The Mosaic Company (MOS) Misses Q2 EPS by 7c

The Mosaic Company (NYSE: MOS) reported Q2 EPS of $0.06, ex-items, $0.07 worse than the analyst estimate of $0.13. Revenue for the quarter came in at $1.7 billion versus the consensus estimate of $1.76 billion.

"We are taking the necessary actions to ensure Mosaic remains competitive across all points of the business cycle," said Joc O'Rourke, President and Chief Executive Officer. "While the environment is challenging, we see signs of stabilization in the second half of the year, with fertilizer prices bottoming and solid demand for our products. At the same time, we are taking action to preserve cash and reduce operating expenses, and believe Mosaic is well positioned to outperform in better markets."

"We are focused on optimizing cash flow and protecting our balance sheet," said Rich Mack, Mosaic's Executive Vice President and Chief Financial Officer. "At the same time, we continue to look for new growth opportunities during the bottom part of the cycle."

Third Quarter Financial Guidance

"With clarity on China and India potash needs, along with strong global demand and supply adjustments, we believe potash prices have bottomed and we see potential for modest price increases in the second half of the year," said O'Rourke.

Total sales volumes for the Phosphates segment are expected to range from 2.4 to 2.7 million tonnes for the third quarter of 2016, compared to 2.0 million tonnes last year. Mosaic's realized DAP price, FOB plant, is estimated to range from $310 to $340 per tonne. The segment gross margin rate is estimated to be around 10 percent, and the operating rate is expected to be approximately 85 percent.

Total sales volumes for the Potash segment are expected to range from 1.8 to 2.1 million tonnes for the third quarter of 2016, compared to 1.6 million tonnes last year. Mosaic's realized MOP price, FOB plant, is estimated to range from $160 to $175 per tonne and the gross margin rate is estimated to be in the mid-single digits. The operating rate is expected to be approximately 65 percent.

Total sales volumes for the International Distribution segment are expected to range from 2.1 to 2.4 million tonnes for the third quarter of 2016, compared to 2.0 million tonnes last year. The segment gross margin is estimated to be in the $15 to $20 dollar per tonne range.

For calendar year 2016, Mosaic updated its guidance as follows:

• SG&A expense to range from $330 to $350 million, down from the initial guidance of $350 to $370 million.
• Brine management costs to range from $150 to $170 million, down from $160 to $180 million.
• Capital expenditures to range from $750 to $850 million, down from the Company's most recent guidance of $800 to $900 million. Equity investments in the Ma'aden Wa'ad Al Shamal Phosphate Company are $220 million.
• CRT to range from $95 to $110 million; the Company will no longer provide CRT rate guidance.
• The effective tax rate to be approximately 10 percent, down from prior guidance of upper teens.

All other full year 2016 guidance remains unchanged:

• Phosphates sales volumes to range from 9.0 to 9.75 million tonnes.
• Potash sales volumes to range from 7.5 to 8.0 million tonnes.
• International Distribution sales volumes to range from 6.0 to 7.0 million tonnes.

For earnings history and earnings-related data on The Mosaic Company (MOS) click here.

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