The Mosaic Company MOS swung to a profit of $112.3 million or 29 cents per share in the fourth quarter of 2018 from a loss of $431.1 million or $1.23 per share in the year-ago quarter.
Adjusted earnings of 77 cents per share for the reported quarter trounced the Zacks Consensus Estimate of 57 cents.
Net sales rose roughly 20% year over year to $2,520.5 million in the quarter, mainly driven by the Vale Fertilizantes acquisition and higher sales prices. The figure also exceeded the Zacks Consensus Estimate of $2,348 million.
The Mosaic Company Price, Consensus and EPS Surprise
The Mosaic Company Price, Consensus and EPS Surprise | The Mosaic Company Quote
FY18 Results
For 2018, profits were $470 million or $1.22 per share compared with a loss of $107.2 million or 31 cents recorded in 2017. Full-year adjusted earnings were $2.12 per share, up 92% year over year.
Net sales for the year went up around 29% year over year to $9,587.3 million.
Segment Highlights
Net sales from Mosaic’s Phosphates segment were $926 million in the quarter, down from $1 billion in the prior-year quarter. Higher realized sales prices were more than offset by lower sales volumes. The segment’s gross margin increased to $151 million from $133 million in the year-ago quarter, mainly driven by higher realized sales prices and increased proportion of premium MicroEssentials sales.
Potash division’s sales rose around 19% year over year to $592 million in the quarter on the back of higher sales volumes and average sales prices. Gross margin in the quarter was $202 million, up from $114 million in the year-ago quarter. The rise was mainly driven by higher average sales prices that more than offset higher Canadian resource taxes.
Net sales in the Mosaic Fertilizantes segment were $969 million, up around 86% year over year, driven by higher realized sales prices and the Vale Fertilizantes acquisition. Gross margin increased to $118 million from $32 million in the year-ago quarter on the back of better distribution margins and the addition of the acquired production business.
Financials
Mosaic ended 2018 with cash and cash equivalents of $847.7 million, down around 61% year over year. Long-term debt fell roughly 8% year over year to around $4,491.5 million.
Cash flow from operating activities was $191 million in the reported quarter, down from $411 million a year ago, impacted by unfavorable working capital changes. Mosaic’s capital expenditures were $328 million in the quarter. Cash flow from operating activities for 2018 was $1.45 billion, up from $936 million in 2017.
Outlook
Moving ahead, Mosaic expects its strong business and financial performance to continue this year. The company expects adjusted earnings per share in the range of $2.10-$2.50 per share for 2019. It also expects adjusted EBITDA for 2019 in the band of $2.2-$2.4 billion.
Mosaic expects phosphates sales volumes in the band of 1.6-1.9 million tons for the first quarter of 2019. The segment’s gross margin is forecast in the band of $40-$50 per ton.
Potash sales volumes have been forecast in the range of 1.7-2 million tons for the first quarter and gross margin is projected in the band of $90-$100 per ton.
The company also expects sales volumes in the Mosaic Fertilizantes segment in the band of 1.3-1.6 million tons for the first quarter. The company also projects gross margin for the unit in the range of $40-$50 per ton.
Zacks Rank & Stocks to Consider
Mosaic currently sports a Zacks Rank #2 (Buy).
Other top-ranked stocks worth considering in the basic materials space include Kirkland Lake Gold Ltd. KL, Israel Chemicals Ltd. ICL and Franco-Nevada Corporation FNV.
Kirkland Lake Gold has an expected earnings growth rate of 20.9% for the current year and carries a Zacks Rank #1 (Strong Buy). Its shares have surged around 125% in the past year. You can see the complete list of today’s Zacks #1 Rank stocks here.
Israel Chemicals has an expected earnings growth rate of 10.8% for the current year and carries a Zacks Rank #2. The company’s shares have rallied around 26% over the past year.
Franco-Nevada has an expected earnings growth rate of 11.2% for the current year and carries a Zacks Rank #2. Its shares have gained roughly 3% in the past year.
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