The Mosaic Company — FY2023 Form 10-K
Reporting period: Year ended December 31, 2023. This is an annual report, not a standalone fourth-quarter earnings report; the supplied filing text does not provide clear Q4-only financial results.
Business context
Mosaic produces and markets phosphate and potash crop nutrients, animal feed ingredients and blended fertilizers. Its three reportable segments are Phosphates, Potash and Mosaic Fertilizantes (principally Brazil); it serves customers in approximately 40 countries. About 66% of 2023 net sales were to customers outside the United States.
Financial performance
| Metric | 2023 | 2022 |
|---|---|---|
| Net sales | $13.696 billion | $19.125 billion |
| Gross margin | $2.211 billion; 16.1% of sales | $5.756 billion; 30.1% of sales |
| Operating earnings | $1.338 billion | $4.785 billion |
| Net earnings attributable to Mosaic | $1.165 billion | $3.583 billion |
| Diluted earnings per share | $3.50 | $10.06 |
| Cash from operating activities | $2.407 billion | $3.936 billion |
| Capital expenditures | $1.402 billion | $1.247 billion |
Sales fell 28% and net earnings fell 67% year over year, principally as fertilizer selling prices retreated from 2022 levels. Gross margin declined 62%. Operating cash flow was down 39%; the company reported a favorable $401.7 million change in assets and liabilities, including lower receivables and inventories.
- Phosphates: Sales of $4.724 billion, down 24%; gross margin $702 million, down 60%. Finished-product volume rose 7% to 7.0 million tonnes, but average selling price fell 29% to $646 per tonne. Lower sulfur and ammonia costs partly offset lower prices and higher conversion and rock costs.
- Potash: Sales of $3.234 billion, down 38%; gross margin $1.215 billion, down 57%. Volume increased 9% to 8.9 million tonnes, while average selling price declined 43% to $365 per tonne. Lower Canadian resource taxes and royalties partly offset price pressure.
- Mosaic Fertilizantes: Sales of $5.685 billion, down 31%; gross margin $212 million, down 80%. Volume increased 3% to 9.7 million tonnes, but average selling price fell 33% to $587 per tonne. Lower product and raw-material costs partly cushioned the price decline.
Financial position, capital allocation and material changes
At December 31, 2023, cash and cash equivalents were $349 million, current assets $4.745 billion and current liabilities $3.874 billion. Long-term debt, including current maturities, was $3.362 billion; short-term debt was $400 million. Stockholders’ equity was $12.4 billion. Mosaic also had $2.49 billion available on its $2.5 billion revolving credit facility and reported compliance with its financial covenants. The filing describes a target liquidity buffer of up to $3.0 billion, including cash and available credit.
Operating cash flow less reported capital expenditures was approximately $1.005 billion (calculated from the filing figures; not a company-reported free-cash-flow measure). Mosaic returned capital through $756 million of share repurchases and $352 million of dividends paid in 2023. The annual dividend was increased from $0.80 to $0.84 per share, effective with the December 2023 declaration.
During 2023, Mosaic drew $500 million on a new 10-year senior unsecured term loan facility, repaid $900 million of 4.25% senior notes due in November, and issued $400 million of 5.375% notes due 2028. Its 2023 repurchases totaled approximately $748 million in open-market purchases, including shares under a $300 million accelerated repurchase agreement. The filing reports 16.9 million shares repurchased for approximately $748 million in its business discussion; the cash-flow statement reports $756 million of total repurchases, including tax.
Outlook, risks and unusual items
- Management expects 2024 capital expenditures of approximately $1.2 billion. It also estimates 2024 environmental capital expenditures of approximately $360 million, excluding consent-decree expenditures, and approximately $340 million for land reclamation, gypstack closure and water treatment. Comparable 2025 estimates are $360 million and $240 million, respectively.
- Esterhazy’s K3 expansion is expected to complete its full production ramp during 2024 or early 2025. Colonsay was idled in the first half of 2023 and returned to production in July.
- The CF ammonia supply agreement is scheduled to end in its current form effective January 1, 2025. Mosaic says it is confident it can secure adequate alternative ammonia supplies at competitive prices.
- Key business risks include volatile fertilizer prices and demand, weather and agricultural conditions, seasonal working-capital needs, raw-material and energy costs, transportation disruptions, foreign-exchange movements, and regulatory and permitting requirements. Operational exposures include brine inflows at potash mines, tailings and gypstack integrity, water treatment and reclamation obligations, and labor availability.
- Countervailing-duty litigation and administrative reviews concerning phosphate imports from Morocco and Russia remain ongoing; applicable rates could change. The company recorded a $57 million gain on the sale of Streamsong Resort. Other notable items included a $42 million pension settlement loss and $185 million of upward revisions to estimated closure costs at closed facilities. Total asset retirement obligations were $2.213 billion at year-end.
- A Brazilian tax-law change eliminating a VAT preference beginning in 2024 could pressure Mosaic Fertilizantes’ valuation; management said its $99.6 million of segment goodwill was not impaired at year-end but could be at risk of future impairment.
Most important facts for investors to verify
- Whether fertilizer prices, realized margins and segment earnings stabilize or recover after the sharp 2023 decline.
- Whether 2024 production and costs meet expectations, particularly the Esterhazy K3 ramp-up and potash turnaround and maintenance requirements.
- How Mosaic replaces the CF ammonia supply agreement before its current form ends in January 2025, and at what cost.
- Whether operating cash flow, seasonal liquidity and debt levels remain consistent with the company’s investment-grade and capital-return priorities.
- How Brazil’s VAT change affects Mosaic Fertilizantes, including potential goodwill impairment, and how phosphate import-duty proceedings affect U.S. market conditions.
- Whether environmental, reclamation and water-treatment estimates—and associated financial assurance—change materially. KPMG issued unqualified audit opinions on the financial statements and internal controls; the audit identified water-treatment assumptions within asset retirement obligations as a critical audit matter.