The Mosaic Co. reported adjusted EBITDA of $1.45 billion in the first quarter of 2022, up from $560 million last year and slightly above the Bloomberg Consensus of $1.44, which averages the projections from major analytical firms. Revenues were up 71 percent year-over-year to $3.9 billion, as stronger pricing more than offset lower volumes. The gross margin rate in the quarter was 36.7 percent, up from 18.9 percent in the first quarter of 2021.
First-quarter net income was reported at $1.18 billion ($3.19 per diluted share), up from last year’s $157 million and above the Bloomberg Consensus of $900.3 million. Adjusted earnings per share (EPS) for the first quarter was $2.41, above last year’s $0.57, but below the Bloomberg Consensus of $2.44.
“Mosaic’s first-quarter results show the strength of our business, which is able to meet customer needs while also delivering value for our shareholders,” said Joc O’Rourke, President and CEO. “Looking forward, we expect higher annual production across our global platform in both potash and phosphates, as a result of the completed ramp up of Esterhazy K3, a higher run-rate at Colonsay, and a recovery of phosphate output from our North American operations.”
Net sales in the Potash segment totaled $1.06 billion for the first quarter, up from $477 million last year, due to higher prices partially offset by lower volumes. Gross margin for the quarter was $579 million, compared to $140 million last year. Potash operating earnings totaled $563 million, and adjusted EBITDA was $651 million in the first quarter.
First-quarter potash sales volumes were down 188,000 mt compared to the 2021 first quarter, reflecting logistical constraints that delayed shipments. Mosaic said winter weather negatively impacted rail performance, which forced containment at its Colonsay and Belle Plaine mines.
Mosaic said Esterhazy K3 is now at its full MOP annual run rate of 5.5 million mt, and Colonsay is operating at an expanded annual run rate of 1.3 million mt. Total potash production is expected to exceed recent historical levels for the remainder of 2022, the company said. MOP cash costs were $81/mt in the first quarter, compared to $64/mt last year, with most of the increase resulting from higher price-related royalties that were up $12/mt from the first quarter of 2021.
Net sales in the Phosphate segment were $1.50 billion for the quarter, up from $1.00 billion last year, due to higher year-over-year prices, partially offset by lower volumes. Gross margin was $528 million, compared to $173 million last year. Phosphates operating earnings totaled $493 million and adjusted EBITDA was $632 million in the quarter.
Production of finished phosphates totaled 1.7 million mt in the quarter, down 9 percent year-over-year, and sales volumes totaled 1.7 million mt, down 19 percent year-over-year. Mosaic said shipments were negatively impacted by lower available inventories as well as poor rail performance due to Covid-related labor shortages. Rail cycle times are improving, Mosaic said, but will likely not reach normal levels until the end of the second quarter.
Mosaic said the price of ammonia realized in cost of goods sold increased to $532/mt during the quarter, up $216/mt from last year. The company said roughly 80 percent of its first-quarter ammonia consumption was internally produced or sourced from its long-term, natural gas-based CF Industries ammonia contract. Mosaic said it is receiving the maximum volume of ammonia, approximately 720,000 mt/y, under the CF contract.
Net sales in the Mosaic Fertilizantes segment were $1.49 billion for the quarter, up from $763 million last year due to higher year-over-year prices, partially offset by lower volumes. Gross margin was $219 million, compared to $103 million last year. Mosaic Fertilizantes operating earnings totaled $187 million and adjusted EBITDA was $233 million for the quarter. Mosaic said the segment’s results benefited from inventories built late in 2021 that were sold at higher market prices, especially toward the end of the first quarter.
Looking ahead, Mosaic said the war in Ukraine, ongoing supply chain constraints, and high crop prices that justify nutrient application all “point to persistent tight markets for both phosphates and potash.” The company expects Phosphate segment sales volumes of 1.9-2.1 million mt and Potash sales volumes of 2.4-2.6 million mt in the second quarter.
Realized pricing for both nutrients is expected to reflect market pricing on a 60-75 day lag as a result of the impact of delayed rail performance, Mosaic said. For phosphates, second-quarter DAP prices on an FOB basis are expected to be $140-$160/mt higher than in the first quarter. Phosphate production costs will be impacted by the rise in input costs, Mosaic said, though prices are expected to outpace the rise in raw materials. For potash, second-quarter MOP prices on an FOB basis are expected to be $40-$60/mt higher than prices realized in the first quarter.
Mosaic said growth investment in the business is expected to total approximately $400 million in 2022, reflecting the ramp up of Esterhazy K3, reserve additions for a mine extension at South Fort Meade, and other projects.
The company also said it is exploring expanded output across potash and phosphates through targeted debottlenecking projects and a restart of idled capacity. Mosaic said its global annual potash operating run-rate now stands at 10.8 million mt, but has the potential to grow by an additional 1.5 million mt by the second half of 2023. North American phosphate production in 2022 is expected to be roughly 1 million mt higher than production in 2021, the company said.
Mosaic said it expects to complete its goal of reducing long-term debt by $1 billion later this year with the retirement of $550 million, which matures in November. The company repurchased $422 million in shares during the first quarter, which includes the execution of the previously announced Accelerated Share Repurchase (ASR). Settlement of the ASR occurred on April 22 and required an additional payment of $54 million to compensate for the performance of MOS shares since the ASR was initiated on Feb. 24, the company reported.
| Potash (millions) | 1Q-22 | 1Q-21 |
| Sales Volume (mt) | 1.8 | 2.0 |
| Gross Margin ($/mt) | 323 | 71 |
| Operating Earnings | 563 | 125 |
| Adjusted EBITDA | 651 | 212 |
| MOP Selling Price ($/mt) | 582 | 200 |
| Phosphate (millions) | 1Q-22 | 1Q-21 |
| Sales Volume (mt) | 1.7 | 2.1 |
| Gross Margin ($/mt) | 318 | 84 |
| Operating Earnings | 493 | 153 |
| Adjusted EBITDA | 632 | 271 |
| DAP Selling Price ($/mt) | 785 | 477 |
| Mosaic Fertilizantes (millions) | 1Q-22 | 1Q-21 |
| Sales Volume (mt) | 1.8 | 2.1 |
| Gross Margin ($/mt) | 120 | 50 |
| Operating Earnings | 187 | 90 |
| Adjusted EBITDA | 233 | 104 |
| Finished Product Selling Price ($/mt) | 817 | 370 |