The Mosaic Company's Q3 2025 Earnings Call: Contradictions Emerge on Phosphate Production Recovery, Potash Market Demand, Cost Management, and Fertilizantes Segment Performance

Business Commentary:

• Phosphate Production and Asset Reliability:

• Mosaic's phosphate production volumes reached approximately 1.8 million tonnes in the trailing 3-month period ending October, marking a 1.8 million tonnes rate, which is within the guidance range.

• The increase in production is attributed to improvements in asset reliability, with a focus on consistent performance and the successful completion of major investments in asset health.

• Cost Reduction and Efficiency:

• Mosaic achieved $150 million in initial cost savings and is on track to meet its revised target of $250 million by the end of 2026.

• Cost savings are driven by automation, supply chain optimization, and improved fixed cost absorption, despite some temporary cost pressures from higher raw material prices and increased maintenance requirements.

• Global Potash Demand and Production:

• Mosaic's potash operations are running at near record operating rates to meet strong global demand, particularly in the Eastern Hemisphere.

• This high demand is driven by robust affordability, strong Chinese consumption, healthy Brazilian imports, and growing Southeast Asian demand.

• ** Brazilian Business Performance:**

• Mosaic Fertilizantes reported an increase in adjusted EBITDA year-over-year, demonstrating effective commercial strategies and disciplined risk management in the challenging credit environment.

• This performance is attributed to the team's deep local expertise and long-standing presence in Brazil, enabling navigation through market complexities.

• Capital Allocation and Strategic Divestments:

• Mosaic completed the sale of the Taquari potash mine and the Patos de Minas asset, reflecting a commitment to streamline the portfolio and redeploy capital toward higher return opportunities.

• The divestments and strategic reviews are part of an overall strategy to optimize the company's capital resources and focus on core growth areas.

Contradiction Point 1

Phosphate Production and Recovery Timeline

It involves expectations regarding phosphate production recovery, which directly affects the company's operational and financial performance.

Update on the turnaround schedule? How did October performance compare to expectations? What are November expectations? - Christopher Parkinson (Wolfe Research, LLC)

2025Q3: We're committed to achieving normalized production rates. After resolving macro issues, we've faced operational challenges due to institutional knowledge gaps. We've invested in CapEx and maintenance to address this. - Bruce Bodine(CEO, President & Director)

What specific factors are causing the negative market reaction to recent quarterly results despite no material changes to the core outlook since the Investor Day? - Benjamin Isaacson (Scotiabank)

2025Q2: Phosphate volumes and costs are trending towards Analyst Day targets. - Bruce M. Bodine (CEO, President & Director)

Contradiction Point 2

Potash Production and Market Demand

It involves expectations regarding potash production and market demand, which impact the company's operational and financial performance.

What caused the Q4 EBITDA decline for Fertilizantes despite previous performance? - Benjamin Theurer (Barclays Bank PLC, Research Division)

2025Q3: We're optimistic about the phosphate market but now expect overall Fertilizantes EBITDA to decline sequentially in Q4. - Bruce Bodine(CEO, President & Director)

What is Fertilizantes' earnings power in the mid-cycle scenario? - Aron Ceccarelli (Berenberg)

2025Q2: Fertilizantes volumes are expected to increase sequentially in Q3 and Q4, driven by strong growth in Brazil's Northern region. - Bruce M. Bodine (CEO, President & Director)

Contradiction Point 3

Cost Management and Cash Flow Conversion

It involves changes in financial forecasts and cost management strategies, which are critical indicators for investors.

What is the expected cash flow-to-EBITDA conversion this year? What is the opportunity to reduce OpEx? - Lucas Beaumont (UBS Investment Bank, Research Division)

2025Q3: Cash conversion is expected to improve to 70%-80% in 2026, with working capital changes normalizing. - Bruce Bodine(CEO, President & Director) and Luciano Pires(Executive VP & CFO)

Are there material deviations in operating cash flow, and what is the expected free cash flow conversion? - Vincent Andrews (Morgan Stanley)

2025Q1: Normal components in cash flow are expected to improve this year. Free cash flow conversion should improve as we reduce working capital seasonality. - Luciano Pires(EVP and CFO)

Contradiction Point 4

Fertilizantes Segment Performance and Cost Management

It involves differing perspectives on the expected performance and cost management strategies of the Fertilizantes segment, which are critical for understanding the company's financial outlook and operational strategy.

What is the expected phosphate run rate, including institutional knowledge improvements, and what are the key factors driving the Q4 vs. Q3 margin changes? - Andrew Wong (RBC Capital Markets, Research Division)

2025Q3: Our trailing 3-month production is at 1.8 million tonnes, within guidance. We're optimistic but acknowledge it's taking longer than expected. - Bruce Bodine(CEO, President & Director)

How will the Fertilizantes business perform in H1 and H2? What is the recovery timeline? - Kristen Owen (Oppenheimer & Co. Inc., Research Division)

2024Q4: Cash flow improvement is expected throughout the year, supported by cost discipline and production reliability enhancements. The $120 million run rate is the floor, with upside expected from Q2. - Bruce Bodine(President and CEO), Luciano Siani Pires(Executive Vice President and CFO)