Mosaic(MOS) - 2025 Q2 - Quarterly Report

PART I. FINANCIAL INFORMATION Item 1. Financial Statements The company achieved a significant profit turnaround in Q2 2025 driven by higher sales, though operating cash flow declined Condensed Consolidated Statements of Earnings (Loss) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $3,005.7 M | $2,816.6 M | $5,626.6 M | $5,496.0 M | | Gross Margin | $518.6 M | $394.0 M | $1,007.0 M | $793.2 M | | Operating Earnings | $244.4 M | $233.3 M | $582.9 M | $406.2 M | | Net Earnings (Loss) attributable to Mosaic | $410.7 M | $(161.5) M | $648.8 M | $(116.3) M | | Diluted EPS attributable to Mosaic | $1.29 | $(0.50) | $2.04 | $(0.36) | Condensed Consolidated Balance Sheet Highlights | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $5,017.9 M | $4,498.3 M | | Total Assets | $24,304.8 M | $22,924.0 M | | Total Current Liabilities | $4,416.7 M | $4,171.3 M | | Long-term Debt | $3,331.3 M | $3,332.3 M | | Total Equity | $12,584.6 M | $11,614.7 M | Condensed Consolidated Statements of Cash Flows | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $652.4 M | $767.0 M | | Net cash used in investing activities | $(659.3) M | $(736.8) M | | Net cash used in financing activities | $(13.2) M | $(30.7) M | | Capital expenditures | $(645.4) M | $(716.9) M | Notes to Condensed Consolidated Financial Statements The notes detail business segments, financing arrangements, significant liabilities like Asset Retirement Obligations, and legal contingencies - The company operates through three main segments: Phosphates (Florida mines, Louisiana plants), Potash (Canada, U.S. mines), and Mosaic Fertilizantes (Brazil assets)[24] - On May 16, 2025, the company amended its five-year credit facility, increasing it to $2.5 billion and extending the maturity to May 16, 2030[44] - Total Asset Retirement Obligations (AROs) were $2.59 billion as of June 30, 2025, a slight increase from $2.57 billion at the end of 2024, with a majority related to Gypstack closure costs[57][58] - The company faces significant legal and tax contingencies in Brazil, with potential liability for non-income tax matters estimated at $700.5 million and for labor claims at $401.3 million[98][100] - No share repurchases were made in the first six months of 2025, compared to the repurchase of 5.2 million shares for approximately $160.4 million in the same period of 2024[84] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Net income recovered strongly in Q2 2025 due to higher selling prices, favorable currency movements, and investment gains Consolidated Results of Operations Q2 2025 net income surged due to higher gross margin, a significant foreign currency gain, and an unrealized investment gain Consolidated Financial Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $3,005.7 M | $2,816.6 M | 7% | | Gross Margin | $518.6 M | $394.0 M | 32% | | Operating Earnings | $244.4 M | $233.3 M | 5% | | Net Earnings (Loss) to Mosaic | $410.7 M | $(161.5) M | NM | | Foreign Currency Gain (Loss) | $169.4 M | $(267.9) M | NM | Segment Performance Performance varied by segment in Q2 2025, with strong growth in Mosaic Fertilizantes and Potash offsetting a decline in Phosphates Phosphate Segment Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $1,173.0 M | $1,179.5 M | (1)% | | Gross Margin | $103.0 M | $153.7 M | (33)% | | Sales Volumes (k tonnes) | 1,546 | 1,696 | (9)% | | Avg. Selling Price ($/tonne) | $665 | $578 | 15% | | Sulfur Cost ($/long ton) | $209 | $138 | 51% | Potash Segment Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $710.5 M | $663.1 M | 7% | | Gross Margin | $209.4 M | $186.4 M | 12% | | Sales Volumes (k tonnes) | 2,343 | 2,346 | 0% | | Avg. Selling Price ($/tonne) | $274 | $240 | 14% | Mosaic Fertilizantes Segment Highlights (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $1,174.9 M | $1,048.9 M | 12% | | Gross Margin | $161.7 M | $101.8 M | 59% | | Sales Volumes (k tonnes) | 2,232 | 2,196 | 2% | | Avg. Selling Price ($/tonne) | $474 | $423 | 12% | Liquidity and Capital Resources The company maintains a strong liquidity position, though operating cash flow decreased due to higher inventory levels - The company targets a liquidity buffer of up to $3.0 billion, including cash and available credit lines[187] Cash Flow Summary (Six Months Ended June 30) | Cash Flow | 2025 | 2024 | Change | | :--- | :--- | :--- | :--- | | Operating Activities | $652.4 M | $767.0 M | $(114.6) M | | Investing Activities | $(659.3) M | $(736.8) M | $77.5 M | | Financing Activities | $(13.2) M | $(30.7) M | $17.5 M | - The decrease in operating cash flow was primarily driven by a $378.1 million increase in inventories, reflecting higher volumes and raw material prices[192] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages market risks from currency, interest rates, and commodities using derivative instruments - Primary foreign currency exposures are the Canadian dollar and Brazilian real, which the company hedges up to 18 months and 12 months, respectively[205] Fair Value of Derivative Instruments | Derivative Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Foreign Currency Contracts | $27.6 M | $(82.6) M | | Natural Gas Contracts | $(0.1) M | $(1.8) M | Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective with no material changes to internal controls - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period[211] - No changes in internal control over financial reporting occurred during the quarter that materially affected, or are reasonably likely to materially affect, internal controls[212] PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is engaged in legal proceedings concerning countervailing duties, a class action lawsuit, and environmental matters - The company is actively involved in litigation to uphold the countervailing duty (CVD) orders on phosphate fertilizers from Morocco and Russia, with multiple administrative reviews and appeals ongoing[213][214][215] - A putative class action lawsuit (Cruz Litigation) alleges elevated radiation levels on reclaimed mining land; the company's motion to dismiss was denied and it intends to continue a vigorous defense[218][220] - An EPA action regarding the Faustina Plant's Risk Management Plan was settled via a Consent Agreement, which included a penalty payment of $217,085[221] Item 1A. Risk Factors Important risk factors are detailed in the company's 2024 Annual Report on Form 10-K - The company's risk factors are detailed in its 2024 Form 10-K report[223] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company did not repurchase any shares of its common stock during the second quarter of 2025 - No shares of common stock were purchased under the company's repurchase programs during the quarter ended June 30, 2025[225] Item 5. Other Information A senior executive established a Rule 10b5-1 trading plan for the potential sale of company stock - A senior executive, Walter Precourt, entered into a Rule 10b5-1 trading plan to sell up to 12,000 shares of common stock[227]