5 Crucial Things The Mosaic Company Management Wants

You to Know

Image source: The Mosaic Company

#1 Outlook for 2016

Upbeat about nutrient markets

despite headwinds

Source: Mosaic

What management said “Unlike hard commodities, we do not see a

structural imbalance in agriculture. So we have a positive outlook for the 2016 global shipments in both potash and phosphates.”

CEO and President, James O’Rourke

Shipments forecast

Source: Mosaic Investor Presentation, February 2016

Why the optimismMosaic projects record global phosphate but

lower potash shipments in 2016. PotashCorp is more optimistic, projecting potash shipments to be down 2% to up 3% this year.

Factors driving demand: The need to replenish soils with nutrientsGreater affordability for farmers because of lower

fertilizer pricesLow energy (input) costs

#2 Strong operational performance

Growth on track despite challenges

What management said “It is important to note that Mosaic

remains solidly profitable and free cash flow positive despite the very tough markets.”

James O’Rourke

Growing profits in challenging times

Source: Mosaic Investor Presentation, February 2016

Key statistics for 2015

Net income: $1 billionOperating cash flow: $1.8 billionFree cash flow: 800 millionCash and cash equivalent: $1.3 billionDebt-to-equity ratio: 40%

#3 Maintaining margins

Aggressive cost cutting underway

Photo credit: www.gotcredit.com

What management said “We are well ahead of schedule on our

initiative to generate $500 million of cost savings by 2018. For the full year, we expect margins to be similar to last year.”

James O’Rourke

Efforts paying offCost savings in 2015:

Potash cash cost of production declined 16% per tonne Phosphate rock cash production cost hit near five-year

lowsSelling, general, and administrative expenses declined

6%

In 2015, Mosaic’s gross and operating margins were 19% and 14%, respectively.

#4 A smart move

CF phosphate acquisition a success

Source: Mosaic Analyst Day Presentation, March 2015

What management said “The CF phosphate acquisition has

exceeded our expectations. Those facilities generated excellent margins for the first 18 months we owned them.”

James O’Rourke

Adding value to Mosaic Mosaic acquired CF

Industries’ phosphate business for $1.4 billion in 2014.

Thanks to the acquisition, Mosaic’s phosphate sales volumes increased to 9.4 million tonnes in 2015 from 8.3 million tonnes in 2013.

#5 Regarding capital allocation

Balancing growth with shareholder returns

Photo credit: LendingMemo.com

What management said “[W]e will continue to balance between

repurchasing our shares and looking for opportunities out there, and if there is something that is extraordinarily compelling it's something that we could act on.”

Richard Mack, Executive Vice President and CFO

A balanced approach

*2013 through 2015. Source: Mosaic Investor Presentation, February 2016

Rewarding shareholders Mosaic increased its annual dividend by

10% and repurchased shares worth $698 million in 2015.

Management is confident that strong cash flows should enable it to pay “reasonable and fair” dividend while balancing repurchases and growth opportunities going forward.

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