Exhibit 99.1
[LOGO OF MOSAIC] 3033 Campus Drive Tel 800-918-8270
Suite E490 Fax 763-577-2986
Plymouth, MN 55441
www.mosaicco.com
PRESS RELEASE
MEDIA CONTACT: Linda Thrasher, 763-577-2864
INVESTOR CONTACT: Douglas Hoadley, 763-577-2867
MOSAIC ANNOUNCES FISCAL 2006 THIRD QUARTER NET LOSS
OF $71.6 MILLION OR $0.19 PER DILUTED SHARE
THIRD QUARTER HIGHLIGHTS
o The third quarter net loss for the period ended February 28, 2006, was
$71.6 million, or $0.19 per diluted share. This compares to reported
net earnings of $38.8 million or $0.09 per diluted share for last
year's third quarter.
o The company recorded an unrealized loss totaling $60.8 million from
marking-to-market the value of natural gas derivative contracts used to
manage price and supply risk in our production operations. In addition,
the company had foreign currency transaction losses of $13.8 million
during the third quarter compared with a gain of $30.8 million from the
prior year period.
o Net sales declined 6%, mainly due to lower volumes for potash. Mosaic's
gross margin declined to 1% of sales compared to 12% a year ago. The
lower gross margins reflected expected seasonal volume weakness,
production shutdown costs, raw material cost increases and unrealized
mark-to-market losses on natural gas derivative contracts.
o The Phosphate business had an operating loss of $19.7 million in the
third quarter compared with earnings of $14.2 million for the same
period a year ago. Although net sales increased as a result of higher
prices, operating results declined because of unrealized non-cash
mark-to-market derivative losses of $34.6 million and higher costs on a
per tonne basis because Mosaic operated both its mining and production
facilities at lower rates.
o The Potash business had operating earnings of $16.1 million in the
third quarter compared with $85.4 million a year ago. The decline in
operating earnings was due to unrealized mark-to-market losses on
natural gas derivative contracts of $26.2 million, lower sales volumes,
and reduced production levels.
o Mosaic's performance is expected to rebound in the fourth quarter,
which is typically Mosaic's best quarter and coincides with the North
American spring planting season.
PLYMOUTH, MN, April 11, 2006 - The Mosaic Company (NYSE: MOS) announced
today a net loss of $71.6 million, or $0.19 per diluted share, for the quarter
ended February 28, 2006. Year-to-date net earnings were $59.5 million, or $0.14
per diluted share.
Net sales in the third quarter were $1.07 billion, a decline of 6%
compared with the same period a year ago. The decline in reported net sales was
mainly the result of lower sales volumes for the Potash business segment.
The operating loss for the third quarter was $44.4 million compared
with earnings of $72.7 million for the same period a year ago. The gross margin
as a percent of sales was 1% for the third quarter compared with 12% a year ago.
"Our results in the third quarter were disappointing, even taking into
consideration sizeable mark-to-market losses on natural gas contracts and
foreign currency transaction losses. Margins in the Phosphate business continue
to be squeezed by high sulfur and ammonia prices, while Potash sales volume
dipped to historically low levels," said Fritz Corrigan, President and Chief
Executive Officer of Mosaic. "We have aggressively reduced operating rates in
our core businesses to more effectively manage our inventory levels, but this
also resulted in higher costs on a per tonne basis."
Selling, general, and administrative (SG&A) expenses of $61.8 million
were incurred in the third quarter, down slightly compared to $64.8 million for
the same period a year ago.
Non-cash foreign currency transaction losses totaled $13.8 million for
the third quarter compared with a gain of $30.8 million for the same period a
year ago. These losses were caused primarily by the strengthening of the
Canadian dollar against the United States dollar. This impacts the carrying
value of the United States dollar denominated net assets of Potash, for which
the Canadian dollar is the functional currency.
Mosaic ended the quarter with $164.6 million in cash and cash
equivalents. Mosaic's total debt at the end of February 2006 was $2.7 billion,
resulting in a debt-to-capital ratio of 42.9%.
The effective tax rate was a benefit of 27.1% for the third quarter and
expense of 65.6% for the nine-month period ending February 28, 2006. This high
year-to-date tax rate and low tax benefit for the third quarter results from
several factors, including the profit mix among Mosaic's business segments and
geographies within those business segments, certain tax attributes in the Potash
entities, and the inability to record a tax benefit for losses in Brazil.
POTASH
The Potash business segment's total sales volume was 1.3 million tonnes
during the third quarter which was 0.7 million tonnes or 36% lower than last
year's third quarter volume. This was due to slow shipments to the North
American market where the supply pipeline was well stocked. Additionally export
markets were slow resulting from ongoing negotiations between Canpotex, the
Saskatchewan potash producers' export association and Sinochem, a large buyer in
China.
Potash net sales were $228.6 million for the third quarter, down $72.4
million compared with a year ago. The Potash business segment's gross margins
declined to $24.1 million in the third quarter due to unrealized non-cash
mark-to-market derivative losses of $26.2 million, lower sales volumes, and
reduced production levels. Operating earnings were $16.1 million during the
third quarter compared to $85.4 million last year.
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PHOSPHATES
The Phosphates business segment's fertilizer and feed shipments were
2.3 million tonnes for the third quarter. Total shipments declined 0.3 million
tonnes for the three months compared with a year ago as a result of lower
exports. Phosphates sales were $699.3 million for the third quarter, $53.6
million higher than the third quarter last year. Phosphates third quarter
results showed a gross margin loss of $0.7 million and an operating loss of
$19.7 million compared to a gross margin of $38.7 million and operating earnings
of $14.2 million for the same period last year. DAP costs increased 19% in the
third quarter compared with the prior year period mainly because of higher
ammonia and sulfur prices. Costs were also higher on a per tonne basis because
of unrealized non-cash mark-to-market derivative losses of $34.6 million and
because Mosaic operated both its mining and production facilities at lower
rates.
OFFSHORE
Mosaic's Offshore business segment's net sales were $186.1 million for
the third quarter, down $10.8 million compared with last year. The third quarter
operating loss was $17.2 million compared to a loss of $11.4 million for the
comparable period last year. The decline in the third quarter operating results
was caused by lower gross margins in Brazil due to poor farm economics.
NITROGEN
Mosaic's Nitrogen business segment's net sales were $31.7 million for
the third quarter, $1.0 million lower than last year. The third quarter
operating earnings were $1.2 million compared to $0.5 million for the third
quarter a year ago.
EQUITY EARNINGS
Total equity earnings in non-consolidated subsidiaries were $2.0
million for the quarter, a decline of $17.0 million compared with last year's
results for the same period. Mosaic's equity earnings from its investment in
Saskferco showed a loss of $2.2 million for the third quarter compared with
earnings of $2.4 million a year ago. Mosaic's equity earnings from Fosfertil
were $3.2 million for the third quarter compared to $13.5 million last year also
as a result of the weak Brazilian farm economics.
YEAR TO DATE
For the nine months ended February 28, 2006, net sales were $4.0
billion, 35% greater than last year. Year-to-date operating earnings were $288.3
million compared with $142.0 million for the same period a year ago.
Year-to-date SG&A expenses were $186.7 million compared with $141.2 million for
the same period in fiscal 2005. The foreign currency transaction loss was $66.5
million for the first nine months of fiscal 2006 compared to a gain of $5.9
million for the same period a year ago. Note that the nine months of fiscal 2005
include former IMC Global results only from October 22, 2004, the date of the
combination which created Mosaic.
OBSERVATIONS AND OUTLOOK
"Our sales are rebounding in the fourth quarter compared to the third
quarter," Corrigan said. "The spring planting season is now picking up momentum
and recent large purchases by customers in India and China are bolstering the
phosphates market. Near term results for potash have been dampened by the
extended price negotiations between China and its main suppliers. However, we
expect potash sales to be very strong upon completion of the negotiations with
China," Corrigan added.
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For Phosphates, fiscal 2006 sales volume are expected to range from
10.2 to 10.5 million tonnes, down from our prior outlook of 10.5 to 10.9 million
tonnes. Phosphate margins are expected to slowly improve as costs decline due to
expectations of lower ammonia and sulfur prices. Potash sales volumes for fiscal
2006 are expected to range from 7.1 to 7.4 million tones, down 0.2 million
tonnes from our prior outlook.
Mosaic expects its synergy benefits to reach $120 to $130 million on a
pre-tax annual run-rate basis by the end of fiscal 2006, and is achieving
annualized benefits at the low end of this range as of the end of the third
quarter. Synergy benefits include cost reduction and cost avoidance initiatives,
production volume enhancement efforts, opportunity savings, capital spending
avoidance and other benefit classifications. These synergies affect operating
costs and help offset higher costs for energy and other production inputs, wages
and benefits, water treatment, raw material inputs, general inflation and
one-time costs to achieve the synergy benefits.
Mosaic is evaluating additional operating efficiencies in light of
significant operating cost and raw material price challenges. An example of this
is the recent announcement of Mosaic's participation in a proposed petroleum
coke project adjacent to its Faustina, Louisiana phosphate plant, where Mosaic
has signed a non-binding letter of intent. Mosaic anticipates being a major
offtaker of ammonia upon completion of the project which is contingent upon
financing and certain other conditions.
Mosaic anticipates capital spending of $350 million to $360 million
during fiscal 2006 which is lower than prior guidance. Mosaic continues to
actively manage its cash flow, including a focus on reduced capital spending and
inventory management.
ABOUT THE MOSAIC COMPANY
The Mosaic Company is one of the world's leading producers and
marketers of concentrated phosphate and potash crop nutrients. For the global
agriculture industry, Mosaic is a single source of phosphates, potash, nitrogen
fertilizers and feed ingredients. More information on the company is available
at www.mosaicco.com.
Mosaic will conduct a conference call on Tuesday, April 11, 2006 to
discuss fiscal 2006 third quarter earnings results. The call will begin at 11:00
a.m. Eastern Daylight Time (10:00 a.m. Central Daylight Time) and will last no
longer than 60 minutes.
Conference Call Phone Number: 800-706-7741
International Phone Call-In Number: 617-614-3471
Participant Passcode: 42787735
Additionally, a Webcast of the conference call, both live and as a
replay, can be accessed by visiting Mosaic's web site at
http://www.mosaicco.com/investors. This Webcast will be available up to one year
from the time of the earnings call.
A replay of the audio call will be available through 6:00 p.m. Eastern
Daylight Time on Tuesday, April 18. Please call 888-286-8010 to access the
replay and use passcode 92888333.
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This press release contains forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. Such statements include, but
are not limited to, 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
predictability of fertilizer, raw material and energy markets subject to
competitive market pressures, changes in foreign currency and exchange rates,
international trade risks including, but not limited to, changes in policy by
foreign governments, changes in environmental and other governmental regulation,
the ability to successfully integrate the former operations of Cargill Crop
Nutrition and IMC Global and the ability to fully realize the expected cost
savings from their business combination within expected time frames, and adverse
weather conditions affecting our operations in central Florida or the Gulf Coast
of the United States, including potential hurricanes or excess rainfall. Actual
results may differ from those set forth in the forward-looking statements.
###
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CONSOLIDATED STATEMENTS OF OPERATIONS
(in millions, except per share amounts)
THE MOSAIC COMPANY (unaudited)
- --------------------------------------------------------------------------------
Three months ended Nine months ended
February 28 February 28
----------------------- -----------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
Net sales $ 1,073.2 $ 1,144.5 $ 3,974.3 $ 2,947.0
Cost of goods sold 1,059.2 1,008.0 3,503.1 2,667.1
---------- ---------- ---------- ----------
Gross margin 14.0 136.5 471.2 279.9
Selling, general and
administrative expenses 61.8 64.8 186.7 141.2
Other operating income (3.4) (1.0) (3.8) (3.3)
---------- ---------- ---------- ----------
Operating earnings (loss) (44.4) 72.7 288.3 142.0
Interest expense 44.2 44.3 125.4 76.9
Foreign currency transaction (gain) loss 13.8 (30.8) 66.5 (5.9)
Other (income) expense (1.7) 1.3 (5.0) (3.6)
---------- ---------- ---------- ----------
Earnings (loss) from consolidated
companies before income taxes
and the cumulative effect of a change
in accounting principle (100.7) 57.9 101.4 74.6
Provision (benefit) for income taxes (27.2) 38.5 66.5 44.2
---------- ---------- ---------- ----------
Earnings (loss) from consolidated
companies before the cumulative effect
of a change in accounting principle (73.5) 19.4 34.9 30.4
Equity in net earnings of nonconsolidated
companies 2.0 19.0 29.0 44.6
Minority interests in net (earnings) loss
of consolidated companies (0.1) 0.4 (4.4) (1.5)
---------- ---------- ---------- ----------
Earnings (loss) before the cumulative
effect of a change in accounting principle (71.6) 38.8 59.5 73.5
Cumulative effect of a change in accounting
principle, net of tax - - - (2.0)
---------- ---------- ---------- ----------
Net earnings (loss) $ (71.6) $ 38.8 $ 59.5 $ 71.5
========== ========== ========== ==========
Diluted net earnings (loss) per share $ (0.19) $ 0.09 $ 0.14 $ 0.21
========== ========== ========== ==========
Diluted weighted average number of
shares outstanding 383.6 432.8 436.1 336.5
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CONSOLIDATED FINANCIAL HIGHLIGHTS
(dollars in millions)
THE MOSAIC COMPANY (unaudited)
- --------------------------------------------------------------------------------
Three months ended Favorable/ Nine months ended Favorable/
February 28 (Unfavorable) February 28 (Unfavorable)
----------------------- ----------------------- ----------------------- -----------------------
2006 2005 Amount % 2006 2005 Amount %
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
NET SALES:
Phosphates $ 699.3 $ 645.7 $ 53.6 8% $ 2,291.7 $ 1,498.7 $ 793.0 53%
Potash 228.6 301.0 (72.4) (24)% 827.6 445.7 381.9 86%
Nitrogen 31.7 32.7 (1.0) (3)% 91.2 142.1 (50.9) (36)%
Offshore 186.1 196.9 (10.8) (5)% 1,002.1 1,009.5 (7.4) (1)%
Corporate/Other (a) (72.5) (31.8) (40.7) 128% (238.3) (149.0) (89.3) 60%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 1,073.2 $ 1,144.5 $ (71.3) (6)% $ 3,974.3 $ 2,947.0 $ 1,027.3 35%
========== ========== ========== ========== ========== ========== ========== ==========
GROSS MARGIN:
Phosphates $ (0.7) $ 38.7 $ (39.4) (102)% $ 207.8 $ 66.0 $ 141.8 215%
Potash 24.1 93.5 (69.4) (74)% 251.5 120.4 131.1 109%
Nitrogen 2.7 2.0 0.7 35% 10.1 10.9 (0.8) (7)%
Offshore 2.3 5.9 (3.6) (61)% 29.2 86.5 (57.3) (66)%
Corporate/Other (a) (14.4) (3.6) (10.8) 300% (27.4) (3.9) (23.5) 603%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ 14.0 $ 136.5 $ (122.5) (90)% $ 471.2 $ 279.9 $ 191.3 68%
========== ========== ========== ========== ========== ========== ========== ==========
OPERATING EARNINGS (LOSS):
Phosphates $ (19.7) $ 14.2 $ (33.9) (239)% $ 129.5 $ 19.7 $ 109.8 557%
Potash 16.1 85.4 (69.3) (81)% 226.0 109.0 117.0 107%
Nitrogen 1.2 0.5 0.7 140% 6.5 7.4 (0.9) (12)%
Offshore (17.2) (11.4) (5.8) 51% (30.9) 28.8 (59.7) (207)%
Corporate/Other (a) (24.8) (16.0) (8.8) 55% (42.8) (22.9) (19.9) 87%
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
$ (44.4) $ 72.7 $ (117.1) (161)% $ 288.3 $ 142.0 $ 146.3 103%
========== ========== ========== ========== ========== ========== ========== ==========
(a) Includes elimination of intercompany sales.
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KEY STATISTICS
THE MOSAIC COMPANY (unaudited)
- --------------------------------------------------------------------------------
Three months ended Favorable/ Nine months ended Favorable/
February 28 (Unfavorable) February 28 (Unfavorable)
----------------------- ----------------------- ----------------------- -----------------------
2006 2005 Amount % 2006 2005 Amount %
---------- ---------- ---------- ---------- ---------- ---------- ---------- ----------
Sales volumes
(000 metric tonnes) (a):
Phosphates (b) 2,312 2,564 (252) (10)% 7,954 5,760 2,194 38%
Potash 1,311 2,043 (732) (36)% 4,778 2,947 1,831 62%
Nitrogen 190 401 (211) (53)% 915 1,090 (175) (16)%
Average price per
metric tonne:
DAP (c) $ 246 $ 220 $ 26 12% $ 244 $ 225 $ 19 8%
Potash (c) 134 118 16 14% 140 116 24 21%
Ammonia (d) 386 303 83 27% 339 303 36 12%
Sulfur (long ton) (d) 78 65 13 20% 73 66 7 11%
(a) Sales volumes include tonnes sold captively. Phosphates volumes represent
dry product tonnes, primarily DAP.
(b) Includes captive sales tonnes to Offshore.
(c) FOB plant/mine.
(d) Delivered Tampa
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THE MOSAIC COMPANY (unaudited)
- --------------------------------------------------------------------------------
Selected Non-GAAP Financial Measures and Reconciliations
The following table summarizes the calculation of EBITDA and provides a
reconciliation to new earnings (loss):
EBITDA Calculation
- --------------------------------------------------------------------------------
Three months ended Nine months ended
February 28 February 28
------------------------ ------------------------
2006 2005 2006 2005
---------- ---------- ---------- ----------
(dollars in millions) (dollars in millions)
Net earnings (loss) $ (71.6) $ 38.8 $ 59.5 $ 71.5
Interest expense 54.9 54.7 157.4 93.5
Income taxes (27.2) 38.5 66.5 44.2
Depreciation, depletion & amortization 80.7 71.5 239.4 137.4
Amortization of debt financing fees 1.3 0.6 3.7 0.6
Amortization of fair market value adjustment
of debt (12.0) (11.0) (35.7) (17.2)
Amortization of mark-to-market contracts (4.1) (1.5) (13.1) (1.5)
---------- ---------- ---------- ----------
EBITDA $ 22.0 $ 191.6 $ 477.7 $ 328.5
========== ========== ========== ==========
The following table summarized the calculation of Total Debt to Capitalization:
Debt to Capitalization Calculation
- --------------------------------------------------------------------------------
February 28 May 31
2006 2005
------------ ------------
(dollars in (dollars in
billions) billions)
NUMERATOR
Total debt $ 2.7 $ 2.7
DENOMINATOR
Book value of equity $ 3.6 $ 3.2
Total debt 2.7 2.7
------------ ------------
Capitalization $ 6.3 $ 5.9
============ ============
Total debt to total capitalization 42.9% 45.8%
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