10-Q: Mosaic Company Reports Significant Net Loss in Q2 2026

The Mosaic Company reported a substantial net loss of $272.8 million for the second quarter of 2026, a sharp decline from the prior year's profit, driven by increased costs and reduced sales volumes.

Summary

• The Mosaic Company reported a net loss of $272.8 million ($0.86 per diluted share) for the three months ended June 30, 2026, a significant decrease from a net income of $410.7 million ($1.29 per diluted share) in the same period of 2025.
• For the six months ended June 30, 2026, the company incurred a net loss of $530.4 million ($1.67 per diluted share), compared to a net income of $648.8 million ($2.04 per diluted share) in the prior year.
• Gross margin for the three months ended June 30, 2026, was $214.7 million, down from $518.6 million in the prior year, with gross margin percentage falling from 17% to 8%.
• The Phosphate segment reported a gross margin loss of $4.5 million for the quarter, a significant drop from a $103.0 million profit in the prior year, impacted by higher raw material costs and lower sales volumes.
• The Mosaic Fertilizantes segment reported a gross margin of $6.2 million for the quarter, down from $161.7 million in the prior year, due to higher product costs and lower sales volumes.
• The company completed the sale of its Carlsbad, New Mexico potash mine on April 30, 2026, for $20 million plus a deferred payment of $10 million.
• Mosaic committed to divesting the Arax mining and chemical complex in Brazil and idling related mining activities at the Patrocnio complex, resulting in significant impairment charges and expenses.

Sentiment

Score: 2

Explanation: StockSavvy.ai views this filing as negative due to a significant net loss, decreased gross margins across key segments, and increased operating expenses, despite some positive pricing trends.

Positives

• Average finished product selling prices increased in the Phosphate segment by 13% to $754 per tonne for the three months ended June 30, 2026, compared to $665 per tonne in the prior year period.
• In the Potash segment, average finished product selling prices increased by 2% to $280 per tonne for the three months ended June 30, 2026, compared to $274 per tonne in the prior year period.
• The Potash segment's gross margin remained relatively stable at $207.3 million for the three months ended June 30, 2026, compared to $209.4 million in the prior year period.
• Sales in China and India collectively showed revenue growth to $179.9 million for the three months ended June 30, 2026, from $132.4 million in the prior year period.

Negatives

• Net loss attributable to Mosaic was $272.8 million for the three months ended June 30, 2026, compared to a net income of $410.7 million in the prior year.
• Gross margin for the three months ended June 30, 2026, decreased by 59% to $214.7 million from $518.6 million in the prior year.
• The Phosphate segment reported a gross margin loss of $4.5 million for the three months ended June 30, 2026, a significant decline from a $103.0 million profit in the prior year.
• The Mosaic Fertilizantes segment's gross margin decreased by 96% to $6.2 million for the three months ended June 30, 2026, from $161.7 million in the prior year.
• Operating earnings (loss) for the company was $(35.5) million for the three months ended June 30, 2026, compared to operating earnings of $244.4 million in the prior year.
• Interest expense, net increased by 18% to $62.8 million for the three months ended June 30, 2026, from $53.0 million in the prior year.
• Foreign currency transaction losses of $39.4 million were recorded for the three months ended June 30, 2026, compared to gains of $169.4 million in the prior year.
• Other income (expense) was an expense of $163.2 million for the three months ended June 30, 2026, compared to income of $203.5 million in the prior year, largely due to mark-to-market losses on Maaden investment.

Risks

• Key inputs for fertilizer production, including sulfur and ammonia, are subject to volatile pricing and availability, exacerbated by geopolitical events like the conflict in Russia and Ukraine and tensions involving Iran, which can disrupt global markets and supply chains.
• Geopolitical instability and escalating tensions involving Iran could disrupt global shipping routes, impacting the availability, cost, or timing of sulfur and ammonia inputs and increasing fuel and transportation costs.
• Changes in trade policies, including tariffs and retaliatory tariffs, can affect raw material and commodity prices.
• Disruptions to operations at key production, distribution, transportation, or terminaling facilities, including those of Canpotex or joint ventures, pose a risk.
• Shortages or unavailability of transportation resources such as trucks, railcars, tugs, barges, and ships can impact the movement of products and raw materials.
• Environmental and other governmental regulations, including those related to water quality, greenhouse gas emissions, and naturally occurring radiation from mining activities, could lead to increased costs or liabilities.
• Legal and administrative proceedings, including antitrust lawsuits, environmental matters, and tax disputes, could result in material expenditures or adverse rulings.
• Brine inflows at potash mines and accidents or other incidents at properties or operations (e.g., fires, explosions, seismic events, sinkholes) present safety and operational risks.

Future Outlook

The company expects its liquidity to fluctuate due to business seasonality and targets debt leverage ratios consistent with investment grade credit metrics. Capital allocation priorities include maintaining financial strength, sustaining assets, investing for growth, and returning cash to shareholders. Funds generated from operations, cash reserves, and credit facilities are expected to be sufficient for the next 12 months and beyond.

Management Comments

• The continued conflict in the Middle East and attacks on Russian and Ukrainian commodities industrial assets have restricted exports of fertilizers and raw materials, further tightening global supplies, driving input costs higher and pressuring affordability of fertilizer products.
• While average selling prices increased in the current year periods, compared to the prior year, the increases were more than offset by elevated input costs, particularly sulfur and ammonia, which pressured margins and limited the benefit of higher selling prices.
• In response to market conditions and limited sulfur supply, in the third quarter of 2026 we are taking and may continue to take steps to temporarily curtail additional production at our phosphate production facilities in North America and Brazil, and blending units in Brazil.

Industry Context

StockSavvy.ai notes that the company's performance is heavily influenced by global commodity prices, geopolitical events impacting supply chains (particularly for sulfur and ammonia), and agricultural demand. The current environment of high input costs and supply constraints is a significant challenge for fertilizer producers.

Comparison to Industry Standards

• The company's gross margin percentage of 8% for the quarter is significantly lower than the 17% reported in the prior year, indicating a substantial deterioration in profitability relative to its own historical performance.
• The significant net loss reported by Mosaic contrasts with the profitability of many competitors who may have better managed input costs or secured more favorable supply agreements.
• The company's operating rate for processed phosphate production in North America was 58% for the three months ended June 30, 2026, down from 61% in the prior year, suggesting underutilization of capacity compared to industry benchmarks that aim for higher operational efficiency.
• The Mosaic Fertilizantes segment's phosphate operating rate decreased to 47% for the three months ended June 30, 2026, from 84% in the same period of the prior year, indicating a severe underutilization of its Brazilian assets, likely impacting cost competitiveness against regional peers.

Legal Proceedings

• Several putative antitrust class action lawsuits have been filed against Mosaic and other fertilizer producers by purported direct and indirect purchasers, alleging anticompetitive conduct.
• Hardee County issued a Notice of Violation for delays in reclamation schedule at the South Pasture mine, which was subsequently resolved by an approved alternative reclamation schedule and settlement agreement.
• A putative class action complaint alleges claims related to elevated levels of radiation at manufactured housing communities on reclaimed mining land in Florida.
• EPA Region 6 issued a Notice of Potential Violation regarding compliance of the Faustina Plant with the Risk Management Plan Rule, leading to a Consent Agreement and Final Order with a penalty and supplemental environmental projects.
• Peru's national environmental authority (OEFA) initiated an administrative sanctioning proceeding against Compaa Minera Miski Mayo for alleged noncompliance with environmental laws.
• EPA Region 6 initiated a review of Mosaic's compliance with a Consent Decree for the Uncle Sam Plant Sulfuric Acid, referring the matter to the Department of Justice for consideration of stipulated penalties.
• The U.S. Department of Commerce (DOC) issued countervailing duty (CVD) orders on imports of phosphate fertilizers from Morocco and Russia, with ongoing litigation challenging these orders and administrative reviews determining subsidy rates.
• President Trump issued a Presidential Proclamation temporarily suspending the CVD order on phosphate fertilizers from Morocco for eight months.

Related Party Transactions

• Transactions with related parties included in net sales primarily relate to sales from Mosaic's Potash segment to Canpotex.
• Transactions with related parties included in cost of goods sold primarily relate to purchases from Canpotex by Mosaic Fertilizantes segment and India and China distribution businesses.
• As of June 30, 2026, the net amount due to non-consolidated companies totaled $132.0 million.

Stakeholder Impact

• Shareholders are impacted by the significant net loss and decrease in earnings per share, reflecting a decline in profitability.
• Employees may be affected by potential production curtailments and the ongoing strategic review of certain assets, which could lead to changes in operational focus or staffing.
• Customers, particularly in Brazil, may face challenges due to constrained raw material availability and limited credit availability, impacting product supply and affordability.
• Suppliers of raw materials like sulfur and ammonia face volatile pricing and demand, influenced by global geopolitical events and supply chain disruptions.
• Creditors and lenders are impacted by the company's financial performance, with covenants on credit facilities requiring maintenance of specific financial ratios.

Next Steps

• Continue to monitor and manage input costs, particularly sulfur and ammonia, in response to global supply constraints.
• Evaluate and potentially implement further production curtailments at phosphate facilities in North America and Brazil, and blending units in Brazil, based on market conditions.
• Complete the divestiture of the Arax mining and chemical complex in Brazil.
• Continue to manage and optimize operations at the Patrocnio complex in Brazil.
• Proceed with legal defense for antitrust and other ongoing legal proceedings.
• Continue to implement the approved alternative reclamation schedule for the South Pasture mine.
• Pursue judicial review of the administrative sanctioning proceeding in Peru, if necessary.
• Continue to monitor and comply with environmental and safety regulations.

Key Dates

Recommendation

The company is experiencing significant financial headwinds with a substantial net loss and declining margins, driven by high input costs and geopolitical factors. While there are some positive pricing trends in certain segments and strategic actions are being taken to address issues, the overall financial performance is concerning. The recommendation is 'hold' as investors await stabilization and evidence of successful execution of restructuring and cost-management strategies, while acknowledging the inherent cyclicality and commodity price risks in the industry.

Keywords

phosphate, potash, fertilizer, crop nutrients, agriculture, mining, raw materials, commodity prices