Mosaic (MOS) Earnings Miss, Sales Surpass Estimates in Q1

The Mosaic Company MOS slipped to a loss of $203 million or 54 cents per share in first-quarter 2020 from a profit of $130.8 million or 34 cents in the year-ago quarter. The bottom line in the reported quarter was affected by $295 million in non-cash foreign currency losses.

Barring one-time items, adjusted loss per share was 6 cents, wider than the Zacks Consensus Estimate of a loss of 5 cents.

Net sales fell 5.3% year over year to $1,798.1 million in the quarter, hurt by reduced sales prices. The figure, however, beat the Zacks Consensus Estimate of $1,641.3 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 $619 million in the quarter, down 23.2% year over year due to lower sales prices. The segment’s gross margin slipped to a loss of $83 from profit of $55 million in the year-ago quarter as lower prices and the cost impacts of reduced operating rate were partly offset by improved raw material costs.

Potash division’s sales dropped 12.3% year over year to $442 million mainly due to lower prices. Gross margin in the quarter was $109 million, down 41% year over year, as lower prices more than offset lower costs.

Net sales in the Mosaic Fertilizantes segment were $731 million, up 4.7% year over year, despite a weaker pricing environment. Gross margin increased to $66 million from $52 million in the year-ago quarter due to enhanced volumes and margins in the distribution business as well as substantial currency tailwind.

Financials

Mosaic ended the quarter with cash and cash equivalents of $1,069.2 million, up 178% year over year. Long-term debt was essentially flat year over year at $4,525.2 million.

Net cash provided by operating activities was $189.9 million in the reported quarter. The company’s capital expenditure was $263.5 million in the first quarter.

Outlook

Mosaic expects depreciation, depletion and amortization of $910-$920 million for 2020. Moreover, it anticipates net interest expenses of $180-$190 million for 2020.

Also, the company anticipates capital expenditure of roughly $1.2 billion for 2020.

Mosaic also expects to receive cash proceeds of up to $170 million from tax refunds and unwinding of an interest rate swap in 2020. The company also noted that it expects to achieve $50 million in Mosaic Fertilizantes' transformational savings for 2020.

Price Performance

Shares of Mosaic have lost 56.6% over a year compared with the industry’s 34.3% decline.

 

 

Zacks Rank & Stocks to Consider

The company currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Equinox Gold Corp. EQX, Franco-Nevada Corporation FNV and Kinross Gold Corporation KGC.

Equinox Gold currently sports a Zacks Rank #1 (Strong Buy) and has a projected earnings growth rate of 231% for 2020. The company’s shares have gained 52.3% in a year. You can see the complete list of today’s Zacks #1 Rank stocks here.

Franco-Nevada has a projected earnings growth rate of 22% for 2020. It currently carries a Zacks Rank #2 (Buy). The company’s shares have rallied 101.3% in a year.

Kinross has a projected earnings growth rate of 52.9% for 2020. The company’s shares have surged 123.2% in a year. It currently has a Zacks Rank #2.

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