Mosaic Upgrades Potash Output to 9.5 Million Tonnes, Boosting Margins

Key Highlights from Mosaic Company's Q2 2025 Earnings Call

During the second quarter of 2025, The Mosaic Company delivered strong financial results and outlined a clear path forward for its operations. CEO Bruce M. Bodine emphasized that the company’s efforts to improve operational performance are beginning to show tangible results, particularly in Brazil. He noted that the U.S. phosphate production business is expected to see improvements now that most of the reliability enhancement projects are complete.

Bodine also highlighted the favorable market conditions, stating that tight supply has led to very strong phosphate margins and rising potash prices. This environment has allowed the company to raise its full-year potash production guidance, citing strong demand. Additionally, Mosaic completed major reliability projects at its U.S. phosphate plants, with no further planned maintenance expected to interfere with its target of an 8 million tonne annual run rate.

The company also launched the Palmeirante facility in Brazil, which adds 1 million tonnes of distribution capacity. Mosaic Biosciences is anticipated to contribute positively to adjusted EBITDA in the fourth quarter. Bodine expressed confidence in the company’s ability to generate stronger free cash flow in the second half of the year, which will allow for debt reduction and capital returns to shareholders.

Financial Performance and Provisions

CFO Luciano Siani Pires described the quarter as “very unusual,” noting a significant amount of noise in the financial results. The company reported net income of $411 million and adjusted EBITDA of $566 million. Pires attributed some of the fluctuations to positive currency effects and a $216 million gain on the market value of modern shares. However, he also mentioned larger than usual provisions totaling over $60 million, most of which did not have a cash impact in the quarter.

Environmental reserves of $8 million and legal reserves of $4 million were recorded during the quarter. These expenses are not expected to repeat at the same level in the following quarters. Pires also explained that phosphates depend heavily on volume, with 85% of the cash cost of conversion being fixed.

Outlook and Production Guidance

Mosaic raised its potash production guidance for the year to between 9.3 million and 9.5 million tonnes, up from previous estimates. The company expects phosphate production to reach between 6.9 million and 7.2 million tonnes, despite extended maintenance downtime in June and July. Third-quarter phosphate sales volume guidance is set at 1.8 million to 2 million tonnes.

Management stated that they expect to meet their Analyst Day per tonne cost targets later this year, with EBITDA growth projected to accelerate in the remainder of 2025, especially in Brazil. Mosaic Biosciences is anticipated to begin contributing positively to adjusted EBITDA in the fourth quarter.

Financial Results Overview

In comparison to the same quarter in 2024, Mosaic reported a net income of $411 million, compared to a net loss of $162 million. Adjusted EBITDA was $566 million, slightly lower than the $584 million reported in the same period last year. The quarter included provisions exceeding $60 million, with $8 million allocated to environmental reserves and $4 million for legal reserves.

Mosaic achieved $106 million of its $150 million cost reduction target in Brazil, and cash mined rock costs in Florida reached $51 per tonne—the lowest in 10 quarters. Potash cash production costs per tonne decreased to $75 from $78 in the first quarter of 2025. The Mosaic Fertilizantes segment delivered $150 million in EBITDA, despite an $18 million net bad debt expense.

The SG&A cost reduction target was extended from $150 million to $250 million, with an additional $100 million expected by the end of 2026.

Q&A Insights and Analyst Questions

During the Q&A session, several analysts raised questions about various aspects of the company’s performance. Benjamin Isaacson of Scotiabank asked about the share price reaction and changes since the Investor Day. Bodine acknowledged that phosphate production volumes were lower than previously indicated but emphasized that the expenses were non-normal.

Christopher Parkinson of Wolfe Research inquired about run rates for July, August, and September. Bodine confirmed that July’s run rate was lower than expected due to delays in the third pumping system at New Wales but remained confident in asset health and Q3 guidance.

Joel Jackson of BMO questioned the ramp down of $50 million in turnaround costs. Bodine suggested that a good number to model for annualized phosphate costs is between $100 million and $110 million.

Andrew Wong of RBC asked about hurricane preparedness and asset upgrades. Bodine detailed the storm preparations and confirmed that all upgrades were completed for asset reliability.

Vincent Andrews of Morgan Stanley questioned asset health metrics. Bodine explained that the metric does not reflect 100% because it allows for normal unplanned downtime.

Aron Ceccarelli of Berenberg asked about earnings power in Fertilizantes amid a shrinking customer base. Bodine and Wang explained that focusing on better credit profiles aligns with growth strategies, targeting larger, more creditworthy customers. Pires projected long-term Fertilizantes EBITDA potential could reach $1 billion.

David Symonds of BNP Paribas inquired about specialty phosphate pricing and Brazil market headwinds. Wang noted a slow soybean season and credit challenges but pointed to strong demand for the next corn crop and ongoing consolidation among Brazilian farmers.

Richard Garchitorena of Wells Fargo asked about potash turnaround costs. Bodine stated that there should be a significant decrease in third-quarter turnaround costs in potash.

Kristen Owen of Oppenheimer sought quantification of Q3 EBITDA improvement. Pires outlined that stripping margins would increase, along with higher phosphate volumes and declining turnaround and idle costs.

Sentiment and Risk Analysis

Analysts expressed skepticism regarding extraordinary expenses, asset reliability, and the sustainability of cost reductions, reflecting a slightly negative tone. Management maintained a confident and constructive tone during prepared remarks, shifting to a more defensive stance during Q&A when pressed on costs and production normalization.

Compared to the previous quarter, the tone from analysts was more probing regarding cost normalization and asset reliability, while management’s confidence was reinforced by the completion of major maintenance and stronger cash flow projections.

Quarter-over-Quarter Comparison

Mosaic’s Q2 net income and adjusted EBITDA improved compared to a loss in Q2 2024 and higher than Q1 2025. Cost reduction and asset reliability initiatives progressed further, leading to lower phosphate production guidance due to extended downtime, but higher potash production guidance. SG&A reduction targets were increased from $150 million to $250 million. Analysts focused more on the normalization of extraordinary costs and the durability of operational improvements, while management became more assertive about the completion of maintenance projects and expectations for a strong second half.

Risks and Concerns

Management highlighted risks related to potential hurricane disruptions in Florida, ongoing credit challenges for smaller customers in Brazil, and possible market unevenness in the Americas. Provisions for environmental and legal reserves, as well as bad debt, were noted but described as largely non-recurring. Analysts raised concerns about the ramp-down of extraordinary costs, asset health sustainability, and potential headwinds in the Brazilian fertilizer market.

Final Takeaway

Mosaic’s leadership underscored that operational upgrades and cost reduction efforts are now largely complete, positioning the company to capitalize on strong market conditions. With asset reliability restored, elevated margins in phosphate and potash, and expanded distribution capacity in Brazil, Mosaic expects to deliver accelerated earnings growth in the second half of 2025, while continuing to strengthen its balance sheet and return capital to shareholders.