Mosaic's Q1 Earnings: A Rocky Start, But the Bull Case is Still Strong!

The fertilizer giant Mosaic (MOS) just delivered a mixed bag in its Q1 2025 earnings: revenue of $2.62 billion missed analyst estimates of $2.69 billion, but EPS of $0.49 surged past expectations by 6% to $0.4622. While Wall Street’s revenue radar was off, the stock popped 4.45% in after-hours trading—proof that investors are betting on the long game here. Let’s dissect why MOS still has legs, even with some potholes in its Q1 road trip!

The Good News: Phosphate and Potash Pricing Are FIRING!

Mosaic’s core fertilizer segments delivered a knockout punch. Phosphate prices averaged $623 per ton—above guidance—and potash hit $223 per ton, also exceeding expectations. These pricing gains are no accident: global supply tightness is crushing competition. In China, lithium iron phosphate (LFP) batteries are soaking up phosphate, while potash supplies are constrained by geopolitical tensions.

The bull case here is clear: MOS is benefiting from a “supercycle” in ag commodities. With farmers worldwide facing rising demand for crops (thanks to biofuels and China’s insatiable appetite), fertilizer prices aren’t just staying high—they’re climbing. Analysts see this as a multi-year tailwind, and MOS is positioned to profit like a price-setting powerhouse.

The Cost Cuts Are Working—And That’s HUGE

Mosaic’s management isn’t just relying on high prices; they’re squeezing every penny out of operations. Here’s the math:
- Phosphate cash conversion costs are projected to drop to $95–100 per ton by year-end, down from Q1’s $134.
- Potash costs will fall to $64–69 per ton as its Esterhazy mine revs up efficiency.
- The company is on track to hit its $150 million annual cost-savings target, with $90 million already booked.

This is a game-changer. Lower costs mean fatter margins even if prices stabilize. And with phosphate production hitting its third-highest level in 18 months (1.4 million tons in Q1), the company is proving it can reliably crank out product—a big deal after years of reliability struggles.

Brazil: The Growth Engine Ignites

Mosaic’s Brazilian subsidiary, Mosaic Fertilizantes, is the real star. Despite a $18 million hit from currency swings, it posted $122 million in EBITDA. Here’s why investors should cheer:
- Sales volume is set to jump 15% YoY, fueled by a new Palmaranche blend plant (online by July!).
- Brazilian fertilizer shipments for the “staffer season” are projected to hit 47 million tons, up 10% from 2024.

Remember, Brazil is the world’s No. 1 fertilizer buyer—and MOS owns 30% of its market. With soybean prices near $14 per bushel (a farmer’s dream), Brazilian growers are loading up on fertilizer. This isn’t a fluke; it’s a structural advantage MOS will milk for years.

The Risks? Yes, They’re Real—But Manageable

• Weather Whiplash: Cold snaps in Saskatchewan crimped potash output, and phosphate plants had planned turnarounds.
• Tariffs and Trade: U.S. ammonia tariffs could disrupt supplies, though MOS claims its imports are tariff-free—for now.
• Sulfur Prices: Rising costs here could pinch margins if they stay elevated.

But here’s the key: these are short-term speed bumps. The $1.2–$1.3 billion capex budget is future-proofing operations, and the company’s “non-core” asset sales (like the Carlsbad mine) could free up cash to weather any storms.

The Stock: Buy the Dip? Absolutely!

MOS is up 25% YTD but still trades at just 12x 2025 earnings estimates. Analysts’ “Moderate Buy” consensus targets a 13.9% upside to $32.94. Even if revenue stumbles in Q2 (guidance: $3.07B), EPS is expected to hit $0.71—a 53% jump from Q1!

The big picture: MOS is a play on the ag supercycle, and no one’s better positioned than this company. With cost cuts, Brazil dominance, and phosphate/potash pricing power, this stock isn’t just surviving—it’s thriving.

Final Call: MOS is a BUY for the Bulls

Despite the Q1 revenue slip, Mosaic’s fundamentals are rock solid. The company is slashing costs, dominating in Brazil, and riding a global fertilizer boom. Bulls have the data on their side:
- 2025 EPS guidance: $2.20 (up 11% from 2024).
- 2025 free cash flow: Expected to improve as production ramps and working capital normalizes.
- Long-term strategy: Monetize non-core assets, double down on phosphate, and grow biosciences (revenue doubled YoY!).

The bears will harp on weather and costs—but MOS is built to handle that volatility. This is a stock to buy on dips and hold for the next leg up in ag commodities. Action Alert: MOS is a must-own for investors willing to ride the fertilizer supercycle. Don’t miss the train!

Disclosure: The author holds no position in MOS at the time of writing.