NYSE:MOS Mosaic Q1 2025 Earnings Report $35.50 +0.15 (+0.42%) As of 05/20/2025 03:58 PM Eastern Earnings HistoryForecast Mosaic EPS ResultsActual EPS$0.49Consensus EPS $0.45Beat/MissBeat by +$0.04One Year Ago EPS$0.65Mosaic Revenue ResultsActual Revenue$2.62 billionExpected Revenue$2.70 billionBeat/MissMissed by -$80.09 millionYoY Revenue Growth-2.20%Mosaic Announcement DetailsQuarterQ1 2025Date5/6/2025TimeAfter Market ClosesConference Call DateWednesday, May 7, 2025Conference Call Time11:00AM ETUpcoming EarningsMosaic's Q2 2025 earnings is scheduled for Tuesday, August 5, 2025, with a conference call scheduled on Wednesday, August 6, 2025 at 11:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Mosaic Q1 2025 Earnings Call TranscriptProvided by QuartrMay 7, 2025 ShareLink copied to clipboard.PresentationSkip to Participants Operator00:00:00Good morning, and welcome to The Mosaic Company's First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Jason Trembley. Please go ahead. Jason TremblayInvestor Relations at The Mosaic Company00:00:40Thank you, and welcome to our first quarter twenty twenty five earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer Jenny Wong, Executive Vice President, Commercial, then cover the market update Luciano Ciane Perez, Executive Vice President and Chief Financial Officer, will review financial results capital allocation progress. We will then open the floor for questions. We will be making forward looking statements during this conference call. The statements include, but are not limited to statements about future financial and operating results. Jason TremblayInvestor Relations at The Mosaic Company00:01:14They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward looking statements are included in our press release published today and in our reports filed with the Securities and Exchange Commission. We will also be presenting certain non GAAP financial measures. Our press release and performance data also contain important information on these non GAAP measures. Jason TremblayInvestor Relations at The Mosaic Company00:01:44Now I'd like to turn the call over to Bruce. Bruce BodineCEO, President & Director at The Mosaic Company00:01:47Good morning, and thanks for joining our call. I'll start with our key messages for today. First, fertilizer fundamentals are compelling and prices are rising. Despite the uncertainty around global trade policies, fertilizer demand is very strong in every key growing region of the world. Second, we are making progress towards normalizing our phosphate production and operating costs and we're on track to deliver stronger results this year and beyond. Bruce BodineCEO, President & Director at The Mosaic Company00:02:16Third, Mosaic's industry leading market access is enabling us to benefit from strong markets and grow in new ways. You can see plenty of evidence of this important strategic advantage. Our business in Brazil is performing exceptionally well. We've increased our potash production outlook to meet demand around the world and our Mosaic Biosciences business continues to grow at a brisk rate. And finally, our work to shed non core assets and reallocate capital is continuing to take shape. Bruce BodineCEO, President & Director at The Mosaic Company00:02:48To cover our first quarter results, net income was $238,000,000 and adjusted EBITDA came in at $544,000,000 The quarter's results underscore very strong phosphate prices, improving potash prices and excellent performance in the Mosaic for Lozanches segment. And remember, the first quarter is traditionally our seasonally slowest quarter of the year. We expect earnings to improve further from our strong start to 2025. Let's take a few minutes to review market fundamentals at a high level as well as our progress towards our operating goals. Jenny will go deeper into the markets and Luciano will discuss financial results, financial strategy and our capital reallocation journey. Bruce BodineCEO, President & Director at The Mosaic Company00:03:35Our market outlook remains positive. Ag commodity fundamentals and fertilizer demand are solid around the world. With sustained supply constraints in phosphate, prices and stripping margins remain elevated compared to historical norms. And with supply reductions from several major potash producers as well as robust demand potash prices are rising. In fact, first quarter realized prices of $623 per ton for phosphate and $223 per ton for potash exceeded our guidance ranges. Bruce BodineCEO, President & Director at The Mosaic Company00:04:10The strong performance of Mosaic Perlizanches was also helped by the realization of higher prices. It is no secret that global trade conflicts and other geopolitical forces have intensified in the past few months. As we continue to monitor the latest developments and evaluate the impact, especially in The U. S. Agriculture sector, we believe we are well positioned to navigate these dynamics. Bruce BodineCEO, President & Director at The Mosaic Company00:04:36Our expansive market access, especially our strong presence and long history of operating in Brazil and our supply chain agility will prove to be important strategic advantages as we navigate shifting trade flows. While trade continues to grab headlines, I can't emphasize enough that Mosaic is built for the long haul. The long term market fundamentals and operating backdrop remain constructive. For example, biofuel mandates around the world continue to advance and that growth is expected to contribute significantly to global grain and oilseed demand. We are seeing this play out in Brazil with increasing ethanol usage and as a result corn growers are enjoying both improving profitability and fertilizer affordability. Bruce BodineCEO, President & Director at The Mosaic Company00:05:25Phosphate demand is also driven by rising lithium iron phosphate production in China, which grew 55% in just the first quarter of this year and continues to limit the amount of phosphate available for export. As a result, the phosphate market remains tight. And while tariffs could disrupt trade flows, they cannot create more phosphate supply. Now let's move on to the progress we are making toward normalizing production and cost. Improving our asset reliability and being disciplined in our cost management remain our key focus areas. Bruce BodineCEO, President & Director at The Mosaic Company00:06:02In potash, the Esterhazy complex continues to generate strong cash flow across the commodity cycle. It clearly benefits us to produce every ton we can at Esterhazy and we're investing to do just that. We expect to complete the 400,000 ton per year hydrofloat project soon. It is expected to increase our production volumes from Esterhazy and improve our product mix flexibility allowing us to maximize our netbacks while driving our per ton costs lower. We're on track to achieve our production cost per ton target this year. Bruce BodineCEO, President & Director at The Mosaic Company00:06:40In phosphate, we produced 1,400,000 tons in the first quarter of twenty twenty five. The Bartow and New Wales plants experienced substantial downtime for planned turnaround and other reliability improving work during the quarter. That said, March was the third strongest production month in the past eighteen months and we are maintaining our 2025 production volume outlook in the 7,200,000 to 7,600,000 ton range. As production improves throughout the year, our conversion cash cost per ton is expected to decline. Mosaic Fertilizantes delivered a very strong operating performance in the first quarter with conversion and production unit costs declining year over year. Bruce BodineCEO, President & Director at The Mosaic Company00:07:25As cost measures yield further benefits, we expect to achieve our full year unit cost targets. In fact, we expect further improvements in segment profitability in the second quarter. Now let's move on to talk about how we're leveraging our market access to redefine growth. While operating initiatives will drive significant value creation in the near term, Mosaic also has substantial opportunities beyond the near term to grow in new markets with new products and from new sources. Our expansive Brazil footprint positions us well for growth and to navigate the current geopolitical tensions. Bruce BodineCEO, President & Director at The Mosaic Company00:08:06Our mosaic for Lizanches volumes returned to year over year growth in the first quarter. And with our new Palmaranshi blend plant expected to be complete in July, we expect further growth in the remainder of Bruce BodineCEO, President & Director at The Mosaic Company00:08:18the year. In fact, we have Bruce BodineCEO, President & Director at The Mosaic Company00:08:21already sold over 50% of the additional tons that are expected from the Palmaranche facility this year. I should also mention that the operating environment is compelling. With the current good farm economics, we now expect approximately 15% sales volume growth this year. Mosaic Biosciences had a strong quarter with revenue more than doubling over the prior year and on track to double for the full year driven by surging sales for our existing products and new product launches in our key markets. Late last month, Mosaic Biosciences brought Neptunian to the market in China. Bruce BodineCEO, President & Director at The Mosaic Company00:09:00Neptunian is a biostimulant that helps crops address abiotic pressures such as drought, salinity and heat by adding stress resistant properties into water soluble fertilizers. Neptunian is currently in the registration process in India and Brazil. We are succeeding at engaging growers around the world and demonstrating through extensive field trials that our biological products deliver meaningful yield and value benefits. Moving on to our portfolio review and cash return focused initiatives. You saw the list of assets we shared at our Investor Day in March. Bruce BodineCEO, President & Director at The Mosaic Company00:09:38Clearly, we have significant potential for future monetization. The conclusion of the Ma'aden transaction gave us a transparent value for our investment, which is about $1,500,000,000 as of today. We announced the PATHOS DEMENIS sale earlier this year. Our pursuit of strategic alternatives for our potash mine in Carlsbad, New Mexico is proceeding well and we continue to assess the performance of assets such as Ereshaw, Patrosenio and Tocore in Brazil. Finally, let me spend a moment addressing capital allocation and capital return to shareholders. Bruce BodineCEO, President & Director at The Mosaic Company00:10:17Free cash flow generation was constrained by typical working capital seasonality in the first quarter. We continue to expect CapEx of 1,200,000,000.0 to $1,300,000,000 this year and we anticipate free cash flow conversion will improve in the remainder of the year. Our commitment to return excess capital to shareholders is unchanged. Now Jenny will provide a more in-depth update of agriculture and fertilizer markets. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:10:46Thank you, Bruce. Ag fundamentals continue to be robust despite significant uncertainties in the market due to global trade policies. Prices for the most important commodities while volatile have moved broadly sideways for the past six months and remain supportive to demand as grower worldwide remain incentivized to push yields higher as global stocks we use ratio remains multi decade low. It is also important to note that global commodity demand tends to be less impacted by global macroeconomic fluctuations. The North American spring season is expected to see typical demand for both P and K with limited channel inventory remaining when planking wraps up in the next couple of weeks. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:11:38We're watching the potential for demand to face some headwinds in the second half of this year due to more challenging fertilizer affordability driven by lower commodity prices in The US. As green and oil seeds importers like China have shifted their buying to other exporters. However, any harmful impact to The US Grower profitability, stemming from tariffs and the trade flow shifts are likely to inure to the benefit of Brazilian growers. For example, China increasing purchases of Brazilian soybeans as opposed to US soybeans. In fact, Brazilian grower economics are quite constructive despite the general weakness in global soybean prices. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:12:29We have long talked about the natural hedge of market access across key agricultural regions provided by Mosaic's operating model in situations just like this. Growers in Brazil are enjoying at commodity prices at a meaningful premium to prices quoted in Chicago. As such, fertilizers shipment into Brazil are expected to set another record with total NP and K shipments likely to exceed 47,000,000 tons. Shipments were a bit under 46,000,000 tons in 2023 and 2024. Purchases of P and K for the upcoming staffer season are running 10% higher than a year ago. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:13:19And elsewhere in the world, grower economics also look compelling. Domestic agriculture is saying additional focus and support in many smaller and mid scale producing countries with their eye towards insulating food security from volatile geopolitical and trade environment. Now a couple of examples. Palm oil producer economics are solid, a low inventory driven by continued robust domestic and export demand. Indian farmer returns are also solid given supportive government policies and domestic act product prices. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:14:03And after 2024, a year in which Indian farmers were left with low phosphate for lighter supply availability due to an insufficient subsidy program that keep to import volume subdued. The Indian government has this year stepped forward with more supportive policy propositions. We believe under this more supportive environment that India will see phosphate demand return to a more historically normal input level of 6,400,000 tons, up 40% year over year. While demand for P and K appears well supported, the price continue to look tight. For phosphate, Chinese export of DAP and MAP remain subdued and are not expected to return with any significance until June. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:15:03As has been the case in recent years, strong domestic fertilizer demand and that the diversion of phosphate molecules into industrial uses like LFP continues to provide a structure change in availability of Chinese high analysis phosphate fertilizer exports. As Bruce mentioned, regarding LFP, production was up 50% year on year in q one. In potash, we have seen production expectations take lower in 2025 from some key suppliers like Russia, China and Chile, where questions about sustainability of higher production from Laos also persist. Exports from Belarus were on the higher end of the expectations in Q1. So we're watching for the supply impact from announced the maintenance there to be realized in Q2. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:16:03From a pricing standpoint, we believe that both P and K will continue to find support at current levels. In fact, we don't anticipate a meaningful summer field reset, if any in The US market. On the raw materials front, sulfur remains firm with the latest spot prices suggesting prices may stay elevated for a longer duration. We expect sulfur prices will normalize by end of the year. Conversely, ammonia supply is ramping and prices continue to shift lower. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:16:39With this backdrop, phosphate benchmark stripping margins are expected to remain elevated. In summary, at commodity, phosphate and potash market fundamentals remain compelling and the Mosaic expects manageable impacts from government and trade policies. Now I'm turning the call to Luciano. Luciano PiresEVP & CFO at The Mosaic Company00:17:03Thank you, Jenny. First, some housekeeping. You will notice that we added cost per ton metrics to our release. With reconciliation tables to U. S. Luciano PiresEVP & CFO at The Mosaic Company00:17:13GAAP metrics at the end. We intend to track and discuss closely with you our progress in those metrics going forward. Now on to the performance. As you can see by the numbers, our phosphate and the potash segments outperformed in realized sales prices compared to our own guidance given in the last earnings call. I guess there's no surprises here as you're certainly following the tight supply and demand situation, the recent upward trend in prices. Luciano PiresEVP & CFO at The Mosaic Company00:17:45And in Q1, we were conducting the maintenance and reliability improvement projects in our facilities to support increasing volumes for the future and that impacted costs. During the phosphate segment, starting by the mines, United States blended rock cost per ton was low, dollars 77 in the first quarter. Hurricane is well behind us. We had very strong mining output in Q1 and this is continuing. So these lower rock costs, they will work through inventory and will reflect favorably in our financial results in the next few quarters. Luciano PiresEVP & CFO at The Mosaic Company00:18:24The cash conversion cost per tonne was $134 That increase was caused by lower production volumes and higher operating expenses to restore asset reliability by design and widely communicated. Going forward, we expect to drive costs down towards our range of $95 to $100 run rate by year end as production output improves throughout the rest of the year. For the potash segment, again on the cost front, the production cash cost per ton was $78 up from $72 per ton in the prior year quarter. During the quarter, we curtailed production in response to the cold weather in Saskatchewan. Railways could not move the products, Our finished product warehouses were full. Luciano PiresEVP & CFO at The Mosaic Company00:19:18We could not keep producing, so we had to stop production. And we also pulled forward repair and maintenance work during this downtime. So between this additional work and the lower fixed cost absorption, the production cash cost per ton was higher year over year. Looking to the remainder of the year, we expect those unit production costs to decline, reaping the benefits of the hydro flow project. We're still very much on track to achieve our target of $64 to $69 per ton. Luciano PiresEVP & CFO at The Mosaic Company00:19:51On Mosecra de Chile Sanchez, our Brazilian business, the improvement story is already developing. We communicated, you will remember in our last earnings call that adjusted EBITDA would have an uplift in Q1, because in Q4 it was impacted by a $35,000,000 negative effect from foreign exchange variations. That is exactly what happened. Adjusted EBITDA came in at $122,000,000 despite still having a negative FX effect on payables and currency hedges of 18,000,000 So last quarter, 35,000,000, this quarter, 18,000,000, but still there. The cost performance continued strong. Luciano PiresEVP & CFO at The Mosaic Company00:20:33In Q1, mining costs continued to decline, mostly due to the new mine plan in Patrocino and better performance in Cagati since last year and that allowed us to stop importing expensive rock. Conversion costs stayed somewhat flat compared to Q4, which was already substantially lower than prior quarters. So we're good here. Looking forward to Q2, results will come in much stronger. Why is that? Luciano PiresEVP & CFO at The Mosaic Company00:21:04First, seasonality. If sales increase by 30%, for example, as we saw in 2024, distribution margins returned to the normalized $30 to $40 range. Remember in Q1, it was more into the $20 Luciano PiresEVP & CFO at The Mosaic Company00:21:20to $30 Luciano PiresEVP & CFO at The Mosaic Company00:21:22And if the FX hit reduces further, presuming the FX remains stable, it's very reasonable to expect that Q2 EBITDA for Fertility Sciences will be above $150,000,000 I can walk you through the math in the Q and A if you want. Now moving on to SG and A and our progress on the overall $150,000,000 cost savings target. Compared to a year ago, SG and A had about a $16,000,000 negative variance in the quarter, primarily due to revaluation of some outstanding incentive programs. The share price increase, we had to record this non cash expense. Other than that, core SG and A declined, albeit at a slower pace. Luciano PiresEVP & CFO at The Mosaic Company00:22:12SG and A reduction should accelerate in Q3 once we start automating a lot of activities, following the introduction of our new software platforms that we discussed during our Investor Day in March. And thus, we expect SG and A to be down for the full year. All in, we've achieved about 60% or US90 million dollars of the US150 million dollars in annual cost savings target. Remember this 150,000,000 it's a run rate cost saving. When compared and that is compared to the 2023 baseline, half of these $90,000,000 savings were contributed by Mosaic Fertilizer. Luciano PiresEVP & CFO at The Mosaic Company00:22:56And within that, about $20,000,000 was a result of consuming a higher volume of internally produced rock that we mentioned before. So 45,000,000 from Mosaic Fertilizantes out of which 20,000,000 from better rock sourcing versus imported. The other half of the $90,000,000 savings was a result of lower SG and A compared to the 2023 baseline. On to cash flows. Well, with the improving pricing environment and outlook, our expectations for cash flow generation is increasing. Luciano PiresEVP & CFO at The Mosaic Company00:23:29In Q1, cash flows were subdued mostly in light of the seasonal increase of approximately $160,000,000 in inventories. That number you can read on the balance sheet, which happened preparing for an increased sales in Q2 and Q3, so that's typical for Q1. And other typical Q1 outflows such for example as taxes and profit sharing. Going forward through year end, under our current market outlook, we expect to see a strong improvement in quarterly cash flows due to seasonally stronger demand and the drawdown of inventories. But still, we expect our working capital to end the year approximately $150,000,000 above Q4 twenty twenty four and driven primarily by the strong increase in the overall level of sales in Brazil and also because of higher prices of raw materials, mainly sulfur. Luciano PiresEVP & CFO at The Mosaic Company00:24:25So although cash flow outlook for 2025 is good, it will be impacted by those factors. Finally, a note on our capital reallocation program. The discussions with counterparties on the non core potash assets, Carlsbad and Takwari, have really accelerated. We have communicated very long ago our desire for a strategic solution for Carlsbad, and now we can firmly say that Takwari is in the same bucket, especially in light of the capital requirements going forward. These investments are not the best allocation of our capital and our portfolio, we better let someone come in and take them. Luciano PiresEVP & CFO at The Mosaic Company00:25:06Bruce, back to you. Bruce BodineCEO, President & Director at The Mosaic Company00:25:08Thank you, Luciano. Bruce BodineCEO, President & Director at The Mosaic Company00:25:10To summarize, Mosaic delivered a solid quarter and our outlook for 2025 is positive. With our improving operational performance, lower cost profiles and excellent financial foundation, Mosaic is well positioned to benefit from the strong market conditions we see ahead and to navigate effectively in the ever changing geopolitical landscape. Now, operator, we would like to take questions from the audience. Operator00:25:37Thank you. We will now begin the question and answer session. The first question comes from Chris Parkinson with Wolfe Research. Please go ahead. Chris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLC00:26:14Great. Thank you. Bruce, something tells me you already know what question I'm going to ask. But if we stood at in your boardroom during the first quarter, how do you have adequate fully assessed yourself when it came to Bartow, New Wales and getting into Riverview and Louisiana? What would be the same answer as you stand here today mid 2Q? Chris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLC00:26:34And generally, what are the puts and takes for the second half when you think about finally getting to the end of what has been a multiyear journey? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:26:47Hey, Chris. Thanks for your question. I apologize to everyone. I've come down a little bit of cold, so bear with my voice. I think we would have been in a similar position, Chris, today versus what we said now. Bruce BodineCEO, President & Director at The Mosaic Company00:27:03There have been some puts and takes as we went into what we knew and had talked about a lot going into this turnaround season in quarter one. We knew it was gonna be heavy at New Whales and Bartow. That turned out to be the case. And as always, when you get into equipment, you have some discoverables at New Whales. We had some brickwork in a reactor in phosphoric acid that was unanticipated that took a couple extra days from a turnaround standpoint. Bruce BodineCEO, President & Director at The Mosaic Company00:27:33We're also doing it some reliability enhancement projects as we talked about as well in our Analyst Day. And, you know, those are paying off as well. And and part of those are in GIP handling, particularly at New Wales. We did our first train of replacing our GIPs and handling system there, Had some commissioning issues as it being the first of three that we're gonna do, and and those were a little more of a struggle than we hoped. But the good news is the benefits there have paid off. Bruce BodineCEO, President & Director at The Mosaic Company00:28:04We're seeing at target rates at New Wales now. We're seeing at target rates at Bartow now. And then we've accelerated some of the additional jip handling work at New Wales more into the first half. So first half may see a little more on the reliability side for improvements that we're gonna do, a little bit more downtime. But really what we're doing is after the learnings of the first train we did at New Wales, we're just gonna apply that to the other two trains and and really just insulate the back half of the year's performance. Bruce BodineCEO, President & Director at The Mosaic Company00:28:44So we're very optimistic about what we're seeing. As you said, Chris, a couple of puts and takes, but we're seeing the results pay off on all of the hard work. And again, accelerating some of the work that we have under our control to just get through this cycle even that much faster and that much better going into the back half of the year. Operator00:29:08Our next question comes from David Simmons with BNP Paribas. Please go ahead. David Simmons, your line has been unmuted. You may proceed with your question. It seems we're not receiving a response from David at this moment. Operator00:29:37We will proceed to the next question, which will be from Jeff Zekauskas with JPMorgan. Please go ahead. Jeff ZekauskasAnalyst at JPMorgan Chase00:29:45Thanks very much. In the light of tariffs of material into The United States, are your ammonia Or are there ways that you can work to keep them under better control? Bruce BodineCEO, President & Director at The Mosaic Company00:30:06Yeah. Thanks, Jeff. And I know there's been some reports on things the last couple of days, but our purchases as of now have not incurred any tariff impacts. And yet to say that that would be the case in going forward in permanency, know, I don't know. But ammonia is exempt in The United States, and that's where we have most of our supply coming from with our contracts in CF particularly. Bruce BodineCEO, President & Director at The Mosaic Company00:30:39And then we are seeing good production out of our own assets in Louisiana. And we don't expect much over 20%, if not less than 20%, exposure to any market forces anyways given the product mix of our ammonia. So, you know, heavy on our supply contracts, strategic supply contracts, which to date, we're not seeing tariff impacts and, you know, heavy where we can on our own production, tariff free. And then exposure is pretty low on the rest of our product needs, Jeff. And like I said, to date, we haven't seen tariff impacts. Operator00:31:21The next question comes from David Simmons with BNP Paribas. Please go ahead. David SymondsAnalyst at Exane BNP Paribas00:31:29Hi guys. Can you David SymondsAnalyst at Exane BNP Paribas00:31:29hear me now? David SymondsAnalyst at Exane BNP Paribas00:31:33Hello? Luciano PiresEVP & CFO at The Mosaic Company00:31:34We can hear you. David SymondsAnalyst at Exane BNP Paribas00:31:35Hello? Operator00:31:41David, you are audible. You may proceed with your question. David SymondsAnalyst at Exane BNP Paribas00:31:45Okay, brilliant. Sorry about that. We're having some tech issues on this side. I had a couple more on phosphates, please. So the first one on VAP prices. David SymondsAnalyst at Exane BNP Paribas00:31:53So if I look at market prices and then look at the range that you're stating, it looks like you could be being conservative there, I would estimate. So maybe you could talk about price realization in April. And if there's any reason that you wouldn't be right at the top end of that range that you've given for realized flat prices? And then the second question, so I hear you maintenance costs. But if I look at the absolute costs in phosphate, it was up €20,000,000 year on year, and that's with production lower. David SymondsAnalyst at Exane BNP Paribas00:32:27And also the idle and turnaround cost line that you give was also lower year on year. So just some more color on that would be good. Is there some maintenance costs that sits outside of that idle and turnaround line? Thanks a lot. Bruce BodineCEO, President & Director at The Mosaic Company00:32:41Hey, David. Thank you. Let me start with your last question. So our costs on a per cost basis or per ton basis, mostly fixed cost absorption, a big impact of that given the heavy turnaround activity. But yes, we've had some extraordinary maintenance costs that don't anticipate being reoccurring as we continue to invest in getting reliability back up with full focus on that. Bruce BodineCEO, President & Director at The Mosaic Company00:33:12With the debt price, let me actually just turn it over to Jenny and talk about that. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:33:17Sure. On DAP prices, I think you're right, David, that market has been really keeping the resilience for the DAP market, DAP prices. Our realized April DAP prices are actually higher than high end of the of the range. We anticipated the market is going to keep the strings for the remaining of the the the the quarter. And you might be right. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:33:45We we we probably would see some upside on the prices for the tons we haven't realized for the remaining of the quarter. And once again, we do not anticipate any price reset post the spring season in North America and the prices in the rest of the world as you can see it's pretty much at parity at $700 level. We foresee this price is going to stay. Thanks. Bruce BodineCEO, President & Director at The Mosaic Company00:34:15Just let me add David, on this costing. We do anticipate once we get back as we said in Analyst Day to our 2,000,000 ton run rate in the back half of the year. And Luciano talked about this in the opening comments as well. Conversion costs will be in that $95 to $100 range. So we're confident in that. Bruce BodineCEO, President & Director at The Mosaic Company00:34:34And as we get through these next few months of extraordinary activities, that's what you should expect. Operator00:34:45We have Joel Jackson with BMO with the next question. Go ahead. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:50Hi, good morning everyone. Thanks for taking my question. Obviously, potash market is nice. It's rising. Things are good, demand driven. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:57Jenny Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:58and Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:58and the rest of the team, I thought some of your comments are interesting. I also, you know, have been following the Belarusian shipments and exports. You talked about let's wait to see if q two shipments come down because q one was so good. But we know overnight, Jenny, right, that we saw Belarus exports be, I think, 1,100,000 tonnes in April, so even higher. It doesn't seem to have any kind of supply issues. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:35:21So are as you think about strategy wise here with Capitex, are you wondering if maybe there are no Belarusian maintenance cuts or it's coming later? I mean, you're raising your volume, but it seems like this has been not really a supply decreased here. What do you think? Bruce BodineCEO, President & Director at The Mosaic Company00:35:41Joel, let me just turn it over to Jenny. You're asking her specifically, so I'll let her answer it. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:35:46Sure. Joel, I think we agree with you specifically on Belarusian's MLP export. We have not seen a shipment reduction as what they announced as as a part of the maintenance and the production cut or whatever. However, we have seen production cut that is coming out of China, and we also have seen the announcement from Chili at QM on their repurpose of their potash production. So to answer your question, have have we seen shipment reduction for the first of four months, especially for the first quarter? Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:36:28Yes. We have seen import reduction in China, which is the largest market for potash for the first quarter down by 7% and which added to the lower production of domestic production. The inventory in China is coming to a very, very low inventory at port less than 2,000,000 tons, which is the 30% lower than the same time of last year. And in country inventory for local producers as they reported was also down by 30%. So the low inventory in situation is a result of reduced reduced to redact reduction from the major producers in the in for for that region. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:37:10So I I would also want to add to with this reduced reduction reduced shipment of domestic reduction in China and also reduced the shipment of multiple international suppliers into China. China's in a very critical low inventory situation for potash, which which set very well for the for the coming contract negotiation. I will stop here. Thank you. Operator00:37:41Our next question is from Kristen Oven with Oppenheimer. Please go ahead. Kristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.00:37:48Hi, thank you for the question. Kristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.00:37:50Sort of a follow-up but more closer to home. Just can you give us an update on the cadence of your cost of production for potash as we go through the year? You noted some of the headwinds in Q1, but given the volume update and your main tank target, just wondering how we should think about the cadence of cash cost of production of potash? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:38:12Yes. Thanks, Kristen. Really, just to reiterate, Q1 was a little bit of a product mix issue as well as Bell Plain was more impacted to these weather constraints that we had that caused them to curtail some of their production, Bell being one of our lowest cost producers. Now that Bell Plain is back up and running full, fluidity of the supply chain is good. We continue to make good progress on the Esterhazy hydro float project, adding 400,000 tons in the back half of the year at that run rate. Bruce BodineCEO, President & Director at The Mosaic Company00:38:49We do expect cost per ton to dramatically improve as we go from quarter two to quarter three to quarter four as those low cost tons at Esterhazy come more into the marketplace. So Luciano, do you have a little bit more you want to talk about? Luciano PiresEVP & CFO at The Mosaic Company00:39:11Action tones. I'm sorry. It was it was with the mic mute. I'll I'll repeat. I was saying that the achievement of the target range could come as early as Q2 if we deliver what's in the plan. Luciano PiresEVP & CFO at The Mosaic Company00:39:26So we're positive on that. Operator00:39:32The next question comes from Andrew Wong with RBC Capital Markets. Please go ahead. Andrew WongEquity Research Analyst at RBC Capital Markets00:39:40Hey, good morning. Thanks for taking my question. Can you just provide some thoughts on, I guess, Mosaic's role and how the S and D plays out over the next, say, like six to twelve months as production improves? How does that impact the market balances and pricing? I know Jenny said that The U. Andrew WongEquity Research Analyst at RBC Capital Markets00:39:57S. Summer prices are unlikely to reset. But I'm assuming there's a lot of the production that Mosaic's producing would go to the domestic market. So just curious how that plays out. Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:40:09Yes. Thanks, Andrew. We provided some new graphics in our earnings deck this time to kind of talk about how we see supply and demand growth in each of the two major commodities, phosphate and potash. There is some detail there. But generally, when you look at phosphate, as we see our production rise in the back half of the year, which we are already anticipating in our kind of supply adds from 2024 to 2025, when you look over on the intersection of supply and demand, you still see pretty much supply constraints. Bruce BodineCEO, President & Director at The Mosaic Company00:40:47So right now, we would say, and I'll let Jenny talk about it in more detail, that demand is constrained by supply, particularly in phosphates. So adding that little bit of additional production from Mosaic in the back half of the year, as we anticipate that, we see we see it still being very constructive to tight on the supply and demand balance. So Jenny, anything to add? Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:41:14Sure. I think, Andrew, your question probably more towards two phosphate. I would just simply say the demand in India, the pent up demand in India is going to consume any operational improvement and also the recovery of production from the Las Amunya. So meaning, the improvement for from Mosaic and some of our peers in North America market plus the recovery in in in a previous those Las Amunia, Elifusa production site will only be able to support the demand issues in India. So to give you some specifics, India demand was down last year on DAP, and the government had their government has realized that this is a issue. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:42:00And with the latest policy support, they will need to buy 2,000,000 tons for the coming caliph season. And that season, they only got 300,000 tons. With their agreement with OCP, that demand cannot be met by only source of of Marco. So to your questions on the movement of product between North America, which is our home market and other market, overall, phosphate market is global market. As we know, for over 40% of the demand is actually in the market, which are subsidized by the government. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:42:42There is no affordability issues. And when that comes to the non subsidized market, especially in The Americas, we might see some demand demand challenges for the second half of the year from North America, which is going to be well offset by the demand in Brazil as we mentioned earlier. The farm economics there are very different than US. So overall, the market are going to be tight. Mosaic, we might make some movement of the product between The US, the whole market, and the rest of the world if it is needed. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:43:23In fact, we we as we we're watching very closely on the affordability issues of phosphate in The US market. And as we are ramping up spring season, and we thought the customers might might delay their purchases for the same concerns that we have. And the the the fact is that over the last week, we started to have major customers in The US came forward to buy their summer fuel phosphate at today's price. So so we're watching affordability issues. The market is really tight. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:44:01Eventually, phosphate turns just like any other products that the price is going to really define where it can be used as the best to use. And we believe the shipping margin price will stay elevated given even even with the headwinds. Operator00:44:24The next question comes from Steve Byrne with Bank of America. Please go ahead. Steve ByrneResearch Analyst at Bank of America Securities00:44:30Yes. Thank you. You have these 15 supply and demand charts for phosphate and potash that are, you know, in your slide deck that are that are very interesting, particularly the phosphate chart that that looks a bit unsustainable here with with what you're projecting for a fourth year of of a meaningful, you know, price rationing demand. Is is there potential that global demand, you know, has has really more stabilized versus what you're projecting here? Or do you think that, you know, this deficit could drive a yield drag globally this year? Steve ByrneResearch Analyst at Bank of America Securities00:45:18Or is this driving demand for for your biologicals to release the insoluble phosphate in the soil? Bruce BodineCEO, President & Director at The Mosaic Company00:45:29Steve, really always appreciate the question. I think it's a combination that I think our biologics for sure help in this regard to get more. But I'm gonna turn it to Jenny and just let her talk a little bit more about it. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:45:48Sure. Steve, I I think we share the same view as you are. If you look at the overall shipment of phosphate over the last couple of years, that has been an issue. The the the the word would need more phosphate in order to support yield increases or yield level. And the fact, if you look at the yield increases over the last four, five years, has really slowed down versus the trained level, and that is a reflection. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:46:20Potentially, major contributor was really the lower phosphate application around globe. So and also I appreciate that you pointed out how biologicals can help in this kind of situation, which basically help the farmers to maximize or improve the efficiency for the investments they made on phosphate. And even it's even more meaningful today at the price level that we all believe it is a relatively high level for the farmers by investing in biologicals to maximize their investment in this higher priced phosphate was really the the the point that we're communicating with the farmers both in North America and also in Brazil. And we foresee this biological product will bring the benefit to the farmers, not only increase the yield, but also help them to improve their ROI return on investment. Operator00:47:20The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Vincent AndrewsManaging Director at Morgan Stanley00:47:26Thank you. I appreciate the comments on the working capital in terms of cash flow. Are there any other line items in cash flow from operations that are going be material deviations either headwinds or tailwinds this year versus last year? And is it possible to talk about what you think your free cash flow conversion of EBITDA in a percentage terms and a range might be this year? Bruce BodineCEO, President & Director at The Mosaic Company00:47:49Vincent, I'm going to turn this straight over to Luciano. Luciano PiresEVP & CFO at The Mosaic Company00:47:54Vincent, I don't anticipate any, I would say, normal components in cash flow for this year. So and because the cash conversion was low last year, pretty much every additional ton of every additional dollar of EBITDA should flow after taxes towards cash flows absent the working capital increase that we gave. We're going to be not going to give you, let's say, a precise number for cash flow conversion. But I think with this directionally, should be able to model it based on that assumption. Every incremental EBITDA that you forecast for this year absent the $150,000,000 working capital increase for Brazil should flow after taxes towards cash flows. Luciano PiresEVP & CFO at The Mosaic Company00:48:50I'd like to take this opportunity to correct an information that I gave a little ago. I said that potash costs should converge into the range already in Q2. I was looking at the wrong column. I'm sorry for that. It should be in range for the second half, so Q3 and Q4. Luciano PiresEVP & CFO at The Mosaic Company00:49:10That's the same thing for phosphates as well, just giving that color. Q3 and Q4 should be in range. When you look at the full year, the full year for potash should be in range. The full year for phosphates should be a little over range the target range just because the Q1 number was so high. Operator00:49:32The next question comes from Ben Isaacson with Scotiabank. Please go ahead. Ben IsaacsonManaging Director - Equity Research at Scotiabank00:49:38Thank you very much and good morning everyone. I'd just like to go back to the Analyst Day and just ask a question on Mosaic Biosciences. So you're targeting $70,000,000 of revenue this year profitability in Q4 and then in five years from now, 200,000,000 of EBITDA. Can you talk about the shape of that EBITDA growth? What do the margins look like? Ben IsaacsonManaging Director - Equity Research at Scotiabank00:50:02And what's the plan with this business? I mean, you don't want a commodity multiple to smother it. So is the intention to spin it off eventually? You. Bruce BodineCEO, President & Director at The Mosaic Company00:50:14Hey, Ben. Thank you. I'm going let Jenny take most of this question. But we're seeing good results out of the bioscience. And as you said, we do and what we said in our opening comments anticipate good revenues as we laid out and continuing to grow over the five year period as we laid out in Analyst Day as well. Bruce BodineCEO, President & Director at The Mosaic Company00:50:35We actually think there might be even additional upside to to those numbers. But let me get over to Jenny and let her talk about some of the more specifics. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:50:49Sure. Thank you, Ben, for the questions. I can provide you a little bit more color on our bioscience growth projection. So the growth in the future, including today, are coming from two different type of products. One is our own products, The products that we invested in the discovery, and we are we did our own product development in the field, and we got our own registration. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:51:16So this is our Mosaic's own product. For this type of product, our gross margin is around 60%. Six zero. In the meantime, at this time, as we are going through product development and the regulatory approval for the products that we haven't really got registration. It takes two to three years depending on countries. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:51:39In this in this situation, we're also selling third party products. We call licensed in product. For this product, the gross margin are lower. It's somewhere between 30 to 40%. Going forward, we are going to have major new product introductions in all major market as we talked about at Analyst Day by leveraging our market access over the next few years after we get the product registration and so that we can more aggressively grow the products that are from our own portfolio. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:52:14So that's basically the story for for our bioscience. As you can you can expect that we're going to disclose more going forward on our new product introduction, on our new product registration, and Neptunium's launch last month in China. It's just the starting point. Thanks. Bruce BodineCEO, President & Director at The Mosaic Company00:52:35But, Ben, we see this very complementary to the rest of our business with the plant and crop nutrition, adding soil health, you know, to this. We do expect as EBITDA continues to grow to meaningful numbers that maybe we do benefit from some of parts valuation. And this is something we're looking forward to and continue to discuss as that business continues to accelerate and grow over the near future. Operator00:53:06The next question comes from Richard Garchitorino with Wells Fargo. Please go ahead. Richard GarchitorenaVice President - Equity Research at Wells Fargo Securities00:53:13Great. Thank you. So maybe we can turn to Brazil, Luciano. If we can dig into the EBITDA upside you were talking about for the second quarter, maybe what's driving that potential 150,000,000 I noticed production volumes or sorry, sales volumes that fills out for the first quarter were up 8%. So I would expect a meaningful increase to that to get to the 15% full year increase? Richard GarchitorenaVice President - Equity Research at Wells Fargo Securities00:53:42And then also just maybe if you had any color on has things really improved in terms of sentiment since the beginning of the year? Obviously, a lot of trade concerns and improved that beneficiary mainly being Brazil. What were your expectations for volumes at the start of the year versus today? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:54:08Thanks, Richard, for your question. Let me just turn it over to Luciano to address the first half. And then if Jenny's got commentary on some of the back half question, let her take it. Luciano PiresEVP & CFO at The Mosaic Company00:54:18Yes. Well, thanks. So the main concept here is that Q1 in Fertilization was mostly driven by our production business. Really, the distribution part of it didn't kick in, and it will kick in. Approximately 300,000 tons were sold from our own production and $1,500,000 from distribution. Luciano PiresEVP & CFO at The Mosaic Company00:54:41If you multiply $1,500,000 by, let's say, 24 per ton of distribution margin, you get to a $36,000,000 EBITDA in distribution. Last the foreign exchange impact, you get to $18,000,000 So out of the $122,000,000 only 18,000,000 was distribution. So by the same token, if you, for example, assume that sales and distribution are going to go from 1,500,000.0 to 2,100,000.0 if you multiply it by something in the mid $30 to $40 and if you remove still another FX impact from 5 to $10 you get to about US55 million dollars So if you add this to the performance of the production business in the first quarter which was $100,000,000 that puts a floor of about $150,000,000 for the performance in Q2. But remember also the production business will also increase sales in Q2. So therefore that's why we're very confident that the 150,000,000 is might be even a conservative estimate for the performance in Q2. Luciano PiresEVP & CFO at The Mosaic Company00:55:55Jenny, anything to add on Luciano PiresEVP & CFO at The Mosaic Company00:55:57the Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:55:58Probably add a little bit on the market. We are expecting Brazil market to grow this year. It's partially also because of the increased acreage for from both corn soybean. And as we mentioned earlier, trade flow change has really benefited the Brazilian farmers. We are seeing this growth of the market. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:19For Mosaic's volume growth as we projected for the rest of the year, it is really coming from partially, Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:26it's Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:26the market growth. Partially, it's really our penetration into the new regions where where we didn't really participate in the past. Mean meaning northern part of the region with Parmanchi going to up and running from July onwards. We are ready to really capture the growth in that part of the region that give us the opportunity to grow and also to to to capture higher share in the market. Lastly, I would say the headwinds in the in Brazil market are related to the credit issues and also some of the high interest rate environment. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:57:02It is still a challenge for the market. And we've been very diligent and disciplined in managing our credit risk as we operate and grow in that market. Operator00:57:16We have our next question from Lucas Beaumont with UBS. Please go ahead. Lucas BeaumontDirector Equity Research Analyst at UBS Group00:57:23Thank you. Yes, I just wanted to clarify on the phosphate volume production outlook. So you kept your target unchanged there. But with where your first half guidance is in that sort of 3,300,000 ton range, you'd need to kinda hit 2,000,000 tons or higher just to get to the bottom of the annual range in the second half. So I was just wondering, does that mean now you're probably pointing towards the low end of that range? Lucas BeaumontDirector Equity Research Analyst at UBS Group00:57:50Or do you think you can even get above 2,000,000 tonnes a quarter in the second half to kind of still be either in the middle or at the upper end of the range there? Bruce BodineCEO, President & Director at The Mosaic Company00:58:01Hey, Lucas. Thanks. Yeah, I know that you're putting single points together, but our overall annual guidance still is 7,200,000 to 7,600,000 tons for phosphate. And I think as we've talked about our quarterly kind of range, 1,800,000 to 2,200,000 tons, I think there is upside to the two based on capability at our facility. So point for me is that we're feeling very good about the work that's been done, the demonstration of capacity that we're seeing post some of these reliability improvement projects that we know that have been hanging on us as we've tried to step on the accelerator into 2025 and late twenty four and that we do feel good about full capacity output in the back half of the year. Bruce BodineCEO, President & Director at The Mosaic Company00:58:53So again, still feel good about the 7,200,000 to 7,400,000 ton range and not willing to say that we're coming down to the low end of that by any means. Operator00:59:08The next question comes from Edlain Rodriguez with Mizuho. Please go ahead. Edlain RodriguezEquity Analyst at Mizuho Securities00:59:13Thank you. Good morning, everyone. This is for Bruce and Jenny, I guess. I mean, I know it's hard to do, but given the near term and medium term dynamics of the respective industries, If you have to choose between P and K, which one would you allocate more capital CapEx to right now? Bruce BodineCEO, President & Director at The Mosaic Company00:59:39Edlain, way to finish the call. I appreciate the question. That is a tough one because we do foresee stripping margins being protracted at a high level for phosphate. I think as we talked about in Analyst Day, we still see very constructive on potash and over the five year period. I don't know what long term, medium term range you're thinking about, but let's just use a five year kind of outlook. Bruce BodineCEO, President & Director at The Mosaic Company01:00:11A lot of it, if I were to have crystal ball and could think about it would be how fast and how lumpy does some of the new supply come on in potash. But we're feeling pretty good about the stripping margins in phosphates. At the end of the day though, however, the EBITDA to cash conversion in potash is better than it is in phosphates just because of the large CapEx demands that that business has with gypsum stacks, clay settling areas and just the cost to maintain those facilities. So it is a catch-twenty two. I think we're happy with both children right now, and we're going to continue to invest appropriately in both. Bruce BodineCEO, President & Director at The Mosaic Company01:00:51And I know that doesn't give you the right answer, but or a one P or K answer. But it always depends, and it depends on structure, depends on what's going on in the market. But we feel pretty good about both, and we're going to continue to do the right things and swing CapEx and investment a little bit here or there depending on how things sharpen up from a clarity standpoint over the next one, three, five years. So I'll leave it at that. Luciano PiresEVP & CFO at The Mosaic Company01:01:22Thank you. For the purpose of thinking about it, the operating leverage in Faucets is huge precisely because it consumes more capital, but also in upturns of the cycle, tends to surprise on the upside in terms of cash flow generation. So bear this in mind. Bruce BodineCEO, President & Director at The Mosaic Company01:01:44Operator, I think we're ready to close. Operator01:01:48Certainly. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Bruce Bodine for any closing remarks. Bruce BodineCEO, President & Director at The Mosaic Company01:01:59Well, thanks, everyone. I'd like to close our call by reiterating our key messages. First, ag and fertilizer markets are strong and prices for our products are rising. We expect good business conditions to persist through the remainder of the year. Second, we are making strides on our work to improve phosphate asset reliability and production and we're on track to deliver better production numbers this year. Bruce BodineCEO, President & Director at The Mosaic Company01:02:24Third, our market access is a significant strategic advantage, and it is enabling us to benefit from the strong markets and grow in new ways. For example, we've built a powerful franchise in Brazil and it is now performing exceptionally well. And our bioscience business is growing faster than others because we have distribution access. And finally, we continue to make progress on our efforts to reclaim underperforming capital so that we can redeploy in pursuit of higher shareholder returns. All in all, Mosaic is performing well across our businesses and geographies and we are in excellent position to continue to benefit from the compelling market conditions we expect over the near and medium term. Bruce BodineCEO, President & Director at The Mosaic Company01:03:09So thank you for joining the call today, and have a great safe day. Operator01:03:15The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJason TremblayInvestor RelationsBruce BodineCEO, President & DirectorJenny WangExecutive Vice President of CommercialLuciano PiresEVP & CFOAnalystsChris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLCJeff ZekauskasAnalyst at JPMorgan ChaseDavid SymondsAnalyst at Exane BNP ParibasJoel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital MarketsKristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.Andrew WongEquity Research Analyst at RBC Capital MarketsSteve ByrneResearch Analyst at Bank of America SecuritiesVincent AndrewsManaging Director at Morgan StanleyBen IsaacsonManaging Director - Equity Research at ScotiabankRichard GarchitorenaVice President - Equity Research at Wells Fargo SecuritiesLucas BeaumontDirector Equity Research Analyst at UBS GroupEdlain RodriguezEquity Analyst at Mizuho SecuritiesPowered by Key Takeaways Strong Q1 results: Net income of $238 million and adjusted EBITDA of $544 million, with realized phosphate at $623/ton and potash at $223/ton exceeding guidance in a seasonally slow quarter and setting the stage for further earnings improvement. Compelling market fundamentals: Robust global fertilizer demand and sustained phosphate and potash supply constraints have driven rising prices, and despite trade policy uncertainties, Mosaic’s extensive market access—especially in Brazil—positions it to capitalize on shifting flows. Operational progress: Phosphate reliability projects are on track to deliver 7.2–7.6 million tonnes in 2025 and reduce conversion cash costs toward $95–$100/ton by year-end, while the 400 kt/y hydrofloat upgrade at Esterhazy will boost potash output and lower per-ton costs. Brazil and biosciences growth: Mosaic Fertilizantes expects ~15% sales volume growth in Brazil, supported by strong farm economics and the new Palmaranshi blend plant, and Mosaic Biosciences more than doubled Q1 revenue with the launch of Neptunian in China and registrations in India and Brazil. Capital reallocation and cost savings: The company has achieved ~$90 million of its $150 million run-rate SG&A savings target, is advancing monetization of non-core assets (e.g., Ma’aden stake, Carlsbad), guiding 2025 CapEx of $1.2–$1.3 billion, and remains committed to returning excess capital to shareholders. A.I. generated. May contain errors.Conference Call Audio Live Call not available Earnings Conference CallMosaic Q1 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipants Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Mosaic Earnings HeadlinesMosaic (NYSE:MOS) Raised to Buy at StockNews.comMay 15, 2025 | americanbankingnews.comMosaic (NYSE:MOS) Hits New 12-Month High After Analyst UpgradeMay 15, 2025 | americanbankingnews.comCollect $7k per month from Tesla’s SECRET dividendI just uncovered a strategy that could pay out up to $7,013 every month—without needing a traditional dividend. It’s a legal income shortcut tied to Tesla and other tech giants. This backdoor is already live—and it could change the way you earn.May 21, 2025 | Investors Alley (Ad)CIBC Raises Mosaic (NYSE:MOS) Price Target to $33.00May 12, 2025 | americanbankingnews.comMosaic (NYSE:MOS) Reaches New 1-Year High After Analyst UpgradeMay 10, 2025 | americanbankingnews.comIs The Mosaic Company (MOS) the Best Agriculture Stock to Buy Right Now?May 9, 2025 | msn.comSee More Mosaic Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Mosaic? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Mosaic and other key companies, straight to your email. Email Address About MosaicMosaic (NYSE:MOS), through its subsidiaries, produces and markets concentrated phosphate and potash crop nutrients in North America and internationally. The company operates through three segments: Phosphates, Potash, and Mosaic Fertilizantes. It owns and operates mines, which produce concentrated phosphate crop nutrients, such as diammonium phosphate, monoammonium phosphate, and ammoniated phosphate products; and phosphate-based animal feed ingredients primarily under the Biofos and Nexfos brand names, as well as produces a double sulfate of potash magnesia product under K-Mag brand name. The company also produces and sells potash for use in the manufacturing of mixed crop nutrients and animal feed ingredients, and for industrial use; and for use in the de-icing and as a water softener regenerant. In addition, it provides nitrogen-based crop nutrients, animal feed ingredients, and other ancillary services; and purchases and sells phosphates, potash, and nitrogen products. The company sells its products to wholesale distributors, retail chains, farmers, cooperatives, independent retailers, and national accounts. The company was incorporated in 2004 and is headquartered in Tampa, Florida.View Mosaic ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Alibaba's Earnings Just Changed Everything for the StockCisco Stock Eyes New Highs in 2025 on AI, Earnings, UpgradesSymbotic Gets Big Earnings Lift: Is the Stock Investable Again?D-Wave Pushes Back on Short Seller Case With Strong EarningsAppLovin Surges on Earnings: What's Next for This Tech Standout?Can Shopify Stock Make a Comeback After an Earnings Sell-Off?Rocket Lab: Earnings Miss But Neutron Momentum Holds Upcoming Earnings Lowe's Companies (5/21/2025)Medtronic (5/21/2025)Mitsubishi UFJ Financial Group (5/21/2025)Sumitomo Mitsui Financial Group (5/21/2025)Snowflake (5/21/2025)TJX Companies (5/21/2025)Autodesk (5/22/2025)Analog Devices (5/22/2025)Copart (5/22/2025)Intuit (5/22/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. Start Your 30-Day Trial MarketBeat All Access Features Best-in-Class Portfolio Monitoring Get personalized stock ideas. Compare portfolio to indices. Check stock news, ratings, SEC filings, and more. Stock Ideas and Recommendations See daily stock ideas from top analysts. Receive short-term trading ideas from MarketBeat. Identify trending stocks on social media. Advanced Stock Screeners and Research Tools Use our seven stock screeners to find suitable stocks. Stay informed with MarketBeat's real-time news. Export data to Excel for personal analysis. Sign in to your free account to enjoy these benefits In-depth profiles and analysis for 20,000 public companies. Real-time analyst ratings, insider transactions, earnings data, and more. Our daily ratings and market update email newsletter. Sign in to your free account to enjoy all that MarketBeat has to offer. Sign In Create Account Your Email Address: Email Address Required Your Password: Password Required Log In or Sign in with Facebook Sign in with Google Forgot your password? Your Email Address: Please enter your email address. Please enter a valid email address Choose a Password: Please enter your password. Your password must be at least 8 characters long and contain at least 1 number, 1 letter, and 1 special character. Create My Account (Free) or Sign in with Facebook Sign in with Google By creating a free account, you agree to our terms of service. This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.
PresentationSkip to Participants Operator00:00:00Good morning, and welcome to The Mosaic Company's First Quarter twenty twenty five Conference Call. All participants will be in a listen only mode. Please note this event is being recorded. I would now like to turn the conference over to Jason Trembley. Please go ahead. Jason TremblayInvestor Relations at The Mosaic Company00:00:40Thank you, and welcome to our first quarter twenty twenty five earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer Jenny Wong, Executive Vice President, Commercial, then cover the market update Luciano Ciane Perez, Executive Vice President and Chief Financial Officer, will review financial results capital allocation progress. We will then open the floor for questions. We will be making forward looking statements during this conference call. The statements include, but are not limited to statements about future financial and operating results. Jason TremblayInvestor Relations at The Mosaic Company00:01:14They are based on management's beliefs and expectations as of today's date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward looking statements are included in our press release published today and in our reports filed with the Securities and Exchange Commission. We will also be presenting certain non GAAP financial measures. Our press release and performance data also contain important information on these non GAAP measures. Jason TremblayInvestor Relations at The Mosaic Company00:01:44Now I'd like to turn the call over to Bruce. Bruce BodineCEO, President & Director at The Mosaic Company00:01:47Good morning, and thanks for joining our call. I'll start with our key messages for today. First, fertilizer fundamentals are compelling and prices are rising. Despite the uncertainty around global trade policies, fertilizer demand is very strong in every key growing region of the world. Second, we are making progress towards normalizing our phosphate production and operating costs and we're on track to deliver stronger results this year and beyond. Bruce BodineCEO, President & Director at The Mosaic Company00:02:16Third, Mosaic's industry leading market access is enabling us to benefit from strong markets and grow in new ways. You can see plenty of evidence of this important strategic advantage. Our business in Brazil is performing exceptionally well. We've increased our potash production outlook to meet demand around the world and our Mosaic Biosciences business continues to grow at a brisk rate. And finally, our work to shed non core assets and reallocate capital is continuing to take shape. Bruce BodineCEO, President & Director at The Mosaic Company00:02:48To cover our first quarter results, net income was $238,000,000 and adjusted EBITDA came in at $544,000,000 The quarter's results underscore very strong phosphate prices, improving potash prices and excellent performance in the Mosaic for Lozanches segment. And remember, the first quarter is traditionally our seasonally slowest quarter of the year. We expect earnings to improve further from our strong start to 2025. Let's take a few minutes to review market fundamentals at a high level as well as our progress towards our operating goals. Jenny will go deeper into the markets and Luciano will discuss financial results, financial strategy and our capital reallocation journey. Bruce BodineCEO, President & Director at The Mosaic Company00:03:35Our market outlook remains positive. Ag commodity fundamentals and fertilizer demand are solid around the world. With sustained supply constraints in phosphate, prices and stripping margins remain elevated compared to historical norms. And with supply reductions from several major potash producers as well as robust demand potash prices are rising. In fact, first quarter realized prices of $623 per ton for phosphate and $223 per ton for potash exceeded our guidance ranges. Bruce BodineCEO, President & Director at The Mosaic Company00:04:10The strong performance of Mosaic Perlizanches was also helped by the realization of higher prices. It is no secret that global trade conflicts and other geopolitical forces have intensified in the past few months. As we continue to monitor the latest developments and evaluate the impact, especially in The U. S. Agriculture sector, we believe we are well positioned to navigate these dynamics. Bruce BodineCEO, President & Director at The Mosaic Company00:04:36Our expansive market access, especially our strong presence and long history of operating in Brazil and our supply chain agility will prove to be important strategic advantages as we navigate shifting trade flows. While trade continues to grab headlines, I can't emphasize enough that Mosaic is built for the long haul. The long term market fundamentals and operating backdrop remain constructive. For example, biofuel mandates around the world continue to advance and that growth is expected to contribute significantly to global grain and oilseed demand. We are seeing this play out in Brazil with increasing ethanol usage and as a result corn growers are enjoying both improving profitability and fertilizer affordability. Bruce BodineCEO, President & Director at The Mosaic Company00:05:25Phosphate demand is also driven by rising lithium iron phosphate production in China, which grew 55% in just the first quarter of this year and continues to limit the amount of phosphate available for export. As a result, the phosphate market remains tight. And while tariffs could disrupt trade flows, they cannot create more phosphate supply. Now let's move on to the progress we are making toward normalizing production and cost. Improving our asset reliability and being disciplined in our cost management remain our key focus areas. Bruce BodineCEO, President & Director at The Mosaic Company00:06:02In potash, the Esterhazy complex continues to generate strong cash flow across the commodity cycle. It clearly benefits us to produce every ton we can at Esterhazy and we're investing to do just that. We expect to complete the 400,000 ton per year hydrofloat project soon. It is expected to increase our production volumes from Esterhazy and improve our product mix flexibility allowing us to maximize our netbacks while driving our per ton costs lower. We're on track to achieve our production cost per ton target this year. Bruce BodineCEO, President & Director at The Mosaic Company00:06:40In phosphate, we produced 1,400,000 tons in the first quarter of twenty twenty five. The Bartow and New Wales plants experienced substantial downtime for planned turnaround and other reliability improving work during the quarter. That said, March was the third strongest production month in the past eighteen months and we are maintaining our 2025 production volume outlook in the 7,200,000 to 7,600,000 ton range. As production improves throughout the year, our conversion cash cost per ton is expected to decline. Mosaic Fertilizantes delivered a very strong operating performance in the first quarter with conversion and production unit costs declining year over year. Bruce BodineCEO, President & Director at The Mosaic Company00:07:25As cost measures yield further benefits, we expect to achieve our full year unit cost targets. In fact, we expect further improvements in segment profitability in the second quarter. Now let's move on to talk about how we're leveraging our market access to redefine growth. While operating initiatives will drive significant value creation in the near term, Mosaic also has substantial opportunities beyond the near term to grow in new markets with new products and from new sources. Our expansive Brazil footprint positions us well for growth and to navigate the current geopolitical tensions. Bruce BodineCEO, President & Director at The Mosaic Company00:08:06Our mosaic for Lizanches volumes returned to year over year growth in the first quarter. And with our new Palmaranshi blend plant expected to be complete in July, we expect further growth in the remainder of Bruce BodineCEO, President & Director at The Mosaic Company00:08:18the year. In fact, we have Bruce BodineCEO, President & Director at The Mosaic Company00:08:21already sold over 50% of the additional tons that are expected from the Palmaranche facility this year. I should also mention that the operating environment is compelling. With the current good farm economics, we now expect approximately 15% sales volume growth this year. Mosaic Biosciences had a strong quarter with revenue more than doubling over the prior year and on track to double for the full year driven by surging sales for our existing products and new product launches in our key markets. Late last month, Mosaic Biosciences brought Neptunian to the market in China. Bruce BodineCEO, President & Director at The Mosaic Company00:09:00Neptunian is a biostimulant that helps crops address abiotic pressures such as drought, salinity and heat by adding stress resistant properties into water soluble fertilizers. Neptunian is currently in the registration process in India and Brazil. We are succeeding at engaging growers around the world and demonstrating through extensive field trials that our biological products deliver meaningful yield and value benefits. Moving on to our portfolio review and cash return focused initiatives. You saw the list of assets we shared at our Investor Day in March. Bruce BodineCEO, President & Director at The Mosaic Company00:09:38Clearly, we have significant potential for future monetization. The conclusion of the Ma'aden transaction gave us a transparent value for our investment, which is about $1,500,000,000 as of today. We announced the PATHOS DEMENIS sale earlier this year. Our pursuit of strategic alternatives for our potash mine in Carlsbad, New Mexico is proceeding well and we continue to assess the performance of assets such as Ereshaw, Patrosenio and Tocore in Brazil. Finally, let me spend a moment addressing capital allocation and capital return to shareholders. Bruce BodineCEO, President & Director at The Mosaic Company00:10:17Free cash flow generation was constrained by typical working capital seasonality in the first quarter. We continue to expect CapEx of 1,200,000,000.0 to $1,300,000,000 this year and we anticipate free cash flow conversion will improve in the remainder of the year. Our commitment to return excess capital to shareholders is unchanged. Now Jenny will provide a more in-depth update of agriculture and fertilizer markets. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:10:46Thank you, Bruce. Ag fundamentals continue to be robust despite significant uncertainties in the market due to global trade policies. Prices for the most important commodities while volatile have moved broadly sideways for the past six months and remain supportive to demand as grower worldwide remain incentivized to push yields higher as global stocks we use ratio remains multi decade low. It is also important to note that global commodity demand tends to be less impacted by global macroeconomic fluctuations. The North American spring season is expected to see typical demand for both P and K with limited channel inventory remaining when planking wraps up in the next couple of weeks. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:11:38We're watching the potential for demand to face some headwinds in the second half of this year due to more challenging fertilizer affordability driven by lower commodity prices in The US. As green and oil seeds importers like China have shifted their buying to other exporters. However, any harmful impact to The US Grower profitability, stemming from tariffs and the trade flow shifts are likely to inure to the benefit of Brazilian growers. For example, China increasing purchases of Brazilian soybeans as opposed to US soybeans. In fact, Brazilian grower economics are quite constructive despite the general weakness in global soybean prices. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:12:29We have long talked about the natural hedge of market access across key agricultural regions provided by Mosaic's operating model in situations just like this. Growers in Brazil are enjoying at commodity prices at a meaningful premium to prices quoted in Chicago. As such, fertilizers shipment into Brazil are expected to set another record with total NP and K shipments likely to exceed 47,000,000 tons. Shipments were a bit under 46,000,000 tons in 2023 and 2024. Purchases of P and K for the upcoming staffer season are running 10% higher than a year ago. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:13:19And elsewhere in the world, grower economics also look compelling. Domestic agriculture is saying additional focus and support in many smaller and mid scale producing countries with their eye towards insulating food security from volatile geopolitical and trade environment. Now a couple of examples. Palm oil producer economics are solid, a low inventory driven by continued robust domestic and export demand. Indian farmer returns are also solid given supportive government policies and domestic act product prices. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:14:03And after 2024, a year in which Indian farmers were left with low phosphate for lighter supply availability due to an insufficient subsidy program that keep to import volume subdued. The Indian government has this year stepped forward with more supportive policy propositions. We believe under this more supportive environment that India will see phosphate demand return to a more historically normal input level of 6,400,000 tons, up 40% year over year. While demand for P and K appears well supported, the price continue to look tight. For phosphate, Chinese export of DAP and MAP remain subdued and are not expected to return with any significance until June. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:15:03As has been the case in recent years, strong domestic fertilizer demand and that the diversion of phosphate molecules into industrial uses like LFP continues to provide a structure change in availability of Chinese high analysis phosphate fertilizer exports. As Bruce mentioned, regarding LFP, production was up 50% year on year in q one. In potash, we have seen production expectations take lower in 2025 from some key suppliers like Russia, China and Chile, where questions about sustainability of higher production from Laos also persist. Exports from Belarus were on the higher end of the expectations in Q1. So we're watching for the supply impact from announced the maintenance there to be realized in Q2. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:16:03From a pricing standpoint, we believe that both P and K will continue to find support at current levels. In fact, we don't anticipate a meaningful summer field reset, if any in The US market. On the raw materials front, sulfur remains firm with the latest spot prices suggesting prices may stay elevated for a longer duration. We expect sulfur prices will normalize by end of the year. Conversely, ammonia supply is ramping and prices continue to shift lower. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:16:39With this backdrop, phosphate benchmark stripping margins are expected to remain elevated. In summary, at commodity, phosphate and potash market fundamentals remain compelling and the Mosaic expects manageable impacts from government and trade policies. Now I'm turning the call to Luciano. Luciano PiresEVP & CFO at The Mosaic Company00:17:03Thank you, Jenny. First, some housekeeping. You will notice that we added cost per ton metrics to our release. With reconciliation tables to U. S. Luciano PiresEVP & CFO at The Mosaic Company00:17:13GAAP metrics at the end. We intend to track and discuss closely with you our progress in those metrics going forward. Now on to the performance. As you can see by the numbers, our phosphate and the potash segments outperformed in realized sales prices compared to our own guidance given in the last earnings call. I guess there's no surprises here as you're certainly following the tight supply and demand situation, the recent upward trend in prices. Luciano PiresEVP & CFO at The Mosaic Company00:17:45And in Q1, we were conducting the maintenance and reliability improvement projects in our facilities to support increasing volumes for the future and that impacted costs. During the phosphate segment, starting by the mines, United States blended rock cost per ton was low, dollars 77 in the first quarter. Hurricane is well behind us. We had very strong mining output in Q1 and this is continuing. So these lower rock costs, they will work through inventory and will reflect favorably in our financial results in the next few quarters. Luciano PiresEVP & CFO at The Mosaic Company00:18:24The cash conversion cost per tonne was $134 That increase was caused by lower production volumes and higher operating expenses to restore asset reliability by design and widely communicated. Going forward, we expect to drive costs down towards our range of $95 to $100 run rate by year end as production output improves throughout the rest of the year. For the potash segment, again on the cost front, the production cash cost per ton was $78 up from $72 per ton in the prior year quarter. During the quarter, we curtailed production in response to the cold weather in Saskatchewan. Railways could not move the products, Our finished product warehouses were full. Luciano PiresEVP & CFO at The Mosaic Company00:19:18We could not keep producing, so we had to stop production. And we also pulled forward repair and maintenance work during this downtime. So between this additional work and the lower fixed cost absorption, the production cash cost per ton was higher year over year. Looking to the remainder of the year, we expect those unit production costs to decline, reaping the benefits of the hydro flow project. We're still very much on track to achieve our target of $64 to $69 per ton. Luciano PiresEVP & CFO at The Mosaic Company00:19:51On Mosecra de Chile Sanchez, our Brazilian business, the improvement story is already developing. We communicated, you will remember in our last earnings call that adjusted EBITDA would have an uplift in Q1, because in Q4 it was impacted by a $35,000,000 negative effect from foreign exchange variations. That is exactly what happened. Adjusted EBITDA came in at $122,000,000 despite still having a negative FX effect on payables and currency hedges of 18,000,000 So last quarter, 35,000,000, this quarter, 18,000,000, but still there. The cost performance continued strong. Luciano PiresEVP & CFO at The Mosaic Company00:20:33In Q1, mining costs continued to decline, mostly due to the new mine plan in Patrocino and better performance in Cagati since last year and that allowed us to stop importing expensive rock. Conversion costs stayed somewhat flat compared to Q4, which was already substantially lower than prior quarters. So we're good here. Looking forward to Q2, results will come in much stronger. Why is that? Luciano PiresEVP & CFO at The Mosaic Company00:21:04First, seasonality. If sales increase by 30%, for example, as we saw in 2024, distribution margins returned to the normalized $30 to $40 range. Remember in Q1, it was more into the $20 Luciano PiresEVP & CFO at The Mosaic Company00:21:20to $30 Luciano PiresEVP & CFO at The Mosaic Company00:21:22And if the FX hit reduces further, presuming the FX remains stable, it's very reasonable to expect that Q2 EBITDA for Fertility Sciences will be above $150,000,000 I can walk you through the math in the Q and A if you want. Now moving on to SG and A and our progress on the overall $150,000,000 cost savings target. Compared to a year ago, SG and A had about a $16,000,000 negative variance in the quarter, primarily due to revaluation of some outstanding incentive programs. The share price increase, we had to record this non cash expense. Other than that, core SG and A declined, albeit at a slower pace. Luciano PiresEVP & CFO at The Mosaic Company00:22:12SG and A reduction should accelerate in Q3 once we start automating a lot of activities, following the introduction of our new software platforms that we discussed during our Investor Day in March. And thus, we expect SG and A to be down for the full year. All in, we've achieved about 60% or US90 million dollars of the US150 million dollars in annual cost savings target. Remember this 150,000,000 it's a run rate cost saving. When compared and that is compared to the 2023 baseline, half of these $90,000,000 savings were contributed by Mosaic Fertilizer. Luciano PiresEVP & CFO at The Mosaic Company00:22:56And within that, about $20,000,000 was a result of consuming a higher volume of internally produced rock that we mentioned before. So 45,000,000 from Mosaic Fertilizantes out of which 20,000,000 from better rock sourcing versus imported. The other half of the $90,000,000 savings was a result of lower SG and A compared to the 2023 baseline. On to cash flows. Well, with the improving pricing environment and outlook, our expectations for cash flow generation is increasing. Luciano PiresEVP & CFO at The Mosaic Company00:23:29In Q1, cash flows were subdued mostly in light of the seasonal increase of approximately $160,000,000 in inventories. That number you can read on the balance sheet, which happened preparing for an increased sales in Q2 and Q3, so that's typical for Q1. And other typical Q1 outflows such for example as taxes and profit sharing. Going forward through year end, under our current market outlook, we expect to see a strong improvement in quarterly cash flows due to seasonally stronger demand and the drawdown of inventories. But still, we expect our working capital to end the year approximately $150,000,000 above Q4 twenty twenty four and driven primarily by the strong increase in the overall level of sales in Brazil and also because of higher prices of raw materials, mainly sulfur. Luciano PiresEVP & CFO at The Mosaic Company00:24:25So although cash flow outlook for 2025 is good, it will be impacted by those factors. Finally, a note on our capital reallocation program. The discussions with counterparties on the non core potash assets, Carlsbad and Takwari, have really accelerated. We have communicated very long ago our desire for a strategic solution for Carlsbad, and now we can firmly say that Takwari is in the same bucket, especially in light of the capital requirements going forward. These investments are not the best allocation of our capital and our portfolio, we better let someone come in and take them. Luciano PiresEVP & CFO at The Mosaic Company00:25:06Bruce, back to you. Bruce BodineCEO, President & Director at The Mosaic Company00:25:08Thank you, Luciano. Bruce BodineCEO, President & Director at The Mosaic Company00:25:10To summarize, Mosaic delivered a solid quarter and our outlook for 2025 is positive. With our improving operational performance, lower cost profiles and excellent financial foundation, Mosaic is well positioned to benefit from the strong market conditions we see ahead and to navigate effectively in the ever changing geopolitical landscape. Now, operator, we would like to take questions from the audience. Operator00:25:37Thank you. We will now begin the question and answer session. The first question comes from Chris Parkinson with Wolfe Research. Please go ahead. Chris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLC00:26:14Great. Thank you. Bruce, something tells me you already know what question I'm going to ask. But if we stood at in your boardroom during the first quarter, how do you have adequate fully assessed yourself when it came to Bartow, New Wales and getting into Riverview and Louisiana? What would be the same answer as you stand here today mid 2Q? Chris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLC00:26:34And generally, what are the puts and takes for the second half when you think about finally getting to the end of what has been a multiyear journey? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:26:47Hey, Chris. Thanks for your question. I apologize to everyone. I've come down a little bit of cold, so bear with my voice. I think we would have been in a similar position, Chris, today versus what we said now. Bruce BodineCEO, President & Director at The Mosaic Company00:27:03There have been some puts and takes as we went into what we knew and had talked about a lot going into this turnaround season in quarter one. We knew it was gonna be heavy at New Whales and Bartow. That turned out to be the case. And as always, when you get into equipment, you have some discoverables at New Whales. We had some brickwork in a reactor in phosphoric acid that was unanticipated that took a couple extra days from a turnaround standpoint. Bruce BodineCEO, President & Director at The Mosaic Company00:27:33We're also doing it some reliability enhancement projects as we talked about as well in our Analyst Day. And, you know, those are paying off as well. And and part of those are in GIP handling, particularly at New Wales. We did our first train of replacing our GIPs and handling system there, Had some commissioning issues as it being the first of three that we're gonna do, and and those were a little more of a struggle than we hoped. But the good news is the benefits there have paid off. Bruce BodineCEO, President & Director at The Mosaic Company00:28:04We're seeing at target rates at New Wales now. We're seeing at target rates at Bartow now. And then we've accelerated some of the additional jip handling work at New Wales more into the first half. So first half may see a little more on the reliability side for improvements that we're gonna do, a little bit more downtime. But really what we're doing is after the learnings of the first train we did at New Wales, we're just gonna apply that to the other two trains and and really just insulate the back half of the year's performance. Bruce BodineCEO, President & Director at The Mosaic Company00:28:44So we're very optimistic about what we're seeing. As you said, Chris, a couple of puts and takes, but we're seeing the results pay off on all of the hard work. And again, accelerating some of the work that we have under our control to just get through this cycle even that much faster and that much better going into the back half of the year. Operator00:29:08Our next question comes from David Simmons with BNP Paribas. Please go ahead. David Simmons, your line has been unmuted. You may proceed with your question. It seems we're not receiving a response from David at this moment. Operator00:29:37We will proceed to the next question, which will be from Jeff Zekauskas with JPMorgan. Please go ahead. Jeff ZekauskasAnalyst at JPMorgan Chase00:29:45Thanks very much. In the light of tariffs of material into The United States, are your ammonia Or are there ways that you can work to keep them under better control? Bruce BodineCEO, President & Director at The Mosaic Company00:30:06Yeah. Thanks, Jeff. And I know there's been some reports on things the last couple of days, but our purchases as of now have not incurred any tariff impacts. And yet to say that that would be the case in going forward in permanency, know, I don't know. But ammonia is exempt in The United States, and that's where we have most of our supply coming from with our contracts in CF particularly. Bruce BodineCEO, President & Director at The Mosaic Company00:30:39And then we are seeing good production out of our own assets in Louisiana. And we don't expect much over 20%, if not less than 20%, exposure to any market forces anyways given the product mix of our ammonia. So, you know, heavy on our supply contracts, strategic supply contracts, which to date, we're not seeing tariff impacts and, you know, heavy where we can on our own production, tariff free. And then exposure is pretty low on the rest of our product needs, Jeff. And like I said, to date, we haven't seen tariff impacts. Operator00:31:21The next question comes from David Simmons with BNP Paribas. Please go ahead. David SymondsAnalyst at Exane BNP Paribas00:31:29Hi guys. Can you David SymondsAnalyst at Exane BNP Paribas00:31:29hear me now? David SymondsAnalyst at Exane BNP Paribas00:31:33Hello? Luciano PiresEVP & CFO at The Mosaic Company00:31:34We can hear you. David SymondsAnalyst at Exane BNP Paribas00:31:35Hello? Operator00:31:41David, you are audible. You may proceed with your question. David SymondsAnalyst at Exane BNP Paribas00:31:45Okay, brilliant. Sorry about that. We're having some tech issues on this side. I had a couple more on phosphates, please. So the first one on VAP prices. David SymondsAnalyst at Exane BNP Paribas00:31:53So if I look at market prices and then look at the range that you're stating, it looks like you could be being conservative there, I would estimate. So maybe you could talk about price realization in April. And if there's any reason that you wouldn't be right at the top end of that range that you've given for realized flat prices? And then the second question, so I hear you maintenance costs. But if I look at the absolute costs in phosphate, it was up €20,000,000 year on year, and that's with production lower. David SymondsAnalyst at Exane BNP Paribas00:32:27And also the idle and turnaround cost line that you give was also lower year on year. So just some more color on that would be good. Is there some maintenance costs that sits outside of that idle and turnaround line? Thanks a lot. Bruce BodineCEO, President & Director at The Mosaic Company00:32:41Hey, David. Thank you. Let me start with your last question. So our costs on a per cost basis or per ton basis, mostly fixed cost absorption, a big impact of that given the heavy turnaround activity. But yes, we've had some extraordinary maintenance costs that don't anticipate being reoccurring as we continue to invest in getting reliability back up with full focus on that. Bruce BodineCEO, President & Director at The Mosaic Company00:33:12With the debt price, let me actually just turn it over to Jenny and talk about that. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:33:17Sure. On DAP prices, I think you're right, David, that market has been really keeping the resilience for the DAP market, DAP prices. Our realized April DAP prices are actually higher than high end of the of the range. We anticipated the market is going to keep the strings for the remaining of the the the the quarter. And you might be right. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:33:45We we we probably would see some upside on the prices for the tons we haven't realized for the remaining of the quarter. And once again, we do not anticipate any price reset post the spring season in North America and the prices in the rest of the world as you can see it's pretty much at parity at $700 level. We foresee this price is going to stay. Thanks. Bruce BodineCEO, President & Director at The Mosaic Company00:34:15Just let me add David, on this costing. We do anticipate once we get back as we said in Analyst Day to our 2,000,000 ton run rate in the back half of the year. And Luciano talked about this in the opening comments as well. Conversion costs will be in that $95 to $100 range. So we're confident in that. Bruce BodineCEO, President & Director at The Mosaic Company00:34:34And as we get through these next few months of extraordinary activities, that's what you should expect. Operator00:34:45We have Joel Jackson with BMO with the next question. Go ahead. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:50Hi, good morning everyone. Thanks for taking my question. Obviously, potash market is nice. It's rising. Things are good, demand driven. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:57Jenny Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:58and Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:34:58and the rest of the team, I thought some of your comments are interesting. I also, you know, have been following the Belarusian shipments and exports. You talked about let's wait to see if q two shipments come down because q one was so good. But we know overnight, Jenny, right, that we saw Belarus exports be, I think, 1,100,000 tonnes in April, so even higher. It doesn't seem to have any kind of supply issues. Joel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital Markets00:35:21So are as you think about strategy wise here with Capitex, are you wondering if maybe there are no Belarusian maintenance cuts or it's coming later? I mean, you're raising your volume, but it seems like this has been not really a supply decreased here. What do you think? Bruce BodineCEO, President & Director at The Mosaic Company00:35:41Joel, let me just turn it over to Jenny. You're asking her specifically, so I'll let her answer it. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:35:46Sure. Joel, I think we agree with you specifically on Belarusian's MLP export. We have not seen a shipment reduction as what they announced as as a part of the maintenance and the production cut or whatever. However, we have seen production cut that is coming out of China, and we also have seen the announcement from Chili at QM on their repurpose of their potash production. So to answer your question, have have we seen shipment reduction for the first of four months, especially for the first quarter? Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:36:28Yes. We have seen import reduction in China, which is the largest market for potash for the first quarter down by 7% and which added to the lower production of domestic production. The inventory in China is coming to a very, very low inventory at port less than 2,000,000 tons, which is the 30% lower than the same time of last year. And in country inventory for local producers as they reported was also down by 30%. So the low inventory in situation is a result of reduced reduced to redact reduction from the major producers in the in for for that region. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:37:10So I I would also want to add to with this reduced reduction reduced shipment of domestic reduction in China and also reduced the shipment of multiple international suppliers into China. China's in a very critical low inventory situation for potash, which which set very well for the for the coming contract negotiation. I will stop here. Thank you. Operator00:37:41Our next question is from Kristen Oven with Oppenheimer. Please go ahead. Kristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.00:37:48Hi, thank you for the question. Kristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.00:37:50Sort of a follow-up but more closer to home. Just can you give us an update on the cadence of your cost of production for potash as we go through the year? You noted some of the headwinds in Q1, but given the volume update and your main tank target, just wondering how we should think about the cadence of cash cost of production of potash? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:38:12Yes. Thanks, Kristen. Really, just to reiterate, Q1 was a little bit of a product mix issue as well as Bell Plain was more impacted to these weather constraints that we had that caused them to curtail some of their production, Bell being one of our lowest cost producers. Now that Bell Plain is back up and running full, fluidity of the supply chain is good. We continue to make good progress on the Esterhazy hydro float project, adding 400,000 tons in the back half of the year at that run rate. Bruce BodineCEO, President & Director at The Mosaic Company00:38:49We do expect cost per ton to dramatically improve as we go from quarter two to quarter three to quarter four as those low cost tons at Esterhazy come more into the marketplace. So Luciano, do you have a little bit more you want to talk about? Luciano PiresEVP & CFO at The Mosaic Company00:39:11Action tones. I'm sorry. It was it was with the mic mute. I'll I'll repeat. I was saying that the achievement of the target range could come as early as Q2 if we deliver what's in the plan. Luciano PiresEVP & CFO at The Mosaic Company00:39:26So we're positive on that. Operator00:39:32The next question comes from Andrew Wong with RBC Capital Markets. Please go ahead. Andrew WongEquity Research Analyst at RBC Capital Markets00:39:40Hey, good morning. Thanks for taking my question. Can you just provide some thoughts on, I guess, Mosaic's role and how the S and D plays out over the next, say, like six to twelve months as production improves? How does that impact the market balances and pricing? I know Jenny said that The U. Andrew WongEquity Research Analyst at RBC Capital Markets00:39:57S. Summer prices are unlikely to reset. But I'm assuming there's a lot of the production that Mosaic's producing would go to the domestic market. So just curious how that plays out. Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:40:09Yes. Thanks, Andrew. We provided some new graphics in our earnings deck this time to kind of talk about how we see supply and demand growth in each of the two major commodities, phosphate and potash. There is some detail there. But generally, when you look at phosphate, as we see our production rise in the back half of the year, which we are already anticipating in our kind of supply adds from 2024 to 2025, when you look over on the intersection of supply and demand, you still see pretty much supply constraints. Bruce BodineCEO, President & Director at The Mosaic Company00:40:47So right now, we would say, and I'll let Jenny talk about it in more detail, that demand is constrained by supply, particularly in phosphates. So adding that little bit of additional production from Mosaic in the back half of the year, as we anticipate that, we see we see it still being very constructive to tight on the supply and demand balance. So Jenny, anything to add? Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:41:14Sure. I think, Andrew, your question probably more towards two phosphate. I would just simply say the demand in India, the pent up demand in India is going to consume any operational improvement and also the recovery of production from the Las Amunya. So meaning, the improvement for from Mosaic and some of our peers in North America market plus the recovery in in in a previous those Las Amunia, Elifusa production site will only be able to support the demand issues in India. So to give you some specifics, India demand was down last year on DAP, and the government had their government has realized that this is a issue. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:42:00And with the latest policy support, they will need to buy 2,000,000 tons for the coming caliph season. And that season, they only got 300,000 tons. With their agreement with OCP, that demand cannot be met by only source of of Marco. So to your questions on the movement of product between North America, which is our home market and other market, overall, phosphate market is global market. As we know, for over 40% of the demand is actually in the market, which are subsidized by the government. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:42:42There is no affordability issues. And when that comes to the non subsidized market, especially in The Americas, we might see some demand demand challenges for the second half of the year from North America, which is going to be well offset by the demand in Brazil as we mentioned earlier. The farm economics there are very different than US. So overall, the market are going to be tight. Mosaic, we might make some movement of the product between The US, the whole market, and the rest of the world if it is needed. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:43:23In fact, we we as we we're watching very closely on the affordability issues of phosphate in The US market. And as we are ramping up spring season, and we thought the customers might might delay their purchases for the same concerns that we have. And the the the fact is that over the last week, we started to have major customers in The US came forward to buy their summer fuel phosphate at today's price. So so we're watching affordability issues. The market is really tight. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:44:01Eventually, phosphate turns just like any other products that the price is going to really define where it can be used as the best to use. And we believe the shipping margin price will stay elevated given even even with the headwinds. Operator00:44:24The next question comes from Steve Byrne with Bank of America. Please go ahead. Steve ByrneResearch Analyst at Bank of America Securities00:44:30Yes. Thank you. You have these 15 supply and demand charts for phosphate and potash that are, you know, in your slide deck that are that are very interesting, particularly the phosphate chart that that looks a bit unsustainable here with with what you're projecting for a fourth year of of a meaningful, you know, price rationing demand. Is is there potential that global demand, you know, has has really more stabilized versus what you're projecting here? Or do you think that, you know, this deficit could drive a yield drag globally this year? Steve ByrneResearch Analyst at Bank of America Securities00:45:18Or is this driving demand for for your biologicals to release the insoluble phosphate in the soil? Bruce BodineCEO, President & Director at The Mosaic Company00:45:29Steve, really always appreciate the question. I think it's a combination that I think our biologics for sure help in this regard to get more. But I'm gonna turn it to Jenny and just let her talk a little bit more about it. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:45:48Sure. Steve, I I think we share the same view as you are. If you look at the overall shipment of phosphate over the last couple of years, that has been an issue. The the the the word would need more phosphate in order to support yield increases or yield level. And the fact, if you look at the yield increases over the last four, five years, has really slowed down versus the trained level, and that is a reflection. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:46:20Potentially, major contributor was really the lower phosphate application around globe. So and also I appreciate that you pointed out how biologicals can help in this kind of situation, which basically help the farmers to maximize or improve the efficiency for the investments they made on phosphate. And even it's even more meaningful today at the price level that we all believe it is a relatively high level for the farmers by investing in biologicals to maximize their investment in this higher priced phosphate was really the the the point that we're communicating with the farmers both in North America and also in Brazil. And we foresee this biological product will bring the benefit to the farmers, not only increase the yield, but also help them to improve their ROI return on investment. Operator00:47:20The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead. Vincent AndrewsManaging Director at Morgan Stanley00:47:26Thank you. I appreciate the comments on the working capital in terms of cash flow. Are there any other line items in cash flow from operations that are going be material deviations either headwinds or tailwinds this year versus last year? And is it possible to talk about what you think your free cash flow conversion of EBITDA in a percentage terms and a range might be this year? Bruce BodineCEO, President & Director at The Mosaic Company00:47:49Vincent, I'm going to turn this straight over to Luciano. Luciano PiresEVP & CFO at The Mosaic Company00:47:54Vincent, I don't anticipate any, I would say, normal components in cash flow for this year. So and because the cash conversion was low last year, pretty much every additional ton of every additional dollar of EBITDA should flow after taxes towards cash flows absent the working capital increase that we gave. We're going to be not going to give you, let's say, a precise number for cash flow conversion. But I think with this directionally, should be able to model it based on that assumption. Every incremental EBITDA that you forecast for this year absent the $150,000,000 working capital increase for Brazil should flow after taxes towards cash flows. Luciano PiresEVP & CFO at The Mosaic Company00:48:50I'd like to take this opportunity to correct an information that I gave a little ago. I said that potash costs should converge into the range already in Q2. I was looking at the wrong column. I'm sorry for that. It should be in range for the second half, so Q3 and Q4. Luciano PiresEVP & CFO at The Mosaic Company00:49:10That's the same thing for phosphates as well, just giving that color. Q3 and Q4 should be in range. When you look at the full year, the full year for potash should be in range. The full year for phosphates should be a little over range the target range just because the Q1 number was so high. Operator00:49:32The next question comes from Ben Isaacson with Scotiabank. Please go ahead. Ben IsaacsonManaging Director - Equity Research at Scotiabank00:49:38Thank you very much and good morning everyone. I'd just like to go back to the Analyst Day and just ask a question on Mosaic Biosciences. So you're targeting $70,000,000 of revenue this year profitability in Q4 and then in five years from now, 200,000,000 of EBITDA. Can you talk about the shape of that EBITDA growth? What do the margins look like? Ben IsaacsonManaging Director - Equity Research at Scotiabank00:50:02And what's the plan with this business? I mean, you don't want a commodity multiple to smother it. So is the intention to spin it off eventually? You. Bruce BodineCEO, President & Director at The Mosaic Company00:50:14Hey, Ben. Thank you. I'm going let Jenny take most of this question. But we're seeing good results out of the bioscience. And as you said, we do and what we said in our opening comments anticipate good revenues as we laid out and continuing to grow over the five year period as we laid out in Analyst Day as well. Bruce BodineCEO, President & Director at The Mosaic Company00:50:35We actually think there might be even additional upside to to those numbers. But let me get over to Jenny and let her talk about some of the more specifics. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:50:49Sure. Thank you, Ben, for the questions. I can provide you a little bit more color on our bioscience growth projection. So the growth in the future, including today, are coming from two different type of products. One is our own products, The products that we invested in the discovery, and we are we did our own product development in the field, and we got our own registration. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:51:16So this is our Mosaic's own product. For this type of product, our gross margin is around 60%. Six zero. In the meantime, at this time, as we are going through product development and the regulatory approval for the products that we haven't really got registration. It takes two to three years depending on countries. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:51:39In this in this situation, we're also selling third party products. We call licensed in product. For this product, the gross margin are lower. It's somewhere between 30 to 40%. Going forward, we are going to have major new product introductions in all major market as we talked about at Analyst Day by leveraging our market access over the next few years after we get the product registration and so that we can more aggressively grow the products that are from our own portfolio. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:52:14So that's basically the story for for our bioscience. As you can you can expect that we're going to disclose more going forward on our new product introduction, on our new product registration, and Neptunium's launch last month in China. It's just the starting point. Thanks. Bruce BodineCEO, President & Director at The Mosaic Company00:52:35But, Ben, we see this very complementary to the rest of our business with the plant and crop nutrition, adding soil health, you know, to this. We do expect as EBITDA continues to grow to meaningful numbers that maybe we do benefit from some of parts valuation. And this is something we're looking forward to and continue to discuss as that business continues to accelerate and grow over the near future. Operator00:53:06The next question comes from Richard Garchitorino with Wells Fargo. Please go ahead. Richard GarchitorenaVice President - Equity Research at Wells Fargo Securities00:53:13Great. Thank you. So maybe we can turn to Brazil, Luciano. If we can dig into the EBITDA upside you were talking about for the second quarter, maybe what's driving that potential 150,000,000 I noticed production volumes or sorry, sales volumes that fills out for the first quarter were up 8%. So I would expect a meaningful increase to that to get to the 15% full year increase? Richard GarchitorenaVice President - Equity Research at Wells Fargo Securities00:53:42And then also just maybe if you had any color on has things really improved in terms of sentiment since the beginning of the year? Obviously, a lot of trade concerns and improved that beneficiary mainly being Brazil. What were your expectations for volumes at the start of the year versus today? Thank you. Bruce BodineCEO, President & Director at The Mosaic Company00:54:08Thanks, Richard, for your question. Let me just turn it over to Luciano to address the first half. And then if Jenny's got commentary on some of the back half question, let her take it. Luciano PiresEVP & CFO at The Mosaic Company00:54:18Yes. Well, thanks. So the main concept here is that Q1 in Fertilization was mostly driven by our production business. Really, the distribution part of it didn't kick in, and it will kick in. Approximately 300,000 tons were sold from our own production and $1,500,000 from distribution. Luciano PiresEVP & CFO at The Mosaic Company00:54:41If you multiply $1,500,000 by, let's say, 24 per ton of distribution margin, you get to a $36,000,000 EBITDA in distribution. Last the foreign exchange impact, you get to $18,000,000 So out of the $122,000,000 only 18,000,000 was distribution. So by the same token, if you, for example, assume that sales and distribution are going to go from 1,500,000.0 to 2,100,000.0 if you multiply it by something in the mid $30 to $40 and if you remove still another FX impact from 5 to $10 you get to about US55 million dollars So if you add this to the performance of the production business in the first quarter which was $100,000,000 that puts a floor of about $150,000,000 for the performance in Q2. But remember also the production business will also increase sales in Q2. So therefore that's why we're very confident that the 150,000,000 is might be even a conservative estimate for the performance in Q2. Luciano PiresEVP & CFO at The Mosaic Company00:55:55Jenny, anything to add on Luciano PiresEVP & CFO at The Mosaic Company00:55:57the Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:55:58Probably add a little bit on the market. We are expecting Brazil market to grow this year. It's partially also because of the increased acreage for from both corn soybean. And as we mentioned earlier, trade flow change has really benefited the Brazilian farmers. We are seeing this growth of the market. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:19For Mosaic's volume growth as we projected for the rest of the year, it is really coming from partially, Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:26it's Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:56:26the market growth. Partially, it's really our penetration into the new regions where where we didn't really participate in the past. Mean meaning northern part of the region with Parmanchi going to up and running from July onwards. We are ready to really capture the growth in that part of the region that give us the opportunity to grow and also to to to capture higher share in the market. Lastly, I would say the headwinds in the in Brazil market are related to the credit issues and also some of the high interest rate environment. Jenny WangExecutive Vice President of Commercial at The Mosaic Company00:57:02It is still a challenge for the market. And we've been very diligent and disciplined in managing our credit risk as we operate and grow in that market. Operator00:57:16We have our next question from Lucas Beaumont with UBS. Please go ahead. Lucas BeaumontDirector Equity Research Analyst at UBS Group00:57:23Thank you. Yes, I just wanted to clarify on the phosphate volume production outlook. So you kept your target unchanged there. But with where your first half guidance is in that sort of 3,300,000 ton range, you'd need to kinda hit 2,000,000 tons or higher just to get to the bottom of the annual range in the second half. So I was just wondering, does that mean now you're probably pointing towards the low end of that range? Lucas BeaumontDirector Equity Research Analyst at UBS Group00:57:50Or do you think you can even get above 2,000,000 tonnes a quarter in the second half to kind of still be either in the middle or at the upper end of the range there? Bruce BodineCEO, President & Director at The Mosaic Company00:58:01Hey, Lucas. Thanks. Yeah, I know that you're putting single points together, but our overall annual guidance still is 7,200,000 to 7,600,000 tons for phosphate. And I think as we've talked about our quarterly kind of range, 1,800,000 to 2,200,000 tons, I think there is upside to the two based on capability at our facility. So point for me is that we're feeling very good about the work that's been done, the demonstration of capacity that we're seeing post some of these reliability improvement projects that we know that have been hanging on us as we've tried to step on the accelerator into 2025 and late twenty four and that we do feel good about full capacity output in the back half of the year. Bruce BodineCEO, President & Director at The Mosaic Company00:58:53So again, still feel good about the 7,200,000 to 7,400,000 ton range and not willing to say that we're coming down to the low end of that by any means. Operator00:59:08The next question comes from Edlain Rodriguez with Mizuho. Please go ahead. Edlain RodriguezEquity Analyst at Mizuho Securities00:59:13Thank you. Good morning, everyone. This is for Bruce and Jenny, I guess. I mean, I know it's hard to do, but given the near term and medium term dynamics of the respective industries, If you have to choose between P and K, which one would you allocate more capital CapEx to right now? Bruce BodineCEO, President & Director at The Mosaic Company00:59:39Edlain, way to finish the call. I appreciate the question. That is a tough one because we do foresee stripping margins being protracted at a high level for phosphate. I think as we talked about in Analyst Day, we still see very constructive on potash and over the five year period. I don't know what long term, medium term range you're thinking about, but let's just use a five year kind of outlook. Bruce BodineCEO, President & Director at The Mosaic Company01:00:11A lot of it, if I were to have crystal ball and could think about it would be how fast and how lumpy does some of the new supply come on in potash. But we're feeling pretty good about the stripping margins in phosphates. At the end of the day though, however, the EBITDA to cash conversion in potash is better than it is in phosphates just because of the large CapEx demands that that business has with gypsum stacks, clay settling areas and just the cost to maintain those facilities. So it is a catch-twenty two. I think we're happy with both children right now, and we're going to continue to invest appropriately in both. Bruce BodineCEO, President & Director at The Mosaic Company01:00:51And I know that doesn't give you the right answer, but or a one P or K answer. But it always depends, and it depends on structure, depends on what's going on in the market. But we feel pretty good about both, and we're going to continue to do the right things and swing CapEx and investment a little bit here or there depending on how things sharpen up from a clarity standpoint over the next one, three, five years. So I'll leave it at that. Luciano PiresEVP & CFO at The Mosaic Company01:01:22Thank you. For the purpose of thinking about it, the operating leverage in Faucets is huge precisely because it consumes more capital, but also in upturns of the cycle, tends to surprise on the upside in terms of cash flow generation. So bear this in mind. Bruce BodineCEO, President & Director at The Mosaic Company01:01:44Operator, I think we're ready to close. Operator01:01:48Certainly. Thank you. This concludes our question and answer session. I would like to turn the conference back over to Bruce Bodine for any closing remarks. Bruce BodineCEO, President & Director at The Mosaic Company01:01:59Well, thanks, everyone. I'd like to close our call by reiterating our key messages. First, ag and fertilizer markets are strong and prices for our products are rising. We expect good business conditions to persist through the remainder of the year. Second, we are making strides on our work to improve phosphate asset reliability and production and we're on track to deliver better production numbers this year. Bruce BodineCEO, President & Director at The Mosaic Company01:02:24Third, our market access is a significant strategic advantage, and it is enabling us to benefit from the strong markets and grow in new ways. For example, we've built a powerful franchise in Brazil and it is now performing exceptionally well. And our bioscience business is growing faster than others because we have distribution access. And finally, we continue to make progress on our efforts to reclaim underperforming capital so that we can redeploy in pursuit of higher shareholder returns. All in all, Mosaic is performing well across our businesses and geographies and we are in excellent position to continue to benefit from the compelling market conditions we expect over the near and medium term. Bruce BodineCEO, President & Director at The Mosaic Company01:03:09So thank you for joining the call today, and have a great safe day. Operator01:03:15The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.Read moreParticipantsExecutivesJason TremblayInvestor RelationsBruce BodineCEO, President & DirectorJenny WangExecutive Vice President of CommercialLuciano PiresEVP & CFOAnalystsChris ParkinsonManaging Director & Senior Research Analyst at Wolfe Research, LLCJeff ZekauskasAnalyst at JPMorgan ChaseDavid SymondsAnalyst at Exane BNP ParibasJoel JacksonEquity Research Analyst - Fertilizers & Chemicals at BMO Capital MarketsKristen OwenExecutive Director & Senior Analyst at Oppenheimer & Co. Inc.Andrew WongEquity Research Analyst at RBC Capital MarketsSteve ByrneResearch Analyst at Bank of America SecuritiesVincent AndrewsManaging Director at Morgan StanleyBen IsaacsonManaging Director - Equity Research at ScotiabankRichard GarchitorenaVice President - Equity Research at Wells Fargo SecuritiesLucas BeaumontDirector Equity Research Analyst at UBS GroupEdlain RodriguezEquity Analyst at Mizuho SecuritiesPowered by