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    MOS
    Earnings call· Jun 2026(Q2 FY26)

    MOSAIC Q2 FY26 earnings call MOS

    Aug 5, 2026 Source

    Executive summary

    The Mosaic Company Q2 FY26 — Navigating Sulfur Headwinds with Strategic Cost Management and Balance Sheet Strength

    Mosaic is actively managing through a challenging market characterized by high sulfur prices and reduced fertilizer application rates, particularly in phosphates. The company is focusing on cost control, balance sheet optimization, and strategic capital allocation while positioning for an eventual market recovery. Despite near-term headwinds, management expresses confidence in its ability to navigate the current environment and benefit from pent-up demand.

    Highlights

    5

    • Successfully negotiated Q3 US sulfur supply at $705/tonne, considerably below spot market prices.

    • SG&A costs reduced by 20% year-over-year, with further declines expected in H2 FY26.

    • Cash flow from operations improved in H1 FY26 and expected to rise further in Q3 and Q4 FY26.

    • Fortified liquidity by replacing short-term commercial paper with a $1 billion term loan.

    • Mosaic Biosciences business on track to double revenues again this year, showing strong growth despite farm economics.

    Concerns

    5

    • Phosphate production curtailed due to unsustainably high sulfur prices and availability issues, impacting operating costs.

    • North America phosphate application forecasted to be down 20% this year, following a 15% decline last year, leading to over 30% reduction vs. normal.

    • Brazil phosphate application forecasted to be down 30% this year.

    • Ongoing curtailments expected to result in elevated idle expenses and limited fixed cost absorption in Phosphates and Fertilizantes in Q3 FY26.

    • Working capital release dynamics shifted, with the bulk of the $300M-$500M expected in Q4 FY26 rather than earlier.

    Guidance & targets

    7
    CategoryTargetConfidence
    Q3 FY26 Realized Sulfur Costs
    $700-$710 per tonne
    high materiality
    High
    Q3 FY26 Realized Ammonia Costs
    $610-$620 per tonne
    high materiality
    High
    Q3 FY26 DAP FOB Pricing
    $820-$840 per tonne
    high materiality
    High
    Full-year FY26 Capital Expenditure
    $1.2 billion
    high materiality
    High
    SG&A Costs
    decline further
    medium materiality
    High
    Working Capital Release
    $300 million to $500 million
    high materiality
    High
    Potash Market Outlook
    remain constructive
    medium materiality
    High

    Segment performance

    3
    SegmentRevenueYoYQoQMargin
    Phosphates
    Production curtailed due to high sulfur prices; operating costs impacted by reduced absorption. Q3 expected to see elevated idle expenses. New Wales and Riverview operating in the mid-70s, Bartow at 40%, Louisiana 100% offline.
    Production and Sales: 1.4 million tonnes (Q2 FY26)Raw Materials Costs (Q2 FY26): Sulfur $522 per long tonne, Ammonia $621 per tonneAverage Realized Stripping Margin (Q2 FY26): $422 per tonne
    		————
    Potash
    Steady earnings and cash flow contributor. Successfully completed Esterhazy annual turnaround in Q2. Expected lower unit costs in H2 FY26 from Esterhazy Hydrofloat project. Q2 MOP costs reflected higher weighting towards Colonsay volumes.
    MOP Costs (Q2 FY26): $84 per tonne
    		————
    Fertilizantes (Brazil)
    Business continues to perform well despite overall market conditions and curtailed phosphate production (except high-margin products) due to sulfur availability. Profitability expected to be down in Q3 compared to Q2 due to curtailed production and shift in working capital dynamics. Biosciences sales in Brazil expected to contribute $30 million in Q3 with 40% margin.
    		———$60 million (Q2 FY26 EBITDA)

    Operational metrics

    16
    Adjusted EBITDA
    $60 million
    Q2 FY26

    EBITDA for the Fertilizantes segment, highlighting its resilience.

    SG&A Costs
    down 20%year-over-year
    Q2 FY26

    Reduction in SG&A costs driven by spending discipline, reduced support labor, lower bad debt, and divestiture benefits.

    Short-term Liquidity
    —
    Q2 FY26

    Company has a 'very comfortable' short-term liquidity position and has not tapped its revolver.

    Mosaic Biosciences Revenue Growth
    doubleyear-over-year
    FY26

    Mosaic Biosciences business is on track to double its revenues again this year, indicating strong growth despite farm economics.

    Global Phosphate Production Shortfall
    up to 30 million tonnesvs. last year
    FY26

    Believed global phosphate production will fall significantly short of last year due to sulfur issues.

    North America Phosphate Application
    down 20%year-over-year
    FY26

    Forecasted reduction in phosphate application in North America for the current crop year.

    Brazil Phosphate Application
    down 30%year-over-year
    FY26

    Forecasted reduction in phosphate application in Brazil for the current crop year.

    Phosphate Nutrient Removal from Soil
    1.3 million tonnesadditional removal
    FY25-FY26

    Additional phosphate removal from soil in Brazil due to under-application.

    Phosphate Nutrient Removal from Soil
    1.4 million tonnesadditional removal
    FY25-FY26

    Additional phosphate nutrient removal from soil in North America due to under-application.

    Phosphate Production and Sales
    1.4 million tonnes
    Q2 FY26

    Volume of phosphate produced and sold in Q2 FY26 despite market turmoil.

    Fertilizantes Q3 Sales (Brazil)
    600,000-800,000 tonnes morevs. Q2 FY26
    Q3 FY26

    Expected increase in sales volume for Fertilizantes in Q3 compared to Q2, though full potential muted by production curtailments.

    Fertilizantes Biosciences Sales
    $30 million
    Q3 FY26

    Expected sales contribution from Biosciences in Brazil for Q3.

    Total Cash Outlays (YTD)
    $1.5 billion
    YTD Q2 FY26

    Total cash outlays including CapEx, dividends, and other expenses year-to-date.

    Idle and Turnaround Costs (Q2 Phosphates)
    $60 million
    Q2 FY26

    Total idle and turnaround costs for the Phosphates segment in Q2.

    Idle and Turnaround Costs (Q3 Phosphates)
    $10-$20 million additionalvs. Q2 FY26
    Q3 FY26

    Expected increase in idle and turnaround costs for Phosphates in Q3, with idle costs doubling and turnaround costs halving compared to Q2.

    Inventory Days
    125 days
    Q2 FY26

    Overall inventory levels at the end of Q2. Raw materials trending up due to prices, finished goods at healthier levels (700k-600k tonnes from 1M tonnes in Q4 FY25).

    Industry KPIs

    2
    MetricValueDetails
    Volume vs price split1.4 million tonnestonnes
    Productivity cost savings program$60 millionUSD

    Product announcements

    1
    ProductTypeDetails
    Mosaic Biosciencesexpansion

    Deals & partnerships

    3
    CarlsbadSale of non-core asset

    The company closed the sale of Carlsbad as part of its capital allocation strategy to optimize its portfolio.

    Araxa complexOptimization of Brazil portfolio

    Mosaic is advancing the process to divest its Araxa complex as part of optimizing its Brazil portfolio and reallocating capital.

    Rainbow Rare Earth Elements projectGrowth opportunity in Brazil

    The Rainbow Rare Earth Elements project in Brazil continues to show good potential as a promising growth opportunity.

    Capital programs

    1
    Esterhazy Hydrofloat projectunderway

    Benefit: meaningful benefits, lower unit costs, additional volumes

    Recent investments, including the Hydrofloat project at Esterhazy, are expected to provide meaningful benefits and lower unit costs, especially with additional volumes.

    Risks & headwinds

    6
    Sulfur affordability and availabilityNear-term (Q3 FY26 and potentially beyond)

    Spot prices remain unsustainably high; Q3 contract at $705/tonne, still elevated.

    Mitigation: Curtailing phosphate production, minimizing high-cost raw material purchases, locking in Q3 sulfur supply at reasonable prices, leveraging strong balance sheet and untapped $2.5 billion revolver.

    Global phosphate production shortfallFY26

    Global production expected to fall by up to 30 million tonnes vs. last year.

    Mitigation: Optimizing product mix, flexing production, maintaining asset health to ramp up when conditions improve.

    Reduced fertilizer application ratesCurrent crop year

    North America phosphate application down 20% this year (30%+ over two years); Brazil phosphate application down 30% this year.

    Mitigation: Monitoring crop prices for signs of recovery, which could be a catalyst for fertilizer demand. Expecting 'revenge fertilizer application' in the future.

    Elevated idle expenses and fixed cost absorptionQ3 FY26

    Operating costs impacted by reduced absorption due to curtailed volumes; Q3 expected to see elevated idle expenses.

    Mitigation: Aggressively removing fixed costs, especially in Brazil, to cope with temporary curtailments and enable leaner restart; maintaining focus on asset health.

    Credit issues in BrazilOngoing

    Shipments remain below historical levels due to ongoing credit issues.

    Mitigation: Observing recent strong fertilizer shipments as growers respond to improved crop pricing, suggesting potential improvement.

    Higher raw material costs (Ammonia)Q3 FY26

    Q3 ammonia costs expected at $610-$620 per tonne, up from $621 per tonne in Q2.

    Mitigation: Managing inventory flow-through and contract negotiations; utilizing internal ammonia production (Faustina) within the Florida network.

    What to watch in Q3 FY26

    5

    Working Capital Release

    Q4 FY26
    CurrentSome release in Q3, bulk expected in Q4
    TargetSignificant release of $200-$300 million

    Why it matters

    Verifying the timing and magnitude of working capital release is crucial for assessing the company's cash flow generation and balance sheet strength.

    So I would say we are still subscribed to the $300 million to $500 million release. The dynamics has changed a little bit. But -- and yes, the last point that Bruce mentioned, this one is important, because the distribution business in Brazil, you buy and you sell. So the cycle is comparatively short. The production business, you produce all over the year and then you sell mostly in Q3, which means that if we were producing, we would be rebuilding inventories in production in Q3 and in Q4. But because we are mostly curtailed in Brazil, that will not happen. And so therefore, the release in the distribution business will not be partially offset by another build in the production side. So again, that's another factor that -- the reason why we believe that $300 million to $500 million will come. Again, maybe 1/3 of it will come in Q3 and 2/3 in Q4.

    Q&A highlights

    6

    What is the estimated phosphate application reduction in North America for this crop year, and what is the outlook for Latin America, particularly Brazil?

    North America phosphate application is estimated to be down 20% this year, on top of a 15% reduction last year, totaling over 30% below normal. Brazil is also forecasted to see a 30% reduction in phosphate application this year, which will significantly impact crop yields.

    “So if you compare with the normal typical phosphate application in North America, we're talking about over 30% phosphate down this year in '27. This is a combination of farm economic challenges, affordability issues but also it's an availability issue. So over to Latin America, especially in Brazil, last year, phosphate application didn't really go down, so that was normal last year. We actually saw some growth in Brazil last year. However, this year, we are forecasting similar percentage of the phosphate application down in Brazil by 30% at a neutral level.”

    asked by Patrick Fischer · answered by Jenny Wang

    2 min read6 chapters

    Detailed Narrative

    01

    Sulfur Market Dynamics and Production Curtailments

    The global sulfur market is experiencing significant disruption due to the Strait of Hormuz closure and Kazakhstan blockade, leading to unsustainably high spot prices. Mosaic has curtailed phosphate production in the U.S. and Brazil, as industry economics cannot accommodate current sulfur costs. This has led to a projected global phosphate production shortfall of up to 30 million tonnes compared to last year, potentially impacting crop yields and food security.

    02

    Strategic Sulfur Sourcing and Cost Management

    Despite market volatility🌐, Mosaic leveraged long-standing relationships with Gulf Coast refiners to secure Q3 U.S. sulfur supply at $705 per tonne, significantly below spot prices. This strategic sourcing allows the company to preserve margins and avoid high-cost inventory. Aggressive cost management, including a 20% year-over-year reduction in SG&A, is expected to yield permanent savings and further declines in the second half of the year.

    03

    Fertilizer Application Trends and Crop Yield Impact

    North America phosphate application is projected to be down 20% this year, following a 15% decline last year, resulting in over 30% reduction compared to normal levels over two years. Brazil is also forecasted to see a 30% reduction in phosphate application this year. This under-application has already shown yield impacts in Brazil, with total crop production forecasts not keeping pace with acreage expansion, and similar effects are anticipated in the U.S.

    04

    Balance Sheet Strength and Capital Allocation

    Mosaic's strong balance sheet provides flexibility, evidenced by the $1 billion term loan to replace short-term commercial paper. The company is reallocating capital from non-core assets, such as the Carlsbad sale and advancing the divestiture of the Araxa complex, towards growth opportunities like the Rainbow Rare Earth Elements project and the rapidly expanding Mosaic Biosciences business.

    05

    Potash Segment Performance and Outlook

    Potash continues to be a stable earnings and cash flow contributor. The Esterhazy annual turnaround was successfully completed in Q2, and the Hydrofloat project is expected to lower unit costs and increase volumes. The potash market is anticipated to remain constructive through the year, supported by strong palm oil economics and inventory replenishment in China, with long-term demand expected to absorb new capacity.

    06

    Working Capital and Cash Flow Improvement

    Cash flow from operations improved in the first half of the year and is expected to rise further in Q3 and Q4 due to working capital release, primarily in Brazil, and additional cost reductions. The full-year CapEx guidance has been lowered to $1.2 billion, contributing to anticipated sequential improvements in free cash flow, with a significant step change in CapEx reduction expected in Q4.

    AI-generated summary of the company’s earnings call. Not investment advice.