Mosaic Co. (NYSE:MOS)

Mosaic Co., adjustments to financial statements

US$ in thousands

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Adjustment to Total Assets
Total assets (as reported)	22,036,400)	19,789,800)	19,298,500)	20,119,200)	18,633,400)
Less: Goodwill	1,172,200)	1,173,000)	1,156,900)	1,707,500)	1,693,600)
Total assets (adjusted)	20,864,200)	18,616,800)	18,141,600)	18,411,700)	16,939,800)
Adjustment to Total Mosaic Stockholders’ Equity
Total Mosaic stockholders’ equity (as reported)	10,604,100)	9,581,400)	9,185,500)	10,397,300)	9,617,500)
Less: Goodwill	1,172,200)	1,173,000)	1,156,900)	1,707,500)	1,693,600)
Total Mosaic stockholders’ equity (adjusted)	9,431,900)	8,408,400)	8,028,600)	8,689,800)	7,923,900)
Adjustment to Net Earnings (loss) Attributable To Mosaic
Net earnings (loss) attributable to Mosaic (as reported)	1,630,600)	666,100)	(1,067,400)	470,000)	(107,200)
Add: Impairment of goodwill	—)	—)	588,600)	—)	—)
Net earnings (loss) attributable to Mosaic (adjusted)	1,630,600)	666,100)	(478,800)	470,000)	(107,200)

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial data indicates a consistent variance between reported and adjusted figures, resulting from the systematic removal of goodwill and intangible assets from the balance sheet. This adjustment reveals a more conservative valuation of the organization's asset base and shareholders' equity over the five-year period from 2017 to 2021.

Asset Valuation Trends: Total assets exhibited a general upward trajectory, growing from 18.63 billion USD in 2017 to 22.04 billion USD in 2021. However, adjusted total assets remained consistently lower, indicating that goodwill and intangible assets represented a significant portion of the reported balance. A notable contraction in the gap between reported and adjusted assets occurred in 2019, where the difference decreased from approximately 1.71 billion USD in 2018 to 1.16 billion USD, suggesting a substantial impairment or write-down of these assets during that fiscal year.
Equity Base Impact: Reported stockholders' equity increased from 9.62 billion USD in 2017 to 10.60 billion USD in 2021. The adjusted equity figures, which exclude goodwill, followed a similar trend but remained lower, ranging from 7.92 billion USD to 9.43 billion USD. The removal of these intangible components results in a lower equity base, which would typically lead to higher calculated returns on equity (ROE) compared to reported figures.
Net Earnings and Impairment Effects: Net earnings demonstrated significant volatility, with a substantial reported loss of 1.07 billion USD in 2019. A critical divergence is observed in the adjusted net earnings for 2019, which were improved to a loss of 478.8 million USD. This discrepancy of approximately 588.6 million USD aligns with the reduction in adjusted total assets for the same period, confirming that the reported 2019 loss was heavily influenced by a non-cash impairment charge related to goodwill or intangible assets.
Long-term Financial Trajectory: By the end of 2021, the company achieved its highest net earnings in the observed period at 1.63 billion USD, with no difference between reported and adjusted figures for that specific year. This suggests that the period of significant intangible asset impairment concluded prior to 2021, and the subsequent growth in assets and equity was driven by operational performance rather than accounting adjustments.

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Mosaic Co., Financial Ratios: Reported vs. Adjusted

Mosaic Co., adjusted financial ratios

	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
Net Profit Margin
Reported net profit margin	13.20%	7.67%	-11.98%	4.90%	-1.45%
Adjusted net profit margin	13.20%	7.67%	-5.38%	4.90%	-1.45%
Total Asset Turnover
Reported total asset turnover	0.56	0.44	0.46	0.48	0.40
Adjusted total asset turnover	0.59	0.47	0.49	0.52	0.44
Financial Leverage
Reported financial leverage	2.08	2.07	2.10	1.94	1.94
Adjusted financial leverage	2.21	2.21	2.26	2.12	2.14
Return on Equity (ROE)
Reported ROE	15.38%	6.95%	-11.62%	4.52%	-1.11%
Adjusted ROE	17.29%	7.92%	-5.96%	5.41%	-1.35%
Return on Assets (ROA)
Reported ROA	7.40%	3.37%	-5.53%	2.34%	-0.58%
Adjusted ROA	7.82%	3.58%	-2.64%	2.55%	-0.63%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

The financial performance between 2017 and 2021 is characterized by significant volatility in profitability, culminating in a strong recovery by the end of the period. The removal of goodwill and intangible assets reveals a more resilient underlying operational performance, particularly during the 2019 fiscal year, where the impact of non-cash impairments is most evident.

Profitability Margins: Reported and adjusted net profit margins remained identical for most of the observed period, with the critical exception of 2019. In 2019, the reported net profit margin of -11.98% was adjusted to -5.38%, indicating that a substantial portion of the losses in that year was attributable to impairments of goodwill or intangible assets. By 2021, both metrics converged at a high of 13.20%, reflecting a strong recovery in earnings power.
Asset Efficiency: Total asset turnover shows a consistent upward trend, increasing from a reported 0.40 in 2017 to 0.56 in 2021. The adjusted total asset turnover is consistently higher than the reported figure across all five years, peaking at 0.59 in 2021. This divergence confirms that the inclusion of goodwill and intangible assets artificially lowers the perceived efficiency of the asset base in generating revenue.
Financial Leverage: Financial leverage remained relatively stable, fluctuating between 1.94 and 2.10 on a reported basis. However, the adjusted financial leverage is consistently higher, ranging from 2.12 to 2.26. The removal of intangible assets reduces the total asset base, thereby increasing the reported leverage ratio and suggesting a higher reliance on debt relative to tangible assets.
Returns on Equity and Assets: Both ROE and ROA exhibit significant volatility, with deep troughs in 2017 and 2019 followed by substantial growth in 2021. Adjusted ROE reached 17.29% in 2021 compared to a reported 15.38%, while adjusted ROA reached 7.82% against a reported 7.40%. The adjusted figures consistently provide a more favorable view of returns, particularly in 2019, where adjusted ROE (-5.96%) was significantly higher than reported ROE (-11.62%), further highlighting the distortive effect of intangible asset write-downs on performance metrics.

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(1,067,400)	470,000)	(107,200)
Net sales	12,357,400)	8,681,700)	8,906,300)	9,587,300)	7,409,400)
Profitability Ratio
Net profit margin¹	13.20%	7.67%	-11.98%	4.90%	-1.45%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(478,800)	470,000)	(107,200)
Net sales	12,357,400)	8,681,700)	8,906,300)	9,587,300)	7,409,400)
Profitability Ratio
Adjusted net profit margin²	13.20%	7.67%	-5.38%	4.90%	-1.45%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Net profit margin = 100 × Net earnings (loss) attributable to Mosaic ÷ Net sales
= 100 × 1,630,600 ÷ 12,357,400 = 13.20%

² Adjusted net profit margin = 100 × Adjusted net earnings (loss) attributable to Mosaic ÷ Net sales
= 100 × 1,630,600 ÷ 12,357,400 = 13.20%

The financial performance from 2017 to 2021 is characterized by significant volatility in the early period followed by a strong, sustained recovery in profitability. The transition from negative to positive earnings reflects a cyclical trend with a peak in operational efficiency occurring in the final year of the observed period.

Net Earnings Volatility: Net earnings experienced substantial fluctuations, starting with a loss of 107.2 million USD in 2017 and culminating in a gain of 1.63 billion USD in 2021. A severe contraction occurred in 2019, where reported net losses reached 1.07 billion USD, marking the lowest point in the five-year sequence before a rapid recovery began in 2020.
Analysis of Adjusted Net Profit Margin Divergence: A notable discrepancy between reported and adjusted margins is evident in 2019. The reported net profit margin was -11.98%, whereas the adjusted net profit margin was -5.38%. This variance suggests the presence of significant non-recurring expenses or non-cash charges during that fiscal year which were excluded to provide a normalized view of performance.
Profitability Trajectory: Since 2019, a consistent upward trend in the adjusted net profit margin is observed. The margin moved from -5.38% in 2019 to 7.67% in 2020, and reached 13.20% by December 31, 2021. This progression indicates a strong improvement in the company's ability to convert revenue into actual profit over the last three years of the analyzed period.

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net sales	12,357,400)	8,681,700)	8,906,300)	9,587,300)	7,409,400)
Total assets	22,036,400)	19,789,800)	19,298,500)	20,119,200)	18,633,400)
Activity Ratio
Total asset turnover¹	0.56	0.44	0.46	0.48	0.40
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Net sales	12,357,400)	8,681,700)	8,906,300)	9,587,300)	7,409,400)
Adjusted total assets	20,864,200)	18,616,800)	18,141,600)	18,411,700)	16,939,800)
Activity Ratio
Adjusted total asset turnover²	0.59	0.47	0.49	0.52	0.44

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Total asset turnover = Net sales ÷ Total assets
= 12,357,400 ÷ 22,036,400 = 0.56

² Adjusted total asset turnover = Net sales ÷ Adjusted total assets
= 12,357,400 ÷ 20,864,200 = 0.59

An examination of the financial metrics from 2017 to 2021 reveals a consistent discrepancy between reported and adjusted asset figures, reflecting the impact of goodwill and intangible assets on the company's balance sheet. While total assets grew over the five-year period, the removal of non-operating assets provides a more optimized view of asset utilization efficiency.

Asset Base Evolution: Reported total assets increased from $18,633,400 thousand in 2017 to $22,036,400 thousand in 2021. Adjusted total assets followed a similar upward trajectory, rising from $16,939,800 thousand to $20,864,200 thousand. A notable reduction in the gap between reported and adjusted assets occurred between 2018 and 2019, suggesting a decrease in the carrying value of goodwill or intangible assets during that interval.
Total Asset Turnover Trends: The reported total asset turnover ratio demonstrated growth from 0.40 in 2017 to 0.56 in 2021, despite a slight decline observed between 2018 and 2020. The adjusted total asset turnover mirrored this pattern, starting at 0.44 in 2017 and reaching a peak of 0.59 in 2021. The most significant increase in efficiency for both metrics occurred between 2020 and 2021.
Impact of Asset Adjustments on Efficiency: The adjusted total asset turnover ratio is consistently higher than the reported ratio across all measured periods. This indicates that the exclusion of goodwill and intangible assets improves the asset turnover profile, as these assets typically do not contribute directly to the generation of revenue in the same capacity as tangible operating assets. The persistent positive variance between the reported and adjusted ratios underscores the significant role that intangible assets play in inflating the total asset base relative to revenue generation.

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Total assets	22,036,400)	19,789,800)	19,298,500)	20,119,200)	18,633,400)
Total Mosaic stockholders’ equity	10,604,100)	9,581,400)	9,185,500)	10,397,300)	9,617,500)
Solvency Ratio
Financial leverage¹	2.08	2.07	2.10	1.94	1.94
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted total assets	20,864,200)	18,616,800)	18,141,600)	18,411,700)	16,939,800)
Adjusted total Mosaic stockholders’ equity	9,431,900)	8,408,400)	8,028,600)	8,689,800)	7,923,900)
Solvency Ratio
Adjusted financial leverage²	2.21	2.21	2.26	2.12	2.14

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ Financial leverage = Total assets ÷ Total Mosaic stockholders’ equity
= 22,036,400 ÷ 10,604,100 = 2.08

² Adjusted financial leverage = Adjusted total assets ÷ Adjusted total Mosaic stockholders’ equity
= 20,864,200 ÷ 9,431,900 = 2.21

The financial position of Mosaic Co. between 2017 and 2021 is characterized by a general expansion of the balance sheet, despite a temporary contraction observed in 2019. Reported total assets increased from 18,633,400 thousand USD to 22,036,400 thousand USD over the five-year period. A consistent gap exists between reported and adjusted total assets, indicating a substantial presence of goodwill and intangible assets that remained relatively stable in proportion to the overall asset base.

Asset and Equity Valuation: Total assets and stockholders' equity followed a parallel trajectory, with both metrics experiencing a decline in 2019 before recovering and reaching their peak in 2021. The adjusted total assets, which exclude intangible assets and goodwill, remained consistently lower than reported assets, ranging from 16,939,800 thousand USD in 2017 to 20,864,200 thousand USD in 2021. Similarly, adjusted stockholders' equity was consistently lower than reported equity, reflecting the impact of removing non-tangible value from the equity calculation.
Reported Financial Leverage: Reported financial leverage exhibited relative stability, fluctuating within a narrow range between 1.94 and 2.10. A peak in leverage was recorded in 2019 at 2.10, coinciding with the period of lowest reported total assets and equity. By 2021, the reported leverage settled at 2.08, indicating a marginal increase in the reliance on debt relative to equity compared to the 2017-2018 period.
Adjusted Financial Leverage and Risk Interpretation: The adjusted financial leverage ratio is consistently higher than the reported ratio for every year analyzed. This indicates that when goodwill and intangible assets are removed, the company's financial risk profile appears more leveraged. The adjusted ratio moved from 2.14 in 2017 to a peak of 2.26 in 2019, before stabilizing at 2.21 in 2020 and 2021. The consistent premium of the adjusted ratio over the reported ratio suggests that intangible assets provide a significant buffer in the reported equity, and their removal exposes a higher underlying leverage position.

The correlation between reported and adjusted leverage trends suggests that the volatility in financial leverage is driven primarily by changes in total assets and equity rather than shifts in the composition of intangible assets. The convergence of both ratios toward the end of the period indicates a stabilization of the company's capital structure.

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(1,067,400)	470,000)	(107,200)
Total Mosaic stockholders’ equity	10,604,100)	9,581,400)	9,185,500)	10,397,300)	9,617,500)
Profitability Ratio
ROE¹	15.38%	6.95%	-11.62%	4.52%	-1.11%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(478,800)	470,000)	(107,200)
Adjusted total Mosaic stockholders’ equity	9,431,900)	8,408,400)	8,028,600)	8,689,800)	7,923,900)
Profitability Ratio
Adjusted ROE²	17.29%	7.92%	-5.96%	5.41%	-1.35%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROE = 100 × Net earnings (loss) attributable to Mosaic ÷ Total Mosaic stockholders’ equity
= 100 × 1,630,600 ÷ 10,604,100 = 15.38%

² Adjusted ROE = 100 × Adjusted net earnings (loss) attributable to Mosaic ÷ Adjusted total Mosaic stockholders’ equity
= 100 × 1,630,600 ÷ 9,431,900 = 17.29%

Financial performance between 2017 and 2021 is characterized by significant volatility in net earnings and a subsequent strong recovery in profitability. While stockholders' equity remained relatively stable with a slight upward trajectory, the divergence between reported and adjusted figures indicates a substantial impact from non-operational assets, such as goodwill and intangibles, on the calculation of returns.

Net Earnings Trends: Reported net earnings exhibited extreme fluctuations, transitioning from a loss in 2017 to a profit in 2018, followed by a significant loss of 1.067 billion USD in 2019. A strong recovery followed, with earnings reaching a peak of 1.631 billion USD by 2021. The adjusted net earnings for 2019 were considerably less negative than the reported figures, reducing the loss to 478.8 million USD, which suggests the exclusion of significant non-cash charges or one-time impairments.
Stockholders' Equity Analysis: A consistent gap exists between reported and adjusted stockholders' equity throughout the five-year period. Adjusted equity is systematically lower than reported equity, remaining approximately 1.2 billion USD lower on average. This reduction indicates that a significant portion of the company's book value is comprised of goodwill and intangible assets, which are removed in the adjusted calculation to focus on tangible capital.
Return on Equity (ROE) Divergence: The Adjusted ROE consistently outperformed the Reported ROE from 2018 through 2021. In 2019, the Adjusted ROE of -5.96% was significantly better than the Reported ROE of -11.62%, demonstrating that the removal of intangible assets mitigated the perceived impact of the 2019 losses. By 2021, the Adjusted ROE reached 17.29%, surpassing the Reported ROE of 15.38%.
Comparative Performance Insights: The relationship between reported and adjusted metrics reveals that the company's operational efficiency is higher than the reported figures suggest. Because the adjusted equity denominator is smaller, any positive net earning result is amplified in the Adjusted ROE. This pattern highlights that the underlying tangible asset base is generating a higher rate of return than the total book value including goodwill.

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	Dec 31, 2021	Dec 31, 2020	Dec 31, 2019	Dec 31, 2018	Dec 31, 2017
As Reported
Selected Financial Data (US$ in thousands)
Net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(1,067,400)	470,000)	(107,200)
Total assets	22,036,400)	19,789,800)	19,298,500)	20,119,200)	18,633,400)
Profitability Ratio
ROA¹	7.40%	3.37%	-5.53%	2.34%	-0.58%
Adjusted for Goodwill
Selected Financial Data (US$ in thousands)
Adjusted net earnings (loss) attributable to Mosaic	1,630,600)	666,100)	(478,800)	470,000)	(107,200)
Adjusted total assets	20,864,200)	18,616,800)	18,141,600)	18,411,700)	16,939,800)
Profitability Ratio
Adjusted ROA²	7.82%	3.58%	-2.64%	2.55%	-0.63%

Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).

2021 Calculations

¹ ROA = 100 × Net earnings (loss) attributable to Mosaic ÷ Total assets
= 100 × 1,630,600 ÷ 22,036,400 = 7.40%

² Adjusted ROA = 100 × Adjusted net earnings (loss) attributable to Mosaic ÷ Adjusted total assets
= 100 × 1,630,600 ÷ 20,864,200 = 7.82%

The financial performance from 2017 through 2021 is characterized by significant volatility in net earnings and a steady expansion of the asset base. A marked recovery is observed beginning in 2020, culminating in peak profitability for both reported and adjusted metrics in 2021.

Net Earnings Trends: Reported net earnings fluctuated considerably, with losses recorded in 2017 and 2019, contrasted by profits in 2018, 2020, and 2021. Adjusted net earnings for 2019 show a substantial reduction in losses compared to reported figures, indicating the impact of non-recurring or non-cash items that were excluded to provide a clearer view of operational performance.
Asset Base Comparison: Reported total assets grew from US$ 18.6 billion in 2017 to US$ 22.0 billion in 2021. Adjusted total assets remained consistently lower than reported assets throughout the period, reflecting the systematic exclusion of goodwill and intangible assets. This gap indicates that a significant portion of the company's balance sheet consists of non-physical or acquired intangible value.
Return on Assets (ROA) Analysis: The Reported ROA exhibited extreme variance, falling to a low of -5.53% in 2019 before rebounding to 7.40% in 2021. The Adjusted ROA consistently provided a more favorable perspective on asset efficiency. Most notably, in 2019, the Adjusted ROA of -2.64% was significantly less negative than the Reported ROA, due to both the higher adjusted earnings and the lower adjusted asset base. By 2021, the Adjusted ROA reached a period high of 7.82%.

The divergence between reported and adjusted metrics underscores the influence of intangible assets on profitability ratios. The acceleration of both ROA metrics from 2020 to 2021 indicates a period of intensified operational efficiency and earnings growth relative to the overall asset base.

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