Breaking Down The Mosaic Company (MOS) Financial Health: Key Insights for Investors

Are you an investor keeping a close watch on the agriculture industry? Have you considered the financial stability and future prospects of fertilizer companies? Let's dive into The Mosaic Company (MOS), a leading producer of concentrated phosphate and potash. In 2024, the company reported a net income of $175 million, with an adjusted EBITDA of $2.2 billion. But how does this stack up against previous years, and what are the underlying factors influencing these figures? With revenue declining by 18.79% to $11.12 billion and a free cash flow plummeting by 95.28%, is this a temporary downturn or a sign of deeper issues? Continue reading to explore key financial insights, dissect the numbers, and understand what they mean for investors.

The Mosaic Company (MOS) Revenue Analysis

Understanding The Mosaic Company's (MOS) revenue streams is crucial for investors. Here's a breakdown of their financial performance:

Primary Revenue Sources:

• Potash: A key crop nutrient.
• Phosphates: Another essential crop nutrient.
• Mosaic Fertilizantes: Sales in Brazil.

Year-over-Year Revenue Growth Rate:

• 2024: The Mosaic Company's annual revenue was $11.123 billion, reflecting an 18.79% decrease compared to 2023.
• 2023: Annual revenue was $13.696 billion, a 28.39% decrease from 2022.
• 2022: The company saw significant growth, with revenue reaching $19.125 billion, a 54.77% increase from 2021.

Segment Contribution (July/August 2024):

In July and August 2024, The Mosaic Company reported the following revenues by business segment:

• Potash: $358 million
• Phosphates: $620 million
• Mosaic Fertilizantes: $886 million

Compared to July/August 2023, Potash and Mosaic Fertilizantes revenues decreased, while Phosphates revenue saw a slight decrease.

Factors Affecting Revenue Changes:

• Lower Selling Prices: Reduced prices in the Potash and Mosaic Fertilizantes segments significantly impacted the full-year revenues.
• Sales Volumes: Lower sales volumes in Mosaic Fertilizantes also contributed to the revenue decline.
• Operational Issues: Production interruptions due to electrical and weather-related events negatively affected production volumes of both phosphate and potash.

Additional Financial Data:

Here’s a summary of key financial figures for 2024:

For more insights into The Mosaic Company's (MOS) financial health, check out: Breaking Down The Mosaic Company (MOS) Financial Health: Key Insights for Investors

The Mosaic Company (MOS) Profitability Metrics

Analyzing profitability provides key insights into its financial health. Several metrics are essential for investors to consider, including gross profit, operating profit, and net profit margins. These figures reveal how efficiently the company generates profit from its revenue.

For the full year 2024, The Mosaic Company (MOS) reported:

• Gross Profit: $1.51 billion
• Operating Income: $621.5 million
• Net Income: $175 million

Full year revenues experienced a 19% year-over-year decrease, reaching $11.1 billion. This decline is attributed to reduced selling prices within the Potash and Mosaic Fertilizantes segments. The gross margin rate also decreased to 14% in 2024, compared to 16% in 2023. Net income saw a significant drop of 85% from 2023, totaling $175 million for 2024. These results were influenced by a negative after-tax impact of $459 million due to notable items, primarily a foreign currency transaction loss, which was partially offset by a gain from the Ma'aden transaction.

Here's a look at Mosaic's profitability trends over recent years:

When comparing profitability ratios to industry averages, The Mosaic Company (MOS) has a gross margin of 13.59%, while the industry average is 37.11%. The operating margin for MOS is 5.59%, significantly lower than the industry average of -63.7%. Similarly, the net profit margin for MOS is 1.57%, compared to an industry average of 25.59%.

The Mosaic Fertilizantes segment reported net sales of $4.4 billion in 2024, a decrease from $5.7 billion in the previous year, due to lower prices and sales volumes. However, the gross adjusted EBITDA per tonne averaged $38 in 2024, an increase from $34 in 2023. Furthermore, Mosaic Fertilizantes operating earnings increased from $75 million in 2023 to $238 million in 2024. Adjusted EBITDA also rose from $327 million last year to $344 million in 2024.

Several factors influence operational efficiency, including cost management and gross margin trends. The company's cost reduction plan aims to achieve $150 million in run-rate cost reductions by the end of 2025, relative to the 2023 baseline. Capital expenditures for 2024 totaled $1.25 billion, which was approximately $200 million lower than in 2023. For more insights into the company and its investors, check out this article: Exploring The Mosaic Company (MOS) Investor Profile: Who’s Buying and Why?

The gross margin rate in 2024 was 14%, a decrease from 16% in 2023. Despite these challenges, Mosaic is implementing various strategies to improve its cost structure and profitability. These include transformation plans and high-return investments, such as the MicroEssentials capacity conversions, which are expected to increase volumes by 25% in 2025.

The Mosaic Company (MOS) Debt vs. Equity Structure

Understanding how The Mosaic Company (MOS) manages its debt and equity is crucial for investors. This insight provides a clear picture of the company's financial strategy and risk profile.

As of the fiscal year 2024, The Mosaic Company's debt levels include both short-term and long-term obligations. Monitoring these figures helps assess the company's immediate and future financial commitments. For instance, examining the trends in their long-term debt provides insight into how the company finances its major projects and expansions. Analyzing short-term debt indicates their ability to meet immediate liabilities. Note that the specific values for 2024 are important for an accurate assessment.

The debt-to-equity ratio is a key metric for evaluating The Mosaic Company's financial leverage. This ratio compares the total debt to shareholders' equity, indicating the extent to which the company is using borrowed money to finance its assets. A high ratio suggests a more aggressive financing approach, which could amplify both profits and losses. Conversely, a lower ratio may indicate a more conservative approach. Comparing The Mosaic Company's ratio to industry standards offers context on whether its leverage is typical or deviates significantly.

Recent activities such as debt issuances, credit ratings, or refinancing provide valuable insights into The Mosaic Company's financial maneuvering. New debt issuances might fund expansions or acquisitions, while refinancing could optimize interest rates and repayment terms. Credit ratings from agencies like Standard & Poor's and Moody's reflect the creditworthiness of The Mosaic Company, influencing its borrowing costs and investor confidence.

The Mosaic Company strategically balances debt financing and equity funding to optimize its capital structure. The decision to lean more on debt or equity depends on various factors, including market conditions, growth opportunities, and risk tolerance. Effective management of this balance is vital for maintaining financial stability and supporting long-term growth.

To further illustrate, consider a hypothetical breakdown:

• Long-term Debt: $4.0 billion
• Short-term Debt: $500 million
• Shareholders' Equity: $8.0 billion

Using these figures, the debt-to-equity ratio would be calculated as ($4.0 billion + $500 million) / $8.0 billion = 0.56. This indicates that for every dollar of equity, The Mosaic Company has $0.56 of debt.

Understanding these elements provides a comprehensive view of The Mosaic Company's financial health and strategic financial decisions. For more detailed insights, you can explore: Breaking Down The Mosaic Company (MOS) Financial Health: Key Insights for Investors

The Mosaic Company (MOS) Liquidity and Solvency

Assessing the liquidity and solvency of The Mosaic Company (MOS) involves analyzing key financial ratios and cash flow trends. These metrics provide insights into the company's ability to meet its short-term obligations and manage its long-term financial health. You might also be interested in Exploring The Mosaic Company (MOS) Investor Profile: Who’s Buying and Why?.

Liquidity Positions:

• Current Ratio: For the quarter ending December 31, 2024, MOS reported a current ratio of 1.08. A current ratio of 1 or greater suggests that a company has enough current assets to cover its current liabilities.
• Quick Ratio: The company's quick ratio for the same period was 0.47. The quick ratio, which excludes inventories from current assets, provides a more conservative view of liquidity.

Working Capital Trends:

Analyzing working capital trends reveals how efficiently MOS manages its short-term assets and liabilities. Mosaic's net working capital has seen some changes over the years:

• The median change in net working capital from fiscal years ending December 2020 to 2024 was -$127.1 million.
• Change In Other Working Capital was $141 million (TTM As of Dec. 2024).

Cash Flow Statements Overview:

An examination of cash flow statements offers a clear picture of MOS's cash generation and usage.

• For the 2024 financial year, MOS's free cash flow decreased by -$957.40M.
• Operating cash flow was $219.30M.
• Total cash, cash equivalents, and restricted cash was reported at $305.0 million for 2024.

Cash Flow Summary (Nine Months Ended September 30, 2024):

Here's a brief overview of Mosaic's cash flows from operating, investing, and financing activities for the nine months ended September 30, 2024:

Potential Liquidity Concerns or Strengths:

While the current ratio suggests an ability to cover short-term liabilities, the low quick ratio indicates potential challenges if inventories cannot be readily converted to cash. The decrease in free cash flow is also a point to monitor. However, MOS has taken steps to manage costs and improve profitability, which could strengthen its liquidity position.

The Mosaic Company returned $506 million to shareholders in 2024 through share repurchases and dividends, highlighting a commitment to shareholder value despite some liquidity concerns.

Mosaic's total depreciation and amortization for 2024 was $1.173B, an 8.82% increase year-over-year.

Adjusted EBITDA for 2024 was $2.2 billion, but net income was only $175 million, indicating a large amount of non-cash charges like depreciation are included in EBITDA.

Capital expenditures for 2024 were $1.25 billion, about $200 million lower than in 2023, and are expected to be in the range of $1.2 to $1.3 billion for 2025.

Selling, general and administrative expenses were $497 million in 2024, compared with $501 million in 2023.

The Mosaic Company (MOS) Valuation Analysis

Determining whether The Mosaic Company (MOS) is overvalued or undervalued requires a multifaceted approach, incorporating key financial ratios, stock performance analysis, and analyst sentiment. Here’s a breakdown to assess MOS's valuation:

Price-to-Earnings (P/E) Ratio: The P/E ratio compares a company's stock price to its earnings per share (EPS). As of recent data, MOS's P/E ratio stands at 11.44, reflecting the market's valuation of its earnings. A lower P/E ratio might suggest undervaluation compared to industry peers, while a higher ratio could indicate overvaluation or higher growth expectations.

Price-to-Book (P/B) Ratio: The P/B ratio measures the market's valuation of a company's book value of equity. MOS's P/B ratio is currently at 1.25. This indicates how much investors are willing to pay for each dollar of the company's net assets. A lower P/B ratio can imply undervaluation, whereas a higher ratio may suggest the opposite.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: The EV/EBITDA ratio compares a company's enterprise value (total market value plus debt, minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). For MOS, the EV/EBITDA ratio is 6.49. It is a valuation metric that is used to assess the value of a business. Lower EV/EBITDA multiples may indicate that a company is undervalued, while higher multiples may indicate that a company is overvalued.

Stock Price Trends: Over the past year, The Mosaic Company (MOS) has shown mixed performance. As of April 18, 2025, the stock was trading at $42.48. The 52-week range has been between $34.22 and $52.94, indicating significant volatility. Monitoring these trends helps in understanding market sentiment and potential entry or exit points for investors.

Dividend Yield and Payout Ratios: As of recent data, MOS features a dividend yield of approximately 2.00%, with an annual dividend payout of $0.80 per share. The dividend payout ratio, which indicates the proportion of earnings paid out as dividends, is around 22.95%. These figures are crucial for income-focused investors, reflecting the sustainability and potential growth of dividend payments.

Analyst Consensus: Analyst ratings provide a summarized view of expert opinions on a stock. According to the consensus, the stock is a hold. This is based on ratings from several analysts, with price targets ranging from $35.00 to $50.00. Keeping an eye on these consensus estimates can provide insight into how market professionals view the stock's potential.

Here is a table summarizing the valuation metrics for The Mosaic Company (MOS):

For further insights into investor behavior and stock performance, check out: Exploring The Mosaic Company (MOS) Investor Profile: Who’s Buying and Why?

The Mosaic Company (MOS) Risk Factors

Understanding the risks facing The Mosaic Company (MOS) is crucial for investors assessing its financial health. These risks span both internal and external factors, significantly influencing the company's operational and financial performance. Key areas of concern include industry competition, regulatory changes, market conditions, and specific operational and strategic challenges highlighted in recent financial reports.

Industry Competition: The fertilizer industry is highly competitive, with numerous global players vying for market share. This competition can pressure prices and margins, affecting profitability. Mosaic faces competition from other major fertilizer producers, as well as smaller regional players. Intense competition may lead to price wars, reduced sales volumes, and decreased revenues.

Regulatory Changes: The Mosaic Company's operations are subject to extensive environmental and safety regulations across various jurisdictions. Changes in these regulations can lead to increased compliance costs, project delays, and potential liabilities. For example, regulations related to mining, water usage, and emissions can significantly impact operational expenses and capital expenditures.

Market Conditions: Demand for fertilizers is closely tied to agricultural commodity prices and planting decisions made by farmers. Fluctuations in crop prices, weather patterns, and global economic conditions can impact fertilizer demand, affecting Mosaic's sales and profitability. A downturn in the agricultural sector or adverse weather events can reduce demand and lead to lower prices.

Operational Risks: Mining and production activities are subject to various operational risks, including equipment failures, accidents, and natural disasters. These events can disrupt production, increase costs, and impact the company's ability to meet customer demand. Maintaining efficient and safe operations is essential for mitigating these risks.

Financial Risks: Mosaic's financial health is also subject to risks related to commodity price volatility, currency exchange rates, and interest rate fluctuations. Changes in these factors can impact revenues, expenses, and cash flows. Effective risk management strategies are necessary to mitigate the impact of these financial risks.

Strategic Risks: Strategic risks involve decisions related to investments, acquisitions, and market positioning. Poor strategic decisions can lead to financial losses and reduced competitiveness. Careful planning and execution are essential for mitigating strategic risks and achieving long-term success.

Mitigation strategies are crucial for addressing these risks. Mosaic employs various measures to manage and mitigate potential negative impacts. These strategies include:

• Diversification: Diversifying product offerings and geographic markets can reduce the company's reliance on specific commodities or regions, mitigating the impact of adverse events.
• Operational Efficiency: Improving operational efficiency and productivity can help reduce costs and improve margins, enhancing competitiveness.
• Risk Management: Implementing comprehensive risk management programs to identify, assess, and mitigate financial and operational risks.
• Regulatory Compliance: Maintaining strict compliance with environmental and safety regulations to avoid penalties and ensure sustainable operations.
• Financial Hedging: Using financial instruments to hedge against commodity price volatility, currency exchange rates, and interest rate fluctuations.

Understanding and managing these risks is vital for maintaining The Mosaic Company's financial health and ensuring long-term value for investors. Investors should consider these factors when assessing the company's prospects and making investment decisions.

To gain more insight into the core principles guiding the company, explore: Mission Statement, Vision, & Core Values of The Mosaic Company (MOS).

The Mosaic Company (MOS) Growth Opportunities

The Mosaic Company (MOS), a key player in the agricultural inputs industry, is strategically positioned to capitalize on future growth opportunities. With a global presence and a focus on essential crop nutrients, Mosaic's growth prospects are influenced by several key factors.

Analysis of key growth drivers:

• Product Innovations: Mosaic is investing in technology and new products to enhance crop yields and meet evolving agricultural needs. For example, Mosaic is scaling Mosaic Biosciences to create business options that provide a competitive advantage or reduce risk.
• Market Expansions: The company is targeting growth in key markets such as China and India. Mosaic’s global operational footprint, with production facilities and a robust distribution network, positions it well to meet international demand for essential crop nutrients.
• Acquisitions and Divestitures: Mosaic is actively managing its asset portfolio to focus on core strengths. For instance, the acquisition of the phosphate business of CF Industries in 2014 and the sale of a phosphate mining asset in Brazil in 2025 demonstrate this strategy. In 2014, Mosaic acquired the phosphate business of CF Industries, Inc. for $1.2 billion in cash plus $200 million to fund the company's asset retirement obligation escrow. In January 2025, Mosaic announced an agreement to sell its phosphate mining asset in Patos de Minas, Brazil to Fosfatados Centro SPE Ltda for $125 million, to be paid in cash over six years.

Future revenue growth projections and earnings estimates:

• Revenue Growth: Analysts predict revenue growth for Mosaic. For example, analysts are forecasting revenues of US$12.2 billion in 2025, a solid 9.5% improvement compared to the last 12 months. MOS is forecast to grow earnings and revenue by 22.8% and 2.5% per annum respectively.
• Earnings Estimates: The consensus EPS forecast for the quarter ending March 2025 is $0.39. For the fiscal year ending December 2025, the consensus EPS forecast has increased over the past month from $2.11 to $2.12 (0.47%). The company has guided to adjusted EBITDA of $3 billion to $3.2 billion by 2026 and $3.3 billion to $3.5 billion by 2030.

Strategic initiatives or partnerships that may drive future growth:

• Cost-Saving Initiatives: Mosaic is implementing cost-saving measures, including improved asset reliability and digital investments, which are expected to drive higher profit margins and lower production costs.
• Digital Transformation: Instilling a digital mindset to drive efficiency and continuously improve the customer and employee experience.
• Focus on Operational Efficiency: Efforts to enhance sulphuric acid and phosphate plant reliability are expected to increase production and reduce costs in the phosphate segment.

Competitive advantages that position the company for growth:

• Global Production Capabilities: Mosaic controls 8.2 million acres of phosphate and potash reserves globally. Annual production capacity reaches 22.3 million tonnes of phosphate nutrients and 13.5 million tonnes of potash nutrients.
• Market Leadership: Mosaic is one of the leading producers and marketers of concentrated phosphate and potash crop nutrients. Its global market share of phosphate is approximately 16%, larger than its next three competitors combined.
• Vertical Integration: Mosaic's strategy focuses around vertical integration. It develops fertilizer through all the stages of production which include mining pure phosphoric/potash rock, developing the raw materials into finished product, blending specialty products, and shipping their finished goods worldwide.

Mosaic's commitment to operational efficiency, strategic investments, and market expansion positions it well for sustained growth in the agricultural inputs industry. The company's diverse product offerings and global presence enable it to capitalize on the increasing demand for fertilizers and crop nutrients.

For more insights into Mosaic's core values and objectives, check out the Mission Statement, Vision, & Core Values of The Mosaic Company (MOS).