Modeling with New Disclosures Linking Price & Drivers to Financial Results
Overview of Approach
At their simplest, the fundamental drivers of our financial performance are volumes, prices, and costs.
Complexities arise primarily in understanding the delay between the market prices you see and prices realized in our
financial results.
For revenues, sales may be priced a quarter before the product is delivered, depending upon the season and depth of order book.
For raw material costs, purchases go through raw material inventory, are used in production, then realized when the product is delivered. Again,
this could result in a delay of a quarter or more, depending upon the season, depth of order book and length of raw material inventory.
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Costs, excluding raw materials, are over 80% fixed in our production businesses, and our long-term operating targets can
help you identify how we are driving our cost trends beyond the current year. In addition, our disclosures include:
1. Market Price Drivers
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2. Cost Drivers (excluding raw materials of sulfur and ammonia)
Known changes to the base costs of the prior year
Published and tracked progress toward multi-year targets
Costs estimates necessary to reconcile adjusted EBITDA to adjusted EPS
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Sensitivity of our earnings to changes in P and K price for all segments
Historical data by product and geographic mix, to help you align to market prices
Historical detail on raw material sourcing for phosphates, to help you assign appropriate costs
3. Volume Drivers
Mosaic's expectations for global shipments by country. In normal periods, we would expect our volumes to reflect overall market growth.
Volumes can be constrained by production capacity, and we will continue to disclose our operating capacity.
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Mosaic
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