MOS — The Mosaic Company

Summary of Mosaic Company's Q4 2025 Earnings Call

1. Key Financial Results and Metrics

• Q4 2025 Performance:
  • Phosphate production was 1.7 million tonnes, impacted by a turnaround at the Bartow facility and soft U.S. demand.
  • Cash cost of conversion for phosphate improved to $112 per tonne, down from $131 in Q3 2025.
  • EBITDA conversion rate fell to mid-30s percentage, significantly below the normalized level of around 70%.
  • Working capital reduced cash flow by $960 million in 2025, leading to an $829 million increase in net debt.
• 2026 Expectations:
  • Anticipate producing at least 7 million tonnes of phosphate and around 9 million tonnes of potash.
  • Expected capital expenditures for 2026 are around $1.5 billion, higher than 2025 due to necessary investments in gyp stacks and environmental reserves.

2. Strategic Updates and Business Highlights

• Operational Improvements:
  • Focused on stabilizing phosphate production and achieving consistent output, with expectations for improved performance in 2026.
  • Successful cost management initiatives led to $150 million in savings achieved ahead of schedule.
  • Expansion of Mosaic Biosciences, which doubled net sales to $68 million in 2025 and is expected to double again in 2026 with 8 to 10 new product launches.
• Divestitures:
  • Sold noncore assets including Patos de Minas and Taquari, with a pending transaction for Carlsbad, generating approximately $170 million in proceeds.

3. Forward Guidance and Outlook

• Market Conditions:
  • Positive outlook for 2026 due to emerging U.S. demand and strong global agricultural fundamentals.
  • Expect global potash shipments to approach record levels, driven by broad-based demand.
• Phosphate Pricing:
  • Anticipate a rebound in phosphate prices in Brazil, with potential for a $300 million to $500 million working capital release expected from inventory normalization.

4. Bad News, Challenges, or Points of Concern

• Q4 Weakness:
  • Significant drop in U.S. phosphate demand due to affordability issues, leading to a weaker than expected fourth quarter.
  • Increased sulfur prices are expected to compress margins in the phosphate segment into the first half of 2026.
• Credit Constraints in Brazil:
  • Ongoing credit issues are impacting fertilizer demand, with uncertainty around sales volumes for Mosaic Fertilizantes.
• Production Challenges:
  • Production curtailments at Araxa and Fospar in Brazil due to high sulfur prices, affecting overall output.

5. Notable Q&A Insights

• Phosphate Demand Dynamics:
  • Management acknowledged challenges in passing through increased sulfur costs to farmers due to affordability issues, particularly in the U.S. market.
• Inventory Management:
  • Excess phosphate rock inventory is expected to be reduced as production ramps up, with a focus on balancing supply and demand.
• Market Strategy:
  • Plans to pivot sales towards international markets if domestic demand remains weak, especially as China restricts exports.
• Long-term Confidence:
  • Despite short-term challenges, management expressed confidence in achieving production targets and improving cost efficiencies moving forward.

Overall, while Mosaic faced significant challenges in Q4 2025, the company remains optimistic about its operational improvements, strategic initiatives, and market conditions for 2026.