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Item 2. Management’s Discussion and Analysis

2022-11-08 compared with 2022-08-02 · 227 added, 218 removed, 256 unchanged (63% of the section changed)

4 unchanged sentences

Results of Operations

The following table shows the results of operations for the three and six months ended June 30, 2022 and June 30, 2021:

Three months ended Six months ended

June 30, 2022-2021 June 30, 2022-2021

The following table shows the results of operations for the three and nine months ended September 30, 2022 and September 30, 2021:

Three months ended Nine months ended

September 30, 2022-2021 September 30, 2022-2021

(in millions, except per share data) 2022 2021 Change Percent 2022 2021 Change Percent

6 unchanged sentences

Other operating expense 222.8 65.2 157.6 NM 337.6 87.8 249.8 NM

Operating earnings 1,674.2 484.0 1,190.2 NM 2,930.0 797.2 2,132.8 NM

Operating earnings 1,154.7 701.6 453.1 65 % 4,084.7 1,498.8 2,585.9 173 %

Interest expense, net (30.6) (47.8) 17.2 (36) % (104.0) (130.1) 26.1 (20) %

Foreign currency transaction gain (loss) (227.2) 111.1 (338.3) NM 83.5 65.3 18.2 28 %

Foreign currency transaction gain (loss) (61.1) (100.1) 39.0 (39) % 22.4 (34.8) 57.2 (164) %

Other income (expense) (2.3) 0.6 (2.9) NM (37.8) 5.0 (42.8) NM

Earnings from consolidated companies before income taxes 1,377.2 559.2 818.0 146 % 2,904.6 784.6 2,120.0 NM

Provision for income taxes 369.3 115.9 253.4 NM 741.7 175.6 566.1 NM

Earnings from consolidated companies 1,007.9 443.3 564.6 127 % 2,162.9 609.0 1,553.9 NM

Earnings from consolidated companies before income taxes 1,060.7 554.3 506.4 91 % 3,965.3 1,338.9 2,626.4 196 %

Provision for income taxes 276.6 176.6 100.0 57 % 1,018.3 352.2 666.1 189 %

Earnings from consolidated companies 784.1 377.7 406.4 108 % 2,947.0 986.7 1,960.3 199 %

Equity in net earnings (loss) of nonconsolidated companies 72.1 (1.2) 73.3 NM 138.7 (13.2) 151.9 NM

4 unchanged sentences

Diluted weighted average number of shares outstanding 347.7 383.2 360.1 383.0

Overview of Consolidated Results for the three months ended June 30, 2022 and 2021

For the three months ended June 30, 2022, Mosaic had net income of $1.0 billion, or $2.85 per diluted share, compared to net income of $0.4 billion, or $1.14 per diluted share, for the prior year period.

Overview of Consolidated Results for the three months ended September 30, 2022 and 2021

For the three months ended September 30, 2022, Mosaic had net income of $841.7 million, or $2.42 per diluted share, compared to net income of $371.9 million, or $0.97 per diluted share, for the prior year period.

Significant factors affecting our results of operations and financial condition are listed below.

Certain of 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.

For the three months ended June 30, 2022, operating results in all of our segments benefited from higher average sales prices compared to the prior year period.

Average selling prices rose throughout 2021 and into the first half of 2022, driven by tightness in global supply and demand and improved grain prices.

The Russian invasion of Ukraine in February 2022 has resulted in instability in global commodities markets and significantly reduced the physical supply of fertilizer exported by Belarus and agricultural commodities produced in those geographies, which has contributed to rising fertilizer prices globally.

In addition, Chinese export restrictions on phosphates have also impacted the global supply of fertilizer and contributed to tightening in the market.

Our operating results for the three months ended June 30, 2022 were favorably impacted in our Phosphate segment by significantly higher average selling prices than the prior year period, driven by the factors described above.

The benefit from higher sales prices was partially offset by higher raw material costs, primarily sulfur and ammonia, in the current year period compared to the prior year period.

For the three months ended September 30, 2022, operating results in all of our segments benefited from higher average sales prices compared to the prior year period.

Average selling prices rose throughout 2021 and into the first half of 2022, driven by tightness in global supply and demand.

The Russian invasion of Ukraine in February 2022 has resulted in instability in global commodities markets.

The invasion, together with the continuation of reduced exports by Belarus, has significantly reduced the physical supply of fertilizer and agricultural commodities produced in those geographies.

This has contributed to rising fertilizer prices globally.

In addition, Chinese export restrictions on phosphates have also impacted the global supply of fertilizer and contributed to tightening in the worldwide fertilizer market.

Our operating results during the three months ended September 30, 2022 were favorably impacted in our Potash segment by higher average sales prices compared to the prior year period, driven by the factors discussed above.

Current period operating results were also favorably impacted by higher sales volumes compared to the prior year period.

Our sales volumes were lower in the prior year period due to production shortfalls caused by the early closures of the K1 and K2 shafts at our Esterhazy mine.

Our operating results for the three months ended September 30, 2022 were unfavorably impacted in our Phosphate segment compared to the prior year period.

Average selling prices were higher than the prior year period, driven by the factors described above.

The benefit from higher sales prices was offset by higher raw material costs, primarily sulfur and ammonia, in the current year period compared to the prior year period.

The purchase prices of these raw materials are driven by global supply and demand.

Operating results in the current year period were also unfavorably impacted by slightly lower sales volumes.

Sales volumes were lower due to a condensed spring season caused by adverse weather and customers deferring purchases in North America.

Our operating results during the three months ended June 30, 2022 were favorably impacted in our Potash segment by higher average sales prices compared to the prior year period driven by the factors discussed above.

Current period operating results were unfavorably impacted by slightly lower sales volumes.

Similar to Phosphate, the lower sales volumes were primarily caused by a condensed spring season caused by adverse weather and customers deferring purchases in North America.

For the three months ended June 30, 2022, our operating results were favorably impacted in our Mosaic Fertilizantes segment.

Operating results in the current year period were also unfavorably impacted by lower finished product sales volumes due to customers deferring purchases to future periods in North America, and delayed shipments caused by Hurricane Ian.

For the three months ended September 30, 2022, our operating results were favorably impacted in our Mosaic Fertilizantes segment.

Sales prices increased globally compared to the same period in the prior year, as discussed above.

The favorable results were partially offset by increased product costs, primarily material purchases by our distribution business, inflationary pressure on production costs and higher raw materials costs, as global prices of sulfur and ammonia increased from the prior year period.

Sales volumes were also slightly lower in the current year period compared to the same period in the prior year.

In addition to the items noted above, our current period results were impacted by a total of $364 million pre-tax, or $(0.79) per diluted share, related to the following notable items:

• Foreign currency transaction loss of $227 million, or $(0.47) per diluted share

Sales volumes were lower in the current year period compared to the same period in the prior year, mainly due to farmers deferring purchase decisions.

In addition to the items noted above, our current period results were negatively impacted by a total of $357 million pre-tax, or $(0.80) per diluted share, related to the following notable items:

• Asset retirement obligation (“ ARO ”) costs of $146 million, or $(0.32) per diluted share, related to upward revisions in the estimated costs of our asset retirement obligations for closed facilities

• Unrealized loss on derivatives of $76 million, or $(0.16) per diluted share

• Other operating expense of $30 million, or $(0.06) per diluted share, related to upward revisions in environmental reserves and $9 million, or $(0.03) per diluted share, related to maintaining closed and indefinitely idled facilities in Florida

• Other non-operating expense of $26 million, or $(0.05) per diluted share, related to a realized gain on RCRA trust securities and $12 million, or $(0.02) per diluted share, related to the write-down of an investment

• Other operating expense of $71 million, or $(0.15) per diluted share, related to an increase in our environmental reserves for remediation at our Florida locations

• Foreign currency transaction loss of $61 million, or $(0.13) per diluted share

• Other operating expense of $12 million, or $(0.02) per diluted share, related to maintaining closed and indefinitely idled facilities in Florida

• Discrete income tax expense of $12 million, or $(0.04) per diluted share

• Asset retirement obligation (“ ARO ”) costs of $5 million, or $(0.01) per diluted share, related to upward revisions in the estimated costs of our asset retirement obligations for closed facilities

• Inventory write-downs of $3 million, or $(0.01) per diluted share

• Other operating income of $7 million, or $0.02 per diluted share, related to a gain on the sale of assets

• Cost of goods sold impact of $9 million, or $(0.02) per diluted share, related to Hurricane Ian idle costs

• Functional currency impact in cost of goods sold of $14 million, or $0.03 per diluted share

• Other operating income of $4 million, or $0.01 per diluted share, for insurance proceeds related to Hurricane Ida

Other Highlights

• During the three months ended June 30, 2022, we repurchased 10,144,320 shares of Common Stock in the open market under the 2021 and 2022 Repurchase Programs for approximately $558.0 million for an average purchase price of $55.00 per share.

We also paid $54.2 million upon completion of the ASR agreement entered in the first quarter of 2022.

Subsequent to quarter end, our Board of Directors approved the establishment of a new $2.0 billion share repurchase authorization.

Overview of Consolidated Results for the six months ended June 30, 2022 and 2021

Net earnings attributable to Mosaic for the six months ended June 30, 2022 was $2.2 billion, or $6.05 per diluted share, compared to net earnings of $593.9 million, or $1.55 per diluted share, for the same period a year ago.

Results for the six months ended June 30, 2022 and 2021 reflected the factors discussed above in the discussion for the three months ended June 30, 2022 and 2021, in addition to those noted below.

• During the three months ended September 30, 2022, our Board of Directors approved the establishment of a new $2.0 billion share repurchase authorization.

• During the three months ended September 30, 2022, we repurchased 11,666,578 shares of Common Stock in the open market under our prior and new repurchase programs for approximately $574.8 million.

Overview of Consolidated Results for the nine months ended September 30, 2022 and 2021

Net earnings attributable to Mosaic for the nine months ended September 30, 2022 was $3.1 billion, or $8.50 per diluted share, compared to net earnings of $965.8 million, or $2.52 per diluted share, for the same period a year ago.

Results for the nine months ended September 30, 2022 and 2021 reflected the factors discussed above in the discussion for the three months ended September 30, 2022 and 2021, in addition to those noted below.

Certain of 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.

Operating results in our Phosphate segment for the six months ended June 30, 2022 were favorably impacted by higher phosphate average selling prices compared to the prior year period.

Operating results in our Potash segment for the nine months ended September 30, 2022 were favorably impacted by an increase in the average selling price of potash compared to the prior year period and an increase in sales volumes in the current year period.

These results were driven by the factors mentioned above in the three-month discussion.

Operating results in the current year period were unfavorably impacted by lower finished product

sales volumes, and higher raw material costs in the current year period, as discussed above in the three-month discussion.

Current year operating results were also unfavorably impacted by higher idle plant and maintenance turnaround costs due to the timing of turnarounds compared to the prior year.

Operating results in our Potash segment for the six months ended June 30, 2022 were favorably impacted by an increase in the average selling price of potash compared to the prior year period, partially offset by lower sales volumes.

Operating results in our Phosphate segment for the nine months ended September 30, 2022 were favorably impacted by higher phosphate average selling prices compared to the prior year period.

These results were driven by the factors mentioned above in the three-month discussion.

For the six months ended June 30, 2022, operating results in our Mosaic Fertilizantes segment were favorably impacted by an increase in average sales prices in the current year compared to the prior year period, driven by strong global demand and tight supply.

These results were partially offset by the unfavorable impact of increased costs as discussed above in the three-month discussion.

In addition to the items noted above, the results for the six months ended June 30, 2022 were negatively impacted by $7 million pre-tax, or $(0.01) per diluted share due to the following notable items:

• Foreign currency transaction gain of $84 million, or $0.15 per diluted share

• Unrealized gain on derivatives of $41 million, or $0.09 per diluted share

• Other operating income of $7 million, or $0.02 per diluted share, related to the sale of assets

• Other operating expense of $30 million, or $(0.06) per diluted share, related to upwards revisions in environmental reserves of $18 million, or $(0.05) per diluted share, related to maintaining closed and indefinitely idled facilities in Florida, and fixed asset write-offs of $4 million, or $(0.01) per diluted share

• Other non-operating expense of $26 million, or $(0.05) per diluted share, related to a realized gain on RCRA trust securities and $12 million, or $(0.02) per diluted share, for the write-down of an investment

• Functional currency impact in cost of goods sold of $18 million, or $(0.03) per diluted share

• Expense of $14 million, or $(0.03) per diluted share, related to upward revisions in the estimated costs of our AROs

• Discrete income tax expense of $5 million, or $(0.01) per diluted share

• Inventory write-downs of $3 million, or $(0.01) per diluted share

Operating results in the current year period were unfavorably impacted by higher raw material costs and lower finished product sales volumes in the current year period, as discussed above in the three-month discussion.

Adverse weather conditions in North America also contributed to a condensed spring season resulting in lower sales volumes for the nine months ended September 30, 2022.

For the nine months ended September 30, 2022, operating results in our Mosaic Fertilizantes segment were favorably impacted by an increase in average sales prices in the current year compared to the prior year period, driven by strong global demand and tight supply.

These results were partially offset by the unfavorable impact of increased costs and lower sales volumes as discussed above in the three-month discussion.

In addition to the items noted above, the results for the nine months ended September 30, 2022 were negatively impacted by $350 million pre-tax due to notable items.

The most significant of which were as follows:

• Expense of $160 million, related to upward revisions in the estimated costs of our AROs

• Other operating expense of $101 million related to upwards revisions in environmental reserves and $30 million, related to maintaining closed and indefinitely idled facilities in Florida

• Unrealized loss on derivatives of $35 million,

• Other non-operating expense of $26 million related to a realized loss on RCRA trust securities and $12 million for the write-down of an investment

• Cost of goods sold impact of $9 million related to Hurricane Ian idle costs

• Discrete income tax expense of $17 million

• Foreign currency transaction gain of $22 million

• Other operating income of $7 million related to the sale of assets

Other Highlights

• During the six months ended June 30, 2022, we repurchased 17,733,984 shares of Common Stock in the open market under the 2021 and 2022 Repurchase Programs for approximately $1.0 billion for an average purchase price of $58.32 per share.

This includes 7,056,229 shares we purchased under an ASR agreement in the first quarter of 2022.

• In the first quarter of 2022, our Board of Directors approved the establishment of a new $1 billion share repurchase authorization.

• During the nine months ended September 30, 2022, we repurchased 29,400,562 shares of Common Stock in the open market under our repurchase programs for approximately $1.6 billion for an average purchase price of $54.73 per share.

This includes 7,056,229 shares we purchased under an accelerated share repurchase agreement in the first quarter of 2022.

• In the first quarter of 2022, our Board of Directors approved the establishment of a new $1 billion share repurchase authorization, which was completed in the second quarter of 2022 and a new $2 billion share repurchase was authorized in the third quarter.

• In the first quarter of 2022, our Board of Directors approved a regular dividend increase to $0.60 per share annually from $0.45, beginning with the second quarter of 2022.

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The following table summarizes the Phosphate segment’s net sales, gross margin, sales volume, selling prices and raw material prices:

Three months ended Six months ended

June 30, 2022-2021 June 30, 2022-2021

Three months ended Nine months ended

September 30, 2022-2021 September 30, 2022-2021

(in millions, except price per tonne or unit)

32 unchanged sentences

Three months ended June 30, 2022 and June 30, 2021

The Phosphate segment’s net sales were $1.8 billion for the three months ended June 30, 2022, compared to $1.2 billion for the three months ended June 30, 2021.

The increase in net sales in the current year period was primarily due to favorable sales prices, which had an impact of approximately $720 million compared to the prior year period.

Three months ended September 30, 2022 and September 30, 2021

The Phosphate segment’s net sales were $1.6 billion for the three months ended September 30, 2022, compared to $1.3 billion for the three months ended September 30, 2021.

The increase in net sales in the current year period was primarily due to higher sales prices, which had a favorable impact of approximately $360 million compared to the prior year period.

This was partially offset by lower phosphate sales volumes in the current period, which had an unfavorable impact on net sales of approximately $110 million compared to the prior year period.

In addition, increased sales of other products, primarily ammonia and sulfur, favorably impacted net sales by approximately $70 million.

Our average finished product selling price increased 79% to $1,048 per tonne for the three months ended June 30, 2022, compared to $584 per tonne in the prior year period, due to the factors discussed in the Overview.

The Phosphate segment’s sales volumes of finished products decreased by 15% for the three months ended June 30, 2022, compared to the same period in the prior year, due to the factors discussed in the Overview.

Gross margin for the Phosphate segment increased to $641.6 million for the three months ended June 30, 2022, from $308.5 million for the three months ended June 30, 2021.

The increase in gross margin in the current year period was primarily due to higher sales prices, which favorably impacted gross margin by approximately $720 million compared to the prior year period.

This was partially offset by an unfavorable impact of approximately $230 million from increased raw material prices, largely driven pricing of sulfur and ammonia.

Net sales were also favorably impacted by approximately $20 million due to increased sales in our Miski Mayo operation.

Our average finished product selling price increased 36% to $924 per tonne for the three months ended September 30, 2022, compared to $681 per tonne in the prior year period, due to the factors discussed in the Overview.

The Phosphate segment’s sales volumes of finished products decreased by 10% for the three months ended September 30, 2022, compared to the same period in the prior year, due to the factors discussed in the Overview.

Gross margin for the Phosphate segment decreased to $357.9 million for the three months ended September 30, 2022, from $364.2 million for the three months ended September 30, 2021.

The decrease in gross margin in the current year period was primarily due to an unfavorable impact of approximately $250 million from increased raw material prices, largely driven by pricing of sulfur and ammonia.

Lower sales volumes unfavorably impacted gross margin by approximately $70 million compared to the prior year period.

The increase in gross margin was also partially offset by the unfavorable impact of approximately $50 million due to increased conversion costs, caused by the composition of rock and higher maintenance and turnaround costs of approximately $40 million compared to the prior period due to the timing of turnarounds during the current year period.

The average consumed price for ammonia for our North America operations increased 55% to $591 per tonne for the three months ended June 30, 2022, from $382 in the same period a year ago.

We typically purchase approximately one-third of our ammonia from various suppliers in the spot market, with the remaining two-thirds either purchased through an ammonia supply agreement or produced internally at our Faustina, Louisiana location.

The average consumed sulfur price for our North America operations increased 124% to $385 per long ton for the three months ended June 30, 2022, from $172 in the same period a year ago.

Gross margin was also unfavorably impacted by approximately $30 million due to increased conversion costs, caused by the composition of rock, and higher maintenance and turnaround costs of approximately $20 million, compared to the prior period, due to the timing of turnaround.

These impacts were partially offset by higher sales prices, which favorably impacted gross margin by approximately $360 million compared to the prior year period.

The average consumed price for ammonia for our North America operations increased 57% to $665 per tonne for the three months ended September 30, 2022, from $424 in the same period a year ago.

We typically purchase approximately one-third of our ammonia from various suppliers in the spot market, with the remaining two-thirds either purchased through an ammonia supply agreement with CF Industries ( "CF" ) or produced internally at our Faustina, Louisiana location.

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.

The contract allows for either party to exercise rights through 2032 that can result in changes to terms and conditions.

We are confident that we will continue to have adequate sources of supply for ammonia at competitive pricing, including from CF Industries.

The average consumed sulfur price for our North America operations increased 104% to $436 per long ton for the three months ended September 30, 2022, from $214 in the same period a year ago.

The purchase prices of these raw materials are driven by global supply and demand.

The consumed ammonia and sulfur prices also include transportation, transformation and storage costs.

The average consumed cost of purchased and produced phosphate rock increased slightly to $64 per tonne for the three months ended June 30, 2022, from $60 for the three months ended June 30, 2021.

For the three months ended June 30, 2022, our North America phosphate rock production decreased to 2.5 million tonnes from 2.8 million tonnes during the same period of the prior year, due to geology of rock and operational challenges.

The Phosphate segment’s production of crop nutrient dry concentrates and animal feed ingredients decreased to 1.6 million tonnes for the three months ended June 30, 2022, compared to 1.8 million for the three months ended June 30, 2021.

Current period production levels were impacted by the timing of turnarounds.

Our operating rate for processed phosphate production decreased to 66% for the three months ended June 30, 2022, from 73% for the same period in 2021.

Six months ended June 30, 2022 and June 30, 2021

The Phosphate segment’s net sales were $3.3 billion for the six months ended June 30, 2022, compared to $2.2 billion for the six months ended June 30, 2021.

The average consumed cost of purchased and produced phosphate rock increased to $68 per tonne for the three months ended September 30, 2022, from $59 for the three months ended September 30, 2021, primarily due to using more Miski Mayo rock in the current year period.

For the three months ended September 30, 2022, our North America phosphate rock production increased slightly to 2.9 million tonnes from 2.8 million tonnes during the same period of the prior year.

The Phosphate segment’s production of crop nutrient dry concentrates and animal feed ingredients decreased 4% for the three months ended September 30, 2022 from the prior year period.

The lower production in the current year period reflects impacts from downtime at our Florida locations due to Hurricane Ian in September.

Our operating rate for processed phosphate production decreased slightly to 67% for the three months ended September 30, 2022, from 70% for the same period in 2021.

Nine months ended September 30, 2022 and September 30, 2021

The Phosphate segment’s net sales were $4.9 billion for the nine months ended September 30, 2022, compared to $3.5 billion for the nine months ended September 30, 2021.

The increase in net sales was primarily due to higher finished product selling prices in the current year period, which favorably impacted net sales by approximately $1.7 billion compared to the prior year period.

This was partially offset by lower sales volumes of finished goods, which unfavorably impacted net sales by approximately $460 million.

In addition, net sales were also favorably impacted by approximately $150 million due to sales of rock in our Miski Mayo operation, sales of excess ammonia and sulfur, and other sales in the current year period.

Our average finished product selling price was $963 per tonne for the six months ended June 30, 2022, an increase of $433 per tonne from the same period a year ago, due to the factors discussed in the Overview.

The Phosphate segment’s sales volumes of finished products decreased by 18% for the six months ended June 30, 2022, compared to the same period in the prior year ago, due to the factors discussed in the Overview.

Gross margin for the Phosphate segment increased to $1.2 billion for the six months ended June 30, 2022, from $481.1 million for the six months ended June 30, 2021.

The increase in gross margin in the current year period was primarily due to the impact of higher finished product prices of approximately $1.3 billion compared to the prior year, and an increase in rock sales and sales of excess ammonia and sulfur of approximately $40 million.

In addition, net sales were also favorably impacted by approximately $160 million, primarily due to sales of rock in our Miski Mayo operation and sales of excess ammonia and sulfur in the current year period.

Our average finished product selling price was $950 per tonne for the nine months ended September 30, 2022, an increase of $375 per tonne from the same period a year ago, due to the factors discussed in the Overview.

The Phosphate segment’s sales volumes of finished products decreased by 15% for the nine months ended September 30, 2022, compared to the same period in the prior year ago, due to the factors discussed in the Overview.

Gross margin for the Phosphate segment increased to $1.5 billion for the nine months ended September 30, 2022, from $845.3 million for the nine months ended September 30, 2021.

The increase in gross margin in the current year period was primarily due to the impact of higher finished product prices of approximately $1.7 billion compared to the prior year.

These increases were partially offset by higher raw material costs as discussed below, which impacted gross margin by approximately $600 million.

Gross margin was also unfavorably impacted by approximately $150 million, due to lower sales volumes, higher conversion costs of approximately $80 million due to lower production and higher costs of approximately $30 million related to the timing of idle plant and turnaround costs in the current year period.

The average consumed price for ammonia for our North American operations was $575 per tonne for the six months ended June 30, 2022, compared to $348 in the same period a year ago.

The average consumed price for sulfur for our North American

operations increased to $302 per long ton for the six months ended June 30, 2022, from $145 in the same period a year ago.

Gross margin was also unfavorably impacted by approximately $200 million due to lower sales volumes, higher conversion costs of approximately $110 million, due to higher maintenance and water management costs, and higher costs of approximately $50 million related to the timing of idle plant and turnaround costs in the current year period.

The average consumed price for ammonia for our North America operations was $583 per tonne for the nine months ended September 30, 2022, compared to $371 in the same period a year ago.

The average consumed price for sulfur for our North America operations increased to $400 per long ton for the nine months ended September 30, 2022, from $167 in the same period a year ago.

The purchase prices of these raw materials are driven by global supply and demand.

The average consumed cost of purchased and produced phosphate rock increased slightly to $63 per tonne for the six months ended June 30, 2022, compared to $60 per tonne for the prior year period.

Our North American phosphate rock production decreased to 4.6 million tonnes for the six months ended June 30, 2022, compared to 5.8 million for the six months ended June 30, 2021.

The decrease from the prior year is due to the challenges noted above in the three-month discussion.

The Phosphate segment’s production of crop nutrient dry concentrates and animal feed ingredients decreased to 3.4 million tonnes for the six months ended June 30, 2022, compared to 3.7 million tonnes in the prior year period.

For the six months ended June 30, 2022, our operating rate for processed phosphate production decreased to 68%, compared to 75% in the same period of the prior year.

The average consumed cost of purchased and produced phosphate rock increased to $68 per tonne for the nine months ended September 30, 2022, compared to $60 per tonne for the prior year period, primarily due to using more Miski Mayo rock in the current year period.

Our North America phosphate rock production decreased to 7.5 million tonnes for the nine months ended September 30, 2022, compared to 8.6 million for the nine months ended September 30, 2021, due to geology of rock and operational challenges.

The Phosphate segment’s production of crop nutrient dry concentrates and animal feed ingredients decreased to 5.0 million tonnes for the nine months ended September 30, 2022, compared to 5.5 million tonnes in the prior year period.

For the nine months ended September 30, 2022, our operating rate for processed phosphate production decreased to 68%, compared to 73% in the same period of the prior year.

Potash Net Sales and Gross Margin

The following table summarizes the Potash segment’s net sales, gross margin, sales volume and selling price:

Three months ended Six months ended

June 30, 2022-2021 June 30, 2022-2021

Three months ended Nine months ended

September 30, 2022-2021 September 30, 2022-2021

(in millions, except price per tonne or unit)

20 unchanged sentences

(b) Includes sales volumes of K-Mag, Aspire and animal feed ingredients.

Three months ended June 30, 2022 and June 30, 2021

The Potash segment’s net sales increased to $1.6 billion for the three months ended June 30, 2022, compared to $663.0 million in the same period a year ago.

The increase was due to higher selling prices, which had a favorable impact on net sales of approximately $940 million, compared to the same period in the prior year.

This was partially offset by slightly lower sales volumes compared to the prior year, which unfavorably impacted net sales by approximately $25 million.

Our average finished product selling price was $686 per tonne for the three months ended June 30, 2022, compared to $285 per tonne for the same period a year ago, as a result of the factors described in the Overview.

The Potash segment’s sales volumes of finished products were 2.3 million tonnes for each of the three months ended June 30, 2022, and 2021.

Gross margin for the Potash segment increased to $927.6 million for the three months ended June 30, 2022, from $217.2 million in the same period of the prior year.

The increase in gross margin in the current year period is primarily due to an increase in selling prices, which contributed approximately $940 million to gross margin, compared to the prior year period.

This increase was unfavorably impacted by higher Canadian resource taxes and royalties, as discussed below.

We had expense of $ 274.5 million from Canadian resource taxes for the three months ended June 30, 2022, compared to $54.3 million in the same period a year ago.

Canadian royalty expense increased to $31.5 million for the three months ended June 30, 2022, compared to $10.0 million for the three months ended June 30, 2021.

Three months ended September 30, 2022 and September 30, 2021

The Potash segment’s net sales increased to $1.4 billion for the three months ended September 30, 2022, compared to $0.6 billion in the same period a year ago.

The increase was due to higher selling prices, which had a favorable impact on net sales of approximately $760 million, compared to the same period in the prior year, and higher sales volumes compared to the prior year, which favorably impacted net sales by approximately $80 million.

Our average finished product selling price was $669 per tonne for the three months ended September 30, 2022, compared to $326 per tonne for the same period a year ago, as a result of the factors described in the Overview.

The Potash segment’s sales volumes of finished products increased to 2.1 million tonnes for the three months ended September 30, 2022, compared to 1.8 million tonnes in the same period a year ago, due to the factors discussed in the Overview.

Gross margin for the Potash segment increased to $798.7 million for the three months ended September 30, 2022, from $236.0 million in the same period of the prior year.

The increase in gross margin in the current year period is primarily due to an increase in selling prices, which contributed approximately $760 million to gross margin, compared to the prior year period, and an increase in sales volumes, which contributed approximately $35 million to gross margin, compared to the prior year.

Gross margin was also positively impacted by favorable absorption of approximately $80 million, due to increased production in the current period, and favorable turnaround impacts, due to timing, of approximately $20 million.

Gross margin was unfavorably impacted by increased plant spending of approximately $110 million, primarily due to higher deprecation and natural gas costs, and by higher Canadian resource taxes and royalties, as discussed below.

We had expense of $ 258.4 million from Canadian resource taxes for the three months ended September 30, 2022, compared to $57.3 million in the same period a year ago.

Canadian royalty expense increased to $30.5 million for the three months ended September 30, 2022, compared to $8.2 million for the three months ended September 30, 2021.

The fluctuations in Canadian resource taxes and royalties are a result of an increase in our sales revenue and margins.

On June 4, 2021, due to increased brine inflows, we made the decision to immediately close the K1 and K2 shafts at our Esterhazy mine, which eliminated future brine inflow management expenses at these locations.

Therefore, we did not incur any brine inflow management expenses for the three months ended June 30, 2022, compared to $19 million in brine inflow management expenses, including depreciation on brine assets, during the three months ended June 30, 2021.

Our operating rate for potash production was 81% for the current year period, compared to 65% in the prior year period.

Six months ended June 30, 2022 and June 30, 2021

The Potash segment’s net sales increased to $2.6 billion for the six months ended June 30, 2022, compared to $1.1 billion in the same period a year ago.

The increase was due to higher selling prices, which had a favorable impact on net sales of approximately $1.6 billion.

This was partially offset by lower sales volumes, which had an unfavorable impact on net sales of approximately $70 million.

Our average selling price was $645 per tonne for the six months ended June 30, 2022, compared to $265 per tonne for the same period a year ago, due to the factors discussed above in the Overview.

The Potash segment’s sales volumes decreased to 4.1 million tonnes for the six months ended June 30, 2022, compared to 4.3 million tonnes in the same period a year ago, due to the factors discussed in the Overview.

Gross margin for the Potash segment increased to $1.5 billion for the six months ended June 30, 2022, from $357.4 million for the same period in the prior year.

Gross margin was favorably impacted by approximately $1.6 billion, due to the increase in average selling prices, partially offset by approximately $20 million, due to the impact of lower sales volumes.

The prior year period operating rate was unfavorably impacted by the closure of our K1 and K2 shafts at our Esterhazy mine.

Nine months ended September 30, 2022 and September 30, 2021

The Potash segment’s net sales increased to $4.1 billion for the nine months ended September 30, 2022, compared to $1.7 billion in the same period a year ago.

The increase was due to higher selling prices, which had a favorable impact on net sales of approximately $2.3 billion, and by higher sales volumes, which had a favorable impact on net sales of approximately $30 million.

Our average selling price was $653 per tonne for the nine months ended September 30, 2022, compared to $283 per tonne for the same period a year ago, due to the factors discussed above in the Overview.

The Potash segment’s sales volumes increased to 6.2 million tonnes for the nine months ended September 30, 2022, compared to 6.1 million tonnes in the same period a year ago, due to the factors discussed in the Overview.

Gross margin for the Potash segment increased to $2.3 billion for the nine months ended September 30, 2022, from $593.4 million for the same period in the prior year.

Gross margin was favorably impacted by approximately $2.3 billion, due to the increase in average selling prices, and by higher sales volumes, which had a favorable impact on net sales of approximately $10 million.

Gross margin was also positively impacted by favorable absorption of approximately $100 million, due to increased production in the current year period.

Gross margin was unfavorably impacted by higher Canadian resource taxes and royalties of approximately $605 million in the current year period, as discussed below.

Gross margin was also negatively impacted in the current year period by higher operational plant spending of approximately $50 million, due to higher natural gas costs and costs associated with operating our Colonsay, Saskatchewan mine, which was not operating in the prior year period.

We incurred $431.7 million in Canadian resource taxes for the six months ended June 30, 2022, compared to $89.2 million in the same period a year ago.

Canadian royalty expense increased to $58.5 million for the six months ended June 30, 2022, compared to $18.5 million for the six months ended June 30, 2021.

The fluctuations in Canadian resource taxes and royalties are due to higher average selling prices and margins in the current year period compared to the prior year.

We did not incur any brine inflow management expenses for the six months ended June 30, 2022, compared to $42 million in brine inflow management expenses, including depreciation on brine assets, during the six months ended June 30, 2021.

Our operating rate was 82% for the current year period, compared to 91% in the prior year period, due to the closure of our K1 and K2 shafts which were operating for most of the prior year period.

Gross margin was also negatively impacted in the current year period by higher operational plant spending of approximately $125 million, due to higher natural gas costs and costs associated with operating our Colonsay, Saskatchewan mine, which was not operating in the prior year period, and depreciation costs associated with our K3 shaft assets.

We incurred $690.1 million in Canadian resource taxes for the nine months ended September 30, 2022, compared to $146.5 million in the same period a year ago.

Canadian royalty expense increased to $89.0 million for the nine months ended September 30, 2022, compared to $26.7 million for the nine months ended September 30, 2021.

The fluctuations in Canadian resource taxes and royalties are due to an increase in our sales revenues and margins.

On June 4, 2021, due to increased brine inflows, we made the decision to immediately close the K1 and K2 shafts at our Esterhazy mine, which eliminated future brine inflow management expenses.

Therefore, we did not incur any brine inflow management expenses for the nine months ended September 30, 2022, compared to $28 million in brine inflow management expenses, including depreciation on brine assets, during the nine months ended September 30, 2021.

Our operating rate was 82% for each of the nine months ended September 30, 2022 and 2021.

Mosaic Fertilizantes Net Sales and Gross Margin

The following table summarizes the Mosaic Fertilizantes segment’s net sales, gross margin, sales volume and selling price.

Three months ended Six months ended

June 30, 2022-2021 June 30, 2022-2021

Three months ended Nine months ended

September 30, 2022-2021 September 30, 2022-2021

(in millions, except price per tonne or unit)

29 unchanged sentences

(a) Excludes internally produced volumes used in purchased nutrients for distribution.

Three months ended June 30, 2022 and June 30, 2021

The Mosaic Fertilizantes segment’s net sales increased to $2.3 billion for the three months ended June 30, 2022, from $1.0 billion in the same period a year ago.

Three months ended September 30, 2022 and September 30, 2021

The Mosaic Fertilizantes segment’s net sales increased to $2.6 billion for the three months ended September 30, 2022, from $1.8 billion in the same period a year ago.

The increase in net sales was due to higher finished product sales prices, which favorably impacted net sales by approximately $1.1 billion.

This was partially offset by slightly lower finished goods sales volumes, which had an unfavorable impact of approximately $10 million.

Net sales were also favorably impacted by increased sales prices of other products, primarily sulfuric acid, of approximately $100 million.

Our average finished product selling price was $974 per tonne for the three months ended June 30, 2022, compared to $442 per tonne for the same period a year ago, due to the increase in global sales prices as discussed in the Overview.

The Mosaic Fertilizantes segment’s sales volumes of finished products decreased 1% for the three months ended June 30, 2022, compared to the same period a year ago.

Sales volumes were impacted by shipment delays due to high customer inventories.

Gross margin for the Mosaic Fertilizantes segment increased to $450.2 million for the three months ended June 30, 2022, from $185.1 million in the same period of the prior year.

The increase in gross margin was primarily due to a favorable impact of

approximately $1.1 billion related to the increase in selling prices during the current year period compared to the prior year period.

An increase in product costs, primarily material purchases by our distribution business, and increases in other production costs collectively had an unfavorable impact on gross margin of approximately $840 million, compared to the prior year period.

The average consumed price for ammonia for our Brazilian operations increased to $1,396 per tonne for the three months ended June 30, 2022, compared to $527 per tonne in the prior year period.

The average consumed sulfur price for our Brazilian operations was $384 per long ton for the three months ended June 30, 2022, compared to $177 per long ton in the prior year period.

This was partially offset by lower finished goods sales volumes, which had an unfavorable impact of approximately $240 million.

Our average finished product selling price was $931 per tonne for the three months ended September 30, 2022, compared to $524 per tonne for the same period a year ago, due to the increase in global sales prices as discussed in the Overview.

The Mosaic Fertilizantes segment’s sales volumes of finished products decreased 16% for the three months ended September 30, 2022, compared to the same period a year ago.

Sales volumes were impacted by a reduction in market demand in the current period.

Gross margin for the Mosaic Fertilizantes segment increased to $348.3 million for the three months ended September 30, 2022, from $332.2 million in the same period of the prior year.

The increase in gross margin was primarily due to a favorable impact

of approximately $1.1 billion related to the increase in selling prices during the current year period compared to the prior year period.

An increase in product costs, primarily higher nitrogen and potash products for our distribution business and higher sulfur and ammonia for phosphate production, and increases in other production costs collectively had an unfavorable impact on gross margin of approximately $1.0 billion, compared to the prior year period.

Gross margin was also unfavorably impacted by a decrease in specialty product revenue, largely driven by gypsum and sulfuric acid, of approximately $20 million, and increased turnaround costs of approximately $30 million.

The average consumed price for ammonia for our Brazilian operations increased to $1,267 per tonne for the three months ended September 30, 2022, compared to $640 per tonne in the prior year period.

The average consumed sulfur price for our Brazilian operations was $432 per long ton for the three months ended September 30, 2022, compared to $222 per long ton in the prior year period.

The purchase prices of ammonia and sulfur are driven by global supply and demand, and also include transportation, transformation, and storage costs.

The Mosaic Fertilizantes segment's production of crop nutrient dry concentrates and animal feed ingredients decreased 5% for the three months ended June 30, 2022, compared to the prior year period.

For the three months ended June 30, 2022, our phosphate operating rate increased to 83%, compared to 72% in the same period of the prior year.

For the three months ended June 30, 2022, our Brazilian phosphate rock production increased slightly to 1.1 million tonnes, from 1.0 million tonnes for the prior year period.

Six months ended June 30, 2022 and 2021

The Mosaic Fertilizantes segment’s net sales were $3.7 billion for the six months ended June 30, 2022, compared to $1.8 billion in the prior year period.

The Mosaic Fertilizantes segment's production of crop nutrient dry concentrates and animal feed ingredients decreased 17% for the three months ended September 30, 2022, compared to the prior year period.

For the three months ended September 30, 2022, our phosphate operating rate decreased to 76%, compared to 91% in the same period of the prior year, due to plant maintenance.

For each of the three months ended September 30, 2022 and 2021, our Brazilian phosphate rock production remained flat at 1.0 million tonnes.

Nine months ended September 30, 2022 and 2021

The Mosaic Fertilizantes segment’s net sales were $6.4 billion for the nine months ended September 30, 2022, compared to $3.6 billion in the prior year period.

In the current period, net sales were favorably impacted by approximately $2.9 billion due to higher finished goods sales prices, partially offset by the impact of lower finished goods sales volumes of approximately $330 million.

Net sales were also favorably impacted by increased sales prices of other products, primarily sulfur acid, of approximately $210 million.

The average finished product selling price increased $497 per tonne to $905 per tonne for the six months ended June 30, 2022, compared to $408 per tonne in the prior year period, primarily due to the increase in global prices mentioned in the Overview.

The Mosaic Fertilizantes segment’s sales volume decreased to 4.1 million tonnes for the six months ended June 30, 2022, from 4.4 million tonnes in the same period a year ago, impacted by lower demand primarily due to adverse weather conditions in certain areas of Brazil during the first quarter of 2022.

Gross margin for the six months ended June 30, 2022, increased to $669.5 million from $288.2 million in the same period in the prior year.

Net sales were also favorably impacted by increased revenues from other products, primarily sulfur acid of approximately $210 million.

The average finished product selling price increased $457 per tonne to $915 per tonne for the nine months ended September 30, 2022, compared to $458 per tonne in the prior year period, primarily due to the increase in global prices mentioned in the Overview.

The Mosaic Fertilizantes segment’s sales volume decreased to 7.0 million tonnes for the nine months ended September 30, 2022, from 7.8 million tonnes in the same period a year ago, impacted by lower demand, primarily due to adverse weather conditions in certain areas of Brazil during the first half of 2022 and a reduction of market demand.

Gross margin for the nine months ended September 30, 2022, increased to $1.0 billion from $620.4 million in the same period in the prior year.

In the current year period, gross margin was favorably impacted by favorable sales prices of approximately $2.9 billion.

Gross margin was also positively impacted by favorable sales of other products, primarily sulfuric acid, of approximately $30 million compared to the prior year period.

In the current year period, gross margin was negatively impacted by higher raw materials costs of approximately $1.4 billion and higher conversion costs at our facilities of approximately $40 million compared to the prior year.

The Mosaic Fertilizantes segment’s production of crop nutrient dry concentrates and animal feed ingredients increased 3% compared to the prior year period.

For the six months ended June 30, 2022, our phosphate operating rate was 87%, compared to 82% in the same period of the prior year.

For the six month period ended June 30, 2022, our Brazilian phosphate rock production remained level at 2.0 million tonnes for the current and prior year period.

In the current year period, gross margin was negatively impacted by approximately $2.3 billion related to higher product costs, primarily material purchases by our distribution business and raw materials costs.

Production costs at our facilities were approximately $70 million higher than the prior year period.

Gross margin was also unfavorably impacted by lower sales volumes of approximately $60 million, and increased turnaround costs of approximately $50 million.

The Mosaic Fertilizantes segment’s production of crop nutrient dry concentrates and animal feed ingredients decreased 4% compared to the prior year period.

For the each of the nine months ended September 30, 2022, and 2021, our phosphate operating rate was 84%, compared to 85% in the same period of the prior year.

For the nine month period ended September 30, 2022, our Brazilian phosphate rock production increased slightly to 3.0 million tonnes, from 2.9 million tonnes for the prior year period.

Corporate, Eliminations and Other

1 unchanged sentence

Corporate, Eliminations and Other includes the results of the China and India distribution businesses, intersegment eliminations, including profit on intersegment sales, unrealized mark-to-market gains and losses on derivatives, debt expenses and Streamsong Resort ® results of operations.

For the three months ended June 30, 2022, gross margin for Corporate, Eliminations and Other was $(173.1) million, compared to $41.5 million for the same period in the prior year.

Gross margin was unfavorably impacted by a net unrealized loss of $58.8 million in the current year period, primarily on foreign currency derivatives, compared to a net unrealized gain of $38.0 million in the prior year period.

Gross margin was also unfavorably impacted by higher elimination of profit on intersegment sales in

the current year period, which changed from the prior year period by approximately $141.8 million.

Gross margin was positively impacted by distribution operations primarily in China due to increased pricing compared to the prior year period.

For the three months ended September 30, 2022, gross margin for Corporate, Eliminations and Other was $(2.9) million, compared to $(67.9) million for the same period in the prior year.

Gross margin was favorably impacted by lower elimination of profit on intersegment sales in the current year period, which changed from the prior year period by approximately $164.2 million.

Gross margin was unfavorably impacted by a net unrealized loss of $75.5 million in the current year period, primarily on foreign currency derivatives, compared to a net unrealized loss of $26.3 million in the prior year period.

Gross margin was also negatively impacted by distribution operations, primarily in China, due to inventory adjustments.

China and India, collectively, had revenue of $158.6 million and gross margin of $(13.7) million in the current year period, compared to revenue of $136.2 million and gross margin of $22.9 million in the prior year period.

For the six months ended June 30, 2022, gross margin for Corporate, Eliminations and Other was $(59.9) million, compared to $60.5 million for the same period in the prior year.

Gross margin was unfavorably impacted by higher elimination of profit on intersegment sales in the current year period, which changed from the prior year period by approximately $215.3 million.

Gross margin was positively impacted by distribution operations primarily in China due to increased pricing.

For the nine months ended September 30, 2022, gross margin for Corporate, Eliminations and Other was $(62.8) million, compared to $(7.4) million for the same period in the prior year.

Gross margin was unfavorably impacted by a net unrealized loss of $34.5 million in the current year period, primarily on foreign currency derivatives, compared to a net unrealized gain of $3.6 million in the prior year period.

Gross margin was also unfavorably impacted by higher elimination of profit on intersegment sales in the current year period, which changed from the prior year period by approximately $51.1 million.

Gross margin was positively impacted by distribution operations, primarily in China, due to increased pricing, which was partially offset by inventory adjustments and increased product costs.

China and India, collectively had revenue of $769.5 million and gross margin of $137.6 million in the current year period, compared to revenue of $475.8 million and gross margin of $95.9 million in the prior year period.

Gross margin was also favorably impacted by a net unrealized gain on foreign currency commodity derivatives of $41.0 million in the current year period compared to a net unrealized gain of $29.9 million in the prior year period.

Other Income Statement Items

Three months ended Six months ended

June 30, 2022-2021 June 30, 2022-2021

Three months ended Nine months ended

September 30, 2022-2021 September 30, 2022-2021

(in millions) 2022 2021 Change Percent 2022 2021 Change Percent

Selling, general and administrative expenses $ 124.5 $ 97.7 $ 26.8 27 % $ 365.1 $ 307.0 $ 58.1 19 %

Mine closure costs — 158.1 (158.1) (100) % — 158.1 (158.1) (100) %

Mine closure costs — — — NM — 158.1 (158.1) (100) %

Other operating expense 222.8 65.2 157.6 NM 337.6 87.8 249.8 NM

2 unchanged sentences

Interest expense, net (30.6) (47.8) 17.2 (36) % (104.0) (130.1) 26.1 (20) %

Foreign currency transaction gain (loss) (227.2) 111.1 (338.3) NM 83.5 65.3 18.2 28 %

Foreign currency transaction gain (loss) (61.1) (100.1) 39.0 (39) % 22.4 (34.8) 57.2 (164) %

Other income (expense) (2.3) 0.6 (2.9) NM (37.8) 5.0 (42.8) NM

Provision for income taxes 369.3 115.9 253.4 NM 741.7 175.6 566.1 NM

Provision for income taxes 276.6 176.6 100.0 57 % 1,018.3 352.2 666.1 189 %

Equity in net earnings (loss) of nonconsolidated companies 72.1 (1.2) 73.3 NM 138.7 (13.2) 151.9 NM

Selling, General and Administrative Expenses

Selling, general and administrative expenses of $108.2 million for the three months ended June 30, 2022, were comparable to that category of costs in the same period of the prior year of $107.6 million.

Selling, general and administrative expenses for the six months ended June 30, 2022 increased $31.3 million compared to the same period of the prior year primarily due to approximately $18 million in consulting and professional services costs related to executing on our strategic initiatives.

Costs in Mosaic Fertilizantes also increased approximately $11 million, due to impacts from inflation and higher compensation costs.

Selling, general and administrative expenses for the three months ended September 30, 2022 increased $26.8 million compared to the same period of the prior year, primarily due to approximately $35 million in consulting and professional services costs related to executing on our strategic initiatives.

This was partially offset by lower incentive compensation costs of approximately $10 million in the current period.

Selling, general and administrative expenses for the nine months ended September 30, 2022 increased $58.1 million compared to the same period of the prior year, primarily due to approximately $46 million in consulting and professional services costs related to executing on our strategic initiatives.

Costs in Mosaic Fertilizantes increased approximately $15 million, due to impacts from inflation and higher compensation costs.

Costs also increased due to increased share based payment expense of approximately $8 million compared to the prior year period.

Increased costs were partially offset by decreased incentive accruals in the current year period of approximately $18 million.

Mine Closure Costs

On June 4, 2021, due to increased brine inflow, we decided to accelerate the shutdown of our K1 and K2 mine shafts at our Esterhazy, Saskatchewan potash mine.

For the three and six months ended June 30, 2021, we recognized pre-tax costs of $158.1 million related to the permanent closure of these facilities.

For the nine months ended September 30, 2021, we recognized pre-tax costs of $158.1 million related to the permanent closure of these facilities.

Other Operating Expense

For the three months ended June 30, 2022, we had other operating expenses of $63.9 million, compared to $2.6 million for the same period in the prior year.

The three months ended June 30, 2022 included an increase of approximately $30 million related to environmental reserves and approximately $5 million related to upward revisions in estimated closure costs for asset

retirement obligations at our closed facilities.

The prior year period included income of approximately $20 million related to a gain on selling a warehouse.

For the six months ended June 30, 2022, we had other operating expenses of $114.8 million, compared to $22.6 million for the same period in the prior year.

The increase from the prior year period was primarily due to approximately $40 million related to an increase in environmental reserves and approximately $15 million related to upward revisions in estimated closure costs for our asset retirement obligations at our closed facilities.

For the three months ended September 30, 2022, we had other operating expenses of $222.8 million, compared to $65.2 million for the same period in the prior year.

The three months ended September 30, 2022 included an increase of approximately $146 million related to upward revisions in estimated closure costs for asset retirement obligations at our closed facilities and approximately $70 million related to environmental reserves related to remediation at our Florida locations.

For the nine months ended September 30, 2022, we had other operating expenses of $337.6 million, compared to $87.8 million for the same period in the prior year.

The increase from the prior year period was primarily due to approximately $160 million related to upward revisions in estimated closure costs for our asset retirement obligations at our closed facilities, approximately $101 million related to increases in environmental reserves, and approximately $30 million related to costs of maintaining closed and indefinitely idled facilities.

The prior year period included income of approximately $20 million related to a gain on the sale of a warehouse and $8 million related to the recovery of a reserve for the Acquired Business.

Interest Expense, net

Net interest expense decreased to $30.6 million and $104.0 million, respectively, for the three and nine months ended September 30, 2022, compared to $47.8 million and $130.1 million for the same periods in the prior year, due to lower debt levels in the current year.

Foreign Currency Transaction Gain (Loss)

We recorded a foreign currency transaction loss of $(227.2) million and a foreign currency transaction gain of $83.5 million for the three and six months ended June 30, 2022, respectively, compared to gains of $111.1 million and $65.3 million for the three and six months ended June 30, 2021, respectively.

For the three months ended June 30, 2022, the loss was the result of the effect of the strengthening of the U.S.

We recorded a foreign currency transaction loss of $(61.1) million and a foreign currency transaction gain of $22.4 million for the three and nine months ended September 30, 2022, respectively, compared to losses of $(100.1) million and $(34.8) million for the three and nine months ended September 30, 2021, respectively.

For the three months ended September 30, 2022, the loss was the result of the effect of the strengthening of the U.S.

dollar relative to the Brazilian real on U.S.

dollar-denominated payables held by our Brazilian subsidiaries and significant intercompany loans, and the strengthening of the U.S.

dollar relative to the Canadian dollar on significant intercompany loans.

For the six months ended June 30, 2022, the gain was the result of the effect of the weakening of the U.S.

dollar relative to the Canadian dollar on significant intercompany loans and U.S.

dollar-denominated payments.

For the nine months ended September 30, 2022, the gain was the result of the effect of the weakening of the U.S.

dollar relative to the Brazilian real of U.S.

dollar-denominated payables held by our Brazilian subsidiaries and on significant intercompany loans.

dollar-denominated payables held by our Brazilian subsidiaries and on significant intercompany loans, partially offset by the strengthening of the U.S.

dollar relative to the Canadian dollar on significant intercompany loans.

Other Income (Expense)

For the three and six months ended June 30, 2022, we had other expense of $(35.7) million and $(35.5) million compared to income of $1.4 million and $4.4 million for the same periods in the prior year.

The current year expense primarily related approximately $25 million of realized losses on the marketable securities held in the RCRA Trusts and $12 million related to the write-down of an investment.

For the three and nine months ended September 30, 2022, we had other expense of $(2.3) million and $(37.8) million compared to income of $0.6 million and $5.0 million for the same periods in the prior year.

The current year expense primarily related to approximately $25 million of realized losses on the marketable securities held in the RCRA Trusts and $12 million related to the write-down of an investment.

Equity in Net Earnings (Loss) of Nonconsolidated Companies

For the three and six months ended June 30, 2022, we had equity in net earnings of nonconsolidated companies of $35.9 million and $66.6 million compared to equity in net losses of nonconsolidated companies of $(4.5) million and $(12.0) million for the same periods in the prior year.

For the three and nine months ended September 30, 2022, we had equity in net earnings of nonconsolidated companies of $72.1 million and $138.7 million compared to equity in net losses of nonconsolidated companies of $(1.2) million and $(13.2) million for the same periods in the prior year.

The current year gain was primarily related to the operations of MWSPC, which were favorably impacted by higher phosphate selling prices, and the continued ramp-up of its operations.

1 unchanged sentence

Three months ended Effective Tax Rate Provision for Income Taxes

June 30, 2022 26.8 % $ 369.3

June 30, 2021 20.7 % $ 115.9

Six months ended Effective Tax Rate Provision for Income Taxes

June 30, 2022 25.5 % $ 741.7

June 30, 2021 22.4 % $ 175.6

Income tax expense was $369.3 million and $741.7 million and the effective tax rate was 26.8% and 25.5% for the three and six months ended June 30, 2022.

For the three months ended June 30, 2022, discrete tax expense was approximately $13.7 million.

This consisted primarily of tax cost related to prior year adjustments, interest on effectively settled unrecognized tax benefits and other miscellaneous costs.

September 30, 2022 26.1 % $ 276.6

September 30, 2021 31.9 % $ 176.6

Nine months ended Effective Tax Rate Provision for Income Taxes

September 30, 2022 25.7 % $ 1,018.3

September 30, 2021 26.3 % $ 352.2

Income tax expense was $276.6 million and $1.0 billion and the effective tax rate was 26.1% and 25.7% for the three and nine months ended September 30, 2022.

For the three months ended September 30, 2022, discrete tax items recorded in tax expense were approximately $12.1 million.

This consisted primarily of the net tax cost related to the true up of estimates from our U.S.

tax return provision and other miscellaneous costs.

In addition to items specific to the period, our income tax rate is impacted by the mix of earnings across the jurisdictions in which we operate, by a benefit associated with depletion, a benefit associated with non-U.S.

incentives, changes in valuation

allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred.

For the six months ended June 30, 2022, discrete tax expense was approximately $4.7 million.

This consisted primarily of tax cost related to prior year adjustments, interest on effectively settled unrecognized tax benefits, share-based excess benefit, and other miscellaneous costs.

incentives, changes in valuation allowances and by the impact of certain entities being taxed in both their foreign jurisdiction and the U.S., including foreign tax credits for various taxes incurred

For the nine months ended September 30, 2022, discrete tax items recorded in tax expense were approximately $16.7 million.

This consisted primarily of tax cost related to prior year estimate adjustments, interest of effectively settled unrecognized tax benefits, share-based excess benefit, true up of estimates related to our U.S.

tax return provision and other miscellaneous costs.

9 unchanged sentences

Liquidity and Capital Resources

As of June 30, 2022, we had cash and cash equivalents of $0.8 billion, short-term debt of $17.0 million, long-term debt, including current maturities, of approximately $4.0 billion, and stockholders’ equity of approximately $11.9 billion.

As of September 30, 2022, we had cash and cash equivalents of $0.7 billion, short-term debt of $0.2 billion, long-term debt, including current maturities, of approximately $4.0 billion, and stockholders’ equity of approximately $11.7 billion.

We have a target liquidity buffer of up to $3.0 billion, including cash and available committed and uncommitted credit lines.

2 unchanged sentences

Our capital allocation priorities include maintaining our target investment grade metrics and financial strength, sustaining our assets, including ensuring the safety and reliability of our assets, investing to grow our business, either through organic growth or taking advantage of strategic opportunities, and returning excess cash to shareholders, including paying our dividend.

During the six months ended June 30, 2022, we returned cash to shareholders through share repurchases of $999.4 million and cash dividends of $94.5 million and invested $553.1 million in capital expenditures.

During the nine

months ended September 30, 2022, we returned cash to shareholders through share repurchases of $1.6 billion and cash dividends of $163.3 million and invested $906.8 million in capital expenditures.

Funds generated by operating activities, available cash and cash equivalents, and our credit facilities continue to be our most significant sources of liquidity.

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There can be no assurance, however, that we will continue to generate cash flows at or above current levels.

As of June 30, 2022, we had $2.49 billion available under our $2.50 billion committed revolving credit facility and approximately $1.08 billion available under our uncommitted facilities.

As of September 30, 2022, we had $2.49 billion available under our $2.50 billion committed revolving credit facility, approximately $652.0 million available under our uncommitted facilities and $2.5 billion available under our commercial paper program, that is backed by the revolving credit facility.

Our credit facilities, including the revolving credit facility, require us to maintain certain financial ratios, as discussed in Note 10 of our Notes to Consolidated Financial Statements in our 10-K Report.

We were in compliance with these ratios as of June 30, 2022.

We were in compliance with these ratios as of September 30, 2022.

All of our cash and cash equivalents are diversified in highly rated investment vehicles.

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subsidiaries and are not subject to significant foreign currency exposures, as the majority are held in investments denominated in U.S.

dollars as of June 30, 2022.

dollars as of September 30, 2022.

These funds may create foreign currency transaction gains or losses, however, depending on the functional currency of the entity holding the cash.

In addition, there are no significant restrictions that would preclude us from bringing these funds back to the U.S., aside from withholding taxes.

The following table represents a comparison of the net cash provided by operating activities, net cash used in investing activities, and net cash used in or provided by financing activities for the six months ended June 30, 2022 and June 30, 2021:

(in millions) Six months ended

June 30, 2022-2021

(in millions) Nine months ended

September 30, 2022-2021

Cash Flow 2022 2021 Change Percent

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Net cash used in investing activities (916.5) (930.6) 14.1 (2) %

Net cash (used in) provided by financing activities (1,456.2) 39.6 (1,495.8) NM

Net cash used in financing activities (2,105.7) (578.7) (1,527.0) NM

Operating Activities

During the six months ended June 30, 2022, net cash provided by operating activities was $2.1 billion, compared to $1.3 billion for the six months ended June 30, 2021.

Our results of operations, after non-cash adjustments to net earnings, contributed $2.9 billion to cash flows from operating activities during the six months ended June 30, 2022, compared to $1.1 billion as computed on the same basis for the prior year period.

During the six months ended June 30, 2022, we had an unfavorable working capital change of $809.4 million, compared to a favorable change of $229.7 million during the six months ended June 30, 2021.

The change in working capital for the six months ended June 30, 2022, was primarily driven by unfavorable impacts from increases in accounts receivable of $721.3 million and in inventories of $818.4 million, partially offset by increases in accounts payable and accrued expenses of $1.1 billion.

During the nine months ended September 30, 2022, net cash provided by operating activities was $3.0 billion, compared to $1.8 billion for the nine months ended September 30, 2021.

Our results of operations, after non-cash adjustments to net earnings, contributed $4.1 billion to cash flows from operating activities during the nine months ended September 30, 2022, compared to $1.9 billion as computed on the same basis for the prior year period.

During the nine months ended September 30, 2022, we had an unfavorable working capital change of $1.1 billion, compared to an unfavorable change of $173.9 million during the nine months ended September 30, 2021.

The change in working capital for the nine months ended September 30, 2022, was primarily driven by unfavorable impacts from increases in accounts receivable of $0.4 billion and in inventories of $1.0 billion, partially offset by increases in accounts payable and accrued expenses of $0.5 billion.

The increase in accounts receivable was primarily related to higher prices at the end of the quarter compared to the end of the prior year.

The increase in inventories was primarily due to higher raw material costs and building inventory volumes as our international locations prepare for their high seasons.

The increases in accounts payable and accrued liabilities were primarily related to an increase in customer prepayments in Brazil in anticipation of the upcoming high season.

The increase in inventories was primarily due to higher raw material costs and higher product costs for our distribution operations, as well as an increase in volumes.

The increases in accounts payable and accrued liabilities were primarily related to an increase in customer prepayments in Brazil, an increase in environmental reserves and higher accrued taxes due to current year earnings.

Investing Activities

Net cash used in investing activities was $561.9 million for the six months ended June 30, 2022 compared to $579.6 million for the same period a year ago.

We had capital expenditures of $553.1 million for the six months ended June 30, 2022, compared to $585.8 million in the prior year period.

Net cash used in investing activities was $916.5 million for the nine months ended September 30, 2022 compared to $930.6 million for the same period a year ago.

We had capital expenditures of $906.8 million for the nine months ended September 30, 2022, compared to $925.8 million in the prior year period.

Financing Activities

Net cash used in financing activities for the six months ended June 30, 2022, was $1.5 billion, compared to net cash provided by financing activities of $39.6 million for the same period in the prior year.

During the six months ended June 30, 2022, we made repurchases of our Common Stock of $999.4 million and paid dividends of $94.5 million.

We also made payments on our inventory financing arrangement of $302.7 million, payments on long-term debt of $28.6 million and payments of $81.1 million to the bank for amounts collected on their behalf under our Receivable Purchasing Agreement.

During the six months ended June 30, 2022, we received net proceeds from short-term borrowings of $11.0 million, and had net proceeds from structured accounts payable arrangements of $25.7 million.

Net cash used in financing activities for the nine months ended September 30, 2022, was $2.1 billion, compared to $578.7 million for the same period in the prior year.

During the nine months ended September 30, 2022, we made repurchases of our Common Stock of $1.6 billion and paid dividends of $163.3 million.

We made payments on short term debt and financing arrangements of $108.0 million and payments on long-term debt of $44.5 million.

We also made payments on our structured accounts payable arrangements of $123.5 million and payments of $79.9 million to the bank for amounts collected on their behalf under our Receivable Purchasing Agreement.

Debt Instruments, Guarantees and Related Covenants

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• business and economic conditions and governmental policies affecting the agricultural industry where we or our customers operate, including price and demand volatility resulting from periodic imbalances of supply and demand;

• the potential drop in oil demand, which could lead to a significant decline in production, and its impact on the availability and price of sulfur, a key raw material input for our Phosphate segment operations;

• a potential drop in oil demand, which could lead to a significant decline in production, and its impact on the availability and price of sulfur, a key raw material input for our Phosphate segment operations;

• because of political and economic instability, civil unrest or changes in government policies in Brazil, Saudi Arabia, Peru or other countries in which we do business, our operations could be disrupted as higher costs of doing business could result, including those associated with implementation of new freight tables and new mining legislation;

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• risks associated with our international operations, including any potential and actual adverse effects related to the Miski Mayo Mine;

• adverse weather conditions affecting our operations, including the impact of potential hurricanes, excessive heat, cold, snow, rainfall or drought;

• adverse weather conditions affecting our operations, including the impact of hurricanes, excessive heat, cold, snow, rainfall or drought;

• difficulties or delays in receiving, challenges to, increased costs of obtaining or satisfying conditions of, or revocation or withdrawal of required governmental and regulatory approvals, including permitting activities;

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• changes in our relationships with other members of Canpotex or any joint venture in which we participate or their or our exit from participation in Canpotex or any such export association or joint venture, and other changes in our commercial arrangements with unrelated third parties;

• difficulties in realizing benefits under our long-term natural gas based pricing ammonia supply agreement with CF, including the risks that the cost savings initially anticipated from the agreement may not be fully realized over the term of the agreement or that the price of natural gas or the market price for ammonia during the agreement’s term are at levels at which the agreement’s natural gas based pricing is disadvantageous to us, compared with purchases in the spot market;

• risks associated with the ammonia supply agreement with CF Industries, including difficulties in realizing benefits under the agreement, such as the risk that the cost savings initially anticipated from the agreement may not be fully realized over the term of the agreement or that the price of natural gas or the market price for ammonia during the agreement’s term are at levels at which the agreement’s natural gas based pricing is disadvantageous to us, compared with purchases in the spot market;

• other risk factors reported from time to time in our SEC reports.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis