MOS — The Mosaic Company

Mosaic Company (MOS) Q2 2026 Earnings Call Summary

1. Key Financial Results and Metrics

• EBITDA: $60 million for the quarter, reflecting resilience despite market challenges.
• Production and Sales: Produced and sold 1.4 million tonnes of phosphate.
• Cost Management: Average raw material costs were $522 per long ton for sulfur and $621 per tonne for ammonia, yielding an average stripping margin of $422 per tonne.
• Cash Flow: Cash flow from operations improved, with expectations for further increases in Q3 due to working capital release.
• CapEx: Reduced expectations for capital expenditures to $1.2 billion from $1.25 billion.

2. Strategic Updates and Business Highlights

• Production Curtailments: Continued curtailment of phosphate production due to high sulfur prices and availability issues.
• Cost Management Initiatives: Aggressive cost-cutting measures led to a 20% year-over-year reduction in SG&A expenses.
• Liquidity Position: Strengthened liquidity by refinancing short-term debt and maintaining access to a $2.5 billion revolver.
• Asset Optimization: Focus on reallocating capital from underperforming assets to growth opportunities, including the Mosaic Biosciences business, which is expected to double its revenues this year.

3. Forward Guidance and Outlook

• Phosphate Market: Anticipated phosphate prices to remain stable due to sulfur-driven supply challenges and reduced Chinese exports.
• Production Expectations: Guidance for Q3 phosphate sales between 1.1 million to 1.4 million tonnes, with potential declines in earnings due to ongoing curtailments.
• Working Capital: Expected release of $300 million to $500 million in working capital, with a significant portion anticipated in Q4.
• Potash Market: Positive outlook for potash demand, with expectations for a constructive market through the year.

4. Bad News, Challenges, or Points of Concern

• Sulfur Supply Issues: Ongoing challenges with sulfur affordability and availability due to geopolitical factors, including the Strait of Hormuz closure and Kazakhstan blockade.
• Production Constraints: Significant curtailments in phosphate production, particularly in Brazil, leading to lower sales volumes and potential yield impacts on crops.
• Market Volatility: Phosphate and sulfur markets remain volatile, with the potential for further disruptions affecting pricing and availability.
• Yield Concerns: Under-application of phosphate in North America and Brazil could lead to long-term yield impacts and food security challenges.

5. Notable Q&A Insights

• Phosphate Application Rates: North America phosphate application is expected to decline by 20% this year, compounding previous reductions, while Brazil may also see similar declines.
• Ammonia Cost Guidance: Expected ammonia costs in Q3 are projected at $610 to $620 per tonne, influenced by contract negotiations and production mix.
• Production Ramp-Up: If sulfur supply normalizes, the company could ramp up production quickly, but the timeline is uncertain due to ongoing geopolitical issues.
• Biosciences Growth: The Mosaic Biosciences segment is expected to contribute positively to revenues, indicating strong demand for its products despite current market conditions.

Overall, while Mosaic is navigating a challenging market environment, it is taking proactive steps to manage costs and position itself for recovery, with a focus on maintaining liquidity and optimizing its asset portfolio.