Mosaic (MOS) Q1 2026 earnings review
Raw Material Spikes Crush Margins and Force Plant Idling
Mosaic grew top-line revenue 15% YoY to $3.0B, but this masked severe operational distress beneath the surface. Soaring raw material costs—specifically sulfur eclipsing $1,200 per tonne—compressed phosphate margins and forced management to abruptly withdraw its full-year phosphate production guidance. The company posted a $258M net loss, weighed down heavily by $442M in charges from indefinitely idling the Araxa and Patrocinio facilities in Brazil. While the Potash segment provided a stabilizing anchor, overall Adjusted EBITDA plunged 24% YoY. Faced with a hostile cost environment, management is pulling the emergency brake: cutting CapEx, curtailing U.S. phosphate production, and exploring asset sales.
🐂 Bull Case
Potash continues to print cash. Adjusted EBITDA rose 15% YoY to $275M, supported by higher realized prices ($265/t vs $223/t) and stable volumes, effectively acting as the sole profit engine while other segments falter.
Management immediately recognized the hostile environment and slashed FY26 CapEx guidance to $1.25B (down from the $1.5B forecasted in Q4), deferring less-critical projects to protect the balance sheet.
🐻 Bear Case
Sulfur prices over $1,200/t completely negated the benefit of higher DAP selling prices ($668/t). Phosphate segment operating earnings swung from a $139M profit a year ago to a $48M loss, forcing production curtailments at Louisiana and Bartow.
Mosaic Fertilizantes posted a massive $422M operating loss following $442M in charges to idle Araxa and Patrocinio. Stripping out notable items, segment Adjusted EBITDA still fell 35% YoY to $79M due to tight credit and squeezed distribution margins.
⚖️ Verdict: 🔴
Bearish. The core phosphate business is under intense structural pressure from uncontrollable raw material spikes, leading to actual production curtailments and withdrawn guidance. Potash stability is not enough to offset the deterioration in Phosphate and Brazil.
Key Themes
Phosphate Margin Collapse & Withdrawn Guidance
A severe raw material shock is derailing the phosphate turnaround. With sulfur prices spiking above $1,200 per tonne, raw material COGS skyrocketed by $280M. Despite DAP selling prices rising 7% YoY, segment Adjusted EBITDA plummeted 58% to $115M. In a highly defensive move, Mosaic withdrew its full-year phosphate production guidance entirely and announced partial production curtailments at its Louisiana and Bartow facilities starting in May.
Brazil Restructuring and Asset Idling
The margin squeeze extends to South America. Mosaic recorded $442M in charges ($328M non-cash) to indefinitely idle its high-cost Araxa and Patrocinio facilities. Management is now pursuing strategic alternatives for these assets, essentially retreating from portions of its Brazilian production footprint as high sulfur costs and local credit constraints erode profitability.
Potash Anchors The Portfolio
Potash is currently carrying the company. Operating earnings rose 13% YoY to $177M. Despite the volume loss from the Carlsbad divestiture (completed in April), Mosaic expects strong output from the newly completed Esterhazy hydrofloat project to maintain full-year production at 9.0 million tonnes, pushing unit costs lower in H2 2026.
Aggressive Capital Expenditure Retreat
To offset the cash drag of lower operating margins and negative free cash flow, management cut its FY26 CapEx budget to $1.25 billion. This is a sharp reversal from the $1.5 billion guided just one quarter ago, reflecting a swift optimization and deferral of 'less-time sensitive' projects.
Other KPIs
While an improvement over the $(298)M posted in 25Q1, free cash flow remains deeply negative. The cash burn reflects a combination of lower adjusted earnings, high CapEx ($356.8M in the quarter), and a seasonal working capital build in the Fertilizantes segment.
SG&A increased by $13 million YoY, largely driven by a bad debt reserve for a Brazilian customer and adverse foreign exchange impacts. Management has executed a new cost-saving initiative aimed at support functions, targeting $50M in annualized savings ($15M expected in 2026).
Guidance
Decelerating. The midpoint of 2.0M tonnes implies a sequential step down from the 2.2M tonnes sold in 26Q1, though realized prices are expected to remain solid at $260-$280 per tonne.
Decelerating. The midpoint of 1.55M represents a sharp drop from the 1.9M tonnes sold in 26Q1, directly reflecting the newly announced partial production curtailments at the Louisiana and Bartow facilities.
Reversing. Downwardly revised from the $1.5 billion expectation set in the previous quarter, as the company enters cash-preservation mode amidst raw material volatility.
Stable. The company is maintaining its 9M tonne target, relying on the Esterhazy ramp-up to offset the volume impact of the Carlsbad mine sale.
Key Questions
Phosphate Curtailment Thresholds
With sulfur eclipsing $1,200 per tonne, what is the breakeven stripping margin for the US Phosphate business, and how much additional capacity remains at risk of curtailment if raw material prices do not normalize?
Brazil Asset Holding Costs
Regarding the strategic alternatives for Araxa and Patrocinio, what is the expected timeline for a potential sale, and what are the ongoing holding/demobilization costs impacting the P&L until a transaction closes?
CapEx Deferral Impacts
You reduced 2026 CapEx by $250 million. What specific projects were deferred, and will this delay your long-term goal of sustaining an 8 million tonne U.S. phosphate production run rate?