MOSAIC CO Q3 FY2024 earnings call

• Acknowledged the great work of Mosaic's people in dealing with Hurricanes Francine, Helene, and Milton with no safety incidents, environmental events, or material physical damage. - Clint Freeland plans to retire as CFO at the end of the year, with Luciano Siani Pires joining as CFO Designate on November 18 and assuming the role on January 1, 2025. - Third quarter results: $2.8 billion revenue, $122 million net income, $448 million adjusted EBITDA, impacted by storms, electrical issues, lower potash prices, and delayed agriculture recovery in Brazil but partially offset by strong phosphate stripping margin. - Expect to achieve targeted annualized phosphate production run rate of 7.8 million to 8.2 million tons by year-end, on track for $150 million annual cost savings by 2025 and $200 million reduction in CapEx this year. - Mosaic Biosciences growth accelerating with biological products used on 9 million acres, self-funding and positioned for long-term growth. - Market discussion: Corn and soybean prices improved, other commodity crops strong, North American farmers have solid yields, Brazil barter ratios healthy, fertilizer demand high globally, potash market balanced with prices trending higher, phosphate market tight with elevated stripping margins.

The Potash segment generated adjusted EBITDA of $180 million for the quarter compared with $267 million a year ago, driven by lower prices and approximately 250,000 tons of lost production due to electrical issues at Esterhazy and Colonsay and the Canadian rail strike. For the fourth quarter, potash sales volumes are expected in the range of 2.2 million to 2.4 million tons and prices in the range of $200 to $220 per ton. The Phosphates segment generated adjusted EBITDA of $265 million for the quarter compared with $201 million a year ago, due to solid pre-hurricane production levels and strong stripping margin. Sales volume was 1.5 million tons in the third quarter. For the fourth quarter, phosphate sales volumes are expected in the range of 1.6 million to 1.8 million tons and prices in the range of $570 to $590 per ton. Mosaic Fertilizantes generated $83 million in adjusted EBITDA compared with $147 million a year ago, lower due to $32 million in bad debt reserves and $20 million of legal reserves from Brazilian customers' bankruptcy filing.

• Potash: Fourth quarter sales volumes expected 2.2-2.4 million tons, prices $200-220 per ton. - Phosphates: Fourth quarter sales volumes expected 1.6-1.8 million tons, prices $570-590 per ton. - On track to achieve $150 million annual cost savings by 2025 and $200 million CapEx reduction this year. - Mosaic Biosciences growth accelerating with biological products used on 9 million acres. - Capital allocation includes investing in strengths and reallocating capital for other assets.

• Impact of hurricanes on production and operations. - Electrical issues at Esterhazy and Colonsay potash mines affecting production. - Canadian rail strike impacting potash production and shipments. - Port labor issues at Vancouver and Montreal potentially affecting potash volumes. - Credit risk in Brazil leading to bad debt reserves. - Unfavorable government subsidy environment in India affecting phosphate demand.

Q: What is the current state of agriculture and fertilizer markets and outlook for next year?

A: Ag fundamentals are solid, fertilizers are affordable, phosphate supply tight into next year, potash market balanced.

Q: Assuming achieving target run rate in fourth quarter, how to think about production volumes moving forward?

A: Expect to achieve target run rate by end of quarter, production will vary quarter-to-quarter depending on turnaround scope, schedule, and product mix.

Q: What is exposure to future credit losses in Brazil?

A: Limited risk, significant portion of customers in good financial condition, employed risk mitigation measures like prepayments and credit insurance.

Q: Details on phosphate business margins despite challenging weather events and cost savings?

A: Proud of margins showing strength of cost reduction program and impact of production on fixed cost absorption, expected $20 to $30 cost improvement per ton from high watermark in 2023 when at full run rate.

Q: Details on Mosaic Biosciences products, pipeline?

A: Products are nutrient use efficiency enhancement products like PowerCoat and BioPath, used on fertilizer granules, liquid fertilizer, etc. Pipeline includes nitrogen fixation materials in final field trial and registration, and products improving phosphorus solubility in development.

Q: Outlook for potash in 2025, supply and Mosaic's ability to supply?

A: See market growing 1-2 million tons next year, supply from Russia, Belarus, Laos, Mosaic can produce additional 400,000 tons with Hydrofloat project at Esterhazy coming online mid-2025.

Q: Commentary on Brazilian business, farmer activity, buying behavior?

A: Farmer activity improving, prices climbing, farmers sold 67% of safrinha corn and purchased over 60% of fertilizers, 28% of soybean sold and 5% of fertilizers purchased for summer season.

Q: Unmet demand in India for phosphate due to unfavorable subsidy environment?

A: Significant unmet demand this year, likely to shift into 2025 with potential subsidy adjustments.

Q: Clarification on phosphate run rate and normalized earnings?

A: 7.8-8.2 million ton annualized range with normal turnarounds and weather disruptions, conversion costs expected to come down $20-30 per ton from 2023 high.

Q: Outlook for Brazil Fertilizantes market and growth?

A: Expect market to continue grow, farm economics and barter ratios improving, selective in sales and credit risk to pursue margin of value.