Good day, and welcome to The Mosaic Company's Fourth Quarter 2024 Earnings Conference Call. All participants will be in a listen-only mode. Please note that this event is being recorded. I would now like to turn the conference over to Jason Tremblay. Please go ahead.

Thank you. Welcome to our fourth quarter 2024 earnings call. Opening comments will be provided by Bruce Bodine, President and Chief Executive Officer. Jenny Wang, Executive Vice President Commercial, will then cover the market update. Luciano Ciani 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. These 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'd like to start by welcoming Luciano to his first call as Mosaic's CFO. We've known him for a long time through his service on Mosaic's board. We are taking a different approach this quarter. During this first part of our call, I'll cover our high-level business performance and strategic progress, then Jenny Wang will give you an update on the markets, followed by Luciano providing more context on our financial performance and capital allocation strategy. After that, we'll take your questions. I'll start with our key messages for today. First, agriculture markets have improved, and we expect constructive ag and fertilizer fundamentals in 2025. Second, at Mosaic, we are making operational and strategic progress, and the business is positioned well to benefit from good markets this year. Finally, our work to shed non-core assets and reallocate capital is taking shape. To cover the numbers, fourth-quarter net income was $169 million, and adjusted EBITDA came in at $594 million. We saw strong phosphate prices and stripping margins, solid potash performance despite low prices, and excellent underlying business performance in Brazil. In potash, the Esterhazy complex, which is the world's largest potash mine and among the most efficient, continues to generate strong cash flow across the commodity cycle, and we are continuing to optimize it. Our Belle Plaine potash mine delivered a 100% operating rate and record production in 2024. We resolved the electrical issues we experienced in the third quarter, and we are operating at full milling and hoisting capacity now, which will let us continue to drive costs down. It clearly benefits us to produce every ton we can at Esterhazy, and we're investing to do just that. Last year, we finished a project to increase our compaction capacity by 500,000 tons, and this year, we expect to complete the hydrofluid project to provide an additional 400,000 tons of capacity per year. We expect potash demand to remain strong given affordability and the trends in crop prices, combined with supply reductions caused by recent news coming out of Laos, China, Belarus, and Russia. There's a lot going on in geopolitics that could impact potash markets. There is quite a bit of uncertainty around Canadian tariffs, and we're watching that situation closely. Even accounting for the impact of tariffs, potash prices will remain affordable. Therefore, we expect no major demand destruction. The potential resolution of the war in Ukraine would have very little impact on the global potash supply. The same goes for Belarus sanctions—very little impact on supply. Jenny will give you more detail about these dynamics in a few minutes. In phosphate, supply remains tight, and demand remains very strong, which has led to prices and stripping margins remaining significantly above historic levels. I should note that we have secured our long-term ammonia supply. We signed the last of three supply contracts late last year, so we have locked up reliable supply at competitive rates. Restoring our US phosphate production to historical levels remains a top priority. Fourth-quarter production was lower than expected because of a challenging recovery from hurricanes Helene and Milton. Most of our storm-related downtime was in the fourth quarter. We've often said the pathway to higher levels is not straight up. Early this year, we have turnarounds at Bartow and New Wales, and we have more work to do to improve asset reliability in Florida and Louisiana. To this end, we are accelerating capital spending to address these issues and expect that work to be finished by the middle of the year. Overall, we expect our production volumes to improve throughout the year and reach 7.2 to 7.6 million tons for the year. Our business in Brazil is performing very well, even with the market and credit headwinds. Our fourth-quarter adjusted EBITDA for the Mosaic Fertilizantes segment of $82 million shows strong underlying business performance. Our margins in Brazil are healthy. Our distribution margin was at the high end of the annual normalized range, and our production cost per ton trended down in the fourth quarter. With the constructive market dynamics we see ahead in 2025, we feel good about Mosaic's business in Brazil. Our solid operating performance is supported by good cost control. We're making good progress toward our cost reduction targets, but I'll leave the details to Luciano. Now I'll talk about our strategic progress. We've told you before that we're analyzing our facilities on the basis of their returns on capital. The outcomes of that work are allowing us to find better owners of underperforming assets and redeploy capital for better returns. We've already announced several deals, including the pending sale of our Patos de Minas site in Brazil and the conclusion of the Ma'aden transaction. That deal gave us a transparent value for our investment, which is about $1.5 billion as of today, as well as a $522 million gain and a long-term capital redeployment possibility. We have other moves in the works, including our pursuit of strategic alternatives for our potash mine in Carlsbad, New Mexico. We're not just focused on making our portfolio stronger; we're also investing in our strengths and growing in our core business in new areas. In addition to the compaction and hydrofluid project I mentioned earlier, our new one million ton blending plant in Paranaguá, Brazil, is almost finished. Our newest growth engine, Mosaic Biosciences, is accelerating. We doubled revenues and acreage on which our products were applied in 2024, and we expect a similar growth rate in 2025. We will have a lot more to say on Mosaic Biosciences at our Analyst Day in New York on March 18th. I hope you'll join us, whether in person or online. Now I'll ask Jenny to give you her thoughts on agriculture and fertilizer markets.

Thank you, Bruce. We expect 2025 to be a good year for agriculture commodities. Let's start with crops. Fundamentals are strong for most crops around the world. Global corn demand in 2024 is leading to expectations of a much lower stocks-to-use ratio, which in turn has led to rising corn prices since last September. Soybean prices have also moved off their lows from last year. Animal protein markets remain very strong and are expected to continue to drive robust demand for grain and oilseeds products in feed regions. In addition, palm oil prices have stayed in a high range for some time now. All in all, the world's farmers have a strong financial incentive to maximize yield in 2025. Of course, that bodes well for phosphate and potash demand. First, the phosphate. Higher crop prices mean phosphate will be more affordable. We believe demand will remain very strong. And remember, phosphate fertilizer demand is driven by a combination of factors, including rising oilseed production with the increase in global biofuel demand. At the same time, rising use of phosphate for battery production has created another pull on phosphate. With limited new phosphate production coming into the market over the next few years and with ongoing Chinese export restrictions, we expect supply to remain tight and prices and stripping margins to remain elevated by historical standards. Regarding stripping margins in the near term, even with sulfur prices increasing, we anticipate that they will remain attractive as ammonia prices are expected to ease. As a matter of fact, March spot ammonia price was concluded at $40 below from the last month. In potash, as Bruce mentioned, global demand has been strong, and we expect that to continue. Palm oil prices are supporting another strong year for potash application in Malaysia and Indonesia, while Chinese demand is expected to remain solid after two consecutive record shipment years in 2023 and 2024, with volume topping 18 million and 19 million tons, respectively. Bear in mind that shipments averaged just 15 million tons in the preceding five years in China. In addition, Brazil has worked through much of its inventories through the second corn crop, and we have seen very strong demand for potash in the soybean season. As a result, we expect 2025 shipments to be strong. Potash supply is likely to be more constrained this year than last due to the two largest producers in China guiding to lower output in 2025, and both Belaruskali and Uralkali announced that they would produce fewer tons. Additionally, there is significant uncertainty as to how much additional production will be available from Laos, given continued issues with mine inflows and sinkholes. As a result, we believe potash markets are improving and are very constructive. Now I will pass the call over to Luciano for insight into our financial performance.

Well, thank you, Jenny, and thanks to you, Bruce, for your warm welcome. I've been CFO of Mosaic now for two months, responsible for finance, strategy, and IT. Coming in, I think Mosaic is mature, has a clear strategic direction, and a strong financial foundation. I can give you several examples. The balance sheet is in a good place, where it's most efficient to be. We have lots of funding options in place. Share count has been reduced by almost 20% over the past years, something that maybe the market doesn't fully appreciate. And yes, after a few years of cost inflation, I believe there's good momentum in the cost control initiatives. The $150 million target, you know, I'm confident we will reach it, and we'll discuss this in a moment. Capital expenditures are also under control. Mosaic delivered on its commitment to reduce capex by about $200 million last year. This year, we have flat capex to address some reliability challenges, but we will continue to reduce capex in future years. I'm privileged to step in with so much already accomplished. I'll give you some detailed comments and color on some of the most meaningful numbers on our financial statements and performance. This is a little new, but my goal is for you to be able to understand the drivers of our performance and to model it going forward. So I'll start my comments with net income. Obviously, it's complicated, with lots of nonrecurring events. First, we exchanged our stake in the MWSPC joint venture for the shares of Ma'aden. You see a $522 million gain on this one, and this is the difference between the market value of the shares on the date of the closing and the book value of our former stake in the joint venture. But then you have another gain of $28 million, and this is now the increase in the market price of the stock between the closing date and December 31st. Going forward, you'll see the mark-to-market of the value of those shares reflected in our financials, so this is going to be recurring. Net income was also impacted by this large balance sheet $390 million foreign exchange loss in the fourth quarter, which is in the notables table in our press release. That comes from the end-of-company loans from the US to Brazil and from the US to Canada. They're both denominated in US dollars. The issue is that the Brazilian real weakened a lot during the fourth quarter by 14%, the worst-performing currency in the world. So the local Brazilian balance sheet also increased by a similar amount. The Canadian dollar also weakened by 6%, so the Canadian balance sheet also faced a loss. These negative effects were huge in the quarter, and they go up into the consolidated financial statements of Mosaic as a whole. But this foreign exchange story also goes into the adjusted EBITDA performance of our businesses, and again, most importantly, into Mosaic Fertilizantes in Brazil. The Brazilian distribution business buys and sells finished products and at any given time has open payables in dollars. The payables now in Brazilian reais are more expensive, and as we pay the obligations, we recognize the loss in EBITDA in the local income statement. The difference between the payables in US dollars at the current exchange rate, which is more expensive, and the other one goes into EBITDA. There are other smaller losses in FX hedging, and all in all, that reduced the adjusted EBITDA for Brazil by $35 million in this quarter and may continue to have around a $20 million impact in the first quarter of 2025 just because we still have to work through the old payables. Why am I saying all of this? Because I want to call your attention to the fact that our adjusted EBITDA for Brazil in the fourth quarter was $82 million, but that was after all these charges. To see our underlying performance, you need to add back this $35 million loss. So instead of $82 million of adjusted EBITDA, we are in the $120 million territory. Once these payable things are gone, that's the number you're going to see printed from the second quarter of 2025 onwards. That's going to actually be even higher given the cost improvements ongoing. One other highlight is SG&A. $497 million in 2024 is largely flat when you compare it to $501 million in 2023. But 2024 includes a $30 million loss on receivables. You remember a significant Brazilian retailer defaulted. But without this loss, SG&A would have been, instead of $4 million less, $34 million less, or a 6% year-over-year reduction. Considering other nonrecurring, noncash factors, we can say that $42 million have already been saved on intrinsic SG&A as part of the $150 million in cost savings. By the way, we've got insurance on this $30 million debt, so at some point, we expect to revert the majority of this loss in bad debt. How about potash and phosphates? In potash, MOP costs have been largely flat, $65 to $75 a ton in the past four quarters, but it should edge down as we produce more tons from Esterhazy, which is our most efficient mine, and with the hydrofluid project coming online later this year. The margins will also improve as we make more granular products, which on average earn about $20 to $30 more than standard products. In phosphates, the cost actually increased in Q4 due to the plants being idled following the hurricanes we discussed, but the recovery volumes in 2025 will dilute the cost per ton. We're already looking for more than $150 million in cost reductions. We have this digital acceleration program that should bring about $70 million in benefits. Another $50 million is coming from a better mine plan and mass recovery at our Patrocínio and Araxá complex in Brazil. We will discuss all of this in detail, and we'll have additional news for you at our Analyst Day on March 18th, which I invite all of you to attend. I'm sure we're going to be also discussing capital allocation in the Q&A. I was very lucky to come in right in the middle of the conclusion of the $1.5 billion deal with Ma'aden shares, and I actually got my hands and worked on the $125 million Patos deal. I'm fully committed to the program to reallocate capital to the benefit of shareholders. One final note, we've decided to discontinue our monthly price and volume releases. We've received some feedback from you that these releases were not particularly helpful, more noise than signal, so we're discontinuing them. With that, I want to turn the call back to you, Bruce.

Thank you, Luciano. To summarize, Mosaic delivered a solid year despite considerable market, weather, and operational challenges. Our outlook for 2025 is positive. With our improving operational performance, lower cost profiles, and excellent financial foundation, Mosaic is well-positioned to benefit from the strong market conditions we see ahead. Now, operator, we'd like to take questions from the audience. At any time your question has been addressed and you would like to withdraw your question, in the interest of time, please limit yourself to one question. Your first question today will come from Chris Parkinson with Wolfe Research. Please go ahead.

Great. Thank you so much. Your press release mentioned it's your belief that 700,000 tons were sacrificed in 2024 for processed phosphate, and you mentioned some of this in your prepared remarks. That would leave you about 7.1 at the midpoint for 2025. So at the midpoint for 2025 guidance, it's about 300,000 tons. Wouldn't just the phosphoric acid turnarounds get you to that number anyway? Or what's the best way to think about that? And if you could throw in some half-on-half comments, that would be very helpful. Thank you so much.

Thanks, Chris. Yeah, about 700,000 tons due to those extraordinary events due to weather and some other things that we had to deal with in 2024. Get you to that 7.1 as you said. It's the phosphoric acid turnarounds. It really is the sulfuric turnarounds that we've been focused on for the last several years coming out of the pandemic that really got upside down on sequencing. We've been talking about that and the catch-up work, and I think that might be where you're going, Chris, if I understand right. So, yes, sulfuric is back, as we've said, on those three-year turnaround cycles. But what we found is we went into December production, and actually, if you were to add in the hurricane impacts, we would've had one of the best production years or quarters in maybe the last two years. So we had a chance to put the accelerator down, given that some of our sulfuric issues are largely behind us. We did find a couple of bottlenecks in phosphoric acid, particularly at New Wales, that we need to address. Part of the reason that our capex is staying flat this year is we're putting a little more money in the first half of the year to deal with some of these lingering effects on downstream sulfuric in some of our facilities here in Central Florida and Louisiana. So that is maybe the half-over-half difference that you're talking about, Chris, and what to look for. As we announced, quarter one was always going to be a kind of a challenged quarter given the Bartow turnaround, which should be wrapping up next week. Then we've got some other turnaround work that was in our normal schedule, but now we're accelerating forward some additional reliability work in phosphoric acid forecasting at New Wales that's going to suck up a little bit more capital this year in order so that the second half of the year is at that max capacity run rate. So we'll see a difference between the first half and the second half, given that pull forward of some work that we're doing to really address those lingering reliability issues in phosphoric acid.

Hey. Good morning. Thanks for taking my questions. So Mosaic's all just happened in a very interesting monetization of assets with Ma'aden and Patos. Just wondering what other assets might be considered. You've mentioned Carlsbad. Is there anything else that might be notable that we should be thinking about? And then just regarding the Ma'aden transaction, are there ways to monetize that investment before the lock-up period?

Yeah, Andrew. No. Thanks. I think we've been pretty consistent, and I'm going to turn it over to Luciano in a minute to talk about some of the details because he kind of highlighted that in the prerecorded section. As we're looking at every asset within our portfolio to see if it generates returns that are acceptable, some examples, as you mentioned, the Ma'aden transaction was the tip of the iceberg as we closed 2024. Even if you go back to Streamsong in 2023, that was another example of looking at our portfolio. The mine, which is an idled mine, had an opportunity to sell that for something that contributes very positively. As you said, Andrew, we do have a process ongoing and are optimistic that we may have some news in the upcoming weeks to announce at Carlsbad. Every asset is being looked at, and if we've got opportunities to think differently about that, opportunities to maybe even consider divesting of that, those are things that we're going to continue to look at. We'll be talking a lot more about that in detail at our Analyst Day on March 18th. But Luciano, I'll turn it over to you.

No, Bruce. You said it all. We ask for patience from you on the street because there are a lot of studies ongoing. No stone is going to be left unturned. There will be specifics given at the Analyst Investor Day. As Bruce pointed out, we're very optimistic with Carlsbad, the way things are going. So we should expect some important news for you, maybe as early as Q2. As regards the Ma'aden shares, yes, there are ways to monetize it beforehand. We are looking into it, but you shouldn't expect something, I would say, on the size of the entire shareholding because there are constraints, liquidity constraints to do it, like third parties to do it. Lots of ideas. That's something that we're looking upon very, very carefully. Again, as news comes out, we're going to let you know as soon as a decision is made.

Yep. Sorry about that. I'm struggling to understand your outlook for global phosphate shipments. It's the chart you have on slide 20. You look at that, and you look at the ten-year period before 2022, and you would project something much greater than the low end of your forecast for 2025. So what has happened in these last few years? It's not like these growers' use of phosphate is discretionary if it's being removed with the crops. Is this a case where there has just been excess material in most soil? Have there been greater application rates than needed? Why isn't there a yield drag from this? And one more by extension, is there potential for this curve to really flatten longer term from your Biopass and PowerCode products, which can release the immobilized phosphate in soil?

Hey, Steve. Thanks for the question. I'm going to end up letting Jenny get into the specifics on the yield and application in phosphate and then the complement of your question on biosciences. But yeah, I think what we see is that it's actually a supply-side limitation on demand growth for phosphates. There just is limited supply in the marketplace, which is why stripping margins have stayed so constructive for so long. We're seeing that kind of $630 to $650 price point and north of $400 stripping margins, realized stripping margins for Mosaic even above that by $20 to $40 a ton, given our advantages. So it really is the constructiveness and the tightness of the market largely driven by the export constraints and the discipline on exports coming out of China. We don't see that changing much, Steve. Actually, competition for phosphate molecules outside of just pure-play agriculture is going to continue with our LFP. This is probably where biosciences are complementary to that supply constraint to actually allow farmers to continue to get good yield improvements even with the supply constraint on phosphates until such time that there is significant new greenfield capacity announced, which just isn't the case. So a 1 to 1.5-pound compound annual growth rate in phosphates, I think, is what we would expect going forward through the decade. But Jenny, I'll turn it over to you.

Sure. Thanks, Bruce. Steve, I think you raised a very good question. We actually project the demand growth for phosphate globally should stay at a trend line between 1% to 2%, but you're exactly right. It didn't happen over the last couple of years. As Bruce mentioned, it's really constrained by supply. As a result of it, it's quite supportive of the stripping margin and prices. I would like to also mention to answer your questions related to the phosphate application rate and how that might impact the yield. As many people know, or probably don't know, phosphorus is one of the least efficient applied nutrients. Meaning in general, only 50% of the phosphorus applied on the ground is uptaken or used by plants or crops. So meaning there's a big amount of phosphate being applied and stayed in the soil. With reduced application rates over the last couple of years, we may see some of the underlying impact on the yield. Some of the biological products, like you mentioned, and thank you for calling out the two flagship brands that we have, PowerCodes and Dialpad. These are two good examples. That microbial materials actually could help to generate organic acid, which helps to make the phosphorus tied to the soil more available for the crops to use, which in turn makes the phosphate use efficiency much higher, which helps the yield increases. So more to come, apart from these two flagship brands that we have. We actually have even more advanced products in the pipeline. Stay tuned. We're going to talk more at our Analyst Day on March 18th.

Good morning. This is Anthony on for Joel. Maybe just a question on potash. What could maximum potash production look like compared to the guidance range you provided as global demand surprises to the upside this year?

Thanks, Anthony. I think there's probably limited upside on maximum production, at least from us, and I think even on the Canadian producers. I mean, you have to talk to Nutrien about what they think. I think it probably happened on a prior call last week, but we're running at full rate at Esterhazy, full rate at Belle Plaine. We use Colonsay as our swing facility. It is running right now. We always continue to analyze that. But if there was upside, I think it gets down to can the supply chain getting out of Canada actually take significantly more tons. For sure, there's more incremental on the fringes, and that's probably on the high side. It is on the high side of our range. But there is a limit just given rail fluidity, capacity at the ports, to get significantly more capacity out of Canada. So I think that becomes the limiting constraint. That would, as I said, the high side of our guidance really assumes that the supply chain works very well and demand is on the higher end of the trend. Jenny, anything to add to that?

I think you're covered, Bruce. I guess, apart from Canadian producers, we do not really see any major spare capacities in the rest of the world. As we mentioned in our earlier commentary, the major producers, the two largest producers in China, announced their production cut this year due to very low inventories that they had year on year. We also have seen the announcement out of FSU on their reduction of the production due to this long-needed turnaround. Lastly, the addition of the supply out of Laos is just very uncertain how much more they can push out of the country due to the issues around the sinkhole and water inflow. So all in all, we do not see really any meaningful extra capacity for potash to be able to get out for this year.

Thank you, and good morning, everyone. I could just ask on CapEx and working capital. You've been in the seats for a couple of months. Can you talk about how you view the CapEx level now? Obviously, it's down versus the last few years, but do you think this is the right level? Are you comfortable for a maintenance cap at this level? Do you think CapEx will stay flat at these levels over the next few years? And then if I could just ask on working capital, whether you think there are any opportunities there, and in particular, maybe you could talk about how much working capital the Fertilizantes business consumes.

No, Vincent. Thank you. Starting with CapEx, we're not happy with the level of CapEx where it is. We do have a target to reduce especially sustaining CapEx throughout the years. We can save probably over the next few years maybe $200 to $300 million from the level that we are today. As Bruce said, we are spending perhaps $100 million more this year to fix the reliability issues. That reduction will mostly come over the next few years on maintenance CapEx. That's what we are targeting. We would like to continue to have about maybe $100 to $150 million every year put forward into very accretive opportunity projects like the ones which were already discussed, like the hydrofloats, compaction, and microsentials. But maintenance CapEx is where we need to do some work. As for working capital, there will be a buildup in working capital this year, especially in the second half, just because the business is resuming its growth. So the larger volumes in phosphates and in potash will point in that direction. The same thing in Brazil with Paranaguá coming in the second half. Our target for sales this year is much greater than last year. Brazil will continue to grow. So all in all, it will be a consumer of working capital. Actually, this plays out in our outlook for cash flow this year. You should expect, I would say, given the same levels of production, stronger cash flows in 2026, even more strong than the second half of 2025, just because of this working capital buildup. That's an intrinsic part of the business. It is well-financed, so we have access to a lot of short-term options to fund it. That's the way it is. We build up in the first half, we generate cash in the second half. This year, despite the cash flow generation in the second half, there's still a little bit more of a buildup because of the growth, which is a good thing.

Alright. Thanks. Good morning. Solid progress on the cost savings and structure for Fertilizantes. Obviously, you've seen $35 million of the $150 million come from that in 2024. Just wondering, for 2025, the remaining cost savings from the $150 million, how much of that is going to be coming from Fertilizantes? Is the rest going to be from SG&A? And then just on the Brazil market in general, maybe if you could give some color in terms of what you've been doing to ensure that the credit issues you saw in 2024 won't continue and anything that you've done that maybe protects you from potential further downside. That'd be great. Thank you.

Hey, Richard. No. Thanks. Just on the appreciation of the recognition on the cost reduction, as we said, half of that's already been delivered from a run rate standpoint. The remainder of that is going to come from a number of different areas. As you said, SG&A still has some cost savings to capture. You're going to see some fixed cost absorption benefits as we get that extra million tons of production and then grow to a million and a half tons of production in phosphates in North America. The improvements in production volume and reliability in South America are going to start to bring fixed cost absorption benefits as well. Then there's the hard savings that Luciano has talked about. But I think Luciano's going to turn it over to him to talk more, but we're really looking at doubling down on even more cost reductions and turning more stones over in all corners of the business. So more that we'll talk about there, and I'll turn it over to him. Then maybe over to Jenny if Luciano doesn't answer it first on the credit issues in Brazil. Luciano?

Well, thank you, Bruce. The $150 million, it's going to be pretty much in the bag just by cost dilution in phosphates and in potash. In fact, anything else in the Fertilizantes side will probably be on top of that. We are already crafting what we can achieve in addition to the $150 million, and we will put some aggressive numbers coming soon. We also appreciate that the performance of Fertilizantes was a little clouded because of these FX effects. So pardon me if I spend too much time discussing it initially. But I've got to reemphasize that we are really, really confident in the performance of this business going forward, precisely because of the cost performance. I'm going to go back to one of the things which I mentioned in the briefing. For example, we have this mine, Araxá and Patrocínio. The mine life is up to 2062. By changing the mine plan, for example, and yes, shortening mine life by maybe ten years from 2062 to 2052, we're accessing much better high-grade areas. The improvement in mass recovery is substantial. Only at this particular site, we're going to get another $50 million US run rate starting in January 2024. So there's a lot to extract from the Fertilizantes business. I encourage you to watch out for the performance of this line of business going forward.

Hi. Good morning, everyone. It's Chris Prell on for Lucas. Following up on the potash commentary, prices were up in the first quarter as a pop ahead of potential tariffs. Could you just expand a bit on what you think potential tariffs on Canadian potash would have on pricing and demand and trade flows? With the price up in the first quarter, do you realize that benefit in Q1 or Q2?

Lucas, I got your question down. I'm going to answer because we had a mic issue here. Didn't get to answer the second half of Richard's question on credit in Brazil. Let's do that first, and then we'll hit your tariffs, demand, and trade flows issue. Jenny, you want to talk about credit in Brazil?

Yes. Thank you, Bruce. Richard, to your question on the credit risk issues in Brazil, we've been very diligent in managing our business in Brazil. We've made some tough choices between volume and margin and the credit risk. As a result of it, we've been really focusing on margin, focusing on lower-risk customers. We have shifted our business away from traditional retailers in Brazil and more towards end users, mega farmers, traders, the grain traders who have very good barter businesses with the farmers, and lastly, the co-ops. So these are very solid customers with solid credit, which gives us a lot of insurance and assurance on the business quality, and we will continue to do so this year.

So, Lucas, on the tariff question, obviously, that's the topic du jour in many corners of the globe. It's a dynamic situation, one that we're watching very closely. I know even as of yesterday, reconfirm these March 25% tariffs, but we have numerous teams across our organization and all functions and facets working on this and paying attention to it. But listen, at the end of the day, if tariffs are imposed or when, we see that it's going to be borne by downstream customers of Mosaic. So that's unfortunate, but it is the reality of that situation. With 80% to 85% of the potash demand in the US coming from Canada, it's just hard to replace that. So again, the downstream customer's going to bear the brunt of that cost. The good news, if you want to look at good news or silver lining, is that given the affordability of potash today and the increase in corn prices and wheat prices and general affordability of commodities on the ag side in general, affordability is not that significant of an issue for potash even with a 20% to 25% tariff on top of it. The other advantage is that spring tons, spring season demand is pretty much already baked and in place in North America. So don't see any immediate impacts for spring on the downstream side. Just to reinforce it, Jenny and I were with one of our large customers out of Ohio, like a cooperative, and we asked and had a lot of discussion around the tariff impact and sentiment of farmers. To be honest, they're not even concerned. The additional cost is not something that they're worried about. Again, it gets down to the affordability, which, to be honest, surprised me a little bit, but it just goes to show the confidence in the market in the farm gate on the pricing and affordability and that transfer of cost per acre basis that the farm is not that significant in the big scheme of things. So don't see the tariffs having a huge impact on demand and anything to do with profitability for Mosaic. Now in the marketplace, to your point prior to any tariffs, we have seen good price appreciation, a greater than $40 a ton up in the US and Brazil on potash, and December of 2024, or the turn of the year, and even higher than that if you look at domestic prices in China. So there is good price momentum around the globe, and some of the first good price momentum we've seen of this magnitude in a couple of years. So where will we realize that? I'll turn that over to Jenny from a rev rec standpoint.

Sure. Lucas, I believe the price momentum, as Bruce mentioned, some of them will be reflected in Q1, and much more will be reflected in Q2. It is just because of the selling setting cycle between Capitec and ourselves in the domestic market are very different. So you should see from our guidance that we're guiding a higher price in Q1 and more to come in Q2.

Thanks very much. Your cash flows in the fourth quarter and for the year-end 2024 were quite low. In that your EBITDA was almost $600 million, and you generated roughly $220 million in cash. You weren't able to cover your dividend and your CapEx this year from operating cash flow. Was there something in the large currency events that pushed cash flow down? Do you expect to cover CapEx and dividends next year with operating cash flow?

Yeah, Jeff. Good question and something we've had a lot of discussion around ourselves. I'm going to turn it over to Luciano to get into the details.

Jeff, indeed, the shortfalls in volumes in production volumes in sales generated a shortfall in cash flows, especially in the second half, which was not in the forecast. So yes, it's true that the cash flows didn't cover the dividend and the CapEx. You can estimate the shortfalls at perhaps around $300 million just by multiplying the shortfalls in production by the margins and with the additional cost involved. Give an example, just in AROs, like, we spend another $20 million in the fourth quarter just to remove the water brought by the hurricanes. You see an uptick in ARO in the quarter as well. But for this year, the situation is different. Yeah. We do expect to cover the minimum dividend, the CapEx, and even have some excess cash in order to either distribute to shareholders or roll back some of the working capital funding additional that we did.

Thank you. Good morning, everyone. First of all, just a clarification. In terms of the model and assumptions you provided, you give production volumes for product in phosphate. What do you expect sales volume to be from Mosaic? Or is it the same number that we should think of? But for my real question, again, in the potash outlook, you talk about farmers, I mean, products remaining affordable and everything else. This despite the tariffs. If that's the case, if farmers can and are willing to pay more for the product, why didn't producers push through those price increases, say, a couple of months ago or last year, when corn prices and if you look at the December corn 2025, it's almost the same level as it is now. So if the corn prices are not attractive, why didn't producers push for higher product prices if farmers were willing to pay for it essentially?

Yeah, Edlain, thanks for the question. Good nuance catch on our guidance, and we don't provide sales guidance and aren't providing sales guidance for the full year. We did decide to give production guidance as something for you all to have better clarity on where we are. But I'll leave it at that for the time being. On the pricing thing, a couple of things change. I mean, one is the price of corn to appreciate as well as some of the other grain commodities. The other one was the late announcements since December of significant production supply-side constraints. That has tightened the market. So as much as you'd say why didn't prices get pushed, it really was a global supply and demand phenomenon that changed from where it was, say, going into September, October, November, and what changed December to now is about a million and a half tons or more have come out from the supply side, particularly in our forecast, with the announcements in China on domestic production going down, with the announcement and issues with the sinkholes in Laos and what could be the effects of that. With the announcements from Uralkali and Belaruskali on their significant maintenance outages. So it really comes back down to fundamentals on supply and demand on why we've seen that price appreciation over the last several weeks.

Yes, good morning and thanks for taking my question. I just wanted to follow up, Luciano, on some of the items you've flagged for Fertilizantes down in Brazil. I was just wondering about the cost you've talked about that you've taken out, and obviously, you expect some of it to come back from the losses in the third quarter with AgroGalaxy. But as we think about 2025 and the modeling go forward, just that SG&A run rate, how much right now of that low level that we saw in Q4 was really just FX related, and what would be a more normalized level if we expect something in the five and a half to six, not maybe beyond six as we've seen it in the fourth quarter? And then to the timing of these insurance reclaims, if you can comment on how you think to gain back those $30 million. Thank you.

Okay. Thanks for the question. I would say if you look at our performance sheet data, we do provide audited non-GAAP costs, mining costs, and phosphate conversion costs, and even potash costs, in Brazilian reais. So whatever exchange rate you want to model, just think of those as, I would say, the ceiling levels going forward. So you have a parameter here. But as I said before, we're trying to reduce those even in Brazilian reais. So that's for one. As for AgroGalaxy, I'm pretty confident that we will recover it this year. Cannot be precise about a quarter, but for sure, these types of processes, they don't take as long. So we're confident that we're going to get the cash flows back this year.

Hi. Good morning. Thank you for taking the question. Sort of a follow-up to the Fertilizantes question here, a little bit more granular. The $120 million quarterly run rate that you outlined as sort of underlying performance of that business. Can you give us a little bit of color, first half second half? And then from an underlying demand perspective, how you're thinking about recovery in the back half of the year given some of the distribution challenges and your shift toward the larger customers or direct to co-ops. Is there an opportunity to refill the channel, or should we just think about a gradual increase in the back half of the year? Thank you.

Yep. Kristen, thanks for the question. Let's unpack that one a little bit on two sides. One, Jenny, maybe a timing of how things shape on cash flows, and then I'll turn it over to Luciano on anything on the underlying financial performance effects.

Sure. Thanks. To your question on the customer selection of moving between different segments, Chris, that has happened. So we actually, over the last year, we've made that move, and we think we are in a good place this year towards the customers that we're going to do business with, with a much more solid credit profile. So I don't necessarily see a major volume change from Q1 to the first half to the second half. I would say the volume growth this year is pretty much going to depend on, a, if the market is going to go as we forecast and that we anticipate, the market is going to hit a new record from a shipment point of view, from a demand point of view, b, from a customer's credit profile point of view, we feel comfortable as where we are today. So just to summarize, we don't see a major change from the first half to the second half.

And on the cost side, yes. You're right. That's exactly the message we want to convey. The $120 million run rate is for the performance of Fertilizantes going forward. Again, I just gave an example in the prior question about something that is not in that $120 million, so you should expect upside from there. We're positive that we'll start showing those results from Q2 onwards.

This concludes our question and answer session. I would like to turn the conference back over to Bruce Bodine for any closing remarks.

Well, thank you, operator. I'll close the call by reiterating a few of our key messages. First, the market backdrop is promising. Global agriculture fundamentals have improved, providing plenty of incentive for farmers to maximize yields. Second, at Mosaic, we're making meaningful strategic progress. Our work to restore phosphate production to historic levels is proceeding well, and we've completed low-cost, high-return projects to enhance our production and distribution in all segments of the business. Third, our efforts to reallocate capital in pursuit of better returns are coming to fruition, and we're excited about that. We've announced or completed several transactions, and we expect to have more news in the near future. All in all, we have a strongly positive outlook for 2025 and a well-defined path to benefit from good market conditions. Thank you all for joining our call, and have a great and safe day.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.