Mosaic Company (The)

I would now like to turn the conference over to Jason Tremblay. Please go ahead.

Thank you, and welcome to our fourth quarter 2024 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer. Jenny Wong, Executive Vice President Commercial, will then cover the market update. Luciano Ciani-Perez, Executive Vice President and Chief Financial Officer, will review financial results and 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'd like to start by welcoming Luciano to his first call as Mosaic's CFO. We've known him for a long time through his service on Mosaic's board, and we're thrilled to have him on our team. We're taking a different approach this quarter. During this first part of our call, I'll cover our high-level business performance and strategic progress, and Jenny Wong will give you an update on the markets, followed by Luciano providing more context on our financial performance and capital allocation strategy. After that, we'll take your questions. I'll start with our key messages for today. First, agriculture markets have improved. and we expect constructive ag and fertilizer fundamentals in 2025. Second, at Mosaic, we are making operational and strategic progress, and the business is positioned well to benefit from good markets this year. And finally, our work to shed non-core assets and reallocate capital is taking shape. To cover the numbers, fourth quarter net income was $169 million. and adjusted EBITDA came in at $594 million. We saw strong phosphate prices and stripping margins, solid potash performance despite low prices, and excellent underlying business performance in Brazil. Let's talk about the segments first. In potash, the Estreise Complex, which is the world's largest potash mine and among the most efficient, continues to generate strong cash flow across the commodity cycle, and we are continuing to optimize it. Our Belle Plaine potash mine delivered a 100% operating rate and record production in 2024. We resolved the electrical issues we experienced in the third quarter, and we are operating at full milling and hoisting capacity now, which will let us continue to drive costs down. It clearly benefits us to produce every ton we can at Esterhazy, and we're investing to do just that. Last year, we finished a project to increase our compaction capacity by 500,000 tons and And this year, we expect to complete a hydroflow project to provide an additional 400,000 tons of capacity per year. We expect potash demand to remain strong given affordability and the trends in crop prices, combined with supply reductions caused by recent news coming out of Laos, China, Belarus, and Russia. There's a lot going on in geopolitics that could impact potash markets. There is quite a bit of uncertainty around Canadian tariffs, and we're watching that situation closely. Even accounting for the impact of tariffs, potash prices will remain affordable. Therefore, we expect no major demand destruction. The potential resolution of the war in Ukraine would have very little impact to the global potash supply. The same goes for Belarus sanctions. Very little impact on supply. Jenny will give you more detail about these dynamics in a few minutes. In phosphate, Supply remains tight and demand remains very strong, which has led to prices and stripping margins remaining significantly above historic levels for the past several years with no end in sight. I should note that we have secured our long-term ammonia supply. We signed the last of three supply contracts late last year, so we have locked up reliable supply at competitive rates. Restoring our U.S. phosphate production to historical levels remains a top priority. Fourth quarter production was lower than expected because of a challenging recovery from Hurricanes Helene and Milton. Most of our storm-related downtime was in the fourth quarter. We've often said the pathway to higher levels is not straight up. Early this year, we have turnarounds at Bartow and New Wales, and we have more work to do to improve asset reliability in Florida and Louisiana. To this end, we are accelerating capital spending to address these issues and expect that work to be finished by the middle of the year. Overall, we expect our production volumes to improve throughout the year and reach 7.2 to 7.6 million tons for the year. Our business in Brazil is performing very well, even with the market and credit headwinds. Our fourth quarter adjusted EBITDA for the Mosaic for Lizanche segment of 82 million shows strong underlying business performance. Our margins in Brazil are healthy. Our distribution margin was at the high end of the annual normalized range, and our production cost per ton trended down in the fourth quarter. With the constructive market dynamics we see ahead in 2025, we feel good about Mosaic's business in Brazil. Our solid operating performance is supported by good cost discipline. We're making good progress toward our cost reduction targets, but I'll leave the details to Luciana. Now I'll talk about our strategic progress. We've told you before that we're analyzing our facilities on the basis of their returns on capital. The outcomes of that work are allowing us to find better owners of underperforming assets and redeploy capital for better returns. We've already announced several deals, including the pending sale of our Patos de Minas site in Brazil and the conclusion of the modern transaction. That deal gave us a transparent value for our investment, which is about $1.5 billion as of today, as well as a $522 million gain and a long-term capital redeployment possibility. We have other moves in the works, including our pursuit of strategic alternatives for our potash mine in Carlsbad, New Mexico. We're not just focused on making our portfolio stronger. We're also investing in our strengths. and growing in our core business in new areas. In addition to the compaction and hydroflow project I mentioned earlier, our new 1 million ton blending plant in Pomerantse Brazil is almost finished. Our newest growth engine, Mosaic Biosciences, is accelerating. We doubled revenues and acreage on which our products were applied in 2024, and we expect a similar growth rate in 2025. We'll have a lot more to say on Mosaic Biosciences at our Analyst Day in New York on March 18th. I hope you'll join us, whether in person or online. Now, I'll ask Jenny to give you her thoughts on agriculture and fertilizer markets. Jenny?