MOSAIC CO Q1 FY2025 earnings call

• Market Fundamentals: Fertilizer demand strong globally despite geopolitical uncertainties. Phosphate prices and stripping margins elevated due to supply constraints, potash prices rising. Biofuel mandates and lithium iron phosphate production in China driving phosphate demand.
• Production Progress: Phosphate plants had downtime but March production strong; potash investing in hydrofloat project; Mosaic Fertilizantes with strong Q1 performance.
• Market Access: Strong presence in Brazil, Mosaic Biosciences growing, non-core assets being shed.
• Capital Allocation: Free cash flow constrained in Q1, but commitment to return excess capital to shareholders unchanged.

Phosphates: Produced 1.4 million tons in Q1 2025. Bartow and New Wales plants had downtime for turnaround and reliability work, but March was the third strongest production month in 18 months. Conversion cash cost per ton increased due to lower production volumes and higher operating expenses, but expected to decline as production improves. Potash: Esterhazy complex generating strong cash flow. Investing in 400,000 ton per year hydrofloat project to increase production and improve product mix flexibility, aiming to lower per ton costs. Mosaic Fertilizantes: Delivered strong operating performance in Q1 with conversion and production unit costs declining year-over-year. Expect further improvements in segment profitability in Q2. Mosaic Biosciences: Revenue more than doubled year-over-year in Q1, on track to double full-year, driven by existing product sales and new product launches like Neptunion in China.

• Net income was $238 million and adjusted EBITDA $544 million in Q1. Expect earnings to improve further from strong start in 2025.
• Phosphate production outlook remains in 7.2 million to 7.6 million ton range.
• Potash production outlook increased to meet global demand.
• Mosaic Biosciences on track to double revenue full-year.

• Geopolitical uncertainties and trade policies impacting market access and supply chains.
• Unanticipated downtime and reliability issues during turnarounds.
• Tariffs disrupting trade flows for phosphate.

Q: Chris Parkinson asked about phosphate plant turnarounds and the journey to end multi-year issues.

A: Bruce Bodine responded that there were discoverables during turnarounds like unanticipated brick work, but benefits are paying off and they're accelerating work to insulate back half performance.

Q: Jeffrey Zekauskas asked about ammonia costs and tariffs.

A: Bruce Bodine said ammonia is exempt in US, purchases haven't incurred tariff impacts, and exposure is low.

Q: David Symonds asked about DAP prices and phosphate costs.

A: Jenny Wang said April DAP prices were higher than expected, and Luciano Siani Pires discussed cost per ton and maintenance costs.

Q: Joel Jackson asked about potash market and Belarusian exports.

A: Jenny Wang discussed low inventory in China and reduced production from major producers, but Belarusian exports were higher in April.

Q: Kristen Owen asked about potash cost cadence.

A: Bruce Bodine and Luciano Siani Pires discussed potash cost per ton improving in Q3/Q4.

Q: Andrew Wong asked about Mosaic's role in supply and demand.

A: Bruce Bodine and Jenny Wang discussed phosphate demand constraints and market tightness.

Q: Steve Byrne asked about phosphate demand and biologics.

A: Bruce Bodine and Jenny Wang discussed biologics helping maximize phosphate efficiency and yield.

Q: Vincent Andrews asked about cash flow and free cash flow conversion.

A: Luciano Siani Pires discussed cash flow components and EBITDA conversion.

Q: Ben Isaacson asked about Mosaic Biosciences growth.

A: Jenny Wang discussed Biosciences revenue growth, product margins, and new product introductions.

Q: Richard Garchitorena asked about Brazil EBITDA upside.

A: Luciano Siani Pires discussed Q2 EBITDA potential in Mosaic Fertilizantes.

Q: Lucas Beaumont asked about phosphate volume production.

A: Bruce Bodine said they feel good about full capacity output in back half of year.

Q: Edlain Rodriguez asked about capital allocation between P&K.

A: Bruce Bodine and Luciano Siani Pires discussed balancing capital allocation between phosphates and potash based on market dynamics