The Mosaic Company Q2 FY2025 earnings call

• Bruce Bodine highlighted that work to improve operating performance is paying off, market environment is strong with tight supply, cost reductions in Brazil are driving earnings growth, and market access is a key competitive advantage.
• Jenny Wang discussed market fundamentals, including tight phosphate and potash markets, demand in regions like India and Brazil, and North American import dynamics.
• Luciano Siani Pires reviewed financial results, discussed EBITDA components, cost reductions in Mosaic Fertilizantes, and increased transparency in segment disclosure.

Phosphate: Generated net income of $411 million and adjusted EBITDA of $566 million. Brazil results improved, and U.S. phosphate production is targeting an 8 million tonnes per year run rate with annual guidance of 6.9 million to 7.2 million tonnes. Potash: Market is tight with strong demand, leading to raising annual production guidance to 9.3 million to 9.5 million tonnes. Mosaic Fertilizantes: Achieved $106 million of $150 million cost reduction target, with EBITDA of $150 million despite bad debt, and expected strong Q3 performance.

• Raised potash annual production guidance to 9.3 million to 9.5 million tonnes.
• Phosphate annual production guidance set at 6.9 million to 7.2 million tonnes.
• Q3 sales volume guidance for phosphate is 1.8 million to 2 million tonnes.
• Mosaic Fertilizantes expected strong Q3 EBITDA, potentially well above $200 million.

• Credit issues persisting in Brazil for Mosaic Fertilizantes.
• Supply chain and part availability affecting maintenance timelines in phosphate production.
• Tariff impacts on phosphate imports, though minimal direct impact currently.

Q: Just looking at the share price performance today, I was hoping you could parse out the noise from what has actually changed from your Investor Day for better or worse.

A: Bruce M. Bodine discussed that phosphate production volumes were down from Analyst Day due to part availability issues, but extraordinary expenses were transitory. Everything else is trending good.

Q: What was your run rate roughly in July? And how are we -- where are we trending in August and September, just essentially what's underscoring your confidence into the balance of the year.

A: Bruce M. Bodine said run rate in July was not ideal due to part delays, but seeing encouraging numbers in August, with confidence in guidance range of 1.8 million to 2 million tonnes for Q3.

Q: You've been very clear about $50 million idle and turnaround one-off costs in Q2. You say that those costs are going down in Q3. How do these exactly ramp down?

A: Bruce M. Bodine stated they don't guide on quarter-to-quarter basis, but historically phosphate turnaround costs are $100 million to $110 million annualized, and potash costs differ, with lumpiness due to unit operations.

Q: So maybe a couple of things here on the phosphate side again. First is, I think we're about to enter the typical hurricane season in Florida. So just curious like what has Mosaic done to harden the assets against any potential weather disruptions?

A: Bruce M. Bodine discussed preparation and crisis planning, including storm surge and wind hardening, and ensuring freeboard in gypsum stacks and clay settling areas.

Q: Can you talk about how tariffs have raised the cost of imports of phosphates into the United States on some kind of percentage or per tonne basis?

A: Yijun Wang stated year-to-date import reduction of around 20% for both P and K, with minimal direct impact on Mosaic's raw materials due to USMCA exemptions and small ammonia import volume from Trinidad.

Q: I have a question on Fertilizantes in fact. I see that you talked about shrinking perhaps your customer base because you're focusing more on better credit profile. At the same time, you are adding capacity in Palmeirante and now you're talking about $200 million or even more than $200 million EBITDA for next quarter. How should we think about the earnings power of this business in a mid-cycle scenario?

A: Yijun Wang and Luciano Siani Pires discussed market growth in Brazil, consolidation due to credit challenges, and long-term earnings potential with distribution and production margins.