Business Context and Reporting Period
Company: The Mosaic Company (MOSAIC CO)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Three and six months ended June 30, 2026
Business Overview: Mosaic produces and markets concentrated phosphate and potash crop nutrients. Operations are organized into three segments: Phosphate (North America and Peru), Potash (Canada and U.S.), and Mosaic Fertilizantes (Brazil). The company is a large accelerated filer with 317.9 million shares of common stock outstanding as of July 31, 2026.
Key Financial Metrics
| Metric (in millions) | Three Months Ended June 30, 2026 | Six Months Ended June 30, 2026 |
|---|---|---|
| Net Sales | $2,824.1 | $5,822.1 |
| Gross Margin | $214.7 (7.6%) | $450.3 (7.7%) |
| Operating Earnings (Loss) | $(35.5) | $(408.4) |
| Net Earnings (Loss) Attributable to Mosaic | $(272.8) | $(530.4) |
| Diluted EPS | $(0.86) | $(1.67) |
| Cash Provided by Operating Activities | N/A | $271.6 |
| Cash and Cash Equivalents (Balance Sheet) | $294.0 | $294.0 |
| Total Debt (Short-term + Long-term) | $5,855.7 | $5,855.7 |
Material Changes vs. Prior Comparable Period
- Revenue: Net sales decreased 6% year-over-year (YoY) for the quarter to $2.8 billion but increased 3% YoY for the six-month period to $5.8 billion.
- Profitability: The company reported a net loss of $272.8 million for the quarter and $530.4 million for the six months, a significant reversal from net income of $410.7 million and $648.8 million, respectively, in the prior year periods.
- Margins: Gross margin percentage contracted sharply from 17% to 8% for the quarter and from 18% to 8% for the six months.
- Segment Performance:
- Phosphate: Reported an operating loss of $103.8 million for the quarter (vs. $7.9 million loss prior year) due to higher raw material costs and reduced volumes.
- Potash: Operating earnings remained relatively stable at $195.5 million for the quarter, supported by higher selling prices despite lower volumes.
- Mosaic Fertilizantes: Operating loss widened to $40.8 million for the quarter (vs. $109.0 million income prior year) driven by lower sales volumes and higher costs.
- Unusual Items:
- Asset Impairments: Recorded a $238.8 million loss on assets sold and to be sold for the six months, primarily due to a $232.6 million impairment on the Araxá mining complex in Brazil and $6.2 million related to the Carlsbad mine sale.
- Project Write-offs: Incurred $69 million in charges for engineering and equipment costs for a project discontinued in the quarter.
- Investment Losses: Recognized an unrealized mark-to-market loss of $161.6 million on the investment in Ma'aden shares for the quarter.
Guidance, Outlook, and Risks
Management Commentary: Management attributes the decline in profitability to elevated input costs, specifically sulfur and ammonia, driven by geopolitical conflicts (Russia-Ukraine, Middle East) and supply constraints. While average selling prices increased, they were insufficient to offset the cost inflation. The company has temporarily curtailed production at certain facilities in North America and Brazil in response to market conditions and limited raw material availability.
Strategic Actions:
- Completed the sale of the Carlsbad potash mine in New Mexico in April 2026.
- Committed to divesting the Araxá mining and chemical complex in Brazil and idling the Patrocínio complex, resulting in significant impairment and exit costs.
- Entered into a new $1.0 billion senior unsecured delayed-draw term loan facility in June 2026.
Risks and Contingencies:
- Input Volatility: Continued volatility in sulfur, ammonia, and energy prices poses a material risk to margins.
- Geopolitical Instability: Conflicts affecting global shipping routes (e.g., Strait of Hormuz) and sanctions impact supply chains.
- Legal Proceedings: Facing antitrust class action lawsuits in the U.S. regarding fertilizer pricing and various environmental and tax contingencies in Brazil and Peru.
- Environmental Obligations: Significant Asset Retirement Obligations (ARO) totaling $2.5 billion, primarily related to Gypstack closure costs in Florida and Louisiana.
Investor Verification Checklist
- Raw Material Costs: Verify the sustainability of sulfur and ammonia price trends and the company's ability to pass these costs to customers.
- Araxá Divestiture: Monitor the timeline and final sale price of the Araxá complex to assess the realization of the recorded impairment.
- Production Curtailments: Assess the duration and impact of production curtailments in North America and Brazil on future revenue volumes.
- Ma'aden Investment: Review the valuation methodology and potential for further mark-to-market losses on the Saudi Arabian Mining Company investment.
- Liquidity Position: Confirm compliance with debt covenants (Consolidated Indebtedness to Capitalization ratio < 0.65) given the recent net losses and increased debt levels.
- Legal Exposure: Track developments in the U.S. antitrust litigation and Brazilian tax/labor contingencies for potential additional accruals.