Mosaic(MOS) - 2023 Q4 - Annual Results

Consolidated Financial Information Consolidated Income Statement Highlights The company experienced a significant decline in diluted net earnings per share and total net sales from Q1 2022 to Q4 2023, with a notable loss in Q3 2023. Gross margin rates also decreased over this period Diluted Net Earnings (Loss) Per Share: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($) | 3.19 | 2.85 | 2.42 | 1.52 | 1.28 | 1.11 | (0.01) | 1.11 | Total Net Sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 3,922 | 5,373 | 5,348 | 4,481 | 3,604 | 3,395 | 3,548 | 3,149 | Gross Margin Rate: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Rate (%) | 37 | 34 | 28 | 22 | 19 | 17 | 12 | 18 | Consolidated Cash Flow and Balance Sheet Highlights Operating cash flow showed variability, with a significant increase in Q2 2023, while investing activities consistently used cash. Net debt fluctuated, ending Q4 2023 higher than Q4 2022 Net cash provided by (used in) operating activities: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 506 | 1,585 | 889 | 956 | 149 | 1,073 | 647 | 538 | Net debt: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 3,576 | 3,138 | 3,457 | 2,887 | 3,779 | 2,996 | 3,066 | 3,413 | Consolidated Operating Data Total finished product tonnes sold showed fluctuations, with a peak in Q3 2023, while sales of performance products also varied, reaching a high in Q3 2023 Total finished product tonnes sold ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 5,645 | 6,832 | 6,838 | 6,372 | 6,246 | 6,829 | 7,413 | 6,935 | Sales of Performance Products (third party) ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 711 | 741 | 790 | 1,265 | 819 | 977 | 1,305 | 1,044 | Segment Contributions Phosphates Segment The Phosphates segment experienced a decline in net sales and gross margin from Q1 2022 to Q4 2023, with operating earnings turning negative in Q3 2023 before a slight recovery. Capital expenditures remained substantial Financial Performance Net Sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 1,496 | 1,801 | 1,577 | 1,310 | 1,382 | 1,286 | 986 | 1,070 | Operating Earnings: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 493 | 578 | 131 | 145 | 266 | 146 | (58) | 21 | Gross margin as a percent of sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Rate (%) | 35 | 36 | 23 | 18 | 19 | 17 | 9 | 13 | Operating Data Total Finished Product Sales volumes ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 1,661 | 1,675 | 1,651 | 1,571 | 1,836 | 1,922 | 1,651 | 1,582 | DAP selling price (fob plant) ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Price | 785 | 920 | 809 | 722 | 660 | 585 | 487 | 552 | Realized costs - Ammonia (tonne) ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Cost | 532 | 591 | 665 | 653 | 605 | 441 | 353 | 366 | Equity Investments MWSPC equity earnings (loss) ($ millions): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount | 31 | 34 | 72 | 58 | 31 | 10 | 17 | — | Miski Mayo external sales revenue ($ millions): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount | 26 | 21 | 33 | 38 | 41 | 47 | 33 | 18 | Potash Segment The Potash segment experienced a decline in net sales and gross margin from Q1 2022 to Q4 2023, with operating earnings also decreasing significantly. Adjusted EBITDA followed a similar downward trend Financial Performance Net Sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 1,060 | 1,580 | 1,432 | 1,136 | 907 | 849 | 720 | 758 | Operating Earnings: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 563 | 915 | 793 | 497 | 402 | 328 | 200 | 222 | Adjusted EBITDA: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 651 | 998 | 871 | 597 | 474 | 408 | 267 | 322 | Operating Data Total Finished Product Sales volumes ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 1,792 | 2,304 | 2,142 | 1,863 | 1,910 | 2,163 | 2,220 | 2,577 | MOP selling price (fob mine) ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Price | 582 | 678 | 666 | 581 | 421 | 326 | 266 | 243 | Operating Rate (%): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Rate | 80 | 87 | 81 | 77 | 69 | 69 | 66 | 90 | Supplemental Cost Information Canadian resource taxes ($ millions): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount | 157 | 274 | 258 | 238 | 121 | 95 | 86 | 102 | MOP cash costs of production excluding brine / production tonne ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Cost | 81 | 78 | 78 | 76 | 81 | 74 | 73 | 66 | Mosaic Fertilizantes Segment The Mosaic Fertilizantes segment experienced fluctuating net sales and gross margins, with operating earnings turning negative in Q1 and Q2 2023 before recovering. Adjusted EBITDA also showed significant variability Financial Performance Net Sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 1,488 | 2,260 | 2,629 | 1,910 | 1,343 | 1,419 | 1,731 | 1,192 | Operating Earnings: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 187 | 420 | 323 | (20) | (32) | (20) | 77 | 50 | Adjusted EBITDA: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 233 | 444 | 343 | 29 | 3 | 66 | 147 | 111 | Operating Data Total Finished Product Sales volumes ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 1,822 | 2,320 | 2,824 | 2,472 | 2,080 | 2,385 | 3,060 | 2,158 | Brazil MAP price ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Price | 882 | 1,021 | 866 | 663 | 669 | 653 | 533 | 580 | Phosphate operating rate (%): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Rate | 92 | 83 | 76 | 87 | 78 | 74 | 81 | 77 | Realized Costs and Purchases Realized Costs - Ammonia/tonne ($): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Cost | 1,145 | 1,396 | 1,267 | 1,354 | 1,150 | 912 | 667 | 655 | Purchases - Potash from Mosaic/Canpotex ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 398 | 663 | 798 | 417 | 235 | 756 | 672 | 404 | Average BRL / USD: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Rate | 5.235 | 4.917 | 5.244 | 5.255 | 5.196 | 4.954 | 4.880 | 4.953 | Corporate and Other Segment The Corporate and Other segment reported fluctuating net sales and gross margins, often showing losses. Operating earnings were consistently negative, and Adjusted EBITDA also remained negative for most periods Financial Performance Net Sales: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | (122) | (268) | (290) | 125 | (28) | (159) | 111 | 129 | Operating Earnings (Loss): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | 13 | (239) | (93) | 78 | (91) | (85) | (74) | (14) | Adjusted EBITDA: | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount ($ millions) | (65) | (172) | (9) | 77 | (82) | (115) | (21) | (46) | Operating Data Sales volumes ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 370 | 533 | 221 | 466 | 420 | 359 | 482 | 618 | Purchases - Potash from Mosaic/Canpotex ('000 tonnes): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Volume | 220 | 471 | 332 | 337 | 296 | 126 | — | 345 | Notable Items Q4 2023 Notable Items Notable items in Q4 2023 resulted in a net positive EPS impact of $0.40, primarily driven by a tax law change benefit and foreign currency transaction gains, partially offset by environmental reserve and land reclamation costs - Total Notable Items Impact on EPS: $0.40[17] - Key positive impacts: Foreign currency transaction gain ($0.20 EPS), Unrealized gain on derivatives ($0.10 EPS), Tax law change ($0.42 EPS)[17] - Key negative impacts: Environmental reserve ($(0.16) EPS), Land reclamation ($(0.07) EPS)[17] Q3 2023 Notable Items Notable items in Q3 2023 resulted in a net negative EPS impact of $(0.69), primarily due to ARO Adjustment, foreign currency transaction loss, and pension plan termination settlement - Total Notable Items Impact on EPS: $(0.69)[17] - Key negative impacts: ARO Adjustment ($(0.28) EPS), Foreign currency transaction gain (loss) ($(0.23) EPS), Pension plan termination settlement ($(0.10) EPS)[17] Q2 2023 Notable Items Notable items in Q2 2023 resulted in a net positive EPS impact of $0.07, driven by unrealized foreign currency transaction gains, partially offset by ARO adjustment and environmental reserve costs - Total Notable Items Impact on EPS: $0.07[20] - Key positive impacts: Unrealized foreign currency transaction gain ($0.26 EPS), Unrealized gain on derivatives ($0.08 EPS)[20] - Key negative impacts: ARO Adjustment ($(0.06) EPS), Environmental reserve ($(0.08) EPS), Land reclamation ($(0.07) EPS)[20] Q1 2023 Notable Items Notable items in Q1 2023 resulted in a net positive EPS impact of $0.14, primarily due to a gain on the sale of Streamsong Resort and foreign currency transaction gains, partially offset by ARO adjustment and facility costs - Total Notable Items Impact on EPS: $0.14[20] - Key positive impacts: Gain on sale of Streamsong Resort ($0.13 EPS), Foreign currency transaction gain ($0.11 EPS)[20] - Key negative impacts: ARO Adjustment ($(0.04) EPS), Closed and indefinitely idled facility costs ($(0.03) EPS)[20] Q4 2022 Notable Items Notable items in Q4 2022 resulted in a net negative EPS impact of $(0.22), primarily due to environmental reserve, hurricane Ian idle costs, and pension plan termination settlement, partially offset by foreign currency transaction gains - Total Notable Items Impact on EPS: $(0.22)[21] - Key negative impacts: Environmental reserve ($(0.09) EPS), Hurricane Ian idle costs ($(0.07) EPS), Pension plan termination settlement ($(0.09) EPS)[21] - Key positive impacts: Foreign currency transaction gain ($0.16 EPS)[21] Q3 2022 Notable Items Notable items in Q3 2022 resulted in a net negative EPS impact of $(0.80), largely driven by ARO adjustment, environmental reserve, and unrealized gain/loss on derivatives - Total Notable Items Impact on EPS: $(0.80)[21] - Key negative impacts: ARO Adjustment ($(0.31) EPS), Environmental reserve ($(0.15) EPS), Unrealized gain (loss) on derivatives ($(0.16) EPS), Foreign currency transaction gain (loss) ($(0.13) EPS)[21] Q2 2022 Notable Items Notable items in Q2 2022 resulted in a net negative EPS impact of $(0.79), primarily due to foreign currency transaction loss, unrealized gain/loss on derivatives, and environmental reserve - Total Notable Items Impact on EPS: $(0.79)[24] - Key negative impacts: Foreign currency transaction gain (loss) ($(0.47) EPS), Unrealized gain (loss) on derivatives ($(0.12) EPS), Environmental reserve ($(0.06) EPS)[24] Q1 2022 Notable Items Notable items in Q1 2022 resulted in a net positive EPS impact of $0.78, primarily driven by foreign currency transaction gains and unrealized gain on derivatives - Total Notable Items Impact on EPS: $0.78[23] - Key positive impacts: Foreign currency transaction gain ($0.62 EPS), Unrealized gain (loss) on derivatives ($0.21 EPS)[23] Footnotes Overview This section provides definitions and explanations for various terms and calculations used throughout the financial tables, including how notable items impact EPS, definitions of non-GAAP measures, and specifics on sales volumes, pricing, and cost components - Notable items impact on EPS is calculated as notable item amount plus income tax effect, based on expected annual effective tax rate, divided by diluted weighted average shares[25] - Finished product sales volumes include intersegment sales[25] - MOP cash costs of production are reflective of actual costs during the period excluding brine management costs, depreciation, depletion, accretion, carbon-based and Canadian resource tax, idle and turnaround costs[25] Non-GAAP Financial Measures Overview and Definitions The company presents non-GAAP financial measures to supplement GAAP, emphasizing that these measures should not be considered substitutes for GAAP results and may not be comparable to other companies' similarly titled measures - Non-GAAP financial measures are supplemental numerical measures that either exclude or include amounts not normally excluded or included in GAAP[27] - These measures should not be considered substitutes for, or superior to, GAAP measures and may not be comparable to other companies' measures[28] Adjusted Diluted Net Earnings Per Share Adjusted diluted net earnings per share is defined as diluted net earnings per share, excluding the impact of notable items. Management uses this measure to assess performance by excluding items not indicative of core operating results - Definition: Diluted net earnings per share, excluding the impact of notable items[29] - Purpose: Provides useful supplemental information by excluding items not indicative of core operating results, used for analyzing performance, financial/operating decision-making, forecasting, and comparing with competitors[29] Consolidated Adjusted EBITDA Consolidated Adjusted EBITDA is defined as consolidated Net Income (Loss) before various non-operating and non-cash expenses, further adjusted for notable items. It is provided to assist in comparisons of operational performance across companies - Definition: Consolidated Net Income (Loss) before net interest expense, depreciation, depletion and amortization, asset retirement obligation accretion, share-based compensation expense, provision for/(benefit) from income taxes, and adjusted for notable items[30] - Purpose: Assists securities analysts, investors, lenders, and others in comparing operational performance, valuation, and debt capacity across companies[30] Consolidated Adjusted EBITDA ($ millions): | Quarter | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Amount | 1,451 | 2,028 | 1,686 | 1,051 | 777 | 744 | 594 | 646 | Segment Adjusted EBITDA Segment Adjusted EBITDA is defined as segment operating earnings (loss) plus specific adjustments, including depreciation, accretion, foreign exchange, other income/expense, equity earnings, and notable items. It is used for evaluating segment operational performance and valuation - Definition: Segment's operating earnings (loss) plus depreciation, depletion and amortization, asset retirement obligation accretion, foreign exchange gain (loss), other income (expense), equity earnings (loss) less equity earnings (loss) from noncontrolling interests, and adjusted for notable items[32] - Purpose: Used for internal management reporting and planning, evaluating operational performance and valuation of segments, and comparing segment performance with competitors[33] Adjusted Gross Margin Adjusted gross margin is defined as gross margin excluding the impact of notable items. Management uses this adjusted measure to gain supplemental information about core operating results for decision-making and forecasting - Definition: Gross margin excluding the impact of notable items[34] - Purpose: Provides useful supplemental information by excluding items not indicative of core operating results, used for analyzing performance, financial/operating decision-making, and forecasting[34]