Earnings Call Insights: The Mosaic Company (MOS) Q2 2025
Management View
- Bruce M. Bodine, CEO, highlighted that "our hard work to improve operating performance is paying off. It's apparent in our Brazil results, and we expect to see improvements in our U.S. phosphate production business now that the vast majority of our work to enhance reliability is complete." He emphasized strong market conditions, stating, "the market environment remains strong with tight supply leading to very strong phosphate margins and rising potash prices." The company increased full-year potash production guidance, citing strong demand, and completed major reliability projects at U.S. phosphate plants, with no further planned maintenance expected to impede the 8 million tonne annual run rate target. Mosaic also inaugurated the Palmeirante facility in Brazil, adding 1 million tonnes of distribution capacity, and expects Mosaic Biosciences to contribute positively to adjusted EBITDA in Q4. Bodine stated that "we are expecting stronger free cash flow in the second half of the year, which would allow us to pay down debt and return capital to shareholders."
- CFO Luciano Siani Pires described the quarter as "very unusual... with a lot of noise." He reported net income of $411 million and adjusted EBITDA of $566 million. Pires noted positive currency effects and a $216 million gain in market value of modern shares. He explained, "we had these larger than usual provisions that amounted to more than $60 million on a net basis... most of these do not have any cash effect in the quarter." Pires outlined that $8 million in environmental reserves and $4 million for legal reserves were recorded in the quarter, and that these expenses are not expected to repeat at the same level in Q3 and Q4. He also stated, "Phosphates, for example. You know that everything hinges upon the volumes. As we said, 85% of our cash cost of conversion is fixed."
Outlook
- Mosaic raised potash production guidance to 9.3 million to 9.5 million tonnes for the year, up from prior guidance, and expects phosphate production of 6.9 million to 7.2 million tonnes due to extended maintenance downtime in June and July. Third quarter phosphate sales volume guidance is 1.8 million to 2 million tonnes. Management stated, "we expect to reach our Analyst Day per tonne cost targets later this year," and forecast EBITDA growth to accelerate in the remainder of 2025, particularly in Brazil. The company anticipates "Mosaic Biosciences to contribute positively to adjusted EBITDA beginning in the fourth quarter."
Financial Results
- Mosaic reported net income of $411 million and adjusted EBITDA of $566 million, compared to a net loss of $162 million and adjusted EBITDA of $584 million in the same quarter of 2024. The quarter included provisions over $60 million, with $8 million in environmental reserves and $4 million in legal reserves. The company achieved $106 million of its $150 million cost reduction target in Brazil, and cash mined rock costs in Florida reached $51 per tonne, the lowest in 10 quarters. Potash cash production cost per tonne was $75, down from $78 in the first quarter of 2025. Mosaic Fertilizantes segment delivered $150 million in EBITDA, despite an $18 million net bad debt expense. The SG&A cost reduction target was extended from $150 million to $250 million, with the additional $100 million expected by the end of 2026.
Q&A
- Benjamin Isaacson, Scotiabank: Asked about share price reaction and what changed since Investor Day. Bodine responded, "our production volume in phosphates was down from what we had on Analyst Day... but that is a definite difference... As far as the extraordinary expenses... about $50 million of that expense in phosphates, particularly was kind of non-normal."
- Christopher S. Parkinson, Wolfe Research: Asked about run rates for July, August, and September. Bodine confirmed, "in July, run rate was not what we were hoping for... delay of about 2 weeks on the third pumping system at New Wales," but expressed confidence in asset health and guidance for Q3.
- Joel Jackson, BMO: Inquired about the ramp down of $50 million in turnaround costs. Bodine replied, "on average, I think a good number to model from an annualized basis for phosphates is about $100 million to $110 million."
- Andrew Wong, RBC: Asked about hurricane preparedness and asset upgrades. Bodine detailed storm preparation and noted that "all of those things are complete" for asset reliability.
- Vincent Andrews, Morgan Stanley: Asked about asset health metrics. Bodine explained, "the reason it's not 100% is that it does allow for normal unplanned downtime, which is just run-of-the-mill stuff that happens all the time."
- Aron Ceccarelli, Berenberg: Questioned Fertilizantes earnings power amid a shrinking customer base. Bodine and Wang explained that a focus on better credit profiles does not conflict with growth, as expansion targets larger, more creditworthy customers. Pires projected Fertilizantes EBITDA potential could reach $1 billion over the long term.
- David Symonds, BNP Paribas: Asked about specialty phosphate pricing and Brazil market headwinds. Wang described slow soybean season and credit challenges but noted strong demand for the next corn crop and ongoing consolidation among Brazilian farmers.
- Richard Garchitorena, Wells Fargo: Inquired about potash turnaround costs. Bodine stated, "you should expect... to see significant decrease in third quarter on turnaround costs in potash."
- Kristen Owen, Oppenheimer: Sought quantification of Q3 EBITDA improvement. Pires outlined, "stripping margins are going to go up... phosphate volumes increasing... turnaround and idle costs are coming down."
Sentiment Analysis
- Analysts expressed skepticism and sought clarification on extraordinary expenses, asset reliability, and the sustainability of cost reductions, reflecting a slightly negative tone and focus on near-term execution risks.
- Management maintained a confident, constructive tone during prepared remarks, shifting to a more detailed and occasionally defensive stance during Q&A, especially when pressed on costs and production normalization. Bodine emphasized that "everything else is actually trending quite good" and repeatedly described current headwinds as transitory.
- Compared to the previous quarter, the tone from analysts was more probing regarding cost normalization and asset reliability, while management’s confidence was reinforced by completion of major maintenance and stronger cash flow projections.
Quarter-over-Quarter Comparison
- Mosaic’s Q2 net income and adjusted EBITDA improved compared to a loss in Q2 2024 and higher than Q1 2025. Cost reduction and asset reliability initiatives progressed further, leading to lower phosphate production guidance due to extended downtime, but higher potash production guidance. SG&A reduction targets were increased from $150 million to $250 million. Analysts focused more on the normalization of extraordinary costs and the durability of operational improvements, while management’s tone became more assertive about the completion of maintenance projects and expectations for a strong second half. The emphasis shifted from ongoing maintenance (Q1) to completed upgrades and readiness for accelerated growth (Q2).
Risks and Concerns
- Management highlighted risks related to potential hurricane disruptions in Florida, ongoing credit challenges for smaller customers in Brazil, and possible market unevenness in the Americas. Provisions for environmental and legal reserves, as well as bad debt, were noted but described as largely non-recurring. Analysts raised concerns about the ramp-down of extraordinary costs, asset health sustainability, and potential headwinds in the Brazilian fertilizer market.
Final Takeaway
Mosaic’s leadership underscored that operational upgrades and cost reduction efforts are now largely complete, positioning the company to capitalize on strong market conditions. With asset reliability restored, elevated margins in phosphate and potash, and expanded distribution capacity in Brazil, Mosaic expects to deliver accelerated earnings growth in the second half of 2025, while continuing to strengthen its balance sheet and return capital to shareholders.
Read the full Earnings Call Transcript
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