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Mosaic (MOS) Q1 Earnings Miss Estimates, Sales Top, View Up

The Mosaic CompanyMOS swung to a profit in the first quarter of 2018, aided by higher realized prices for nutrients and improved market conditions. The Minnesota-based fertilizer maker logged a profit of $42 million or 11 cents per share, against a loss of $1 million or break-even per share recorded a year ago.

Adjusted earnings of 20 cents per share for the reported quarter, however, trailed the Zacks Consensus Estimate of 24 cents. Adjusted earnings were affected by a delayed spring season and weather-related issues that hurt sales volumes for phosphate and potash in the quarter.  

The company's revenues rose roughly 22% year over year to $1,933.7 million in the quarter, driven by the Vale Fertilizantes acquisition. It beat the Zacks Consensus Estimate of $1,877 million.

The Mosaic Company Price, Consensus and EPS Surprise

The Mosaic Company Price, Consensus and EPS Surprise | The Mosaic Company Quote

Segment Highlights

Revenues from Mosaic's Phosphates segment were up 3% year over year to $866 million in the reported quarter as higher average realized sales prices more than offset reduced sales volumes due to a delayed spring season and logistical headwinds. The segment's gross margin increased to $97 million from $57 million a year ago, driven by higher realized sales prices and operational improvements. Average finished product selling price rose to $431 per ton from $369 per ton a year ago while sales volumes fell 17% to 1.9 million tons.

Potash division's sales dipped around 2% year over year to $404 million in the quarter as lower sales volumes more than offset higher average realized sales prices. Gross margin in the quarter was $102 million, up from $69 million reported a year ago. The rise was mainly driven by higher average realized sales prices.  Average selling price rose to $239 per ton from $210 per ton a year ago while sales volumes fell 15% to 1.7 million tons.

Revenues from the Mosaic Fertilizantes segment went up around 56% year over year to $665 million, aided by higher selling prices. Gross margin increased to $59 million from $18 million a year ago on the back of the Vale Fertilizantes acquisition. Average finished product selling price rose to $420 per ton from $375 per ton a year ago.

Financials

Mosaic ended the quarter with cash and cash equivalents of $659.4 million, down around 2% year over year. Total long-term debt rose 34% year over year to $5.1 billion.

Mosaic's capital expenditures were $223 million in the reported quarter.

Outlook

Mosaic bumped up its adjusted earnings per share guidance for 2018 factoring in improved market conditions. For 2018, the company now expects adjusted earnings to be in the range of $1.20-$1.60 per share, up from its prior view of $1.00-$1.50 per share.

Mosaic expects phosphates sales volumes in the band of 2.1 million to 2.4 million tons for the second quarter of 2018. The segment's adjusted gross margin is expected to be in the band of $65 to $75 per ton.

Potash sales volumes have been forecast in the range of 2.1-2.4 million tons for the second quarter and the adjusted gross margin is anticipated to be in the band of $50 to $60 per ton.

Selling, general & administrative expenses are forecasted to be between $325 million and $350 million for the year. Capital expenditure is anticipated to be in the range of $900-$1,100 million for 2018.

Price Performance

Mosaic's shares have moved up 22.5% in the last six months, outperforming the 4% gain of its industry .

Zacks Rank & Other Stocks to Consider

Mosaic is a Zacks Rank #3 (Hold) stock.

Better-ranked stocks in the basic materials space are Kronos Worldwide Inc. KRO , Celanese Corporation CE and Methanex Corporation MEOH .

Kronos has an expected long-term earnings growth rate of 5% and flaunts a Zacks Rank #1 (Strong Buy). The company's shares have moved up around 31% in a year. You can see the complete list of today's Zacks #1 Rank stocks here .

Celanese has an expected long-term earnings growth rate of 8.9% and flaunts a Zacks Rank #1. Its shares have gained roughly 25% over a year.

Methanex has an expected long-term earnings growth rate of 15% and carries a Zacks Rank #2 (Buy). Its shares have roughly 48% over a 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.


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

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