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Mosaic (MOS) Tops Q3 Earnings and Revenue Estimates


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Mosaic MOS reported earnings of 11 cents per share in the third quarter of 2016, down from 45 cents per share recorded a year ago. Earnings, barring one-time items, were 33 cents per share that topped the Zacks Consensus Estimate of 11 cents.

The Minnesota-based company's revenues fell roughly 7.3% year over year to $1,952.2 million in the reported quarter. The figure, however, beat the Zacks Consensus Estimate of $1,892 million.

Segment Highlights

Revenues from Mosaic's Phosphates segment declined to $930 million in the quarter from $1 billion in the prior year quarter owing to lower prices of finished product. The segment's gross margin shrunk around 49.2% to $101 million due to lower average selling prices, partly offset by lower realized ammonia and sulfur costs and gains from the company's cost-cutting actions.

Potash division's sales slipped around 13% year over year to $428 million in the quarter, hurt by lower average realized prices. Gross margin tumbled 58.8% year over year to $40 million, hurt by lower selling prices, partly offset by reduced Canadian resource taxes and benefits of cost reduction measures.  

Revenues from the International Distribution segment went up around 2.9% year over year to $849 million as increased sales volumes more than offset lower average selling prices. Gross margin increased around 16.4% to $71 million.

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Financials

Mosaic's cash and cash equivalents amounted to $653.5 million as of Sep 30, 2016, down around 49.1% year over year. Long-term debt fell to $3,450.3 million as of Sep 30, 2016 from $3738.1 million as of Sep 30, 2015. Mosaic's capital expenditures and investments were $380 million in the reported quarter. Operating cash flow was $96 million in the quarter, down from $184 million in the year ago quarter.

Outlook

Mosaic expects phosphates sales volumes in the band of 2.1 million to 2.4 million tons for the fourth quarter of 2016 versus 2.2 million tons for the same quarter in 2015. Average selling price, FOB plant, is expected to be in the range of $300 to $330 per ton. The segment gross margin rate is forecast to be in the upper single digits.

Potash sales volumes have been forecast in the range of 1.9 million to 2.1 million tons for the fourth quarter, compared with 1.9 million tons in the prior year quarter. Average selling price, FOB plant, is expected to rise sequentially to $160 to $175 per ton and the gross margin rate is anticipated to be in the mid- teens.

Total sales volumes for the International Distribution segment are expected to range from 1.7 to 1.9 million tons for the fourth quarter of 2016. The segment gross margin is estimated to be around $20 per ton.

For 2016, the company expects selling, general and administrative (SG&A) expense to range from $315 to $330 million, further lowered from the initial guidance of $350 to $370 million.

The effective tax rate is expected to be around 0%, down from earlier guidance of roughly 10%.

Capital expenditures are forecast in the range of $750 to $850 million, down from the initial guidance of $900 million to $1.1 billion.

MOSAIC CO/THE Price, Consensus and EPS Surprise

MOSAIC CO/THE Price, Consensus and EPS Surprise | MOSAIC CO/THE Quote

Zacks Rank

Mosaic currently has a Zacks Rank #3 (Hold).

Some better-ranked companies in the basic materials space include Newmont Mining Co. NEM , Pershing Gold Corp. PGLC and Eldorado Gold Corp. EGO all carrying a Zacks Rank #2 (Buy). You can see the complete list of today's Zacks #1 (Strong Buy) Rank stocks here .

Newmont has an expected earnings growth rate of 82.8% for the current year.

Pershing Gold has an expected earnings growth rate of 26.3% for the current year.

Eldorado Gold has an expected earnings growth rate of 120% for the current year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing , Business , Earnings , Stocks
Referenced Symbols: MOS , NEM , EGO , PGLC


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