Mosaic : Announces 2021 First Quarter Earnings Release (opens in a new window)

The Mosaic Company

101 E. Kennedy Blvd., Suite 2500

Tampa, FL 33602

w ww.mosaicco.com

FOR IMMEDIATE RELEASE
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Ben Pratt	Laura Gagnon
The Mosaic Company	The Mosaic Company
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THE MOSAIC COMPANY REPORTS FIRST QUARTER 2021 RESULTS

TAMPA, FL, May 3, 2021 - The Mosaic Company (NYSE: MOS), reported net income of $157 million, or $0.41 per share, for the first quarter of 2021. Adjusted EPS(1) was $0.57 and adjusted EBITDA(1) was $560 million. Gross margin was $435 million compared to $41 million a year ago, reflecting improved per tonne margins in all three operating segments as a result of higher phosphates prices, higher potash volumes and transformation benefits. Reported earnings were negatively impacted by notable items of $77 million.

"Mosaic delivered excellent earnings for the first quarter of 2021, and our outlook for the year remains favorable," said Joc O'Rourke, President and CEO. "We are demonstrating the earnings power resulting from the combination of our long- term cost structure improvements and strong global fertilizer markets."

Highlights:

• First quarter revenues were up 28 percent year-over-year to $2.3 billion, as the company capitalized on stronger market conditions.
• Gross margins in the quarter were up almost 10-fold from the prior year period, primarily as a result of year-over- year price increases. The gross margin rate in the quarter was 19 percent, up from 2 percent in first quarter of 2020, and the highest gross margin rate since the second quarter of 2015.
• Mosaic's balance sheet continued to strengthen. Unrestricted cash totaled $692 million as of March 31. The company generated $319 million in cash flow from operations in the quarter. Capital expenditures were $289 million in the quarter, and net debt ended the quarter at $3.8 billion, down $700 million from the year ago period.
• Phosphates sales volumes were up 7 percent year-over-year to 2.1 million tonnes. Production volumes were 1.9 million tonnes, reflecting turnaround activity in the quarter. Due to ongoing strong demand, inventories remain well below historical levels, and as a result, sales are expected to be constrained to production volumes in the second quarter. Higher input costs were more than offset by improved pricing, and lower cash conversion costs,

which resulted in gross margin per tonne increasing to $84 per tonne, up from last year's loss of $43 per tonne.

(1)See "Non-GAAP Financial Measures" for additional information and reconciliation.

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• Potash sales volumes of 2.0 million tonnes in the first quarter were up 4 percent year-over-year as the company's operating rate reached 94 percent in the quarter. Essentially flat MOP prices year-over-year, higher volumes and lower brine management spending resulted in a gross margin per tonne of $71. On an adjusted basis, gross margin per tonne in the first quarter was $82, up 19 percent from the prior year period.
• Mosaic Fertilizantes recorded its highest first quarter adjusted EBITDA of $104 million, up 53 percent from the prior year period. In the quarter, Mosaic Fertilizantes generated a gross margin per tonne of $50, primarily due to higher prices. The business is ahead of schedule in reaching its targeted $200 million of annual EBITDA contribution from transformation in the 2019 to 2022 period.
• Mosaic continues to lead the industry in environmental, social and governance performance, and our efforts are being recognized. In addition to being named to Barron's list of the 100 Most Sustainable Companies, Mosaic was also recognized as the 2020 winner of the prestigious Robert W. Campbell Award by the National Safety Council, which honors companies that achieve business excellence through the integration of environment, health and safety management into business operations.
• The U.S. International Trade Commission concluded that subsidized phosphate imports from Morocco and Russia materially injured the U.S. phosphate industry. As a result, the U.S. Department of Commerce imposed import duties on phosphates from Morocco and Russia. Mosaic sought these duties in order to level the competitive playing field in the U.S.

First Quarter Segment Results
Potash Results*	1Q 2021	4Q 2020	1Q 2020
Sales Volumes million tonnes	2.0	2.7	1.9
MOP Selling Price(2)	$200	$176	$200
Gross Margin (GAAP) per tonne	$71	$45	$57
Adjusted Gross Margin (non-GAAP) per tonne	$82	$51	$69

*Tonnes= finished product tonnes

1. Average MOP Selling Price (fob mine)

Net sales in the Potash segment totaled $477 million for the first quarter, up from $442 million one year ago, due to higher volumes. Gross margin for the first quarter was $140 million compared to $109 million for the same period a year ago.

Cash cost per tonne excluding brine management during the quarter averaged $64, up from the prior year period average of $57. This increase mainly reflected adverse foreign exchange rates, and a production mix shift at Esterhazy as K1 and K2 contributed higher than expected volumes needed to meet the increased product demand. Esterhazy costs of production will continue to decline as K3 ramps up and K1 and K2 are taken out of service. Brine management cash costs declined to $15 million from $21 million in the prior year quarter as development of K3 nears completion.

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Mosaic Fertilizantes Results*	1Q 2021	4Q 2020	1Q 2020
Sales Volumes million tonnes	2.1	2.3	2.1
Brazil MAP Selling Price(3)	$421	$384	$330
Average Finished Product Selling Price (destination)	$370	$352	$352
Gross Margin (GAAP) per tonne	$50	$32	$32

*Tonnes= finished product tonnes

1. Average MAP selling price (Brazil production, delivered price to third party customers)

Net sales in the Mosaic Fertilizantes segment were $763 million for the first quarter, up from $731 million in the prior year period due to higher year-over-year prices. Gross margin was $103 million, compared to $66 million for the same period a year ago, as improved pricing and favorable foreign currency impacts offset inflationary and other pressures on production costs.

Inflationary impacts on year-over-year Brazilian Real-based cash costs have been substantially offset by benefits of a weakening Brazilian currency. U.S. dollar cash costs of phosphate conversion were $65 per tonne in the first quarter of 2021, down from $69 per tonne in the prior year period, as transformation benefits offset a lower operating rate. U.S. dollar cash costs of mined rock were $72 per tonne, up from $70 per tonne in the prior year period, as lower mined volumes and rock mix shifts atAraxa offset transformation benefits in the quarter. The company expects both operating rates and mined volumes to revert to normal levels in the second quarter.

Phosphates Results*	1Q 2021	4Q 2020	1Q 2020
Sales Volumes million tonnes	2.1	2.3	1.9
DAP Selling Price(4)	$426	$363	$274
Gross Margin (GAAP) per tonne	$84	$73	$(43)
Adjusted Gross Margin (non-GAAP) per tonne	$84	$73	$(41)

*Tonnes= finished product tonnes

(4) Average DAP Selling Price (fob plant)

Net sales in the Phosphates segment were $1.0 billion for the first quarter, up from $619 million in the prior year period due to higher year-over-year prices and volumes. Gross margin was $173 million, compared to a loss of $83 million for the same period a year ago, as improved pricing, higher volumes and lower conversion costs offset the impact of higher input costs. Gross margin per tonne was $84 compared to a loss of $43 in the prior-year period.

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Other

Selling, general and administrative costs (SG&A) were $102 million, up from $68 million in the year-ago period, which primarily reflected the mark-to-market impact of a higher Mosaic share price on current period equity-based incentive accruals. Last year's first quarter included a $14 million benefit from the reversal of an accrual related to incentive compensation.

Other operating expenses in the quarter were $20 million, down from $40 million in the first quarter of 2020. Total Asset Retirement Obligation cash spending in the quarter was $38 million, which continued to reflect higher spending related to the Plant City closure.

The tax rate during the quarter was 26.5 percent, down from 42 percent in the prior year period reflecting the geographic shift in earnings. The company continues to expect an effective rate for full year 2021 in the mid-20 percent range under current tax regulations.

2021 Market Outlook and Key Assumptions

Strengthening fundamental trends reflected in our results over the last three quarters are expected to continue through the remainder of 2021. Grower economics in most global growing regions remain attractive as a result of strong crop demand, affordable inputs and favorable weather. In China, domestic crop prices continue to incent nutrient application to drive higher yields. In India, a favorable monsoon, above-average reservoir levels and good crop prices are incenting growers to maximize yields, while higher retail prices may negatively impact fertilizer demand.

Phosphate producer and channel inventories remain well below normal. While Chinese phosphate exports continue to be a key consideration, exports declined in 2020 and are expected to remain lower in 2021, as strong domestic demand and recent industry restructuring limit supplies available for export. In phosphates, the company expects to realize approximately $50 per tonne in margin improvement in the second quarter over the first quarter, reflecting an $80 to $90 per tonne improvement in average realized prices partially offset by $30 to $35 per finished product tonne of higher raw material costs.

Potash is seeing similar dynamics that continue to drive demand globally. In April, India signed a contract for $280 per tonne, up nearly 22 percent from the prior year contract, and Canpotex announced it is fully committed into September, highlighting the tightness in the current market. The company expects to realize a $20 to $30 per tonne improvement in average realized prices in the second quarter over the first quarter of 2021.

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The company provided the following modeling assumptions for the full year 2021:

Estimated reconciling items EBITDA to EPS	Full Year 2021
Depreciation, Depletion & Amortization	$875	- $900 million
Selling, General, and Administrative(1)	$375	- $400 million
Net Interest Expense	$180	- $190 million
Non-notable adjustments	$80	- $90 million
Effective tax rate(2)	Mid 20's %

(1)Mark-to-market adjustmentson equity-based incentive compensation may drive further changesto SG&A expectations.

(2)The company expectscash taxes for the full year 2021 to be approximately $160 million, dependent upon earningslevelsand geographic mix.

Capital Expenditures Expectations	$ in Billions
Sustaining Capital	$0.75-$0.80
Growth Capital	$0.30-$0.35
Total Capital	~$1.1
.

Sensitivities Table Using 2020 Cost Structure

The company provided the following sensitivities to price and foreign exchange rates to help investors anticipate the potential impact of movements in these factors.

These sensitivities are based on 2020 adjusted EBITDA of $1.56 billion. The company hedges approximately 50 percent of its Brazilian real exposures over time.

Sensitivity

Full year adj. EBITDA impact(1)

2020 Actual

Average MOP Price / tonne (fob mine)(3) Average DAP Price / tonne (fob plant)(3) Average BRL / USD

Average CAD / USD

$10/mt price change = $65 million (2)	$181
$10/mt price change = $105 million	$310
0.10 change, unhedged = $13 million(4)	5.15
0.01 change, unhedged = $13 million	1.35

1. See "Non-GAAP Financial Measures" for additional information and reconciliation.
2. Includesimpact of Canadian Resource Tax
3. Approximately 20% of DAP price sensitivity impact isexpected to be in the Mosaic Fertilizantessegment.; approximately 5% of the MOP price sensitivity impact isexpected to be in the Mosaic Fertilizantessegment.
4. The company hedged about 50 percent of the annual sensitivity. Over longer periodsof time, inflation isexpected to offset a portion of currency benefits.

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