The Mosaic Company's MOS profits tumbled in third-quarter 2015, hurt by lower net sales.
Mosaic logged a profit of $160 million or 45 cents per share in the reported quarter, down roughly 21% from $201.9 million or 54 cents per share a year ago. Earnings, barring one-time items, were 62 cents per share, which surpassed the Zacks Consensus Estimate of 52 cents.
The Minnesota-based company’s revenues fell roughly 6.5% year over year to $2,105.5 million in the quarter owing to lower volumes and prices. Sales, however, missed the Zacks Consensus Estimate of $2,361 million.
Segment Highlights
Revenues from Mosaic’s Phosphates segment declined roughly 9% year over year to $1 billion in the quarter on lower sales volumes and reduced lower realized prices. The segment’s gross margin shrank around 15.7% to $199 million due to lower margins on monoammonium phosphates and higher conversion costs per ton.
Segment sales volumes went down roughly 5% year over year to 2.1 million tons. Average selling price fell around 3% to $451 per ton in the quarter from $463 per ton in the prior-year quarter.
Potash division sales decreased around 17% year over year to $492 million in the quarter, hurt by lower sales volumes and lower average realized prices. Sales volumes fell roughly 11% year over year to 1.6 million tons, while selling price declined roughly 9% to $265 per ton from $291 per ton a year ago. Gross margin decreased 37% year over year to $97 million, dragged down by lower average realized prices.
Revenues from the International Distribution segment increased around 21% year over year to $825 million on higher volumes from the ADM acquisition. Gross margin climbed around 20% to $61 million. Selling price fell around 17% to $400 per ton, while volumes grew roughly 43% to 2 million tons.
Financials
Mosaic ended the quarter with cash and cash equivalents of $1,284.9 million, down around 57% year over year. Long-term debt decreased roughly 1% over year to $3,738.1 million. Mosaic’s capital expenditures were $245 million in the reported quarter. Operating cash flow was $184 million in the quarter, down around 51% year over year.
Outlook
Mosaic, which is among the top fertilizer makers, along with Potash Corp. POT, Agrium AGU and CF Industries CF, is optimistic about its fourth-quarter results as the company expects its production to match up with anticipated demand. The company also expects to gain from its strategic actions.
Mosaic anticipates phosphates sales volumes in the band of 1.9–2.2 million tons for the fourth quarter compared with 2.4 million tons achieved a year ago. Average selling price for the quarter is projected to be in the band of $410–$440 per ton. The segment’s gross margin for the quarter is expected in the high teens, while operating rate is estimated to be around 80%.
Potash sales volumes have been projected in the range of 1.8–2.1 million tons for the fourth quarter versus 2.3 million tons a year ago. Average selling price for the quarter is expected in the range of $235–$255 per ton. The segment’s gross margin is expected to be in the mid-20% range in the fourth quarter. Operating rate is estimated to be around 70%.
Sales volumes for the International Distribution segment are expected in the band of 1.3–1.6 million tons for the fourth quarter compared with 1.1 million tons a year ago. Segment gross margin is anticipated in the range of $23–$28 per ton for the quarter.
For 2015, capital expenditures and investments are now expected in the range of $1.1 billion–$1.2 billion versus $1.1 billion–$1.3 billion expected earlier.
Mosaic currently has a Zacks Rank #5 (Strong Sell).
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