The Mosaic Stock price
Compare with Peer Group
📊 Peer Group
📈 What is it?
The peer group consists of the companies with the most similar business model. They serve as a benchmark for putting a stock into context.
🧮 How is it selected?
Based on similarity of business model, meaning companies from the same industry with comparable products and a similar customer base. That's the only way to compare apples to apples.
🏛️ Why does it matter?
Whether a stock is cheap or expensive is best judged by comparison. A P/E of 18 or an EV/FCF of 20 can look cheap or expensive depending on the yardstick. The peer group gives you the most accurate one: companies with a similar business model that operate under the same conditions.
🎯 What does it mean for investors?
When a metric sits below the peer average, the stock is valued more cheaply relative to its competitors, and above the average more expensively. A discount to the peer group can be an opportunity, but it can also have a reason (for example lower growth). The comparison is a starting point, not a verdict.
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StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
Invest better with AI
StocksGuide Unlimited – full access to AI analyses
👉 More detailed insights
👉 Exclusive perspectives on opportunities & risks
👉 Clear answers to your questions
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Key metrics
📘 Market Capitalization
📈 What is it?
Market capitalization shows how much a company is currently worth on the stock market.
🧮 How is it calculated?
🏛️ Why is it important?
It helps classify companies by size (Large, Mid, Small Cap) and indicates their market presence and relative stability.
🧮 Calculation
🎯 What does this mean for investors?
- Large-cap companies tend to be more stable, often pay dividends, but may grow more slowly.
- Smaller firms may offer higher growth potential but come with more volatility.
- Market capitalization is a useful indicator of company size — but not a measure of whether a stock is undervalued or overvalued.
📘 Enterprise Value (EV)
📈 What is it?
Enterprise Value represents the total cost to acquire a company — including its debt and excluding its cash reserves.
🧮 How is it calculated?
(= Market Cap + Net Debt)
🏛️ Why is it important?
EV gives a more complete picture of a company's value than market cap alone and is used in key valuation ratios like EV/FCF or EV/Sales.
🧮 Calculation
🎯 What does this mean for investors?
- Enterprise Value shows the true cost of buying a company, including all financial obligations.
- It is more accurate than just looking at market cap, especially when comparing companies with different levels of debt or cash.
- Professional investors prefer EV-based multiples because they better reflect the company’s full financial footprint.
📘 Net Debt
📈 What is it?
Net Debt shows how much debt remains after subtracting a company’s available cash reserves.
🧮 How is it calculated?
🏛️ Why is it important?
It indicates how dependent a company is on borrowed money and how easily it can service its debt in the short term.
🧮 Calculation
🎯 What does this mean for investors?
- Low or negative net debt signals financial strength and flexibility.
- Companies with strong cash positions are better positioned in crises.
- High net debt increases financial risk — especially in environments with rising interest rates or economic downturns.
📘 Cash
📈 What is it?
Cash represents all liquid assets a company can access immediately — including cash, bank deposits, and short-term investments.
🧮 How is it calculated?
🏛️ Why is it important?
It reflects a company’s financial flexibility and resilience — enabling investments, buybacks, or buffer in downturns.
🧮 Calculation
🎯 What does this mean for investors?
- A strong cash position means greater room for maneuver and crisis resistance.
- Cash-rich companies can invest, pay down debt, or repurchase shares.
- But excess idle cash might indicate a lack of growth opportunities.
📘 Shares Outstanding
📈 What is it?
Shares outstanding represent the total number of a company’s shares currently held by investors — excluding treasury stock.
🧮 How is it calculated?
🏛️ Why is it important?
It’s the basis for key metrics like Earnings Per Share (EPS), Market Capitalization, or the Price/Earnings ratio (P/E).
🧮 Calculation
🎯 What does this mean for investors?
- Fewer shares in circulation typically increase earnings per share — making each share more valuable.
- Share buybacks reduce the number of shares and boost per-share metrics.
- Issuing new shares does the opposite — diluting shareholder value and lowering per-share figures.
📘 Price-to-Earnings Ratio (P/E)
📈 What is it?
The P/E ratio shows how many times a company's earnings per share are reflected in its current share price — in other words, how "expensive" the stock appears relative to its profits.
🧮 How is it calculated?
🏛️ Why is it important?
The P/E ratio is one of the most widely used valuation metrics. It helps investors assess whether a stock appears cheap or expensive compared to its earnings power.
🧮 Calculation
📊 P/E (TTM) = Based on earnings from the last 12 months (Trailing Twelve Months):🎯 What does this mean for investors?
- A low P/E may indicate undervaluation — or signal underlying issues.
- A high P/E may reflect strong growth expectations — or an overvalued stock.
📘 Price-to-Sales Ratio (P/S)
📈 What is it?
The P/S ratio shows how much investors are paying for $1 of the company’s revenue – regardless of profitability.
🧮 How is it calculated?
🏛️ Why is it important?
P/S is especially useful for evaluating growth companies or businesses not yet profitable. It reflects how the market values the company’s sales.
🧮 Calculation
Market Cap = $8.07b | Revenue (TTM) = $12.25b
Market Cap = $8.07b | Estimated Revenue = $12.42b
🎯 What does this mean for investors?
- A low P/S may indicate undervaluation — or low profitability.
- A high P/S can reflect strong growth expectations — or excessive optimism.
- Especially helpful when evaluating companies where profits are low, volatile, or negative.
📘 Enterprise Value to Sales (EV/Sales)
📈 What is it?
EV/Sales shows how much investors are paying for $1 of revenue — considering not just equity, but also debt and cash. It’s the capital structure–adjusted version of the P/S ratio.
🧮 How is it calculated?
🏛️ Why is it important?
It’s ideal for comparing companies with different levels of debt. It reflects a company's true cost relative to its revenue.
🧮 Calculation
Enterprise Value = $13.63b | Revenue (TTM) = $12.25b
Enterprise Value = $13.63b | Forward Revenue = $12.42b
🎯 What does this mean for investors?
- EV/Sales allows for capital structure–neutral company comparisons.
- A lower ratio may indicate undervaluation; a higher one may signal strong growth expectations or overvaluation.
- Especially helpful when evaluating high-growth companies with low or negative earnings.
📘 Enterprise Value to Free Cash Flow (EV/FCF)
📈 What is it?
EV/FCF shows how many years it would take for a company to "pay back" its enterprise value using its free cash flow.
🧮 How is it calculated?
🏛️ Why is it important?
It focuses on real cash generation, ignoring accounting noise — ideal for assessing profitability and value based on liquidity, not earnings.
🧮 Calculation
🎯 What does this mean for investors?
- A low EV/FCF may signal undervaluation and strong cash generation.
- A high EV/FCF might reflect weak recent cash flow or aggressive growth expectations.
- Best suited for stable, mature businesses with predictable free cash flows.
📘 Price-to-Book Ratio (P/B)
📈 What is it?
The P/B ratio compares a company’s market value to its book value — showing how much investors are paying for each dollar of net assets.
🧮 How is it calculated?
🏛️ Why is it important?
P/B is commonly used for asset-heavy industries like banks or industrials. It helps assess whether a stock is trading above or below its net asset value.
🧮 Calculation
🎯 What does this mean for investors?
- A P/B below 1 may signal undervaluation — or weak profitability.
- A P/B above 1 implies the market expects future value creation (e.g., brand, IP, growth).
- Best used for companies with tangible assets and strong balance sheets.
📘 Dividend per Share (DPS)
📈 What is it?
Dividend per Share shows how much cash a company pays out to shareholders for each share they own – usually on an annual or quarterly basis.
🧮 How is it calculated?
🏛️ Why is it important?
DPS is the absolute value of the payout per share – crucial for income-focused investors and dividend strategies.
🧮 Calculation
🎯 What does this mean for investors?
- A stable or growing DPS often signals a strong, shareholder-friendly business.
- DPS alone doesn’t tell you how attractive the payout is – the stock price also matters (→ see Dividend Yield).
- Long-term dividend growth is often a hallmark of high-quality companies – like the dividend aristocrats.
📘 Dividend Yield
📈 What is it?
Dividend yield shows how large a company’s dividend is in relation to its current share price.
🧮 How is it calculated?
🏛️ Why is it important?
It allows investors to compare dividend payouts across stocks, regardless of price or payout size.
🧮 Calculation
🎯 What does this mean for investors?
- A stable yield can reflect reliable distributions.
- Comparing 1Y and 5Y yield shows whether dividend growth keeps pace with stock price appreciation.
- A low yield isn’t always negative – it can signal strong past performance or growth focus.
📘 Dividend Growth
📈 What is it?
Dividend growth shows how much a company has increased its dividend per share over time.
🧮 How is it calculated?
5Y: Compound Annual Growth Rate (CAGR)
🏛️ Why is it important?
Consistently rising dividends are often a sign of financial strength and shareholder orientation – especially relevant for long-term investors.
🧮 Calculation
🎯 What does this mean for investors?
- Stable dividend growth is a sign of sustainable earning power.
- High dividend growth can significantly boost your total return:
- If a company pays $1 in dividends and increases it by 15% annually over 5 years, you’ll receive $2 per share in year 5 – twice as much as at the start!
📘 Payout Ratio
📈 What is it?
The payout ratio shows what percentage of a company’s earnings (per share) is distributed to shareholders as dividends.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess whether the dividend is sustainable – especially in relation to the company’s profitability.
🧮 Calculation
🎯 What does this mean for investors?
- A low payout ratio means the company retains more earnings for reinvestment – typical for growth companies.
- A moderate payout (e.g. 25–50%) indicates a healthy balance between returns and reinvestment.
- High payout ratios may seem attractive but can carry risk if earnings decline.
📘 Consecutive Dividend Increases
📈 What is it?
This metric shows how many consecutive years a company has raised its dividend per share – without any cuts or pauses.
🧮 How is it calculated?
(Special dividends are not considered.)
🏛️ Why is it important?
A long track record of increases reflects financial strength, consistency, and shareholder commitment.
🎯 What does this mean for investors?
- A long dividend increase streak builds confidence – especially in volatile markets.
- Such companies are seen as reliable and income-friendly investments.
- The longer the streak, the stronger the company’s dividend discipline.
📘 Revenue
📈 What is it?
Revenue shows how much a company earns in total from selling its products and services – the gross income before any costs are deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Revenue is one of the key figures to assess a company’s size, market position, and growth potential.
🧮 Calculation
🎯 What does this mean for investors?
- Growing revenue indicates rising demand and can be an early signal of future earnings growth.
- Comparing actual and expected revenue reveals trends in the market environment and analyst sentiment.
- Note: Strong revenue alone isn’t enough – margins and profitability matter just as much.
📘 EBITDA
📈 What is it?
EBITDA stands for “Earnings Before Interest, Taxes, Depreciation, and Amortization.” It reflects a company’s operating profit before the effects of financing, taxes, and accounting depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
EBITDA is widely used to evaluate a company’s operating performance – especially across capital-intensive sectors or international comparisons.
🧮 Calculation
🎯 What does this mean for investors?
- A high or growing EBITDA indicates strong operational profitability – independent of taxes, interest, or accounting methods.
- It’s especially useful for comparing companies across sectors or geographies.
- Important: EBITDA is not a net income figure – it excludes key costs like depreciation and interest.
📘 EBIT
📈 What is it?
EBIT stands for “Earnings Before Interest and Taxes.” It reflects a company’s operating profit after depreciation, but before interest and tax expenses.
🧮 How is it calculated?
🏛️ Why is it important?
EBIT is a core profitability metric that shows how well the company performs in its main business operations – independent of capital structure and tax environment.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT indicates strong profitability from the company’s core business – before financial and tax effects.
- It allows better comparison between companies with different debt levels or tax structures.
- Compared to EBITDA, EBIT already accounts for depreciation and reflects capital intensity more clearly.
📘 Net Income
📈 What is it?
Net income is the company’s total profit – the amount left after all expenses, taxes, interest, and depreciation have been deducted.
🧮 How is it calculated?
🏛️ Why is it important?
Net income is the most comprehensive measure of a company’s profitability – showing how much actual profit remains after all business and financing costs.
🧮 Calculation
🎯 What does this mean for investors?
- Growing net income indicates that the company is managing all of its costs efficiently.
- It directly influences valuation metrics like P/E ratio and the company’s dividend capacity.
- Over time, net income trends reveal how resilient and profitable the business model really is.
📘 Free Cash Flow (FCF)
📈 What is it?
Free Cash Flow shows how much actual cash remains after a company covers its operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
FCF reflects a company’s real financial strength – regardless of accounting profits. It shows how much flexibility a company has for dividends, share buybacks, or debt reduction.
🧮 Calculation
🎯 What does this mean for investors?
- High free cash flow means the company generates real, usable cash – independent of reported net income.
- It’s often the most reliable base for sustainable dividends and buybacks.
- Declining FCF can be an early warning sign – even when profits appear stable.
📘 Revenue Growth
📈 What is it?
Revenue growth shows how much a company’s sales have changed compared to the previous year – both on a trailing basis (TTM) and based on forward projections.
🧮 How is it calculated?
Forward = (Expected revenue ÷ Revenue in prior year − 1) × 100
Forward growth is based on analyst estimates for the current fiscal year.
🏛️ Why is it important?
Rising revenue signals growing demand, business expansion, and market share gains – especially important for growth-oriented companies.
🧮 Calculation
🎯 What does this mean for investors?
- Growth is the engine of long-term value creation – especially in tech and growth sectors.
- What matters is not just current growth, but its sustainability.
- Forward projections reflect whether analysts expect continued momentum – or a slowdown.
📘 EBITDA Growth
📈 What is it?
EBITDA growth shows how much a company’s operating profit (before interest, taxes, depreciation, and amortization) has increased or decreased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBITDA ÷ EBITDA from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
Growing EBITDA indicates improving operational profitability – regardless of financing or accounting effects.
🧮 Calculation
🎯 What does this mean for investors?
- Strong EBITDA growth signals operational efficiency and scalability – especially during growth phases.
- EBITDA growth can be an early indicator of margin and earnings expansion – but should be assessed alongside revenue and EBIT.
📘 EBIT Growth
📈 What is it?
EBIT growth shows how much a company’s operating profit (after depreciation, but before interest and taxes) has increased compared to the previous year.
🧮 How is it calculated?
Forward = (Expected EBIT ÷ EBIT from prior year − 1) × 100
The forward estimate is based on analyst projections for the current fiscal year.
🏛️ Why is it important?
EBIT growth is a direct indicator of a company’s business performance – taking into account capital intensity through depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- Rising EBIT signals improving operating profitability – even after accounting for depreciation.
- It’s especially important for evaluating companies with significant capital expenditures.
- Combined with revenue and EBITDA growth, EBIT growth provides a well-rounded view of operational progress.
📘 Net Income Growth
📈 What is it?
Net income growth shows how much a company’s bottom-line profit has increased or decreased compared to the previous year – both on a trailing basis (TTM) and based on analyst projections.
🧮 How is it calculated?
Forward = (Expected net income ÷ Net income from prior year − 1) × 100
The forward estimate reflects analysts’ expectations for the current fiscal year.
🏛️ Why is it important?
Net income is the ultimate measure of profitability. Growing net income signals stronger efficiency, cost control, and sustainable earnings power.
🧮 Calculation
🎯 What does this mean for investors?
- Stronger net income boosts valuation, dividend potential, and investor confidence.
- If profits stall while revenue grows, it may signal margin pressure.
📘 Free Cash Flow Growth
📈 What is it?
Free cash flow (FCF) growth shows how a company’s available cash – after covering operating expenses and capital expenditures – has changed compared to the previous year.
🧮 How is it calculated?
🏛️ Why is it important?
Free cash flow reflects real financial strength. Growing FCF indicates more flexibility for dividends, share buybacks, and reinvestment.
🧮 Calculation
🎯 What does this mean for investors?
- Declining FCF may point to rising investments, increasing costs, or weaker operating performance.
- Especially for dividend investors, FCF growth is critical – since dividends are paid from actual available cash.
- A negative trend isn't always bad, but it deserves closer attention.
📘 Gross Margin
📈 What is it?
Gross margin shows how much of a company’s revenue remains after deducting the direct costs of goods sold (like materials and production). It represents the company’s “raw profit” before fixed costs, taxes, and interest.
🧮 How is it calculated?
Or simply: Gross Margin = Gross Profit ÷ Revenue × 100
🏛️ Why is it important?
Gross margin indicates how efficiently a company can produce or procure what it sells. It is a key measure of product-level profitability and pricing power.
🧮 Calculation
🎯 What does this mean for investors?
- A high gross margin suggests strong pricing power and efficient production.
- Falling margins may signal rising input costs or competitive pressure.
- Compared to peers, gross margin offers insights into the quality of a business model.
📘 EBITDA Margin
📈 What is it?
The EBITDA margin shows how much of a company’s revenue remains as operating profit before interest, taxes, depreciation, and amortization.It reflects operating efficiency without being distorted by financing or accounting factors.
🧮 How is it calculated?
🏛️ Why is it important?
The EBITDA margin reveals how much operating income a company generates per dollar of revenue – independent of capital structure and tax effects.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBITDA margin reflects strong core profitability – before accounting distortions.
- It allows for effective comparisons across companies and sectors.
- A stable or growing margin signals efficient cost control and business scalability.
📘 EBIT Margin
📈 What is it?
The EBIT margin shows what percentage of revenue remains as operating profit after depreciation but before interest and taxes.
🧮 How is it calculated?
🏛️ Why is it important?
The EBIT margin reflects a company’s core profitability while accounting for capital intensity (e.g. machinery, infrastructure). It’s especially useful for comparing businesses with different levels of depreciation.
🧮 Calculation
🎯 What does this mean for investors?
- A high EBIT margin shows that the company remains efficient even after factoring in depreciation.
- It’s especially relevant for capital-intensive industries.
- Stable or rising EBIT margins over time are a strong indicator of pricing power and business quality.
📘 Net margin
📈 What is it?
Net margin shows how much of a company’s revenue remains as bottom-line profit after deducting all costs, interest, taxes, and depreciation.
🧮 How is it calculated?
🏛️ Why is it important?
Net margin reflects a company’s overall efficiency – across operations, financing, and taxation. It shows how much actual profit is generated from each dollar of revenue.
🧮 Calculation
🎯 What does this mean for investors?
- A high net margin means the company is not only strong operationally but also manages financing and taxes efficiently.
- Peer comparisons reveal business quality and competitiveness.
- Declining margins despite revenue growth can be a red flag for rising costs or inefficiencies.
📘 Free cash flow margin
📈 What is it?
The free cash flow (FCF) margin shows how much of a company’s revenue remains as actual free cash after covering all operating expenses and capital expenditures.
🧮 How is it calculated?
🏛️ Why is it important?
This margin reflects the true liquidity generated by the business – independent of accounting rules or depreciation. It’s especially relevant for dividends, buybacks, and reinvestment decisions.
🧮 Calculation
🎯 What does this mean for investors?
- A high FCF margin means a company consistently generates strong cash flow.
- It’s a positive signal for financial stability and shareholder returns.
- The long-term trend is key – a declining margin may indicate rising investments or weakening operating efficiency.
📘 Equity Ratio
📈 What is it?
The equity ratio indicates what portion of a company’s total assets is financed by shareholders’ equity – in other words, how much it relies on its own capital.
🧮 How is it calculated?
🏛️ Why is it important?
A high equity ratio reflects financial strength and stability, especially during downturns. It’s a key indicator of a company’s solvency and long-term risk profile.
🧮 Calculation
🎯 What does this mean for investors?
- Companies with high equity ratios are generally more resilient and less dependent on external debt.
- Low equity ratios can signal higher risk or aggressive financial strategies.
- Important: Always assess the equity ratio in combination with the return on equity (ROE). This shows not just how stable the company is – but also how efficiently it uses shareholder capital.
📘 Return on Equity (ROE)
📈 What is it?
Return on equity (ROE) shows how efficiently a company uses its shareholders’ equity to generate profit. In other words: how much net income is earned per dollar of equity.
🧮 How is it calculated?
🏛️ Why is it important?
ROE is a core profitability metric. It helps investors understand whether a company delivers attractive returns on the capital provided by its shareholders.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROE indicates that the company is using its capital efficiently and profitably.
- It’s especially meaningful for capital-intensive businesses or firms with high equity bases.
- Important: A very high ROE can also result from high debt levels – always interpret it alongside the equity ratio to assess financial health.
📘 Return on Capital Employed (ROCE)
📈 What is it?
ROCE measures how efficiently a company generates profits from its total capital – including both equity and interest-bearing debt.
🧮 How is it calculated?
It evaluates the return on all capital employed, regardless of how it’s financed.
🏛️ Why is it important?
ROCE is ideal for comparing companies with different financing structures. It shows how well management uses capital to create value for both shareholders and creditors.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROCE means the company uses its capital efficiently – regardless of whether it's funded by debt or equity.
- The higher the ROCE compared to peers, the more value the company creates with its invested capital.
- Especially relevant for capital-intensive sectors like industrials, energy, or infrastructure.
📘 Return on Invested Capital (ROIC)
📈 What is it?
ROIC measures how efficiently a company generates returns from the capital invested in its core operations – regardless of whether the capital comes from equity or debt.
🧮 How is it calculated?
- NOPAT = Net Operating Profit After Taxes
- Invested Capital = Operating assets minus non-interest-bearing liabilities
🏛️ Why is it important?
ROIC is one of the most accurate indicators of capital efficiency. Unlike return on equity, it is not distorted by leverage and shows how much value is created for all capital providers.
🧮 Calculation
🎯 What does this mean for investors?
- A high ROIC shows how effectively a company uses the capital that is truly invested in its core operations.
- Unlike ROCE, ROIC focuses only on the capital that is actively used to run the business – and that requires a return (i.e. interest-bearing).
- Especially useful when comparing companies with large amounts of excess cash or non-interest-bearing liabilities – giving a more realistic picture of capital efficiency.
📘 Leverage Ratio (Debt-to-Equity)
📈 What is it?
The leverage ratio indicates how much a company relies on interest-bearing debt (such as loans and bonds) relative to its shareholders’ equity.
🧮 How is it calculated?
🏛️ Why is it important?
This ratio helps assess a company’s financial structure and risk profile. High leverage can enhance returns – but also increases exposure to interest rate changes and financial stress.
🧮 Calculation
🎯 What does this mean for investors?
- A low leverage ratio signals financial strength and independence.
- A higher ratio can improve returns in good times but increases risk during downturns or rising interest rate periods.
- 👉 Always interpret in the context of industry, capital intensity, and interest rate environment.
📘 Earnings per share (EPS)
📈 What is it?
Earnings per Share (EPS) shows how much profit is attributable to a single share – and is one of the most important metrics for evaluating a company's performance.
🧮 How is it calculated?
The diluted share count reflects potential new shares that could be issued through options, convertible bonds, or other rights.
🏛️ Why is it important?
EPS is the basis for many key valuation metrics like P/E ratio, PEG ratio, or payout ratio. It enables comparisons of profitability across companies, regardless of their size.
🧮 Calculation
🎯 What does this mean for investors?
- EPS captures per-share profitability and is especially useful for comparisons over time or with analyst estimates.
- Rising EPS may signal consistent growth or share buybacks.
- Important: Always use diluted EPS for more realistic valuations – especially in companies with stock-based compensation.
📘 Free cash flow per share (FCF per share)
📈 What is it?
Free Cash Flow per Share shows how much free cash flow a company generates per outstanding share – after investments, but before dividends or debt repayments.
🧮 How is it calculated?
Free cash flow is calculated as operating cash flow minus capital expenditures (CapEx).
🏛️ Why is it important?
FCF per Share reveals how much real cash is available per share – useful for dividends, buybacks, or reducing debt. Unlike net income, free cash flow is harder to manipulate and often seen as a more reliable metric.
🧮 Calculation
🎯 What does this mean for investors?
- High FCF per share signals strong financial flexibility.
- It shows how much capital the company can effectively reinvest or return to shareholders.
- Particularly relevant for dividend payers and capital-efficient businesses.
📘 Short interest
📈 What is it?
Short interest indicates how many shares of a company are currently sold short – that is, borrowed and sold by investors who expect the price to decline.
🧮 How is it calculated?
It reflects the percentage of a company’s shares that are being shorted relative to the total shares available.
🏛️ Why is it important?
Short interest serves as a sentiment indicator: A high value may signal skepticism or bearish expectations – but also increases the potential for a short squeeze if prices rise unexpectedly.
🧮 Calculation
🎯 What does this mean for investors?
- Low short interest usually indicates market confidence in the company.
- High short interest can be a warning sign – or an opportunity if sentiment shifts.
- Especially relevant in volatile markets or ahead of key earnings releases.
📘 Employees
📈 What is it?
The employee count shows how many people a company employs worldwide – offering insights into its size, structure, and business model.
🧮 How is it calculated?
🏛️ Why is it important?
It helps assess operational scale, labor intensity, and cost structure. Combined with revenue and profit, it enables key metrics like revenue per employee or productivity.
🧮 Calculation
🎯 What does this mean for investors?
- A high headcount can signal operational complexity – but also significant growth capacity.
- Revenue per employee is a key indicator of efficiency.
- Especially useful for comparing tech, industrial, or service-heavy companies.
📘 Turnover per employee
📈 What is it?
Revenue per employee indicates how much revenue a company generates on average per employee – a key measure of efficiency and productivity.
🧮 How is it calculated?
The employee count is typically taken from the most recent annual report.
🏛️ Why is it important?
This metric helps compare business models – especially between labor-intensive and technology-driven companies. A high value suggests automation, operational efficiency, or strong value creation per head.
🧮 Calculation
🎯 What does this mean for investors?
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The Mosaic Stock Analysis
Analyst Opinions
25 Analysts have issued a The Mosaic forecast:
Analyst Opinions
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The Mosaic Events
Past Events
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AUG
5
Q2 2026 Earnings Call
about one month ago
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MAY
11
Q1 2026 Earnings Call
4 months ago
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FEB
25
Q4 2025 Earnings Call
7 months ago
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NOV
5
Q3 2025 Earnings Call
11 months ago
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The Mosaic — Q2 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to The Mosaic Company's Second Quarter 2026 Earnings Conference Call. [Operator Instructions] And now I'll turn it over to Mr. Paul Massoud. Please go ahead.
Thank you, and welcome to our second quarter 2026 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer; Luciano Siani Pires, Executive Vice President and Chief Financial Officer will review financial results. We will then welcome Jenny Wang, Executive Vice President, Commercial, to join Bruce and Luciano as we open the floor for questions.
We will be making forward-looking statements during this conference call. Statements include, but are not limited to, statements about future financial and operating results. They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in our press release published this morning and in our reports filed with the Securities and Exchange Commission.
Please note, in today's presentation and in our press release and performance data, we will refer to and provide various financial measures, including adjusted EBITDA, adjusted earnings per share, free cash flow, cost per tonne and adjusted effective tax rate, either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found in our earnings release.
Now I'd like to turn the call over to Bruce.
Good morning. Thank you for joining our call. Our message for you today is simple. Mosaic is working through a difficult market by successfully managing what is under our control and positioning ourselves for an eventual recovery. Sulfur affordability and availability remain key drivers, but we know the situation will improve. We've curtailed production, and we're relying on our strong balance sheet as a bridge to a more sustainable environment.
Here are some key examples from the quarter. We further curtailed phosphate production and minimized our purchases of high-cost raw materials. We've locked in a significant portion of our third quarter sulfur supply at reasonable prices that, while historically elevated, are still well below the current spot market. Across our business, we're aggressively managing our costs, which you can see in SG&A. These are real savings that we expect to be permanent. We fortified our liquidity by terming out short-term debt. If this environment persists, we have full access to our untapped $2.5 billion revolver. And we've addressed all of these near-term issues without sacrificing our long-term goals. We're reallocating underperforming capital away from non-core assets to support future opportunities. We continue to explore strategic opportunities for certain assets, including Araxa and Patrocinio while investing in new areas like our fast-growing and resilient Mosaic Biosciences business.
Before I get into our business performance, let's address the sulfur situation in our markets. The ongoing Strait of Hormuz closure and the more recent Kazakhstan blockade continue to impact the global flow of sulfur and spot prices remain unsustainably high. We have curtailed production in the U.S. and Brazil simply because phosphate industry economics cannot accommodate current sulfur prices. That said, Mosaic is in a better position to weather the storm than most of our competitors are. Our long-standing relationships with Gulf Coast refiners and other global suppliers give us reliable access to sulfur. In fact, we were recently able to negotiate third quarter U.S. sulfur supply at a price that is considerably below the spot market. We are producing to meet as much demand as possible while trying to preserve margins and avoid high-cost inventory building.
The sulfur situation is more than just an inconvenience for our industry. We believe global phosphate production will fall well short of last year by up to 30 million tonnes. With last year's low application rates, especially in the U.S. and limited fertilizer availability this year, crop yields will suffer, which could lead to food security challenges around the world in the near term. We are already seeing evidence of challenges. In Brazil, for example, despite significant acreage expansion, total crop production forecasts for the year have not kept up, suggesting significant yield impacts. Another season of under application will only exacerbate the problem. Only recently have crop prices begun to acknowledge the reality of production challenges around the world. In the past month, major ag commodity prices have moved up, providing some relief from high input costs for the world's farmers. The outlook for farm incomes is improving, which should be a catalyst for fertilizer demand.
We're seeing early signs of this in Brazil. While shipments remain below historical levels as a result of ongoing credit issues, over the past several weeks, fertilizer shipments to Brazil have been very strong as growers respond to improved crop pricing. We expect phosphate prices to remain at current levels with sulfur-driven supply challenges as well as severely reduced Chinese exports, availability is likely to remain limited in many parts of the world. As we expected, the temporary suspension of the U.S. countervailing duties on phosphate imports from Morocco has not yet had an impact on NOLA prices. Phosphate prices remain higher in other key regions of the world and producers can realize higher netbacks selling in markets outside the U.S. So there is little incentive for producers to send fertilizer to the U.S.
In addition, as part of the ongoing sunset review, the U.S. Department of Commerce has determined that the illegal subsidies that led to the duties in the first place remain in place in both Russia and Morocco. And the U.S. Court of International Trade recently reaffirmed the International Trade Commission's determination that the subsidies cause injury in the U.S. market. We are confident that the duties should continue once the suspension ends. While phosphate and sulfur markets are quite volatile, the potash supply and demand picture is much more balanced with product moving freely around the world and global supply meeting strong demand in all major potash-consuming regions. In fact, our summer fill program was fully subscribed. Strong palm oil economics and inventory replenishment in China bode well for ongoing good potash demand. Overall, we expect the potash market to remain constructive through this year. And longer term, we continue to believe that announced potash capacity expansions will be absorbed by steadily growing demand.
Let's move on to our business, which is performing well, all things considered. Our global market access remains an important advantage. During the second quarter, we produced and sold 1.4 million tonnes of phosphate despite all the turmoil in the market. We were able to achieve these numbers because we have strong customer relationships across key agricultural markets, and we optimize our product mix to meet shifting demand. In addition, our ability to flex production and manage through the cycle is supported by the extensive work we completed over the past 18 months to fortify our assets. We're prepared to ramp back up to full production rates when market and raw material conditions improve.
Potash remains a steady earnings and cash flow contributor and our recent investments, including the HydroFloat project at Esterhazy will provide meaningful benefits. In Brazil, where we have curtailed all phosphate production, except for high-margin products due to sulfur availability, our business continues to perform well. Given the overall market conditions, our $60 million of EBITDA for the quarter highlights the resilience of our Fertilizantes franchise.
Capital allocation remains an important pillar of our strategy, and we continue to make good progress. We closed the Carlsbad sale. We're optimizing our Brazil portfolio with the advancing process to divest our Araxa complex, and we're allocating capital in pursuit of promising growth opportunities. The Rainbow Rare Earth Elements project in Brazil continues to show good potential, and our Mosaic Biosciences business is on track to double its revenues once again this year. I want to note that Biosciences growth is strong despite current farm economics, a clear indicator that growers are finding real value in our proven products.
To summarize, we are attacking a difficult market situation by doing all we can to keep the company strong and preserve our ability to benefit from improving markets. Now over to Luciano for more detail on our financials.
Thank you, Bruce. If there is one takeaway for investors regarding our financials, it's that we are effectively managing factors under our control as we wait for a more sustainable market environment. In Phosphates and Fertilizantes, our operating costs were impacted by reduced absorption due to curtailed volumes. We're now doing 2 things simultaneously. First, we're aggressively removing fixed costs where we can, especially in Brazil to better cope with the temporary curtailments and to enable us to come back leaner when we restart. Second, we're maintaining our focus on asset health so that we can return to full production rates when the time is right.
In the near term, however, ongoing curtailments are expected to result in limited fixed cost absorption and elevated idle expenses in Phosphates and in Fertilizantes in the third quarter, but this is temporary and does not represent what this business is capable of in normal operating conditions. In our U.S. Phosphate business, we've shown an ability to manage our input costs. In quarter 2, our raw materials costs averaged $522 per long ton for sulfur and $621 per tonne for ammonia, resulting in an average realized stripping margin of $422 per tonne. For quarter 3, as Bruce discussed, we settled a sulfur contract at $705 per ton. While much of this new contract price will be reflected in fourth quarter sales, we do expect some impact later in the third quarter. Given the dynamic nature of the market, we have chosen to once again provide some guidance for near-term raw materials costs.
Therefore, for the third quarter, we expect realized sulfur costs of approximately $700 to $710 per ton and ammonia costs of approximately $610 to $620 per tonne. Combining this with our DAP FOB pricing guidance of $820 to $840 per tonne yields an implied realized stripping margin well above historical averages, which is a good result.
In Potash, we successfully completed Esterhazy's annual turnaround during the second quarter. Looking ahead, the segment should see lower unit costs, especially with the additional volumes from Esterhazy's HydroFloat project. Second quarter MOP costs of $84 per tonne reflected a production mix that was more heavily weighted towards Colonsay volumes, but we expect to revert lower in the second half of the year. To offset some of the second quarter's curtailment impacts, we've become more aggressive in our review of corporate spending.
You can see in our results that we've brought SG&A costs down by 20% year-over-year despite persistent inflation. Increased spending discipline, reduced support labor costs, lower bad debt expenses and benefits from recent divestitures are driving these savings. In the second half of the year, we expect SG&A to decline further as more of these savings are realized.
From a cash flow perspective, we're starting to see the results of our actions. Mosaic's cash flow from operations improved through the first half of the year, and it is expected to rise further in the third quarter as working capital is released, mostly in Brazil and as additional cost reductions are realized. These are expected to more than offset any impact from higher raw materials costs. Combined with our lower CapEx expectation for the year of $1.2 billion, down from $1.25 billion, we expect sequential improvements in free cash flow in the third and in the fourth quarters.
Our strong balance sheet continues to provide us with the flexibility to manage through this environment. In the second quarter, we put in place a $1 billion term loan to replace and extend very short-term commercial paper maturities. We refinanced $500 million of our commercial paper in June and the rest was done in July. We have a very comfortable short-term liquidity position. We have not tapped our revolver at all, and we will continue to evaluate opportunities to optimize our balance sheet.
On the capital reallocation front, we continue to evaluate opportunities to optimize our portfolio and reallocate capital. We're advancing the process around Araxa, and we are progressing several opportunities involving our landholdings. To close, we've taken decisive actions and executed well as we work through the sulfur situation. The steps we have taken, first, across our operations; second, in our cost structure; third, in our capital spending; and fourth, in our balance sheet have all positioned us well for an ultimate recovery as market conditions normalize.
And with that, I'll turn the call back to the operator for Q&A.
[Operator Instructions] And the first question for today will come from Duffy Fischer with Goldman Sachs.
2. Question Answer
Question is just really around consumption in the Americas. So we know that last fall, we didn't put down -- and I saw on phosphate that we shorted the market on phosphate. Speculation is we did the same thing in the first half. So for this crop year, what's your best estimate for how much below normal phosphate application was for North America? And then a similar question, although it's looking forward, what do you think will be the application of phosphate in Latin America relative to normal?
Duffy, thanks for the question. You're right. We did see, as you said, application in North America down on phosphate last year. We're seeing the same thing this year. I'll turn it over to Jenny to give more details, but we also expect declines in Brazil and Latin America as well, mostly driven by Brazil. So let me turn it over to Jenny to give you details.
Sure. So as you said, Duffy, last year, we believe North America phosphate application was down close to 15% versus the normal year. And this year, we are forecasting this application rate to further cut by around 20%. So if you compare with the normal typical phosphate application in North America, we're talking about over 30% phosphate down this year in '27. This is a combination of farm economic challenges, affordability issues but also it's an availability issue. So over to Latin America, especially in Brazil, last year, phosphate application didn't really go down. So that was normal last year. We actually saw some growth in Brazil last year.
However, this year, we are forecasting similar percentage of the phosphate application down in Brazil by 30% at nutrient level. And this is likely going to be applied in the rest of the Latin America market. In fact, this under application of phosphate are going to have profound impact to the yield -- specifically for North America and Brazil, by looking at what has been applied to the field and also what has been the yield over the last 2 years, we are seeing additional phosphate removal from the field in Brazil could be up to 1.3 million tonnes of DAP equivalent, for that number in North America, in the U.S., that's 1.4 million tonnes additional removal of the nutrient.
So as you can imagine, with this additional removal of phosphorus from the soil, that will have impact to the yield. And specifically, we have started to see yield impact in some of the major states in Brazil for the last crops. We see despite increased harvest areas, but the yield actually came down. That was evident in terms of the yield impact from this under application of phosphorus. U.S. market, we may see the impact this year, which can be even more evident with the weather event.
Your next question will come from Joel Jackson with BMO.
I'm trying to understand a bit about some of your guidance around phosphate in Q3. It's the ammonia cost you gave of $610 to $620 a tonne. It seems surprising considering I imagine that these run rates you're running at really just tonnes, cost and cost plus. I just want to ask about what's going on there? And second part of the question would be, does this sort of imply that phosphate earnings are lower in Q3 by a little bit, a lot. So can you just give us color about Q3 phosphate earnings, all the things you're talking about and what that implies like relatively versus Q2 earnings?
Yes, Joel, thanks for the question. We did -- as Luciano pointed out, ammonia will go up a little bit. Part of that is due to the flow-through of inventory of the contracts that were settled in June and July. So June, July, August came down, we'll see that actually flow through COGS in quarter 4 on the ammonia side. But to your point, a mix just because of lower production is going to be more heavily weighted towards those contract negotiations and our own internal production. So we're going to see a peak of that in Q3, which does kind of hurt stripping margins a little bit as well as the ammonia that Luciano talked about.
But I would use those as factors as you're looking towards guidance. The other factors to think about are cost absorption for the additional production down in North America. Quarter 2 didn't represent all of those curtailments. Quarter 3, given that those curtailments are likely to be sustained barring some unforeseen circumstance in the market, we'll have to absorb more of that. So that will affect some of our conversion costs on the margin as well. So expect stripping margins to be down, but still the good news is well above kind of historic levels. So we're feeling good about where they are, even though there are some headwinds, we should start to see some tailwinds on pricing.
As Jenny alluded to on yield impacts, we're starting to see crop -- ag commodity prices respond in a favorable level, which should raise the affordability piece on the farm side, which really is another constraint that may not be seen because of supply constraint. But that demand constraint definitely is out there if supply were to come back.
Luciano, I don't know if you want to add anything?
And again, because we're guiding for sales between 1.1 million tonnes to 1.4 million tonnes compared to this quarter, 1.4 million tonnes, again, depending on how the market goes, there could be a little bit of downside in volumes as well.
The next question will come from Vincent Andrews with Morgan Stanley.
My recollection is that you were previously expecting about a $400 million outflow of working capital through the course of the year. Is that still a good number to work with? Or do you think it will be more or less based on what you know today?
Yes, Vincent, I think we've said $300 million to $500 million so $400 million is, yes, the midpoint of that kind of range. We do still expect that type of liberation. We saw some of that in Phosphate in the first half, but the bigger one that we've been pointing to comes often many times in this time of year historically is the liberation of working capital in Brazil. But we actually see that being more acute this year because our B2B business, our production is down. So you actually see more liberation. But Luciano has some details on that. I'll let him talk about it.
Okay. Vincent, so bear with me, this is going to be a little longer answer. So in Q1, we actually were kind of flat in working capital compared to a big investment the year prior. So that was a result of the destocking of phosphate inventories. In Q2, we actually increased inventories again by $200 million, but mostly in Brazil. And we actually collected a lot of the sales from the Q1 excess inventory that we discharge in Phosphates. So therefore, the working capital kind of situation in Q2 was negative, but not by a large amount. Again, which is -- if you compare it to prior year, it's a little better given the quarter we're talking about because of these collections from Q1.
What really disappointed in Q2 were actually the prepayments in Brazil. If you look a year back, there was -- if you look in the cash flow statement, there was a very strong cash inflow from what we call accrued liabilities, which include prepayments we received from our customers in Brazil in anticipation for the sales of Q3. But there has been a clear change in buyer behavior because of many factors. So prepayments didn't come in as much, so close to 0. So the prepayments did not offset this small decline in working capital. But the consequence of that is that because prepayments didn't come in Q2 that farmers will actually need to pay for the product in Q3.
And so the sales in Q3 will be, as they've always been substantially higher. Just to give you a number, in the last 3 years, Brazil has sold 600,000 tonnes on average more in Q3 than in Q2. So these sales will kind of repeat this year. And the collections that are going to come from these sales are going to come mostly in Q4.
So we should expect, first, some release of working capital in Q3, maybe between $100 million and $200 million, but the bulk of the $300 million to $500 million will come in the second quarter -- in the fourth quarter when the collections come in. So I would say we are still subscribed to the $300 million to $500 million release. The dynamics has changed a little bit. But -- and yes, the last point that Bruce mentioned, this one is important because the distribution business in Brazil, you buy and you sell. So the cycle is comparatively short.
The production business, you produce all over the year and then you sell mostly in Q3, which means that if we were producing, we would be rebuilding inventories in production in Q3 and in Q4. But because we are mostly curtailed in Brazil, that will not happen. And so therefore, the release in the distribution business will not be partially offset by another build in the production side. So again, that's another factor that the reason why we believe the $300 million to $500 million will come. Again, maybe 1/3 of it will come in Q3 and 2/3 in Q4.
The next question will come from Chris Parkinson with Wolfe Research.
Got it. Can we just kind of take a step back, just given all the noise of curtailments, and I think those have been notoriously well publicized. But you said in your release that you're operating Bartow about 40%. Louisiana is entirely offline. Given the guidance of kind of production and volume sales at least for the third quarter, does that basically imply both New Wales and Riverview are somewhere in the low to mid-70s?
I mean, obviously, I know there were some maintenance activity in the first half. But in terms of getting those -- both of those facilities, specifically New Wales back to an operating rate, which you'd be eventually happy with and the implications in a normalized environment. Bruce, I'd just love to hear your thoughts on kind of where we are in the third quarter, how we're progressing and how we should think about that if and when things finally normalize in terms of how you can operate your network?
Yes, Chris, I think you're pretty spot on, on the operating rates in the mid-70s at the other facilities. So let me just go back maybe a little bit and set the stage. I think of what you're looking for -- as we came out of Q1, Q2 turnaround at New Wales, prior to the big announcements of curtailments and conserving sulfur inventory that was lower cost out of Q1 and Q2, New Wales was running at its kind of full utilization rate. So we were seeing great signs of that.
Then came -- we pulled the brakes back on everything in Louisiana and kind of the Central Florida network to conserve sulfur. So we saw great signs on a sustained basis for good parts of the month following start-up out of turnaround. Riverview also had a turnaround, came up, it never really had a chance to stretch its legs at full capacity because we were already kind of sulfur curtailed, if you want to look at it that way. So we've seen good signs at all of our facilities.
Now I think the last one out there was at New Wales, and we did get to stretch its legs following turnaround, and we're very encouraged by what we saw running at its full capacity target. The sulfur thing, as you pointed out, has put a constraint. We are only dealing with sulfur based on our contract volumes, which provide that full run rate that you just described, Chris, which is still a little bit down at New Wales and Riverview, 40% at Bartow and then 100% down at New Wales. So that sulfur supply -- I'm sorry, at Louisiana, that sulfur supply is what we're now constrained to and how we're trying to optimize.
Now what will happen in any given week or any given month depending on what product demand there is because we don't have endless product capability at every facility. Those are the general targets that we're shooting for. But if we have higher DAP demand coming out of the international market, and we need to run Bartow a little bit more and run Riverview or New Wales a little bit less because that's where we can make more DAP for an active market, that's what we'll do. So it is a little bit messy during this constrained period of time, but we're managing to the sulfur constraint and then pairing that up to where active demand is with highest netbacks and what product mix we can make at what facility. There are a number of other factors like water balance, utilization of people around the network, et cetera, et cetera, that go into that decision.
But the decision right now is not to try to run hard at any one site. It's to try to optimize for the constraint of sulfur for what the active product in whatever markets that are active and then producing that in Central Florida now because Louisiana is 100% down. I hope that answers. I know it's complicated. I wish there was an easier way to formulaically tell you something, but we'd be happy to follow up on a call if necessary.
The next question will come from Jeff Zekauskas with JPMorgan.
It's a 2-part question. Your cash flows from operations are about $270 million year-to-date and your overall spending on CapEx loss and dividends is about $1.5 billion. So order of magnitude, will you -- maybe cash flow from operations this year can be $900 million if you hit your working capital targets or $1 billion. So are you going to be maybe about $500 million or so short of the cash outlays that you have to make? And secondly, Faustina is your lowest cost source of ammonia. Why is Faustina being closed down? Is it that you have commitments to buy ammonia and so you would have too much. What's your strategy there?
I'm going to let -- thanks, Jeff, for sure. Let Luciano answer the first part of the question, but let me address the Faustina thing because there's some misunderstanding there. We are used -- running Faustina's ammonia plant full, and we're using that within the Florida network. So again, it becomes what a product mix issue is, how we can manage water going into hurricane season and what outlets we have at individual facilities. Louisiana has a lot of flexibility to be 100% down in that regard on fertilizer production. But no doubt, we're going to take advantage of the producer economics, ammonia and use that by shipping it across Gulf into Florida. And if we have excess, we would sell it into the market because it's quite attractive from a profitability standpoint. But the intent is not to run it, to sell it. It's -- the first intent is run the ammonia plant to utilize within the Florida network. Luciano, over to you on cash flow.
So Jeff, your numbers are -- yes, are correct, both for the cash flows from operations for the full year and for the sum of the capital expenditures with the dividend, which means, yes, we're going to be down around $500 million for the year. But most of it is passed already. So I would say our expectation is to be indebtedness kind of stable in Q3 and then go down a little bit in Q4. And of course, if this is -- goes into 2027, which we do not believe we need to pull additional levers to try to balance those things.
But again, the message is, so far, we're managing for a temporary situation. And we believe not only this is unsustainable, but maybe as a follow-up to the first question on under application, whenever the bounce back comes, it will come up with a lot of pent-up demand. As much as people are talking about, for example, the need to replenish strategic oil reserves following the resolution of the conflict as much as there was a lot of revenge travel following COVID, there will be some revenge fertilizer application for years to come to support, we think, the business. So it's just a question to how to manage until we get there.
The next question will come from Ben Theurer with Barclays.
I wanted to dig a little bit into your outlook for the back half in Fertilizantes, just given that the purely the focus shifts towards South America. So you've mentioned in your release and in the commentary that you expect profitability to be down in the third quarter compared to the second quarter. Can you help us understand what the main drivers are behind that? Is that just associated with your own production? Is that part of the distribution business coming? Is it all of it? And then how should we conceptually think as you look into these dynamics around increased crop pricing and so on for the business in South America as we move into the fourth quarter?
Yes, I appreciate the question there, Ben. Let me tee it up and then Luciano can get into some details on more on the EBITDA and how to think about that out of Fertilizantes. But let's start with kind of volume out of quarter 3. Quarter 3 is always kind of the peak volume quarter within the calendar year. So we expect that to be the same this year. However, historically, we see Q3 over Q2, roughly about 600,000 tonnes to 800,000 tonnes more quarter-over-quarter. And we would expect the same this year.
But what's muting the full potential of what's historic is actually our production business being down. We are not making or making very little commodity fertilizers in Brazil, given the sulfur availability and affordability issue. And so that is what's driving kind of demand being down or supply to feed demand, however you want to look at it in Brazil. And Jenny addressed that being down, what, up to 20% -- 20%, 30% this year on phosphate.
So that is what will give you kind of to help figure out on volume. So better than quarter 2. Typically, quarter 2 is up 600,000 tonnes to 800,000 tonnes. Obviously, our quarter 2 this year was down, but then it is constrained because we don't have our B2B production volumes to be able to sell. So with that, that already is going to handicap EBITDA. And then we're going to be more down than we were in quarter 2. And Luciano can kind of talk about how to think about how the EBITDA puts and takes work with Fertilizantes.
Yes. I would say that the goal throughout these curtailments is to make, for example, the production business stand on its own, so be kind of a 0 net contributor and how this is achieved, like the contribution margin of our animal feed sales plus a little bit of the sulfuric acid sales plus co-products should match the fixed costs and the turnaround costs. And we're actually kind of seeing Q3 even a little surplus because it's a strong quarter for coproducts as well. And a reminder, when we talk about coproducts, people usually associate, well, if I'm not producing, where are the coproducts?
About half of our revenue from coproducts comes from the sale of gypsum, which we actually have a very large stockpile. So to sell gypsum for the Brazilian farmers, we don't need actually to produce. So the sales are going to be there irregardless of curtailments, gypsum only, which is about half of the co-product sales. So this is the first bucket. So the margin we make in animal feed, sulfuric acid and coproducts should pay for all of the fixed costs and turnaround costs in the production business.
And then the other bucket is the distribution. So Q3 is very strong for distribution. So -- and margins are not yet where we would like it to be, but they are slowly improving. And Q3, actually, we're going to start having some contribution from Biosciences in Brazil. We expect around $30 million of sales of Biosciences only in Brazil with a kind of a margin contribution margin of around 40%.
And so you start seeing maybe it's not a lot, but it's the beginning, right? $12 million of contribution from Biosciences in Brazil only. So if you add the distribution margin plus Biosciences, on the one hand, you have SG&A on the other. And so there will be a surplus in Q3, and we hope that we can maintain a kind of surplus going forward so that Brazil could keep in positive territory. Again, it's going to be hard for the Q4 because we have a less prominent quarter as usual. But for Q3, we're confident that we're going to be positive, albeit as we signaled maybe the $60 million will not be achieved in Q3.
Now to your question about improving crop prices, that's actually some upside that maybe we're not baking in. We have seen recently, and Jenny can provide details over the last few weeks have actually returned to pretty normal buying patterns. And if that were to continue, we probably would have some upside potential in Brazil. Anything to add there, Jenny? I think I covered it. So thanks again, Ben.
The next question will come from Matt DeYoe with Bank of America.
I appreciate that there's a lot of uncertainty out there and just trying to get a sense, I guess, for the idle turnaround costs in the third quarter in Phosphates, right? It was $60 million in 2Q and the implied commentary was that it goes up. So I mean, order of magnitude, is $100 million the right number for the third quarter? Could it be $120 million? How do we frame that? And then guiding potash realizations to be relatively flat quarter-over-quarter, maybe like plus $10. Maybe a little bit soft of our expectations and what we've seen in the market. So is that just a function of higher freight rates driving lower netbacks to FOB. Or what else -- is that sell forward? What's going on there?
Let me take the back half of your question, and Luciano can talk a little bit about the idle turnaround. You're spot on with freight rates, particularly on the export side. So Canpotex is definitely seeing higher freight rate. So the netback impact is there. The other thing is in the mix. So where we're seeing growth in Potash is through Canpotex. And so the contribution, it's a channel mix issue. There's more export in Q3 than what we have historically seen. We're not losing anything in North America. It's just more international growth through Canpotex that is at a lower netback and then being discounted even more because of those higher freight rates. So I think that's probably what hopefully squares the circle or circles the square for you on why there might be a disconnect. Luciano, maybe over to you on turnaround idle.
So Matt, the $60 million in Q2 is basically half and half, half idle, half turnaround. And so yes, for Q3, that idle component, it's probably going to double, right? So it's another $30 million. But the turnaround component is going to half probably. So maybe we're talking about $15 million, let's just put a bracket $10 million to $20 million additional from Q3 to Q2. But in the fourth quarter, you're going to have an additional reduction in turnaround because you're not doing turnaround on something which is either, right? So you're going to probably go back to the -- with the [ 6 ] handle in the fourth quarter. So it's not $100 million, it's not $120 million. It's well below that.
And maybe just to highlight on that. I mean, these plants, if you take Louisiana, it's now 100% down. They are basically being put in a frozen stasis. So they're not being utilized. The planned turnaround schedules will be delayed. So CapEx that may be invested associated with a normal type turnaround is going to be deferred. That does not mean we're deferring CapEx for asset structural health. So as these assets are not running, we're still sticking to its running turnaround time schedule.
But while they're down, we are taking advantage of both CapEx and turnaround costs that will be deferred until these things are back up and running and utilize that run time for turnaround. So it is, again, complicated, but this is -- we're looking very detailed at everything and taking advantage of everything we can, as we've talked about, the things we can control to wring costs out in a way that doesn't damage asset health for the long term.
By the way, we didn't have the opportunity, but the CapEx profile. So you remember, we started the year with $1.5 billion, then we got back to $1.25 billion and then now $1.2 billion. The pace at which you kind of slam the brakes matters here. So CapEx will still be in Q3 somehow around like $300 million, with a [ 3 ] handle, but then it will drop substantially in Q4. So it's another reason why Q4 should be a stronger quarter for cash flows just because that's the way you manage, right? You cannot just stop all of a sudden. So you have to manage through and then you're going to see a step change in CapEx down for Q4.
The next question will come from Edlain Rodriguez with Mizuho.
Bruce, in terms of the affordability issue in phosphate, like how long can this go on? And how do you think it gets addressed? Is it crop prices moving up or phosphate prices moving down or combo? And what's your preference?
Edlain, no, thanks. I always appreciate the question. Yes, it's impossible to know exactly. I think it's probably a combination of both. In what proportion, I don't know. I don't think that I have a preference to be quite honest, Edlain. I think in my mind, what's most certain is, as Jenny outlined, there has been up to 30 million tonnes this year of production that just won't happen, depending on how long this sulfur availability thing is prolonged. If it goes to the end of the year, the number can be up to 30 -- it could be the high end, 30 million tonnes based on our calculation. Already less phosphate applied last year, a significant reduction this year in Latin America and in the U.S., the agronomic science has not changed.
So this will have an impact on yields at some point and then layer into the risk of what does El Nino do globally. So I think ag commodity prices are set to continue to rise as more evidence as crop gets removed over the course of the next 3 months, 4 months, 6 months, which is going to provide tailwinds for farmer demand. It won't take much for farmers to change the -- to feel differently about the narrative on affordability. If corn hits $5, north of $5, that is going to provide a lot of sentiment positivity. It's going to provide a lot of tailwinds. And the most -- the place that I would look first is in Brazil because the soil type just doesn't have the ability to bank nutrient value for mining it later as much as North America.
But as Jenny said, in North America even, we've mined almost 2.7 million tonnes over 2 years of phosphate out of the crop removal from '25 and now '26 projection above what is average, and we aren't applying average nutrients to replenish that. So I think crop prices are going to rise. What happens with raw materials, your guess is as good as mine. But what we are in today is not sustainable. There will have to be a new economic equilibrium hit in order to not have yields on a long-term sustained basis, stay negatively impacted.
The next question will come from Kristen Owen with Oppenheimer.
I did want to ask 2 things here. First, there was a write-down in the period. Can you just articulate what that was? And then my real question just is on your inventory levels. You finished the quarter at about 125 days. Can you just help us parse out how much of that is raw versus finished goods? And how we should think about that being sort of elevated levels versus elevated prices? Just provide a little bit more color on that inventory level, please?
No, Kristen, thank you. The write-down was a capital project that we had looked pursuing in the past, which was purified phosphoric acid and going into battery cathode material. I think we had talked about that publicly 2, 3 years ago. It became the point that we pretty much ruled out that ever being a possibility and took the write-down noncash. On the inventory, Luciano, I'll turn it over to you, maybe you got some more color on what's driving...
Yes. So Kristen, there's -- you probably looked into it. There's a footnote in our financial statements. I think it's footnote 5, which gives the breakdown of inventories in the various categories. So raw materials have been on a trend up because of prices, of course. But I would say they tend to go down now because even if you keep the same days of inventory, like you were running less facilities and especially in Brazil, where sulfur inventories are pretty much going to go down all the way to 0. The same is going to probably happen with work in progress as well. So you may remember past conference calls, we talked about an accumulation of rock inventories. And again, there was still a little bit of buildup in Q2 because, again, you stop the facilities and then you're still like processing rock and -- but structurally, these tend to go down a little bit as well.
Finished goods, I would say that there's -- in terms of physical inventories, there's no different pattern for Phosphates or for Potash than we observed in the past. You remember, there was an uptick in finished good inventory for Phosphates in Q4 last year. We ended up with close to 1 million tonnes of finished goods, but now we're down to kind of 700,000 tonnes, 600,000 tonnes. This is more like a healthier level.
If there's a rebound in demand, we might even go lower than that. MRO inventory, it's kind of stable, flat as well. So I'd say other than the traditional seasonality of Brazil, which will have the behavior I described earlier -- very quickly. I'd say from the physical perspective, the absolute trend for inventories is coming down. And of course, you layer on top of it the price effects.
The next question will come from Lucas Beaumont with UBS.
So I guess just want to get back to kind of the Phosphates volume outlook. So based on the current conditions, what you know today in terms of the pricing, input costs and sulfur and ammonia, if conditions kind of remain where they are now, what would you expect to do from a production footprint reduction standpoint as we go into the fourth quarter? Would you keep things the same in the U.S.? Would you reduce them? Or would you be able to increase it further?
Yes. Lucas, I appreciate the question. Under your assumption, which I don't -- would say is not that disconnected from probably where we're assuming right now, production would stay the way it currently is. We would consume what we believe we have is advantaged sulfur to the competition. And we know there are enough active markets globally to be able to utilize that sulfur and constrain ourselves to that advantaged contract sulfur that we have in the active markets. And based on that, we kind of see that production volume -- listen, it may fluctuate 100,000 tonnes, 200,000 tonnes here or there, we'll see. But generally, in that ZIP code is probably a good assumption.
The next question will come from Andrew Wong with RBC.
Just have a couple here. When things do normalize and you like to get back to the regular operating rates, how quickly could that ramp up look like? Like could we -- let's say, the Strait opens up today, could you get back to regular operating rates by like September?
And then my second question is on the sulfur contracts. $705 per long ton was pretty -- it was well below spot prices. Can you just kind of talk about how that came about? And let's say, if the Strait does remain closed into Q4, could you still sign another contract at the roughly similar level?
Let me start, Andrew, with the latter part. I think it's worth talking about that we were able to create a separation on that settlement cost from what spot solid sulfur was. And I think that is a testament to the relationship that's very symbiotic that we have with the Gulf Coast producers here in the United States to be able to take their molten supply and give them a baseload that's very ratable and doesn't jeopardize their primary existence, which is to produce oil and gas, right? So that is a relationship that has worked in ways that favor us and in ways that favor them over the decades that we've had this advantaged relationship here in North America.
So I can't speak to what we should expect. I think they appreciate, as we've appreciated when economics have been tough for them in the past that we are riding the edge on economics because we can't pass through that on the demand side because then we will run up against demand disruption. So we found this way to thread the needle. I think they appreciate that.
They appreciate our relationship and our expectation is that, that continues to stay there. I can't guarantee what that is going to be, but I think we've proven in Q3 that we have that relationship, and we would expect to continue to see something there. How fast we can ramp back up? It's going to depend on -- well, in your scenario that magically things just return, which, by the way, they won't. It's going to take time to recover. Even if the Strait's opened up tomorrow, there's damage in refineries that are producing sulfur, what's going on in Russia and Ukraine is independent of the Strait's opening up, what's happening with Kazakhstan restrictions, that has to change as well.
I mean all of those things have to happen. But if magically if sulfur were to return, we can ramp up pretty quick. As we talked about, we are making a priority to protect asset health and any of the decisions we're making about capital prioritization to do just that. Now granted, if things become protracted for even longer, that may add a little bit of time. But I'd say we're talking weeks, not months to get back to production.
The next question will come from David Symonds with BNP.
It's just a follow-up on Jeff's question about the realized ammonia costs in Faustina. You talked about $610 per tonne to $620 per tonne realized ammonia cost in Q3. I just want to understand, does that include the internal buying of Faustina and the kind of advantaged supply there? And if it does, I would have thought Faustina would be quite a large portion of your ammonia supply at the guided production rates of phosphates. So could we see a big drop in the ammonia realized cost in Q4?
It does include that, and it is -- yes. So it does include that. It's just based on the other contracts that we have settled and how that's going to flow through inventory. So a good chunk, the majority of our production is either internal gas-based or gas tied contracts. We do still have some spot that's in there. But the settlement prices for our strategic contracts that are tied to market negotiation on a monthly basis, that's all included in the -- in what Luciano was talking about on how that would impact on COGS. So that does include our Louisiana tonnes.
This will conclude our question-and-answer session. I would like to turn the conference back over to management for any closing remarks. Please go ahead.
To conclude our call, I'd like to restate our key points. While sulfur affordability and availability are challenging for everyone in the phosphate industry, we know that the crisis will come to an end. We're taking all the necessary actions to weather the storm, cutting capital and other costs, idling facilities where necessary, redeploying capital in pursuit of higher returns and further strengthening our balance sheet, all while preserving our ability to thrive when conditions improve.
So to be clear, Mosaic remains in an advantageous position with access to U.S. sulfur and open shipping channels in the Americas. In fact, our raw material advantage moves us down the cost curve at times of stress like we're feeling right now. At the same time, we're pushing to grow with incremental tonnes in potash, our very promising Mosaic Biosciences business and potential for new minerals extraction. Put simply, this is a tough time, but Mosaic is strong and resilient and better markets are ahead. So thank you, and have a great and safe day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
The Mosaic — Q2 2026 Earnings Call
The Mosaic — Q2 2026 Earnings Call
Mosaic is managing a sulfur-driven supply shock with production curtailments, permanent cost cuts and stronger liquidity while awaiting market recovery.
📊 Quarter at a Glance
- Phosphate volumes: Produced and sold 1.4 million tonnes of phosphate in Q2.
- Fertilizantes EBITDA: $60 million for the quarter, showing resilience despite curtailments.
- Raw materials: Q2 averages — sulfur $522 per long ton, ammonia $621 per tonne; realized stripping margin $422 per tonne.
- SG&A: Down 20% year‑over‑year (permanent cost reductions targeted).
- CapEx & liquidity: 2026 CapEx guidance cut to $1.2B; $1B term loan in place and $2.5B revolver untapped; working capital release of $300–$500M expected.
🎯 What Management Says
- Manage the controllables: Curtail production where sulfur cost is prohibitive, prioritize lower‑cost contracted sulfur and avoid building high‑cost inventory.
- Permanent cost action: Aggressive SG&A cuts and fixed‑cost removal (notably in Brazil) while preserving asset health for a restart.
- Capital reallocation: Divesting non‑core assets (Araxá process advancing, Carlsbad closed), investing in potash growth (HydroFloat at Esterhazy), Rainbow rare earths and fast‑growing Mosaic Biosciences.
🔭 Outlook & Guidance
- Input cost guide: Q3 realized sulfur ~$700–$710/long ton; ammonia ~$610–$620/tonne; DAP FOB pricing guided $820–$840/tonne (implied strong stripping margin).
- Volumes & cash: Q3 phosphate sales guidance 1.1–1.4M tonnes; expect working capital release ~ $100–$200M in Q3 and $300–$500M total by year‑end; free cash flow expected to improve in Q3 and Q4.
- Risks: Continued Strait of Hormuz disruption and Kazakhstan blockade keep sulfur spot prices elevated and sustain production curtailments.
❓ Analyst Q&A
- Sulfur impact: Sulfur constraints forced curtailments (Bartow ~40% run rate, Louisiana offline, New Wales/Riverview mid‑70s), with management prioritizing contracted advantage and market netbacks.
- Under‑application risk: Management forecasts large nutrient under‑application — North America down ~20% this year (cumulative >30% vs a normal year), Brazil down ~30% at the nutrient level; estimated additional phosphorus removal: U.S. ~1.4M DAP‑eq tonnes, Brazil ~1.3M.
- Liquidity & cash gap: Expected cash shortfall this year roughly $500M after operations, CapEx and dividends; company is refinancing short‑term paper, drawing on term loan/revolver if needed and expects net debt roughly stable Q3 and down in Q4.
⚡ Bottom Line
Near‑term earnings and volumes will be pressured by unusually high sulfur costs and production curtailments, but management has cut costs, preserved liquidity and reallocated capital to higher‑return areas; shareholders are exposed to a binary recovery tied to resolution of sulfur constraints and rebounding farm demand.
The Mosaic — Q1 2026 Earnings Call
1. Management Discussion
Good morning, and welcome to the Mosaic Company's First Quarter 2026 Earnings Conference Call. [Operator Instructions]
Please note, this event is being recorded. And I'll now turn it over to Paul Massoud. Please go ahead.
Thank you, and welcome to our first quarter 2026 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer; Luciano Siani Pires, Executive Vice President and Chief Financial Officer, will review financial results. We will then welcome Jenny Wang, Executive Vice President, Commercial, to join Bruce and Luciano as we open the floor for questions.
We will be making forward-looking statements during this conference call. Statements include, but are not limited to, statements about future financial and operating results. They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in our press release published this morning and in our reports filed with the Securities and Exchange Commission.
Please note in today's presentation and in our press release and performance data, we will refer to and provide various financial measures, including adjusted EBITDA, adjusted earnings per share, free cash flow, cost per tonne and adjusted effective tax rate, either on a total company or a segment basis.
Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to comparable GAAP financial measures can be found in our earnings release.
Now I'd like to turn the call over to Bruce.
Good morning, and thank you for joining our call. Our message for today is straightforward. The business climate is challenging, but it is allowing Mosaic to differentiate itself by benefiting from our significant advantages and optimizing our capital. I'll touch on these topics to begin.
First, the business environment was and continues to be very dynamic. Geopolitical events are driving volatility throughout the global phosphate supply chain. Many producers are struggling to secure raw materials, resulting in an already tight market becoming even tighter. Global phosphate prices reflect that shortage, and this has put additional pressure on farm economics.
Second, the current environment has allowed Mosaic to differentiate itself. The investments we've made in our U.S. phosphate assets over the last 2 years are driving higher production rates with 3 of our 4 facilities operating at targeted rates at the end of the first quarter. With a planned turnaround at our largest facility, New Wales, now behind us, our production capability has improved significantly. Mosaic maintains an advantaged geographic position as well as a greater diversity of sources relative to global peers when it comes to sulfur and ammonia supply, but we aren't without risk. Raw material prices and availability, especially for sulfur, are forcing us to revisit our production plan. We'll discuss this in more detail shortly. But our key message on this topic is that we are making tough but responsible decisions that maintain shareholder value through the current environment without sacrificing our ability to benefit when conditions improve.
This leads into my third point, which is that Mosaic remains focused on a disciplined capital allocation and reallocation strategy. In addition to adjusting our operating plan, investing in our phosphate assets and optimizing our strong potash business, we're also shifting capital away from underperforming assets toward better opportunities. Over the last few months, we sold 3 mines and idled production at underperforming assets, and we're continuing to invest in new opportunities. This is all happening as we manage through the current realities of our business with agility. We've reduced this year's CapEx and are adapting our production outlook to the current market environment and moving inventory built at the end of last year to improve our working capital position.
Before we dive deeper into our business, I'd like to spend some time on the broader market. As all of you have seen, the conflict in the Persian Gulf has exacerbated an already stretched global fertilizer market. Roughly 20% of global phosphate, 1/3 of urea, 1/4 of ammonia and 1/2 of seaborne sulfur volumes originate in the Middle East. When combined with the product that comes out of the Black Sea, nearly half of all phosphate raw materials have been impacted by the conflicts in Ukraine and Iran. You can see these dynamics in current phosphate benchmark stripping margins, which are under severe pressure despite elevated finished product prices.
Compressed margins and limited raw material availability have forced producers to curb production. For example, China has banned phosphate exports through August, and other competitors have significantly curtailed production primarily due to sulfur availability. To put it simply, there is not going to be enough phosphate to meet global demand. Demand for phosphate remains dynamic as well with diverging trends around the world. In the U.S., farm economics remain challenging, leading to careful nutrient purchasing decisions that impacted spring demand. In Brazil, farmer economics and access to credit remains significant headwinds and availability of nutrients and raw materials is weighing further on Brazilian agriculture.
In contrast, demand from key markets in Asia has been stronger. In India, for example, the government has signaled that it will continue to support phosphate imports at today's prices. For regions grappling with affordability, demand disruptions should be temporary. There are real agronomic consequences caused by persistent under application. There is no substitute for phosphate. And when application rates are reduced too far or for too long, soil nutrient balances drop and yields are impacted. While those effects may not appear immediately, they have historically been an important driver of demand normalization as growers respond.
Shifting to potash. Last year's stability has continued in 2026. Market fundamentals remain balanced with robust demand in all major markets consuming global supply. U.S. growers see good value in potash at today's prices, and this is being reflected in spring demand. In Southeast Asia, attractive palm oil prices are driving strong application. In China, imports set a record in the first quarter as the country replenishes low inventories. Last month, Canpotex announced it was fully committed through June and on pace for a record 2026. As such, we expect inventories to be tight through the second quarter.
With this market backdrop in mind, I'll shift our conversation to Mosaic's business performance and outlook. In phosphate, we sold 1.9 million tonnes in the first quarter as deferred demand from the end of 2025 returned. This was the highest quarterly sales volume total for the segment in 5 years and reflection of the broad market access that allows us to position product where it's needed.
On the production side, our investments in our assets are yielding results as well. In the past, we've talked about reaching finished product volumes of 1.8 million tonnes to 2 million tonnes per quarter. But one of the most significant production hurdles for us over the last few years has been in our U.S. phosphoric acid rates. And this is where we're seeing real improvements. In the first quarter, Bartow, Riverview and Faustina had phosphoric acid operating rates at or above 80%, which is in line with our targets.
Our largest facility, New Wales, completed a very extensive planned turnaround in March, which should allow for higher [ phos ] acid rates from that plant in the future. Keep in mind that our finished product volumes will ultimately be driven by a combination of [ phos ] acid operating rates and the type of product our customers need, as some finished products like DAP and MAP require more acid than MicroEssentials.
The recovery in our U.S. operating rates, combined with our structural advantages for raw materials have helped us thus far. Roughly 80% of our U.S. ammonia needs are supplied by our own plant in Louisiana and below-market domestic supply agreements, some of which are tied directly to natural gas, and roughly 80% of our sulfur needs come from the U.S. Gulf oil refineries in molten form, which we've been able to source through the second quarter with no constraints.
That said, we're not immune to the current environment as strong global sulfur demand competes for limited available supply, including product from our own backyard in the U.S. Today, spot sulfur prices imply compressed third quarter stripping margins that are well below our realizations in the first half of the year. Given this environment, we are reviewing our 2026 global production plan for phosphates and taking initial steps to curtail production. As part of these efforts, we're partially reducing production rates at Bartow and Louisiana, and scaling back additional fertilizer production in Brazil. This is a temporary move that allows us to limit the need for incremental sulfur at today's prices and wait until the market normalizes.
Our second quarter sales volume guidance reflects these actions, but we're prepared to restart operations quickly when conditions improve. We're committed to staying nimble and adapting as needed over the coming quarter. Fortunately, our potash business has been unaffected by recent geopolitical turmoil and continues to produce strong results. Our Belle Plaine solution mine benefited from low-cost natural gas and volumes from Esterhazy trended higher from the fourth quarter. With the strength of global demand, we've continued to run Colonsay, which is a higher-cost mine that can have an impact on our per tonne production costs. That said, the ramp of hydrofloat project and other optimization projects at Esterhazy are expected to drive cost meaningfully lower as we move through the year, and this should offset the cost impact of Colonsay.
In Brazil, we've managed the business to adapt to the difficult credit environment. We've been selective in how we deployed capital, prioritize higher quality counterparties and adjusted sales pace where appropriate, while continuing to support growers and maintain our market presence. In the short term, as we just discussed, raw material availability will have an impact on near-term operating rates. However, long-term fundamentals in Brazil remain promising, and we're positioned to respond as conditions improve.
As we think about the enterprise as a whole, we remain committed to optimizing our portfolio, reallocating capital to our key assets and investing in high-return opportunities. Free cash flow remains a key focus for us as we manage through the industry seasonality and the global trends we just discussed. Deferred fourth quarter phosphate demand meant we started the year with elevated inventories that we're now managing lower. Our phosphate finished goods inventory declined by roughly $120 million in the first quarter, although this was offset by product positioning in Brazil ahead of seasonal demand later this year.
In addition to managing our working capital, we're taking a harder look at our CapEx profile in supporting costs. After a thorough review of our project plans, we've lowered our 2026 CapEx guidance by $250 million to $1.25 billion. Our new outlook optimizes our portfolio of projects and defers any less time-sensitive projects to future periods. Our new plan will not have an impact on our longer-term production targets.
In addition, we are moving deliberately to streamline the organization support functions. In April, we initiated a workforce reduction that is expected to generate annualized expense savings of $50 million, of which $15 million will be realized this year. This is in addition to the $100 million value capture program announced last year.
We also continue to make significant progress in our efforts to address noncore assets as part of our capital reallocation strategy. Last month, we announced the idling and demobilizing of SSP production at Araxa in Brazil, along with related mining activity at Patrocinio. We're assessing strategic alternatives for both sites, including a potential sale of the assets and the development of a niobium project at Patrocinio.
In April, we completed the sale of our Carlsbad potash mine in New Mexico to International Minerals Carlsbad. These efforts to control costs and reduce future capital and ARO requirements create space for us to invest in new opportunities.
Mosaic Biosciences continues to grow rapidly despite the financial pressure on farmers, a clear indication that our products are delivering on their value proposition. We expect to launch 8 to 10 new products in 2026, including 2 new products that were launched during the first quarter. We expect Mosaic Biosciences revenues to double again in 2026.
I also want to touch on our work on rare earth elements, which represents a long-term growth opportunity for Mosaic. In March, we announced a project development agreement with Rainbow Rare Earths, following a positive economic assessment of the Uberaba gyp stack in Brazil. The project would recover rare earth elements from phosphogypsum rather than through traditional hard rock mining, leveraging existing byproducts from our operations. We are evaluating similar opportunities for rare earth extraction in the U.S. and early findings are encouraging. This is a long-term opportunity, and we are advancing it in a disciplined phased manner consistent with our investment criteria.
To conclude, clearly, we and the rest of the industry are operating in a challenging climate. Overall, we are managing with speed and agility, taking actions that are required by our current environment without sacrificing the long-term opportunities of our business. We believe we are well positioned to take advantage of the inevitable better market conditions when they arrive.
Now I'll ask Luciano to provide more details on our financials.
Thank you, Bruce. So I will focus on what moved the numbers this quarter and the actions we took in response. In phosphates, prices have continued to rise as a result of tight supply and the growing incremental consumption in industrial markets. On the raw material side, our dedicated sulfur supply chain in the Gulf on one hand and some delay in the flow of higher price sulfur through inventories on another enable us to realize an average cost of sulfur of $379 per tonne, which allowed us to realize stripping margins near $400 per tonne for the quarter.
On the cost side, as Bruce mentioned, customer demand resulted in a product mix toward a higher percentage of sales represented by MAP and DAP, and this had an impact on all lines in our cost of goods sold. To put this in perspective, on a per tonne basis, MicroEssentials are comprised of 33% to 40% phosphoric acid, depending on which MicroEssentials product we're talking about. However, MAP is comprised of 52% phosphoric acid. Higher acid content per tonne of finished product we sell will have an impact on unit COGS, including conversion cost per tonne and raw cost per tonne. This dynamic will become less visible when our production volumes and product mix normalize.
Specifically with regard to rock cost, during the first quarter, we moved all 3 of our South Fort Meade drag lines to the new Eastern extension, and we performed a turnaround at the mines beneficiation plan. As we have said in the past, transition to this new area defers the need to construct a new mine and beneficiation plant well into the future as a result of our ability to pump slurry much longer distances to existing plants. However, we're seeing increased overburden in the new area, which resulted in somewhat higher Florida cash mining costs of $63 per tonne, but we expect some improvement as the year progresses.
Finally, in raw materials, we do expect to see further increases in sulfur and ammonia costs in our second quarter financials. Historically, we have stayed away from guiding towards sulfur and ammonia costs, but given today's dynamic market, we thought some guidance will be helpful. For the second quarter in our phosphate segment, we anticipate realized sulfur costs of roughly $540 per tonne and ammonia costs roughly $610 per tonne. When combined with our DAP pricing guidance for the segment of $7.60 to $7.80 per tonne, this suggests that second quarter realized stripping margins will be in excess of $400 per tonne for our sales book, 60% of which has already been committed and priced.
Shifting to Brazil. In Brazil, we managed through similar sulfur cost dynamics alongside a challenging credit environment with performance for the quarter coming in better than expected. Our distribution business continues to differentiate itself through careful risk management. Per tonne distribution margins improved sequentially despite a challenging environment for customer credit availability, and we expect further improvements in the second quarter.
In production, as we previously reported, we made the decision to idle operations at Araxa and Patrocinio. Of the $442 million in charges associated with these actions, $328 million was noncash. While the former idling of [indiscernible] in December was directly related to the current sulfur environment, our decision on Araxa and Patrocinio had been contemplated long before the recent disruptions. This is very important. Sulfur prices have exacerbated the situation, but Araxa's returns have struggled to meet our internal hurdle rates for some time. Remember, that facility was exclusively focused on SSP production, a product whose margins have historically been challenged by significant import competition.
Looking ahead, we believe this decision will result in improved operating margins for the segment with annual maintenance CapEx savings of $20 million to $30 million helping cash flows. Also on the positive side, our Fertilizantes production business benefited from sequentially lower turnaround and repair costs.
Finally, as Bruce mentioned, we're very focused on cash flows. Our updated CapEx guidance follows a thorough review of our project portfolio and a deferral of less time-sensitive projects to future periods. On working capital, we delivered on our promise to sell 1.9 million tonnes of phosphate products above production and thus, we were able to release $120 million of inventories tied to finished goods in the phosphates segment. This release was mostly offset by purchases and increases in finished goods inventories in Mosaic Fertilizantes in preparation for seasonal demand in the coming quarters.
If you look straight into the balance sheet, total working capital was modestly higher in Q1 compared to an increase of roughly $400 million in the first quarter of 2025. So what's the outlook for cash flow generation to the remainder of the year? 2026 cash flow generation will be influenced by higher raw materials prices as higher sulfur and ammonia costs continue to pressure working capital, both in the raw materials inventory line and in finished goods inventory as well.
Also, our production plan will influence cash flow generation, which we will continue to evaluate as market conditions evolve through the balance of the year. In the meantime, we will be diligent on things that we can control as we've shown through our cost savings initiatives and our lower CapEx budget in 2026.
To close, we have taken decisive actions to face an uncertain environment, curtailing operations, reducing support function costs, cutting CapEx and managing working capital. All these actions reflect our resilience and position us to benefit over the longer term.
I'll stop here and turn the call back to the operator for Q&A.
[Operator Instructions] Our first question today is from Vincent Andrews with Morgan Stanley.
2. Question Answer
This is Justin Pellegrino on for Vincent. I was just hoping you could help us a little bit on the working capital side. You had previously mentioned the $300 million to $500 million of working capital release, understanding the world has changed since that was provided. But any sort of directional range including your change in production guidance? Or any other changes in raw materials would be helpful to directionally understand what's going on there.
Justin, thanks for the question. We have been saying that $300 million to $500 million release of working capital. We saw a good chunk of that, all else being equal, as we came out of Q4 into Q1 materialize with that 300,000 tonnes of additional sales in phosphates over production. As Luciano talked about, it was about $120 million of cash. But we did see some offsets in that with working capital build, which is seasonal, by the way, in Brazil, but with these higher input costs that helped to offset that as well. But given the production plan that we have talked about, and I'll turn it over to Luciano in a minute, we do see release of more working capital in the second quarter and throughout the year.
Luciano?
Yes. Okay. Sorry, just to understand the dynamics, if we were not to curtail production, actually, the increase in the price of sulfur and ammonia will actually reduce that $300 million to $500 million of release. Just for you to understand, we do have about 30 days of inventory of sulfur. That equates to approximately 400,000 tonnes of sulfur. And there's another 400,000 tonnes of sulfur in our finished goods inventory usually, give or take.
So 800,000 tonnes of sulfur, if sulfur prices increase, for example, from $500 to $800, $900 per tonne, you can see $400 times 800,000 tonnes, it gives you a headwind of about $300 million of working capital additional build. However, because of the curtailments, you should expect a more accelerated release of working capital kind of offsetting a little bit the effect of sulfur. Of course, because this curtailment will be temporary, it's a little bit difficult to anticipate now what is going to be the actual release of working capital, but we see 2 opposing forces now. Increased raw material prices reduced in the release, which was mentioned in Q1, but the curtailment is actually increasing the release. So the $300 million to $500 million pretty much continues to be our estimate for release.
Next question is from Chris Parkinson with Wolfe Research.
Can you just talk a little bit about the U.S. versus international dynamics? I mean, even with rising ammonia and sulfur prices, I mean, the prices in the international market continue to strengthen even as of this morning in India. And obviously, that hasn't been a huge focus over the last few years. But can you just talk about how you're thinking about the 2, and probably perhaps more so the 3Q order book, and whether or not your production guidance for the second quarter assumes that sulfur is going to rise even further for the 3Q contract in terms of how you're thinking about second half dynamics as it relates to projected stripping margins.
Yes, Chris, thanks. I think we're seeing it pretty similar to the way you've kind of framed the question. International prices are garnering a premium over domestic North American prices. But besides that, we're just seeing demand not as active in the Americas as in international. We've positioned product, trying to be cognizant of the North American farmer needs. But until buying actually happens, we've been forced to pivot the international markets. And to your point, prices have been pretty good.
But at today's input costs on sulfur and ammonia, even at the international prices going into Q3 and Q4, given an anticipated rise in sulfur price, we see stripping margins being in a place that may not make as much sense for us. So taking action today even though demand continues to be active in certain parts of Asia, and Jenny can talk more about that in just a minute, we've been forced because we can't get raw material in some jurisdictions. And then the price of that, that we can get in other jurisdictions simply have stripping margins beyond the place that we feel that we can reliably run.
So we are making the decisions today to preserve more Q2 sulfur for longer, as Luciano was saying, and we'll have to make decisions in the future on what happens on the raw material front, and we'll have to watch what happens with net stripping margins worldwide. But we only have so much sulfur that we feel comfortable with to meet the needs of where we do see active production or active demand in any jurisdiction.
Jenny, do you want to talk a little bit about dynamics in the world?
Yes. You see very quickly, Chris, the international demand is very strong, partially because of a very low inventory as we ended 2025, and that is the effect of continuous strong demand and restricted supply. And in the first quarter and also into the second quarter, it is particularly obvious in the market like India and also some other markets, like Pakistan, you will see it in some of the African countries like Ethiopia. Those governments, they provide support and the subsidies to their farmers. Therefore, you can see that the demand is much more active even with the price that we're talking about as for today. And the latest Indian tender basically confirmed what we have assumed in the demand.
The next question is from Kristen Owen with Oppenheimer.
Similar type of question. Appreciate the Q2 visibility that you provided and understanding that the world is very dynamic, maybe don't have as much visibility into the back half of the year. But maybe you could help us walk through the milestones that you are watching for the second half. What are the scenarios as you see them playing out today? And maybe ask you to emphasize particularly how you're viewing the market in Brazil here going into the second half of the year.
Yes. Thanks, Kristen. No doubt, things are murky on clarity of what's going to happen. So the things we are watching, obviously, as everyone is watching is what's happening on fluidity out of the Strait of Hormuz. Every day, there's a reaction, it seems like. So we're watching that. But what we'll be watching, assuming the conflict comes to some resolution in a near-term scenario is how quickly that fluidity gets back to normal, particularly for us on sulfur flows.
Make no mistake, sulfur availability and subsequent affordability are the biggest things driving our view from a Mosaic standpoint on where we can participate and what we can produce to participate. That is the biggest driver of everything that we have done and continue to watch. So how quickly sulfur starts to get to more normalized levels from a cost standpoint and a fluidity standpoint are things we're going to watch.
But I think in the big scheme, no matter how frustrating and dynamic the current situation is, these are temporary issues. And we got to look beyond this Persian Gulf unrest. Things will get back to normal at some point in time. The under application of fertilizer, particularly on phosphate and in Brazil, just difficult to getting all nutrients, particularly nitrogen and phosphate, is going to have a yield impact on the future crops.
Yes, global grain and oilseed stock-to-use ratios sit in a not crisis mode today, but it doesn't take much to upset that 2% to 3%. And we see ag commodity prices actually being pressured in a good way on the upside where affordability concerns will get better for farmers in time, and that with the fluidity that will ultimately come for sulfur and other commodities in the fertilizer space coming out of the Strait of Hormuz, things will return. And we're making decisions on production curtailments today that we can quickly unwind and be flexible to come back with production when things, a, get more clear on what's going to happen with the raw materials and where will demand actually go. And b, as all of that starts to underline, we know that tailwinds will exist for nutrient demand, given the under application of phosphate that's going on, particularly in the Americas.
The next question is from Jeff Zekauskas with JPMorgan.
I have a 2-part question on raw materials. Your average ammonia prices were, I think, $626 a tonne in your phosphate segment? And you say in your script that 80% to 85% of your needs are met through production from Faustina. I thought Faustina was maybe 1/3 or 1/4? And the $626, call it, $626 number, like that's very close to prices for ammonia. I mean, those were higher prices than, what, CF or Nutrien realized. Why are the ammonia values as high as they are?
And then secondly in sulfur. Do we know how much sulfur are on ships that are behind -- that are currently blocked that would be released if the Straits opened?
Jeff, thanks. Let's just go back through on our ammonia just to set the table, 80% of our ammonia is either internally supplied or market advantaged strategic contracts. That puts us at [ 20% ] exposed to spot. But going into Q2, we did see sulfur -- ammonia prices rising on settled monthly contracts. And I think probably in quarter 4, we had in the quarter when we had Faustina and some turnarounds. So that affected the mix of sulfur. But on a normalized basis, roughly 30% comes from Faustina supply, again, depending on turnarounds and what's going on in any given quarter. And then the remaining up to 80% is better than market, much of which is natural gas tied contracts with producers. And then we're exposed to 20% on spot.
As far as sulfur goes and what is pent-up on ships behind the Strait of Hormuz, I don't think there is good visibility into that, Jeff. That definitely is something that we're going to have to watch intently as things are more normalized or resumed to whatever new normal is going to be. But make no mistake, there has been refinery damage due to the conflict in different parts of the Arab Gulf and how fast that's able to return to resume to kind of normalized levels of supply are yet to be determined as well. So we know there will be some disruption, but getting fluidity back is key to seeing what we believe is a recovery and better participation.
Luciano has something to say.
Jeff, and for all, there is a big difference between the marginal cost of sulfur and ammonia for the marginal cargo, which drives our decisions at the margin and the average cost across our portfolio, and even the average cost across time because it takes time for prices to flow -- portfolio prices to flow through inventories. And so every decision that you're seeing us taking today is driven by the marginal cost of sulfur, which today is at $1,200 per tonne and the marginal cost of ammonia, give or take, let's say, $800 per tonne. So if you apply these marginal costs, for example, to the stripping margins that we realized in Q1, very quickly, you're going to see that the marginal stripping margin is below variable costs. So it doesn't even cover variable costs. So very important, not to separate marginal cost to average cost, which is going to be much more favorable even in Q2 because of our portfolio, because it takes time for raw materials to flow through inventories. So I just wanted to make that distinction.
The next question is from Matthew DeYoe with Bank of America.
I wanted to ask on potash a bit. I know mix changes a little bit, but we're kind of running the third potential quarter here of FOB mine potash prices with a $260 kind of on the low end would imply maybe on the lower end, just flat potash realizations for 3 quarters. Why isn't that lower end improving at all, just given what we've seen as it relates to kind of market prices moving up? And then the 2Q potash shipments guidance may be a little bit weaker than I would have thought, and it's particularly in the general framework of 9 million tonnes, I guess, overall produced. Is that just maybe a difference between production and shipments because it would seem like it implies a fairly strong 2H kind of shipment guidance, not crazy, but maybe considering the backdrop for the economics of the farmer in 2H, maybe a little bit heavier lift than we would have thought?
Yes. Thanks, Matthew. I'm going to turn it over to Jenny to answer the first part of your question. But let me while I'm on take the second part. I think one thing that perhaps people are missing in our guidance is that K-Mag is no longer in our potash guidance, which, depending on the quarter, could be around 150,000 tonnes, 175,000 tonnes. So I think if you add that back in historically to the guidance that we gave, we're seeing pretty normal uptick rates in demand in our guidance number within North America and internationally.
In fact, Canpotex sold out through June, is on pace to set a new record potentially this year. And to your point, Matthew, that does mean a record second half shipments internationally out of Canpotex if that were to materialize, and then we see pretty much normalized North American shipments. So it is a heavier second half for potash shipments, but the guidance in Q2, fairly normal without K-Mag in there, which I think would appear that it's lower than what usually is because that math is not in there.
Jenny, you want to talk about ASPs?
Yes. Matthew, let's start to the potash market. It's a stable and balanced market. The demand has been pretty strong, and the supply was keeping up. So the price that's why you're not seeing a major change on the bottom end of the GAAP guidance, one factor that I probably want to remind you is Canpotex is selling potash in a pretty big contract market, which is the same price for the full year.
The second part is they are certainly very far ahead of the delivery time, meaning Q2, most likely, most of the sales was made in probably in Q4 and into Q1. Since February 28, we have seen very strong price appreciation in the major spot market, including Brazil. And also, so that will reflect the selling price for -- and the netback for Canpotex in the following quarters. And lastly, I would say North America, over the spring lean season sales, we have seen very nice price bump due to this very strong demand by the U.S. farmers. So that will be reflected in Q2 and also into Q3 in terms of the sales.
The next question is from Lucas Beaumont with UBS.
Just going back to kind of the phosphate volumes. So I mean the production there has been pretty steady for sort of 3 quarters of about 1.65 million tonnes. I mean you called out kind of the further improvements in the underlying asset base sort of during the quarter.
So I guess can you kind of just frame for us exactly how much are you curtailing production into 2Q? I guess what would have the production been otherwise? And then as we look forward into the second half, I guess, one, if raw materials continue to kind of be constrained how they are now, would you need to take production down further as we go into the third quarter? And is this helping or hurting your ability to kind of get to that sort of 8 million tonne target over time? Is there any extra work you're going to do while things are down? Or is this going to sort of slow things down that way and maybe make the improvements over time?
Lucas, I appreciate the question. Let me just start by we're disappointed that we have to make these actions because we are seeing great progress in quarter 1. In fact, 3 of our -- 3 of the 4 facilities were at kind of our target rate. With the fourth in New Wales, our biggest facility at was in turnaround. In fact, it was one of the longest and largest turnarounds that's been done in several years at New Wales just by nature of the scope of things that were up for scheduled turnaround timing.
So we were very optimistic coming out of that, that we would have seen further improved rates. How much is this going to affect, it's impossible to answer precisely. But let me give you a little color of the magnitude of what the announcements are that we did make today. So Louisiana partial curtailment is about half of its production capacity at 1.4-ish million tonnes of finished product capability and about half of Bartow's capacity at 2 million tonnes of annualized capacity.
As I said and as we said in the prepared remarks, these are temporary matters that can be quickly unwound. And if we see things change on raw materials, we will quickly undo that. As far as doing more work during this down period, we were happy with where we were performing and we're anxious to see coming out of this New Wales turnaround how all 4 facilities were going to perform. Unfortunately, this situation is going to mute our ability to prove that and demonstrate that in the short term.
So we're going to continue to invest in the things that we need to invest in. But with the production curtailments, we have made some decisions on postponing some CapEx more, probably around waste due to the lack of production on gypsum stacks and clay settling areas that we can get away with, mostly gypsum stacks, and other time-sensitive things that this creates an opportunity on. So we've been diligent in looking at how to do that to match up with our current thoughts on production plans.
If this situation becomes protracted, and we don't see relief in sulfur price or net improvement in what we see as future realized stripping margins, we have more options that we are looking at and we'll execute on for further production curtailments. At the end of the day, if we don't see relief in stripping margins, however you want to calculate getting there, whether it's sulfur price, finished product price or some other way, we don't feel good about the margins that we have in this business to be a reliable supplier to what the world needs. So these are the difficult decisions that we are looking at day-to-day and watching what happens in the Middle East and the Persian Gulf specifically to see how we go from here.
The next question is from Edlain Rodriguez with Mizuho.
I mean this is for Bruce and Jenny also. I mean I think this is about affordability in phosphates. If prices go up too high, you might see demand deferral or demand disruption. But at the same time, the industry needs to raise prices to recover margins. What do you do?
Yes, Edlain, this is an unsustainable situation that we're in. And I think you highlight that well. Rarely, if ever, have we seen where stripping margins on the phosphate producer side are this compressed and farmer affordability at the same time being distressed, something has to give. And I think at $1,200 sulfur price, as an example, much, if not all, of the producer cost curve is underwater. And we're not immune to that.
So that's why I believe you're seeing curtailments happen throughout the globe. That's why it's happening within Mosaic is because this sulfur price is unsustainable given the other cost of raw materials. And given the net stripping margin that we see boxed in by probably farmer affordability given current ag commodity prices.
As I said, what gives in the future and why we remain optimistic that this is a temporary issue and things will revert. At some point in time, the Strait of Hormuz will open up. At some point in time, the fluidity of sulfur will get better and improve. The nutrient removal last year, the lack of application in fall and spring this year net-net for crop year is going to be significant, and yield response will show up. We're already seeing ag commodity prices in whole since the beginning of the year rise. Jenny can talk more about that. Corn and soybeans not as fast as some of the others.
But this is likely what's going to happen in the future. It will improve farmer affordability. Hopefully, you see improvements on raw material costs that go into phosphate, net of net, a much more healthy environment at whatever new sustained level that is. But we see stripping margins actually getting back to something much more healthy once we get beyond this temporary issue. And remember, even before this Persian Gulf conflict, phosphate was tight. It was driving demand destruction just because there wasn't enough supply. It's only been further exacerbated by this with a boxed in barrier of farmer affordability, and that's mostly in the Americas. But we are seeing, to Jenny's point, participation in other areas, particularly in Asia, where government policy and subsidies and things like that help keep things moving.
But again, eventually, things will revert back. More likely, ag commodity prices will be better, given the need for nutrient replenishment and the fact that yields will be impacted due to lack of fertilizer application over this past 6 months. And we remain optimistic that the fundamentals will return, and we're going to be positioned in a good place to capitalize on that with our production that's returning and the raw material supply and agreements that we have, we think, in the long run, still advantage us more than others.
The next question is from Joel Jackson with BMO Capital Markets.
[ Evan ] on for Joel. I just want to ask about Fertilizantes. Obviously, for the guidance for Q2. And usually, Q2 is much higher earnings than Q1. If you wouldn't mind outlining the puts and takes in Brazil for Q2, please?
Yes. Thanks, [ Evan. ] I'll probably turn it over to Luciano and Jenny to provide some commentary. But no doubt, there's uncertainty. Hence, why we pulled kind of our recent practice of providing some type of indication on EBITDA for the segment. But with the lack of ability to get sulfur into our production facilities, that's one contributing factor. But Brazil, in general, has to import all of -- much of their nutrient needs for fertilizer blends that go to the farm. Lack of nitrogen, lack of phosphate and the uncertainty of when those things resume to more normal levels is why we kind of pulled that guidance -- why we kind of is why we pulled that guidance because there is just lack of certainty.
Now before they get into the details, we're still very bullish on long-term outlook in Brazil. Again, Mosaic has positioned ourselves, our strategy, we still believe in that we will be there with our assets, particularly on the blending side to grow as that market grows. But 2026 is likely going to be a contraction in fertilizer use in Brazil just due to the sheer fact that nutrient availability is not there.
Jenny? Luciano?
A few reasons why Q1 performance was a little better. First, distribution margins surprise on the upside. And I'd say they tend to continue to improve because with actually less volume to sell, you can actually target your better customers. So distribution margins tend to increase. A little bit of pricing better than we expected in Q1. And also the appreciation of the Brazilian real has a short-term impact on some of our payables, especially the distribution payables in equal parts, these 3 things explained the surprise and the upside for results.
Looking forward to Q2, we do have parts of our portfolio of sales that are profitable in, I would say, in any environment. So part of sulfuric acid that we produce, it's tied into cost-plus contracts. We also produced DCP, which is a product that goes into animal nutrition, which has much higher, I would say, willingness to pay. It's a much smaller percentage of the cost structure of these customers. But the commodity products, SSP is in a very bad place right now. And even the MAP and DAP products, as I indicated, with marginal stripping margins are in a bad place. So put all of this together, very hard to predict where we're going to land in Q2.
The data point For Brazil market. Bruce mentioned, we're likely going to see a decline of the shipment in Brazil. A big part of the reason is the availability of the new trains. And Brazil needs to import 85% of NPK that the country needs. And the first 4 months, especially April, we saw reduction of the input, especially on nitrogen and phosphate. The in-country inventory is extremely low for all the new trains and the [ nitrogen, ] phosphate is unlikely going to be -- the shipment is unlikely going to be catching up given the low availability in the international market. So that is also the reason that we are not really giving guidance, given so much uncertainties.
The next question is from Duffy Fischer with Goldman Sachs.
Just two quick questions. One, what's going to be the cost impact of running the phosphate segment at the lower operating rates in Q2, either in absolute or on a per unit basis? And then the second one, I just want to double check, your base expectation is still that working capital generates at least $300 million of positive cash flow with the puts and takes? Did I hear that right?
Yes, Duffy. I'm going to just turn it over to Luciano to address that.
Starting by the second question, yes, the expectation continues to be there. As I laid out 2 opposing force is raw materials tending to push this down, but curtailments tending to push this up. On the cost impact, we actually were aiming at getting close to $105 per tonne conversion cost in phosphates before the curtailments -- I'm sorry, $90 per tonne before the curtailments, which is actually significant. It's below actually the range we gave in Investor Day last year. But with the curtailments, if they continue, it's probably going to land at $105, $110, so it's not going to be much lower than $110. And it's going to be driven mostly by better performance at New Wales, again, most of the tonnes come from there after turnarounds, operating rates going up. So even with the curtailments, we see cost per tonne coming down.
I mean it is hard to predict what's going to happen beyond Q2, and I know your question was more on the Q2 side. But that's why we're doing everything we can to control the things we can control with looking at CapEx, looking at another round of cost savings, the $50 million we talked around for support function costs. That adds to an already $100 million target. So controlling the things we can control are the things we're going to focus on to continue to remain as cash positive as we can given this difficult time.
Next question is from Mike Sison with Wells Fargo.
Just when you think about phosphate volumes in 2Q, you gave us guidance for that. If nothing really changes, is that sort of the level base case we should think about for the third quarter? And then, I guess, similar with Fertilizantes, you didn't give us specific volume guidance. But whatever you end up doing in the second quarter, is that kind of a base case heading into the third until everything gets better?
Sorry, we had a problem here. What was your first part of your question?
Mr. Sison, did you mute your phone?
No. Yes. My question was for phosphate. And if the 2Q volumes come in as is, is that the base case for the third quarter? And similarly for Fertilizantes, is that whatever volumes you come in into the second, is that the base case into the third until conditions improve?
Yes, Mike, thanks. Really, that's why we not -- we pulled guidance is we don't feel comfortable being able to give you a forecast on that. I could say it could go either way, to be quite honest, depending on if somebody could say this conflict ends in the Persian Gulf and fluidity gets back to normal within 60 days. I'm just picking a scenario that would probably improve things for us. If it became protracted beyond Memorial Day -- or what's that, Labor Day, sorry, and went on further, we're going to be struggling with this for longer. And it could actually be even more dramatic as sulfur availability is even more curtailed than what we currently may be thinking about. So again, it comes down to affordability of sulfur that if you can find it, what's its supportability going to be? But more specifically, is it even available.
Just a correction. I mentioned $110 to $105. This is more a second half cost profile than a Q2. Q2 is going to be somewhere in between what you saw this quarter and the second half numbers.
This concludes our question-and-answer session. I would like to turn the conference back over to Bruce Bodine for any closing remarks.
Well, thanks, everyone. To conclude our call, I'd like to take the long view, as we've talked about today. Yes, the current environment is challenging for the phosphate industry. At Mosaic, we're doing everything we can to weather the storm without sacrificing our ability to benefit when business conditions improve, and they will improve. Raw material prices are at unsustainable levels, and they will come down once global trade flows resume. But more importantly, the long-term phosphate supply and demand picture has not changed. Phosphate supply is very tight now and will remain tight when more normal economic conditions resume.
We've built Mosaic to be resilient, and we're demonstrating that resilience now. Our improved asset reliability, extensive market access, diversified business and strong financial foundation will allow Mosaic to thrive in better markets. So thank you for joining our call, and have a great day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
The Mosaic — Q1 2026 Earnings Call
The Mosaic — Q1 2026 Earnings Call
Volatile phosphate markets push Mosaic to cautious capital discipline and selective production shifts.
📊 Quarter at a Glance
- Volume: Phosphate sales 1.9 million tonnes in Q1; highest quarterly total in 5 years.
- Inventory: Phosphate finished goods inventory declined by about $120 million in Q1.
- Utilization: 3 of 4 phosphate facilities at or near targeted rates; New Wales turnaround completed.
- CapEx: 2026 guidance cut by $250 million to $1.25 billion as projects are prioritized.
- Working cap: 2026 expected working-capital release of $300–$500 million; Q1 release ~$120 million.
🎯 What Management Says
- Strategy: Environment is dynamic; Mosaic differentiates via U.S. phosphate assets and diversified raw-material sourcing while optimizing capital.
- Capital allocation: Tighten capital spending, idle underperforming assets, and pursue high-return opportunities; cost saves and portfolio shifts ongoing.
- Growth optionality: Mosaic Biosciences expansion and rare-earth initiatives (with Rainbow Rare Earths) remain long-term growth avenues.
🔭 Outlook & Guidance
- CapEx: 2026 CapEx lowered to $1.25 billion; defers less time-sensitive projects but does not change long‑term targets.
- Production: Phosphate curtailments to manage sulfur costs; conditions could unwind quickly if raw materials normalize.
- Cash flow: 2026 free cash flow influenced by higher raw-material costs; working-capital release targeted at $300–$500 million; cost controls in place.
❓ Analyst Q&A
- Working capital & raw materials: Management reiterated the $300–$500 million release range, noting opposing forces from higher sulfur/ammonia costs and production curtailments.
- Brazil / Fertilizantes: Guidance for Q2 and H2 remains uncertain amid sulfur supply constraints and Brazil’s import dependence; limited Q3 visibility.
- Potash & Canpotex: K-Mag not in current potash guidance; Canpotex on pace for record H2 shipments, supporting potential upside in ASPs.
⚡ Bottom Line
Mosaic is navigating a tight phosphate market with disciplined capital allocation, using temporary production curtailments and lower CapEx to protect cash while awaiting a return to more normal conditions. Long-term upside remains from Mosaic Biosciences and rare-earth initiatives, offering optionality for shareholder value as demand and supply normalize.
The Mosaic — Q4 2025 Earnings Call
1. Management Discussion
Good morning, and welcome to The Mosaic Company's Fourth Quarter and Full Year 2025 Earnings Conference Call. [Operator Instructions] Please note, this conference is being recorded.
And now I'll turn it over to Jason Tremblay.
Thank you, and welcome to our fourth quarter 2025 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer. Luciano Siani Pires, Executive Vice President and Chief Financial Officer, will review financial results and capital allocation progress. We will then welcome Jenny Wang, Executive Vice President, Commercial, to join Bruce and Luciano as we open the floor for questions.
We will be making forward-looking statements during this conference call. The statements include, but are not limited to, statements about future financial and operating results. They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in our press release published yesterday and in our reports filed with the Securities and Exchange Commission.
Please note in today's presentation and in our press release and performance data, we will refer to and provide various financial measures, including adjusted EBITDA, adjusted earnings per share, free cash flow, cost per tonne and adjusted effective tax rate, either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non-GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found in our earnings release.
Now I'd like to turn the call over to Bruce.
Good morning. Thank you for joining our call. As we look back on 2025, I want to start by recognizing the work our teams delivered across Mosaic throughout the year. We asked a lot of our people, and they responded with tremendous effort. The other members of the executive team and I are grateful for their dedication.
I will start today's call with a high-level review of the markets and our business. Then Luciano will provide some details on our financial expectations for 2026, and Jenny is here to address your market-related questions.
Our key messages for today are: first, while the fourth quarter was weaker than we expected due to phosphate demand in the United States, U.S. demand is emerging as farmers prepare for spring planting in North America and global ag fundamentals are solid. Second, we are on track to improve phosphate production performance, and we have posted consistently good potash production throughout 2025. The work we have completed has restored our operational foundation and positioned Mosaic for a strong 2026. Third, we delivered meaningful cost and efficiency progress in 2025, and we have committed to achieve further reductions in 2026. Fourth, our extensive market access continues to provide a powerful platform for growth, especially in our Mosaic Biosciences business. And finally, in our capital allocation program, we have divested several noncore assets, Patos de Minas and Taquari as well as a pending transaction to sell Carlsbad that will allow us to focus attention and capital where it matters.
Before I get into a more detailed review of the business and our outlook, I will turn to a high-level view of the market conditions and explain why despite the tough ending to 2025, our long-term outlook remains constructive. U.S. demand, especially for phosphate, fell sharply in the fourth quarter, pressured by affordability challenges and uncertainties surrounding government support. Recently, we have seen an increase in spring inquiries as growers look to nourish their soil, especially after last year's big crop and corresponding nutrient removal. As we enter the buying season across several key geographies, a compressed demand time frame is possible and could place additional strain on logistics capabilities. While overall North America potash and phosphate shipments declined in 2025, Mosaic's North America sales volumes proved more resilient, indicating we captured additional market share. Looking ahead, phosphate supply and demand dynamics are supportive as China continues to restrict exports to prioritize domestic demand and lithium iron phosphate battery demand continues to consume an even larger share of the world's phosphoric acid.
Potash markets remain balanced with prices that appeal to the world's farmers and fertilizer producers alike. As we look at 2026, we expect global potash shipments to approach record levels driven by broad-based demand across most key geographies. And as a result, we expect to continue producing at high operating rates. While credit constraints remain a challenge in Brazil, expanding planted acreage and rising crop yields bode well for long-term Brazilian fertilizer demand. Demand also remains strong in other key growing regions of the world, including China and India.
Now I'll move on to discuss our business and outlook. In phosphate, we delivered strong rock production last year with Florida reaching its highest level in three years and record mining production at Miski Mayo. Our top strategic priority in 2025 was to restore stability in our operations and normalize costs. While the recovery of our production volumes has taken longer than expected, we accomplished a great deal toward that goal. In our U.S. Phosphate business, we invested time and money across our assets to set ourselves up for reliably strong production, and we are seeing positive results. The key measure of our success is P2O5 output because acid gives us the ability to flex grades and products to meet demand and P2O5 production improved during the year. Our phosphate fertilizer production also rose through the year, and we expect consistently good production in 2026. We produced 1.7 million tonnes in the fourth quarter even with an extended turnaround at our Bartow facility as well as deliberate steps to adjust production amid soft U.S. demand. We are off to a strong start this year, and we expect to produce at least 7 million tonnes of phosphate in 2026.
In potash, we are back at full operating rates at Esterhazy since the tragic fatality in December, and our HydroFloat project is ramping up. We expect to achieve record production at Esterhazy in 2026. International sales volume set a record last year, and we anticipate continuing strong demand in 2026. In fact, we expect to produce around 9 million tonnes of potash this year, a level similar to 2025, even after we complete the Carlsbad transaction.
On the cost front, we are maintaining disciplined cost management through all market conditions. In 2025, we faced significant market volatility. When sulfur prices spiked at the end of the year, which we expect will significantly compress margins in our Phosphate and Mosaic Fertilizantes segments well into the first half of 2026, we moved quickly to protect margins and profitability. We have idled Araxa and Fospar in Brazil, our lowest margin operations until further notice.
Turning to managing our controllable costs and driving operating efficiency. We made excellent progress on this front last year. We executed our mine optimization plan, improved our fixed labor costs, consolidated suppliers where possible and managed corporate costs well. Our business in Brazil was a standout, delivering cost improvements through increased mine production and the elimination of high-cost imported rock. In fact, rock output in Brazil reached near record levels in 2025.
In phosphate, we began to reverse the cost pressures that arose from extensive maintenance activities in the first half of the year. Fourth quarter cash cost of conversion was $112 per tonne, which is an improvement of approximately $20 per tonne compared with a high watermark earlier in the year. This improvement is structural, not one-off. In potash, our cash cost of production averaged $75 per tonne in 2025 and would have been within our Analyst Day target range, if not for the extension of Colonsay, which carries higher costs. At Mosaic Fertilizantes, blended rock cost per tonne reached $97, the lowest level since 2021. We achieved our $150 million cost savings objective ahead of schedule in 2025.
As we enter the new year, we are advancing a broad set of technology-enabled initiatives to drive the next wave of efficiencies from optimizing supply chains in North America and Brazil to improving how we manage contracts and vendors to enhancing productivity. These efforts have positioned us to deliver another $100 million in savings in 2026.
Our other strategic pillars are leveraging our market access and redefining our growth. And here, too, we have made important strides. In 2025, we expanded our Brazil distribution capacity with the completion of a 1 million tonne blending facility in Palmeirante in the fast-growing agriculture region in Northern Brazil. The facility positions us to better serve customers in the area and to meet rising demand as credit conditions normalize.
One of our most promising growth stories is Mosaic Biosciences. Our global market access, the strength of our brand and our long-term customer relationships provide significant strategic advantages for us. We launched five new products in 2025 and expanded commercialization in the Americas, China and India. Mosaic Biosciences is capitalizing on previous investments in R&D by expanding registrations of current products to our core markets and new geographies, now reaching 60-plus registrations and selling into 16 countries. The business consistently delivers stable gross margins in the 40s and future product launches should provide a pathway to higher margins over time.
In 2025, Mosaic Biosciences doubled net sales to $68 million. Looking ahead to 2026, our expectation of continued adoption across our current portfolio, along with 8 to 10 anticipated new product launches positions us to achieve another year of doubling net sales. Mosaic Biosciences is delivering on the promise we saw from the start. It has become a truly scalable growth platform.
The final element of our strategy is reallocating capital in pursuit of stronger returns. We continue to reshape our portfolio and strengthen our financial foundation last year. On the capital reallocation front, the transactions announced in 2025, including Carlsbad, are expected to generate approximately $170 million in proceeds over time and also allow for a reduction of $60 million in asset retirement obligations. More importantly, we will avoid significant capital expenditures that these assets would have required. While the proceeds from the transactions announced last year are modest, this continues the process that began three years ago and has already generated significant value. As an example, our position in Ma'aden equity is currently valued at about $2.1 billion.
Looking ahead to 2026, we expect progress on multiple fronts. We're pursuing strategic alternatives for selected Brazilian assets, including unlocking incremental value from co-products, niobium and other critical minerals. We also expect to generate value through monetization of some of our Florida land holdings.
A note on capital expenditures. We expect CapEx in 2026 to come in around $1.5 billion, higher than 2025 due to mine, gyp stack and clay settling area expansions in Florida. At the same time, cash spending on asset retirement obligations and environmental reserves are expected to decline by roughly $50 million, partially offsetting the increase as much of our closure work, particularly at Plant City is complete. Looking further ahead, we continue to expect capital expenditures to trend down, reaching approximately $1 billion by 2030, with ARO and environmental reserve cash spending also declining to about $200 million by 2030.
Now I'll turn the call over to Luciano. Luciano?
Thank you, Bruce. Good morning, everyone. 2025 was a challenging year for Mosaic from a cash flow perspective. Inventory builds in both finished products and raw materials weighted on cash flow for much of the year and intensified as demand weakened significantly in the fourth quarter. The impact was significant. Working capital reduced cash flow by $960 million for the year and contributed to an $829 million increase in net debt. The buildup in working capital changed our plans for the balance sheet. In November 2025, we successfully raised $900 million through three-year and five-year notes. While the original intent was to refinance a portion of the 2027 maturity, the fourth quarter demand downturn and the resulting increase in debt led us to reassess and to redirect the proceeds towards retiring short-term commercial paper. Our next maturity isn't until the end of 2027, and we continue to monitor markets for opportunity.
Looking forward, how do we see '26 cash flows, debt and shareholder returns. In the near term, cash flow remains constrained by lower EBITDA. a result of the sharp increase in sulfur prices since December. Phosphate stripping margins are under pressure. Every $10 increase in sulfur prices adds approximately $10 million of quarterly expense. Compared with the prior year first quarter, we thus expect a roughly $250 million headwind to Q1 '26 EBITDA. This margin pressure also led us to idle Araxa and Fospar in Brazil until further notice. And given the uncertainty surrounding our production plans in Brazil, we're not providing full year 2026 Mosaic Fertilizantes sales volumes guidance. But we expect cash flow to improve progressively as the year unfolds. We expect our own phosphate production to improve, supporting better fixed cost absorption and higher profitability on incremental volumes. Phosphate prices are rebounding from recent lows in Brazil, and working capital release is expected to drive a significant cash flow uplift this year.
On working capital, we exited 2025 with about 240,000 tonnes of excess inventory in phosphates versus the prior year. At current inventory values, this represents roughly $140 million of potential working capital release over the next few quarters from demand recovery alone. While the typical seasonal inventory build in Mosaic Fertilizantes will offset part of this capital release in the first quarter, it will set up a more pronounced working capital benefit in the second and third quarters. But beyond demand recovery, higher phosphate production provides another source of working capital release as we currently hold excess phosphate rock and stockpiles. In addition, movements in sulfur and ammonia could provide some relief. And taken together, we believe a $300 million to $500 million working capital release is highly possible, supporting meaningfully higher cash flow generation in 2026. EBITDA to cash flow from operations conversion rate reached a low point in the mid-30s range in 2025 versus a more normalized level of 70%. As working capital unwinds, we expect a meaningful improvement in this conversion rate.
Now how should we think about capital allocation in 2026? We will continue to invest in our business. Capital expenditures are expected to be higher in 2026 than in 2025, driven primarily by required investment in new gyp stacks at multiple sites. The positive offset, though, is that asset retirement obligations and environmental reserve spending is expected to trend down.
Taken together, as Bruce mentioned, total cash outlays for CapEx, ARO and environmental reserves are expected to be modestly higher than the prior year. This is a way of thinking that we suggest you to adopt going forward as ARO and environmental reserve spending will trend down for the next few years. We continue to see opportunities to reduce CapEx towards $1 billion by the end of the decade with ARO and environmental reserves steadily edging down to approximately $200 million. Overall, we expect to generate free cash flow after CapEx and other cash spend above the minimum dividend in 2026. This will allow us to prioritize debt reduction and subsequently pave the way to resume extraordinary returns to shareholders.
I'll stop here and turn the call back to the operator for questions and answers.
[Operator Instructions] And today's first question comes from Duffy Fisher at Goldman Sachs.
2. Question Answer
First question is just on phosphate or DAP. Can you triangulate what you're thinking? I mean, obviously, Q4, you're telling us that pricing was too high and farmers kind of balked at that. Pricing has come down now, but so have your margins pretty significantly in a relatively tight market, you'd argue you should be able to get margin expansion. So do you think you'll be able to price for that higher sulfur as we go through this planting season? And if you do, do you think farmers will actually buy? Or will they forgo DAP applications this year? Or do you think they just pushed it to the spring?
Duffy, thanks for the question. So, on DAP, definitely recognize that affordability for the farmers is still challenged, although better. And I say we see that improving in 2026 versus 2025, just given the dynamics on the ag commodity side. But to your point about pass-through on sulfur price, I don't know that we'll be able to pass through as much as maybe historically in a tight market given the affordability issues. But we do see, at least for us, anything above a stripping margin above $300, we still see very constructive being in the middle of the cost curve. And that's kind of how we're looking at that. So it will be interesting to watch what happens to sulfur coming out of Q1. We do see things looking to improve. I don't think that sulfur will revert back to some three-year-old, two-year-old number with a one handle or two handle on it. But we do see sulfur getting better, which should help on stripping margins.
And then in addition to how we're thinking about that is that the more we push on getting to our full capacity on phosphate fertilizer production, it's just going to continue to expand with that fixed cost absorption, our margin to insulate us even more from some of the uncontrollables on the raw material side. So, farmer affordability, I think, is going to cover it. How much we can pass through, there probably is a limit. But we've got still a lot of room to go before we feel a lot of pressure on margin -- stripping margin standpoint for profitability around phosphate.
I don't know, Jenny, any comments to it?
Yes. I probably just want to add one point, Bruce. DAP price in North America, especially in the U.S. market has been pretty stable, and that is basically impacted by the farm affordability issues very acute in the U.S. market. If you look at the international market, we see very different dynamics. And you have major DAP consuming countries between China and India. And these two countries, the government basically subsidized their farmers. Therefore, we are seeing the price increases over the last five weeks for DAP in the international market. In fact, today, international market price for DAP netback is actually at higher -- at a premium than the NOLA price. So I understand the concerns on affordability. This is probably more severe in the U.S. market than the rest of the world.
Yes. I think that's a great point, Jenny, for everyone is the international market is a little bit disconnected from an affordability and constructiveness standpoint than maybe just the U.S. which is great given our distribution access, we will pivot as necessary to take advantage of that.
And our next question today comes from Chris Parkinson of Wolfe Research.
Bruce, when we take a step back and we just look at 2026 versus your Capital Markets Day expectations in terms of turnarounds, can you just kind of give us a walk-through of the phosphate production or asset portfolio, where we were, where we kind of were trending towards the end of the fourth quarter and where you expect to be in '26. You're back down to $112 in terms of conversion costs. How should we think about that as it relates to your greater than 7 million tonne production guidance for '26?
Yes, Chris, thanks for the question. I think our guide is based on -- and we talked about this the last quarter, kind of trailing demonstrated. But by no means does that mean that is where the status is going forward. So I can see where there's some disconnect and confusion, and Chris, and I'm happy to try to give you some color.
So, in fourth quarter -- well, first, let me back up. To get to kind of the 8 million tonne rate, you need an operating factor of 80 -- low 80s, 81% of our overall fertilizer assets in North America. We were there in Bartow for much of 2025. We got there in Louisiana in the fourth quarter. We were in the mid-70s at Riverview in the fourth quarter. New Wales was a little behind with some issues that they were facing, still working through some operating consistency.
As we've moved into -- so good quarter, saw improvements, particularly on P2O5 production from quarter 3 to quarter 4, and we're continuing to see that going into quarter 1. Bartow continues to run at its plus 80% operating factor. Louisiana is running also at that 80% threshold. Riverview is also approaching that 80%. So when you look at those three facilities in aggregate, kind of already at kind of that 80% operating factor, and we're seeing more and more days strung together at all facilities where they're at or above kind of that ultimate aspiration that we want to get back to.
New Wales is in a turnaround as we speak. And we expect as they come out of turnaround into quarter 2 that they will be approaching that 80%. And again, New Wales is our biggest facility at 3 million tonnes of granular capacity. So we expect in the first half of the year to get through some of these turnarounds. Bartow has no more turnarounds for the year. New Wales will get through this major turnaround. Riverview has a turnaround in second quarter of this year. We expect even coming out of that turnaround to be better than they have been. So we're feeling very optimistic about production in the back half of the year. Hence, we said 7 plus, 7 is kind of where we've been over the last two quarters, but we see some upside, Chris, to your point.
Luciano has got something to say.
Yes. May I comment on the cost side. The $112 per tonne in phosphates is where it should be given the current production volumes. The $131 of Q3 was actually very abnormal because of lots of repairs done outside of turnarounds. And the rule of thumb is every 100,000 tonnes per quarter should represent kind of a $7 to $8 decline through cost absorption on this $112. So therefore, if the path from 1.7 to 2.0 would imply kind of between $20 and $25 per tonne decline over current levels of phosphate conversion costs.
Yes. So, Chris, we remain confident in our ultimate objective we talked about in Analyst Day, both on volume and cost to Luciano's point, getting below $100 conversion cost. And then we're continuing to focus on some of the last things of talent and training, discipline around our operations management system, better asset predictive maintenance and analytics, which continue to take us kind of to that next frontier.
And our next question today comes from Jeff Zekauskas with JPMorgan.
I can see where your capital expenditures comes through your cash flow statement. Where does your ARO and environmental reserves cash spend come through? Is that part of operations? Or is that a capital cost, the $400 million in cash spend you talked about $408 million?
Thanks, Jeff. I'm just going to put this over right to Luciano. He's got that.
Jeff, it actually is spread around a few lines. There's a little bit that comes through -- it all comes through the operational part of cash flows, nothing on the capital expenditures, but it's in between a few lines. You have accrued liabilities. For example, the current portion of ARO, when you spend on that, you decline accrued liabilities. You have a little bit on the net income line itself, the part of -- that offsets the accretion expenses. So it's a little complicated, but it's in the operational part of the cash flow statement.
And our next question today comes from Vincent Andrews at Morgan Stanley.
Just to follow up on the CapEx, maybe the inventory a little bit. I think the Street had CapEx coming down about $300 million from '25 to '26. So I know you called out why it's going up. But could you talk about sort of what changed and what triggered the need to do this in '26 and your confidence that this will not leak into '27 and beyond?
And then secondarily, you called out on the inventory line that you have excess phosphate rock inventory. So I'd just be curious if you could help us understand, is that because you thought you were going to produce more last year. So you bought excess rock where you thought rock prices were going to go up, so you bought ahead of that increase. Just trying to understand how you're going to work that number down.
Vincent, no, thanks for the question. On CapEx, as Luciano and I talked about, we had an interesting confluence this year of a number of waste disposal projects in gyp stacks and clay settling areas and tailings dam in Brazil as well that have all kind of hit from a timing standpoint at the same time. That is unusual. But I would tell you that the $1.5 billion that we've said is, I would say, is really the ceiling. We probably see that as a worst-case outcome and actually have some upside to that.
But just to give you an example, you don't know exactly how much a gyp stack, for example, is going to cost until you do some of the ground survey work. And then you find that out and have to tweak the estimates. So those are type of things that happen. It's just clarification of what those waste costs are and then the timing of those given the exhaustion of existing capacity. So we have a gypsum stack at New Wales, a gypsum stack at Bartow, a gypsum stack in Louisiana, all happening in 2026. We have a tailings dam at Tapira, and then we have two clay settling areas, one winding down and another one being built at Four Corners.
The good news is, is once you get beyond these, and that's why we have confidence that this number will come down in time, you don't build another gyp stack for another 4, 6, 8, even 16 years depending on the facility. And then clay settling areas last anywhere from two to five years. So these are lumpy when they do come through. It's unfortunate that they've all lined up together. It's not by choice, it's by necessity. And then once we're through this, we're very confident that the tail down to $1 billion towards the end of the decade is definitely possible.
On the rock side, just a little bit, we don't buy rock on the external market like maybe other nonintegrated producers do. Our production of rock, I'm not going to say it's decoupled from the consumption, but there are largely two processes and then you manage rock production, rock inventory because we have millions of tonnes of available storage for rock inventory to kind of manage through the near term, the next two to three years. But given that production on the fertilizer side, with all the work that went into asset reliability in the first half and into the second half of the year, actually, we didn't consume as much. We built some of that rock inventory. But as I just talked about with two questions ago, we're seeing very good run rates. We'll start to more balance that out and actually start to reduce that rock inventory as we pull through more of that into finished goods.
Luciano, do you want to add something?
There's a slide on the presentation that shows a $346 million increase in raw materials. That includes both sulfur ammonia and also the rock inventories work in process. And it's about half and half the increase. So the potential is with increased production rates to release that roughly $170 million, $180 million of excess rock inventory.
And the other thing that inventory allows us to do on the rock side, particularly in Florida, is as we move into new areas, which we're going through a major area relocation right now at South Fort Meade, it gives us even some buffer to make sure that we don't run out of rock or the ability to blend our rock for consistency to our acid facilities. So it serves that purpose as well, Vincent.
And our next question today comes from Lucas Beaumont with UBS.
Just going to [ Fertilizantes ]. I just wanted to kind of ask about the volume outlook there. So you guys talked about the continued kind of challenges on the credit issues in Brazil and that your first quarter volumes are going to be down year-on-year. So if we assume that means maybe sort of 1.7 million tonnes or so and then your phosphate production is curtailed at least through sort of the first half with the cost challenges there. I mean that probably gets us to something flattish around 9 million tonnes for the year again. So, I mean, last year, coming into the year, you guys were sort of looking at 10 million to 10.8 million tonnes in volumes. You've added the capacity there. So you clearly have room to grow. So, I guess, could you just kind of help us frame how should we think about the volume outlook there for 2026? And then how we should sort of see your leverage to the upside to grow going forward?
Yes, Lucas, I appreciate the question. I'm going to ask Jenny to talk a little bit about the market side of Brazil. But we are still very much a believer in being in Brazil. As we've talked about before, we've been there for well over two decades and know how to navigate in that environment. The credit issues that are being faced in Brazil have caused headwinds to the type of market capture that we were hoping for when we put those 10.8 kind of million tonne numbers out there to not take risk in what you see maybe with some of our competitors have experienced, we have not had as much problems there. So we've taken a more conservative approach, but we do have as you've said, that kind of buffer to grow as the market rebounds and more stabilizes, not only in our existing facilities, but to your point, our new Palmeirante facility as well.
So, Jenny, maybe you want to talk about how the market looks in '26 and then even beyond.
Sure. Thanks. The market has been, as everyone knows, challenged by the high interest rate and the credit issues. We have really seen some major shift in the industry, both at the retailer side and also at the farmer side. The number of the filing of Chapter 11, the U.S. equivalent of Chapter 11 cases have increased over the last two years. The positive part of those challenges are the consolidations started to happen as well, both at the retailer side and also at the grower side.
For 2026, we foresee this is going to be a challenging year as we go through this process. Therefore, if you think about the overall fertilizer shipment in the country, we may see some uncertainties, which, a, related to the farm economics and affordability; b, probably also related to the supply availability, especially on phosphate with the restriction of the Chinese export. So overall market is likely going to be flat and our own distribution volume, we will make a prudent decision on how much we want to sell, which customers we want to sell. We are not going to take credit risk, and we're not going to compete in the market where the business quality is not really good.
Lastly, I would say, last year was a significant application of low-quality phosphate and key products out of China. And we have started to see the official report on the yield impact. And if there's any further under application of fertilizer in the current crop year, the ongoing safrinha corn or the coming sur season, the Brazilian farmers will have a very clear decision to make on what application rate they need to manage. So, in midterm, we are very optimistic to this market. Brazil is growing, it's expanding and yield is very important for the farmers. But before the market turned high, we need to manage through this process, especially in this year.
Lucas, I'm going to ask Luciano to talk a little bit on the cost side and the resiliency of kind of Fertilizantes from an interesting perspective. But no doubt, the raw material prices have provided some headwinds in that business, and we've made some moves. We're going to watch that closely before we decide on what to do next for maximizing shareholder value. And a lot of that depends on what happens with sulfur price and what happens with fertilizer price. And probably, hence, why we didn't guide in this regard is there's a lot to unfold in the next, say, month to 3 months for us to watch to get more comfortable on how things are going to come out.
But regardless of that, I think it's worth Luciano talking about kind of the financial performance of that business.
Yes, there has been some reactions notes with some disappointment about the performance of design in the fourth quarter. But I'd like to offer a different perspective. So because of high sulfur prices, we actually curtailed production. We removed 30% of our SSP production in Brazil. We also put our major site in turnaround, which was Uberaba. We anticipated a turnaround. We're not expecting. So it became stopped for -- so we produced significantly less. Our distribution margins because of the credit issues, they narrowed quite significantly. Sales dropped precipitously at the end of the quarter.
And with all of that, still the business generated almost $50 million on EBITDA. And so that would be, I would say, a phenomenal performance for the set of circumstances that we faced and that we actually decided to impose to the business in the fourth quarter. So the platform is there. And as soon as the market conditions improve, you're going to see results rebounding pretty quickly.
And our next question comes from Andrew Wong at RBC Capital Markets.
I just had a couple of questions on the U.S. First, on the phosphate demand, it's been down pretty significantly for the past four years, but yields, the crop yields have still been pretty strong. So what should we take away from that dynamic? Are the just extremely, extremely depleted? Have farmers just been really efficient with applications?
And then secondly, on the U.S. countervailing duties, I think that's up for review this year. Can you just go over that process? And how does the current high-priced phosphate market affect that review?
Thanks, Andrew, for your question. Let me start with your latter one, and then I'm going to turn it over to Jenny to talk about the lower phosphate in North America and any yield impacts or response to answer the first part of your question.
On the countervailing duties, there really is no correlation to that on the process itself. But this process this year enters into its sunset review, which will kick off in April. And we're evaluating our needs to participate in that process as we speak. So a lot more to come there. And just to remind, as that process unfolds, duties do stay in place until an ultimate decision is made on the countervailing duties from the sunset review.
I'll turn that over to Jenny now to talk about yields in North America.
Sure, Andrew. We just want to remind ourselves on the shipment of phosphate in North America. Basically, the changes is really in the U.S. market. That was down to below 9 million tonnes in 2022, recovered in '23 to 10 million tonnes, '24, 10 million tonnes. And then we see a major drop last year, 8.5 million tonnes. So whether we should see yield impact, it is going to come in from the coming season, the current season. So, last year, the drop of this 14%, 15% of shipment of phosphate in the North American market, majority of them happened in fall application, meaning that is the tonnes go to the field in this spring for the spring crop. So the yield impact likely going to -- if there are major impact, it is likely going to be the current crop, the crop going to be going into the field.
I would also see, say, the precision ag has made a lot of farmers make their decisions on cutting rate in the same time, looking for products that they are able to improve the use efficiency where that is the biologicals coming in play. Biologicals like our PowerCoat and BioPath, are not able to increase the supply of phosphorus. But in the time in one year or two, when the rate is not going to be applied as high as normally they do, the efficiency effect will come into play. So, in short, whether we will see a yield impact in North America in the U.S., like we see in Brazil, it is going to be this crop, we will watch.
Our next question today comes from [ Evan McCall ] at BMO Capital Markets.
Evan McCall on for Joel Jackson. Just wondering what changed with this 2 million per tonne -- 2 million per quarter phosphate. That was the expectation for now a year later at the end of the year targeting 1.7 to 1.8.
Evan, this is the operator. I apologize [indiscernible]
Sorry, we did not understand the question, it was pretty garbled. I don't know if it's your connection or where you are. If you want to -- I don't know, drop and try to get back in.
Okay.
[indiscernible] your question now, sir?
Yes. Sorry about that. Just wondering what changed with the 2 million per tonne -- sorry, 2 million per quarter in phosphate and now the expectation is a bit lower at 1.7 million to 1.8 million tonnes a quarter. Is that just the turnaround in the first half and you'd expect to be higher after that? Or what are your thoughts on that?
Yes. No, we -- as we've talked about in, I think, prior quarters where we started, our guide is going to be on actually demonstrated prior trailing three months, which means that there's likely upside to the numbers, Evan. But until we see them, we're just being more cautious on that as we probably got ahead of our skis in the past.
So, by no means have we lost confidence. And I think, hopefully, the proof points that I gave earlier to, I think, the second question on where we are from an operating factor alludes to the progress that we are making and the confidence that we have in ultimately getting to that full utilization to hit 8 million tonnes.
And our next question today comes from Kristen Owen at Oppenheimer.
Two brief ones for me. First is on mix. Just given some of the netback comments that you made, Jenny, can you help us in terms of how you're thinking about product mix and geographic mix in 2026? And then my second question just relates to the working capital. Can you give us a sense of how much of that working capital is tied up in Brazil?
Thanks, Kristen. I'll start with the working capital one and maybe turn it over to Luciano to give you a little more color on that one.
Okay. So we're thinking about a release of $300 million to $500 million through a combination of factors through some release of rock inventories, the sales above production in the faucet business, Brazil as well, which ended up with slowed down sales at the end of the quarter. And therefore, we had to pay a lot of accounts payable for purchased nutrients that we didn't repurchase. So that dragged down working capital as well. So all these factors with normalization of demand should -- and production should come down. And our estimate is $300 million to $500 million of contribution for cash flow this year.
And then, Kristen, on product mix and geographic mix, I'm just going to turn it over to Jenny to give you the latest thoughts on that.
Kristen, I think your question probably more towards to phosphate. Usually, our phosphate production goes around 55% to 60% stay in North America and the rest for the export market. This year, we are going to watch the market trend and demand very closely, especially in the U.S. market. I wouldn't be surprised to see increased sales of phosphate to the international market and the less percentage in North America. It is really market demand driven.
And I think, Kristen, what's driving that to Jenny's point, is how disciplined China stays to their export constraints. If it goes beyond the first half of the year, there may be even more opportunities on the international side. But we are getting reach out from customers who are traditionally may be served more by the Chinese export market looking for tonnes.
And I think it's important to understand that from our view anyway, that the phosphate market is a supply-constrained market. So, people are out there, particularly in India, Southeast Asia, looking for tonnes that would otherwise more traditionally have been supplied through China. And given their discipline and policy announcements, there could be meaningful reduction again this year on exports available from China.
And one of the reasons why the corporate segment is actually improving performance is because of our sales through China and India, which are accounted for in that segment. So there's increased contribution, EBITDA contribution, but within the corporate segment, which is the negative amount is declining.
Our next question today comes from Benjamin Theurer with Barclays.
This is Rahi on for Ben. So just a couple of questions. From the $300 per tonne in sulfur cost in your cost of goods sold in 4Q and the benchmark levels hitting about $500 in late last quarter, is it reasonable to assume some average around $400 per metric ton for sulfur cost in 1Q? Or would this boost automatically, you think already in 1Q to $500 per metric ton for sulfur?
And then also for Fertilizantes, is the $50 million EBITDA the go forward per quarter if production stays curtailed?
Thanks for your question. Let's start with your first one, sulfur. I'll probably ask Jenny to weigh in on this as well. But that sulfur price, as you've well noted, does flow through inventory. We do see in our current forecast, but more to come through that sulfur will moderate in price as the year goes on. But sulfur and COGS through quarter 1 to quarter 2 may actually increase as that higher cost sulfur that we negotiated in quarter 1 flows through inventory. Jenny, anything to add to that?
And then on the second part of the question, what was the second part? I'll turn it over to Luciano. Sorry. $50 million is not -- I mean there's a lot of factors that go into quarter-by-quarter EBITDA. One is product mix. Seasonally, quarter 4, quarter 1 are always kind of low just given product mix, more nitrogen products and volume less on -- lower volume, less on our performance products like Mosaic Fertilizantes, which pull through a margin premium as an example. So there's a lot of things that depend on that. But $50 million is not the new normal.
Yes, it's definitely going to be better than that, first and foremost, because Uberaba coming back and normalizing its level of production will uplift this. And we should expand our distribution margins as well. So we should expect a much higher EBITDA on a quarterly basis going forward. The wildcard is continued to be Araxa, which right now is idle. And currently, the expenditures are hitting -- although we are saving on CapEx and other things, the expenditures are continuing to hit EBITDA at a rate of around $10 million per month. But yes, but still with that, performance should improve.
Our next question today comes from Edlain Rodriguez with Mizuho.
I mean this is a question for Jenny. So we saw the demand deferral or destruction in phosphates in Q4. Like are you surprised that farmers took a holiday in phosphate, but not on potash, especially given the two mineral fertilizers tend to be applied in tandem.
Yes. Go ahead, Jenny.
Yes. I guess your question is probably more referred to U.S.
Yes.
Am I surprised to the demand destruction on phosphate? I would say when we had this earnings call back in October for Q4, we did mention there were some uncertainties on the demand in Q4 on both phosphate and potash. One is related to when the U.S. government payment is going to be made. And the second part is really weather. Eventually, the weather didn't really come through that basically cut off some of the applications, which could have been in November and December. The demand destruction on phosphate are far greater than potash big part of the reason is potash affordability. The price are much more affordable than phosphate and nitrogen.
Last question that you asked, that was a very interesting one because I thought the same. The U.S. farmers, they wouldn't go to the field only put down potash without getting nitrogen and phosphate in and indeed happened in December and in November. Some of the farmers, they basically -- they decided to wait until phosphate price getting reset, which, of course, we all know it is unlikely going to happen given the tight supply situation. But yes, indeed, there are farmers, they went to the field for potash application without phosphate. It is not very common.
Our next question today comes from David Symonds at BNP Paribas.
Just a couple of modeling ones left. So you mentioned that Faustina will be 50% more available in 2026 than it was in '25. I don't know how low we got in 2025, but can you just confirm if you did 7 million tonnes of phosphate production, how much of that is -- or how much of your ammonia requirement is served by Faustina in 2026?
And then the second one, I'm not totally clear how you accounted for the increased value of your sulfur inventory. So could you just tell me, was there an inventory gain in your EBITDA, in your adjusted EBITDA in the phosphate business for the increase in the sulfur value?
Yes. On the ammonia one, just to confirm, David, we will -- given the turnaround we just did in quarter 4, and the upgrades that we've made at that facility. We expect 50% -- up to 50% more production out of that facility going into 2026 now that it's up and running. That will consume a larger percentage of our portfolio as consumed -- as produced ammonia. And that is going to be 35% to 40% of the portfolio versus much less than that, which we would have been exposed to market on.
So the biggest component still remains kind of our strategic contracts, which are cost-based-ish. Then we've got 35% to 40% at times, maybe a little bit more from Faustina. Not only will Faustina consume its own ammonia fully, we'll have enough to ship into the Florida system. And then we'll be much less exposed with the remainder to spot.
David, so there's absolutely no revaluation of inventory. There are no gains recorded on the EBITDA. The reason why prices affect inventory is mostly in Brazil because in Brazil, you have purchased nutrients. So if prices go up, you need to pay higher prices, and therefore, your inventory is recorded at a higher value. But in North America, which is everything is produced, inventory is recorded at cost of production and is not revalued, and there's no gain or loss.
And our final question today comes from Mike Sison with Wells Fargo.
Just one quick one. You all said there was a $250 headwind in the first quarter given where stripping margins are at. If on Slide 14, the February '26 metrics don't change, is that a similar headwind for the rest of the quarters? And I understand sulfur is supposed to come down, hopefully. And any sensitivity on how that $250 goes away and what the important variables are as the year unfolds?
Yes. Thanks, Mike. Obviously, if sulfur price persists at that level, the component of margin erosion or to the stripping margin erosion for that sulfur would play would stay constant. We also see ammonia prices coming down throughout '26 as well. So there is some offset to that. And then ultimately depends on what we talked about earlier in the call is how much can be passed through on price and what ultimately happens with price to the realization on stripping margin.
The other benefit that we will see is we'll see better -- from '25 to '26, better turnaround and idle cost. And we'll also see, as production improves, better fixed cost absorption on conversion cost that will buffer out some of that time. So not all is static. There's a lot of moving parts, but those are the variables -- the key variables that go into that.
Luciano, anything else to add?
Yes. So realized stripping margins in the fourth quarter were $444 per tonne. And so if you correct for the current sulfur prices compared to the $306 that was recorded in the fourth quarter, you would have somehow $400 per tonne of stripping margins. And so what would be the impact to the bottom line? So just to give you an example, today, at $444, the EBITDA margin per tonne was $108. That per se suggests if you just take $444 less $108 that $330 would have been the breakeven point at Q4. However, there's about a $50 penalty just because of turnaround expenses and other SG&A expenses divided by a very small sales volume.
So I would say these two lines are kind of $50 above what they should be. So that puts us at $280 breakeven. And if you add the cost dilution that we expect in going for 8 million tonnes, like we should be around $250 per tonne of 3P margin breakeven. So in a normalized world at a $400 3P margin, we should be making $150 per tonne approximately. Just a ballpark for you to reason around the phosphate performance.
That concludes our question-and-answer session. I'd like to turn the conference back over to Bruce Bodine for any closing remarks.
Thank you, everyone, for joining us. To conclude our call, I'd like to reiterate our key messages for today. Clearly, the second half of 2025 was challenging for Mosaic and the agriculture business, especially in the U.S. We saw demand drop significantly as farmers dealt with tough economics and uncertainty around government payments. That said, our outlook for 2026 is positive, in part because demand is emerging in the U.S. and remains strong in other key areas of the world, but also because of the progress we've made to strengthen Mosaic. We're on track to improve phosphate production, and we expect a strong year for potash production. We've made good progress on cost and efficiency, and we expect further strides this year. Our Mosaic Biosciences platform is growing quickly and holds meaningful promise for the future. And our capital allocation program continues to produce results with several divestitures of noncore assets in 2025.
So, overall, Mosaic is well positioned to weather the storm and deliver strong earnings as business conditions improve. Thank you very much, and have a safe day.
Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines, and have a wonderful day.
The Mosaic — Q4 2025 Earnings Call
The Mosaic — Q4 2025 Earnings Call
📊 Quarter at a Glance
- Phosphate 7.0M t target for 2026; Q4 2025 run-rate was 1.7M t as turnarounds progress.
- Potash ~9.0M t planned for 2026; 2025 ran at near-record international volumes.
- CapEx guidance around $1.5B in 2026, higher than 2025 due to mine, gyp stack and environmental projects.
- WC/FCF potential working-capital release of about $300–$500M in 2026 to lift cash flow.
- Sulfur headwind ~$250M EBITDA impact in Q1 2026 from elevated sulfur prices.
🎯 What Management Says
- Production recovery: phosphate and potash are back on the path to higher utilization; Biosciences expanding with more registrations and launches.
- Cost discipline: $150M in annual savings achieved; another ~$100M of savings targeted for 2026 via tech-enabled efficiencies and better cost absorption.
- Capital reallocation: noncore asset divestitures (Patos de Minas, Taquari; Carlsbad pending) to free capital and reduce retirement obligations; assets redeployed to higher-return opportunities.
🔭 Outlook & Guidance
- Free cash flow expected to improve in 2026 as working capital unwinds; $300–$500M potential release supports higher cash flow.
- Capex profile approx. $1.5B in 2026; environment reserves and asset retirement costs trend down over time, with CapEx moderating toward ~$1B by 2030.
- Risks: sulfur price volatility and U.S./China export dynamics could pressure margins; management sees better cost absorption as volumes recover.
❓ Analyst Q&A
- Sulfur & margins: pass-through limited by farmer affordability; margins improve as production fixes and fixed-cost absorption kick in, with sulfur still a key swing factor in early 2026.
- Brazil & volumes: Brazil remains a headwind from credit conditions; Palmeirante expansion supports future growth, but near-term volumes in Fertilizantes may be flat to down.
- U.S. phosphate policy: countervailing duties sunset review proceeding; process is separate from pricing dynamics and will influence longer-term market access.
⚡ Bottom Line
Mosaic is navigating a difficult 2025 with a clearer path to 2026: production improvements, stronger cost discipline, and a growing Mosaic Biosciences platform support a rebound in earnings and cash flow. Portfolio actions, divestitures, and a targeted CapEx plan aim to free up capital for debt reduction and shareholder returns, though near-term sulfur cost and Brazil credit headwinds remain key watch points.
The Mosaic — Q3 2025 Earnings Call
1. Management Discussion
Good morning, and welcome to The Mosaic Company's Third Quarter 2025 Earnings Conference Call. [Operator Instructions]
And now I'll turn the call over to Jason Tremblay. Please go ahead.
Thank you, and welcome to our third quarter 2025 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer; Jenny Wang, Executive Vice President, Commercial, will then cover the market update; and Luciano Siani Pires, Executive Vice President and Chief Financial Officer, will review financial results and capital allocation progress. We will then open the floor for questions.
We will be making forward-looking statements during this conference call. The statements include, but are not limited to statements about future financial and operating results. They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in our press release published yesterday and in our reports filed with the Securities and Exchange Commission.
We will also be presenting certain non-GAAP financial measures. Our press release and performance data also contain important information on these non-GAAP measures.
Now I'd like to turn the call over to Bruce.
Good morning. Thank you for joining our call. Mosaic's third quarter results reflect the resilience and strength of our global business as well as the extraordinary work our teams are delivering to help us operate effectively in a highly dynamic market and geopolitical environment. We've demonstrated the ability to shift tonnes to regions with the strongest demand and capture value across agricultural and industrial markets, and we are navigating near-term fertilizer affordability issues while looking ahead to positive structural market trends.
We remain focused on achieving reliable and consistent production from our assets, leveraging our market access advantage and executing our capital reallocation strategy, all in the service of creating shareholder value.
Let me begin with our key messages for the quarter. First, we've made major investments in asset health, and we are seeing improving reliability. U.S. phosphate production has improved sequentially throughout the year and we remain focused on driving consistent performance across our phosphate assets. Second, our business in Brazil continues to deliver excellent performance. Adjusted EBITDA increased year-over-year, and we are managing well despite a challenging credit environment.
Third, global potash demand remains very strong, especially in the Eastern Hemisphere, and we are running near record operating rates to meet that demand and capture value. Fourth, cost discipline remains a priority. We've achieved $150 million in initial cost savings and are on track to achieve our revised $250 million cost savings target by the end of 2026, driven by automation, supply chain optimization and improved fixed cost absorption as production increases.
And finally, we remain committed to disciplined capital allocation. Recent divestments, including the Taquari potash mine and the Patos de Minas asset reflect our commitment to streamlining the portfolio and redeploying capital toward higher return opportunities.
To cover our third quarter results, net income for the third quarter increased to $411 million versus $122 million in the prior year. While adjusted EBITDA in the third quarter rose to $806 million from $448 million a year ago, driven by higher prices across all segments and very strong performance in Mosaic Fertilizantes.
Let's look briefly at market dynamics. I'll leave the details to Jenny. Phosphate markets remain tight as global supply constraints persist. Key long-term drivers remain intact, including continued growth in LFP battery demand, rising domestic fertilizer demand in China which is likely to further erode exports and limited new capacity additions over the next few years. Despite coming off recent highs, phosphate prices remain elevated and affordability pressure remains a concern.
We've seen growers in the U.S. and Brazil cautiously approach seasonal buying, which has moderated prices and impacted the timing of sales volumes. The challenging farm credit situation in Brazil continues to exacerbate this trend. In India, strong shipments in 2025 have largely recovered back closer to historical norms, but we still see a need for substantial replenishment after multiple years of tight supply and under application.
Potash markets are balanced as good affordability drives demand around the world, particularly in China and Southeast Asia. Potash and phosphate demand should benefit from the strong yields U.S. and Brazilian farmers have generated this year. We expect big crops in North America and Brazil to remove an additional 1.5 million tonnes of potash and similar amount of phosphate from the soil compared to last year. Growers will need to replenish these nutrients to avoid lower yields next year.
For Mosaic, the focus on U.S. phosphate asset health is allowing us to run more reliably and at increased rates. We have experienced 3 consecutive quarters of production volumes improvement, and volumes for the trailing 3-month period ending October have reached approximately 1.8 million tonnes, which is further improved from the third quarter.
We remain committed to return to previously achieved normalized production rates. Our focus now is on consistent and sustainable performance. In potash, we completed the Esterhazy turnaround in the second quarter, and the new HydroFloat system is delivering incremental tonnes.
The resilience of our Brazil business demonstrates our effective commercial strategy and disciplined risk management, including a focus on sales to customers with strong credit profiles. Our team's deep local expertise and long-standing presence in Brazil have been instrumental in navigating market complexities and maintaining profitable growth.
While we expect the usual seasonally slower fourth quarter, we expect earnings in this year's fourth quarter to be higher than a year ago. Cost initiatives are progressing across the company. Mosaic Fertilizantes continues to generate cost reductions and selling, general and administrative expenses declined year-over-year in the third quarter without the impact of the bad debt expense.
We continue to leverage our market access, which is a key strategic advantage for Mosaic to accelerate growth in Mosaic Biosciences. Revenues for the first 9 months more than doubled year-over-year. We anticipate Mosaic Biosciences will contribute positively to consolidated adjusted EBITDA beginning in the fourth quarter. In addition to strong growth in the Americas, the market for biologicals is growing quickly in China, and we expect India to follow. All in all, we are well positioned for a strong finish to 2025 and a promising 2026 and beyond.
Now I'll turn the call over to Jenny for more detail on agriculture and fertilizer markets.
Thank you, Bruce. We continue to navigate a very dynamic global agriculture environment. Commodity values and trade uncertainty have impacted near-term sentiment in North America, but the recent recovery of corn soybean prices should encourage more fertilizer activity, particularly with China now looking to purchase U.S. soybeans and wheat. Any additional direct government help to farmers could provide further support to the market.
In Brazil, growers have had to navigate tighter credit availability and higher interest rate, but have benefited from expanded trade opportunities, particularly with China. Brazilian fertilizer demand is still growing this year and will likely expand again next year as growers replenish soils and expand acreage for upcoming seasons.
Our customers remain engaged and are actively buying fertilizers for the upcoming safrinha core and the 2026 Safra soybean. Ag economics remain more constructive in other parts of the world, and Mosaic has pivoted to active markets. Longer term, we continue to see ag fundamentals as supportive to fertilizer demand, driven by growing demand on food, feed and fuel, which we have seen supportive biofuel legislation around globe.
Moving to the fertilizer market. On phosphate, markets have been very constructive for March of 2025, given robust demand for nutrients, which in turn has supported prices. Prices of phosphate have moderated from recent peaks, but remain elevated, driven by tight global supplies and strong demand. Stripping margins also remain above historical norms. Chinese export of DAP, MAP and TSP are expected to decrease more than 1.5 million tonnes this year, and China has recently pulled back phosphate export approvals.
Like Bruce mentioned, LFP battery demand has continued its growth. In the first 3 quarters, Chinese LFP production has already surpassed the full year production in 2024 and representing over 40% year-over-year growth. While Chinese demand for fertilizer and the industrial phosphate continues to grow, we see limited new capacity expansion in other regions over the medium term.
In the case of potash, markets are balanced after a first half supply deficit. Global demand has been steady and expected to approach another record as affordability has encouraged strong Chinese consumption, healthy Brazilian import and the growing Southeast Asian demand, which is tracking up to 50% higher input in some of the key countries.
Given this persistent global appetite, we expect record Canpotex shipments this year and the further strength heading into 2026. North American potash demand has held relatively consistent this year on healthy affordability and fall application tonnes are moving to the ground as we speak. However, given potash is often applied with phosphate, we may see some modest fall deferral into Q1.
In summary, we are optimistic heading into 2026 as growers look to replenish soils and fulfill any pent-up demand. Long-term food security and the industrial use continue to support a constructive outlook for phosphate markets, particularly absent any significant capacity additions. Potash markets are stable on balanced fundamentals, and we expect demand growth to reach to a new record.
Thank you, Jenny. Let us take a deeper dive into our performance. You will remember that Q2 EBITDA came below expectations due to a number of larger than usual provisions, inventory adjustments, environmental reserves, legal reserves, and also due to a sharp increase in turnaround expenses. We said these effects were going to reverse in Q3, and they did. Q3 was more of a clean quarter, minimal onetime items and a reversal of turnaround expenses from USD 144 million in Q2 to $85 million in Q3. You should expect idle and turnaround expenses to remain at normal levels in Q4.
Despite being a clean quarter, Q3 EBITDA was impacted by lower sales volumes, which reflect a shortfall in phosphate production and an intentional slowdown of sales from Fertilizantes given the credit challenges in Brazil.
Let's address phosphates. On the revenue side, for Q4, we expect phosphate sales to be between 1.7 million to 1.9 million tonnes with risk to the downside due to demand referral. On the cost side, you saw the significant decline in idle and turnaround expenses from $84 million in Q2 to $42 million in Q3 as expected. But we still had a lot of repair work mostly in July, recording into cash conversion costs, which were at $131 per tonne, which is about the same level of $126 per tonne in the second quarter.
The next step is to have a meaningful decline of cash conversion costs in the fourth quarter, given that the asset health and repair work will be normalized and also due to our expectation of higher production and fixed cost absorption. So for phosphates in Q4, higher sales volumes, historically elevated stripping margins and anticipated lower conversion costs should support results.
In Potash, cash production cost per tonne of $71 was down from $75 from Q2 as production volume increased. We expect the fourth quarter unit costs to be similar to Q3 and finish the year at low to mid-70s. If you recall, we guided 2025 unit production costs in the $64 to $69 range on Investor Day earlier this year. Since then, we kept operating at higher cost Colonsay mine for longer than expected and the Canadian dollar has strengthened against the U.S. dollar. If we adjust the Investor Day targets to reflect the current exchange rate, our full year forecast would be on track to hit the targets. Potash continues to be a very stable business in terms of production volumes, costs and capital intensity.
Fertilizantes, our results were driven by 2 opposing forces. On one hand, strong underlying business performance, but on the other hand, a softening market in the near term. EBITDA came in at USD 241 million, above the $200 million that we have guided even after we strip out the $27 million recovery of the bad debt recorded in Q2. That performance was achieved despite distribution margins at about $20 per tonne, which is, again, below our targeted $30 to $40 range as we had to make margin concessions because of the weakening market. The new level of EBITDA generation of Fertilizantes is a testament to the strong cost performance of the business in 2025 despite the strengthening of the Brazilian real.
What do you expect for Q4? Well, we expect an important drop in EBITDA due to a number of factors. Lower prices, still compressed distribution margins, normal for the season, but still compressed, higher raw materials costs, seasonally lower overall sales volumes and product mix. These uncertainties in volumes, prices and margins are very high in the quarter. So EBITDA could be in a wide range. But in any scenario, we still expect it to be above the same quarter prior year. Thanks to the sustained cost improvements.
A few words on cash flows. Cash flow from operations was only USD 229 million for the third quarter because of over $400 million increase in working capital driven by several factors: higher physical inventories of the end products in North America and Brazil due to the slowdown in sales at the end of the quarter, higher prices for such inventories and for raw materials, and the buildup of inventory of phosphate rock to support future production plans.
We expect these effects to partially reverse in Q4, supporting cash flows. But even with that reversal in Q4, if you look at the full year, and we have a slide in the deck for that, working capital will continue to post a large increase. And therefore, 2025 cash flows will be well below what is intrinsic to the business.
In 2026, with raw materials prices stabilizing, phosphate rock inventories being consumed by higher production and the adjustment in inventories in Brazil and North America, cash flow from operations and free cash flow is expected to improve significantly. Therefore, we're prudently deferring any extraordinary dividends or buybacks to 2026.
Finally, a note on noncore asset sales and capital reallocation. You saw Mosaic announcing the completion of the Taquari transaction yesterday. We sold this potash mine in Brazil for USD 27 million. But the transaction is also expected to eliminate capital investments exceeding USD 20 million in the short term. We will avoid significant capital investments to extend life of mine beyond 2030 in the medium term, and we will transfer asset retirement obligations of USD 22 million. So a lot of capital that is not going to be deployed anymore in this asset.
Mosaic also announced the closing of the sales of Patos de Minas idle phosphate mine early October with proceeds of $111 million with $51 million already received. The rest will be collected over 4 years. We have many assets under review and several strategic talks ongoing, and we expect 2026 to be a year when capital reallocation will gather steam.
So in conclusion, we are highly confident in our ability to finish the year on a high note, and we encourage you shareholders to focus on the strong momentum we expect to enter in 2026.
With that, operator, please open the line for questions.
[Operator Instructions] And the first question will come from Chris Parkinson with Wolfe Research.
2. Question Answer
Just given, obviously, you've been on a pretty long-term fixing of the turnaround schedule across the 4 primary facilities. Can we just get an update on after the issues in late September, how you performed in October versus expectations, how you're thinking about initial November? And just what's your degree of confidence that you should be within that 4Q production guide? And how we should think about the cadence of such given the outlines that you projected at the CMD back in March, how we should be thinking about the confidence level as it relates to 2026?
Chris, thanks for your question. First off, we're committed to achieving our normalized production rates that we've been talking about. We did have those issues that we had a press release out in September, those are behind us. But I think as I've reflected on this, things are taking a little longer than anticipated. As we did, as you pointed out, get to our normalized turnaround schedule, which was the big issue for us was to do that first. And as we remove that macro asset health issue, it shined a light on some other issues, mostly that for me, and this is my terminology, that we kind of lost some muscle memory, and I'll give you some examples.
Since we haven't run at these rates for 5-ish years, we've kind of stumbled on just starting back up out of normal repair days, stumbled on making product shifts. So now that asset health on the big unit operations are not the issue anymore, it's really with high turnover in our workforce over the last 5 years that institutional knowledge is a place that we've got to focus. The good news is that we are seeing full rates a lot of the time. And in fact, at times even over full rates. We just need to lock in on more consistency and then sustain that for longer periods of time.
But as I reflect for me in the past 18 months, to your point, we've made significant progress and sulfuric acid plant turnarounds were accelerated to kind of eliminate that really macro asset health issue. But during that time, we advanced several improvement projects in potash and granulation and more importantly, some of our critical support facilities around water and electrical infrastructure.
All in all, we've invested an additional $100 million in CapEx and an additional $100 million this year in maintenance expense that are above and beyond just kind of normal for these operational enhancements and asset health improvements. In addition to that, to leave no stone unturned, we have brought on board some external consultants to make sure that we are leveraging everything we can do to get back to those rates.
So as you pointed out, all the work has led to 3 consecutive quarters of sequential improvements. And with those consistent gains, as we reported in the earnings presentation, the trailing 3-month period ending in October is at that 1.8 million tonnes, which is in the middle of our guidance range. So we are changing our guidance philosophy a little bit, and I think that's important is that we're going to base guidance on the forward quarter based on kind of how we have proven in the past months. And so that trailing 3-month was critical for us to set kind of that guidance range of 1.7 million tonnes to 1.9 million tonnes phosphate because we were actually at that 1.8 million tonnes rate right now.
But looking ahead, we're going to continue to focus, Chris, on our processes and instilling operational discipline across the organization. We've got work ongoing and a lot of emphasis on strengthening our institutional knowledge at the front line. And then we've got a lot of work also on further leveraging technology across our ops and maintenance teams to put better data and decision-making at their fingertips.
So we're optimistic and very excited about what the future is bringing. It's just a little unfortunate, it's taking longer to get there. But where we are right now, we feel very comfortable and confident achieving the guidance range that we've set forward.
Next question will come from Joel Jackson with BMO Capital Markets.
If I could follow up on your answer to Chris' question. Can you maybe Bruce dive into what is the difference between a good day and a bad day? So good days says you're at full rates or better; a bad day, you're not there. Is it a certain asset? Is it a certain thing going on? Can you elaborate good day and a bad day versus your targets?
Yes. Thanks, Joel. A good day, bad day is very nuanced, as you can well imagine. And it depends on the facility in the suite. But right now, bad days are not where something is catastrophically failing prematurely or that we're holding it together until we can get to a turnaround. Those are not the structural issues. Today, the difference between good and bad is did we actually run without an upset more from operational decision-making at the front line in phos acid, particularly ore granulation.
So again, a perfect example would be, hey, we have to switch from map to MicroEssentials product at -- it doesn't matter what facility, facility X. The quality wasn't immediate at that start-up as quickly as it should be. We lost product from that standpoint or we had to actually shut down kind of [ reseat ] granulator as an example. So it's more of those institutional operating practices that really right now are separating good from bad. It's not structural asset health. It's more on operational practice and just -- and then delivering on that consistency.
So every time we switch or start up from a repair day, which happened frequently within the month, that's just normal ops and maintenance practices is that getting up to that full rate quickly, add quality performance and then sustaining it until the next cycle for repair or product switch. Hopefully, that provides some color that it's no longer structural asset health as the big issue. It's more operational knowledge, institutional knowledge and consistency of delivering on that day in and day out at these high rates.
The next question will come from Andrew Wong with RBC Capital Markets.
So maybe can I just clarify on the expected phosphate run rate? Is that now 1.8 million tonnes? Or is that just for the very near-term upcoming quarter and then there's longer-term upside to that, like more on a normalized basis as some of that institutional knowledge comes back and you're able to work on those processes? And then just on phosphate margins, can you just think -- help us think about all the different moving pieces as we kind of get into Q4 versus Q3? Because obviously, there's lot of changes on prices and input costs and asset health. But as production goes up, that should also help with fixed cost per tonne. So can you just help us understand that?
Yes. As I said, Andrew, our guidance philosophy has switched to more proven. But at the end of the day, we're committed to get back to full rates. There's no question about that. So there's no wavering on that. It's just rather than guide to the promise we're going to guide to actually what's delivered and then the upside is there as we achieve all those gaps that you just mentioned that we talked about in the last 2 questions as well.
So yes, to your point on cost, fixed cost absorption is the biggest thing. And we're not seeing any more unusual expenses in the script. Luciano talked about the higher cost of putting in these new gyp handling systems at New Wales. Those things are behind us from an expense standpoint. So normalized turnaround costs, normalized maintenance costs, labor and all those things being fixed with the higher cost of production as we go from what we've demonstrated now 1.8 million tonnes towards that 2 million tonnes, all are going to go to the bottom line, fixed cost absorption.
Luciano, you got more to say?
Yes. Andrew, we posted $131 per tonne of conversion cash costs. But if you look August and September, the number was actually a little under $120. And the rule of thumb is for every 100,000 tonnes additional in the quarter, you should see about $7 per tonne reduction. So if we were to post 2 million tonnes in a single quarter, which is our long-term aspiration, that sub-$120 would be somehow between $100 and $105, which is still kind of $5 above our Investor Day targets. So we still have maybe $5 of extraordinary small repair work that we need to shave, but that gives you kind of a ballpark thinking about how the costs should progress.
In addition, I would like to call attention to the operational leverage in phosphates. So because most of the costs are fixed, the marginal tonne earns way more than the average tonne, which means that, for example, if you were to increase production by 25%, so for example, coming from 6.4 million tonnes to an 8 million tonnes rate, theoretically, EBITDA could improve by more than 50%, and the impact on cash flows would even be even more magnified. So that is something to bear in mind that the results of phosphates are very, very leveraged to volumes.
Your next question will come from Lucas Beaumont with UBS.
I just wanted to touch on the cash flow again. So I mean the operating cash flow to EBITDA conversion this year has been about 45%. Typically, your long-run range is in sort of the 80s. So I just wanted to kind of -- you talked about it improving next year, but I just wanted to get your thoughts on where you think that conversion should go?
And then just secondly, sort of you guys have also sort of talked about trying to get OpEx down after fixing the production issues. But I mean, this year is kind of tracking towards sort of that $1.3 billion, which is pretty much in line with where it's been in the past kind of 7 years. So just how much scope do you think there is to kind of help free cash flow into next year on that side as well.
Yes, Lucas, thanks. I'll just start and then turn it over to Luciano, he's got a lot to say about this issue particularly. But yes, cash flow is a little weaker than we wanted or anticipated for the quarter, mostly because of the kind of slowdown in sales in the Americas, which caused a little bit of a build in inventory and then the higher pricing in inventory and our buildup of rock inventory, particularly in North America for phosphates anticipated higher production kind of added some of that cash into inventory, but that will revert as production starts to materialize and sales start to move into spring season. So feel good about that, and they will improve on the cash conversion.
But go ahead, Luciano, maybe you want to talk about that.
Yes. So Lucas, you're probably referring to an annual cash conversion rate. And I understand you're referring to the conversion between EBITDA and operating cash flow, which, yes, this year should be in the year at around 50%. You referenced 45%, like maybe a little more than that with the recovery in the fourth quarter. But that's because inventories and working capital are kind of taking up about 20% of that EBITDA in the year. So if you were to adjust for working capital/inventory changes, it would be at a level of around 70%, which we believe is kind of the industry norm, like we see some competitors around that level as well. And which means that looking forward to '26, we actually have an expectation of a wind down and a positive contribution of working capital. So we may be in '26 above the 70%, maybe who knows close to 80%. But that's before CapEx, as you pointed out.
It happens that capital expenditures this year are also close to 50% of EBITDA. So your net cash conversion of 50% with CapEx running at 50%, you're basically at a free cash flow for '25, which is very close to zero. But again, in 2026, with the -- an improvement in EBITDA with higher volumes and the cash conversion going more above 70% towards 80%, it is possible that you're going to have like a free cash flow to conversion rate of 25% to 30%. So that's the situation in the short term.
Over the long term, we see already a positive trend in reduction of ARO and legal and environmental reserves. This is one line that we've been spending around $400 million this year, and we expect next year to be the first of a long-term trend of decline. So this is a tailwind to cash flows. But in terms of CapEx, we have this long-term view of reducing capital expenditures. We're exactly now in our budgeting process. We're seeing what's going to be the rate for next year, and we will inform you appropriately once we make our decisions. But the good remark would be like asset retirement obligations, environmental reserves, or the reclamation work is already showing declines in cash outflows.
Next question will come from Matthew DeYoe with Bank of America.
If I'm just looking at ore grades at the mine site, particularly in Florida and the degradation, is it like realistic to hit 2 million tonnes per quarter for phosphate? And I say because I assume with like higher throughput, it means you're probably driving up asset where you're probably burning out pumps more quickly, and that probably plays into just uptime in general. So can you manage these issues? Has that already been handled and that's really not the issue anymore? Is that a nonfactor? How does that just in general play into this?
Yes. Thanks, Matthew. Ore -- the chemistry of the ore is not really a concern for us. Yes, on the margins, you're right. Where that played out this year was particularly at New Wales when we needed to upgrade the gypsum handling system because we did have more waste generated per tonne of feed and hadn't tested those systems in the last, say, 5, 6 years at these higher rates. But P2O5 quality, the chemistry of the ore, definitely not a concern about hitting those rates. It does limit catch-up capacity. So it forces us to be that much more precise on operating discipline to your point.
But from a rock quality standpoint, it's more the geology drives some of the issues on cost for mined rock, particularly in Florida. And those things come down to stripping ratio, how much overburden do you have to remove, what's your pumping distance, things like that, that may affect cost that goes into total profitability on finished product. But those are pretty stable as well. So ore grade, the chemistry of it is not the biggest concern. Even though it does create challenges, we just have to be very consistent and more disciplined on being better operators as we were processing that.
Maybe, Bruce, to your point, in order to reduce the risks, we actually are building up rock inventories this year as well. So there's ample buffer to absorb any variations. And indeed, back to the cash flow conversation, about $160 million of increase in working capital this year comes from rock inventory that we are preparing to fire in all cylinders when we can in the concentration plants.
Your next question will come from Jordan Lee with Goldman Sachs.
Regarding the fourth quarter phosphate sales volume guide, I wanted to clarify whether the potential demand deferral that you called out is reflected in that range? Or would it be lower if that occurs? And could you maybe try to size that potential impact?
Yes. Let me start, Jordan. Appreciate that. Our guidance is really based on production at this point. We did mention in the commentary that any deferral could be risk. And let me just turn it over to Jenny to kind of talk about what that is, it looks like.
Sure. So I'd like to start to talk about overall of North America phosphate shipment this year. I know there have been a lot of discussions on demand change. I want to remind ourselves that the import to the U.S. market to North America market year-to-date October has reduced by 1.1 million tonnes, which is 36% of reduction. And if there's no more import into this country by end of the year, the total import reduction will be 1.3 million tonnes. So meaning the shipment or demand in North America, likely going to be impacted by supply. So that's a fact.
And I also want to remind ourselves, spring application were very normal in terms of the shipment and the summer field subscription that we have seen very strong. And at this moment, the fall applications are very well underway. Now understand the customers' cautiousness in getting into the winter fill period, given the farmers' economic situation and uncertainties related to the government payment, we've been cautious on potential deferral of phosphate application into -- from Q4, from December, basically into Q1. That deferral possibility could be depending on several factors. We would say if the government payment, which is likely going to come out, we just don't know when, and we don't know how much, that will impact the customer's decision on when they want to step in for winter fill.
The second factor is weather condition. In the normal November, December, if the weather is dry and warm and farmers tend to get out to get fertilizers on the ground before the winter weather really impacts them. So these 2 major factors we're watching very closely, so as our customers. And they are going to say whether the tonnes are going to go -- going to get purchased in November, December or pushed back into Q1 next year.
So in summary, for phosphate, I want to call out, the potential deferral is depending on these 2 factors. The demand impact has been driven by supply, meaning import, reduced import. Potash is a very different story. The affordability itself isn't really an issue. We are cautious on the potential deferral just because of some of the customers and farmers when they apply potash in North America, they go together with phosphate. So if there was a deferral, some part of the potash application could be deferred into Q1 as well.
I would end to say with a very big harvest that we are seeing in North America and also for a fact in Brazil as well, there are significant removal of nutrients for phosphate and potash. This additional removal of phosphate and potash from soil need to be replenished into the soil in order to not impact productivity and yield for next year. The farmers in the U.S., in Canada and in Brazil, they know that. So I'll end with that.
Your next question will come from Ben Theurer with Barclays.
I wanted to come back to Fertilizantes. I mean I remember about a year ago at the Investor Day, you've talked about it how you want to bring this business into a level of somewhere north of $100 million, like $120 million, $130 million, I think, was target on a quarterly basis. And you've been on a nice track as it relates to the delivery in Q1, Q2 and then significantly surpassed Q3. So maybe explain us a little bit more what drives your expectation for the fourth quarter so much down, particularly considering that this is actually a relatively important quarter in Brazil. So help us understand what is taking it back to square one so to speak? And then how should we think about it as we look into 2026?
Yes. Thanks, Ben. I think we may disagree that it's not going back to square one, as I think we put in our earnings material kind of a comparison to last year. But we do believe that fourth quarter this year will be significantly better than last year. But the credit situation in Brazil is definitely driving some risks in buying in Brazil, particularly for small farmers. So that is maybe more of it. And then quarter 4, historically, and that's why you see is a lower distribution margin quarter based on product mix, the products that we sell, more nitrogen products, less phosphate products for the growing season. So that is an impact as well. But north of $100 million and we said approximately $100 million is actually -- we feel not a bad quarter given the backdrop of what's going on in that business.
And when you average all that out quarter by quarter, I think we would expect north of $100 million, would you say, $120 million of EBITDA on a quarterly basis. But you're going to see seasonality in first quarter and fourth quarter as they are always our lowest quarters based on mostly product mix in Brazil.
But Jenny, do you want to add anything? Luciano, go ahead.
Most of the decline is going to be driven by the production business in Brazil because of product mix that was mentioned. And so because the Brazilian market these days have been purchasing way more low analysis products, SSP, for example, even through imports. And because part of our production in Brazil is of higher value products, we're kind of baking in the forecast lower sales, especially of these higher-margin products. So that's affecting a lot. So we're making around $70 million of decline in the results of the production side of it.
The other thing, which is seasonal, just to remind, is the co-products. So we -- third quarter is kind of a peak season for sales of co-products. They should about decline by another like USD 20-something million, just the co-products sales. And again, we won't have the tailwind of the bad debt recovery. So when you bake all of this and admittedly with a little bit of a hedge to see how the sale of the higher-margin products are going to behave, that's why we're being a little more cautious on the guidance.
Your next question will come from Edlain Rodriguez with Mizuho.
This is for Bruce or even Jenny. So given all the puts and takes in the ag market right now, crop prices, inventory levels, supply/demand and so forth, in your view, like what drives fertilizer prices higher in the near term?
Yes, Edlain, thanks. I'm going to actually -- let me just start and then turn it over to Jenny because she's got some data points on what's happening in various geographies. But I think it comes down to the macros, Edlain. And I know you're focused on, maybe part of your question is, how do you separate that from ag fundamentals and maybe ag farmer affordability, but on the 2 commodities that we make, the S&Ds for fertilizer, as Jenny did say in phosphate, supply is constrained. They just -- the prices have to come up in order to make demand meet the supply, right? And until something fundamentally changes there, and in phosphate, particularly, as I said in the opening script, with China's demand continuing to grow, not only for ag inputs, but also on LFP industrial, less Chinese phosphate is going to actually be exported.
And I know Jenny is going to talk a little bit maybe about what is coming out on further restrictions potentially, but without new supply of significance coming on, fundamentally changing the fertilizer supply and demand, it's just not happening on the supply side. So we actually see demand continuing to be constrained in the near term because of lack of supply. And that likely is not going to change in our forecast anyways of significance for quite some time. And the first time, you might start to see a little bit more supply coming, 2028, I think, Jenny, as OCP starts to ramp up some of their announced increases as well as Ma'aden. So that's phosphate.
And on potash, it's not a heck of a lot different. It's a very constructive supply and demand. And it's that S&D that we see driving fertilizer prices on each of those 2 sides, the potash and the phosphate. So with the first half of this year and the former FSU kind of down, supply was tight. Prices picked up. We didn't see as much come out of Laos this year. So FSU was down. China, Chile were down this year from a supply standpoint. But China's appetite continues to grow on potash as well. So again, you get down to the puts and takes. And Southeast Asia was a huge consumer this year of potash, keeping things tight. So the S&D is very constructive. Again, don't see that dramatically changing in 2026. In fact, continuing more of the same as BHP has pushed out their start-up. We do see a little bit of tonnes coming out of Laos additional, a little bit out of EuroChem and maybe BPC with Nezhinsky project near the tail end of this year. But demand, we can see continuing to grow to suck up that supply. So things stay very constructive on the S&D for fertilizer.
Jenny, I turn it over to you as I've maybe covered some of your stuff, but go ahead.
I probably want to add some data points. Firstly, when we talk about ag economics and farm economics, we tend to only focus in U.S. and Brazil. I would say the ag economics are very variable across the globe. Well, it is pressured in Americas. We have seen much more favorable conditions in the rest of the world. And if you look into the major ag market, China and India are very supportive from the government policies. So ag economics are not really a challenge. Therefore, we have seen very big growth -- significant growth on the consumptions of potash in both markets and also phosphate. So that's a reminder and let alone some of the other markets in Asia due to different crop dynamics, right?
The other data -- very quick data point on phosphate. Chinese exports of phosphate is likely going to continuously to be restricted. This year, year-to-date, already we've seen reduced -- reduction of 18% over 1 million tonnes. For the rest of the year, we are going to see very little exports out of China. So the full year, we are going to see over 1.5 million tonnes reduction. So that hold, there's nobody this year on phosphate supply is able to put in. So the market for phosphate is really demand is constrained by supply. Looking into 2026, the economics are really supportive for further demand growth. But again, that is going to be depending on how much supply is going to be improved and partially it's coming from Mosaic ourselves.
For potash, I think Bruce, you covered very well, very stable market. And the nutrient itself, affordability is very good. And that's the reason we see the growth across the board, and this is going to continue in 2026.
The next question will come from David Symonds with BNP Paribas.
Yes. Just one on sulfur, please. So -- or sort of phosphate inputs more generally. So Russia sulfur export ban seems to be pushing sulfur prices higher. There's some outages in ammonia, which are also pushing ammonia prices higher some. Just curious, obviously, the spot stripping margin that you showed in your presentation has come down to, I guess, more normalized levels. Is there a risk that, that goes further with very weak farmer economics, making it harder to pass through some of these prices in DAP? Do you see that sort of risk in the short term on stripping margins?
Thanks, David. Good question, something we talk about a lot. We definitely do see stripping margins coming down because of exactly what you said on raw materials. Sulfur is -- we see some of these higher costs sticking into early next year, for sure. Ammonia, we do see that trending down in time as new capacity comes on. But in the short term, as you mentioned, certain restrictions have caused prices to increase. But stripping margins right now and particularly realized for Mosaic are still above historical norms. They have come down, but they're coming down from a 5-handle number to maybe low 4s or upper 3s potentially, but that is still very healthy stripping margins for phosphate based on history.
So Jenny, maybe you want to comment a little bit more on what you're hearing on the raw material side.
Yes, sure. Some data point. Sulfur export out of Russia post the war has significantly reduced. So the recent attack of Ukrainian to refineries in Russia has, for sure, contributed to the tightness of the export of sulfur out of Russia. I would also say the overall sulfur being used on fertilizer production is over 50%. So if the price of phosphate is under pressure and that will have impact to the sulfur price as well. So I would say not only the sulfur price is not only driven by supply/demand itself, it will also be impacted by the demand from phosphate. If any pressure on the prices of phosphate that will eventually impact the sulfur prices as well. So that happened many times in history. It will just take a bit of time to work through the S&D dynamics between phosphate S&D and also sulfur S&D.
The next question will come from Kristen Owen with Oppenheimer.
Just wanted to revisit the critical minerals. I think the comment period for that ends this month. So just remind us, puts and takes on whether phosphate has any implication for you? What -- how we should think about the puts and takes on that being added to the list?
Yes, Kristen, great question. We're active in Washington, not only ourselves, but through industry associations to advocating for that. And it seems that there is momentum to add it. I know even at some of the Senate hearings recently talking about that seems to indicate more momentum than not. What does it do for us? I think what we're hoping for is that it brings a spotlight to the criticality of that, obviously, being a critical mineral. But it keeps that education within government that we need streamlined regulatory frameworks, maybe less burden, quicker permitting times to bring things to market. That is probably where the biggest advantage is for us to make sure that at the end of the day, we keep good supply within North America for good pre-trade and competitiveness for farmers to maximize the food that they grow. And that's what we're interested in by adding phosphate to the critical minerals list.
Your next question will come from Vincent Andrews with Morgan Stanley.
I just wanted to ask on the finished goods inventory. I think it's about 1.7 billion. How much of that is at the mine or one of your facilities versus perhaps on consignment with the customer?
Yes, Vincent, thanks. Luciano, I'm just going to turn it over to him as he's got that handy here.
So I would say the inventories are mostly spread around the entire supply chain, right? So we have our warehouses in the Midwest. We have barges on the river. We have our finished good yards in our Florida facility. So there's -- it's ready to be moved and it's well positioned as soon as demand comes back to be sold.
I think with that, we're going to close the call as we're at time. So thank you for your questions, everyone. To conclude our call, I'd like to reiterate a few of our key points.
First, our work to improve phosphate asset reliability is definitely paying off, and we're seeing that day in and day out with phosphate production climbing as the year moves along. We intend to reach our targeted rates, and we intend to sustain our production at high levels once we get there. Our business in Brazil is performing very well despite the difficult credit environment. And Mosaic's potash business continues to deliver very strong results. We are producing at high rates to meet robust global demand. And we remain focused on our financial foundation. We're reducing costs and remaining committed to disciplined capital allocation. In all, Mosaic is in excellent position to deliver compelling returns through 2026 and beyond.
So thank you for joining the call, and have a great and safe day.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
The Mosaic — Q3 2025 Earnings Call
Financial data from The Mosaic
Revenue
Revenue is the sum of all sales generated by a company, e.g. for its products or services.
Revenue (TTM) metric explainedDirect Costs
Direct costs are the costs incurred directly in connection with the manufacture of the product or service.
Gross Profit
Gross Profit indicates how much of the revenue remains in the company after deducting direct production costs. If the percentage share of sales is calculated, this is referred to as the gross margin.
Gross Profit metric explainedSelling and Administrative Expenses
Selling, general and administrative expenses (SG&A) include all expenses for marketing and sales as well as the general administration of the company.
Research and Development Expense
Research and development costs (R&D) provide information on how much the company invests in the research and development of its products. The costs are particularly interesting as a percentage of revenue and in comparison to direct competitors.
EBITDA
EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) is the company's earnings before interest, taxes, depreciation and amortization. The EBITDA margin is calculated as a percentage of sales.
Depreciation and Amortization
Depreciation represents reductions in the value of the company's assets (e.g. due to wear and tear on machinery).
EBIT (Operating Income)
EBIT (Earnings Before Interest and Taxes) is the company's profit before interest and taxes, also known as the operating income. The EBIT Margin is calculated as a percentage of sales at
.
Net Profit
Net Profit represents the profit or loss after deduction of all costs.
Net Profit metric explainedStocksGuide Premium
| Jun '26 |
+/-
%
|
||
| Revenue | 12,248 12,248 |
9%
9%
100%
|
|
| - Direct Costs | 10,903 10,903 |
14%
14%
89%
|
|
| Gross Profit | 1,345 1,345 |
22%
22%
11%
|
|
| - Selling and Administrative Expenses | 512 512 |
7%
7%
4%
|
|
| - Research and Development Expense | - - |
-
-
|
|
| EBITDA | 1,764 1,764 |
3%
3%
14%
|
|
| - Depreciation and Amortization | 1,154 1,154 |
13%
13%
9%
|
|
| EBIT (Operating Income) EBIT | 610 610 |
24%
24%
5%
|
|
| Net Profit | -639 -639 |
168%
168%
-5%
|
|
In millions USD.
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Company Profile
The Mosaic Co. engages in the production and marketing of concentrated phosphate and potash crop nutrients. The company operates its businesses through its wholly and majority owned subsidiaries. It operates through the following segments: Phosphates, Potash, and Mosaic Fertilizantes. The Phosphates segment owns and operates mines and production facilities in North America which produces concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and concentrated crop nutrients. The Potash segment owns and operates potash mines and production facilities in North America which produce potash-based crop nutrients, animal feed ingredients, and industrial products. The Mosaic Fertilizantes segment produces and sell phosphate and potash-based crop nutrients, and animal feed ingredients, in Brazil. The company was founded on October 22, 2004 and is headquartered in Plymouth, MN.
StocksGuide Premium
| Head office | United States |
| CEO | Mr. Bodine |
| Employees | 13,249 |
| Founded | 2004 |
| Website | www.mosaicco.com |


