The paragraph introduces The Mosaic Company's Fourth Quarter 2024 Earnings Conference Call, indicating it is recorded and in a listen-only mode. Jason Tremblay opens the call, stating that Bruce Bodine, the President and CEO, will provide opening comments, followed by Jenny Wang's market update and Luciano Ciani Perez's review of financial results. The call will include forward-looking statements subject to risks and uncertainties, and actual results may differ from projections. Non-GAAP financial measures will also be discussed. Bruce Bodine welcomes new CFO Luciano Ciani Perez and notes a different approach this quarter.

The paragraph outlines an update on Mosaic's business performance and strategic initiatives. Key points include improved agriculture markets with favorable expectations for 2025, operational and strategic progress at Mosaic, and efforts to shed non-core assets and reallocate capital. Financial highlights include a fourth-quarter net income of $169 million and adjusted EBITDA of $594 million, with strong phosphate prices and solid potash performance. The Esterhazy potash mine is performing well, with ongoing optimization to enhance cash flow and production capacity. The Belle Plaine mine achieved record production and resolved previous electrical issues. Mosaic finished increasing compaction capacity and expects to boost production further with an upcoming hydrofluid project, amid strong potash demand due to high crop prices and supply reductions in certain countries.

The paragraph discusses the geopolitical factors affecting potash markets, particularly Canadian tariffs, which aren't expected to significantly impact demand or prices. The resolution of the Ukraine war and Belarus sanctions are also deemed to have minimal effect on global potash supply. In contrast, phosphate supply is tight with strong demand, keeping prices high. The company secured long-term ammonia supply contracts, ensuring reliable and competitive rates. However, US phosphate production was below expectations due to hurricane impacts, but improvements are planned with increased capital spending. Production is expected to rise to 7.2-7.6 million tons for the year. Additionally, the company's Brazilian business is performing well despite market challenges, with strong fourth-quarter adjusted EBITDA of $82 million.

The paragraph discusses Mosaic's positive outlook for its business in Brazil due to favorable market dynamics and effective cost control, noting a decrease in production costs and a high distribution margin. The company is focusing on strategic initiatives, such as selling underperforming assets like the Patos de Minas site and exploring alternatives for its Carlsbad potash mine, to improve returns on capital. Mosaic is investing in growth by completing new projects and facilities in Brazil and expanding its Mosaic Biosciences division, which has seen significant revenue and application growth. The company plans to provide more details on these developments at an upcoming Analyst Day. Jenny Wang is introduced to discuss predictions for the agriculture and fertilizer markets in 2025, starting with crops.

The global agricultural market is showing strong fundamentals, with rising corn and soybean prices due to increased demand. Animal protein markets are also driving robust demand for grain and oilseeds. Palm oil prices remain high, encouraging farmers to maximize yields in 2025, which increases the demand for phosphate and potash fertilizers. Phosphate demand is driven by higher crop prices and increased biofuel production, while supply is tight due to limited production and Chinese export restrictions, keeping prices and margins elevated. Despite rising sulfur prices, ammonia prices are easing, maintaining attractive stripping margins. Potash demand is strong, supported by high palm oil prices in Malaysia and Indonesia and solid Chinese demand following record shipments in 2023 and 2024.

The paragraph discusses the current state and future outlook of the potash market and the financial performance of Mosaic. It highlights that potash shipments are expected to be strong in 2025, with supply likely constrained due to reduced output from major producers in China and production challenges in Laos. The CFO of Mosaic, Luciano Ciani Perez, outlines the company's strong financial foundation, noting a reduced share count, effective cost control initiatives, and successful capital expenditure management. He expresses confidence in achieving financial targets and continued capex reduction in the future, while emphasizing Mosaic's mature strategic direction.

The paragraph explains the key financial events affecting the company's net income. The company recorded a $522 million gain from exchanging its stake in the MWSPC joint venture for shares of Ma'aden and an additional $28 million gain due to an increase in the stock's market price. These gains, particularly the latter, will be recurring as the shares are marked to market. However, net income was negatively impacted by a $390 million foreign exchange loss in the fourth quarter, primarily due to the weakening of the Brazilian real and Canadian dollar against the US dollar. This affected both the consolidated financial statements and the adjusted EBITDA for the company's businesses, especially Mosaic Fertilizantes in Brazil, which deals with transactions in US dollars.

The paragraph discusses the financial impact of currency exchange rates and other factors on the company's adjusted EBITDA in Brazil. Due to expensive payables in Brazilian reais and smaller FX hedging losses, the adjusted EBITDA for the quarter was reduced by $35 million, leading to a reported figure of $82 million. However, the underlying performance, excluding these charges, would show adjusted EBITDA of $120 million. The projected outlook from the second quarter of 2025 is even more positive due to cost improvements. Additionally, SG&A costs in 2024 were nearly flat compared to 2023, despite a $30 million loss on receivables due to a Brazilian retailer default, which is partly insured and expected to be recovered. Cost-saving initiatives have already saved $42 million as part of a $150 million target. The paragraph ends with a brief mention of potash and phosphates.

The paragraph discusses Mosaic's efforts to improve efficiency and reduce costs in potash and phosphates production. Potash prices are expected to decrease with increased production from efficient mines, while margins will improve with more granular products. Phosphate costs rose due to plant shutdowns from hurricanes, but recovery in 2025 is expected to lower costs. Mosaic aims to cut costs by over $150 million through a digital program and improved mine planning in Brazil. The company plans to address these topics and capital allocation at an upcoming Analyst Day. Additionally, they are discontinuing monthly price and volume releases due to their limited usefulness. The paragraph concludes with a summary from Bruce Bodine, highlighting Mosaic's strong performance despite challenges and a positive outlook for 2025.

The paragraph discusses a question from Chris Parkinson of Wolfe Research regarding the company's 2024 and 2025 production forecasts for processed phosphate. Bruce Bodine responds, explaining that 700,000 tons were lost in 2024 due to weather and other extraordinary events, which affects the 2025 midpoint projection of 7.1 million tons. Bodine emphasizes that sulfuric acid turnaround cycles have normalized post-pandemic, enabling potential acceleration of production. However, some bottlenecks in phosphoric acid remain, particularly at the New Wales facility, which need to be addressed.

The paragraph discusses Mosaic's capital expenditure (capex) strategy for the year, which remains flat. The company is investing more in the first half to address lingering issues with downstream sulfuric facilities in Central Florida and Louisiana, which contributes to a difference in spending between the two halves of the year. They are also accelerating reliability work in phosphoric acid forecasting at New Wales to maximize capacity in the second half. Andrew Wong from RBC Capital Markets asks about asset monetization possibilities, mentioning recent transactions with Ma'aden and Patos, and inquiring about other potential assets, including Carlsbad. He also asks about monetizing the Ma'aden investment before the lock-up period. Bruce Bodine responds, indicating consistency in their approach, and mentions that Luciano will provide more details.

The paragraph discusses a company's review of its asset portfolio to ensure acceptable returns. It mentions past transactions, such as the Ma'aden and Streamsong deals, as examples of portfolio evaluation. The company is considering different strategies, including potential asset divestitures, and will provide more details on these strategies at their Analyst Day on March 18th. Bruce notes optimism about developments in Carlsbad and hints at significant announcements by Q2. Luciano Ciani Perez mentions ongoing studies and reassures stakeholders of a thorough review, with specifics to be shared as decisions are made. The paragraph concludes with a transition to a question from Steve Byrne about global phosphate shipments.

The paragraph discusses the factors affecting phosphate demand and supply in agriculture. Despite expectations for increased demand based on past trends, growth is limited by supply constraints, primarily due to export restrictions from China. These constraints have kept phosphate prices high, with Mosaic achieving significant margins thanks to their market advantages. The tight supply situation is not expected to change soon, and competition for phosphate, given its uses beyond agriculture, will persist. Bioscience products like Biopass and PowerCode may help improve yields by releasing immobilized phosphate in the soil, countering supply constraints until new production capacity becomes available.

The paragraph discusses the expected global demand growth for phosphate, projected to be between 1% and 2%, and notes that growth has been constrained by supply, affecting prices and margins. Jenny Wang highlights that phosphorus is inefficiently used by plants, with only 50% uptake, leading to excess phosphate in the soil. Despite reduced application rates impacting yields, microbial products like PowerCodes and Dialpad can improve phosphorus availability and efficiency, boosting crop yields. Wang also mentions upcoming advanced products to be discussed at an Analyst Day. The paragraph ends with a new question from Anthony regarding potash.

The paragraph discusses the limitations on increasing potash production in response to rising global demand. Bruce Bodine notes that while their facilities, like Esterhazy and Belle Plaine, are operating at full capacity, significant increases in production are constrained by supply chain issues, particularly in Canada, such as rail fluidity and port capacity. Jenny Wang adds that outside of Canadian producers, no major spare production capacities exist globally. Chinese producers are cutting production due to low inventories, and there's a reduction in production from the Former Soviet Union due to maintenance. Additionally, potential increases from Laos face uncertainties related to environmental issues. Overall, there are no significant capacities to increase potash supply this year.

Vincent Andrews from Morgan Stanley inquires about the current levels of CapEx and working capital. Luciano Ciani Perez expresses dissatisfaction with the current CapEx levels and highlights a target to reduce sustaining CapEx by $200 to $300 million in the coming years, despite an additional $100 million spent this year to address reliability issues. The focus is on cutting maintenance CapEx while still investing $100 to $150 million annually in high-return projects like hydrofloats, compaction, and microsentials. On working capital, there is an expected increase, particularly in the second half of the year, due to business growth and higher sales volumes in phosphates and potash, as well as expansion in Brazil with Paranaguá. Overall, the business's growth will lead to greater working capital consumption.

The paragraph discusses the company's outlook on cash flow and cost savings. It anticipates stronger cash flows in 2026 compared to the second half of 2025 due to a buildup of working capital, which is part of their business strategy. The company is well-financed with access to short-term funding options and typically builds up in the first half of the year and generates cash in the second half. Despite some growth-related cash flow buildup this year, they're making progress on cost savings, particularly in their Fertilizantes segment—$35 million saved in 2024 out of a $150 million goal. Richard Garticarena from Wells Fargo asks how much of the remaining cost savings for 2025 will come from Fertilizantes and what steps are being taken to address prior credit issues in Brazil. Bruce Bodine responds that additional savings will come from various sources, including SG&A and fixed cost absorption benefits from increased production in North America.

The paragraph discusses improvements in production volume and reliability in South America, which are expected to result in fixed cost absorption benefits. Luciano Ciani Perez highlights plans for cost reductions in their Fertilizantes business, projecting an additional $150 million in cost savings through dilution in phosphates and potash. They are also exploring further savings opportunities. Despite some FX effects clouding the performance of Fertilizantes, there's confidence in its future due to strong cost performance. Additionally, changes in mine plans for sites like Araxá and Patrocínio are anticipated to improve high-grade area access and mass recovery, leading to a projected $50 million annual run rate improvement starting in January 2024.

In the article paragraph, Chris Prell fills in for Lucas and requests more information on the potential impact of Canadian potash tariffs on pricing, demand, and trade flows. Bruce Bodine addresses a prior question concerning credit risk in Brazil, explaining that the company is focusing on lower-risk customers such as mega farmers, traders, and co-ops to ensure business quality. Regarding the tariff issue, Bodine acknowledges its dynamic nature and says that any imposed tariffs will ultimately affect downstream customers, which is an unfortunate but realistic outcome.

The paragraph discusses the impact of tariffs on potash demand in the US, highlighting that 80-85% of US potash demand is met by Canada and can't easily be replaced, pushing costs downstream. Despite a 20-25% tariff, the affordability of potash, coupled with high corn and wheat prices, minimizes concern among farmers, who don't foresee significant issues with increased costs. As spring demand is already established in North America, the tariff's immediate impact is negligible. Surprisingly, the agricultural market remains confident due to pricing and cost transfer per acre. Potash prices have risen significantly in the US, Brazil, and China, reflecting positive global price momentum not seen in years, with no expected adverse effects on Mosaic's profitability. The paragraph ends by indicating that Jenny will discuss revenue recognition.

In the discussion, Lucas mentions that the price momentum will be reflected more in Q2 due to differing sales cycles between Capitec and their company. Jeff Zekauskas from JPMorgan raises concerns about low cash flows in the previous year despite a high EBITDA, and questions whether currency events affected cash flow and if future CapEx and dividends can be covered by operating cash flow. Bruce Bodine acknowledges these concerns and defers to Luciano Ciani Perez, who explains that production and sales volume shortfalls, especially in the second half of the year, contributed to the cash flow issues. He notes additional costs, such as $20 million spent in ARO to address hurricane-related water removal. However, Luciano is optimistic about the current year, expecting to cover minimum dividends and CapEx, with potential excess cash for shareholder distribution or reducing working capital funding.

In this paragraph, Edlain Rodriguez from Mizuho asks about the sales and production volumes for Mosaic's phosphate product and why producers did not increase prices when they anticipated that corn prices and tariffs would allow farmers to afford higher prices. Bruce Bodine responds by clarifying that while Mosaic provided production guidance, they do not offer sales guidance for the full year. He explains that the pricing situation has changed due to the appreciation in corn prices and recent supply-side constraints that have tightened the market.

The paragraph discusses global supply and demand changes affecting prices, particularly in the fertilizer industry, due to reduced supply from China, Laos, and maintenance outages at Uralkali and Belaruskali. Ben Theurer from Barclays asks Luciano Ciani Perez about costs related to Fertilizantes in Brazil and their future projections. Perez highlights that while recent lower performance might be influenced by foreign exchange rates, audited costs are provided in Brazilian reais, which should be considered as the ceiling for future cost modeling. The question also touched on potential timing for insurance claims, but no specific details on that were provided.

In the paragraph, the speaker discusses their efforts to reduce expenditures in Brazilian reais and expresses confidence in recovering cash flows from AgroGalaxy within the year, though not specifying an exact quarter. Christian Owen from Oppenheimer asks about the $120 million quarterly run rate for Fertilizantes, seeking details on demand recovery given distribution challenges and customer shifts. Bruce Bodine responds, addressing cash flow timing and the financial impact of shifting to customers with better credit profiles. Jenny Wang notes that the customer shift has already occurred, and no major volume changes are expected between the first and second halves of the year.

In the paragraph, Luciano Ciani Perez and Bruce Bodine discuss Mosaic's positive outlook for the year, highlighting market growth dependent on demand and customer credit profiles. They anticipate volume growth and convey a message of optimism regarding Fertilizantes' cost performance, projecting a $120 million run rate with potential upside starting from Q2. Bruce Bodine reinforces the promising market backdrop, improved global agriculture fundamentals, and strategic advancements in phosphate production at Mosaic. He mentions successful capital reallocation efforts and the expectation of further positive developments leading to a strong outlook for 2025. The conference closes with these key messages.

The paragraph thanks attendees for participating in the presentation and informs them that they can now disconnect.

This summary was generated with AI and may contain some inaccuracies.