Mosaic : Third Quarter 2020 Commentary

3Q20 EARNINGS COMMENTARY

November 2, 2020

Management of The Mosaic Company provided the following commentary to accompany its third quarter 2020 earnings news release and performance data:

Mosaic delivered strong results in the third quarter of 2020. Excellent cost controls across the company led to improved year-over-year gross margin, adjusted EBITDA and adjusted earnings per share, despite lower year-over-year prices in all three segments. Global phosphate prices, which began strengthening during the third quarter, modestly benefitted results for the period, but are expected to have a more material positive impact on Mosaic's results in the fourth quarter 2020 and beyond.

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Third quarter net loss was $6 million and adjusted EBITDA was $438 million, compared with $389 million in the third quarter of 2019. The improvement was driven by declines in cost of goods sold per tonne, offsetting lower year-over-year realized prices in all three segments. Reported earnings per share (EPS) was negative $0.02, and adjusted EPS, excluding notable items, was $0.23.

Highlights and key observations from the quarter include:

• Mosaic continues to drive progress on its transformation initiatives. Production costs continued to decline in the potash, phosphate and Mosaic Fertilizantes businesses, and corporate selling, general and administrative (SG&A) costs remain well controlled. The benefits of these efforts are clear in our results: Despite 14 percent lower net sales compared with a year ago, the company delivered a 13 percent increase in adjusted EBITDA. These results reflect continued progress toward our target of $700 million in additional adjusted EBITDA benefits by 2023, as we execute key strategic initiatives and optimize our asset portfolio.
• Fertilizer markets continue to improve, and our outlook remains positive. Strong global demand for phosphate has led to a tight market and significant price increases in all major markets. The potash market remains

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well balanced, and prices have increased slightly in Brazil and the U.S. corn belt. Global channel inventories are low, and we expect that to continue through the end of 2020 and into 2021.

• Agriculture market fundamentals are strong in key regions. An improved growing season in North America, compared with the difficult 2019 season, as well as strong harvests in Brazil, India and elsewhere, are helping the world's farmers meet extremely strong global grain and oilseed demand. Crop prices are supportive of strong planting in 2021, and this should drive significant application of fertilizers, which remain affordable in the current environment.
• As the Covid-19 pandemic continues, we remain dedicated to maintaining a safe environment for our employees. Neither our operations nor market demand for our products has been materially impacted, and our people around the world continue to overcome the challenges the pandemic presents so that Mosaic can perform its critical mission-to help the world grow the food it needs.
• Mosaic remains in a strong financial position. Early in 2020, we believed it was prudent to increase our cash position to be prepared for any potential business impacts from Covid-19. As the pandemic has continued with minimal impact on our business, we began the process of repaying all short-term borrowings from earlier this year, and as of the end of October, had repaid all amounts outstanding. Over the quarter, we've lowered net debt by over $250 million. Our total liquidity was over $3 billion at the end of the quarter and we continue to target long-term debt reduction of $1 billion over time.
• Looking ahead, we expect to realize the benefits of recent market price improvements, particularly in phosphate. The typical 45- to 60-day lag between market price changes and their appearance in our results leads us to expect to realize a $50 per tonne improvement in phosphate prices in the fourth quarter, compared to the third.

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The Potash Segment generated operating earnings of $87 million for the quarter, lower than the third quarter of 2019 primarily due to lower market prices. The segment delivered $169 million of adjusted EBITDA, down from $215 million a year ago, and gross margin per tonne of $48, down from $68 in 3Q 2019.

Lower market prices were somewhat offset by lower potash costs, with fixed costs down over $12 million from the prior year period. MOP cash costs, excluding brine management expenses, were $52 per tonne, down from $61 a year ago. The steady reduction of brine management cash costs, which were $16 million in the quarter compared to $24 million in the same quarter a year ago, will continue until they are eliminated entirely by the end of 2021, with the full transition to our new Esterhazy K3 mine expected in June 2022.

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