TAMPA, FL - The Mosaic Company (NYSE: MOS), reported net income of $372 million, or $0.97 per diluted share, for the third quarter of 2021. Adjusted EPS(1) was $1.35 and adjusted EBITDA(1) was $969 million. Gross margin was $865 million compared to $355 million a year ago, as all three operating segments benefited from higher prices and transformation efforts, partially offset by lower volumes. Reported earnings were negatively impacted by primarily non-cash notable items of $168 million.
Mosaic's third quarter results were the strongest in more than a decade, as our business continues to realize the benefits of a favorable market amplified by our transformation efforts. From the acquisition and optimization of Mosaic Fertilizantes to the acceleration of our Esterhazy K3 potash mine and the recent restart of the Colonsay potash mine, Mosaic has evolved into a business that we believe can deliver results throughout the cycle,' said Joc O'Rourke, President and CEO. 'These efforts are generating significant free cash flow, which we are using to strengthen the balance sheet and invest in the business, while returning capital to investors.'
Highlights:
Third quarter revenues were up 44 percent year-over-year to $3.4 billion, as stronger pricing more than offset lower volumes. Gross margins in the quarter were up 143 percent from the prior year period. The gross margin rate in the quarter was 25.3 percent, up from 14.9 percent in third quarter of 2020. The company generated $423 million in cash flow from operations during the quarter. Year-to-date cash flow from operations totaled $1.8 billion. Cash and equivalents totaled $843 million as of September 30, 2021. Repairs to address the impacts of Hurricane Ida at our Louisiana phosphate plants and the mechanical failure at our New Wales facility have proceeded in line with early expectations. Louisiana operations have now been restored to normal operating levels, and repairs at New Wales are nearly complete. Operating rates in the phosphates segment are expected to reach normalized levels during the fourth quarter.
In October, the second production hoist at Esterhazy K3 entered service, one month ahead of schedule, and Colonsay successfully ramped up to its targeted annual run rate of approximately 1 million tonnes. Total potash production is expected to exceed recent historical levels by the end of the first quarter of 2022, as Esterhazy reaches full operation. * Mosaic Fertilizantes achieved transformation benefits of $65 million in the third quarter. The segment has now exceeded its $200 million target, well ahead of 2023, by optimizing commercial positioning and addressing its cost structure. The North America business remains on schedule to reach its goal of a $500 million EBITDA benefit from transformation efforts by the end of 2023, having already achieved more than half through the third quarter of 2021. * The company expects upward pricing momentum to continue, with about 90 percent of fourth quarter sales committed and priced, and some customers are now requesting commitments as far forward as the second quarter of 2022. Phosphate average realized prices in the fourth quarter are expected to be $55 to $65 per tonne higher than prices realized during the third quarter. Fourth quarter phosphate raw material costs per finished tonne are expected to be $5 to $10 higher than third quarter costs. Potash average realized prices are expected to be $110 to $130 per tonne higher than third quarter realized prices.
The company continues to allocate capital across its three priorities: * Mosaic strengthened its balance sheet by retiring $450 million of long-term debt in August. * Mosaic's Board of Directors approved a 50 percent increase to the targeted annual dividend, to $0.45 per share, effective with the next declaration, which is expected to be in December 2021. The company also began to execute its recently expanded share repurchase program, repurchasing 956,404 shares at an average price of $35.72 per share through October 31. * Growth investment in the business is expected to total approximately $450 million in 2021, reflecting the acceleration of Esterhazy K3 development, reserve additions for a mine extension at South Fort Meade, and high returning opportunistic projects throughout the business. Capital expenditures were $340 million in the third quarter and are expected to total $1.3 billion for the full year.
About The Mosaic Company
The Mosaic Company is one of the world's leading producers and marketers of concentrated phosphate and potash crop nutrients. Mosaic is a single source provider of phosphate and potash fertilizers and feed ingredients for the global agriculture industry. More information on the company is available at www.mosaicco.com.
Mosaic has posted prepared comments and related slides on its website, www.mosaicco.com/investors, concurrently with the posting of this release and performance data. In addition, the company will provide access to a fireside chat addressing questions on the quarter, current market conditions, and other topics on Tuesday, November 2, 2021, at 11 am Eastern. The fireside chat will be available both on the website and via telephone at the following number: 678-825-8336 Conference ID# 5571319. All earnings related material, including audio, will be available up to one year from the time of the earnings call.
Forward-Looking Statements
This release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about proposed or pending future transactions or strategic plans and other statements about future financial and operating results. Such statements are based upon the current beliefs and expectations of The Mosaic Company's management and are subject to significant risks and uncertainties. These risks and uncertainties include, but are not limited to: the economic impact and operating impacts of the coronavirus (Covid-19) pandemic, the potential drop in oil demand/production and its impact on the availability and price of sulfur, political and economic instability and changes in government policies in Brazil and other countries in which we have operations; the predictability and volatility of, and customer expectations about, agriculture, fertilizer, raw material, energy and transportation markets that are subject to competitive and other pressures and economic and credit market conditions; the level of inventories in the distribution channels for crop nutrients; the effect of future product innovations or development of new technologies on demand for our products; changes in foreign currency and exchange rates; international trade risks and other risks associated with Mosaic's international operations and those of joint ventures in which Mosaic participates, including the performance of the Wa'ad Al Shamal Phosphate Company (also known as MWSPC), the timely development and commencement of operations of production facilities in the Kingdom of Saudi Arabia, and the future success of current plans for MWSPC and any future changes in those plans; difficulties with realization of the benefits of our long term natural gas based pricing ammonia supply agreement with CF Industries, Inc., including the risk that the cost savings initially anticipated from the agreement may not be fully realized over its term or that the price of natural gas or ammonia during the term are at levels at which the pricing is disadvantageous to Mosaic; customer defaults; the effects of Mosaic's decisions to exit business operations or locations; changes in government policy; changes in environmental and other governmental regulation, including expansion of the types and extent of water resources regulated under federal law, carbon taxes or other greenhouse gas regulation, implementation of numeric water quality standards for the discharge of nutrients into Florida waterways or efforts to reduce the flow of excess nutrients into the Mississippi River basin, the Gulf of Mexico or elsewhere; further developments in judicial or administrative proceedings, or complaints that Mosaic's operations are adversely impacting nearby farms, business operations or properties; difficulties or delays in receiving, increased costs of or challenges to necessary governmental permits or approvals or increased financial assurance requirements; resolution of global tax audit activity; the effectiveness of Mosaic's processes for managing its strategic priorities; adverse weather conditions affecting operations in Central Florida, the Mississippi River basin, the Gulf Coast of the United States, Canada or Brazil, and including potential hurricanes, excess heat, cold, snow, rainfall or drought; actual costs of various items differing from management's current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental regulation, Canadian resources taxes and royalties, or the costs of the MWSPC; reduction of Mosaic's available cash and liquidity, and increased leverage, due to its use of cash and/or available debt capacity to fund financial assurance requirements and strategic investments; brine inflows at Mosaic's potash mines; other accidents and disruptions involving Mosaic's operations, including potential mine fires, floods, explosions, seismic events, sinkholes or releases of hazardous or volatile chemicals; and risks associated with cyber security, including reputational loss; as well as other risks and uncertainties reported from time to time in The Mosaic Company's reports filed with the Securities and Exchange Commission. Actual results may differ from those set forth in the forward-looking statements.
Contact:
Paul Massoud
The Mosaic Company
T: 813-775-4260
E: paul.massoud@mosaicco.com
THE MOSAIC COMPANY 
