Mosaic : Reports Third Quarter 2022 Results

The Mosaic Company

101 E. Kennedy Blvd., Suite 2500 Tampa, FL 33602 www.mosaicco.com

FOR IMMEDIATE RELEASE
Investors	Media
Paul Massoud	William Barksdale
813-775-4260	813-775-4208
[e-mail]	[e-mail]

THE MOSAIC COMPANY REPORTS THIRD QUARTER 2022 RESULTS

• Third quarter net income of $842 million, Adjusted EBITDA(1) of $1.7 billion
• Cash from Operations of $889 million, Free Cash Flow(1) of $587 million
• Year-to-datecapital return totaled $1.8 billion, including $1.6 billion of share repurchases

TAMPA, FL, November 7, 2022 - The Mosaic Company (NYSE: MOS), reported net income of $842 million, or $2.42 per diluted share, for the third quarter of 2022. Adjusted EPS(1) was $3.22 and Adjusted EBITDA(1) was $1.7 billion. Gross margin was $1.5 billion.

"Mosaic delivered record sales in the first nine months of 2022, and we expect favorable fundamentals as we conclude the year and look forward to 2023," said Joc O'Rourke, President and CEO. "We are returning capital to shareholders while strengthening the balance sheet and investing in the business to generate strong results throughout the cycle."

Highlights:

• Third quarter revenues were up 56 percent year-over-year to $5.3 billion. The gross margin rate in the quarter was 28 percent, up from 25 percent in third quarter of 2021.
• Adjusted EBITDA totaled $1.7 billion, up from the prior year period total of $969 million. The company generated cash flow from operations of $889 million and free cash flow of $587 million(1).
• Potash operating earnings totaled $793 million, up from $220 million in the prior year period, and adjusted EBITDA totaled $871 million, up from $272 million in the third quarter of 2021.
• Phosphates operating earnings totaled $131 million, down from $326 million in the prior year period. This quarter's operating earnings included $226 million of notable items, most of which was related to a noncash adjustment to future asset retirement obligation expenses. Third quarter adjusted EBITDA totaled $481 million, up from $479 million last year.
• Mosaic Fertilizantes operating earnings totaled $323 million and adjusted EBITDA totaled $343 million in the third quarter of 2022. This compares to operating earnings of $290 million and Adjusted EBITDA of $317 million from the prior year period.
• Equity earnings from MWSPC, the joint venture in Saudi Arabia, totaled $72 million in the third quarter and $137 million year-to date, which is excluded from Adjusted EBITDA.

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

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• The company remains committed to its capital allocation strategy:
• • Mosaic returned $1.8 billion to shareholders during the first nine months of 2022, including $1.6 billion of share repurchases, which represents 96% of free cash flow(1) and 58% of net income. Mosaic remains committed to returning 100% of 2022 free cash flow(1), after debt reduction commitments are met, to shareholders through a combination of share repurchases and dividends. As of the end of the third quarter, Mosaic had completed the second $1.0 billion authorization approved by the Board last February and had begun repurchasing shares under the most recently approved $2.0 billion authorization.
  • The company expects to complete its goal of reducing long-term debt by $1.0 billion with the retirement of $550 million later this month. Mosaic has no plan to further reduce long-term debt.
  • Total expected capital expenditures in 2022 remain unchanged at $1.3 billion. Growth investments reflect the optimization of the Esterhazy complex, a restart of the second mill at Colonsay, and reserve additions for a mine extension at South Fort Meade.

Third Quarter Segment Results

Potash Results	Q3 2022	Q2 2022	Q3 2021

Sales Volumes million tonnes*

MOP Selling Price(2)

Gross Margin (GAAP) per tonne

Adjusted Gross Margin (non-GAAP) per tonne(1)

Operating Earnings - millions

Segment Adjusted EBITDA(1) - millions

*Tonnes = finished product tonnes

2.1	2.3	1.8
$666	$678	$290
$373	$403	$131
$373	$403	$131
$793	$915	$220
$871	$998	$272

Net sales in the Potash segment totaled $1.4 billion, up from $589 million one year ago, due to higher prices and volumes. Gross margin was $799 million compared to $236 million for the same period a year ago, as higher pricing and volumes were partially offset by higher royalties and Canadian resource taxes. Gross margin per tonne was $373 compared to $131 in the prior-year period.

Total potash production was 2.3 million tonnes, up from 1.6 million tonnes in the prior year period, reflecting the contribution from K3 and Colonsay. Sales volumes totaled 2.1 million tonnes, up from 1.8 million tonnes in the prior year quarter.

MOP cash costs were $78 per tonne, compared to $72 per tonne in the prior year period. Costs reflected the inclusion of production from the higher-cost Colonsay mine, higher natural gas costs at Belle Plaine, and higher price-related royalties.

Sales volumes in the fourth quarter are expected to be 2.0-2.2 million tonnes with realized mine-gate MOP prices in the range of $580-$630 per tonne.

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

1. Average MOP Selling Price (fob mine)

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Phosphate Results	Q3 2022	Q2 2022	Q3 2021

Sales Volumes million tonnes*

DAP Selling Price(4)

Gross Margin (GAAP) per tonne

Adjusted Gross Margin (non-GAAP) per tonne(1)

Operating Earnings - millions

Segment Adjusted EBITDA(1) - millions

*Tonnes = finished product tonnes

1.7	1.7	1.8
$809	$920	$605
$217	$383	$198
$222	$383	$208
$131	$578	$326
$481	$758	$479

Net sales in the Phosphate segment were $1.6 billion, up from $1.3 billion in the prior year period, due to higher year-over-year prices. Gross margin was $358 million, compared to $364 million for the same period a year ago, as improved pricing was offset by lower volumes and higher raw material costs. Gross margin per tonne was $217 compared to $198 in the prior-year period, reflecting the impact of higher unit prices.

Production of finished phosphates totaled 1.7 million tonnes, down 4 percent year-over-year, and sales volumes totaled 1.7 million tonnes, down 10 percent year-over-year. Lower production was a result of plant turnarounds and the impact of Hurricane Ian at the end of the quarter. Cash conversion costs were $85 per tonne, up from the year ago level of $68 per tonne, reflecting the impact of rising inflation and the hurricane.

Mosaic benefited from its advantaged ammonia cost position during the third quarter. The price of ammonia realized in cost of goods sold averaged $665 per tonne, well below the $1,070 per tonne average third quarter spot price.

Sales volumes in the fourth quarter are expected to be 1.7-2.0 million tonnes with DAP prices on an FOB basis averaging $700-$750 per tonne. Lower raw material prices are expected to provide a sequential benefit of $40-$45 per tonne in the fourth quarter.

Mosaic Fertilizantes Results	Q3 2022		Q2 2022		Q3 2021
Sales Volumes million tonnes*	2.8		2.3		3.4
Finished Product Selling Price	$931		$974		$524
Gross Margin (GAAP) per tonne	$123		$194		$99
Adjusted Gross Margin (non GAAP) per tonne(1)	$118		$194		$98
Operating Earnings - millions	$323		$420		$290
Segment Adjusted EBITDA(1) - millions	$343		$444		$317
*Tonnes = finished product tonnes

Net sales in the Mosaic Fertilizantes segment were $2.6 billion, up from $1.8 billion in the prior year period due to higher year-over-year prices, partially offset by lower volumes. Higher costs of goods sold reflect higher prices for purchased nitrogen and potash products for distribution and sulfur and ammonia for phosphate production.

Gross margin was $348 million, compared to $332 million for the same period a year ago, primarily as a result of improved pricing and transformation benefits, partially offset by higher raw material costs, inflationary pressures on production costs, and lower volumes. Gross margin per tonne was $123 in the third quarter, up from $99 in the prior year period.

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

(4)Average DAP Selling Price (fob plant)

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Other

Selling, general, and administrative costs (SG&A) were $125 million, up from $98 million in the year-ago period. As part of ongoing transformation efforts, Mosaic has initiated a "Global Digital Acceleration" program aimed at extracting efficiencies through the optimization of its internal technology systems, and this has resulted in increased spending related to information technology consulting.

The effective tax rate during the quarter was 26.1 percent. The company expects an effective rate for full year 2022 in the mid-20 percent range under current tax laws and regulations.

Market Outlook

Grain and oilseed markets are expected to remain tight through 2022 and 2023. The disruption to Ukraine's agricultural production caused by war, coupled with poor growing conditions in several major growing regions like the Americas, Europe and China, have resulted in lower global agricultural production. This suggests that global stocks-to-use ratios, already projected at 20-year lows, will remain under pressure.

Historically elevated crop prices, coupled with fertilizer pricing that has moderated from the post-Ukraine-invasion spike, justifies a return to normal nutrient applications. In North America, sentiment has improved significantly from the spring season. As a result, fall nutrient application rates are trending toward normal levels, and this is expected to deplete channel inventories. In Brazil, nutrient prices remain historically elevated but have retreated to levels that are incenting in-country shipments, which are expected to pull year-end inventories down to levels comparable to last year. In India, government subsidies, particularly for phosphates, are expected to remain at levels that support imports.

For both potash and phosphates, supply constraints remain. In potash, we maintain our expectation that annual production from Belarus will be down 8 million tonnes year-over-year in 2022, and very little recovery is expected next year. In phosphates, China's exports are estimated to be reduced by as much as 5 million tonnes versus 2021, and current export restrictions are expected to be extended into 2023. Together, the fundamental tightness in global markets for both potash and phosphates is expected to persist well into 2023 and quite likely beyond.

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2022 Expectations and Key Assumptions

The Company provides the following modeling assumptions for the full year 2022:

Modeling Assumptions	Full Year 2022
Total Capital Expenditures	$1.3 billion
Depreciation, Depletion & Amortization	$890 - $900 million
Selling, General, and Administrative Expense	$460 - $490 million
Net Interest Expense	$130 - $140 million
Non-notable adjustments	$100 - $110 million
Effective tax rate	Mid 20's %
Cash tax rate	Low 20's %

Sensitivities Table Using 2021 Cost Structure

The Company provides 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 2021 actual realized pricing and sales volumes.

Sensitivity	Full year Adj. EBITDA impact(1)	2021 Actual
Average MOP Price / tonne (fob mine)(6)	$10/mt price change = $64 million (5)	$285
Average DAP Price / tonne (fob plant)(6)	$10/mt price change = $94 million	$564
Average BRL / USD	0.10 change, unhedged = $10 million(7)	5.39

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

1. Includes impact of Canadian Resource Tax
2. Approximately 20% of DAP price sensitivity impact is expected to be in the Mosaic Fertilizantes segment.; approximately 5% of the MOP price sensitivity impact is expected to be in the Mosaic Fertilizantes segment.
3. The company hedged about 50 percent of the annual sensitivity. Over longer periods of time, inflation is expected to offset a portion of currency benefits.

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