Release Date: August 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- The Mosaic Co (MOS, Financial) delivered adjusted EBITDA of $584 million on revenues of $2.8 billion for Q2 2024.
- The company has achieved more than one-third of its $150 million annual run rate cost savings target.
- Phosphate production volume increased by almost 100,000 tons over the first quarter.
- The Mosaic Co (MOS) has launched its biological products in multiple international markets, covering 5 million acres.
- The company returned almost $300 million to shareholders, including $160 million in share repurchases in the first six months of 2024.
Negative Points
- Adjusted EBITDA and revenues decreased compared to the same quarter last year, from $744 million and $3.4 billion respectively.
- Adjusted earnings per share dropped to $0.54 from $1.04 in 2023.
- The company experienced serious safety incidents, including a fatality at the New Wales facility.
- Riverview performance was lower than the target rate due to an outage caused by a brushfire and a slow production ramp-up.
- The operating environment in Brazil agriculture has been challenging, impacting market participants.
Q & A Highlights
Highlights of The Mosaic Co (MOS) Q2 2024 Earnings Call
Q: What is your view on the demand outlook for fertilizers given the recent weakness in corn and soybean prices?
A: Bruce Bodine, President and CEO, explained that despite the softness in corn and soybean prices, the demand for other grains and oilseeds remains strong. Only one-third of phosphate and potash consumption is related to corn and soybeans. Jenny Wang, EVP, Commercial, added that near-term demand in North America and Brazil is robust, with strong sales and prepayments.
Q: What is the latest on phosphate exports out of China?
A: Bruce Bodine noted limited exports due to strong domestic demand and rising prices in China. Jenny Wang added that first-half exports were down 27% year-over-year due to increased domestic shipments and a shift towards industrial products like LFP.
Q: How is the production ramp-up going?
A: Bruce Bodine reported significant progress in phosphate production, with volumes up nearly 100,000 tons sequentially. He expects annual production to be in the range of 7.8 million to 8.2 million tons, with continued improvements in unit costs.
Q: What's the thought process on restarting Colonsay?
A: Bruce Bodine explained that Colonsay is essential to meet customer commitments, especially during Esterhazy's turnaround. Colonsay will run for about five months to offset one month of Esterhazy production.
Q: What is the latest situation in Brazil?
A: Bruce Bodine highlighted the challenging operating environment but noted Mosaic's strong brand and expertise in Brazil. The company has gained market share as other participants have exited or reduced their footprint.
Q: Are you on track to meet cost savings and CapEx reduction targets?
A: Bruce Bodine confirmed significant progress, with $50 million in run-rate cost reductions achieved and on track to reduce CapEx by $200 million this year.
Q: Can you elaborate on the safety incidents mentioned at the beginning of the call?
A: Bruce Bodine acknowledged a serious incident at New Wales, resulting in a fatality. He emphasized the company's commitment to safety and ongoing efforts to improve safety culture.
Q: How do you see the disconnect between phosphate and potash prices playing out?
A: Bruce Bodine noted that the supply and demand fundamentals for the two commodities are different. He does not see a significant change in potash prices but remains optimistic about phosphate prices due to limited supply and strong demand.
Q: What are the key factors influencing the potash market?
A: Bruce Bodine explained that trade flows have shifted due to sanctions, but supply has largely returned to pre-sanction levels. Demand is also rebounding, particularly in Southeast Asia.
Q: Can you provide more details on the biological products you are selling?
A: Bruce Bodine and Jenny Wang discussed the significant growth potential for biologicals, which are complementary to existing products. They are sold through current customer channels and can be coated on fertilizer granules or used as standalone applications.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
