What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-05-04 compared with 2022-11-08 · 201 added, 283 removed, 200 unchanged (71% of the section changed)

4 unchanged sentences

Results of Operations

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

The following table shows the results of operations for the three months ended March 31, 2023 and March 31, 2022:

Three months ended

March 31, 2023-2022

(in millions, except per share data) 2023 2022 Change Percent

Net sales $ 3,604.3 $ 3,922.3 $ (318.0) (8) %

3 unchanged sentences

Selling, general and administrative expenses 127.7 132.4 (4.7) (4) %

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

Other operating expense 222.8 65.2 157.6 NM 337.6 87.8 249.8 NM

Other operating (income) expense (1.9) 50.9 (52.8) NM

Operating earnings 544.6 1,255.8 (711.2) (57) %

Interest expense, net (41.1) (39.3) (1.8) 5 %

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

Foreign currency transaction gain 51.4 310.7 (259.3) (83) %

Other income (expense) (8.9) 0.2 (9.1) NM

Earnings from consolidated companies before income taxes 546.0 1,527.4 (981.4) (64) %

1 unchanged sentence

Earnings from consolidated companies 427.7 1,155.0 (727.3) (63) %

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

Net earnings including noncontrolling interests 856.2 376.5 479.7 127 % 3,085.7 973.5 2,112.2 NM

Net earnings attributable to noncontrolling interests 14.5 4.6 9.9 NM 26.1 7.7 18.4 NM

Net earnings attributable to Mosaic $ 841.7 $ 371.9 $ 469.8 126 % $ 3,059.6 $ 965.8 $ 2,093.8 NM

Diluted net earnings per share attributable to Mosaic $ 2.42 $ 0.97 $ 1.45 149 % $ 8.50 $ 2.52 $ 5.98 NM

Equity in net earnings of nonconsolidated companies 31.3 30.7 0.6 2 %

Net earnings including noncontrolling interests 459.0 1,185.7 (726.7) (61) %

Net earnings attributable to noncontrolling interests 24.2 3.7 20.5 NM

Net earnings attributable to Mosaic $ 434.8 $ 1,182.0 $ (747.2) (63) %

Diluted net earnings per share attributable to Mosaic $ 1.28 $ 3.19 $ (1.91) (60) %

Diluted weighted average number of shares outstanding 338.7 370.1

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.

Overview of Consolidated Results for the three months ended March 31, 2023 and 2022

For the three months ended March 31, 2023, Mosaic had net income of $434.8 million, or $1.28 per diluted share, compared to net income of $1.2 billion, or $3.19 per diluted share, for the prior year period.

Net sales for the three months ended March 31, 2023 decreased 8% compared to the same period of the prior year, driven by lower average selling prices, as discussed further below.

Net income for the three months ended March 31, 2023 was also impacted by a lower foreign currency transaction gain which decreased 83% compared to 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 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 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 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 $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

• 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 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 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 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.

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

For the three months ended March 31, 2023, operating results in all of our segments were impacted by lower average sales prices compared to the prior year period.

Global markets have softened compared to the prior year period, as buyers have delayed purchases in anticipation of lower prices.

Average selling prices in 2022 were driven higher by tightness in global supply and demand.

In addition, the Russian invasion of Ukraine in February 2022 resulted in instability in global commodity markets and significantly reduced the supply of fertilizer and agricultural commodities produced in those geographies, which contributed to rising fertilizer prices in the prior year period.

Our operating results for the three months ended March 31, 2023 were unfavorably impacted in our Phosphate segment compared to the prior year period due to lower average selling prices compared to the prior year period, driven by the factors described above.

Higher raw material costs, primarily ammonia and blended rock, and higher conversion costs also had an unfavorable impact on operating results.

Operating results in the current year period were positively impacted by higher

finished product sales volumes, as the prior year period was impacted by logistical constraints caused by low inventory levels, and longer rail cycle times.

Our operating results for the three months ended March 31, 2023 were unfavorably impacted in our Potash segment by lower average sales prices compared to the prior year period, driven by the factors discussed above.

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

Our sales volumes were lower in the prior year period primarily due to longer rail cycle times in North America driven by weather conditions in Canada, and third-party labor issues.

Our operating results for the three months ended March 31, 2023 were unfavorably impacted in our Mosaic Fertilizantes by lower sales prices, which decreased globally compared to the same period in the prior year, as 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 demand recovery.

Sales volumes of other products, primarily gypsum and acids, were lower than the prior year period, driven by unfavorable weather, and sulfuric acid availability in the current year period.

Other Highlights

• 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.

• On January 12, 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.

• On January 17, 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.

• On February 24, 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.

During the quarter ended March 31, 2023, we repurchased 8,690,936 shares of Common Stock in the open market for approximately $448.0 million.

This includes 5,624,574 shares purchased under the 2023 ASR Agreement at an average purchase price of $53.34 per share.

• In March 2023, we paid a special dividend of $0.25 per share to our stockholders.

Phosphate Net Sales and Gross Margin

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

Three months ended Nine months ended

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

Three months ended

March 31, 2023-2022

(in millions, except price per tonne or unit)

2022 2021 Change Percent 2022 2021 Change Percent

2023 2022 Change Percent

North America

30 unchanged sentences

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.

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.

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.

Three months ended March 31, 2023 and March 31, 2022

The Phosphate segment’s net sales were $1.4 billion for the three months ended March 31, 2023, compared to $1.5 billion for the three months ended March 31, 2022.

The decrease in net sales in the current year period was primarily due to lower average finished goods sales prices, which had an unfavorable impact of approximately $240 million compared to the prior year period.

Net sales were also unfavorably impacted by approximately $15 million due to decreased sales of ammonia and sulfur.

This was partially offset by higher finished product sales volumes in the current period, which had a favorable impact on net sales of approximately $140 million compared to the prior year period.

Our average finished product selling price decreased 18% to $717 per tonne for the three months ended March 31, 2023, compared to $877 per tonne in the prior year period, due to the factors discussed in the Overview.

The Phosphate segment’s sales volumes of finished products increased by 11% for the three months ended March 31, 2023, 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 $259.3 million for the three months ended March 31, 2023, from $527.7 million for the three months ended March 31, 2022.

The decrease in gross margin in the current year period was primarily due to lower sales prices, which unfavorably impacted gross margin by approximately $240 million.

Gross margin was also unfavorably impacted by approximately $40 million, due to increased conversion costs and higher maintenance and turnaround costs.

Increased raw material prices in the current period, largely driven by blended rock and ammonia, unfavorably impacted gross margin by approximately $25 million.

These impacts were partially offset by higher sales volumes, which had a favorable impact of approximately $50 million.

The average consumed price for ammonia for our North America operations increased 14% to $605 per tonne for the three months ended March 31, 2023, from $532 in the same period a year ago.

The average consumed sulfur price for our North America operations decreased 16% to $236 per long ton for the three months ended March 31, 2023, from $281 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 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 $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 $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 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.

The average consumed cost of purchased and produced phosphate rock increased to $77 per tonne for the three months ended March 31, 2023, from $61 for the three months ended March 31, 2022, primarily due to an increase in processing costs and using more Miski Mayo rock in the current year period.

For the three months ended March 31, 2023, our North America phosphate rock production remained steady at 2.1 million tonnes.

The Phosphate segment’s production of crop nutrient dry concentrates and animal feed ingredients increased 5% for the three months ended March 31, 2023 from the prior year period.

Our operating rate for processed phosphate production increased to 74% for the three months ended March 31, 2023, from 70% for the same period in 2022.

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 Nine months ended

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

Three months ended

March 31, 2023-2022

(in millions, except price per tonne or unit)

2022 2021 Change Percent 2022 2021 Change Percent

2023 2022 Change Percent

North America

1 unchanged sentence

International

991.6 291.8 699.8 NM 2,443.6 661.8 1,781.8 NM

452.5 529.7 (77.2) (15) %

Total 906.6 1,059.8 (153.2) (14) %

Cost of goods sold 493.3 480.9 12.4 3 %

Gross margin $ 798.7 $ 236.0 $ 562.7 NM $ 2,305.2 $ 593.4 $ 1,711.8 NM

Gross margin $ 413.3 $ 578.9 $ (165.6) (29) %

Gross margin as a percentage of net sales 46 % 55 %

11 unchanged sentences

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

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.

Three months ended March 31, 2023 and March 31, 2022

The Potash segment’s net sales decreased to $0.9 billion for the three months ended March 31, 2023, compared to $1.1 billion in the same period a year ago.

The decrease was due to lower selling prices, which had an unfavorable impact on net sales of approximately $230 million, compared to the same period in the prior year.

This was partially offset by higher sales volumes compared to the prior year, which favorably impacted net sales by approximately $70 million.

Our average finished product selling price was $475 per tonne for the three months ended March 31, 2023, compared to $591 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 1.9 million tonnes for the three months ended March 31, 2023, 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 decreased to $413.3 million for the three months ended March 31, 2023, from $578.9 million in the same period of the prior year.

The decrease in gross margin in the current year period is primarily due to a decrease in selling prices, which contributed approximately $230 million to gross margin, compared to the prior year period, and an increase in turnaround costs of approximately $10 million, compared to the prior year.

Gross margin was also unfavorably impacted by increased product costs of approximately $10 million compared to the prior year period, which was driven by lower production volumes.

The decreases were partially offset by $50 million due to higher sales volumes, and a $40 million reduction in Canadian resource taxes and royalties compared to the prior year, as discussed below.

We had expense of $ 120.8 million from Canadian resource taxes for the three months ended March 31, 2023, compared to $157.2 million in the same period a year ago.

Canadian royalty expense decreased to $18.6 million for the three months ended March 31, 2023, compared to $27.0 million for the three months ended March 31, 2022.

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

Our operating rate for potash production was 69% for the current year period, compared to 80% in the prior year period.

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 $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.

The decreased operating rate reflects the temporary idling of our Colonsay, Saskatchewan mine during the quarter, due to market conditions.

We expect to restart the mine in the second half of 2023.

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 Nine months ended

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

Three months ended

March 31, 2023-2022

(in millions, except price per tonne or unit)

2022 2021 Change Percent 2022 2021 Change Percent

2023 2022 Change Percent

Net Sales $ 1,343.3 $ 1,488.6 $ (145.3) (10) %

Cost of goods sold 1,344.4 1,269.3 75.1 6 %

Gross margin $ 348.3 $ 332.2 $ 16.1 5 % $ 1,017.8 $ 620.4 $ 397.4 64 %

Gross margin $ (1.1) $ 219.3 $ (220.4) NM

Gross margin as a percent of net sales — % 15 %

24 unchanged sentences

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

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 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.

Three months ended March 31, 2023 and March 31, 2022

The Mosaic Fertilizantes segment’s net sales decreased to $1.3 billion for the three months ended March 31, 2023, from $1.5 billion in the same period a year ago.

The decrease in net sales was due to lower finished product sales prices, which unfavorably impacted net sales by approximately $260 million, and lower sales volumes of other products, primarily gypsum and acids, which unfavorably impacted net sales by approximately $80 million.

This was partially offset by higher finished goods sales volumes, which had a favorable impact of approximately $190 million.

Our average finished product selling price was $646 per tonne for the three months ended March 31, 2023, compared to $817 per tonne for the same period a year ago, due to the decrease in global sales prices as discussed in the Overview.

The Mosaic Fertilizantes segment’s sales volumes of finished products increased 14% for the three months ended March 31, 2023, compared to the same period a year ago.

Sales volumes were impacted by an increase in market demand for fertilizer products in the current period.

Gross margin for the Mosaic Fertilizantes segment decreased to $(1.1) million for the three months ended March 31, 2023, from $219.3 million in the same period of the prior year.

The decrease in gross margin was primarily due to an unfavorable impact of approximately $260 million related to the decrease in selling prices during the current year period, compared to the prior year

Gross margin was also unfavorably impacted by approximately $30 million, due to lower sales volumes of other products, primarily gypsum and acids, driven by unfavorable weather, and sulfuric acid availability.

Lower costs had a favorable impact of $90 million, driven by a decrease in product costs for our distribution business, and lower sulfur costs in our production business.

The average consumed price for ammonia for our Brazilian operations increased to $1,150 per tonne for the three months ended March 31, 2023, compared to $1,145 per tonne in the prior year period.

The average consumed sulfur price for our Brazilian operations was $278 per long ton for the three months ended March 31, 2023, compared to $337 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 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 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.

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.

The Mosaic Fertilizantes segment's production of crop nutrient dry concentrates and animal feed ingredients decreased 13% for the three months ended March 31, 2023, compared to the prior year period due to down time for plant maintenance.

For the three months ended March 31, 2023, our phosphate operating rate decreased to 78%, compared to 92% in the same period of the prior year.

For the three months ended March 31, 2023, our Brazilian phosphate rock production decreased slightly to 0.86 million tonnes, from 0.93 million tonnes for the prior year period.

Corporate, Eliminations and Other

In addition to our three operating segments, we assign certain costs to Corporate, Eliminations and Other, which is presented separately in Note 18 to our Notes to Condensed Consolidated Financial Statements.

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 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 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.

The prior year period also included the results of operations for the Streamsong Resort®.

For the three months ended March 31, 2023, gross margin for Corporate, Eliminations and Other was $(1.1) million, compared to $113.2 million for the same period in the prior year.

Gross margin was unfavorably impacted by a net unrealized loss on derivatives of approximately $1 million in the current year period, compared to a net unrealized gain of approximately $100 million in the prior year period.

Gross margin was also negatively impacted by approximately $100 million due to unfavorable product costs and inventory adjustments in our distribution operations, primarily in China.

Sales in China and India collectively, resulted in revenue of $266.8 million and gross margin of $(10.8) million in the current year period, compared to revenue of $220.9 million and gross margin of $87.0 million in the prior year period.

These changes were partially offset by the favorable impact of lower elimination of profit on intersegment sales in the current year period, which changed from the prior year period by approximately $97.2 million.

Other Income Statement Items

Three months ended Nine months ended

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

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

Three months ended

March 31, 2023-2022

(in millions) 2023 2022 Change Percent

Selling, general and administrative expenses $ 127.7 $ 132.4 $ (4.7) (4) %

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

Other operating (income) expense (1.9) 50.9 (52.8) NM

Interest expense (50.2) (43.9) (6.3) 14 %

1 unchanged sentence

Interest expense, net (41.1) (39.3) (1.8) 5 %

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

Foreign currency transaction gain 51.4 310.7 (259.3) (83) %

Other income (expense) (8.9) 0.2 (9.1) NM

Provision for income taxes 118.3 372.4 (254.1) (68) %

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

Equity in net earnings of nonconsolidated companies 31.3 30.7 0.6 2 %

Selling, General and Administrative Expenses

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 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 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 $(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 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, partially offset by the strengthening of the U.S.

dollar relative to the Canadian dollar on significant intercompany loans.

Selling, general and administrative expenses for the three months ended March 31, 2023 decreased $4.7 million compared to the same period of prior year, primarily due to lower incentive compensation costs which decreased by approximately $17 million in the current period compared to the prior year period.

This was partially offset by higher costs of approximately $10 million in consulting and professional services related to executing on our strategic initiatives.

Other Operating (Income) Expense

For the three months ended March 31, 2023, we had other operating income of $1.9 million, compared to expense of $50.9 million for the same period of the prior year.

The current year period includes a gain on the sale of the Resort of approximately $57 million.

Foreign Currency Transaction Gain

We recorded a foreign currency transaction gain of $51.4 million for the three months ended March 31, 2023 compared to $310.7 million for the same period in the prior year.

For the three months ended March 31, 2023, the gain was the result of the effect of the weakening of the U.S.

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

dollar-denominated payables held by our Brazilian subsidiaries.

Other Income (Expense)

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 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.

For the three months ended March 31, 2023, we had other expense of $8.9 million compared to income of $0.2 million for the same period in the prior year.

The current year expense was primarily related to realized losses on the marketable securities held in the RCRA Trusts of approximately $8 million.

Equity in Net Earnings of Nonconsolidated Companies

For the three months ended March 31, 2023, we had equity in net earnings of nonconsolidated companies of $31.3 million compared to $30.7 million for the same period in the prior year.

These results were primarily related to the operations of MWSPC.

Provision for Income Taxes

Three months ended Effective Tax Rate Provision for Income Taxes

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.

March 31, 2023 21.7 % $ 118.3

March 31, 2022 24.4 % $ 372.4

Income tax expense was $118.3 million and the effective tax rate was 21.7% for the three months ended March 31, 2023.

For the three months ended March 31, 2023, discrete tax items recorded in tax expense resulted in a benefit of approximately $13.9 million.

The net tax benefit consisted primarily of share-based excess benefit, true-up of estimates 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 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.

incentives, by 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.

Critical Accounting Estimates

1 unchanged sentence

In preparing the Condensed Consolidated Financial Statements, we are required to make various judgments, estimates and assumptions that could have a significant impact on the results reported in the Condensed Consolidated Financial Statements.

We base these estimates on historical experience and other assumptions believed to be reasonable by management under the circumstances.

We base these estimates on

historical experience and other assumptions believed to be reasonable by management under the circumstances.

Changes in these estimates could have a material effect on our Condensed Consolidated Financial Statements.

3 unchanged sentences

Liquidity and Capital Resources

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.

As of March 31, 2023, we had cash and cash equivalents of $464.8 million, short-term debt of $854.6 million, long-term debt, including current maturities, of approximately $3.4 billion, and stockholders’ equity of approximately $12.1 billion.

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

1 unchanged sentence

We also target debt leverage ratios that are consistent with investment grade credit metrics.

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 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.

Our capital allocation priorities include maintaining our target investment grade metrics and financial strength, sustaining our assets, including ensuring the safety of our employees 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 three months ended March 31, 2023, we returned cash to shareholders through share repurchases of $456.0 million and cash dividends of $152.4 million, and invested $321.5 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.

1 unchanged sentence

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

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.

As of March 31, 2023, we had $2.49 billion available under our $2.50 billion committed revolving credit facility, approximately $475.0 million available under our uncommitted facilities and had $2.1 billion available under our $2.5 billion commercial paper program, that is backed by, and reduces availability under, 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 September 30, 2022.

We were in compliance with these ratios as of March 31, 2023.

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

2 unchanged sentences

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

dollars as of September 30, 2022.

dollars as of March 31, 2023.

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 nine months ended September 30, 2022 and September 30, 2021:

(in millions) Nine months ended

September 30, 2022-2021

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 three months ended March 31, 2023 and March 31, 2022:

(in millions) Three months ended

March 31, 2023-2022

Cash Flow 2023 2022 Change Percent

1 unchanged sentence

Net cash used in investing activities (221.4) (297.2) 75.8 (26) %

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

Net cash used in financing activities (209.0) (125.0) (84.0) 67 %

Operating Activities

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 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.

During the three months ended March 31, 2023, net cash provided by operating activities was $149.0 million, compared to $506.2 million for the three months ended March 31, 2022.

Our results of operations, after non-cash adjustments to net

earnings, contributed $636.3 million to cash flows from operating activities during the three months ended March 31, 2023, compared to $1.1 billion as computed on the same basis for the prior year period.

During the three months ended March 31, 2023, we had an unfavorable change in assets and liabilities of $487.3 million, compared to an unfavorable change of $639.0 million during the three months ended March 31, 2022.

The change in assets and liabilities for the three months ended March 31, 2023, was primarily driven by a decrease in accounts payable and accrued expenses of $841.6 million, partially offset by favorable impacts from decreases in accounts receivable of $310.7 million and inventories of $241.2 million.

The decrease in accounts payable and accrued liabilities was primarily related to a decrease in raw material purchase prices, a decrease in customer prepayments in Brazil, payment of taxes and the payment of incentive compensation related to 2022.

The decrease in accounts receivable was primarily related to lower selling prices at the end of the quarter compared to the end of the prior year.

The decrease in inventories was primarily due to lower raw material costs in our Phosphate and Mosaic Fertilizantes segments and lower inventory volumes in North America, due to seasonality.

Investing Activities

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.

Net cash used in investing activities was $221.4 million for the three months ended March 31, 2023 compared to $297.2 million for the same period a year ago.

We had capital expenditures of $321.5 million for the three months ended March 31, 2023, compared to $290.5 million in the prior year period.

During the three months ended March 31, 2023, we completed the sale of the Resort for net proceeds of $158.4 million.

We also purchased the other 50% equity of GSS for $41.0 million.

GSS is now wholly owned by Mosaic.

Financing Activities

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.

Net cash used in financing activities for the three months ended March 31, 2023, was $209.0 million, compared to $125.0 million for the same period in the prior year.

During the three months ended March 31, 2023, we made repurchases of our Common Stock at an aggregate cost of $456.0 million and paid dividends of $152.4 million.

We also made payments on our structured accounts payable arrangements of $211.4 million and payments on long-term debt of $15.0 million.

We received net proceeds from short term debt of $228.6 million and proceeds of $400.8 million under our inventory financing arrangement.

Debt Instruments, Guarantees and Related Covenants

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Further information regarding financial assurance requirements is included in Management’s Discussion and Analysis of Results of Operations and Financial Condition in our 10-K Report, under “EPA RCRA Initiative,” and in Note 8 to our Condensed Consolidated Financial Statements in this report.

Environmental, Health, Safety and Security Matters

Federal Initiatives to Define “ Waters of the United States.

” The 1972 amendments to the Clean Water Act (“ CWA ”) established federal jurisdiction over “navigable waters,” defined in the Act as “waters of the United States” and often abbreviated as “WOTUS.” As it relates to Mosaic’s operations and facilities, the scope of the term WOTUS dictates legal requirements for our National Pollutant Discharge Elimination System wastewater discharge permits and for impacts to surface waters and wetlands associated with our phosphate mining operations.

A broad definition of WOTUS, and thus the scope of federal jurisdiction, increases the time required to identify wetlands and waterways subject to federal regulatory and permitting requirements, and the amount and type of mitigation required to compensate for impacts to jurisdictional WOTUS caused by our mining operations.

The current regulatory definition of WOTUS was promulgated on April 21, 2020, by the U.S.

Environmental Protection Agency (“EPA”) and the U.S.

Army Corps of Engineers and was designated the “Navigable Waters Protection Rule” (“NWPR”).

The NWPR was intended to provide clarity, predictability and consistency so that the regulated community

could better understand where the CWA applies and where it does not.

On June 9, 2021, EPA announced its plans to repeal and replace the NWPR, and in December 2021 issued a proposed regulation to revise the WOTUS definition and replace the NWPR.

On December 30, 2022, EPA and the Corps promulgated a revised, expanded definition of the term WOTUS (the "2022 WOTUS Rule"), which became effective on March 20, 2023.

The 2022 WOTUS Rule asserts a broader geographic scope of federal jurisdiction than either the 2020 NWPR or any previous WOTUS regulatory definition.

Two separate legal challenges to the 2022 WOTUS Rule have been filed in the U.S.

District Court for the Southern District of Texas;

one lawsuit was brought by the State of Texas, and the second by agricultural interests.

A third lawsuit was filed in the U.S.

District Court for District of North Dakota by twenty-four states, several trade associations and tribal entities.

On April 12, 2023, the U.S.

District Court for North Dakota granted a preliminary injunction of the Biden administration's 2022 WOTUS Rule.

The Court’s Order and Preliminary Injunction prevents the 2022 WOTUS Rule from being implemented in 24 states, including Florida.

The case is West Virginia, State of et al v.

Environmental Protection Agency et al., Case NO.

3:23-cv-0032.

The State of Florida and 23 other states were plaintiffs in the suit, as were a number of trade associations and several tribes who intervened in the case.

The broader decision by the North Dakota District followed an earlier decision in March in the U.S.

District Court for the Southern District of Texas preliminarily enjoining the 2022 WOTUS Rule in Texas and Idaho.

Additionally, it is anticipated that EPA and the Corps will be revising the 2022 WOTUS Rule after the U.S.

Supreme Court decides Sackett v.

The Sackett case is expected to clarify Clean Water Act jurisdiction and oral argument was held on October 3, 2022.

A final decision by the Court that interprets the constitutional scope of the term WOTUS is anticipated to be issued during the second quarter of 2023.

Off-Balance Sheet Arrangements and Obligations

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Factors that could cause reported results to differ materially from those expressed or implied by the forward-looking statements include, but are not limited to, the following:

• the impact of the novel coronavirus Covid-19 pandemic on the global economy and our business, suppliers, customers, employees and the communities in which we operate, as further described in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2021;

• 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;

• 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;

• the continued impact of the novel coronavirus Covid-19 pandemic on the global economy and our business, suppliers, customers, employees and the communities in which we operate;

• changes in farmers’ application rates for crop nutrients;

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• changes in the costs, or constraints on supplies, of raw materials or energy used in manufacturing our products, or in the costs or availability of transportation for our products;

• economic and market conditions, including supply chain challenges and increased costs and delays caused by transportation and labor shortages;

• declines in our selling prices or significant increases in costs that can require us to write down our inventories to the lower of cost or market, or require us to impair goodwill or other long-lived assets, or establish a valuation allowance against deferred tax assets;

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• disruptions of our operations at any of our key production, distribution, transportation or terminaling facilities, including those of Canpotex or any joint venture in which we participate;

• shortages or other unavailability of railcars, tugs, barges and ships for carrying our products and raw materials;

• shortages or other unavailability of trucks, railcars, tugs, barges and ships for carrying our products and raw materials;

• the effects of and change in trade, monetary, environmental, tax and fiscal policies, laws and regulations;

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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 hurricanes, excessive heat, cold, snow, rainfall or drought;

• adverse weather and climate conditions affecting our operations, including the impact of potential 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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• any significant reduction in customers’ liquidity or access to credit that they need to purchase our products;

• the effectiveness of the processes we put in place to manage our significant strategic priorities, including the expansion of our Potash business and our investment in MWSPC, and to successfully integrate and grow acquired businesses;

• the effectiveness of the processes we put in place to manage our significant strategic priorities, including our investment in MWSPC, and to successfully integrate and grow acquired businesses;

• actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental obligations and Canadian resource taxes and royalties, or the costs of MWSPC or its existing or future funding;

• the costs and effects of legal and administrative proceedings and regulatory matters affecting us, including environmental, tax or administrative proceedings, complaints that our operations are adversely impacting nearby farms, businesses, other property uses or properties, settlements thereof and actions taken by courts with respect to approvals of settlements, costs related to defending and resolving global audit, appeal or court activity, and other, and other further developments in legal proceedings and regulatory matters;

• the costs and effects of legal and administrative proceedings and regulatory matters affecting us, including environmental, tax or administrative proceedings, complaints that our operations are adversely impacting nearby farms, businesses, other property uses or properties, settlements thereof and actions taken by courts with respect to approvals of settlements, costs related to defending and resolving global audit, appeal or court activity and other further developments in legal proceedings and regulatory matters;

• the success of our efforts to attract and retain highly qualified and motivated employees;

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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;

• 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;

• 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;

• 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