Mosaic(US:MOS)2019-08-06 19:37Financial Performance - For the three months ended June 30, 2019, Mosaic reported a net loss of $233.1 million, or $(0.60) per diluted share, compared to net earnings of $67.9 million, or $0.18 per diluted share for the same period in 2018[95]. - Net sales for the three months ended June 30, 2019, were $2,176.9 million, a decrease of 1% from $2,205.0 million in the same period of 2018[92]. - The gross margin for the three months ended June 30, 2019, was $227.2 million, representing a gross margin percentage of 10%, down from 13% in the prior year[92]. - For the six months ended June 30, 2019, Mosaic reported a net loss of $102.3 million, or $(0.27) per diluted share, compared to net earnings of $110.2 million, or $0.29 per diluted share for the same period in 2018[99]. Segment Performance - Operating results in the Potash segment were positively impacted by higher average selling prices, driven by strong global demand, despite lower sales volumes[95]. - For the six months ended June 30, 2019, the Phosphates segment's net sales were $1.7 billion, a decrease of 10% from $1.9 billion in the same period of 2018[107]. - The Potash segment's net sales increased to $599.1 million for the three months ended June 30, 2019, up from $569.5 million in the same period a year ago, representing a 5% increase[112]. - Mosaic Fertilizantes segment's net sales increased to $832.7 million for Q2 2019, up from $712.7 million in Q2 2018, driven by higher sales volumes and prices[118]. Production and Costs - Plant City closure costs amounted to $369 million, significantly impacting the net loss for the quarter[95]. - The company temporarily idled its Tapira and Catalão phosphate mines in Brazil to comply with new legislation regarding tailing dam safety, impacting production and costs[98]. - The average finished product selling price for the Phosphates segment was $418 per tonne for the six months ended June 30, 2019, down 5% from the prior year[107]. - North American phosphate rock production decreased to 5.9 million tonnes for the six months ended June 30, 2019, down from 8.0 million tonnes in the same period of 2018[109]. Cash Flow and Liquidity - Net cash provided by operating activities for the six months ended June 30, 2019, was $331.8 million, a decrease of 55% compared to $736.0 million in the same period of 2018[137]. - The company had cash and cash equivalents of $0.4 billion and long-term debt of approximately $4.6 billion as of June 30, 2019[135]. - The company paid dividends of $28.9 million during the six months ended June 30, 2019, compared to $19.2 million in the prior year[140]. - The company anticipates that funds generated from operations and available cash will be sufficient to finance operations for the next 12 months[135]. Foreign Currency and Commodity Risks - The company is exposed to fluctuations in the Canadian dollar and Brazilian real, with notional amounts of $399.6 million and $644.8 million respectively for foreign currency exchange forwards[156]. - The company is exposed to fluctuations in the purchase price of natural gas, ammonia, and sulfur, which may impact earnings and cash flows[169]. - The company utilizes derivatives to mitigate foreign currency risks, interest rate risks, and the effects of changing commodity prices[169]. - The company is managing risks associated with significant price changes in natural gas through derivatives[159]. Regulatory and Legal Risks - The company is subject to various regulatory risks, including environmental regulations and trade policies, which may impact operations[151]. - The company is subject to ongoing legal proceedings related to the 2015 Clean Water Rule, which may increase compliance costs and permitting requirements[168]. - The company faces risks from potential defaults by customers on trade credit, particularly during business exits[151]. Operational Challenges - The company expects increased expenses of up to $80 million in 2019 due to higher delivered costs of phosphate rock and idle plant costs[98]. - The unfavorable working capital change for the six months ended June 30, 2019, was $372.9 million, primarily due to an increase in inventories of $413.6 million[138]. - The company recognized pre-tax costs of $369.4 million related to the permanent closure of the Plant City facility in Q2 2019[126]. - Other operating expenses for Q2 2019 were $21.6 million, up from $19.0 million in Q2 2018, including costs related to integration and future synergies[127].