Mosaic Q3 Earnings Call Highlights

Key Points

• Fourth-quarter earnings are expected to hit a low point, particularly in phosphate, as higher-cost sulfur flows through inventory. Mosaic has curtailed production to match limited affordable sulfur supply, though lower contract prices are beginning to support cash flow.
• Mosaic is targeting less than $1 billion in capital spending in 2027 and SG&A below $500 million, while pursuing asset and land sales. It expects to have sulfur contracted for about 65%–66% of its production needs going into 2027.
• Phosphate supply remains constrained, while North American demand has been stronger than expected; signs of improving demand in Brazil remain tentative. Potash costs declined sequentially, and management described the global potash market as constructive amid potential shipment losses from Russia and Belarus.

Mosaic NYSE: MOS expects fourth-quarter earnings before interest, taxes, depreciation and amortization to reach a low point as higher-cost sulfur moves through its phosphate inventory, even as lower contract prices begin to improve cash flow, executives said on the company’s third-quarter earnings call.

Chief Financial Officer Luciano Siani Pires said the expected earnings pressure would be especially pronounced in the phosphate segment. Mosaic expects sulfur costs recognized in fourth-quarter cost of goods sold of $800 to $850 per ton, above its third-quarter realized price of $715 per ton.

President and Chief Executive Officer Bruce Bodine said the company had secured fourth-quarter sulfur supply at $615 per ton, below the current market price, but not in sufficient volume to operate its U.S. phosphate assets at full capacity. Mosaic expects positive free cash flow in the second half of 2026 despite production curtailments in the U.S. and Brazil.

Phosphate curtailments continue

Mosaic has curtailed phosphate production at Bartow, Louisiana and in Brazil to match output with its supply of affordable sulfur. It also idled mining at South Fort Meade and Miski Mayo to avoid building excess phosphate rock inventory while processing plants run below capacity.

Bodine said Mosaic was confident it had contracted sulfur going into 2027 to meet roughly 65% to 66% of its production needs. He said that supply fits the company’s Florida footprint, where operating rates generally are in the low- to mid-60% range.

Before restarting idled facilities, Mosaic needs to see sustained improvement in phosphate stripping margins and lower spot sulfur prices, Bodine said. The company also wants confidence that conditions will not quickly reverse, given the difficulty of idling and restarting operations.

Mosaic expects fourth-quarter realized phosphate stripping margins in the mid-$300s per ton, with ammonia costs of $590 to $610 per ton. Bodine said lower-cost raw materials and cost reductions should improve the business’s underlying economics as the company moves into 2027.

Cost cuts and asset sales

Mosaic is targeting less than $1 billion in capital spending in 2027, approximately $200 million below where it expects to finish 2026. It also expects selling, general and administrative expenses below $500 million next year, compared with a forecast of $510 million to $530 million for 2026.

Siani Pires said the 2027 spending assumptions are based on current production levels. Bodine said idle facilities require less sustaining capital and are not filling waste-disposal areas, allowing some spending on new capacity to be deferred. That spending will be needed over time as facilities operate and disposal areas fill, he said.

The company is advancing the sale of its Araxá asset in Brazil and expects the process to conclude over the next several months. Bodine said Mosaic completed Canadian land sales last month that netted $36 million and is pursuing additional land sales in Canada and Florida.

In August, Mosaic refinanced and extended long-term debt maturities previously due in 2027 and 2028. Bodine said the company has no long-term obligations over the next two years and has access to liquidity if needed.

Demand signals and potash outlook

Bodine said phosphate supply remains constrained by sulfur availability and affordability. Mosaic expects global phosphate shipments to fall approximately 20 million tons from last year, with the trend carrying into 2027.

Executive Vice President of Commercial Jenny Wang said North American fall phosphate demand has been stronger than anticipated as agricultural commodity prices improved. Mosaic’s fourth-quarter phosphate availability is largely committed, and Wang said the company sees demand for additional tons if it can produce them.

In Brazil, Bodine said fertilizer inventories are low and farm economics have improved, though customer credit remains constrained. He characterized the signs of returning demand as early indications rather than a confirmed recovery.

Potash remains an important cash generator for Mosaic. Third-quarter cash production costs fell $11 per ton sequentially as output shifted toward lower-cost Esterhazy volumes. Production there was affected by lower ore grades, while heavier maintenance turnarounds also contributed to total potash output falling short of the company’s expectations for the quarter, Bodine said.

Low inventories limited Mosaic’s ability to build stock for anticipated fourth-quarter sales, prompting it to adjust guidance. Bodine said Esterhazy subsequently set production and mining records in October and is on pace for more than 5 million tons of production going into 2027. Together with Belle Plaine and Colonsay, Mosaic has more than 9 million tons of potash capacity, he said.

Executives described the global potash market as constructive. Wang said logistics restrictions affecting Russian and Belarusian exports through Baltic ports could reduce fourth-quarter shipments by roughly 1.5 million tons. She said the company believes those tons are likely to be lost rather than shipped later.

About Mosaic (NYSE:MOS)

The Mosaic Company is a global producer and marketer of concentrated phosphate and potash crop nutrients. Its products help farmers supply crops with essential nutrients, including phosphorus and potassium, and are sold under brands such as MicroEssentials, Aspire and K-Mag.

Mosaic operates an integrated fertilizer business that includes phosphate rock mining, processing and manufacturing, as well as potash mining and production. The company also produces animal feed ingredients and other products derived from phosphate operations.

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