Mosaic Co. (NYSE:MOS)

Net Operating Profit After Taxes (NOPAT)

The net operating profit after taxes demonstrated significant volatility over the observed period. Initially, it decreased from approximately 610 million to about 515 million between the years 2017 and 2018. In 2019, there was a sharp decline leading to a substantial loss of nearly 1.2 billion. Following this downturn, NOPAT rebounded with a positive figure of roughly 136 million in 2020 and further increased to approximately 1.88 billion by the end of 2021, indicating a strong recovery and growth in operating profitability.

Cost of Capital

The cost of capital showed an overall upward trend, starting at 15.82% in 2017 and increasing to 18.19% by the end of 2021. There were some fluctuations, including a slight decline in 2019 to 14.32%, but in general, the cost of capital rose, indicating possibly higher risk perceptions or changes in capital structure over time.

Invested Capital

The invested capital figures remained relatively stable but fluctuated within a moderate range. It increased from approximately 15 billion in 2017 to around 15.59 billion in 2018, then declined slightly in 2019 and 2020 to about 15 and 14.65 billion respectively. In 2021, invested capital rose again to nearly 15.84 billion, reflecting possible reinvestments or capital expenditures during this period.

Economic Profit

Economic profit was consistently negative throughout the period, indicating that the company was not generating returns above its cost of capital. The losses were most pronounced in 2019 when economic profit dropped sharply to about -3.36 billion. Although there was some improvement in subsequent years, economic profit remained negative, reducing the deficit to roughly -1 billion by 2021. This pattern suggests challenges in value creation despite the recent recovery in operating profit.

The financial performance displayed over the reported periods reveals significant volatility in key profitability measures.

Net Earnings (Loss) Attributable to Mosaic

The net earnings figures exhibit substantial fluctuations across the five-year span. In 2017, the company recorded a net loss of approximately $107.2 million. This shifted positively in 2018, showing a net profit of $470 million. However, this trend reversed sharply in 2019, with net losses deepening to roughly $1.067 billion. The year 2020 marked a recovery with net earnings rising to $666.1 million, followed by further strong gains in 2021, reaching about $1.63 billion. This pattern indicates a high degree of instability in profitability, with pronounced losses in 2017 and 2019 contrasted by substantial profits in 2018, 2020, and 2021.

Net Operating Profit After Taxes (NOPAT)

The NOPAT values similarly demonstrate marked variability. In 2017, NOPAT was approximately $610.5 million, followed by a decline to $515.1 million in 2018. The most notable change occurred in 2019, with NOPAT plunging to a negative $1.198 billion, signaling operational challenges. In 2020, NOPAT rebounded to $136.4 million, and then grew significantly to about $1.88 billion in 2021. The results suggest a recovery in operational efficiency beginning in 2020 after a considerable downturn in 2019, with 2021 marking the highest operational profitability within the period.

Overall, the data demonstrates a pattern of extreme fluctuations in both net earnings and operating profitability. The year 2019 represents a significant downturn in both measures, followed by a phased recovery in the subsequent years. The company’s financial results reflect considerable volatility possibly driven by external market conditions or internal operational factors that affected profitability during the reviewed timeframe.

Provision for (benefit from) income taxes

The provision for income taxes exhibited considerable volatility over the five-year period. In 2017, the provision was a positive amount close to $495 million, indicating a tax expense. This sharply declined in 2018 to approximately $77 million, followed by a notable shift into a tax benefit in 2019 and 2020, with negative amounts of roughly $225 million and $579 million respectively. However, in 2021, the provision reverted to a tax expense of around $598 million. This fluctuation suggests significant changes in taxable income or tax-related adjustments during these years.

Cash operating taxes

Cash operating taxes demonstrated an increasing trend with some fluctuations. In 2017, a negative value near -$69 million indicates a tax benefit or refund during that year. From 2018 onwards, cash operating taxes were positive and generally growing, rising from about $211 million in 2018 to over $526 million in 2021. This progressive increase in cash taxes paid corresponds with a return to a positive tax provision in 2021, reflecting higher tax payments aligning with increased taxable earnings or changes in tax liabilities.

Total reported debt & leases

The total reported debt and leases exhibit a general declining trend over the period analyzed. Starting at approximately 5.88 billion USD at the end of 2017, the liabilities decreased to about 5.15 billion USD by the end of 2021. This represents a consistent reduction in debt levels during the timeframe, with the most notable year-on-year decrease occurring between 2019 and 2021, indicating potential efforts to deleverage or optimize debt management.

Total Mosaic stockholders’ equity

Stockholders’ equity showed fluctuations but overall an increasing trend. It grew from roughly 9.62 billion USD at the end of 2017 to about 10.60 billion USD by the end of 2021. After peaking above 10.39 billion USD in 2018, equity declined somewhat in 2019 but rebounded in the following years, suggesting periods of both capital accretion and consolidation. The equity levels at the end of the period are the highest reported and indicate strengthening shareholders' financial interest in the company.

Invested capital

Invested capital remained relatively stable with minor fluctuations, beginning at approximately 15.02 billion USD in 2017 and ending at about 15.84 billion USD in 2021. The values show a slight increase overall but include periods of decline, notably between 2018 and 2020. The general stability of invested capital indicates consistent asset or business investments relative to the company's size, without extreme expansions or contractions.

Summary of trends and insights

The data reflect a company progressively reducing its total debt and lease obligations over the five-year span, positively impacting financial leverage and possibly credit risk. Concurrently, the rise in stockholders’ equity suggests that the company has successfully maintained or increased its capital base, which may result from retained earnings or additional equity infusion. The sturdiness of invested capital further reinforces a stable investment footing. Taken together, these patterns imply a strategic emphasis on strengthening the balance sheet and maintaining capital adequacy while potentially streamlining debt exposure.

Economic Profit

The economic profit consistently remained negative throughout the period from 2017 to 2021. It showed a worsening trend from 2017 through 2019, declining from approximately -1.77 billion USD in 2017 to about -3.36 billion USD in 2019. After 2019, economic profit improved notably, rising to around -2.27 billion USD in 2020 and further improving to approximately -1.00 billion USD by the end of 2021. Despite the continued negative values, this indicates a reduction in economic losses over the latter years.

Invested Capital

The invested capital fluctuated moderately during the five-year period. It increased slightly from about 15.02 billion USD in 2017 to a peak near 15.59 billion USD in 2018. It then decreased to approximately 14.65 billion USD by 2020. In 2021, invested capital rose again to a higher level of about 15.84 billion USD. Overall, invested capital maintained a relatively stable range with a slight upward trend towards the end of the period.

Economic Spread Ratio

The economic spread ratio, which indicates the return over invested capital relative to cost, was negative throughout the entire period reflecting underperformance. It deteriorated from -11.75% in 2017 to its lowest point of -22.26% in 2019. Thereafter, it improved significantly, rising to -15.47% in 2020 and further to -6.32% in 2021. This improvement aligns with the trend observed in economic profit, suggesting better utilization of capital and decreasing losses over time, although remaining negative.

Economic Profit

The economic profit exhibited a consistently negative trend across the analyzed periods, indicating that the company experienced economic losses each year. The losses deepened notably from 2017 to 2019, reaching a peak negative value in 2019 at over -3.35 billion USD. Subsequently, there was an improvement in economic profit in 2020 and 2021, with the negative amount decreasing significantly to about -1.00 billion USD by the end of 2021. This suggests a gradual but meaningful reduction in economic losses over the last two years of the period.

Net Sales

Net sales followed a generally upward trend with some fluctuations. Sales increased from approximately 7.41 billion USD in 2017 to a peak of around 9.59 billion USD in 2018, followed by a decline in 2019 and 2020 to 8.91 billion USD and 8.68 billion USD respectively. In 2021, net sales increased substantially, reaching 12.36 billion USD, representing the highest sales volume within the five-year span. This reflects recovery and expansion in sales after a slight downturn in the mid-period years.

Economic Profit Margin

The economic profit margin remained negative throughout all periods, indicating that the company did not generate economic profit relative to sales. The margin worsened significantly during 2019, reaching approximately -37.7%, corresponding with the deepest economic losses that year. There was a steady improvement thereafter, with the margin enhancing to -26.1% in 2020 and further to -8.1% in 2021. This improving margin aligns with the reduction in economic losses and increase in net sales, suggesting some positive operational or financial efficiencies being realized.

Overall Analysis

The data indicates that while the company struggled with substantial economic losses during the period, especially around 2019, there have been signs of recovery by 2021. The strong increase in net sales combined with an improving economic profit margin suggests better cost management or enhanced profitability dynamics. However, despite improvements, economic profit remains negative, signaling the need for continued focus on profitability improvements to achieve sustainable positive economic returns.