |
| | $ | 216 |
| | $ | 226 |
| | $ | 154 |
| | $ | 327 |
|
As % of Sales | | 49 | % | | 42 | % | | 31 | % | | 21 | % | | 29 | % | | 30 | % | | 26 | % | | 43 | % |
Freight included in revenue & cost of goods sold (in millions)(i) | | $ | 44 |
| | $ | 51 |
| | $ | 28 |
| | $ | 61 |
| | $ | 73 |
| | $ | 57 |
| | $ | 51 |
| | $ | 69 |
|
Net sales less freight | | $ | 781 |
| | $ | 923 |
| | $ | 495 |
| | $ | 591 |
| | $ | 660 |
| | $ | 705 |
| | $ | 542 |
| | $ | 694 |
|
Cost of Goods Sold less freight | | $ | 377 |
| | $ | 518 |
| | $ | 333 |
| | $ | 456 |
| | $ | 444 |
| | $ | 479 |
| | $ | 388 |
| | $ | 367 |
|
Resources Taxes | | $ | 32 |
| | $ | 67 |
| | $ | 31 |
| | $ | 57 |
| | $ | 30 |
| | $ | 45 |
| | $ | 46 |
| | $ | 48 |
|
Royalties | | 15 |
| | 14 |
| | 11 |
| | 9 |
| | 6 |
| | 7 |
| | 6 |
| | 8 |
|
Total Resources Taxes & Royalties | | $ | 47 |
| | $ | 81 |
| | $ | 42 |
| | $ | 66 |
| | $ | 36 |
| | $ | 52 |
| | $ | 52 |
| | $ | 56 |
|
Gross Margin (excluding Resources Taxes & Royalties)(j) | | $ | 451 |
| | $ | 486 |
| | $ | 204 |
| | $ | 201 |
| | $ | 252 |
| | $ | 278 |
| | $ | 206 |
| | $ | 383 |
|
As % of Sales | | 55 | % | | 50 | % | | 39 | % | | 31 | % | | 34 | % | | 36 | % | | 35 | % | | 50 | % |
Segment Operating Earnings | | $ | 313 |
| | $ | 362 |
| | $ | 69 |
| | $ | 89 |
| | $ | 170 |
| | $ | 189 |
| | $ | 69 |
| | $ | 229 |
|
Depreciation, Depletion and Amortization | | 79 |
| | 89 |
| | 86 |
| | 84 |
| | 87 |
| | 92 |
| | 89 |
| | 87 |
|
EBITDA(d) | | $ | 392 |
| | $ | 451 |
| | $ | 155 |
| | $ | 173 |
| | $ | 257 |
| | $ | 281 |
| | $ | 158 |
| | $ | 316 |
|
Cost of Goods Sold Detail (in millions) | | | | | | | | | | | | | | | | |
COGS additional detail | | | | | | | | | | | | | | | | |
Resource Taxes | | $ | 32 |
| | $ | 67 |
| | $ | 31 |
| | $ | 57 |
| | $ | 30 |
| | $ | 45 |
| | $ | 46 |
| | $ | 48 |
|
Royalties | | 15 |
| | 14 |
| | 11 |
| | 9 |
| | 6 |
| | 7 |
| | 6 |
| | 8 |
|
Brine Inflow Expenses | | 53 |
| | 51 |
| | 48 |
| | 50 |
| | 44 |
| | 46 |
| | 44 |
| | 47 |
|
Depreciation, Depletion and Amortization | | 79 |
| | 89 |
| | 86 |
| | 84 |
| | 87 |
| | 92 |
| | 89 |
| | 87 |
|
Total | | $ | 179 |
| | $ | 221 |
| | $ | 176 |
| | $ | 200 |
| | $ | 167 |
| | $ | 190 |
| | $ | 185 |
| | $ | 190 |
|
Operating Data | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes) | | | | | | | | | | | | | | | | |
Crop Nutrients North America(g) | | 705 |
| | 804 |
| | 417 |
| | 933 |
| | 1,111 |
| | 873 |
| | 691 |
| | 964 |
|
Crop Nutrients International(g) | | 1,134 |
| | 1,468 |
| | 781 |
| | 744 |
| | 1,065 |
| | 1,427 |
| | 919 |
| | 1,228 |
|
Non-Agricultural | | 168 |
| | 176 |
| | 182 |
| | 185 |
| | 179 |
| | 200 |
| | 198 |
| | 117 |
|
Total(g) | | 2,007 |
| | 2,448 |
| | 1,380 |
| | 1,862 |
| | 2,355 |
| | 2,500 |
| | 1,808 |
| | 2,309 |
|
Production Volumes ('000 tonnes) | | | | | | | | | | | | | | | | |
Production Volume | | 2,197 |
| | 2,161 |
| | 1,957 |
| | 1,741 |
| | 1,871 |
| | 2,044 |
| | 1,666 |
| | 2,584 |
|
Operating Rate(k) | | 83 | % | | 81 | % | | 73 | % | | 65 | % | | 70 | % | | 76 | % | | 62 | % | | 91 | % |
Realized prices (FOB plant, $/tonne) | | | | | | | | | | | | | | | | |
MOP - North America crop nutrients(h)(l) | | $ | 426 |
| | $ | 415 |
| | $ | 364 |
| | $ | 332 |
| | $ | 300 |
| | $ | 308 |
| | $ | 344 |
| | $ | 355 |
|
MOP - International(h) | | $ | 327 |
| | $ | 326 |
| | $ | 294 |
| | $ | 225 |
| | $ | 209 |
| | $ | 225 |
| | $ | 232 |
| | $ | 239 |
|
MOP - Average(h) | | $ | 376 |
| | $ | 366 |
| | $ | 342 |
| | $ | 303 |
| | $ | 267 |
| | $ | 267 |
| | $ | 291 |
| | $ | 295 |
|
Brine inflow cost/production tonne | | $ | 24 |
| | $ | 24 |
| | $ | 25 |
| | $ | 29 |
| | $ | 24 |
| | $ | 23 |
| | $ | 26 |
| | $ | 18 |
|
MOP cash cost/sales tonne | | $ | 125 |
| | $ | 142 |
| | $ | 149 |
| | $ | 164 |
| | $ | 136 |
| | $ | 134 |
| | $ | 137 |
| | $ | 97 |
|
EBITDA(d)/sales tonne(m) | | $ | 195 |
| | $ | 184 |
| | $ | 112 |
| | $ | 93 |
| | $ | 109 |
| | $ | 112 |
| | $ | 87 |
| | $ | 137 |
|
Potash CAPEX (in millions) | | $ | 235 |
| | $ | 216 |
| | $ | 199 |
| | $ | 197 |
| | $ | 144 |
| | $ | 94 |
| | $ | 92 |
| | $ | 141 |
|
The Mosaic Company - Phosphates Segment
Selected Calendar Quarter Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Net Sales and Gross Margin (in millions, except per tonne) | | | | | | | | | | | | | | | | |
Segment income statement | | | | | | | | | | | | | | | | |
North America | | $ | 549 |
| | $ | 589 |
| | $ | 417 |
| | $ | 721 |
| | $ | 559 |
| | $ | 725 |
| | $ | 636 |
| | $ | 714 |
|
International | | 594 |
| | 593 |
| | 476 |
| | 351 |
| | 400 |
| | 608 |
| | 497 |
| | 498 |
|
Net Sales | | $ | 1,143 |
| | $ | 1,182 |
| | $ | 893 |
| | $ | 1,072 |
| | $ | 959 |
| | $ | 1,333 |
| | $ | 1,133 |
| | $ | 1,212 |
|
Cost of Goods Sold | | 891 |
| | 925 |
| | 764 |
| | 938 |
| | 759 |
| | 1,062 |
| | 897 |
| | 981 |
|
Gross Margin | | $ | 252 |
| | $ | 257 |
| | $ | 129 |
| | $ | 134 |
| | $ | 200 |
| | $ | 271 |
| | $ | 236 |
| | $ | 231 |
|
As % of Sales | | 22 | % | | 22 | % | | 14 | % | | 13 | % | | 21 | % | | 20 | % | | 21 | % | | 19 | % |
Freight included in revenue & cost of goods sold (in millions) | | $ | 75 |
| | $ | 90 |
| | $ | 74 |
| | $ | 112 |
| | $ | 81 |
| | $ | 100 |
| | $ | 88 |
| | $ | 103 |
|
Net sales less freight | | $ | 1,068 |
| | $ | 1,092 |
| | $ | 819 |
| | $ | 960 |
| | $ | 878 |
| | $ | 1,233 |
| | $ | 1,045 |
| | $ | 1,109 |
|
Cost of Goods Sold less freight | | $ | 816 |
| | $ | 835 |
| | $ | 690 |
| | $ | 826 |
| | $ | 678 |
| | $ | 962 |
| | $ | 809 |
| | $ | 878 |
|
PhosChem sales of other member | | $ | 14 |
| | $ | 46 |
| | $ | 15 |
| | $ | 23 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
Segment Operating Earnings | | $ | 201 |
| | $ | 191 |
| | $ | 61 |
| | $ | 64 |
| | $ | 146 |
| | $ | 219 |
| | $ | 188 |
| | $ | 135 |
|
Depreciation, Depletion and Amortization | | 69 |
| | 71 |
| | 72 |
| | 75 |
| | 79 |
| | 93 |
| | 91 |
| | 97 |
|
Equity Earnings (Loss) | | 1 |
| | 5 |
| | 3 |
| | 4 |
| | (4 | ) | | (3 | ) | | (4 | ) | | 7 |
|
EBITDA(d) | | $ | 271 |
| | $ | 267 |
| | $ | 136 |
| | $ | 143 |
| | $ | 221 |
| | $ | 309 |
| | $ | 275 |
| | $ | 239 |
|
Operating Data | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes) | | | | | | | | | | | | | | | | |
North America - DAP/MAP | | 638 |
| | 682 |
| | 515 |
| | 1,116 |
| | 747 |
| | 948 |
| | 805 |
| | 837 |
|
International - DAP/MAP(e)(g) | | 866 |
| | 795 |
| | 687 |
| | 577 |
| | 650 |
| | 1,040 |
| | 878 |
| | 882 |
|
MicroEssentials®(g) | | 430 |
| | 459 |
| | 407 |
| | 541 |
| | 510 |
| | 481 |
| | 357 |
| | 502 |
|
Feed and Other | | 131 |
| | 141 |
| | 145 |
| | 161 |
| | 144 |
| | 168 |
| | 136 |
| | 171 |
|
Total(f) | | 2,065 |
| | 2,077 |
| | 1,754 |
| | 2,395 |
| | 2,051 |
| | 2,637 |
| | 2,176 |
| | 2,392 |
|
Production Volumes ('000 tonnes) | | | | | | | | | | | | | | | | |
Total tonnes produced(n) | | 2,038 |
| | 2,049 |
| | 2,123 |
| | 1,960 |
| | 1,971 |
| | 2,458 |
| | 2,480 |
| | 2,364 |
|
Operating Rate | | 84 | % | | 84 | % | | 88 | % | | 81 | % | | 79 | % | | 84 | % | | 85 | % | | 81 | % |
Realized prices ($/tonne) | | | | | | | | | | | | | | | | |
DAP (FOB plant)(f) | | $ | 486 |
| | $ | 476 |
| | $ | 436 |
| | $ | 370 |
| | $ | 413 |
| | $ | 465 |
| | $ | 463 |
| | $ | 447 |
|
Realized costs ($/tonne) | | | | | | | | | | | | | | | | |
Ammonia (tonne)(o) | | $ | 550 |
| | $ | 517 |
| | $ | 486 |
| | $ | 422 |
| | $ | 374 |
| | $ | 473 |
| | $ | 508 |
| | $ | 544 |
|
Sulfur (long ton)(p) | | $ | 178 |
| | $ | 169 |
| | $ | 167 |
| | $ | 123 |
| | $ | 96 |
| | $ | 128 |
| | $ | 148 |
| | $ | 154 |
|
Blended rock | | $ | 64 |
| | $ | 64 |
| | $ | 58 |
| | $ | 62 |
| | $ | 64 |
| | $ | 68 |
| | $ | 60 |
| | $ | 58 |
|
Average Market prices ($/tonne) | | | | | | | | | | | | | | | | |
Ammonia (tonne)(q) | | $ | 644 |
| | $ | 578 |
| | $ | 489 |
| | $ | 467 |
| | $ | 455 |
| | $ | 557 |
| | $ | 547 |
| | $ | 625 |
|
Sulfur (long ton)(r) | | $ | 153 |
| | $ | 153 |
| | $ | 111 |
| | $ | 77 |
| | $ | 104 |
| | $ | 131 |
| | $ | 135 |
| | $ | 131 |
|
Natural Gas(s) | | $ | 3.5 |
| | $ | 4.0 |
| | $ | 3.6 |
| | $ | 3.9 |
| | $ | 4.7 |
| | $ | 4.6 |
| | $ | 4.0 |
| | $ | 3.9 |
|
Full production conversion cost/production tonne | | $ | 79 |
| | $ | 76 |
| | $ | 76 |
| | $ | 81 |
| | $ | 89 |
| | $ | 87 |
| | $ | 82 |
| | $ | 90 |
|
EBITDA(d)/sales tonne(m) | | $ | 131 |
| | $ | 129 |
| | $ | 78 |
| | $ | 60 |
| | $ | 108 |
| | $ | 117 |
| | $ | 126 |
| | $ | 100 |
|
Phosphates CAPEX (in millions) | | $ | 98 |
| | $ | 127 |
| | $ | 114 |
| | $ | 135 |
| | $ | 116 |
| | $ | 104 |
| | $ | 85 |
| | $ | 98 |
|
The Mosaic Company - International Distribution Segment
Selected Calendar Quarter Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Net Sales and Gross Margin (in millions, except per tonne) | | | | | | | | | | | | | | | | |
Segment income statement | | | | | | | | | | | | | | | | |
Net Sales | | $ | 456 |
| | $ | 615 |
| | $ | 665 |
| | $ | 549 |
| | $ | 393 |
| | $ | 542 |
| | $ | 684 |
| | $ | 516 |
|
Cost of Goods Sold | | 450 |
| | 579 |
| | 615 |
| | 520 |
| | 371 |
| | 508 |
| | 633 |
| | 475 |
|
Gross Margin | | $ | 6 |
| | $ | 36 |
| | $ | 50 |
| | $ | 29 |
| | $ | 22 |
| | $ | 34 |
| | $ | 51 |
| | $ | 41 |
|
As % of Sales | | 1 | % | | 6 | % | | 8 | % | | 5 | % | | 6 | % | | 6 | % | | 7 | % | | 8 | % |
Per tonne | | $ | 8 |
| | $ | 33 |
| | $ | 39 |
| | $ | 26 |
| | $ | 25 |
| | $ | 29 |
| | $ | 36 |
| | $ | 37 |
|
SG&A and Other Operating Expenses | | $ | 16 |
| | $ | 19 |
| | $ | 14 |
| | $ | 19 |
| | $ | 14 |
| | $ | 18 |
| | $ | 21 |
| | $ | 19 |
|
Segment Operating Earnings | | $ | (10 | ) | | $ | 17 |
| | $ | 36 |
| | $ | 10 |
| | $ | 8 |
| | $ | 16 |
| | $ | 30 |
| | $ | 22 |
|
Depreciation, Depletion and Amortization | | 2 |
| | 2 |
| | 2 |
| | 2 |
| | 2 |
| | 2 |
| | 2 |
| | 2 |
|
EBITDA(d) | | $ | (8 | ) | | $ | 19 |
| | $ | 38 |
| | $ | 12 |
| | $ | 10 |
| | $ | 18 |
| | $ | 32 |
| | $ | 24 |
|
Operating Data | | | | | | | | | | | | | | | | |
Sales volumes ('000 tonnes) | | | | | | | | | | | | | | | | |
Total | | 792 |
| | 1,102 |
| | 1,282 |
| | 1,133 |
| | 870 |
| | 1,185 |
| | 1,398 |
| | 1,113 |
|
Realized prices ($/tonne) | | | | | | | | | | | | | | | | |
Blends (FOB destination) | | $ | 557 |
| | $ | 557 |
| | $ | 504 |
| | $ | 455 |
| | $ | 449 |
| | $ | 454 |
| | $ | 469 |
| | $ | 427 |
|
Purchases ('000 tonnes) | | | | | | | | | | | | | | | | |
DAP/MAP from Mosaic | | 83 |
| | 127 |
| | 220 |
| | 212 |
| | 93 |
| | 290 |
| | 331 |
| | 214 |
|
MicroEssentials® from Mosaic | | 106 |
| | 124 |
| | 161 |
| | 131 |
| | 147 |
| | 168 |
| | 83 |
| | 56 |
|
Potash from Mosaic/Canpotex | | 216 |
| | 377 |
| | 205 |
| | 340 |
| | 269 |
| | 484 |
| | 261 |
| | 334 |
|
International Distribution CAPEX (in millions) | | $ | 1 |
| | $ | 12 |
| | $ | 6 |
| | $ | 8 |
| | $ | 8 |
| | $ | 11 |
| | $ | 7 |
| | $ | 9 |
|
Working Capital (in millions)(t) | | $ | 56 |
| | $ | (51 | ) | | $ | 103 |
| | $ | 87 |
| | $ | 38 |
| | $ | (35 | ) | | $ | 43 |
| | $ | 170 |
|
EBITDA(d)/sales tonne(m) | | $ | (10 | ) | | $ | 17 |
| | $ | 30 |
| | $ | 11 |
| | $ | 11 |
| | $ | 15 |
| | $ | 23 |
| | $ | 22 |
|
The Mosaic Company - Corporate and Other Segment
Selected Calendar Quarter Financial Information
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Net Sales and Gross Margin (in millions) | | | | | | | | | | | | | | | | |
Segment income statement | | | | | | | | | | | | | | | | |
Net Sales | | $ | (112 | ) | | $ | (152 | ) | | $ | (172 | ) | | $ | (91 | ) | | $ | (99 | ) | | $ | (197 | ) | | $ | (159 | ) | | $ | (112 | ) |
Cost of Goods Sold | | (92 | ) | | (119 | ) | | (218 | ) | | (115 | ) | | (73 | ) | | (187 | ) | | (133 | ) | | (92 | ) |
Gross Margin (loss) | | $ | (20 | ) | | $ | (33 | ) | | $ | 46 |
| | $ | 24 |
| | $ | (26 | ) | | $ | (10 | ) | | $ | (26 | ) | | $ | (20 | ) |
Elimination of profit in inventory (income) loss included in COGS | | $ | 6 |
| | $ | 8 |
| | $ | (30 | ) | | $ | (30 | ) | | $ | 9 |
| | $ | 29 |
| | $ | (3 | ) | | $ | (18 | ) |
Unrealized (gain) loss on derivatives included in COGS | | $ | 2 |
| | $ | 19 |
| | $ | (24 | ) | | $ | 3 |
| | $ | 4 |
| | $ | (26 | ) | | $ | 23 |
| | $ | 31 |
|
Segment Operating Earnings | | $ | (13 | ) | | $ | (44 | ) | | $ | (22 | ) | | $ | 16 |
| | $ | (57 | ) | | $ | (21 | ) | | $ | (10 | ) | | $ | (21 | ) |
Depreciation, Depletion and Amortization | | 5 |
| | 6 |
| | 6 |
| | 6 |
| | 6 |
| | 7 |
| | 8 |
| | 7 |
|
Equity Earnings (Loss) | | 1 |
| | — |
| | — |
| | 1 |
| | 1 |
| | 1 |
| | — |
| | — |
|
EBITDA(d) | | $ | (7 | ) | | $ | (38 | ) | | $ | (16 | ) | | $ | 23 |
| | $ | (50 | ) | | $ | (13 | ) | | $ | (2 | ) | | $ | (14 | ) |
Footnotes
| |
(a) | Diluted earnings per share has been previously published in our Form 10-Q reports and quarterly performance data. It is not impacted by the change in operating segments. |
| |
(b) | Since Q4 2013, diluted weighted average number of shares reflects the impact of shares subject to the forward contract for our contractual share repurchase obligations. |
| |
(c) | Includes a discrete income tax benefit of approximately $45 million in Q3 2013, $63 million in Q1 2014, $14 million in Q2 2014, $29 million in Q3 2014, $100 million in Q4 2014 and a discrete income tax expense of approximately $104 million in Q4 2013. |
| |
(d) | The Company defines EBITDA as operating earnings plus depreciation, depletion and amortization plus equity earnings in nonconsolidated companies. EBITDA is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a supplemental numerical measure of a company's performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with U.S. generally accepted accounting principles ("GAAP"). A reconciliation of EBITDA to the nearest comparable GAAP measure and an explanation of why we include EBITDA appear below under "Non-GAAP Reconciliation". |
| |
(e) | Includes elimination of intersegment sales. |
| |
(f) | Excludes tonnes sold by PhosChem for its other member. Effective December 31, 2013, we and PhosChem's other member each assumed responsibility for PhosChem's former activities as they related to our respective products. We subsequently dissolved PhosChem. |
| |
(g) | Sales volumes include intersegment sales. |
| |
(h) | FOB Plant, sales to unrelated parties. |
| |
(i) | Includes inbound freight, outbound freight and warehousing costs on domestic MOP sales. |
| |
(j) | The Company has presented gross margin excluding Canadian resource taxes and royalties (“CRT”) for Potash which is a non-GAAP financial measure. Generally, a non-GAAP financial measure is a supplemental numerical measure of a company’s performance, financial position or cash flows that either excludes or includes amounts that are not normally excluded or included in the most directly comparable measure calculated and presented in accordance with GAAP. Gross margin excluding CRT provides a measure that we believe enhances the reader’s ability to compare our gross margin with that of other companies which incur CRT expense and classify it in a manner different than the Company in their statement of earnings. Because securities analysts, investors, lenders and others use gross margin excluding CRT, the Company’s management believes that the Company's presentation of gross margin excluding CRT for Potash affords them greater transparency in assessing the Company’s financial performance against competitors. Because not all companies use identical calculations, investors should consider that the Company's calculation may not be comparable to other similarly titled measures presented by other companies. Gross margin excluding CRT, should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with GAAP. |
| |
(k) | Q4 2014 operating rate includes an additional 600 thousand metric tonnes of annual capacity from our Colonsay expansion. |
| |
(l) | This price excludes industrial and feed sales. |
| |
(m) | Calculated as EBITDA divided by sales tonnes. |
| |
(n) | Includes crop nutrient dry concentrates and animal feed ingredients. |
| |
(o) | Amounts are representative of our average ammonia costs in cost of goods sold. |
| |
(p) | Amounts are representative of our average sulfur cost in cost of goods sold. |
| |
(q) | Three point quarterly average (Fertecon). |
| |
(r) | Three point quarterly average (Green Markets). |
| |
(s) | Three point quarterly average (NYMEX). |
| |
(t) | Calculated as current assets less cash and liabilities for the International Distribution segment. |
The Mosaic Company
Selected Calendar Quarter Financial Information
(Unaudited)
Non-GAAP Reconciliation
EBITDA is provided to assist securities analysts, investors, lenders and others in their comparisons of operational performance, valuation and debt capacity across companies with differing capital, tax and legal structures. EBITDA should not be considered as an alternative to, or more meaningful than, net income as a measure of operating performance. Since EBITDA is not a measure determined in accordance with GAAP and is thus susceptible to varying interpretations and calculations, EBITDA, as presented, may not be comparable to other similarly titled measures of other companies. A reconciliation of net income to EBITDA is included below.
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Q1 2013 | | Q2 2013 | | Q3 2013 | | Q4 2013 | | Q1 2014 | | Q2 2014 | | Q3 2014 | | Q4 2014 |
Potash EBITDA(d) | | $ | 392 |
| | $ | 451 |
| | $ | 155 |
| | $ | 173 |
| | $ | 257 |
| | $ | 281 |
| | $ | 158 |
| | $ | 316 |
|
Phosphates EBITDA(d) | | 271 |
| | 267 |
| | 136 |
| | 143 |
| | 221 |
| | 309 |
| | 275 |
| | 239 |
|
ID EBITDA(d) | | (8 | ) | | 19 |
| | 38 |
| | 12 |
| | 10 |
| | 18 |
| | 32 |
| | 24 |
|
Corporate EBITDA(d) | | (7 | ) | | (38 | ) | | (16 | ) | | 23 |
| | (50 | ) | | (13 | ) | | (2 | ) | | (14 | ) |
Consolidated EBITDA(d) | | $ | 648 |
| | $ | 699 |
| | $ | 313 |
| | $ | 351 |
| | $ | 438 |
| | $ | 595 |
| | $ | 463 |
| | $ | 565 |
|
Consolidated Foreign Currency Gain/(Loss) | | 17 |
| | 22 |
| | (30 | ) | | 25 |
| | 43 |
| | (39 | ) | | 27 |
| | 47 |
|
Consolidated Gain (Loss) in Value of Share Repurchase Agreement | | — |
| | — |
| | — |
| | 73 |
| | (60 | ) | | (5 | ) | | 5 |
| | — |
|
Consolidated Interest Income/(Expense) | | 4 |
| | — |
| | 2 |
| | (12 | ) | | (27 | ) | | (25 | ) | | (25 | ) | | (31 | ) |
Consolidated Depreciation, Depletion & Amortization | | 155 |
| | 168 |
| | 166 |
| | 167 |
| | 174 |
| | 194 |
| | 190 |
| | 193 |
|
Consolidated Non-Controlling Interest | | — |
| | — |
| | 1 |
| | 1 |
| | — |
| | — |
| | 1 |
| | 1 |
|
Consolidated Provision from/(Benefit for)Income Taxes | | 134 |
| | 126 |
| | (6 | ) | | 131 |
| | (3 | ) | | 83 |
| | 78 |
| | 27 |
|
Consolidated Other Income (Expense) | | — |
| | 3 |
| | — |
| | (9 | ) | | (5 | ) | | (1 | ) | | 1 |
| | 1 |
|
Consolidated Net Income | | $ | 380 |
| | $ | 430 |
| | $ | 124 |
| | $ | 129 |
| | $ | 218 |
| | $ | 248 |
| | $ | 202 |
| | $ | 361 |
|
Furnished herewith as Exhibit 99.2 and incorporated by reference herein is a copy of a presentation entitled “Segment Reporting Changes March 2015,” which provides additional information regarding the Realignment and updated first quarter and full year guidance for 2015 reflecting the Realignment.
Item 9.01. Financial Statements and Exhibits.
(d) Exhibits.
Reference is made to the Exhibit Index hereto with respect to the exhibits furnished herewith. The exhibits listed in the Exhibit Index hereto are being “furnished” in accordance with General Instruction B.2. of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
| | | | | | |
| | | | | | |
| | | | THE MOSAIC COMPANY |
| | | |
Date: March 13, 2015 | | | | By: | | /s/ Mark J. Isaacson |
| | | | Name: | | Mark J. Isaacson |
| | | | Title: | | Vice President, General Counsel |
| | | | | | and Corporate Secretary |
EXHIBIT INDEX
|
| | |
Exhibit No. | | Description |
| |
99.1 | | Press release, dated March 13, 2015, of The Mosaic Company regarding the realignment of its business segments. |
| |
99.2 | | Presentation entitled "Segment Reporting Changes March 2015" |
Exhibit 99.1
|
| |
| The Mosaic Company 3033 Campus Drive, Suite E490 Plymouth, MN 55441 www.mosaicco.com |
FOR IMMEDIATE RELEASE
|
| |
Media Benjamin Pratt The Mosaic Company 763-577-6102 media@mosaicco.com | Investors Laura Gagnon The Mosaic Company 763-577-8213 investor@mosaicco.com |
THE MOSAIC COMPANY RELEASES HISTORICAL FINANCIALS
UNDER NEW SEGMENTS
Guidance For New Segments
PLYMOUTH, MN, March 13, 2015 - The Mosaic Company (NYSE: MOS) today released new historical segment financials. With Mosaic’s acquisition of Archer Daniels Midland’s (ADM) distribution business in Brazil and Paraguay, the Company will now manage and report a new International Distribution segment. Beginning with the first quarter of 2015, Mosaic will report four segments: Phosphates, Potash, International Distribution, and Corporate and Other. The new Phosphates segment will split out manufacturing from International Distribution. The Corporate and Other segment will contain legacy Argentinean and Chilean businesses, as well as mark to market adjustments on derivatives.
“The new disclosures we released today are expected to increase transparency and improve peer benchmarking and business modeling,” stated Rich Mack, Mosaic’s Executive Vice President and Chief Financial Officer. “These enhanced disclosures provide additional data and metrics across all our businesses to allow our owners and analysts to measure our strategic and financial progress. The new segmentation also provides better visibility into our Phosphates segment by separating it from our International Distribution segment.”
New Performance Data and a PowerPoint Presentation describing the new segmentation are available on Mosaic’s website at www.mosaicco.com/investors.
The Company also announced an update of the near-term price, volume and gross margin guidance reflecting the new segmentation. Finished phosphate volumes that are manufactured by Mosaic and sold through International Distribution will be accounted for in both segments. In the first quarter, Mosaic expects about 200,000 tonnes will drive both manufacturing margins in the Phosphates segment and distribution margins in the International Distribution segment.
|
| |
Phosphates (New Segment) |
Q1 Sales volume | 2.1 to 2.3 million tonnes |
Q1 DAP selling price | $450 to $460 per tonne |
Q1 Gross margin rate | High teens |
Q1 Operating rate | 80 to 85 percent |
2015 Sales Volumes | 9 to 10 million tonnes |
|
| |
International Distribution (New Segment) |
Q1 Sales volume | 0.85 to 0.95 million tonnes |
Q1 Gross margin per tonne | $24 to $27 per tonne |
2015 Sales volume | 6 to 7 million tonnes |
All other guidance remains unchanged.
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 phosphate and potash fertilizers and feed ingredients for the global agriculture industry. More information on the company is available at www.mosaicco.com.
This document 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 the Wa’ad Al Shamal Phosphate Company (also known as the Ma’aden joint venture), the acquisition and assumption of certain related liabilities of the Florida phosphate assets of CF Industries, Inc. (“CF”) and Mosaic’s ammonia supply agreements with CF; repurchases of stock; other proposed or pending future transactions or strategic plans and other 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 risks and uncertainties arising from the ability of the Ma’aden joint venture to obtain additional planned funding in acceptable amounts and upon acceptable terms, the future success of current plans for the Ma’aden joint venture and any future changes in those plans; difficulties with realization of the benefits of the transactions with CF, including the risk that the cost or capital savings from the transactions may not be fully realized or may take longer to realize than expected, or the price of natural gas or ammonia changes to a level at which the natural gas based pricing under one of the long term ammonia supply agreements with CF becomes disadvantageous to Mosaic; customer defaults; the effects of Mosaic’s decisions to exit business operations or locations; 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 economic and credit market conditions; the level of inventories in the distribution channels for crop nutrients; changes in foreign currency and exchange rates; international trade risks and other risks associated with Mosaic’s international operations and those of joint ventures in which Mosaic participates, including the risk that protests against natural resource companies in Peru extend to or impact the Miski Mayo mine; changes in government policy; changes in environmental and other governmental regulation, including greenhouse gas regulation, implementation of numeric water quality standards for the discharge of nutrients into Florida waterways or efforts to reduce the flow of excess nutrients into the Mississippi River basin, the Gulf of Mexico or elsewhere; further developments in judicial or administrative proceedings, or complaints that Mosaic’s operations are adversely impacting nearby farms, business operations or properties; difficulties or delays in receiving, increased costs of or challenges to necessary governmental permits or approvals or increased financial assurance requirements; resolution of global tax audit activity; the effectiveness of Mosaic’s processes for managing its strategic priorities; adverse weather conditions affecting operations in Central Florida, the Mississippi River basin, the Gulf Coast
of the United States or Canada, and including potential hurricanes, excess heat, cold, snow, rainfall or drought; actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental regulation, Canadian resources taxes and royalties, the liabilities Mosaic assumed in the Florida phosphate assets acquisition, or the costs of the Ma’aden joint venture, its existing or future funding and Mosaic’s commitments in support of such funding; reduction of Mosaic’s available cash and liquidity, and increased leverage, due to its use of cash and/or available debt capacity to fund share repurchases, financial assurance requirements and strategic investments; brine inflows at Mosaic’s Esterhazy, Saskatchewan, potash mine or other potash shaft mines; other accidents and disruptions involving Mosaic’s operations, including potential mine fires, floods, explosions, seismic events or releases of hazardous or volatile chemicals; and risks associated with cyber security, including reputational loss, 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.
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Segment Reporting Changes March 2015
Click to edit Master title style 2 Safe Harbor Statement This document 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 the Wa’ad Al Shamal Phosphate Company (also known as the Ma’aden joint venture), the acquisition and assumption of certain related liabilities of the Florida phosphate assets of CF Industries, Inc. (“CF”) and Mosaic’s ammonia supply agreements with CF; repurchases of stock; other proposed or pending future transactions or strategic plans and other 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 risks and uncertainties arising from the ability of the Ma’aden joint venture to obtain additional planned funding in acceptable amounts and upon acceptable terms, the future success of current plans for the Ma’aden joint venture and any future changes in those plans; difficulties with realization of the benefits of the transactions with CF, including the risk that the cost or capital savings from the transactions may not be fully realized or may take longer to realize than expected, or the price of natural gas or ammonia changes to a level at which the natural gas based pricing under one of the long term ammonia supply agreements with CF becomes disadvantageous to Mosaic; customer defaults; the effects of Mosaic’s decisions to exit business operations or locations; 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 economic and credit market conditions; the level of inventories in the distribution channels for crop nutrients; changes in foreign currency and exchange rates; international trade risks and other risks associated with Mosaic’s international operations and those of joint ventures in which Mosaic participates, including the risk that protests against natural resource companies in Peru extend to or impact the Miski Mayo mine; changes in government policy; changes in environmental and other governmental regulation, including greenhouse gas regulation, implementation of numeric water quality standards for the discharge of nutrients into Florida waterways or efforts to reduce the flow of excess nutrients into the Mississippi River basin, the Gulf of Mexico or elsewhere; further developments in judicial or administrative proceedings, or complaints that Mosaic’s operations are adversely impacting nearby farms, business operations or properties; difficulties or delays in receiving, increased costs of or challenges to necessary governmental permits or approvals or increased financial assurance requirements; resolution of global tax audit activity; the effectiveness of Mosaic’s processes for managing its strategic priorities; adverse weather conditions affecting operations in Central Florida, the Mississippi River basin, the Gulf Coast of the United States or Canada, and including potential hurricanes, excess heat, cold, snow, rainfall or drought; actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental regulation, Canadian resources taxes and royalties, the liabilities Mosaic assumed in the Florida phosphate assets acquisition, or the costs of the Ma’aden joint venture, its existing or future funding and Mosaic’s commitments in support of such funding; reduction of Mosaic’s available cash and liquidity, and increased leverage, due to its use of cash and/or available debt capacity to fund share repurchases, financial assurance requirements and strategic investments; brine inflows at Mosaic’s Esterhazy, Saskatchewan, potash mine or other potash shaft mines; other accidents and disruptions involving Mosaic’s operations, including potential mine fires, floods, explosions, seismic events or releases of hazardous or volatile chemicals; and risks associated with cyber security, including reputational loss, 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.
• Following acquisition of Archer Daniels Midland’s (ADM) fertilizer business Mosaic realigned management and reporting of results into four segments: – Potash – Phosphates – International Distribution – Corporate and Other • Expected outcomes/benefits: – Increased transparency – Improved peer benchmarking – Ease of modeling 3 Summary Provides execution proof points of strategic and operational initiatives
4 Summary of Changes • Potash, Phosphates and International Distribution Segments will no longer include mark-to-market gains/losses on derivatives. • Phosphates Segment now captures only manufacturing economics, with inter- segment transactions based on arms length transfer pricing methodology with the International Distribution segment. • Phosphates Segment will include our equity earnings from our Miski Mayo and Ma’aden investments. • The new International Distribution segment will capture the lower margin, less capital intense distribution businesses currently operating in Brazil and Paraguay, India and China. • The Corporate and Other segment includes inter-segment eliminations, the mark-to-market gains/losses on derivatives, debt expenses, as well as the legacy Argentina and Chile results. • We have also provided incremental disclosures to facilitate benchmarking and analytics. Old and new metrics are defined at the end of this deck.
5 Business Drivers: 101 • Realized prices are reported FOB mine. • Mix of domestic vs. international shipments impacts price realization. Price realizations reported exclude impact of intercompany sales to International Distribution. • Realized prices also lag spot market (supply chain length). • Over 70% of costs are fixed in the short term, so per tonne costs fluctuate with operating rate. • Production mix (between mines) also impacts average costs/tonne. • K-Mag ® sells at a premium to MOP on a K20 content basis. • Phosphates is a margin business with market prices for raw materials (ammonia & sulfur) generally correlated to prices of finished product. • Realized prices are reported FOB plant. Price realizations reported exclude impact of intercompany sales to International Distribution. • Realized DAP price is provided as the reference price, however, the company sells multiple products, so product mix impacts revenues and margins. • Ammonia costs realized in costs of goods sold are expected to be lower starting in 2017 as a result of deliveries under a long-term contract with price based on natural gas costs. • Over time, shift to higher mix of MicroEssentials® is expected to benefit margins. Potash Phosphates
6 Potash Segment – More Detail • Accounting Review: • Continue to include domestic freight revenue in net sales. → Canpotex revenues exclude freight • Continue to include in costs of good sold (COGS): → Canadian resource taxes & royalties → Freight costs (associated freight revenues) • Depreciation, depletion & amortization (DD&A) was increased as a result of a step up in asset values at inception of Mosaic formation. → Average asset life for depreciation = 24 years for building and improvements and 14 years for machinery and equipment. • New Disclosures: • Freight revenues and costs • Cash COGS per sales tonne • EBITDA per sales tonne • Key Business Relationships: • With ~ 70% of product costs fixed, operating rate is key driver of cash costs per tonne of production → One percentage point swing in operating rate (all else equal) = $1 change in cash costs per tonne (assuming same production profile by mine). • Canadian resource taxes (CRT) are a driven by profitability before CRT less CAPEX.
7 Phosphates Segment – More Detail • Accounting Review: • Continue to include freight in both revenue and costs of goods sold. • Depreciation, depletion & amortization (DD&A) is historically higher than competitors as a result of a step up in asset values at inception of Mosaic formation. • Additionally, DD&A increased roughly $14 million per quarter as a result of the recent CF Industries’ phosphate business acquisition. • New Disclosures: • Freight revenue and costs • Full production conversion costs per production tonne • EBITDA per sales tonne • Total MicroEssentials sales volumes (prior disclosures excluded sales through International Distribution blends) • Key Business Relationships: • Realized raw material costs are normally one quarter lagged from purchase prices. • Realized ammonia costs are a function of both internal production and market purchases. Faustina ammonia plant’s operating capacity is 500 thousand tonnes. Annual ammonia consumption is ~1.8 million tonnes. • Costs to produce one tonne of DAP = 1.7x blended rock costs + 0.2x realized ammonia costs + 0.4x realized sulfur costs + conversion costs. • MicroEssentials products generate a margin premium over DAP.
8 International Distribution Segment • Accounting Overview: • Prices and revenue include transportation costs. • All of the Selling, General and Administrative (SG&A) expenses are local. • Revenue and profit from products sold to International Distribution from the Phosphates and Potash segments that are not sold to end customers in the same period are eliminated in a Corporate and Other segment adjustment called profit in inventory adjustment. As inventory levels and profits change this amount could be positive or negative. • Key Business Relationships: • The historical seasonality in this business has resulted in the third quarter normally being the strongest and first quarter the weakest in terms of volumes which often impact gross margin per tonne. • Blends prices vary based on nutrient content mix. • Over time, increasing sell-through of MicroEssentials® is expected to drive higher margins, both per tonne and in absolute. • Business Strategy is Two-fold: • First, to increase the value of the phosphates and potash manufacturing businesses by → providing market access to geographies outside North America, → allowing the flexibility to manage seasonality in demand and maintaining consistent North American operating rates, as well as → supporting premium product growth. • And, second, to run a successful stand-alone distribution business.
9 Guidance Update Phosphates Guidance Q1 Sales volume 2.1 to 2.3 million tonnes Q1 DAP selling price $450 to $460 per tonne Q1 Gross margin rate in the high teens Q1 Operating rate in the 80 to 85 percent range 2015 Sales volume 9 to 10 million tonnes International Distribution Guidance Q1 Sales volume 0.85 to 0.95 million tonnes Q1 Gross margin of $24 to $27 per tonne 2015 Sales volumes 6 to 7 million tonnes Prior phosphate volume and margin guidance reflected the combined manufacturing and distribution businesses. This guidance aligns with new segment reporting. This guidance also reflects roughly 0.2 million tonnes of volumes manufactured by the Phosphates business and sold through the International Distribution business. All other guidance remains unchanged.
10 Appendix: Select Metric Definitions Metric: Potash Definition Cash COGS per sales tonne Cash COGS per sales tonne are calculated excluding resources taxes and royalties, freight and DD&A. Royalties are included in the calculation. MOP North America realized price Excludes non-agricultural product prices MOP average realized price Includes non-agricultural product prices Sales volumes Sales volumes include intercompany sales Metric: Phosphates Definition Sulfur realized costs Purchased price of sulfur plus ~$20/tonne of transportation, transformation and storage costs Ammonia realized costs Blended ammonia costs (purchased and produced) plus ~$30/tonne of transportation and storage costs Blended rock costs Average realized rock costs including purchased phosphate rock, Miski Mayo JV off-take and Florida mined rock Miski Mayo JV rock costs Recorded through the P&L at market price with an off-set in equity earnings Full production conversion costs per production tonne Chemical plant costs including related DD&A per production tonne DAP realized prices DAP realized prices exclude intercompany sales Sales volumes Sales volumes include intercompany sales
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