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Mosaic's (MOS) Earnings and Sales Surpass Estimates in Q2

The Mosaic Company MOS logged net income of $47.4 million or 12 cents per share in second-quarter 2020 against a net loss of $233.1 million or 60 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 11 cents that beat the Zacks Consensus Estimate of a loss of 4 cents.

Net sales fell 6.1% year over year to $2,044.7 million in the quarter. However, the figure beat the Zacks Consensus Estimate of $1,871.5 million.

The Mosaic Company Price, Consensus and EPS Surprise

The Mosaic Company Price, Consensus and EPS Surprise

The Mosaic Company price-consensus-eps-surprise-chart | The Mosaic Company Quote

Segment Highlights

Net sales in the Phosphates segment were $763 million in the quarter, down 16.8% year over year due to lower sales prices. The segment’s gross margin improved to $7 from a loss of $7 million in the year-ago quarter as lower raw material costs, strong volumes and production cost improvement overcame price declines.

Potash division’s net sales dropped 7.3% year over year to $555 million mainly due to lower prices, which was partly offset by higher sales volumes during the North America spring planting season. Gross margin in the quarter was $132 million, down 27.1% year over year, as lower prices more than offset lower production costs and higher sales volumes.

Net sales in the Mosaic Fertilizantes segment were $787 million, down 5.5% year over year. Results were affected from lower prices that more than offset stronger sales volumes. Gross margin increased to $101 million from $35 million in the year-ago quarter due to lower turnaround and idle costs as well as considerable currency tailwinds.

Financials

At the end of first six months, Mosaic had cash and cash equivalents of $1,073.3 million, up 167.1% year over year. Long-term debt fell 0.3% year over year to $4,527.9 million.

Net cash provided by operating activities rose 62% year over year to $813.7 million in the reported quarter. The company’s capital expenditures were $257 million in the quarter.

Outlook

For 2020, Mosaic now expects depreciation, depletion and amortization of $860-$910 million compared with $910-$920 million expected earlier. The company continues to anticipate net interest expenses of $180-$190 million for 2020. Capital expenditure is expected to be around $1.2 billion for 2020.

The company also stated that phosphate fertilizer products prices have strengthened globally. This reflects tightening supply and demand balance. Further, it expects potash prices to be stable. The risk of coronavirus is also expected to persist throughout the remainder of 2020.

Price Performance

Shares of Mosaic have lost 42% over a year compared with the industry’s 25.4% decline.



Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space include Equinox Gold Corp. EQX, Gold Fields Limited GFI and Northern Dynasty Minerals Ltd. NAK, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Equinox Gold has an expected earnings growth rate of 255.2% for 2020. The company’s shares have surged 103% in the past year.

Gold Fields has an expected earnings growth rate of 35.7% for 2020. Its shares have returned 121.1% in the past year.

Northern Dynasty has an expected earnings growth rate of 35.7% for 2020. The company’s shares have gained 88.2% in the past year.

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