Mosaic's (MOS) Q2 Earnings Miss Estimates, Revenues Beat
The Mosaic Company MOS reported a second-quarter 2023 net income of $369 million or $1.11 per share, down from $1,035.9 million or $2.85 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were $1.04, missing the Zacks Consensus Estimate of $1.07.
Net sales declined roughly 36.8% year over year to $3,394 million in the quarter. It surpassed the Zacks Consensus Estimate of $3180.3 million. The decline in sales was primarily due to lower selling prices.
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 Potash segment were $849 million in the reported quarter, down around 47% from $1.6 billion in the prior year’s quarter. Sales volumes totaled 2.2 million tons, down 4.3%. The figure is higher than our estimate of 2.183 million tons. The segment’s gross margin decreased to $336 million from $928 million in the year-ago quarter.
The Phosphate division’s net sales were $1.3 billion, down 27.8% from $1.8 billion in the prior-year period. Sales volumes in the segment rose 11.8% year over year to 1.9 million tons, higher than our estimate of 1.823 million tons. The gross margin in the quarter was $216 million, down from $642 million.
Net sales in the Mosaic Fertilizantes segment were around $1.4 billion in the quarter, down around 39.1% year over year. Sales volume in the quarter declined 4.3% to 2.4 million tons. The gross margin in the quarter was $13 million, down from $450 million in the prior-year quarter.
Financials
At the end of the quarter, Mosaic had cash and cash equivalents of $626.1 million, down from $735.4 million as of Dec 31, 2022. Long-term debt increased to $2,423.3 million from $2,411.9 million as of Dec 31, 2022.
Net cash provided by operating activities increased roughly 32.3% year over year to $1,073 million in the reported quarter.
Outlook
The company stated it remains committed to carrying out investments with high returns with moderate capital expenditures, such as the expansion of MicroEssentials capacity at its Riverview facility, constructing a new blending and distribution center in Palmeirante, Brazil, executing the construction of a purified phosphoric acid plant for sale in North Americ, and installing a Hydrofloat flotation system at Esterhazy's K2 mill. The estimated total capital expenditures for 2023 are $1.3 to $1.4 billion.
Mosaic aims to return substantial free cash flow in 2023 to shareholders. Mosaic strives to maintain a healthy balance sheet. In the second quarter, the company closed on a $700 million 10-year term credit facility under the Farm Credit System, allowing it additional flexibility to manage its capital.
Price Performance
Shares of Mosaic have lost 24% in the past year compared with a 22.9% decline of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
Mosaic currently carries a Zacks Rank #5 (Strong Sell).
Better-ranked stocks worth considering in the basic materials space include PPG Industries Inc. PPG, ATI Inc. ATI and Carpenter Technology Corporation CRS.
PPG, currently carrying a Zacks Rank #2 (Buy), has an expected earnings growth rate of 20.8% for the current fiscal year. The Zacks Consensus Estimate for PPG's earnings for the current fiscal year has been revised 1.6% upward in the past 60 days. It delivered an earnings surprise of 7.3% each of the trailing four quarters, on average. PPG has gained around 14.9% over a year. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
ATI, currently carrying a Zacks Rank #2, has a projected earnings growth rate of 13.1% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 13%, on average. ATI shares are up around 87.4% in a year.
CRS, currently carrying a Zacks Rank #1, has a projected earnings growth rate of 198.11% for the current year. Its earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 30.9%, on average. CRS shares are up around 83.9% in a year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ATI Inc. (ATI) : Free Stock Analysis Report
PPG Industries, Inc. (PPG) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
The Mosaic Company (MOS) : Free Stock Analysis Report
