The Mosaic Company (MOS) Q3 2026 Earnings Call Transcript

Operator: Good morning. And welcome to The Mosaic Company's Third Quarter 26 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. And this conference is being recorded. After the company completes their prepared remarks, the lines will be open to take your questions. And now I will turn it over to Luciano Siani Pires, Executive Vice President and Chief Financial Officer.

Luciano Siani Pires: Thank you, and welcome to our third quarter 26 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer. We will then welcome Yijun Wang, Executive Vice President commercial to join Bruce and myself as we open the floor to 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. 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 yesterday afternoon. And in our reports filed with the Securities and Exchange Commission. Please note, in today's presentation and in our press release and performance data, we will refer to and provide various financial measures. Including adjusted EBITDA, adjusted earnings per share, free cash flow, cost per ton, and adjusted effective tax rate. Either on a total company or segment basis. Unless we specifically state otherwise, statements regarding these measures refer to our adjusted non GAAP financial measures. Reconciliations of these measures to our most directly comparable GAAP financial measures can be found in our earnings release. Now, I would like to turn the call over to Bruce.

Bruce Bodine Jr.: Good morning, and thank you for joining our call. Our message to investors remains unchanged. Mosaic is navigating a difficult phosphate market by managing all that is within our control. I have lived through many cycles over my 30 year career in the industry. And while certain aspects of today's environment seem unprecedented, 1 important constant to remember is that markets bounce back. The strongest companies are built to withstand markets like this by taking decisive actions, preserving financial flexibility, and positioning themselves to benefit as conditions improve. Allow me to summarize a few of the actions we have taken. We temporarily adjusted our phosphate production across our portfolio to match the availability of affordable sulfur. This includes curtailments at Bartow, Louisiana, and in Brazil. We have also idled mining at South Fort Meade and Misquimayo to reduce unnecessary buildup of rock inventory, preserve cash, and better align mining activity with current production levels. For the production that remains online, our strategic relationships with US Gulf Coast refiners continue to provide an important sulfur sourcing advantage. For the fourth quarter, we have secured supply at $615 per ton. We are continuing to review spending across the enterprise. We have reduced corporate SG&A significantly and expect 2027 SG&A to be below $500 million. We are also continuing to optimize our capital budget. And now target 2027 capital expenditures of below $1 billion. $200 million lower than where we expect to finish 2020. We are continuing to pursue several portfolio actions to improve capital efficiency. Strengthen financial flexibility, and invest in the opportunities that offer the greatest strategic value. This includes the completion of Canadian land sales last month netting $36 million advancing the sale process of Araxa in Brazil, and evaluating other noncore assets. Finally, we have taken important steps to maintain the strength of our balance sheet. In early August, we refinanced and extended all long term debt maturities that were previously due in 2027 and 2028. We have no long term obligations over the next 2 years and access to liquidity remains available should we need it. Together, these actions ensure a strong foundation for any market and we are already seeing results. Even with production curtailments in the US and Brazil, we expect to generate positive free cash flow in the second half of this year. Before going deeper into the business, I would like to address broader markets. Long term agricultural fundamentals remain favorable. And near term dynamics in our key markets are also starting to improve. After 2 years of underapplication and now unfavorable weather, yield impacts are becoming more visible around the world. At the same time, grain and oilseed prices have risen from their lows earlier in the year, which is supportive of better farm economics and nutrient affordability. Better nutrient affordability is coming at an important moment. Yield impacts in Brazil have become quite pronounced and growers in North America have likely exhausted most residual soil nutrients. Under application cannot go on indefinitely and growers understand that. Phosphate supply remains constrained with sulfur availability and affordability continuing to limit production and margins across the industry. For those still producing, spot sulfur prices are resulting in unsustainably low stripping margins. Fortunately, we are starting to see some improvement in prices. Which is driving incremental production. But current economics remain insufficient for meaningful recovery in global supply. Some producers in Asia have begun exploring nontraditional sources of sulfur including reclamation from gyp stacks and the restart of long dormant sulfur mines. These are longer term solutions that could provide the industry with additional raw material supply options over time. In the near term, however, global phosphate shipments are expected to be down approximately 20 million tons from last year and we expect this trend to carry over into 2027. Despite limited supply, we are seeing some indications of improving phosphate demand in our key markets. North America's net max moved higher toward the end of the third quarter after lagging other regions for much of the year. Customer engagement has continued to improve in the fourth quarter ahead of fall application and winter fill in North America. And our tons are largely committed. In Brazil, fertilizer inventories are low. Particularly for phosphate. While it is still too early to call it a recovery, we are seeing green shoots emerge as appetite returns. Higher soybean prices supported stronger demand during the third quarter and farm economics in Mato Grosso in the third quarter were at their highest level in the last 3 years. Customer credit remains constrained and we continue to be selective in extending credit. But improving farm economics and low inventories provide a more constructive backdrop for demand in 2027. In India, phosphate imports have been robust for most of the year. While purchasing has slowed seasonally in recent weeks, additional import demand is expected through year end. The global potash market continues to be constructive, with strong demand driven by good value and inventory replenishment. China continues to be an important source of demand as it supports domestic consumption and continues to build strategic reserves. Against this backdrop, negotiations for the 2027 contract have already begun earlier than in prior years. On the supply side, logistic constraints in Russia and Belarus have disrupted roughly 1.5 million tons of potash shipments from the Baltic Sea in the fourth quarter. Overall, we see a constructive potash supply and demand picture. Turning to our business, I will start with phosphate. As previously announced, we curtail production at Bartow in Louisiana to align with the affordable sulfur available to us through our US Gulf supply agreements. In the third quarter, our realized sulfur price of $715 was well below the market average of $1.1 thousand per ton. Looking ahead, our fourth quarter contract was recently signed $615 per ton. Once again below current market price. Though volumes at that price are not enough to run our US assets fully, And while spot prices have begun to move lower, they are still not low enough to restart curtailed production. In the meantime, we are focused on meeting our customers' needs as best we can while optimizing netbacks and managing inventory For this reason, we began curtailing operations at South Fort Meade and Misquimayo to avoid building unnecessary rock inventory while concentrate plants are running below rate. Despite lower operating rates, we have begun seeing improvements in our production costs. Cash cost of conversion per ton saw a meaningful sequential decline reflecting in part the idling of phosphate production in Louisiana which is our highest conversion cost facility. And we expect these improvements to continue in the fourth quarter. Looking ahead, our lower sulfur contract price settlement will have an immediate benefit to fourth quarter cash flows. While the benefit to earnings will take longer as higher cost inventory moves through the system, Because of the volatility, we have again decided to provide some guidance on raw material costs for the fourth quarter. For sulfur, we expect realized prices in cost of goods sold to be in the range of $800 to $850 per ton. For ammonia, we expect cost to be in the range of $590 to $610 per ton. And this will result in realized stripping margins in the mid-$300s per ton. As lower cost raw materials flow through inventory, and our cost actions gain traction, we expect the underlying economics of the phosphate business to improve as we move into 2027. Potash continues to be a strong performer and an important cash generator. Third quarter cash cost of production declined $11 per ton sequentially as the production shifted toward lower cost Esterhazy volumes. During the quarter, production at Esterhazy was affected by lower ore grades associated with geology in the current mining area. This is temporary, and we anticipate the ore grades to improve as we continue mining. We continue to target annual potash production of more than 9 million tons over the longer term. In Mosaic for lozanches, third quarter results reflected a full quarter production curtailments across most of the business. Higher margin animal feed production continued. Distribution margins were within our normalized annual target range of $30 to $40 per ton. Supported by normal seasonality and commercial execution. We also made meaningful progress reducing finished goods inventory during the quarter, and collections associated with stronger third quarter sales are expected to support cash generation in the fourth quarter. Mosaic Biosciences continues to deliver strong growth. Year to date, net sales have more than doubled year over year. And we remain on track to generate nearly $135 million in 2026. We expect a long a total of 8 to 10 new products this year and deliver positive EBITDA. A strong step toward our goal of generating $200 million of EBITDA from the business by 2030. Finally, I would like to spend a moment on our recent cost reduction actions and strategic capital allocation priorities. We are taking more aggressive actions to align our cost structure with current operating conditions. These decisions have been difficult, but they are necessary to position the business for long term success. These actions include removing fixed costs from idle and underutilized operations, reducing SG&A, and concentrating resources on the areas that create the greatest long term value. We expect 2026 SG&A to be $510 million to $530 million but our cost reduction initiatives suggest 2027 SG&A to be below $500 million. Capital spending remains an important lever. We have reduced our 2026 capital expectations over the course of the year and sharpened our focus on maintenance, reliability and high return projects. Based on our current plans, we are targeting below $1 billion of capital expenditures in 2020 roughly $200 million below where we expect to finish 2026. We remain focused on optimizing our portfolio of assets. Over the last few years, we have divested noncore assets that have allowed shift resources to better returning opportunities. This effort continues. 1 example is the divestiture of our Araxa asset in Brazil. A process we expect to complete over the next several months. We are also pursuing additional land sales in Canada and in Florida. This year, we have signed $67 million and we expect additional transactions over the next 12 months. And we are continuing to explore additional of noncore and underutilized assets that will further ease our capital expenditures burden and enable us to focus our on our opportunities. Let me close with this. The environment remains challenging. But we are acting decisively and seeing increasingly constructive signals across our markets. These actions have strengthened our underlying business and have positioned us to generate strong cash flow and returns as markets normalize. With that, we will open the call for questions.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star, then 2. The first question will come from Christopher Parkinson with Wolfe Research. Please go ahead.

Christopher Parkinson: You have spoken a lot about over the last couple of quarters about just having sulfur at the right facility to basically sustain operating rates at the facilities that are in fact running I would love to just go through a kind of a State of the Union of New Wales Bartow Riverview, understanding that there can be differences in operating rates based on products. On and so forth. But, you know, where do you stand there in terms of your sulfur supply heading in 2027? How do you feel about New Wales after, I think, 1 of the you know, company's largest turnarounds in history in the first quarter of this year? there is still a lot to kind of look forward to. So I am just kind of curious on where you think you are in that process.

Bruce Bodine Jr.: Hey, Christopher. Thanks for the question. Something we do talk a lot about and are working hard on, but just on the sulfur piece, we do have sulfur and confident we have sulfur going into 2027. To meet what we have kinda said of about 65-66% of our production needs. And that fits nicely with the Florida footprint and that also helps us alleviate water management issues in Florida's tropical environment on rainfall. Because 1 of the biggest ways to do that is to run the asset So we feel good about where we are from a sulfur supply. Again, on our contract basis, which is continued to stay advantage to spot. And we are, optimistic that we could continue to do that. With the relationships that we have with the refiners. On the second part of your question is how are things going at the facilities? Generally, things are going very, very well. We have seen production improvements at, New Wales. We have seen production improvements at Riverview. I think, Christopher, you like to see kinda operating rate, if I am not mistaken, operating rate for the Florida footprint generally is in the low- to mid-60%. Versus 10 k. And those vary month by month that you just said on product mix. But what we see when we put the gas pedal down when product mix lines up at new wells particularly is very good production. And no concerns on the things that we were dealing with over the last 2 to 3 years. So we would love to get no more than anyone else, this sulfur thing behind us where we could demonstrate that more fully, but we are seeing very good results at Riverview, New Wales, Bartow continues to perform when dApp is a heavy product mix because that plant makes it better than anyone. And like I said, the Florida footprint is working to balance that sulfur that we have very well. And hit the objectives of dealing with cash flow in the ways that we want.

Operator: The next question will come from Joel Jackson with BMO. Please go ahead.

Joel Jackson: Hi. Good morning. A couple of potash questions. Just first at Esterhazy. Could you talk about hitting a lower grade part of the ore last quarter? Was it hitting a salt course that you have to move the machine somewhere else? And then we know there was some seismic activity. Or maybe generated by the miners. Basically, if you can comment on that. And then just wanted to talk about the guidance for performance products going forward. Is the run rate we saw in Q3 now the new run rate with KMAG gone Thanks.

Bruce Bodine Jr.: Yeah, Joel. Appreciate the question. Let's just start with the seismic activity. I think there was some press potentially on that yesterday or day before. it is not unusual to have seismic activity in that deposit. It happens do not wanna say once a year, but that would not surprise me if it was something like that. it is pretty moderate. On the Richter scale standpoint. there is monitoring that Canadian government has. We have our own internal modern. Monitoring as well. We did issue a statement just because of that activity was felt at surface and in the town of Esterhazy specifically. So we wanna make sure that we brought comfort to the community that there was no abnormal issue there. We do have protocols when those things happen to check as you can imagine, the precious infrastructure underground that we have, particularly around the shafts, and other mine workings that are critical. And, everything was unaffected. As it normally is. And our Shavs are built for seismic activity that is pretty significant given that there is a history of seismic activity there. But as you can imagine, that whole piece of ground between the operators in that is pretty developed. And, as you as you said, seismic activity is not unusual So just want to put that at ease that nobody likes to see that, but it is a. it is an artifact of heavy mining And we have got protocols in place. And then it is important for us to make sure we update our community citizens to make sure that everything's alright as well. When it comes to your second question before I turn it over to Performance Products, and I will turn that to Jenny. We did put out a statement on org grade, but let me cover maybe the broader question more broadly, which is just potash in general. Because there is some things that I wanna clarify in quarter 3, and then I really wanna talk about where we are even through October because it is quite exciting. Although we did hit our sales target that we put out guidance on for quarter 3, Our quarter 3 total potash production was below what we anticipated going into the quarter. So there is a few reasons for that. 1, Joel, you nailed is, we did encounter some anomalous ore features. They were, kind of salt domes that, were not anticipated. That happens from time to time, and you have to adjust your mine plan. That was behind us, but did cause some issues. The other was in aggregate in quarter 3, we had heavier turnarounds that impacted us, in totality in time from shutdown to full ramp up. And then given our low throughout Q3 and it remains pretty low, as well right now. We were unable to build inventory as we needed for the anticipated Q4 sales and we did have to adjust guidance, which I know many of you have seen. The good news is that the facilities are performing very well. In fact, Esterhazy, particularly, I want to highlight, has set 2 records in October. The first was most production tons on k 3 ore. In its history. And then the second is the most ore tons mined at the site in over 60 years. So just to anchor on some proof points, Esterhazy is performing extremely well. Has been as the quarter ore tons were actually quite good as well 1 of the highest of the highest of the year. So going into 2027, Esterhazy is on pace for over 5 million tons of production. And together with Belle Plaine and Colonsay, confidently, we have total MOP capacity over 9 million tons at a time. Where we feel, as we have described what is going on in the Baltic and other places of the world, that the world's gonna need it. So we are pleased with where we are on the potash segment. So thanks for the question. And with that, I am gonna turn it over to Jenny to talk about Performance Products.

Yijun Wang: Thanks, Bruce. Joel, I think your question is more related to K-Mag. And With the transaction completed On Carlsbad, we actually stopped sales of K-Mag in Q3. And we have been supporting and bridging customers with the new owner of Carlsbad. Aspire is another performance product in our potash portfolio with robust demand to potash the value of boron added to Aspire has been supported by the customers in North America and Brazil as well. So it is. We are very pleased with the performance of our performance product in the potash portfolio. Thanks.

Operator: The next question will come from Benjamin Theurer with Barclays. Please go ahead.

Analyst: Bruce, you mentioned earlier about conversion costs were improving, and I just wanted to ask about that trajectory. At your Investor Day, you talked about a 2027 target of reaching $90 to $95 and let's leave the year for now. But is that quantum still a achievable? If not, what is the right target and is the gap to achieving that only based on volume improvement, or are there further operational changes or upgrades that need to be made? Thank you.

Bruce Bodine Jr.: Benjamin, thanks for the question. So going back to Day, just the level set that was the target. And those future targets were not adjusted for inflation. So you would however you wanna adjust those, Not trying to get cute, but that just is the reality of what that presentation was based on. And, yes, we are seeing improvement. In fact, was it $11 a ton, Luciano, quarter over quarter improvement on conversion cost? Now granted, some of that is due to Louisiana being down, and that is a higher conversion cost facility. But when we put those targets out, Benjamin, they were based primarily on cost absorption on those incremental tons. And, just given 70-75% of our costs are fixed. That was a huge lever for us on, achieving lower costs. There are other things around water management with some of our potential injection wells to better manage water at a lower cost. That would be part of that as well. But by far, the biggest needle mover is, volume improvement. Luciano, anything to add to that?

Luciano Siani Pires: Just 1 other proof point. Turnaround costs are not included in conversion costs, and they have been coming down. I am talking about just turnaround. Not turnaround plus idle plus underutilization. If you look at compared last year with this year, it is a decline of about $100 million. So another, very good trend. Of course, it is going to be a little puzzling, going forward because of the idle and underutilization cost. But turnaround itself, you may remember, we had a very bad Q2 in 2025 and a lot of spend in Q1. So they have come down significantly as well.

Operator: The next question will come from Andrew Wong with RBC. Please go ahead.

Andrew Wong: Hey, good morning. Thanks for taking my questions. Can we just touch on 2 things actually. 1 is on the capital expenditures. The 2026 spend was cut to $1.2 billion from $1.5 billion. I think delaying some work on gyp stacks and settling ponds, and for 2027, you are targeting less than $1 billion. So can you just talk about what kind of spend is being deferred? And when that capital expenditures spend would need to occur? And then just secondly, on the phosphate ramp up decision, like, what would you need to see to make that decision? Is it just mainly about sulfur? Do you need a Do you need to see a sustained period of phosphate margin improvements before restarting? Like, if the Strait were to reopen tomorrow, would you just start prepping for that right away in anticipation of phosphate margins improving? Can you just help us understand that a little bit better? Thank you.

Bruce Bodine Jr.: Yeah. Andrew, that is definitely the topic we focus on the most these days. Is what would that look like. But let me address the capital expenditures first. So we have said in. Before this acute disruption in the Persian Gulf and what we are dealing with right now, that $1.5 billion that we were planning to spend in 2026 was gonna be our high watermark. We would have seen capital expenditures moderate a little bit, over the maybe the next 2 to 3 years in the 5-year period. But at the 5-year point, being at that kind of $1 billion We still believe that is the case. Obviously, we are not running our full footprint, which that was based on. And how we have been able to moderate capital expenditures to date this year and looking forward into 2027 is because we are far from running our full complement of footprint. If you are not running the asset, it does not take sustaining capital expenditures. You are not eroding. You are not corroding. You are not doing anything. it is basically in the garage waiting to be driven. So we have the luxury in an odd way of being able to avoid right now general sustaining capital expenditures. Along with that, those facilities that are not running whether they be mines or whether they be fertilizer complexes, their waste disposal requirements are not being needed to be expanded or the next new capacity built because we are adding no waste to them. So they also sit as they did when they were parked, ready to take on those tons. And then in time as they are filled, that capital expenditure spend will need to be put in to build new gyp stacks or new clay settling areas or new tailings dams, in Brazil. So that wave is just being spread out and pushed, but again, we still believe that in time, when things do normalize, we will get down to a run rate of that billion dollars of capital expenditures for the full-complement footprint that we were talking about prior to the Persian Gulf conflict. So when will that occur? Well, I wish I knew, but I know you have thrown some hypotheticals, and we kinda play scenario dartboard here in our own office on what could happen. But we need to see, first and foremost, stripping margins on a sustained basis above where they are today. For our full portfolio. In more importantly, we need to see spot sulfur that we would be exposed to turn the new-- those idled facilities on far improved to where those spot prices are today. And we would need to have the confidence that those are not gonna whipsaw again because these actions are very serious actions to idle these things. And to bring them back, bring people back, we wanna have the confidence that we do not have to do this again in another week, month, 4 months down the road. So we will have a very moderated approach if and when that well, not if. When that time would come, because we are seeing good signs that things are improving. Sulfur prices are on the spot market are definitely improving in all geographies, but US Gulf spot is 1 that we are particularly interested in given our footprint exposure. And all of those things are starting to come to the right direction. Move in the right direction. But they are not quite where they need to be yet, And then when they do get there, we need to see that sustain and have confidence in total stripping margin includes DAP and all the other things, be north of where it is today. Luciano, you got more you wanna add?

Luciano Siani Pires: Back to the capital expenditures question, another data point to call your attention. The asset retirement obligations, if you look into our consolidated statement of cash flows, we now the second quarter in a row, we have aligned specifying how much we spent on those. If you look at that 9 months ended 9/30/2025, $201 million. 9 months ended 9/30/2030, $133 million. So it is a very meaningful decline. And that decline is structural because it is associated with work that has already been completed, especially in our permanently idle sites like Plant City. So another important, number to watch.

Operator: The next question will come from Duffy Fischer with Goldman Sachs. Please go ahead.

Patrick Fischer: Yes. Good morning, guys. I just want to understand a little bit more on phosphate, the demand picture for your product today. So if you could get more sulfur, you know, at your $615 would you produce more phosphate, and is the demand there to sell it at current prices? And then what is your take on North American fall application this year relative to this year, kind of flat, or, you know, do you think it will be down again?

Bruce Bodine Jr.: Duffy, great question. Thanks for asking. Let me just talk. Just generally, and I am gonna turn it over to Jenny. But what we see not only in North America, but around the globe, is that demand is actually surprisingly good on the upside. And I think if we could get the economics and the confidence from a risk profile that those economics are sustainable for a period of time that we would turn things back on and we would probably do that in a moderated way as volume would flow through. We thought about that. We have got a number of permutations that we would work on, but to answer your question, demand is pretty good. I think demand is constrained generally because of, the sulfur in the supply side. So I will let Jenny add to that and then address North American fall how this year compares to normal.

Yijun Wang: Sure. Thanks, Bruce. I. I would like to say the demand on phosphate globally, it is actually constrained by supply. It has been the case over the cup. Last couple of years, and this year is in particular. Because of the, sulfur-related product constraint. So this supply constraint is just there. And 1 of the evidence that I can share with you is North America. If you recall last year, we saw reduction in North America more driven by farm economics. So last year, North America phosphate shipment was down 15% year-over-year. This year, the general expectation was the demand will be further reduced, and that was probably the case for the spring application. As we got into fall applications, especially when the commodity prices went up, in late second half of September. The farmers were really motivated to step in. With a very clear understandings of underapplication of phosphate over the last seasons and also with the improving farm economics. So the fall demand for phosphate in North America has been, coming much stronger than, many of us anticipated. Even our customers, the retail customers, they have not prepared for such a strong demand. So with that, you have heard, Bruce mentioned that we basically sold out our Q4 availability. So if we were to be able to produce, more tons of phosphate in Q4 or in 2027 we definitely see the demand. So that probably hopefully answers your question.

Operator: The next question comes from Vincent Andrews with Morgan Stanley. Please go ahead.

Vincent Andrews: Thank you. Good morning, everybody. Just wanted to ask a bit on the Eastern European potash situation. Tied together with some of the other global dynamics. Which I think I heard you refer to, probably a reduction in exports particularly out of Russia. Of potash for the fourth quarter. Wondering if you know if that is just production that is being continuing, but exports that are not taking place. So, therefore, it will get those exports get pushed into future periods, or some of the trade publications are suggesting there might actually be a reduction in production. And I think if I tie that together with your announcement that you are gonna make 400 thousand fewer tons of potash, this year than you thought before. In your other comment that sounds like China's coming to the renegotiating table. On the contract maybe earlier than was previously expected just given where their port inventories are. Can you just put all that together for us in terms of you know, what you are seeing and how you think that is going to play out? Over the next quarter or 2? Thank you.

Bruce Bodine Jr.: Yeah. Vincent, thanks. A lot there to unpack. I am gonna probably get Jenny to assist me with this. But let's start with kind of the big ones is just demand overall for potash. We see that being record or very close to record this year, about 75 million tons. Of demand. So there is good demand. The affordability factor on potash still feels good for buyers, and farmers. So, that is the good news in the backdrop, and we continue to see good growth going into even 2027 on that front. China has come in big. They have got big demand. So the. They are stock to use ratios, when you put aside. And I will let Jenny get into the details of that. Their strategic reserve, which they really. that is a emergency program, and there is all sorts of hurdles that have to be met in order for that to be released, that is really not on the table. So that is why given the backdrop and the constructiveness in the market, I think some of these things that we have been talking about, with Eastern Europe potash, shipments coming out of the Baltic Sea, things like that, that China is very eager to engage. In fact, there has been engagement, as you have noted, and I have said in my prepared comments, This is some of the earliest that they have done that possibly ever. But let me have Jenny kinda add to that, because we see the potash market being very constructive. Jenny?

Yijun Wang: Sure, Bruce. I guess, probably just want to add some data points. The growth of demand for potash this year is actually across the board, with 1 exception, which is in Southeast Asia, Malaysia, Indonesia because of the, the drought situation. Other than those 2 markets, the growth of potash has been really robust in 2026. In term of China, indeed, we have seen a very strong import demand And as you can see that they have imported more than 4 million tons up to end of September, and that added port inventory, which is very visible. Right? I want to call out 2 things. 1 is the domestic demand. The on the ground application increased close to 1 million tons. So that import demand increases, it is not only building inventory. It actually support the growth of demand in-country. The second part is really the strategic reserve. it is very clear the Chinese government has seen the demand and the benefit. Of building its reserve, in order to support its agriculture market, the early starting point of the negotiation pretends their desire to further build the strategic reserve. We heard speculations of higher reserves being ordered to be built. So those are the very strong drivers to further build the demand growth into 2027. Lastly, on the logistic constraints at Baltic ports in Russia, and that was widely reported. It was ordered by the Russian government in order to support the shipment of other commodities, grains. And then potash was ordered to slow down its shipment. So the question is whether those slowdown of shipment are going to be-- will they be rebuilt or Those are shipment are going to be gone. We tend to believe those towns are likely going to be gone, because they cannot be shipped out into the market. The total reduction of the export out of Russia and Belarus are likely going to be 1 million tons in Q4 only, which further support the strong fundamental for potash as we get into 2027.

Operator: The next question will come from Suk Lee with KeyBanc. Please go ahead.

Analyst: Yes. Thank you very much. Just wondering, what are your expectations firstly broadly for phosphate pent up demand next year? Say, you know, for this. For the market, if prices stay where they are currently, still at elevated levels and, you know, what could be the shipment rebound? It be very material in double digit? If phosphate prices become much more affordable as sulfur goes down? And you have that very interesting slide showing the phosphorus content in the soil globally. Firstly, can you clarify? It shows that there is sufficient excess phosphorus in North America. That seems to be a little bit at odds with a comment you had earlier in the call that nutrients in the soil are being depleted rapidly. But also, given what it does show that in Europe and North America, have a lot of phosphorus in the soil, Is there any chance this indicates actually that we have been overapplied for years and the actual North American European market demand should actually be quite a bit lower than it is been for the past 5 years?

Yijun Wang: Yeah. So let me start from the phosphate deficiency. I am very glad that you saw you saw the map So for the markets like Europe and US, although you see that market to soil type probably are more favorable to keep the nutrient phosphorus in the soil. But it does not mean that nutrient removal can stay without replenishment, can stay longer. A couple of data points: PSI just released a report. it is a sample tests for the soil in North America. It shows 45% of the soil tested in North America shows phosphorus deficiency. So that is 1 data point. The second data point, as you mentioned earlier, phosphate application in The US market over the last 2 seasons, have been lower than the normally required. Although you have not really seen the yield impact, as we did in Brazil, which is very visible for the yield impact in The US market. This past season while the harvest is just ongoing or just complete, We heard from our customers or farmers on the ground telling us the yield level are far different than what they anticipated. And those anecdotal reports from the field may not be the same as the data that have been published. But we believe that the yield impact will eventually be reflected to the production eventually going to support the corn soybean prices. So that is the phosphate deficiency part. On the demand side, I just want remind you of some of the data points. With the significant reduction of application or shipment for phosphate due to supply, across the globe, we are seeing significant reduction on the shipment. it is including in North America. We are going to see further reduction this year in 2026. If you combine 25 and 26, North America phosphate reduction application are going to be reduced close to 25% versus normal year. Brazil, this year, we are going to see over 25% of the phosphate reduction in terms of the application. Remember, Brazil, you will see on the same season yield impact due to this application reduction. We are saying India, even with the government support, their application are going to be reduced by 20%. So this list is going to go long. With the coming improvement of the commodity prices as we mentioned on the yield impact and potentially weather impact we see a very strong tailwind for phosphate demand as we get into 2027.

Operator: The next question will come from Matthew DeYoe with Bank of America. Please go ahead.

Matthew DeYoe: Thank you. I wanted to hone in a little bit on the mining costs. Because I feel like some comments have been made in passing a little bit to me over time. If we just look at, like, the last 3 years, what would you say consolidated stripping ratios have been for the Florida mining operations? What should that look like in 2027 versus 2026? What generally have variable mining costs been And with all this debottlenecking work, is it kind of reasonable to. If you publish a new technical report this year? Kind of think it would make sense.

Bruce Bodine Jr.: Yeah. Matthew, I do not have 2027 stripping margins at the tip of my fingertips. For mining in Florida. And part of that is we are still going through the planning process of what 2027 will be based on where we see demand, And so that. that is a big variable because each mine has got something different. But in general, stripping margins have increased particularly because of our South Fort Meade reserve. That reserve is incredibly deep. It does have good rock, in the eastern part but we are having to bench mine there, which means strip off a 20 foot layer of overburden get the dragline back down on the bench, and then be able to mine the last 80 feet of, overburden, rock, interburden, whatever may be there. So that has definitely added to cost at South Fort Meade. Those are highly variable as well, and I would I am sure you have been to our sites. Unlike in potash where things are more consistent, generally speaking, In Florida, know, you can see, in a few square mile difference, you know, higher variability. But in general, South Fort Meade has a higher strip ratio than what it has had in the past. The good news is, at least for now, in 1 regard, is that mine is idled, and we are benefiting from a much lower cost as we move into 27 with just 4 Corners, Wingate, and then what is running at Misquimayo that is a much more advantaged composition for rock supply. And cost.

Operator: The next question will come from Edlain Rodriguez with Mizuho. Please go ahead.

Analyst: Thank you. Good morning, everyone. Just trying to get your insights into the affordability concerns with phosphate. Like, if prices stay as elevated as they are, like, what is going to drive farmers back to normal consumption? I mean, do we need to see lower profit prices? Or significant increase in crop prices? Because with December 2027 corn prices below $5, like, I am not sure that is going to do it. Like, what do we need to see happening for the affordability concerns to be know, kind of resolve. Be resolved.

Bruce Bodine Jr.: No. Totally get your question, Edlain. And appreciate that because it is something we talk about a lot too is, there probably is at some point, a ceiling that, you know, could put the damper on demand. But we actually do not ironically see that right now, and it is hard to separate and this is a difficulty for all of us is, you know, what is actually driving the lower consumption? Is it actually supply constraint? Or is it actually demand disruption due to affordability? And I cannot parse and parcel that particularly well. It might be a little bit of both depending on the geography and what is going on. In North America, particularly, and Jenny alluded to it earlier, and I will let her comment on it again if she's got more to add. Is, we are seeing the farmers actually want to engage. it is a matter of likely not being able to get as much product as they want. Farmers know the agronomic science. They know what is in their soil, particularly in The US. And in Canada and North America in general. Brazil as well, they are very sophisticated in test. Testing that. They are seeing, as Jenny alluded to earlier, proof points that their soils are deficient. They are going to, for that marginal cost, probably want to apply fertilizer. To maximize yield. As long as they can get it. Could there be a point where that destroys? We always are trying to know, think about that. We do not necessarily control that because these prices are global. But the other thing is if you believe, and we do, that yields will be impacted because of underapplication that is happened over the last 2 seasons/2 years, fertilizer seasons, fertilizer years, these are gonna be evident at some point in time. It likely. The biggest proof point to that is gonna be a harvest that comes off in the spring. And we will see what yields actually are And that will probably set a direction on ag commodity prices. And if those yields are down where we think, you know, what we are hearing boots on the ground from our people, that. that is probably more on the downside. To what some of the published yields are. that is going to be tailwinds for commodity prices. it is going to be tailwinds for farmer economics. Going to be tailwinds for fertilizer demand. Jenny, anything to add? She's shaking her head no, Edlain. So I learned from her well.

Operator: The next question will come from Kristen Owen with Oppenheimer. Please go ahead.

Kristen Owen: Good morning. Thank you for taking the question. You have talked about production costs improving, but not yet at the level to restart. You have also given us some color on SG&A and capital expenditures in 2027. Can you just explain for us what is the production assumption underlying those estimates? And what would change in that cost outlay if you were to get comfortable enough to restart production? Thank you.

Bruce Bodine Jr.: Yep. Kristen, I am gonna turn it over to Luciano and give you some color around that question.

Luciano Siani Pires: Thank you. So the assumptions are the current production levels. So if you go back to full operating rates, then you would have all the cost dilutions, applied on top of that. On the proportion of, 80% fixed cost, 20% variable.

Bruce Bodine Jr.: So, Kristen, it is too murky right now to know exactly when. So what we are doing, as we have said, and what I think a company in this situation should do is control what we can control and plan for the things that are only directly in front of us, which is maintaining that sulfur advantage contract that we have versus spot. Producing as efficiently as we can and placing those tons in the marketplace where there is active demand. And waiting to see and be ready to capitalize on upside economics as fast as possible when those costs, particularly around raw materials, fall into a favorable sustainable level that we feel worth the risk to restarting and then that would justify if there is additional capital expenditures that we have deferred that needs to be pulled forward. And other costs. So that is how we are thinking about it, and I think that is the right way to think about it. Because we just do not know when that is gonna happen.

Luciano Siani Pires: But 1 other thing is, absolutely, Q4 is gonna be a trough in terms of EBITDA especially in the phosphate segment. Because of the flow through of the guidance we just gave of $800 to $850 per ton on sulfur prices. So it is obviously higher than the $715 of this quarter. So that is gonna have an impact on realized stripping margins that you are gonna see in print. But although from a cash perspective, we are gonna immediately start realizing the benefits of the $615 contract price and lower sulfur prices. So we could talk about many tailwinds on the cash side. But the number you are gonna see from a EBITDA perspective in phosphates and for Mosaic will trough at quarter 4.

Bruce Bodine Jr.: So with that, we are at time for this call. Great, detail and complex questions. Much appreciated the active engagement, but thank you to all of you But to conclude our call, I would like to reiterate a few key points. We have a strong foundation, a more resilient portfolio, and the flexibility to manage through the current environment while remaining focused on long term value creation. We are seeing increasingly constructive signals across our markets, Agricultural fundamentals remain supportive. Phosphate supply, does remain constrained, and potash continues to benefit from strong global demand. As affordability improves and growers replenish nutrients, following an extended period of underapplication, we are confident that Mosaic is positioned to generate stronger cash flow and returns as market conditions normalize. Thank you all for joining us today. And have a great, safe day.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.