The Mosaic Company

Mosaic did not give companywide revenue or EPS figures on the call. In U.S. Phosphates, Q2 raw materials costs averaged $522 per long ton for sulfur and $621 per tonne for ammonia, with an average realized stripping margin of $422 per tonne. The company said Q2 produced and sold 1.4 million tonnes of phosphate, Brazil Fertilizantes generated $60 million of EBITDA, and second-quarter MOP costs were $84 per tonne. SG&A was down 20% year over year. For Q3, Mosaic guided U.S. phosphate sales to 1.1 million tonnes to 1.4 million tonnes, realized sulfur costs of about $700 to $710 per ton, ammonia costs of about $610 to $620 per tonne, DAP FOB pricing of $820 to $840 per tonne, and said CapEx should be about $1.2 billion for the year. Management reiterated a $300 million to $500 million working-capital release, with roughly $100 million to $200 million in Q3 and the rest in Q4, and said Q3 EBITDA in Brazil could be positive though likely below the $60 million level seen in Q2.

Bruce Bodine framed the quarter as a defensive but disciplined response to a difficult market, saying Mosaic is managing what it can control and positioning for an eventual recovery. He emphasized sulfur as the key constraint, noted that the company curtailed phosphate production, minimized high-cost raw material purchases, and preserved asset health so it can ramp back up when conditions improve. He also highlighted strategic actions such as the Carlsbad sale, progress toward divesting Araxa, investment in Mosaic Biosciences, and optionality around rare earths and other growth projects.

Luciano Pires focused on cost control, margin protection and balance sheet flexibility. He said Q2 sulfur cost averaged $522 per long ton and ammonia $621 per tonne, while Q3 guidance implies realized sulfur of $700 to $710 per ton and ammonia of $610 to $620 per tonne, with DAP FOB pricing of $820 to $840 per tonne. He said SG&A fell 20% year over year, CapEx was reduced to $1.2 billion from $1.25 billion, and the company expects sequential free cash flow improvement in Q3 and Q4 as working capital is released and spending steps down. He also highlighted the $1 billion term loan used to extend commercial paper and said Mosaic has not tapped its revolver.

Analysts pressed on how far phosphate application has fallen in North America and Brazil, with management saying North America was down about 15% last year and is expected to be down another 20% this year versus normal, while Brazil phosphate application is forecast to be down about 30% at the nutrient level. Questions on Q3 phosphate margins and higher ammonia costs were answered with explanations that lower production, inventory flow-through and fixed-cost absorption will pressure margins, but still leave them above historical levels. On working capital, management reiterated the $300 million to $500 million release target, saying Q3 should release about $100 million to $200 million and the balance should come in Q4. There were also questions on potash netbacks, idle turnaround costs, sulfur contracts, and ramp-up timing; management said higher freight and export mix are pressuring potash netbacks, Q3 idle/turnaround costs should be well below $100 million, and if sulfur markets normalized, production could ramp back in weeks rather than months.