The Mosaic Company (MOS) Earnings

Management highlights

### Market Environment - Geopolitical conflicts in Ukraine and the Persian Gulf have disrupted roughly half of global phosphate raw material supply, including 20% of global phosphate output, half of seaborne sulfur, a third of urea, and a quarter of ammonia, tightening an already tight global phosphate market. - China has banned phosphate exports through August 2026, and most competitors have curtailed phosphate production due to sulfur availability issues, leading to an expected global phosphate supply shortfall relative to demand. - Demand trends are diverging: U.S. and Brazilian demand is soft due to challenging farm economics and credit conditions, while demand from subsidized Asian markets (India, Pakistan, parts of Africa) remains strong. Long-term, persistent phosphate underapplication will eventually drive demand normalization as soil nutrient levels decline and yields drop. ### Operational Progress - Mosaic holds structural advantages in raw material sourcing: ~80% of U.S. ammonia needs are supplied via internal production or below-market, natural gas-linked contracts, and ~80% of U.S. sulfur needs are sourced from domestic Gulf Coast refineries with no constraints through Q2 2026. - Temporary production curtailments have been implemented: partial curtailment at Bartow and Louisiana U.S. phosphate facilities, and scaled back production in Brazil, to limit exposure to high-cost spot sulfur while retaining the ability to quickly restart operations when market conditions normalize. - New growth initiatives are advancing: Mosaic Biosciences is growing rapidly, with 8-10 new product launches planned in 2026 and expected 2x revenue growth for the full year. A development agreement for rare earth element recovery from phosphogypsum byproduct was signed with Rainbow Rare Earths for the Ubaraba gypstack in Brazil, with additional opportunities being evaluated in the U.S. ### Capital and Cost Optimization - Mosaic is executing a disciplined capital reallocation strategy, shifting capital from underperforming assets to higher-return opportunities. Three idle mines have been sold, and the sale of the Carlsbad potash mine was completed in April 2026. - A 10% workforce reduction in support functions was initiated in April 2026, expected to generate $50 million in annualized expense savings, with $15 million realized in 2026, adding to the $100 million value capture program launched in 2025. Mosaic maintains that current market challenges are temporary, and the company is positioned to capitalize on improved market conditions when they return.

Guidance

- Full year 2026 capital expenditure guidance was revised downward by $250 million to $1.25 billion, reflecting the deferral of non-time-sensitive projects; the reduction does not impact long-term production targets. - For Q2 2026 phosphate, management expects realized sulfur costs of ~$540 per ton, ammonia costs of ~$610 per ton, and DAP pricing of $760 to $780 per ton, resulting in expected stripping margins of over $400 per ton, with 60% of Q2 sales already committed and priced. - Management maintains its prior full-year 2026 guidance of $300 million to $500 million in working capital release; higher raw material prices that would reduce the release are offset by production curtailments that accelerate inventory drawdowns, leaving the original range intact. - Phosphate conversion costs are expected to be $105 to $110 per ton in the second half of 2026, up from a pre-curtailment target of ~$90 per ton, but still below the prior Investor Day target range, driven by improved performance at the completed New Wales turnaround. - Management withdrew Q2 2026 earnings guidance for Brazilian operations due to high uncertainty around raw material availability and pricing.

Segment performance

1. Phosphate Segment: Sold 1.9 million tons in Q1 2026, the highest quarterly sales volume in five years. Three of four U.S. phosphate facilities reached targeted 80%+ phosphoric acid operating rates after completed maintenance at the New Wales facility. Average realized sulfur cost for the quarter was $379 per ton, with stripping margins near $400 per ton. Florida cash mining costs hit $63 per ton due to increased overburden in the new mining area. The segment achieved a $120 million reduction in finished phosphate inventories from the end of 2025. 2. Potash Segment: Unaffected by recent geopolitical turmoil, with continued strong performance. Production volumes at Esterhazy increased from Q4 2025, and the Belle Plaine mine benefited from low-cost natural gas. Global demand remains balanced and robust, with record Q1 import volumes in China and strong demand from U.S. growers and Southeast Asian palm oil producers. Campotex is sold out through June 2026 and on track for a full-year 2026 volume record. 3. Brazil Operations (Combined Distribution and Production): Q1 2026 performance came in better than expected, with improved sequential per-ton distribution margins despite challenging credit conditions. Non-cash charges of $328 million were recorded as part of idling SSP production at Arishaw and related mining at Patrocinio, a decision that was planned long before recent sulfur price disruptions. The 50% owned production business saw sequentially lower turnaround and repair costs.

Risks & headwinds

- Prolonged closure or disruption to shipping through the Straits of Hormuz will continue to constrain global sulfur and ammonia supply, keeping prices elevated and forcing further phosphate production curtailments across the industry, including at Mosaic. - Sustained high marginal raw material costs have pushed marginal phosphate stripping margins below variable production costs, making current production uneconomical at current spot prices. - Challenging farm economics and credit conditions in the U.S. and Brazil have softened near-term phosphate demand, and a prolonged period of low application may pressure near-term profitability even as it drives long-term demand recovery. - Brazil's reliance on imports for 85% of its NPK demand leaves the domestic market vulnerable to global supply disruptions, creating significant uncertainty for Mosaic's Brazilian operations. - Higher raw material prices create working capital headwinds, as higher input costs increase the value of raw material and finished goods inventories, offsetting cash released from inventory drawdowns.

Analyst Q&A

• Q: What is the current outlook for 2026 working capital release, given changes in production plans and raw material prices?

  A: Management had previously guided for a $300-500 million working capital release. Higher raw material prices would normally reduce this total via higher inventory valuation, but temporary production curtailments accelerate inventory drawdown to offset this impact. Management still expects the full-year working capital release to land in the original $300-500 million range.

• Q: How does Mosaic view current U.S. vs international phosphate dynamics, and why is the company curtailing production even with strong international demand?

  A: International phosphate prices and demand are stronger than in the Americas, driven by low inventories and government subsidies in markets like India. However, even at current international prices, the marginal cost of spot sulfur and ammonia pushes Q3 and Q4 stripping margins to levels that do not justify running at full production. Mosaic has limited secure sulfur supply, so it is curtailing near-term output to preserve raw material and align production with viable margins.

• Q: How do you explain the current average ammonia cost, and what is the visibility into blocked sulfur supplies if the Straits of Hormuz reopen?

  A: Mosaic holds 80% of its ammonia exposure in internal supply or advantageous long-term contracts, with only 20% exposed to spot prices; Q1 average prices were impacted by temporary turnarounds that reduced internal output. The key distinction is that current production decisions are driven by marginal spot costs ($1,200/ton for sulfur, ~$800/ton for ammonia), which are much higher than portfolio average costs. There is no clear visibility into the volume of blocked sulfur cargoes, and there is also refinery damage from the conflict that will slow supply normalization even after the straits reopen.

• Q: Why have potash selling prices not moved up despite recent spot market price increases?

  A: The potash market remains balanced and stable. Much of Campotex' potash is sold via annual fixed-price contracts, and Q2 2026 sales were mostly priced far in advance (Q4 2025/Q1 2026) before recent spot price increases. Recent spot price appreciation will flow through to realized prices in future quarters. North America spring demand has already driven a noticeable price bump that will be reflected in Q2 and Q3 results.