The Mosaic Company Q4 FY2025 earnings call

• Market conditions: Fourth quarter phosphate demand in US weaker due to affordability and government support uncertainties, but spring inquiries increasing as farmers prepare for planting. Global ag fundamentals solid. North America potash and phosphate shipments declined in 2025 but Mosaic's North America sales volumes more resilient. Phosphate supply and demand supportive with China restricting exports and lithium iron phosphate battery demand consuming phosphoric acid. Potash markets balanced with prices appealing to farmers and producers.
• Business outlook: Phosphate production performance to improve, restored operational foundation. Potash production consistent in 2025, expect strong 2026 production. Delivered cost and efficiency progress in 2025, committed to further reductions in 2026. Expanded Brazil distribution capacity with blending facility. Mosaic Biosciences growing with new product launches and registrations.
• Capital allocation: Divested noncore assets like Patos de Minas, Taquari and pending Carlsbad sale, expected to generate proceeds and reduce asset retirement obligations.

Phosphate: Delivered strong rock production in 2025, with Florida reaching highest level in three years and record mining at Miski Mayo. U.S. Phosphate business invested to set up reliable production, P2O5 output improved, phosphate fertilizer production rose in 2025, expected to produce at least 7 million tonnes in 2026. Fourth quarter produced 1.7 million tonnes despite Bartow facility turnaround. Potash: Back at full operating rates at Esterhazy since December fatality, HydroFloat project ramping up, expected to achieve record production in 2026, international sales volume set record in 2025, expect to produce around 9 million tonnes in 2026 even after Carlsbad transaction. Mosaic Biosciences: Launched five new products in 2025, expanded commercialization in Americas, China and India, doubled net sales to $68 million in 2025, expects to double net sales again in 2026 with 8 - 10 new product launches, consistently delivers stable gross margins in 40s.

• Cash flow constrained in near term due to lower EBITDA from sharp sulfur price increase in December, expect cash flow to improve progressively in 2026. - Expect CapEx in 2026 around $1.5 billion, higher than 2025 due to mine, gyp stack and clay settling area expansions in Florida, but ARO and environmental reserve cash spending expected to decline. - Expect working capital release of $300 million to $500 million in 2026 from demand recovery, phosphate production improvement and other factors. - Expect to generate free cash flow after CapEx and other cash spend above minimum dividend in 2026, prioritize debt reduction and resume extraordinary returns to shareholders.

• Credit constraints in Brazil remain a challenge. - Sulfur price spikes can compress margins in Phosphate and Mosaic Fertilizantes segments well into the first half of 2026. - Uncertainty surrounding production plans in Brazil, especially with idling of Araxa and Fospar. - Uncertainty in the timing and outcome of countervailing duties sunset review in the US.

Q: Just on phosphate or DAP, can you triangulate what you're thinking?

A: Duffy, on DAP, affordability for farmers still challenged but improving in 2026. Pass - through of sulfur price may be limited due to affordability issues, but see stripping margin above $300 as constructive. Sulfur expected to improve, helping stripping margins.

Q: When we take a step back and look at 2026 versus Capital Markets Day expectations in terms of turnarounds, can you give a walk - through of phosphate production or asset portfolio?

A: Bruce explains that to get to 8 million tonne rate, need operating factor of low 80s. Bartow, Louisiana running at 80%+ operating factor, Riverview approaching it, New Wales in turnaround, expect to approach 80% in Q2. Luciano comments on cost side, $112 per tonne in phosphates is where it should be given production volumes, ultimate objective to get below $100 conversion cost.

Q: Where does your ARO and environmental reserves cash spend come through?

A: Luciano says it's spread around a few lines, comes through operational part of cash flows, in accrued liabilities and offsets accretion expenses on net income line.

Q: 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.

A: Bruce says on CapEx, confluence of waste disposal projects in gyp stacks, clay settling areas and tailings dam in Brazil hit at same time, $1.5 billion is ceiling, worst - case, but once through these, confident CapEx will tail down to $1 billion by end of decade. On inventory, didn't buy rock externally like non - integrated producers, built rock inventory due to good run rates, will start to reduce as pull through into finished goods. Luciano adds about $346 million increase in raw materials including rock inventories, potential to release $170 - $180 million of excess rock inventory with increased production rates.

Q: 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?

A: Bruce says still believer in Brazil, taken conservative approach due to credit issues, but have buffer to grow as market rebounds. Jenny talks about market challenges in Brazil with high interest rates, credit issues, consolidations, market likely flat in 2026, will make prudent decisions on distribution volume. Luciano says Fertilizantes business had reactions notes on fourth quarter performance, but in fourth quarter, despite high sulfur prices, curtailed production, removed SSP production, put site in turnaround, still generated almost $50 million on EBITDA.

Q: 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?

A: Bruce says countervailing duties process enters sunset review in April, evaluating participation. Jenny says phosphate shipment in North America changed, drop in fall application likely to impact current crop yield, precision ag and biologicals play role in use efficiency.

Q: Just wondering what changed with the 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.

A: Bruce says guide is on demonstrated prior trailing three months, likely upside to numbers, by no means lost confidence, proof points on operating factor show progress.

Q: 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?

A: Jenny says phosphate production usually 55% - 60% stay in North America, rest for export, 2026 market demand driven. Luciano says working capital release of $300 million - $500 million through combination of factors including release of rock inventories and slowed sales in Brazil dragging down working capital.

Q: 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?

A: Bruce says sulfur price expected to moderate in year, but higher cost sulfur in Q1 may flow through, $50 million not new normal as factors like product mix and seasonality affect. Luciano says Uberaba coming back will uplift performance, Araxa idle has $10 million per month expense, but performance should improve.

Q: 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.

A: Jenny says in Q4, had uncertainties on phosphate and potash demand related to US government payment and weather, demand destruction on phosphate greater than potash due to potash affordability, some farmers went to field for potash without phosphate.

Q: 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?

A: Bruce says Faustina expected to produce 50% more in 2026, consume 35% - 40% of ammonia portfolio. Luciano says no revaluation of inventory in North America, no gains recorded on EBITDA as inventory recorded at cost of production and not revalued.

Q: 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?

A: Bruce says if sulfur price persists, margin erosion would stay constant, but ammonia prices expected to come down, better turnaround and idle cost, and better fixed cost absorption will buffer. Luciano gives details on stripping margins and breakeven points, saying about $250 headwind in Q1, but variables like sulfur and ammonia prices, turnaround and idle cost, fixed cost absorption affect.