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Mosaic's (MOS) Earnings Beat, Sales Miss Estimates in Q3

Zacks Equity Research
·4 min read

The Mosaic Company MOS logged net loss of $6.2 million or 2 cents per share in third-quarter 2020 compared with a net loss of $44.1 million or 11 cents in the year-ago quarter.

Barring one-time items, adjusted earnings per share were 23 cents that beat the Zacks Consensus Estimate of 22 cents.

Net sales fell 13.5% year over year to $2,381.5 million in the quarter. The figure missed the Zacks Consensus Estimate of $2,408.7 million.

The Mosaic Company Price, Consensus and EPS Surprise

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 $745 million in the quarter, down 9.1% year over year. Sales volumes in the segment went down 6% year over year due to inventory limitations stemming from a strong spring season. The segment’s gross margin improved to $11 from a loss of $10 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 24.7% year over year to $464 million due to lower prices. Sales volumes in the segment fell 2% year over year. Gross margin in the quarter was $108 million, down 31.6% year over year.

Net sales in the Mosaic Fertilizantes segment were $1,140 million, down 17.9% year over year. Results were affected from lower prices that more than offset stronger sales volumes. Gross margin increased to $177 million from $132 million in the year-ago quarter.

Financials

At the end of first nine months, Mosaic had cash and cash equivalents of $923 million, up 44% year over year. Long-term debt fell 0.3% year over year to $4,519.5 million.

Net cash provided by operating activities fell 29.9% year over year to $340.6 million in the reported quarter. The company’s capital expenditures were $265 million in the quarter.

Outlook

For 2020, Mosaic now expects depreciation, depletion and amortization of $860-$900 million compared with $860-$910 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 strengthening fundamental trends is expected to continue in 2021. Factors like strong crop demand, affordable inputs and favorable weather makes grower economics across the globe attractive.

Price Performance

Shares of Mosaic have lost 8.4% over a year compared with the industry’s 7.1% decline.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the basic materials space are Agnico Eagle Mines Limited AEM, Barrick Gold Corporation GOLD and Comstock Mining, Inc. LODE. While Agnico Eagle sports a Zacks Rank #1 (Strong Buy), Barrick and Comstock Mining carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Agnico Eagle has an expected earnings growth rate of 100% for 2020. Its shares have returned 35.3% in the past year.

Barrick has an expected earnings growth rate of 100% for 2020. The company’s shares have surged 63.9% in the past year.

Comstock Mining has an expected earnings growth rate of 370% for 2020. The company’s shares have gained 117.1% in the past year.

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Barrick Gold Corporation (GOLD) : Free Stock Analysis Report
 
Agnico Eagle Mines Limited (AEM) : Free Stock Analysis Report
 
The Mosaic Company (MOS) : Free Stock Analysis Report
 
Comstock Mining, Inc. (LODE) : Free Stock Analysis Report
 
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