Mosaic Company (The)

Good morning and welcome to the Mosaic Company's first quarter 2025 conference call. All participants will be in the listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note, this event is being recorded. I would now like to turn the conference over to Jason Tremblay. Please go ahead.

Thank you, and welcome to our first quarter 2025 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 Siani 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'll start with our key messages for today. First, fertilizer fundamentals are compelling and prices are rising. Despite the uncertainty around global trade policies, fertilizer demand is very strong in every key growing region of the world. Second, we are making progress towards normalizing our phosphate production and operating costs, and we're on track to deliver stronger results this year and beyond. Mosaic's industry-leading market access is enabling us to benefit from strong markets and grow in new ways. You can see plenty of evidence of this important strategic advantage. Our business in Brazil is performing exceptionally well. We've increased our potash production outlook to meet demand around the world, and our Mosaic Biosciences business continues to grow at a brisk rate. And finally, our work to shed non-core assets and reallocate capital is continuing to take shape. To cover our first quarter results, net income was $238 million and adjusted EBITDA came in at $544 million. The quarter's results underscore very strong phosphate prices, improving potash prices, and excellent performance in the mosaic for lasagna segment. And remember, the first quarter is traditionally our seasonally slowest quarter of the year. We expect earnings to improve further from our strong start to 2025. Let's take a few minutes to review market fundamentals at a high level, as well as our progress towards our operating goals. Jenny will go deeper into the markets, and Luciano will discuss financial results, financial strategy, and our capital reallocation journey. Our market outlook remains positive. Ag commodity fundamentals and fertilizer demand are solid around the world. With sustained supply constraints in phosphate, prices and stripping margins remain elevated compared to historical norms. And with supply reductions from several major potash producers, as well as robust demand, potash prices are rising. In fact, first quarter realized prices of $623 per ton for phosphate and $223 per ton for potash exceeded our guidance ranges. The strong performance of Mosaic for Los Angeles was also helped by the realization of higher prices. It is no secret that global trade conflicts and other geopolitical forces have intensified in the past few months. As we continue to monitor the latest developments and evaluate the impact, especially in the US agriculture sector, we believe we are well positioned to navigate these dynamics. Our expansive market access, especially our strong presence and long history of operating in Brazil, and our supply chain agility will prove to be important strategic advantages as we navigate shifting trade flows. While trade continues to grab headlines, I can't emphasize enough that Mosaic is built for the long haul. The long-term market fundamentals and operating backdrop remain constructive. For example, biofuel mandates around the world continue to advance, and that growth is expected to contribute significantly to global grain and oilseed demand. We're seeing this play out in Brazil with increasing ethanol usage, and as a result, corn growers are enjoying both improving profitability and fertilizer affordability. Phosphate demand is also driven by rising lithium iron phosphate production in China, which grew 55% in just the first quarter of this year and continues to limit the amount of phosphate available for export. As a result, the phosphate market remains tight, and while tariffs could disrupt trade flows, they cannot create more phosphate supply. Now, let's move on to the progress we are making toward normalizing production and costs. Improving our asset reliability and being disciplined in our cost management remain our key focus areas. In potash, The Esterhazy complex continues to generate strong cash flow across the commodity cycle. It clearly benefits us to produce every ton we can at Esterhazy, and we're investing to do just that. We expect to complete the 400,000 ton per year hydroflow project soon. It is expected to increase our production volumes from Esterhazy and improve our product mix flexibility, allowing us to maximize our netbacks while driving our per ton cost lower. We're on track to achieve our production cost per ton target this year. In phosphate, we produced 1.4 million tons in the first quarter of 2025. The Bartow and New Wales plants experienced substantial downtime for planned turnaround and other reliability improving work during the quarter. That said, March was the third strongest production month in the past 18 months, and we are maintaining our 2025 production volume outlook in the 7.2 to 7.6 million ton range. As production improves throughout the year, our conversion cash cost per ton is expected to decline. Mosaic for Lizantes delivered a very strong operating performance in the first quarter, with conversion and production unit costs declining year over year. As cost measures yield further benefits, we expect to achieve our full year unit cost targets. In fact, we expect further improvements in segment profitability in the second quarter. Now, let's move on to talk about how we're leveraging our market access to redefine growth. While operating initiatives will drive significant value creation in the near term, Mosaic also has substantial opportunities beyond the near term to grow in new markets with new products and from new sources. Our expansive Brazil footprint positions us well for growth and to navigate the current geopolitical tensions. Our mosaic for Lizanche's volumes returned to year-over-year growth in the first quarter, and with our new Pomeranchi blend plant expected to be complete in July, we expect further growth in the remainder of the year. In fact, we have already sold over 50% of the additional tons that are expected from the Pomeranchi facility this year. I should also mention that the operating environment is compelling. With the current good farm economics, we now expect approximately 15% sales volume growth this year. Mosaic Biosciences had a strong quarter, with revenue more than doubling over the prior year and on track to double for the full year, driven by surging sales for our existing products and new product launches in our key markets. Late last month, Mosaic Biosciences brought Neptunian to the market in China. Neptunian is a biostimulant that helps crops address abiotic pressures such as drought, salinity, and heat by adding stress-resistant properties into water-soluble fertilizers. Neptunian is currently in the registration process in India and Brazil. We are succeeding at engaging growers around the world and demonstrating, through extensive field trials, that our biological products deliver meaningful yield and value benefits. Moving on to our portfolio review and cash return focused initiatives. You saw the list of assets we shared at our investor day in March. Clearly, we have significant potential for future monetization. The conclusion of the modern transaction gave us a transparent value for our investment, which is about $1.5 billion as of today. We announced the Pathos de Minas sale earlier this year. Our pursuit of strategic alternatives for our potash mine in Carlsbad, New Mexico, is proceeding well, and we continue to assess the performance of assets such as Arisha, Patrocinio, and Tecori in Brazil. Finally, let me spend a moment addressing capital allocation and capital return to shareholders. Free cash flow generation was constrained by typical working capital seasonality in the first quarter. We continue to expect capex of $1.2 to $1.3 billion this year, and we anticipate free cash flow conversion will improve in the remainder of the year. Our commitment to return excess capital to shareholders is unchanged. Now, Jenny will provide a more in-depth update of agriculture and fertilizer markets.