Mosaic : 2023 Annual Report

2023

Annual Report

Strategic Priorities

As The Mosaic Company celebrates its 20th Anniversary and the transition to President and CEO, Bruce Bodine, our strategic priorities continue to be our guiding principles in growth, reliability, and resilience.

1OPERATIONS ORGANIZATIONAL TRANSFORMATION3B& ALIGNMENT

$

Investment in COMPLETED

ESTERHAZY K3

3 GROW & STRENGTHEN THE PRODUCT PORTFOLIO

Introduced

MOSAIC BIOSCIENCES

A Portfolio of Biologicals to

Enhance Nutrient Efficiency

5 OPTIMIZE CAPITAL

MANAGEMENT $1Returned.1B

TO SHAREHOLDERS

in buy backs and dividends

2 SOUTH AMERICA VALUE GROWTH

Investment in

NEW BLENDING

FACILITY IN

PALMEIRANTE

Serving the

Northern Region of Brazil

4 INCREASE FUNCTIONAL EFFICIENCY & SCALABILITY

DRIVING TOWARD

ZERO INCIDENTS & INJURIES

6 ACT

18RESPONSIBLY

SUSTAINABILITY

TARGETS

LAUNCHED

Since 2020

2 COMPLETED 16 IN PROGRESS

CEO Message

Bruce Bodine

President and CEO

Dear Mosaic Stakeholders,

Over the past eight years, with Joc O'Rourke leading Mosaic, we made considerable strides forward. We completed and ramped up production at the world's largest potash mine in Esterhazy, Saskatchewan, Canada. We expanded our global production footprint with an acquisition that established Mosaic as the largest phosphate producer in Brazil. We committed to 16 sustainability targets so that society at large can understand our progress on environmental and social issues. We restructured our cost profiles. And we built a strong, efficient financial foundation by reducing debt and diversifying our funding options.

I am grateful for Joc's leadership, for his long-termmentorship-and for the strong momentum propelling Mosaic forward as I begin my tenure as the company's President and CEO.

Our momentum increased in 2023. Despite generally lower fertilizer prices, Mosaic produced net income of $1.2 billion and adjusted EBITDA of $2.8 billion and returned $1.1 billion to shareholders through share repurchases and dividends.

We made important progress: We completed the development of Esterhazy K3, which is now the world's largest potash mine and one of the most efficient. We began construction of a 1 million tonne fertilizer blending and distribution facility in Palmeirante, in the state of Tocantins, Brazil, which will provide Mosaic access to the fast-growing northern agricultural region. We began converting part of our Riverview, Florida phosphate facility to expand production capacity of our MicroEssentials® performance phosphate fertilizer; once the facility is at full capacity, we expect that half of our U.S. phosphate sales will be non-commodity MicroEssentials products. And in January 2023, we completed the sale of Streamsong Resort for $160 million and committed to use a portion of the proceeds to fund our community investment work for the long term.

We operated in relatively strong markets in 2023. While potash and phosphate prices declined from their peaks early in the Russia-Ukraine war, fertilizers remain relatively

affordable for the world's farmers, giving them good incentive to maximize crop yields by using the necessary fertilizer.

We expect global phosphate market dynamics to be particularly strong as we move through 2024. Demand for grains and oilseeds is rising-both for food and, more dramatically, for biofuels-while phosphate supply has been limited mostly by the Chinese government's decision to restrict exports. So the supply and demand picture for phosphate fertilizers is tight. At the same time, competition for phosphate molecules is growing as the world's fast-rising demand for batteries-both for electric vehicles and larger-scalestorage-is turning to a technology that includes phosphoric acid. We expect compelling market conditions to persist through 2024 and beyond.

In potash, demand was re-emerging around the world at this March 2024 writing. While higher-than-expected supply from Russia and Belarus kept prices low through 2023, we have seen prices stabilize. With strong pent-up demand, especially in Southeast Asia, we expect total global demand in 2024 to be at or near the all-time record.

Mosaic has many opportunities to benefit from the constructive market dynamics in 2024 and beyond, and the Executive Leadership Team and I are energized to bring them to life. Our focus areas include:

• Reducing our costs. We fully understand the imperative of keeping costs as low as possible in a cyclical commodity business like ours. While inflationary pressures have been formidable the last few years, we believe we can remove $150 million in expenses over time.
• Further de-commoditizing our product base. The MicroEssentials capacity expansion will help in this regard, and so will the introduction later this year of Mosaic's patented MicroEssentials Pro™ fertilizer family, the next generation of the single most successful performance fertilizer family ever. MicroEssentials Pro has demonstrated significant yield gains-even over the previous generation-in field trials, so we are confident that our customers and growers will welcome the product.

Continued on next page.

CEO Message Continued

In addition, we recently launched Mosaic Biosciences™ to encompass our small acquisitions and joint ventures in the agricultural biologicals field. Biologicals hold great promise to help plants use nutrients more efficiently, which in turn drives value for farmers. We believe biologicals could be the next frontier in crop nutrition, and we are poised to participate.

• We are working to restore our U.S. phosphate production to higher rates. A combination of storms-hurricanes are a fact of life in our U.S. phosphate operating areas-and unplanned asset outages led to lower production last year. We have plans in place, including a rigorous facility maintenance turnaround schedule, to improve reliability and work toward 8 million tonnes on phosphate production per year.
• The Palmeirante blending and distribution facility in Brazil is under construction and is expected to be in service in early 2025. Brazilian agriculture's remarkable growth trajectory is continuing, and much of that growth is occurring in the region around Palmeirante.
• We expect to complete our Global Digital Acceleration project by the middle of 2024. The project is an extensive modernization of Mosaic's technology, and it will help us serve our customers better and drive costs down through greater efficiency.
• We will remain careful stewards of our capital, and our allocation strategy will not change: We invest to maintain our assets, grow the business through investments that generate strong returns, and return excess cash to shareholders. We will be looking at our business-facility by facility, region by region, business by business-on a return on capital employed basis so that we can make the best possible allocation decisions.

As always, we have a lot to accomplish. Regardless of how busy we might be and become, rest assured that we will maintain and even amplify our efforts to operate responsibly. I want my legacy as Mosaic's fourth CEO to include financial success, of course, and I want to be known for taking a very responsible company and making it still better.

Safety is our first priority. We have made tremendous strides in our safety performance over the past 10 years, but for the past two years our numbers have plateaued. We have a renewed, companywide mandate to drive toward zero injuries, and we intend to get there through refined training, a better management system and regular communication. It is our top job as leaders to ensure that every Mosaic employee and contractor goes home safely after every single shift.

It is our top job as leaders to ensure that every Mosaic employee and contractor goes home safely after every single shift"

Mosaic has been a leader in our industry when it comes to sustainability performance and reporting for many years, and we intend to maintain our lead. We are making good progress toward our 16 sustainability targets-including carbon emission and water use reductions, steps forward on our diversity and inclusion journey, and widespread education for our customers and farmers on proper use of fertilizers.

We also will continue our decades of work to make our communities better. In 2023, we invested nearly $17 million in communities around the world, and our people amplified those investments through thousands of hours of volunteer time.

Society's expectations of companies' role in the use of resources, treatment of people and participation in communities has increased dramatically. At Mosaic, we welcome and embrace this change, and we will do our part.

In 2024, Mosaic will celebrate its 20th year as a public company. I have been here for every moment of our extraordinary evolution, and I am proud to lead the company-along with more than 14,000 women and men around the world-to achieve our mission of helping the world grow the food it needs.

Sincerely,

Bruce Bodine

President and CEO

The Mosaic Company

Calendar Year 2023 Financial Review

Financial Table of Contents

Management's Discussion and Analysis of Financial Condition and Results of Operations	2
Reports of Independent Registered Public Accounting Firm	32
Consolidated Statements of Earnings	35
Consolidated Statements of Comprehensive Income	36
Consolidated Balance Sheets	37
Consolidated Statements of Cash Flows	38
Consolidated Statements of Equity	40
Notes to Consolidated Financial Statements	41
Management's Report on Internal Control Over Financial Reporting	83

Management's Discussion and Analysis of Financial Condition and Results of Operations

Introduction

The Mosaic Company (before or after the Cargill Transaction, as defined below, "Mosaic," and with its consolidated subsidiaries, "we," "us," "our" or the "Company") is the parent company of the business that was formed through the business combination ("Combination") of IMC Global Inc. and the Cargill Crop Nutrition fertilizer businesses of Cargill, Incorporated and its subsidiaries (collectively, "Cargill") on October 22, 2004. In May 2011, Cargill divested its approximately 64% equity interest in us in a split-off to its stockholders and a debt exchange with certain Cargill debt holders.

We produce and market concentrated phosphate and potash crop nutrients. We conduct our business through wholly- and majority-owned subsidiaries as well as businesses in which we own less than a majority or a non-controlling interest, including consolidated variable interest entities and investments accounted for by the equity method.

We are organized into the following business segments:

• Our Phosphates business segment owns and operates mines and production facilities in Florida, which produce concentrated phosphate crop nutrients and phosphate-based animal feed ingredients, and processing plants in Louisiana, which produce concentrated phosphate crop nutrients for sale domestically and internationally. We have a 75% economic interest in the Miski Mayo Phosphate Mine ("Miski Mayo Mine") in Peru. These results are consolidated in the Phosphates segment. The Phosphates segment also includes our 25% interest in the Ma'aden Wa'ad Al Shamal Phosphate Company ("MWSPC"), a joint venture to develop, own and operate integrated phosphate production facilities in the Kingdom of Saudi Arabia. We market approximately 25% of the MWSPC phosphate production. We recognize our equity in the net earnings or losses relating to MWSPC on a one-quarter reporting lag in our Consolidated Statements of Earnings.
• Our Potash business segment owns and operates potash mines and production facilities in Canada and the U.S. which produce potash-based crop nutrients, animal feed ingredients and industrial products. Potash sales include domestic and international sales. We are a member of Canpotex, Limited ("Canpotex"), an export association of Canadian potash producers through which we sell our Canadian potash outside the U.S. and Canada.
• Our Mosaic Fertilizantes business segment includes five phosphate rock mines, four phosphate chemical plants and a potash mine in Brazil. The segment also includes our distribution business in South America, which consists of sales offices, crop nutrient blending and bagging facilities, port terminals and warehouses in Brazil and Paraguay. We also have a majority interest in Fospar S.A., which owns and operates a single superphosphate granulation plant and a deep-water port and throughput warehouse terminal facility in Brazil.

Intersegment eliminations, unrealized mark-to-market gains/losses on derivatives, debt expenses, corporate functional costs and the results of the China and India distribution businesses are included within Corporate, Eliminations and Other. See Note 25 of the Consolidated Financial Statements in this Form 10-K for segment results.

Key Factors that can Affect Results of Operations and Financial Condition

Our primary products, phosphate and potash crop nutrients, are, to a large extent, global commodities that are also available from a number of domestic and international competitors, and are sold by negotiated contracts or by reference to published market prices. The markets for our products are highly competitive, and the most important competitive factor for our products is delivered price. Business and economic conditions and governmental policies affecting the agricultural industry and customer sentiment are the most significant factors affecting worldwide demand for crop nutrients. The profitability of our businesses is heavily influenced by worldwide supply and demand for our products, which affects our sales prices and volumes. Our costs per tonne to produce our products are also heavily influenced by fixed costs associated with owning and operating our major facilities, significant raw material costs in our Phosphates and Mosaic Fertilizantes businesses, and fluctuations in currency exchange rates.

Our products are generally sold based on the market prices prevailing at the time the sales contract is signed or through contracts which are priced at the time of shipment. Additionally, in certain circumstances the final price of our products is determined after shipment based on the current market at the time the price is agreed to with the customer. Forward sales programs at fixed prices increase the lag between prevailing market prices and our average realized selling prices. The mix

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and parameters of these sales programs vary over time based on our marketing strategy, which considers factors that include, among others, optimizing our production and operating efficiency within warehouse limitations, as well as customer requirements. The use of forward sales programs and the level of customer prepayments may vary from period to period due to changing supply and demand environments, seasonality, and market sentiments.

World prices for the key raw material inputs for concentrated phosphate products, including ammonia, sulfur and phosphate rock, have an effect on industry-wide phosphate prices and production costs. The primary feedstock for producing ammonia is natural gas. The product price for ammonia is generally highly dependent on the supply and demand balance for ammonia. In North America, we purchase approximately one-third of our ammonia from various suppliers in the spot market, with the remaining two-thirds either purchased through a long-term ammonia supply agreement (the "CF Ammonia Supply Agreement") with an affiliate of CF Industries, Inc. ("CF") or produced internally at our Faustina, Louisiana location. The CF Ammonia Supply Agreement provides for U.S. natural gas-based pricing that is intended to lessen pricing volatility. If the price of natural gas rises or the market price for ammonia falls outside of the range anticipated at execution of this agreement, we may not realize a cost benefit from the natural gas-based pricing over the term of the agreement, or the cost of our ammonia under the agreement could be at a competitive disadvantage. During 2023, the contract provided an advantage over pricing in the spot market. At times, we have paid more or less for ammonia under the agreement than in the spot market. On October 14, 2022, we received notice from CF to exercise the bilateral, contractual right to end the ammonia supply agreement in its current form, effective January 1, 2025. In Brazil, we purchase all our ammonia from a single supplier.

Sulfur is a global commodity that is primarily produced as a by-product of oil refining. The market price is based primarily on the supply and demand balance for sulfur. We believe our current and future investments in sulfur transformation and transportation assets will enhance our competitive advantage.

We produce and procure most of our phosphate rock requirements through either wholly or partly owned mines. In addition to producing phosphate rock, Mosaic Fertilizantes purchases phosphate, potash and nitrogen products which are either used to produce blended crop nutrients ("Blends") or for resale.

Our per tonne selling prices for potash are affected by shifts in the product mix, geography and customer mix. Our Potash business is significantly affected by Canadian resource taxes and royalties that we pay to the Province of Saskatchewan in order for us to mine and sell our potash products. In addition, cost of goods sold is affected by a number of factors, including: fluctuations in the Canadian dollar; the level of periodic inflationary pressures on resources in western Canada, where we produce most of our potash; and natural gas costs for operating our potash solution mine at Belle Plaine, Saskatchewan. In the past, we have also incurred operating costs to manage salt saturated brine inflows at our Esterhazy, Saskatchewan K1 and K2 mine shafts, which we closed in June 2021, due to an acceleration of brine inflows. We have now transitioned mining to the K3 mine shaft, which has replaced production from the K1 and K2 shafts.

Our results of operations are also affected by changes in currency exchange rates due to our international footprint. The most significant currency impacts are generally from the Canadian dollar and the Brazilian real.

A discussion of these and other factors that affected our results of operations and financial condition for the periods covered by this Management's Discussion and Analysis of Financial Condition and Results of Operations is set forth in further detail below. This Management's Discussion and Analysis of Financial Condition and Results of Operations should also be read in conjunction with the narrative description of our business in Item 1, and the risk factors described in Item 1A, of Part I of this Annual Report on Form 10-K("Form 10-K"), and our Consolidated Financial Statements, accompanying notes and other information listed in the accompanying Financial Table of Contents.

This section of this Form 10-K discusses 2023 and 2022 items and year-to-year comparisons between 2023 and 2022. Discussions of 2021 items and year-to-year comparisons between 2022 and 2021 that are not included in this Form 10-K can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations" in Part II, Item 7 of the Company's Form 10-K for the year ended December 31, 2022 and are incorporated by reference herein.

Throughout the discussion below, we measure units of production, sales and raw materials in metric tonnes which are the equivalent of 2,205 pounds, unless we specifically state that we mean short or long ton(s), which are the equivalent of 2,000 pounds and 2,240 pounds, respectively. In addition, we measure natural gas, a raw material used in the production of our products, in MM BTU, which stands for one million British Thermal Units ("BTU"). One BTU is equivalent to 1.06 Joules. Management uses the following metrics to monitor segment performance: production volume, sales volume, average finished product selling price and average cost per unit consumed.

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In the following table, there are certain percentages that are not considered to be meaningful and are represented by "NM".

Results of Operations

The following table shows the results of operations for the years ended December 31, 2023, 2022, and 2021:

	Years Ended December 31,	2023-2022	2022-2021
(in millions, except per share data)	2023		2022		2021		Change		Percent		Change		Percent
Net sales	$13,696.1	$19,125.2	$12,357.4	$ (5,429.1)	(28)%	$ 6,767.8	55	%
Cost of goods sold	11,485.5		13,369.4		9,157.1		(1,883.9)		(14)%		4,212.3		46	%
Gross margin	2,210.6	5,755.8	3,200.3	(3,545.2)	(62)%	2,555.5	80	%
Gross margin percentage	16.1 %	30.1 %	25.9 %	(14.0)%			4.2 %
Selling, general and administrative
expenses	500.5	498.0	430.5	2.5	1 %	67.5	16	%
Impairment, restructuring and other
expenses	-		-	158.1		-		NM	(158.1)	(100)%
Other operating expenses	372.0		472.5		143.2		(100.5)		(21)%		329.3		NM
Operating earnings	1,338.1	4,785.3	2,468.5	(3,447.2)	(72)%	2,316.8	94
Interest expense, net	(129.4)	(137.8)	(169.1)	8.4	(6)%	31.3	(19) %
Foreign currency transaction gain
(loss)	194.0	97.5	(78.5)	96.5	99 %	176.0		NM
Other (expense) income	(76.8)	(102.5)	3.9	25.7	(25)%	(106.4)		NM
Earnings from consolidated
companies before income taxes	1,325.9	4,642.5	2,224.8	(3,316.6)	(71)%	2,417.7	109
Provision for income taxes	177.0	1,224.3	597.7	(1,047.3)	(86)%	626.6	105

Earnings from consolidated companies

Equity in net earnings of nonconsolidated companies

Net earnings including noncontrolling interests

Less: Net earnings attributable to noncontrolling interests

Net earnings attributable to Mosaic

1,148.9	3,418.2	1,627.1	(2,269.3)	(66)%	1,791.1	110	%
60.3		196.0		7.8		(135.7)		(69)%		188.2		NM
1,209.2	3,614.2	1,634.9	(2,405.0)	(67)%	1,979.3	121	%
44.3		31.4		4.3		12.9		41 %		27.1		NM
$ 1,164.9		$ 3,582.8		$ 1,630.6		$ (2,417.9)		(67)%		$ 1,952.2		120	%

Diluted net earnings per share

attributable to Mosaic	$	3.50	$ 10.06	$	4.27	$ (6.56)	(65)% $	5.79	136 %
Diluted weighted average number of
shares outstanding		333.2	356.0		381.6

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Overview of the Years ended December 31, 2023 and 2022

Net earnings attributable to Mosaic for the year ended December 31, 2023 were $1.2 billion, or $3.50 per diluted share, compared to $3.6 billion, or $10.06 per diluted share for 2022.

Significant factors that affected our results of operations and financial condition in 2023 and 2022 are listed below. These factors are discussed in more detail in the following sections of this Management's Discussion and Analysis of Financial Condition and Results of Operations.

Year ended December 31, 2023

For the year ended December 31, 2023, operating results in all of our segments were impacted by lower average sales prices compared to the prior year. Global markets softened compared to the prior year, with a rebound in supply combined with buyers delaying purchases in the first half of the year, in anticipation of lower prices. Buyer deferral reversed in the later part of the current year, and we saw seasonal price strength in many markets.

In the Phosphates segment, operating results for 2023 were driven by lower average selling prices, partially offset by lower raw material costs and higher sales volumes compared to the prior year. Selling prices decreased due to the factors described above and were partially offset by lower raw material costs, primarily sulfur and ammonia, due to global supply and demand. Finished product sales volumes were favorable versus the prior year, driven by buyers deferring purchases in the prior year period in anticipation of lower sales prices.

In the Potash segment, 2023 operating results were unfavorably impacted by lower average selling prices of potash compared to the prior year period, driven by the factors discussed above. This was partially offset by higher sales volumes, driven by the factor discussed above. Current year operating results were also unfavorably impacted by higher idle plant and maintenance turnaround costs, due to the temporary idling of our Colonsay, Saskatchewan mine in the first half of the year, due to market conditions, and the length of turnarounds, compared to the prior year.

In the Mosaic Fertilizantes segment, 2023 results were unfavorably impacted by a decrease in average selling prices compared to the prior year period, driven by the factors discussed above. Sales volumes of finished goods, including performance products, were higher in the current year period, compared to the same period in the prior year, due to an increased customer base as a result of our growth strategy to expand our presence in Brazil. Results were also favorably impacted by a decrease in product costs for our distribution business, and lower sulfur and ammonia costs in our production business.

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Other highlights in 2023 include:

• In January 2023, we completed the sale of the Streamsong Resort® (the "Resort") and the approximately 7,000 acres on which it sits for net proceeds of $158 million. The Resort is a destination resort and conference center, which we developed in an area of previously mined land as part of our long-term business strategy to maximize the value and utility of our extensive land holdings in Florida. In addition to a hotel and conference center, the Resort includes multiple golf courses, a clubhouse and ancillary facilities. The sale resulted in a gain of $57 million.
• In the first quarter of 2023, we purchased the other 50% interest of equity of Gulf Sulphur Services ("GSS"), which gives us full ownership and secures control of our sulfur supply chain in the Gulf of Mexico.
• In February 2023, pursuant to existing stock repurchase authorizations, we entered into an accelerated share repurchase agreement (the "2023 ASR Agreement") with a third-party financial institution to repurchase $300 million of our Common Stock. In 2023, we repurchased 16,879,059 shares of Common Stock in the open market for approximately $748 million. This includes 5,624,574 shares that we purchased under the 2023 ASR Agreement.
• In the first quarter of 2023, our Board of Directors approved a special dividend of $0.25 per share to be distributed in March to our stockholders of record as of March 15, 2023. In the fourth quarter of 2023, our Board of Directors approved a regular dividend increase to $0.84 per share annually from $0.80, beginning with the dividend declared in December 2023.
• In May 2023, we entered into a 10-year senior unsecured term loan facility pursuant to which we can draw up to $700 million. The term loan matures on May 18, 2033. We may voluntarily prepay the outstanding principal without premium or penalty. As of December 31, 2023, $500 million has been drawn under this facility.
• In 2023, we paid the outstanding balance of $900 million on our 4.25% senior notes, due November 15, 2023, without premium or penalty. On December 4, 2023, we issued new 5.375% senior notes consisting of $400 million aggregate principal, amount due 2028.
• In 2021, the U.S. Department of Commerce ("DOC") issued countervailing duty ("CVD") orders on imports of phosphate fertilizers from Morocco and Russia, in response to petitions filed by Mosaic. The orders were based on DOC's determination that the imports were unfairly subsidized and the U.S. International Trade Commission's ("ITC") determination that the imports materially injure the U.S. fertilizer industry. The purpose of the CVD orders was to remedy the injury and thereby restore fair competition. CVD orders normally stay in place for at least five years, with possible extensions.
  Moroccan and Russian producers have initiated actions at the U.S. Court of International Trade ("CIT") seeking to overturn the orders. Mosaic has also made claims contesting certain aspects of DOC's final determinations that, we believe, failed to capture the full extent of Moroccan and Russian subsidies. These litigation challenges remain underway. Most recently, in January 2024, DOC and the ITC issued revised determinations on remand from the CIT, upholding their original determinations that Moroccan phosphate fertilizer is unfairly subsidized, and that Moroccan and Russian imports materially injure the U.S. industry, respectively. The CIT is now reviewing these remand determinations. Also in January 2024, the CIT issued a ruling affirming DOC's original determinations that Russian phosphate fertilizer is unfairly subsidized.
  When a CVD order is in place, DOC normally conducts annual administrative reviews, which establish a final CVD assessment rate for past imports during a defined period, and a CVD cash deposit rate for future imports. In November 2023, DOC announced the final results of the first administrative reviews for the CVD orders on phosphate fertilizers for Russia and Morocco, covering the period November 30, 2020 to December 31, 2021. DOC calculated new subsidy rates of 2.12% for Moroccan producer OCP and 28.50% for Russian producer PhosAgro. Mosaic, foreign producers, and a U.S. importer have appealed these decisions to the CIT. DOC is also conducting administrative reviews covering the period January 1, 2022 to December 31, 2022. The applicable final CVD assessment rates and cash deposit rates for imports of phosphate fertilizer from Morocco and Russia could change as a result of these various proceedings and potential associated appeals, whether in federal courts or at the World Trade Organization.

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