The Mosaic Company (MOS) stock prices were down by a marginal 0.43% as of market close on May 3rd 2021, bringing the price per share down to USD$35.03. Subsequent pre-market fluctuations saw the price fall further by a more substantial 7.37%, bringing the stock down to USD$32.45.
Massive Gains in Gross Margin
MOS reported net income in the amount of USD$157 million on May 3rd, 2021, representing a net income of USD$0.41 per share, for the first quarter of the fiscal year 2021. Adjusted earnings per share came out to USD$0.57 and adjusted EBITDA was USD$560 million. The monumental increase of a gross margin of USD$41 million in Q1 2020 to USD$435 million for Q1 2021. This reflects the stronger margins per ton in all three of the company’s operating sectors, with higher phosphate prices, higher potash volumes, and transformation benefits.
Revenues Support Optimistic Projections
Building on the demonstrated success of the combination of the company’s long-term improvements in cost structure and strengthening global fertilizer markets, MOS is expecting a favorable upcoming fiscal year. Most recently reported revenues indicated a 28% year-over-year increase to USD$2.3 billion in support of the company’s optimistic outlook.
Because of year-over-year increases in price increases, gross margins reported for Q1 2021 were up nearly tenfold from the year-prior period. Up from the 2% reported for the first quarter of 2020, Q1 2021 reported a gross margin of 19%, representing the highest gross margin report since the second quarter of the fiscal year 2015.
Consolidated Balance Sheet
The first quarter of 2021 saw the continued strengthening of the company’s balance sheet, with USD$692 million in unrestricted total cash as of March 31st, 2021. Cash flow from operations amounted to USD$319 million having been generated for Q1 2021, while capital expenditures were reported at USD289 million. The company ended the first quarter of 2021 with USD$3.8 billion, down from the USD$4.5 billion from the year-ago period.
Favorable Market Conditions
The company’s phosphate sales volumes were up to 2.1 million tons, a 7% year-over-year increase. Turnaround activity over the course of Q1 2021 was reflected by potash production volumes being reported at 1.9 million tons. As strong demand is sustained, MOS inventories are consistently below historical levels, with the company’s sales being restricted to production volumes in the second quarter of 2021. Gross margins per ton, meanwhile, had gone up to USD$84 from a loss of USD$43 per ton in Q1 2020.
Future Outlook for MOS
With MOS running at full capacity and having excess demand left unmet, the company is taking strides to address the difference. Current and potential investors are hopeful given the company’s recent financial success and increasingly favorable market conditions.