Analysis of Debt
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- Balance Sheet: Assets
- Common-Size Balance Sheet: Assets
- Analysis of Profitability Ratios
- Analysis of Solvency Ratios
- Enterprise Value to FCFF (EV/FCFF)
- Dividend Discount Model (DDM)
- Selected Financial Data since 2005
- Price to Earnings (P/E) since 2005
- Price to Operating Profit (P/OP) since 2005
- Analysis of Revenues
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Total Debt (Carrying Amount)
Mosaic Co., balance sheet: debt
US$ in thousands
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 debt data reveals a dynamic pattern in the composition and overall levels of financial obligations over the five-year period. The company's short-term debt exhibits substantial fluctuation, starting at a relatively low level in 2017, rising sharply in 2019, falling drastically in 2020, and then increasing dramatically to a peak in 2021.
Current maturities of long-term debt show a mixed trend. There is a significant drop from 2017 to 2018, followed by a gradual increase in the subsequent years, reaching its highest point at the end of 2021. This suggests an increased portion of long-term debt maturing in the near term towards the end of the period.
Structured accounts payable arrangements demonstrate a consistent upward trend, with only a slight dip in 2020. The overall growth from 2017 to 2021 indicates a growing reliance on these arrangements as a form of liability financing or operational credit.
The long-term debt, excluding current maturities, declines steadily across the years, reflecting a reduction in longer-dated obligations. This reduction could indicate repayments, refinancing, or adjustments in capital structure aimed at decreasing long-term leverage.
The total debt carrying amount starts at its highest point in 2017, decreases through 2018, then rises in 2019 before gradually declining over the next two years. Despite fluctuations, the overall trend from 2017 to 2021 is a moderate decrease in total debt levels.
In summary, the debt profile shows an increasing shift towards short-term obligations and structured accounts payable arrangements, coupled with a reduction in long-term debt. This shift impacts the maturity profile and potentially the company's liquidity management and refinancing risk. The total debt amount slightly decreases over the period despite the volatility in its components, suggesting active debt management and possible strategic financial adjustments.
Total Debt (Fair Value)
| Dec 31, 2021 | |
|---|---|
| Selected Financial Data (US$ in thousands) | |
| Structured accounts payable arrangements | |
| Short-term debt | |
| Long-term debt, including current portion | |
| Total total debt (fair value) | |
| Financial Ratio | |
| Debt, fair value to carrying amount ratio | |
Based on: 10-K (reporting date: 2021-12-31).
Weighted-average Interest Rate on Debt
Weighted-average effective interest rate on debt:
| Interest rate | Debt amount1 | Interest rate × Debt amount | Weighted-average interest rate2 |
|---|---|---|---|
| Total | |||
Based on: 10-K (reporting date: 2021-12-31).
1 US$ in thousands
2 Weighted-average interest rate = 100 × ÷ =
Interest Costs Incurred
Mosaic Co., interest costs incurred
US$ in thousands
| 12 months ended: | Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Interest expense | |||||||||||
| Capitalized interest on major construction projects | |||||||||||
| Interest costs incurred |
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).
- Interest Expense
- The interest expense exhibited an overall increasing trend from 2017 through 2019, rising from 171,300 thousand US dollars to a peak of 216,000 thousand US dollars in 2019. It remained relatively stable in 2020 at 214,100 thousand US dollars before declining to 194,300 thousand US dollars in 2021. This pattern suggests an increase in borrowing costs or debt levels through 2019, followed by a reduction in interest expense in the two subsequent years.
- Capitalized Interest on Major Construction Projects
- Capitalized interest fluctuated over the period, starting at 23,900 thousand US dollars in 2017 and decreasing to 22,100 thousand US dollars in 2018. It then increased progressively to 28,500 thousand US dollars in 2019 and peaked at 33,300 thousand US dollars in 2020, before decreasing slightly to 30,100 thousand US dollars in 2021. This trend indicates an increased capitalization of interest related to construction projects, particularly from 2019 onwards, suggesting more investment or capitalization activity in major projects during these years.
- Interest Costs Incurred
- Interest costs incurred, which combine interest expense and capitalized interest, showed a steady increase from 195,200 thousand US dollars in 2017 to a peak of 247,400 thousand US dollars in 2020. In 2021, the interest costs decreased to 224,400 thousand US dollars. The growth reflects rising financing costs or increased debt levels over the period, while the decline in 2021 aligns with the reductions observed in interest expense and capitalized interest.
- Summary of Trends
- Overall, the data reveals a pattern of increasing interest-related costs from 2017 through 2020, influenced by both higher interest expenses and greater capitalized interest costs on construction projects. The peak in 2020 for total incurred interest costs and capitalized interest suggests heightened investment activity requiring financing. The decline observed in 2021 across all interest-related items may indicate debt reduction, improved financing terms, or a slowdown in capital expenditure. The varying capitalized interest trends imply fluctuating levels of construction investment across these years.
Adjusted Interest Coverage Ratio
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 Interest coverage ratio (without capitalized interest) = EBIT ÷ Interest expense
= ÷ =
2 Adjusted interest coverage ratio (with capitalized interest) = EBIT ÷ Interest costs incurred
= ÷ =
- Interest Coverage Ratio (Without Capitalized Interest)
- The interest coverage ratio demonstrated variability over the five-year period. Initially, the ratio increased slightly from 3.28 in 2017 to 3.53 in 2018, indicating improved ability to meet interest expenses. However, it declined sharply in 2019 to a negative value of -5.09, signifying a period where earnings were insufficient to cover interest obligations. The ratio then recovered to positive territory in 2020 at 1.41, suggesting partial restoration of interest coverage capability. A significant improvement occurred in 2021, with the ratio rising sharply to 12.49, reflecting a strong enhancement in earnings relative to interest expenses.
- Adjusted Interest Coverage Ratio (With Capitalized Interest)
- The adjusted interest coverage ratio, which accounts for capitalized interest, followed a pattern similar to the unadjusted ratio. From 2017 to 2018, it increased moderately from 2.88 to 3.21, implying a strengthening position. A major downturn was observed in 2019 with a value of -4.5, indicating earnings were not sufficient to cover capitalized and expensed interest combined. This was followed by a slight recovery in 2020 to 1.22. In 2021, the ratio improved markedly to 10.82, demonstrating a substantial recovery in the company's ability to service its interest obligations, even when considering capitalized interest.
- Overall Trends and Insights
- Both interest coverage ratios experienced significant volatility during the period. The sharp negative values in 2019 suggest a challenging financial year with earnings inadequately covering interest expenses, possibly indicating operational or economic difficulties. The subsequent improvement in 2020 and strong recovery in 2021 highlight a positive turnaround in financial performance and interest expense management. The differences between adjusted and unadjusted ratios are consistently present but follow the same trajectory, emphasizing the impact of capitalized interest on the company's debt servicing profile.