MOSAIC (MOS) Q1 2026 Earnings Call Transcript
Neutral Agricultural Inputs 9.10B USA
Next Earnings
2026-05-06
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Mosaic 2025 faced US phosphate weakness, but 2026 guidance is positive with higher production, ongoing cost discipline, and growth through Mosaic Biosciences and strategic divestitures.
⭐ Key Highlights
Q4 performance and 2026 outlook
Q4 2025 was weaker due to U.S. phosphate demand, but Mosaic expects a constructive 2026 with improved phosphate and strong potash production.
Operational improvements and costs
Delivered meaningful cost and efficiency progress in 2025, including $150 million in savings ahead of schedule and planned further savings of $100 million in 2026.
Capital allocation and asset divestitures
Completed divestitures of noncore assets (Patos de Minas, Taquari) with Carlsbad pending; these moves are intended to reallocate capital to higher-return opportunities.
Mosaic Biosciences growth
Mosaic Biosciences expanded registrations to 60+ countries and 16 markets, launched five new products in 2025, and targets continued doubling of net sales in 2026.
Balance sheet and cash flow dynamics
2025 cash flow was pressured by working capital buildup; management expects $300–$500 million of working capital release in 2026 and debt reduction to enable shareholder returns.
✔Positive Signals
- Significant 2025 cost savings achieved ahead of schedule ($150 million) with a plan for an additional $100 million in savings in 2026.
- Mosaic Biosciences achieving scale with 60+ registrations, 16 countries, and 68 million net sales in 2025, with doubling potential in 2026.
- Phosphate production improved in 2025; Bartow and Louisiana running at ~80% operating factor, aiming for up to 7+ million tonnes in 2026.
- Capital allocation actions reduced exposure to low-return assets and unlocked value through divestitures (Patos de Minas, Taquari) and Carlsbad strategy.
- Working capital release expected to be $300–$500 million in 2026, supporting higher cash flow and potential debt reduction.
✖Negative Signals
- Q4 2025 weakness driven by weak U.S. phosphate demand and higher sulfur costs; near-term margin pressure in phosphate and Mosaic Fertilizantes.
- Higher sulfur prices creating EBITDA headwinds in Q1 2026 (~$250 million annualized impact) and potential pass-through limits on prices.
- Brazilian Fertilizantes exposure to credit issues and ongoing turnaround/CapEx at Brazil sites elevating near-term risk (Araxa, Fospar idle; Uberaba turnaround).
- CapEx guidance raised to about $1.5 billion in 2026 due to gyp stack, tailings, and clay settling area expansions, with timing risk and lumpy spend.
- Inventory build in 2025 (approx. $960 million working capital impact) delaying cash flow recovery and pressuring the balance sheet.
📊Financial Results
- 2025 cash flow was pressured by working capital builds, reducing cash flow by $960 million and increasing net debt by $829 million.
- Inventory and working capital contributed to a sizable 2025 cash flow impact, with excess phosphate inventory representing about $140 million potential release over the next few quarters.
- Fourth-quarter phosphate conversion cost was $112 per tonne, significantly improved from earlier highs; 2023 cost levels were abnormal due to nonrecurring maintenance.
- EBITDA to cash flow conversion fell to the mid-30s in 2025 from a normalized ~70%, with expectations for meaningful improvement as working capital unwinds.
- Rock and sulfur costs and Brazil operational dynamics caused near-term volatility, with 2025 rock costs reaching near record levels but positioned for improvement in 2026.
🔮Future Guidance
- CapEx for 2026 expected around $1.5 billion, higher than 2025 due to gyp stacks and clay settling area expansions; long-term CapEx trend toward ~$1 billion by 2030.
- Phosphate production guidance remains focused on 7+ million tonnes for 2026, with operations moving toward higher fixed-cost absorption to improve margins.
- Total cash outlays for CapEx, ARO, and environmental reserves are expected to be modestly higher than 2025 but trend downward over the long term (to about $200 million by 2030).
- Mosaic Biosciences to continue launching new products (8–10 launches anticipated) and expand registrations, aiming for continued doubling of net sales in 2026.
💡Interesting Insights
- Management expects a meaningful 300–500 million working capital release in 2026 as demand recovers and production improves, a key lever for cash flow improvement.
Detailed Analysis
AI-generated summary of MOSAIC earnings call transcript.
The company reported a challenging end to 2025 driven by weaker U.S. phosphate demand and heightened sulfur costs, but maintained a constructive long-term outlook supported by improving phosphate production, robust potash output, and ongoing cost-reduction initiatives. Mosaic executed a strategic capital reallocation, including divestitures of noncore assets, and advanced technology-driven efficiency programs to deliver at least $100 million in further savings in 2026. The Mosaic Biosciences platform showed strong momentum with multiple product launches and expanded registrations, positioning it as a scalable growth engine. While near-term cash flow was pressured by working capital build and higher sulfur costs, management projected a meaningful working capital release of $300–$500 million in 2026, along with debt reduction to support potential shareholder returns. CapEx is guided higher in 2026 to around $1.5 billion, driven by gyp stack and clay settling-area investments, with expected reductions in ARO and environmental reserves over time. Overall, Mosaic expects production to trend toward record levels in potash and improved phosphate utilization, supporting a higher-quality earnings trajectory as the year unfolds.
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