The Mosaic Company (MOS) Q3 2026 earnings review
Mosaic reaches cash breakeven, but sulfur costs deepen phosphate losses
Mosaic brought cash flow back to breakeven by selling down inventory, but surging sulfur costs pushed its phosphate business deeper into the red. Revenue fell 10% from a year ago to $3.1 billion, and the fertilizer maker swung to a $72 million net loss. Chief executive Bruce Bodine cut phosphate output to avoid buying expensive sulfur, yet unit losses widened and management warned that fourth-quarter profit will fall again.
| Revenue | $3.1B -10% from a year ago |
|---|---|
| Phosphate gross margin per tonne | -$105 -$4 last quarter |
| Free cash flow | $2M -$153M last quarter |
| Full-year potash production outlook | Cut 4% to 8.6M tonnes from 9.0M |
⚖️ Verdict: 🔴 Bearish
The story got worse because phosphate losses will deepen in the fourth quarter while the potash division hit a mining snag. A cheaper $615 per ton fourth-quarter sulfur contract will not help earnings until early 2027 due to inventory lags, and new mine curtailments will raise idle plant costs first. Meanwhile, ore grade trouble at the Esterhazy potash mine forced a production cut, and net debt rose again to $5.64 billion.
The question now is whether lower sulfur contract prices and inventory drawdowns can stop the debt build before 2027. Either the $615 sulfur settlement and fourth-quarter cash collections cover the dividend and restore phosphate profits in the first quarter, or idle mine costs keep eating the savings. First-quarter 2027 phosphate margins and year-end net debt will settle it.
🐂 Bull Case
Inventory Drawdowns Brought Cash Flow to Breakeven
Mosaic has promised all year that selling down its stockpiles would rescue cash flow in the second half. In the third quarter, the fertilizer producer finally reduced balance sheet inventories by $444 million from June to $3.22 billion, "primarily driven by lower finished goods inventories". That drawdown generated $433.5 million of operating cash and lifted free cash flow to $2 million, up from a $153 million outflow last quarter.
Management also tightened capital spending to protect the balance sheet. It held its 2026 capital expenditure plan at $1.2 billion and set an initial 2027 target below $1 billion. The group also refinanced and extended all long-term debt maturities through 2028. Even so, nine-month changes in assets and liabilities remain a $80.8 million cash drain by our math, leaving a steep climb for the fourth quarter.
What to watch: fourth-quarter cash collections from Brazilian customers when full-year results arrive. Another large working capital release would show the company can fund its capital spending without adding more debt in 2027.
Crop Nutrient Demand and Biosciences Sales Improved
Farmers in the Americas have applied less fertilizer for two straight seasons, raising fears that weaker buying habits might stick. Mosaic countered that view this quarter: "Demand is outpacing many customers' initial expectations as stronger agricultural commodity prices have improved farmer economics." Depleted soil nutrients and rising crop prices are bringing North American buyers back for the fall application season, while low stockpiles in Brazil point to returning import demand.
Meanwhile, Mosaic Biosciences, the unit that makes biological treatments to help crops absorb nutrients, doubled its nine-month net sales from a year ago. The division launched six new products in the first nine months, plans up to four more in the fourth quarter, and remains on track to double full-year sales to $135 million. Fourth-quarter volume plans for both phosphate and potash also point to about 9% to 10% growth from a year ago by our math.
What to watch: fourth-quarter phosphate and potash shipment volumes against the company's targets. Hitting the top of those ranges would confirm that farmers are replenishing soil nutrients rather than delaying purchases again.
🐻 Bear Case
Sulfur Costs Deepened the Phosphate Loss
"We aligned phosphate production with the availability of affordable sulfur, reduced costs, strengthened our financial position, and continued to advance opportunities to optimize the portfolio," chief executive Bruce Bodine said. Despite those actions, consolidated cost of goods sold rose 13.3 percentage points of revenue from a year ago to 97.3%. Consumed sulfur costs jumped 163% to $715 per long ton, pushing the phosphate division to a $194 million operating loss.
- Phosphate gross margin: negative $105 per tonne, down from negative $4 in the second quarter
- Phosphate idle and turnaround costs: $77 million, up from $42 million a year ago
- Fourth-quarter sulfur contract: settled at $615 per long ton, down from $705 in the third quarter
The lower $615 sulfur contract will help fourth-quarter cash flow, but Mosaic takes two to three months to work raw materials through inventory. Because of that lag and "additional curtailments at the South Fort Meade and Miski Mayo mines", management expects fourth-quarter phosphate margins and profit to drop even further before the cheaper sulfur helps earnings in the first quarter of 2027.
What to watch: first-quarter 2027 phosphate gross margin per tonne once the $615 sulfur contract flows through cost of goods sold. A negative margin then would show that mine curtailments and fixed costs are offsetting the raw material relief.
Potash Hit a Grade Snag while Debt Rose
Potash, the potassium fertilizer division that has carried Mosaic's profits this year, ran into mining trouble during the quarter. Production fell to 2.1 million tonnes because of routine maintenance and "abnormal geological conditions at Esterhazy that resulted in lower-than-expected ore grades". That forced management to cut its full-year potash production outlook from 9.0 million tonnes to 8.6 million tonnes, even though it called the lower ore grades temporary.
At the same time, keeping the $0.22 per share quarterly dividend required more borrowing. Over the first nine months of 2026, Mosaic generated negative $402.6 million in free cash flow and paid $210.6 million in dividends, creating a $613.2 million cash shortfall by our math. Net debt climbed another $80 million in the quarter to $5.64 billion, up $864 million since year-end, and the company raised its full-year net interest expense outlook by $20 million.
What to watch: fourth-quarter net debt and Potash cash production costs per tonne. A further rise in net debt during the peak collection quarter would show that working capital inflows are not enough to cover the dividend.
Brazil Curtailments Crushed Local Margins
Mosaic Fertilizantes, the company's Brazilian production and distribution business, shrank sharply as management idled local sulfur-intensive plants and avoided customers with weak credit. Total sales volumes fell 32% from a year ago to 1.9 million tonnes, and sales of fertilizer actually mined and made in Brazil dropped from 1.0 million tonnes to 0.4 million tonnes. Operating rates at its Brazilian phosphate plants sank to 27%, down from 84% a year ago.
Running plants that empty drove phosphate cash conversion costs up 48% to $147 per tonne, while idle and unabsorbed fixed costs jumped to $70 million from $27 million last year. Although retail distribution margins returned to normal seasonal levels and animal feed production stayed profitable, segment profit before interest, taxes, depreciation, and one-offs fell 83% to $41 million. Management expects fourth-quarter profit in Brazil to drop below third-quarter levels.
What to watch: Brazilian idle and unabsorbed fixed costs in the fourth quarter. If those costs stay near $70 million while sales drop seasonally, the segment will remain a drag into early 2027.
Risks this quarter didn't answer
Four standing concerns from prior quarters could not be checked because the earnings release omits footnote and call-level detail.
- Customer prepayments: not in the release; the quarterly filing's footnote will show whether Brazilian advance payments rebounded from near zero.
- Biosciences profit margins: management gave nine-month sales growth, but did not disclose the unit's standalone profit or its Brazil contribution margin.
- Legal and environmental liabilities: updates on the New Wales stack repairs, Kansas antitrust cases, and Brazilian tax disputes await the quarterly filing.
- Moroccan phosphate import duties: the release did not address the U.S. tariff review that could affect domestic price floors.
👓 Other Themes
Asset Sales and Restructuring Charges Continued
Mosaic booked $53 million in pre-tax one-off charges this quarter, including $42 million for environmental reserves, $28 million for closed facilities in the U.S. and Brazil, and $12 million for restructuring, partly offset by a $39 million gain on its Ma'aden shares. Alongside these closures, the company is "advancing the sale process for the Araxá facility in Brazil" and has collected $67 million from land sales so far this year.
💲 Other KPIs
Overhead expenses fell 0.9% from a year ago and 5.5% from the second quarter. Mosaic said cost-saving actions across corporate support functions offset inflation. Over the first nine months of 2026, overhead spending dropped 5.6% to $391.9 million, keeping the company on track for its full-year cost plan.
Cash tax payments dropped 29.2% from $89 million a year ago, though they rose from $45 million in the second quarter. Almost all of the tax bill came from profits in the Canadian potash mines, while heavy losses in U.S. and Brazilian phosphate operations lowered the company's overall tax burden.
Money owed by customers fell 4.4% from $1,060.4 million a year ago and 6.0% from year-end 2025. Within the third quarter, however, seasonal fall fertilizer shipments caused receivables to build by $152.7 million on the cash flow statement, partially offsetting the cash raised from selling down inventory.
🔮 Guidance
Cut. Mosaic lowered its full-year potash mining target by 400,000 tonnes after hitting lower-grade ore at its Esterhazy mine. By our math, the new plan leaves 2.44 million tonnes of production for the fourth quarter, up 11.6% from a year ago and 16.2% above the third quarter.
Raised. Management lifted the middle of its full-year interest cost forecast by $20 million after refinancing debt and carrying higher borrowings. It is the second straight $20 million increase after starting the year at $200–220 million. By our math, the midpoint implies $72.4 million of net interest in the fourth quarter, up 50% from a year ago.
Cut. The middle of the full-year cash tax range dropped by $75 million to $200 million, following a $25 million reduction last quarter. Operating losses in phosphate have reduced taxable income outside Canada. By our math, after paying $172 million over the first nine months, the midpoint leaves $28 million for the fourth quarter.
Unchanged. Mosaic kept its full-year capital spending plan at $1.2 billion after cutting it by $250 million in the first quarter and $50 million in the second. Having spent $958.6 million in the first nine months, the target leaves $241.4 million for the fourth quarter by our math, a 31% drop from a year ago.
Unchanged. The full-year overhead plan stays at a $520 million midpoint following two $10 million reductions earlier in the year. By our math, subtracting nine-month spending of $391.9 million leaves $128.1 million for the fourth quarter, up 8% from a year ago.
Unchanged. The full-year non-cash depreciation forecast remains at a $1.15 billion midpoint for afourth straight quarter. With $900.6 million recorded through September, the midpoint implies $249.4 million in the fourth quarter by our math, down 7% from a year ago.
New. Fourth-quarter phosphate shipments are planned at a 1.45 million tonne midpoint, up 3.3% from the third quarter and 9.0% above last year's weak fourth quarter by our math. Over the last four quarters, actual volumes have averaged 4.0% below the initial midpoint.
New. The fourth-quarter price range matches the third quarter's initial plan. The $830 per tonne midpoint is down 1.0% from third-quarter realized prices of $838, but up 21.0% from $686 a year ago by our math.
New. Shipments are forecast to rise to a 2.45 million tonne midpoint for the fall application season, up 18.5% from the third quarter and 9.7% from a year ago by our math. Black Sea shipping disruptions are limiting competing imports into North America.
New. The $265 per tonne midpoint steps down $11 per tonne, or 4.0%, from third-quarter realized prices of $276, and sits 0.4% above the fourth quarter of 2025 by our math.
❓ Key Questions
What is the new full-year working capital cash target?
Changes in assets and liabilities drained $80.8 million over the first nine months despite a $206.9 million third-quarter inflow. Management did not say in the release whether its prior $300–500 million full-year cash release target still stands.
How long will lower ore grades last at Esterhazy?
Abnormal geological conditions forced a 400,000-tonne cut to 2026 potash production. Investors need to know how many months it will take to mine through the lower-grade zone and whether it threatens the 9-million-tonne target for 2027.
Why cut South Fort Meade and Miski Mayo rock mining now?
Mosaic settled fourth-quarter sulfur at $615 per long ton, down $90 from the third quarter, yet announced new fourth-quarter curtailments at two phosphate rock mines. Management should explain whether rock stockpiles are full or if sulfur remains scarce.
What are Mosaic Biosciences' standalone profit margins?
Nine-month Biosciences sales doubled and remain on track for $135 million this year, but the release gives no profit figures. Without standalone gross margin or EBITDA numbers, investors cannot tell how much the unit helps offset fertilizer losses.