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F500-2021-346-Mosaic

The Tampa-based mining company plays a major role in the agriculture sector as one of the world's largest producers of phosphate and potash, which are used in fertilizers and animal feed.

This year's Fortune 500 marks the 66th running of the list.

F500-2020-356-Mosaic

This producer of phosphate and potash nutrients for the agriculture industry is based in Plymouth, Minn.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

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The Mosaic Company produces concentrated phosphate and potash crop nutrients used in agriculture and industry to increase crop yields and soil health. Operating through its phosphates, potash, and Mosaic Fertilizantes segments, the company manufactures fertilizers such as diammonium phosphate, monoammonium phosphate, potash, and specialty blends like MicroEssentials and K-Mag. Mosaic also supplies phosphate-based animal feed ingredients under the Biofos and Nexfos brands, and distributes nitrogen-based fertilizers and biological complements. Its operations include mining, chemical manufacturing, blending, bagging, and logistics infrastructure across the Americas and international markets. Mosaic serves a wide range of customers, from agricultural retailers, cooperatives, and wholesalers to farmers and industry.

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Mosaic (MOS): Company Profile, Stock Price, News, Rankings

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Mosaic

mosaic

Good 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.

Thank 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.

They 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.

Now I'd like to turn the call over to Bruce.

Good 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.

Third, 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.

To 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.

Our 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.

The 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.

Our 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.

Phosphate 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.

In 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.

In 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.

As 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.

Our 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

already 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.

Neptunian 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.

Clearly, 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.

Free 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.

Thank 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.

We'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.

We 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.

And 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.

And 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.

As 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.

From 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.

With 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.

Thank you, Jenny. First, some housekeeping. You will notice that we added cost per ton metrics to our release. With reconciliation tables to U. S.

GAAP 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.

And 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.

The 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.

We 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.

On 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.

In 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?

First, 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

And 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.

SG 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.

And 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.

In 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.

So 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.

To 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.

Thank you. We will now begin the question and answer session. The first question comes from Chris Parkinson with Wolfe Research. Please go ahead.

Great. 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?

And 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.

Hey, 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.

There 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.

We'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.

We'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.

So 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.

Our 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.

We will proceed to the next question, which will be from Jeff Zekauskas with JPMorgan. Please go ahead.

Thanks 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?

Yeah. 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.

And 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.

The next question comes from David Simmons with BNP Paribas. Please go ahead.

David, you are audible. You may proceed with your question.

Okay, 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.

So 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.

And 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.

Hey, 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.

With the debt price, let me actually just turn it over to Jenny and talk about that.

Sure. 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.

We 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.

Just 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.

And as we get through these next few months of extraordinary activities, that's what you should expect.

We have Joel Jackson with BMO with the next question. Go ahead.

Hi, good morning everyone. Thanks for taking my question. Obviously, potash market is nice. It's rising. Things are good, demand driven.

and 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.

So 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?

Joel, let me just turn it over to Jenny. You're asking her specifically, so I'll let her answer it.

Sure. 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?

Yes. 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.

So 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.

Our next question is from Kristen Oven with Oppenheimer. Please go ahead.

Sort 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.

Yes. 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.

We 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?

Action 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.

The next question comes from Andrew Wong with RBC Capital Markets. Please go ahead.

Hey, 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.

S. 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.

Yes. 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.

So 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?

Sure. 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.

And 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.

There 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.

In 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.

Mosaic (MOS) Q1 2025 Earnings Call Transcript

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