Mosaic's Ride on the Commodity Roller Coaster

Today's company breakdown: The Mosaic Company (MOS). The world's largest fertilizer producer that most outside of ag have never heard of.

Quick hits on why this matters to you:

• They went from $12.4B to $19.1B to $13.7B revenue in just 3 years (classic commodity rollercoaster).

• They control hard assets (mines) which are often impossible to replicate.

• Mosaic successfully petitioned the U.S. government to impose countervailing duties on phosphate fertilizer imports from Morocco, which were implemented and have undergone several adjustments.

• Their MicroEssentials product proves you can differentiate even boring commodities.

• New CEO trying to pivot from pure mining to tech-enabled agriculture. AgTech is hard given John Deere's dominant position and many companies vying for the farmer's eyes and data. So I’m not bullish on this being a material needle-mover for them.

What caught my attention:

• Timing is everything - They bought their biggest competitor during a downturn, then revenue exploded 55% when markets recovered

• Environmental baggage - Managing 1 billion tons of radioactive waste with $1.8B in cleanup costs (yikes)

• Weather dependency - Recent hurricanes knocked out production multiple times, showing how nature still rules

Main takeaway: Even in commodity businesses, you can build moats through vertical integration and strategic acquisitions.

With that, I'll talk to you tomorrow!

Nick

TL;DR

• World's largest integrated phosphate-potash producer with $13.7B FY-2024 revenue

• Controls critical North American fertilizer deposits with 30+ year reserves

• Rode commodity super-cycle from $12.4B (2021) to peak $19.1B (2022) revenue

• New CEO Bruce Bodine pivoting toward operational excellence and premium products

• Key lesson: Master industry cycles and differentiate commodities through innovation

The 30,000-Foot View

The Mosaic Company dominates global fertilizer production through three segments: Phosphates (37% of sales), Potash (20%), Mosaic Fertilizantes (36%), and Other (7%). With 13,765 employees across eight countries, Mosaic transforms mined minerals into crop nutrients that help feed 8 billion people globally.

Key Stats:

• Market cap: ~$11 billion

• FY-2024 revenue: $13.70 billion

• Gross margin: 13%

• Net income: $0.17 billion

• Employees: 13,765

• Industry: Basic Materials - Agricultural Inputs

Company History

• 2004 - IMC Global and Cargill merge fertilizer assets to form Mosaic (Cargill owns 64%)

• 2011 - Cargill divests stake through share distribution

• 2013 - Acquires CF Industries' phosphate operations for $1.4 billion

• 2018 - Purchases Vale Fertilizantes for $2.5 billion, becomes Brazil leader

• 2024 - Bruce Bodine becomes CEO; agrees to sell Saudi JV stake for $1.5 billion

Show Me the Money

Stand-out financial features:*

• Extreme cyclicality with revenue swinging 55% up then 28% down

• Strong cash generation even in down cycles ($2.4B operations cash flow in 2023)

• Aggressive shareholder returns: $1.7B buybacks at peak, $415M YTD 2024

• Minimal recurring revenue, pure commodity exposure

Financial Data

The N.O.O.B. Nine — Competitive Powers

The Nerd Out on Business Nine is made up of Hamliton Helmer's famous "7 Powers" of competitive advantage (Scale Economies, Network Economies, Counter-Positioning, Switching Costs, Branding, Cornered Resource, and Process Power) combined with two of my own (Data Flywheel and Distribution Advantage).

Average Score: 3.2/5 - With a 3.2/5, Mosaic possesses formidable physical asset advantages but faces insane cyclicality.

Memorable Marketing

Mosaic's marketing evolved from commodity supplier to solutions provider through strategic campaigns focusing on sustainability and farmer education.*

Key campaigns:

• MicroEssentials "The Mighty Micro" - Created premium brand equity in commodity category through integrated digital/traditional marketing

• 4R Nutrient Stewardship - Educational program teaching Right Source, Rate, Time, Place to optimize yields

• Digital transformation - $25M digital marketing investment increased engagement 40% YoY

Tactical Takeaways:

1. Invest in customer education to expand markets ($45M annual farmer training)

2. Create distinctive branding for commodity products through performance claims

3. Use precision digital targeting to reach agricultural decision-makers

4. Maintain physical presence at trade shows despite digital shift

5. Position around sustainability to command premium pricing

*Note: A "Grow Green" campaign with $30M investment was reported by one source but could not be verified through official Mosaic materials.

AI Uses & Opportunities

Current AI deployment focuses on operational efficiency:

• Automated invoice processing reducing administrative costs

• Predictive maintenance preventing equipment failures

• Building "Mosaic AI environment" for safety applications

Future opportunities include precision agriculture prescription services, yield prediction models, and supply chain optimization—areas where Mosaic lags competitors like Nutrien who acquired digital platforms.

Bumps in the Road

Environmental challenges:

• Manages 1 billion tons of phosphogypsum waste with $1.8B closure liability

• 2016 New Wales sinkhole drained 200M gallons into Florida aquifer

• Recent hurricanes (Milton, Helene, Ian) repeatedly disrupted operations

Market volatility:

• DAP prices crashed from $900 to $454/tonne (2022-2023)

• Potash declined from $600+ to $290/tonne FOB NOLA same period

• Trade disputes with Morocco created tariff uncertainty

Regulation:

• Mosaic successfully petitioned the U.S. government to impose countervailing duties on phosphate fertilizer imports from Morocco

• Initial duties were set at approximately 19.97% on Moroccan phosphate imports

• Duties were later reduced to 2.12% in 2023, then raised again to 16.81% in 2024

• The countervailing duty saga illustrates Mosaic's dependence on trade protection to maintain competitiveness.

Operational risks:

• Aging Florida phosphate mines face depletion

• Community opposition to mining expansion

• Dependence on weather-sensitive agricultural demand

Your Swipe File

Positive lessons:

1. Time major investments for cycle troughs - Vale acquisition during 2018 downturn positioned perfectly for 2021-2022 boom (but predicting the future is hard so proceed with caution when it comes to market timing)

2. Differentiate commodities through innovation - MicroEssentials proves premium pricing possible with demonstrable performance

3. Build operational resilience - Proactive hurricane shutdowns and rapid restarts minimize long-term damage

4. Maintain capital discipline - Returned cash to shareholders even during downturns

Negative lessons to avoid: 

1. Cyclicality can kill a business without proper risk management

2. Reliance on regulation - Relying on a government to impose duties on competitors is an awfully weak moat in most cases

3. Don't delay critical disclosures - 2016 sinkhole communication failure damaged stakeholder trust permanently

4. Avoid overexposure to single commodities - Potash concentration created extreme earnings volatility

5. Don't neglect digital transformation - Late start on precision agriculture platforms cedes advantage to competitors

6. Environmental liabilities compound - Phosphogypsum management costs escalate without innovative solutions