Mosaic's (MOS) Q3 Earnings Miss Estimates, Revenues Beat
The Mosaic Company MOS reported a net loss of $4.2 million or a penny per share in third-quarter 2023, deteriorating from a profit of $841.7 million or $2.42 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 68 cents, missing the Zacks Consensus Estimate of 80 cents.
Net sales declined nearly 33.7% year over year to $3,548.3 million in the quarter. The metric surpassed the Zacks Consensus Estimate of $3,159.2 million. Lower selling prices primarily caused the downside.
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 $720 million in the reported quarter, down around 48.6% from $1.4 billion in the prior year’s quarter. Sales volumes totaled 2.2 million tons, up 4.7% year over year. The figure is lower than our estimate of 2.295 million tons. The segment’s gross margin declined to $95 per tonne from $373 per tonne in the year-ago quarter.
The Phosphate division’s net sales were $1 billion, down 37.5% from $1.6 billion in the prior-year period. Sales volumes in the segment totaled 1.7 million tons (flat year over year), higher than our estimate of 1.667 million tons. The gross margin in the quarter was $53 per tonne, down from $217 per tonne in the year-ago quarter.
Net sales in the Mosaic Fertilizantes segment were around $1.7 billion in the quarter, down about 34.6% year over year. Sales volume in the quarter increased 10.7% to 3.1 million tons. The gross margin in the quarter was $35 per ton, down from $118 per tonne in the prior-year quarter.
Financials
At the end of the quarter, Mosaic had cash and cash equivalents of $591 million, down 15.9% year over year. Long-term debt was $2,402.2 million, down 27.8% year over year.
Net cash provided by operating activities declined nearly 27.1% year over year to $647.4 million in the reported quarter.
Outlook
The company expects the global grain and oilseed markets to remain tight into 2024. Geopolitical unrest, extreme weather, and reduced fertilization are affecting crop production. Strong demand from demographic shifts and renewable fuel consumption is straining stocks. Growers are focused on maximizing yields, leading to increased fertilizer application in North America and Brazil. Potash and phosphate inventories are depleted in major growing regions, necessitating replenishment in 2024.
Potash supply is uncertain, with Belarusian exports down by 34 million tons due to sanctions and limited growth expected in 2024. China prioritizes domestic demand over phosphate exports, keeping global markets tight throughout the year and into 2024.
The company projects total capital expenditures for 2023 in the band of $1.3-$1.4 billion.
Price Performance
Shares of Mosaic have lost 40.6% in the past year compared with a 38.9% decline of the industry.
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Zacks Rank & Key Picks
Mosaic currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Basic Materials space are Carpenter Technology Corporation CRS, sporting a Zacks Rank #1 (Strong Buy), and The Andersons Inc. ANDE and Linde plc LIN, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The consensus estimate for CRS’s current fiscal year earnings is pegged at $3.57, indicating a year-over-year growth of 213.2%. CRS beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have surged 69.1% in the past year.
The Zacks Consensus Estimate for ANDE’s current-year earnings has been revised 3.3% upward in the past 60 days. Andersons beat the Zacks Consensus Estimate in each of the last four quarters. It delivered a trailing four-quarter earnings surprise of 64.4% on average. ANDE’s shares have rallied around 37.7% in a year.
The consensus estimate for Linde’s current fiscal year earnings is pegged at $14.08, indicating a year-over-year growth of 14.6%. LIN beat the Zacks Consensus Estimate in all of the last four quarters, with the average earnings surprise being 5.7%. The company’s shares have rallied 23.7% in the past year.
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