The Mosaic Company (NYSE:MOS) Q2 2023 Earnings Conference Call August 2, 2023 11:00 AM ET Company Participants Paul Massoud - Vice President of Investor Relations and FP&A James O'Rourke - President and Chief Executive Officer Clint Freeland - Senior Vice President and Chief Financial Officer Jenny Wang - Senior Vice President-Global Strategic Marketing Conference Call Participants Stephen Byrne - Bank of America Joel Jackson - BMO Capital Markets Richard Garchitorena - Wells Fargo Christopher Parkinson - M ...

[PART I. FINANCIAL INFORMATION](index=3&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis of financial condition and results of operations [ITEM 1. FINANCIAL STATEMENTS](index=3&type=section&id=ITEM%201.%20FINANCIAL%20STATEMENTS) This section presents Mosaic's unaudited condensed consolidated financial statements and detailed notes for Q2 2023 and 2022 [Condensed Consolidated Statements of Earnings](index=3&type=section&id=Condensed%20Consolidated%20Statements%20of%20Earnings) This section presents the company's condensed consolidated statements of earnings for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Earnings (Three Months Ended June 30) | Metric | June 30, 2023 (Millions $) | June 30, 2022 (Millions $) | Change (Millions $) | Percent Change | | :----- | :------------------------- | :------------------------- | :------------------ | :------------- | Condensed Consolidated Statements of Earnings (Six Months Ended June 30) | Metric | June 30, 2023 (Millions $) | June 30, 2022 (Millions $) | Change (Millions $) | Percent Change | | :----- | :------------------------- | :------------------------- | :------------------ | :------------- | [Condensed Consolidated Statements of Comprehensive Income](index=4&type=section&id=Condensed%20Consolidated%20Statements%20of%20Comprehensive%20Income) This section presents the company's condensed consolidated statements of comprehensive income for the three and six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Comprehensive Income (Three Months Ended June 30) | Metric | June 30, 2023 (Millions $) | June 30, 2022 (Millions $) | | :----- | :------------------------- | :------------------------- | Condensed Consolidated Statements of Comprehensive Income (Six Months Ended June 30) | Metric | June 30, 2023 (Millions $) | June 30, 2022 (Millions $) | | :----- | :------------------------- | :------------------------- | [Condensed Consolidated Balance Sheets](index=5&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) This section presents the company's condensed consolidated balance sheets as of June 30, 2023, and December 31, 2022 Condensed Consolidated Balance Sheets (As of June 30, 2023 and December 31, 2022) | Account | June 30, 2023 (Millions $) | December 31, 2022 (Millions $) | | :------ | :------------------------- | :----------------------------- | [Condensed Consolidated Statements of Cash Flows](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) This section presents the company's condensed consolidated statements of cash flows for the six months ended June 30, 2023 and 2022 Condensed Consolidated Statements of Cash Flows (Six Months Ended June 30) | Cash Flow Activity | June 30, 2023 (Millions $) | June 30, 2022 (Millions $) | | :----------------- | :------------------------- | :------------------------- | Supplemental Disclosure of Cash Flow Information (Six Months Ended June 30, 2023) | Item | Amount (Millions $) | | :--- | :------------------ | [Condensed Consolidated Statements of Equity](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Equity) This section presents the company's condensed consolidated statements of equity for the three and six months ended June 30, 2023 Condensed Consolidated Statements of Equity (Three Months Ended June 30, 2023) | Account | Common Stock (Shares) | Common Stock (Dollars) | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive (Loss) | Noncontrolling Interests | Total Equity | | :------ | :-------------------- | :--------------------- | :----------------------------- | :---------------- | :------------------------------------- | :----------------------- | :----------- | Condensed Consolidated Statements of Equity (Six Months Ended June 30, 2023) | Account | Common Stock (Shares) | Common Stock (Dollars) | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive (Loss) | Noncontrolling Interests | Total Equity | | :------ | :-------------------- | :--------------------- | :----------------------------- | :---------------- | :------------------------------------- | :----------------------- | :----------- | [Notes to Condensed Consolidated Financial Statements](index=9&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) This section provides detailed notes explaining the accounting policies, financial data, and specific accounts for the financial statements [1. Organization and Nature of Business](index=9&type=section&id=1.%20Organization%20and%20Nature%20of%20Business) Mosaic produces and markets phosphate and potash crop nutrients through its Phosphate, Potash, and Mosaic Fertilizantes segments - Mosaic produces and markets concentrated phosphate and potash crop nutrients[21](index=21&type=chunk) - Business segments include Phosphate (Florida, Louisiana, Peru, Saudi Arabia JV), Potash (Canada, U.S.), and Mosaic Fertilizantes (Brazil, Paraguay)[23](index=23&type=chunk) [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) Unaudited Condensed Consolidated Financial Statements adhere to SEC interim reporting and GAAP, involving key estimates for assets, liabilities, and taxes - Financial statements are prepared on an accrual basis, in accordance with SEC rules for interim reporting and GAAP[23](index=23&type=chunk) - Significant accounting estimates involve fair value of acquired assets, recoverability of non-current assets (including goodwill), useful lives and net realizable values of long-lived assets, environmental and reclamation liabilities (ARO), and income tax accounts[25](index=25&type=chunk) [3. Recently Issued Accounting Guidance](index=10&type=section&id=3.%20Recently%20Issued%20Accounting%20Guidance) New FASB guidance on supplier financing programs was adopted on January 1, 2023, requiring annual disclosures without impacting balance sheet presentation - Adopted new FASB guidance on supplier financing programs as of January 1, 2023, requiring annual disclosures on key terms and outstanding amounts[26](index=26&type=chunk) - The adoption did not impact balance sheet presentation or footnote disclosures due to prior similar reporting practices[26](index=26&type=chunk) [4. Other Financial Statement Data](index=11&type=section&id=4.%20Other%20Financial%20Statement%20Data) This section details changes in selected balance sheet accounts, including other current assets, accrued liabilities, and noncurrent liabilities Other Current Assets (Millions $) | Account | June 30, 2023 | December 31, 2022 | | :------ | :------------ | :---------------- | Other Assets (Millions $) | Account | June 30, 2023 | December 31, 2022 | | :------ | :------------ | :---------------- | Accrued Liabilities (Millions $) | Account | June 30, 2023 | December 31, 2022 | | :------ | :------------ | :---------------- | Other Noncurrent Liabilities (Millions $) | Account | June 30, 2023 | December 31, 2022 | | :------ | :------------ | :---------------- | [5. Earnings Per Share](index=12&type=section&id=5.%20Earnings%20Per%20Share) This note reconciles basic and diluted EPS, detailing net earnings and weighted average shares, and noting anti-dilutive share exclusions EPS Reconciliation (Three Months Ended June 30) | Metric | 2023 | 2022 | | :----- | :--- | :--- | EPS Reconciliation (Six Months Ended June 30) | Metric | 2023 | 2022 | | :----- | :--- | :--- | - **0.7 million** and **0.4 million** shares for the three and six months ended June 30, 2023, respectively, were excluded from diluted EPS calculation as they were anti-dilutive[31](index=31&type=chunk) [6. Inventories](index=12&type=section&id=6.%20Inventories) This section details inventory composition as of June 30, 2023, and December 31, 2022, including raw materials and finished goods Inventories Composition (Millions $) | Category | June 30, 2023 | December 31, 2022 | | :------- | :------------ | :---------------- | - Final price deferred inventory represents product shipped to customers where the price has not yet been agreed upon[32](index=32&type=chunk) [7. Goodwill](index=12&type=section&id=7.%20Goodwill) Mosaic's goodwill remained at **$1.1 billion** as of June 30, 2023, with the next impairment review scheduled for October 31, 2023 - Goodwill was **$1.1 billion** as of June 30, 2023, and December 31, 2022[33](index=33&type=chunk) Changes in Goodwill by Reporting Unit (Millions $) | Reporting Unit | Balance as of Dec 31, 2022 | Foreign Currency Translation | Balance as of June 30, 2023 | | :------------- | :------------------------- | :--------------------------- | :-------------------------- | - The next annual goodwill impairment analysis is scheduled for October 31, 2023[34](index=34&type=chunk) [8. Marketable Securities Held in Trusts](index=13&type=section&id=8.%20Marketable%20Securities%20Held%20in%20Trusts) Mosaic holds available-for-sale marketable debt securities in RCRA Trusts for Gypstack Closure Costs, valued using a fair value hierarchy - RCRA Trusts hold investments for Gypstack Closure Costs, classified as available-for-sale marketable debt securities[35](index=35&type=chunk)[36](index=36&type=chunk) - Fair value hierarchy (Level 1, 2, 3) is used for valuation, with most investments classified as Level 2 (corporate debt, municipal bonds, U.S. government bonds)[37](index=37&type=chunk)[38](index=38&type=chunk)[39](index=39&type=chunk)[41](index=41&type=chunk) Estimated Fair Value of RCRA Trusts Investments (June 30, 2023) | Category | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :------- | :------------- | :--------------------- | :---------------------- | :--------- | Estimated Fair Value of RCRA Trusts Investments (December 31, 2022) | Category | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Fair Value | | :------- | :------------- | :--------------------- | :---------------------- | :--------- | Gross Unrealized Losses and Fair Values of Available-for-Sale Securities (June 30, 2023) | Category | Fair Value | Gross Unrealized Losses | | :------- | :--------- | :---------------------- | Gross Unrealized Losses and Fair Values of Available-for-Sale Securities (December 31, 2022) | Category | Fair Value | Gross Unrealized Losses | | :------- | :--------- | :---------------------- | Contractual Maturity of Available-for-Sale Debt Securities (June 30, 2023) | Maturity Period | Amount (Millions $) | | :-------------- | :------------------ | - For the six months ended June 30, 2023, realized gains were **$9.1 million** and realized losses were **$15.2 million**[44](index=44&type=chunk) [9. Financing Arrangements](index=15&type=section&id=9.%20Financing%20Arrangements) Mosaic uses diverse financing, including inventory and receivable agreements, Brazilian structured payables, commercial paper, and an undrawn **$700 million** term loan - Inventory financing arrangement allows selling up to **$625 million** of inventory; no outstanding balance as of June 30, 2023[45](index=45&type=chunk) - Receivable Purchasing Agreement (RPA) allows selling up to **$600 million** of receivables; **$1.1 billion** sold for the six months ended June 30, 2023[46](index=46&type=chunk)[47](index=47&type=chunk) - Structured accounts payable arrangements in Brazil totaled **$592.5 million** as of June 30, 2023[48](index=48&type=chunk) - Commercial paper program had **$199.7 million** outstanding as of June 30, 2023, with a weighted average interest rate of **5.37%**[49](index=49&type=chunk) - Entered into a **$700 million** 10-year senior unsecured term loan facility in May 2023, with no amounts drawn as of June 30, 2023[50](index=50&type=chunk) [10. Asset Retirement Obligations](index=16&type=section&id=10.%20Asset%20Retirement%20Obligations) Mosaic recognizes AROs at fair value for legal obligations like Gypstack closure, primarily in Florida and Louisiana, with financial assurance - AROs are recognized at fair value for legal obligations such as land reclamation, Gypstack closure, and facility decommissioning[51](index=51&type=chunk)[52](index=52&type=chunk)[53](index=53&type=chunk) Reconciliation of Asset Retirement Obligations (Millions $) | Item | June 30, 2023 | December 31, 2022 | | :--- | :------------ | :---------------- | - A majority of AROs relate to Gypstack Closure Costs in Florida and Louisiana, with financial assurance provided through RCRA Trusts and surety bonds[55](index=55&type=chunk)[56](index=56&type=chunk)[58](index=58&type=chunk)[60](index=60&type=chunk) - As of June 30, 2023, aggregate AROs for Plant City and Bonnie Facility Gypstack closure costs were **$328.9 million**[61](index=61&type=chunk) [11. Income Taxes](index=18&type=section&id=11.%20Income%20Taxes) Gross unrecognized tax benefits increased to **$28.9 million**, with effective tax rates of **22.8%** and **22.2%** for the three and six months ended June 30, 2023 - Gross unrecognized tax benefits increased by **$3.5 million** to **$28.9 million** for the six months ended June 30, 2023[62](index=62&type=chunk) Income Tax Provision and Effective Tax Rate | Period | Effective Tax Rate | Provision for Income Taxes (Millions $) | | :----- | :----------------- | :-------------------------------------- | - Discrete tax items provided a benefit of approximately **$9.9 million** for the three months and **$23.8 million** for the six months ended June 30, 2023[65](index=65&type=chunk)[67](index=67&type=chunk) - The company is assessing the financial statement impact of the Treasury Department's Notice 2023-55 regarding temporary relief for foreign tax credits[68](index=68&type=chunk) [12. Derivative Instruments and Hedging Activities](index=19&type=section&id=12.%20Derivative%20Instruments%20and%20Hedging%20Activities) Mosaic uses derivatives to manage foreign currency, interest rate, and commodity price risks, recorded at fair value without hedge accounting for most contracts - Derivatives are used to mitigate foreign currency, interest rate, and commodity price risks, recorded at fair value[69](index=69&type=chunk) - No hedge accounting is applied to foreign currency, commodity, or freight contracts; fixed-to-floating interest rate contracts use fair value hedge accounting, but none were in effect as of June 30, 2023[70](index=70&type=chunk)[71](index=71&type=chunk) Total Absolute Notional Volume of Outstanding Derivative Instruments (Millions of Units) | Derivative Instrument | Derivative Category | Unit of Measure | June 30, 2023 | December 31, 2022 | | :-------------------- | :------------------ | :-------------- | :------------ | :---------------- | - The aggregate fair value of derivative instruments with credit-risk-related contingent features in a liability position was **$10.9 million** as of June 30, 2023[73](index=73&type=chunk) [13. Fair Value Measurements](index=20&type=section&id=13.%20Fair%20Value%20Measurements) This note details fair value measurement techniques for recurring assets and liabilities, including derivatives and other financial instruments - Foreign currency derivatives are primarily Level 2, with some Level 1, and had a gross asset position of **$39.7 million** and gross liability of **$15.3 million** as of June 30, 2023[75](index=75&type=chunk) - Commodity derivatives (natural gas) are Level 2, with a gross asset position of **$6.3 million** and gross liability of **$0.8 million** as of June 30, 2023[76](index=76&type=chunk) - No interest rate derivative positions were held as of June 30, 2023[77](index=77&type=chunk) Carrying Amounts and Estimated Fair Values of Financial Instruments (Millions $) | Instrument | June 30, 2023 (Carrying Amount) | June 30, 2023 (Fair Value) | December 31, 2022 (Carrying Amount) | December 31, 2022 (Fair Value) | | :--------- | :------------------------------ | :------------------------- | :---------------------------------- | :----------------------------- | [14. Share Repurchases](index=21&type=section&id=14.%20Share%20Repurchases) Mosaic's Board approved **$3.0 billion** in share repurchases, with **$448.0 million** executed in the first six months of 2023 - Board approved **$3.0 billion** in share repurchase programs in 2022[79](index=79&type=chunk) - For the six months ended June 30, 2023, **8,690,936 shares** were repurchased for approximately **$448.0 million** (average price **$51.55/share**)[81](index=81&type=chunk) - No share repurchases occurred in the three months ended June 30, 2023[81](index=81&type=chunk) - For the six months ended June 30, 2022, **17,733,984 shares** were repurchased for approximately **$1.0 billion** (average price **$64.37/share**)[83](index=83&type=chunk)[82](index=82&type=chunk) [15. Accumulated Other Comprehensive Income (Loss) ("AOCI")](index=22&type=section&id=15.%20Accumulated%20Other%20Comprehensive%20Income%20(Loss)%20(%22AOCI%22)) This note details changes in AOCI, net of tax, by component for the three and six months ended June 30, 2023 and 2022 Changes in AOCI, Net of Tax (Three Months Ended June 30, 2023) | Component | Balance at March 31, 2023 | Other Comprehensive Income (Loss) | Tax (Expense) Benefit | Other Comprehensive Income (Loss), Net of Tax | Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | Balance as of June 30, 2023 | | :-------- | :------------------------ | :-------------------------------- | :-------------------- | :-------------------------------------------- | :---------------------------------------------------------------------- | :-------------------------- | Changes in AOCI, Net of Tax (Six Months Ended June 30, 2023) | Component | Balance at December 31, 2022 | Other Comprehensive Income (Loss) | Tax (Expense) Benefit | Other Comprehensive Income (Loss), Net of Tax | Other Comprehensive Income (Loss) Attributable to Noncontrolling Interest | Balance as of June 30, 2023 | | :-------- | :--------------------------- | :-------------------------------- | :-------------------- | :-------------------------------------------- | :---------------------------------------------------------------------- | :-------------------------- | [16. Related Party Transactions](index=23&type=section&id=16.%20Related%20Party%20Transactions) Mosaic engages in related party transactions, with **$408.3 million** due to non-consolidated companies as of June 30, 2023 - Net amount due to non-consolidated companies was **$408.3 million** as of June 30, 2023, up from **$56.8 million** at December 31, 2022[86](index=86&type=chunk) Related Party Transactions in Condensed Consolidated Statements of Earnings (Millions $) | Transaction Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | - Net sales to related parties primarily from Potash segment to Canpotex. Cost of goods sold from related parties primarily from Canpotex and MWSPC to Mosaic Fertilizantes and distribution businesses[87](index=87&type=chunk) [17. Contingencies](index=23&type=section&id=17.%20Contingencies) Mosaic faces environmental, coastal zone, and Brazilian legal contingencies, with accruals for probable losses and potential future expenditures - Contingent environmental liabilities arise from current/former facilities, adjacent facilities, and third-party Superfund sites, with accruals of **$174.4 million** as of June 30, 2023[89](index=89&type=chunk) - A reserve of **$53.9 million** was established for estimated repairs at the New Wales Phase II East Stack due to a cavity and liner tear[91](index=91&type=chunk) - Louisiana coastal zone cases are expected to be resolved through a memorandum of understanding with funding from third-party indemnitors/insurers[96](index=96&type=chunk) - Brazilian subsidiaries face judicial/administrative proceedings with aggregate damages/fines of approximately **$868.4 million**, with a probable aggregate loss of **$74.5 million** accrued[97](index=97&type=chunk) - Brazilian tax contingencies have a maximum potential liability of approximately **$586.5 million**, with **$220.2 million** subject to an indemnification agreement with Vale S.A[99](index=99&type=chunk) [18. Business Segments](index=25&type=section&id=18.%20Business%20Segments) Mosaic's Phosphate, Potash, and Mosaic Fertilizantes segments are evaluated by operating earnings, with detailed financial and sales data provided Segment Information (Three Months Ended June 30, 2023) | Metric | Phosphate | Potash | Mosaic Fertilizantes | Corporate, Eliminations and Other | Total | | :----- | :-------- | :----- | :------------------- | :-------------------------------- | :---- | Segment Information (Six Months Ended June 30, 2023) | Metric | Phosphate | Potash | Mosaic Fertilizantes | Corporate, Eliminations and Other | Total | | :----- | :-------- | :----- | :------------------- | :-------------------------------- | :---- | Net Sales by Geographic Area (Millions $) | Country/Region | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | Net Sales by Product Type (Millions $) | Product Type | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :----------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | [ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS](index=28&type=section&id=ITEM%202.%20MANAGEMENT'S%20DISCUSSION%20AND%20ANALYSIS%20OF%20FINANCIAL%20CONDITION%20AND%20RESULTS%20OF%20OPERATIONS) This section analyzes Mosaic's financial performance for Q2 2023, highlighting declines in sales and earnings due to lower prices, segment performance, liquidity, and forward-looking statements [Results of Operations Overview](index=29&type=section&id=Results%20of%20Operations%20Overview) Mosaic's net income and sales significantly declined in Q2 2023 due to lower selling prices and market softening, despite foreign currency gains Consolidated Results of Operations (Three Months Ended June 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Change (Millions $) | Percent Change | | :----- | :---------------- | :---------------- | :------------------ | :------------- | Consolidated Results of Operations (Six Months Ended June 30) | Metric | 2023 (Millions $) | 2022 (Millions $) | Change (Millions $) | Percent Change | | :----- | :---------------- | :---------------- | :------------------ | :------------- | - Net income attributable to Mosaic decreased by **64%** to **$369.0 million** for the three months ended June 30, 2023, and by **64%** to **$803.8 million** for the six months ended June 30, 2023, compared to prior year periods[112](index=112&type=chunk)[113](index=113&type=chunk)[121](index=121&type=chunk) - Net sales decreased by **37%** for the three months and **25%** for the six months ended June 30, 2023, primarily due to lower average selling prices[112](index=112&type=chunk)[113](index=113&type=chunk) - Foreign currency transaction gain positively impacted net income by **$148.5 million** (3 months) and **$199.9 million** (6 months) in 2023[113](index=113&type=chunk)[121](index=121&type=chunk) - Key highlights include entering a **$700 million** term loan facility (undrawn), sale of Streamsong Resort for **$158 million** gain, full ownership of Gulf Sulphur Services, **$300 million** accelerated share repurchase, and a special dividend of **$0.25 per share**[120](index=120&type=chunk)[128](index=128&type=chunk) [Segment Performance](index=32&type=section&id=Segment%20Performance) All segments experienced lower sales prices and reduced gross margins due to market softening, despite some volume increases and lower raw material costs [Phosphate Segment](index=32&type=section&id=Phosphate%20Segment) Phosphate segment net sales and gross margin decreased due to lower selling prices, partially offset by higher volumes and reduced raw material costs Phosphate Segment Performance (Three Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | Phosphate Segment Performance (Six Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | - Average finished product selling price decreased **40%** to **$634/tonne** (3 months) and **30%** to **$674/tonne** YoY (6 months)[129](index=129&type=chunk)[131](index=131&type=chunk)[137](index=137&type=chunk) - Finished product sales volumes increased **15%** (3 months) and **13%** (6 months) YoY[129](index=129&type=chunk)[131](index=131&type=chunk)[137](index=137&type=chunk) - Gross margin decreased by **66%** to **$216.2 million** (3 months) and **59%** to **$475.5 million** (6 months) YoY, primarily due to lower sales prices[129](index=129&type=chunk)[132](index=132&type=chunk)[138](index=138&type=chunk) - Average consumed ammonia price decreased **25%** (3 months) and **12%** (6 months) YoY; sulfur price decreased **49%** (3 months) and **30%** (6 months) YoY[129](index=129&type=chunk)[133](index=133&type=chunk)[139](index=139&type=chunk) [Potash Segment](index=34&type=section&id=Potash%20Segment) Potash segment net sales and gross margin declined significantly due to lower selling prices, reduced volumes, and increased idle plant costs Potash Segment Performance (Three Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | Potash Segment Performance (Six Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | - Average finished product selling price decreased **43%** to **$392/tonne** (3 months) and **33%** to **$431/tonne** YoY (6 months)[142](index=142&type=chunk)[144](index=144&type=chunk)[150](index=150&type=chunk) - Sales volumes decreased **6%** (3 months) and **1%** (6 months) YoY[142](index=142&type=chunk)[145](index=145&type=chunk)[150](index=150&type=chunk) - Gross margin decreased by **64%** to **$336.0 million** (3 months) and **50%** to **$749.3 million** (6 months) YoY, primarily due to lower selling prices and volumes[142](index=142&type=chunk)[146](index=146&type=chunk)[151](index=151&type=chunk) - Canadian resource taxes decreased by **$179.5 million** (3 months) and **$215.9 million** (6 months) YoY[147](index=147&type=chunk)[152](index=152&type=chunk) - Operating rate for potash production decreased to **69%** (3 months) and **69%** (6 months) YoY, reflecting temporary idling of Colonsay mine and maintenance turnarounds[148](index=148&type=chunk)[153](index=153&type=chunk) [Mosaic Fertilizantes Segment](index=36&type=section&id=Mosaic%20Fertilizantes%20Segment) Mosaic Fertilizantes segment saw significant decreases in net sales and gross margin due to lower selling prices, despite increased sales volumes Mosaic Fertilizantes Segment Performance (Three Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | Mosaic Fertilizantes Segment Performance (Six Months Ended June 30) | Metric | 2023 | 2022 | Change | Percent Change | | :----- | :--- | :--- | :----- | :------------- | - Average finished product selling price decreased **39%** to **$595/tonne** (3 months) and **32%** to **$619/tonne** YoY (6 months)[156](index=156&type=chunk)[158](index=158&type=chunk)[165](index=165&type=chunk) - Finished product sales volumes increased **3%** (3 months) and **8%** (6 months) YoY[156](index=156&type=chunk)[158](index=158&type=chunk)[165](index=165&type=chunk) - Gross margin decreased by **97%** to **$12.8 million** (3 months) and **98%** to **$11.7 million** (6 months) YoY, primarily due to lower selling prices[156](index=156&type=chunk)[159](index=159&type=chunk)[166](index=166&type=chunk) - Lower product costs and raw material costs (sulfur and ammonia) favorably impacted gross margin by **$370 million** (3 months) and **$470 million** (6 months)[160](index=160&type=chunk)[166](index=166&type=chunk) [Corporate, Eliminations and Other](index=37&type=section&id=Corporate,%20Eliminations%20and%20Other) Corporate, Eliminations and Other segment's gross margin improved due to derivative gains and lower intersegment profit elimination, despite unfavorable product costs - Gross margin for Corporate, Eliminations and Other was **$6.1 million** (3 months) and **$5.0 million** (6 months) in 2023, compared to **$(173.1) million** and **$(59.9) million** in 2022[170](index=170&type=chunk)[171](index=171&type=chunk) - Gross margin was favorably impacted by a net unrealized gain on derivatives of approximately **$34 million** (3 months) and **$33 million** (6 months) in 2023[170](index=170&type=chunk)[171](index=171&type=chunk) - Lower elimination of profit on intersegment sales favorably impacted gross margin by approximately **$215 million** (3 months) and **$313 million** (6 months)[170](index=170&type=chunk)[171](index=171&type=chunk) - Unfavorable product costs in China and India distribution businesses negatively impacted gross margin[170](index=170&type=chunk)[171](index=171&type=chunk) [Other Income Statement Items](index=38&type=section&id=Other%20Income%20Statement%20Items) SG&A expenses increased, other operating expenses were impacted by AROs and a resort sale gain, and foreign currency transaction gains were significant Other Income Statement Items (Millions $) | Item | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Change | Percent Change | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Change | Percent Change | | :--- | :------------------------------- | :------------------------------- | :----- | :------------- | :----------------------------- | :----------------------------- | :----- | :------------- | - Selling, general and administrative expenses increased by **$21.7 million** (3 months) and **$17.0 million** (6 months) YoY, driven by consulting services and compensation[173](index=173&type=chunk)[174](index=174&type=chunk) - Other operating expense for the six months ended June 30, 2023, included a **$57 million** gain on the sale of Streamsong Resort and **$21 million** in insurance proceeds, partially offset by increased ARO closure costs[177](index=177&type=chunk) - Foreign currency transaction gain was **$148.5 million** (3 months) and **$199.9 million** (6 months) in 2023, primarily due to the weakening U.S. dollar against the Brazilian real and Canadian dollar[178](index=178&type=chunk)[179](index=179&type=chunk) - Equity in net earnings of nonconsolidated companies decreased by **64%** (3 months) and **34%** (6 months) YoY, mainly due to lower selling prices for MWSPC products[181](index=181&type=chunk) [Liquidity and Capital Resources](index=40&type=section&id=Liquidity%20and%20Capital%20Resources) Mosaic reported **$626.1 million** cash, **$3.4 billion** long-term debt, and a **$3.0 billion** liquidity target, with operating cash flow decreasing to **$1.2 billion** - As of June 30, 2023: Cash and cash equivalents: **$626.1 million**; Short-term debt: **$229.0 million**; Long-term debt (including current maturities): ~**$3.4 billion**; Stockholders' equity: ~**$12.6 billion**[187](index=187&type=chunk) - Target liquidity buffer of up to **$3.0 billion**, including cash and available credit lines[187](index=187&type=chunk) - Available credit: **$2.49 billion** under **$2.50 billion** revolving credit facility, ~**$1.0 billion** under uncommitted facilities, and **$2.3 billion** under **$2.5 billion** commercial paper program[188](index=188&type=chunk) Net Cash Flow Comparison (Six Months Ended June 30) | Cash Flow Activity | 2023 (Millions $) | 2022 (Millions $) | Change (Millions $) | Percent Change | | :----------------- | :---------------- | :---------------- | :------------------ | :------------- | - Net cash provided by operating activities was **$1.2 billion** for the six months ended June 30, 2023, a **42%** decrease YoY[191](index=191&type=chunk)[192](index=192&type=chunk) - Net cash used in investing activities was **$532.9 million**, including **$631.8 million** in capital expenditures and **$158.4 million** from the sale of the Resort[191](index=191&type=chunk)[194](index=194&type=chunk) - Net cash used in financing activities was **$815.6 million**, including **$456.0 million** in share repurchases and **$220.1 million** in dividends[191](index=191&type=chunk)[195](index=195&type=chunk) [Financial Assurance Requirements](index=42&type=section&id=Financial%20Assurance%20Requirements) Mosaic is subject to financial assurance requirements in Florida and Louisiana for its Phosphate segment, requiring credit support for environmental obligations - Subject to financial assurance requirements in Florida and Louisiana for Phosphate segment operations[197](index=197&type=chunk) - Required to pass a financial strength test or provide credit support (surety bonds, letters of credit, certificates of deposit, or trust funds)[197](index=197&type=chunk) [Environmental, Health, Safety and Security Matters](index=42&type=section&id=Environmental,%20Health,%20Safety%20and%20Security%20Matters) The Supreme Court's Sackett v EPA ruling narrowed "Waters of the United States" (WOTUS), invalidating EPA's 2023 definition, with a new regulation expected - U.S. Supreme Court's Sackett v EPA decision significantly limits the scope of "Waters of the United States" (WOTUS) under the Clean Water Act[199](index=199&type=chunk) - The ruling requires wetlands to have a continuous surface connection to relatively permanent bodies of water to be considered WOTUS[199](index=199&type=chunk) - The EPA's 2023 regulatory definition of WOTUS was invalidated, and a new regulation is expected by September 1, 2023[200](index=200&type=chunk) [Off-Balance Sheet Arrangements and Obligations](index=42&type=section&id=Off-Balance%20Sheet%20Arrangements%20and%20Obligations) Off-balance sheet arrangements and obligations are incorporated by reference from the 10-K Report and Note 17 [Contingencies](index=42&type=section&id=Contingencies) Contingencies information is incorporated by reference from Note 17 to the Condensed Consolidated Financial Statements [Forward-Looking Statements](index=43&type=section&id=Forward-Looking%20Statements) This section cautions that forward-looking statements are subject to risks and uncertainties, including economic conditions, market volatility, and regulatory changes - All statements not of historical fact are forward-looking and subject to risks and uncertainties[204](index=204&type=chunk) - Factors influencing results include economic conditions, government policies, market volatility, geopolitical instability (Brazil, Saudi Arabia, Peru), COVID-19 impact, oil demand, changes in application rates, market consolidation, competitor actions, product innovations, seasonality, raw material/energy costs, transportation issues, trade policies, foreign exchange rates, international operations risks, weather, regulatory approvals, environmental regulations (WOTUS, GHG emissions), financial resources of competitors, customer defaults, liquidity, strategic initiatives, actual costs differing from estimates, legal/administrative proceedings, labor relations, brine inflows, accidents, terrorism, and cybersecurity risks[205](index=205&type=chunk)[211](index=211&type=chunk) [ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK](index=46&type=section&id=ITEM%203.%20QUANTITATIVE%20AND%20QUALITATIVE%20DISCLOSURES%20ABOUT%20MARKET%20RISK) Mosaic faces market risks from currency, interest rates, commodity prices, and freight, using derivatives to mitigate these non-speculative exposures - Exposed to market risks from currency, interest rates, commodity prices (natural gas, ammonia, sulfur), and freight costs[212](index=212&type=chunk) - Uses derivatives to mitigate risks, not for speculation[212](index=212&type=chunk) - Primary foreign currency exposures are the Canadian dollar and Brazilian real, hedged up to 18 months and 12 months, respectively[213](index=213&type=chunk) [Foreign Currency Exchange Contracts](index=46&type=section&id=Foreign%20Currency%20Exchange%20Contracts) This section details the fair value and notional volumes of foreign currency exchange derivatives used to manage currency risk - Fair value of major foreign currency exchange contracts was **$24.4 million** as of June 30, 2023, compared to **$(27.3) million** as of December 31, 2022[214](index=214&type=chunk) Foreign Currency Exchange Derivatives (Millions US$) | Currency | Notional (2023) | Notional (2024) | Fair Value (June 30, 2023) | Notional (2023) | Notional (2024) | Fair Value (Dec 31, 2022) | | :------- | :-------------- | :-------------- | :------------------------- | :-------------- | :-------------- | :------------------------ | [Commodities](index=47&type=section&id=Commodities) This section details the fair value and notional volumes of natural gas commodity derivatives used to manage price risk - Fair value of natural gas commodities contracts was **$5.9 million** as of June 30, 2023, compared to **$18.7 million** as of December 31, 2022[216](index=216&type=chunk) Natural Gas Derivatives (Millions) | Metric | Notional (2023) | Notional (2024) | Fair Value (June 30, 2023) | Notional (2023) | Notional (2024) | Fair Value (Dec 31, 2022) | | :----- | :-------------- | :-------------- | :------------------------- | :-------------- | :-------------- | :------------------------ | [ITEM 4. CONTROLS AND PROCEDURES](index=48&type=section&id=ITEM%204.%20CONTROLS%20AND%20PROCEDURES) Management concluded disclosure controls and procedures were effective as of June 30, 2023, with no material changes in internal control - Disclosure controls and procedures were evaluated and deemed effective as of June 30, 2023[219](index=219&type=chunk) - No material changes in internal control over financial reporting were identified during the three months ended June 30, 2023[220](index=220&type=chunk) [PART II. OTHER INFORMATION](index=49&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section provides additional information on legal proceedings, risk factors, equity sales, mine safety, and other disclosures [ITEM 1. LEGAL PROCEEDINGS](index=49&type=section&id=ITEM%201.%20LEGAL%20PROCEEDINGS) Mosaic is involved in legal proceedings including countervailing duty investigations, settled reclamation litigation, a class action, and an EPA violation notice - Countervailing duty orders are in place against phosphate fertilizer imports from Morocco and Russia, with cash deposit rates ranging from **9%** to **47%**[221](index=221&type=chunk) - Litigation regarding reclamation deadlines at the South Pasture Mine Extension was settled, with a waiver of deadlines until end of 2023 and a civil penalty payment of **$249,000**[228](index=228&type=chunk) - A class action lawsuit (Cruz Litigation) alleges elevated radiation levels at manufactured housing communities on reclaimed mining land; Mosaic intends to vigorously defend the matter[230](index=230&type=chunk)[232](index=232&type=chunk) - EPA Region 6 issued a Notice of Potential Violation to the Faustina Plant regarding compliance with the Risk Management Plan Rule, with ongoing settlement discussions[233](index=233&type=chunk) [ITEM 1A. RISK FACTORS](index=51&type=section&id=ITEM%201A.%20RISK%20FACTORS) Key risk factors are incorporated by reference from Item 1A of the company's Annual Report on Form 10-K - Key risk factors are incorporated by reference from the Annual Report on Form 10-K[235](index=235&type=chunk) [ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS](index=51&type=section&id=ITEM%202.%20UNREGISTERED%20SALES%20OF%20EQUITY%20SECURITIES%20AND%20USE%20OF%20PROCEEDS) No options to purchase Common Stock were exercised using already-owned shares as payment during the reporting periods - No options to purchase Common Stock were exercised using already-owned shares as payment during the reporting periods[236](index=236&type=chunk) [ITEM 4. MINE SAFETY DISCLOSURES](index=51&type=section&id=ITEM%204.%20MINE%20SAFETY%20DISCLOSURES) Mine safety disclosures, as required by Dodd-Frank and Regulation S-K, are provided in Exhibit 95 of this report - Mine safety disclosures are provided in Exhibit 95 of the report[237](index=237&type=chunk) [ITEM 5. OTHER INFORMATION](index=51&type=section&id=ITEM%205.%20OTHER%20INFORMATION) No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers - No Rule 10b5-1 or non-Rule 10b5-1 trading arrangements were adopted or terminated by directors or officers during the quarter[238](index=238&type=chunk) [ITEM 6. EXHIBITS](index=52&type=section&id=ITEM%206.%20EXHIBITS) This section lists all exhibits filed with the Form 10-Q, including agreements, plans, certifications, and disclosures Exhibit Index | Exhibit No | Description | Incorporated Herein by Reference to | Filed with Electronic Submission | | :--------- | :---------- | :---------------------------------- | :------------------------------- | [Signatures](index=53&type=section&id=Signatures) The report is signed by Russell A. Flugel, Vice President and Controller, on behalf of The Mosaic Company on August 2, 2023 - Report signed by Russell A. Flugel, Vice President and Controller, on August 2, 2023[243](index=243&type=chunk)

The Mosaic Company BMO Global Farm to Market Conference ...

Mosaic Co (NYSE:MOS) Q1 2023 Earnings Conference Call May 4, 2023 11:00 AM ET Company Participants Paul Massoud - VP, IR James O’Rourke - CEO, President & Director Clint Freeland - SVP & CFO Jenny Wang - SVP, Global Strategic Marketing and Head of China & India Conference Call Participants Christopher Parkinson - Mizuho Securities Stephen Byrne - Bank of America Merrill Lynch Benjamin Theurer - Barclays Bank Andrew Wong - RBC Capital Markets Richard Garchitorena - Wells Fargo Securities Vincent Andrews - Mo ...

Table of Contents UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _______________________________________________________________________ FORM 10-Q _______________________________________________________________________ ☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2023 OR ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Comm ...

The Mosaic Company (NYSE:MOS) Q4 2022 Earnings Conference Call February 23, 2023 11:00 AM ET Company Participants Paul Massoud - Vice President, Investor Relations and Financial Planning and Analysis Joc O’Rourke - President and CEO Clint Freeland - Senior Vice President and CFO Jenny Wang - Senior Vice President, Global Strategic Marketing Conference Call Participants Steve Byrne - Bank of America P.J. Juvekar - Citi Christopher Parkinson - Mizuho Adam Samuelson - Goldman Sachs Richard Garchitorena - Wells ...

The Mosaic Company Full Year 2022 Results Date: February 22, 2023 Forward Looking Statements & Non-GAAP Financial Measures This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements may include, but are not limited to, statements about proposed or pending common dividends, special dividends, share repurchases, future transactions or strategic plans and other statements about future financial and operating results. Such st ...

Phosphate Production and Operations - The Phosphates segment produced approximately 6.3 million tonnes of concentrated phosphate crop nutrients in 2022, accounting for about 69% of estimated North American annual production[27]. - The company’s U.S. phosphate operations have a capacity to produce approximately 4.5 million tonnes of phosphoric acid per year, representing about 7% of global annual capacity and 60% of North American annual capacity[24]. - In 2022, the company’s phosphate rock mines in Florida produced approximately 10.5 million tonnes, which accounted for approximately 47% of estimated North American annual production[28]. - The Miski Mayo Mine in Peru has an annual capacity of 4.0 million tonnes, and the company holds a 75% economic interest in this mine[22]. - The company’s Florida phosphate operations are supplied with ammonia under multi-year contracts, with a capacity of approximately 530,000 tonnes produced at the Faustina facility[37]. - The company has a 25% interest in the Ma'aden Wa'ad Al Shamal Phosphate Company, which produced 2.6 million tonnes of phosphate in 2022, with an expected ramp-up to 3.0 million tonnes in annual production capacity[31]. - The company’s phosphate crop nutrient products are marketed worldwide, with principal products including Diammonium Phosphate (DAP) and Monoammonium Phosphate (MAP)[24]. Potash Production and Operations - The North American potash annualized operational capacity totals 11.2 million tonnes, accounting for approximately 14% of world annual capacity and 34% of North American annual capacity[48]. - In 2022, potash production totaled 9.0 million tonnes, representing approximately 14% of estimated world annual production and 35% of estimated North American annual production[49]. - The Brazilian phosphates operations have a capacity to produce approximately 1.1 million tonnes of P2O5 per year, which is about 70% of Brazilian annual capacity[55]. - The Belle Plaine solution mine typically accounts for approximately 80% of the Potash segment's total natural gas requirements for potash production[51]. - Combined natural gas usage for both solution and shaft mines totaled 17.7 million MM BTU during 2022[51]. Sales and Market Performance - Mosaic Fertilizantes sold approximately 9.4 million tonnes of crop nutrient products in 2022, accounting for approximately 22% of fertilizer shipments in Brazil[53]. - In 2022, Mosaic Fertilizantes produced approximately 2.8 million tonnes of concentrated phosphate crop nutrients, accounting for approximately 49% of estimated Brazilian annual production[57]. - Phosphate rock production in Brazil totaled approximately 4.0 million tonnes in 2022, accounting for approximately 79% of estimated Brazilian annual production[58]. - The company consumed approximately 1.5 million tonnes of phosphate-based products and 2.3 million tonnes of potash products in 2022[55]. - The company sold approximately 230,000 tonnes of blends and distributed another 825,000 tonnes of phosphate and potash crop nutrients in China in 2022[70]. - The company has a 36.2% entitlement percentage of Canpotex for potash sales outside of North America in 2022[77]. Financial and Tax Contributions - In 2022, the company paid approximately $18.0 million in royalties and resource taxes for phosphate and potash production in Brazil[60]. - The company paid approximately $11.4 million in royalties related to the leasing of potash assets and mining rights for Taquari in 2022[67]. Employee and Labor Relations - The company had 13,570 employees as of December 31, 2022, with approximately 9,868 salaried and 3,702 hourly employees[95]. - The company operates under ten collective bargaining agreements in the U.S. and Canada, with about 5% of employees covered by agreements expiring in 2023[96]. - The company has agreements with 35 unions in Brazil, with potential risks of labor stoppages if agreements are not renewed[97]. Community and Environmental Initiatives - The company invests an average of $15 million annually in community initiatives focused on food, water, and local community[105]. - The company has a 2030 diversity and inclusion target for community investment, focusing on underserved populations[106]. - The company aims for zero harm to people and zero environmental incidents through its safety management system[100]. - The company has established a structured approach to manage and control risks for employee safety and well-being[100]. - The company evaluates pay equity annually and intends to address identified disparities during the 2023 compensation cycle[109]. - The company has a global worker wellness program that includes health screenings and mental health resources[101]. - The company is committed to creating a diverse and inclusive workplace, with initiatives to enhance workforce engagement and accountability[107]. Leadership and Management - James "Joc" C. O'Rourke has been the President and CEO since August 2015, previously serving as Executive Vice President - Operations[116]. - Benjamin J. Pratt was appointed Senior Vice President - Government and Public Affairs in April 2020, focusing on corporate communications and U.S. Federal Government relations[117]. - Walter F. Precourt III became Senior Vice President - Strategy and Growth on January 1, 2019, previously overseeing Phosphates and Potash Operations[118]. - Corrine D. Ricard was appointed Senior Vice President - Mosaic Fertilizantes on November 15, 2019, after holding various leadership roles within the company[119]. - Karen A. Swager was named Senior Vice President - Supply Chain effective April 1, 2020, overseeing Procurement and corporate EHS teams[120]. - Yijun ("Jenny") Wang became Senior Vice President - Global Strategic Marketing, Head of China and India on January 1, 2022, previously serving as Vice President - Global Strategic Marketing[121]. Risk Management and Market Analysis - The company has included a discussion about market risks in the Management's Analysis section of the report, indicating a focus on financial condition and results of operations[459].

The Mosaic Company (NYSE:MOS) Q3 2022 Results Conference Call November 8, 2022 11:00 AM ET Company Participants Paul Massoud - VP, IR and Financial Planning and Analysis Joc O’Rourke - President and CEO Clint Freeland - SVP and CFO Jenny Wang - SVP, Global Strategic Marketing Conference Call Participants Steve Byrne - Bank of America Adam Samuelson - Goldman Sachs Josh Spector - UBS Edlain Rodriguez - Credit Suisse Christopher Parkinson - Mizuho Jeff Zekauskas - JP Morgan P.J. Juvekar - Citi Joel Jackson - ...