The Mosaic Company reports a strong fiscal second quarter

Record sales and Adjusted EBITDA1, earnings per share decline

Mosaic (NYSE: MOS), a leading global producer of phosphate and potash fertilizers, reported its financial results for the second quarter ended March 31, 2023.

Earnings Summary

Mosaic reported a 46% increase in net sales to $4.3 billion for the second quarter of fiscal 2023, compared to $2.9 billion in the same period of fiscal 2022.Adjusted EBITDA1 increased by 63% to $1.1 billion, and diluted earnings per share were $1.85 compared to $2.10 in the prior-year period. The increase in Adjusted EBITDA is primarily due to higher year-over-year fertilizer prices. Earnings per share were impacted by foreign exchange translation losses.

Sales Volume and Realized Prices

Total nutrient sales volume increased by 6% during the quarter, driven by higher phosphate sales volumes in both the Americas and International segments. Mosaic benefited from higher realized prices for both phosphate and potash during the quarter. The average realized price for phosphate increased by 76% to $925 per tonne and the average realized price for potash increased by 56% to $834 per tonne.

Segment Results

In the Americas segment, net sales increased by 42% to $2.4 billion, primarily due to the timing of phosphate sales, volume growth and higher realized phosphate prices. Adjusted EBITDA increased by 84% to $668 million. In the International segment, net sales increased by 52% to $1.9 billion, driven by higher realized potash and phosphate prices. Adjusted EBITDA increased by 43% to $437 million.

Outlook

Mosaic expects continued strong demand for its products. The company expects net sales to be in the range of $4.2 to $4.4 billion for the third quarter of fiscal 2023. Adjusted EBITDA is expected to be in the range of $1.0 to $1.2 billion.

Analyst Commentary

Analysts are generally positive on Mosaic's results. Jefferies analyst Chris LaFemina maintained a Buy rating on the stock and raised the price target to $55 from $48. He said that Mosaic's results were "impressive" and that the company is "well-positioned to benefit from continued strength in the fertilizer market."

BMO Capital Markets analyst Joel Jackson maintained an Outperform rating on the stock and raised the price target to $60 from $55. He said that Mosaic's results were "solid" and that the company is "a leader in the global fertilizer market."