Mosaic's (MOS) Q4 Earnings Lag Estimates, Revenues Beat
The Mosaic Company MOS reported a net income of $365.3 million or $1.11 per share in fourth-quarter 2023, down from a profit of $523.2 million or $1.52 per share in the year-ago quarter.
Barring one-time items, adjusted earnings per share were 71 cents, missing the Zacks Consensus Estimate of 82 cents.
Net sales declined nearly 29.7% year over year to $3,149.5 million in the quarter. The metric, however, surpassed the Zacks Consensus Estimate of $3,009.8 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 $758 million in the reported quarter, down around 33% from $1.1 billion in the prior-year quarter. Sales volumes totaled 2.6 million tons, up 37% year over year. The figure is higher than our estimate of 2.464 million tons. The segment’s gross margin declined to $99 per ton from $289 per ton in the year-ago quarter.
The Phosphate division’s net sales were $1.07 billion, down 18% from $1.3 billion in the prior-year period. Sales volumes in the segment totaled 1.6 million tons (flat year over year), lower than our estimate of 1.64 million tons. The gross margin in the quarter was $88 per ton, down from $148 per ton in the year-ago quarter.
Net sales in the Mosaic Fertilizantes segment were around $1.19 billion in the quarter, down about 37.7% year over year. Sales volume in the quarter fell 12% to 2.2 million tons. The gross margin in the quarter was $44 per ton, up from $11 per ton in the prior-year quarter.
Financials
At the end of the quarter, Mosaic had cash and cash equivalents of $349 million, down 52% year over year. Long-term debt was $3,231.6 million, down 34% year over year.
Net cash provided by operating activities declined nearly 43.7% year over year to $538.1 million in the reported quarter.
FY23 Results
For full-year 2023, Mosaic recorded a net income of $1.2 billion or $3.50 per share. The company's adjusted EBITDA for the same period stood at $2.8 billion, with adjusted EPS of $3.57. Mosaic's revenues for the year totaled $13.7 billion, down 28% year over year.
Outlook
In 2024, global grain and oilseed markets face tight conditions due to geopolitical unrest, extreme weather and reduced fertilization, straining production against solid demand from demographic shifts and renewable fuel consumption, per MOS. As a result, global stocks-to-use ratios for grains and oilseeds are expected to stay low. Favorable agricultural conditions incentivize growers to maximize yields and fertilizer use, significantly boosting demand for phosphate amid tight global supply.
China's fertilizer exports remain limited, supporting firm phosphate prices. In North America, robust demand persists after a prolonged Fall season and strong winter fill activities. For Brazil, MOS anticipates strong shipments fueled by favorable barter ratios, while in India, growers await higher government subsidies. Potash demand remains robust in North America, with Southeast Asia and Brazil showing improving demand, supported by adequate supply in the near term.
The company projects total capital expenditures for 2024 in the band of $1.1-$1.2 billion.
Price Performance
Shares of Mosaic have lost 39.8% in the past year compared with a 34.7% 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), Eldorado Gold Corporation EGO and Hawkins, Inc. HWKN, both 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’ current fiscal year earnings is pegged at $3.97 per share, indicating a year-over-year surge of 248.3%. CRS beat the Zacks Consensus Estimate in each of the last four quarters, with the average earnings surprise being 14.3%. The company’s shares have rallied 33.7% in the past year.
Eldorado has a projected earnings growth rate of 1,040% for the current year. The Zacks Consensus Estimate for EGO’s current-year earnings has been revised upward by 10% in the past 60 days. EGO topped the consensus estimate in each of the last four quarters, with the average earnings surprise being 496%. The company’s shares have rallied 34.7% in the past year.
The consensus estimate for HWKN’s current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised upward by 4.3% in the past 30 days. HWKN beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have surged 67.7% in the past year.
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