The Mosaic Company — FY2022 Form 10-K
Business context and reporting period. Mosaic is a global producer and marketer of phosphate- and potash-based crop nutrients, animal-feed ingredients and fertilizer blends. It reports Phosphates, Potash, and Mosaic Fertilizantes as its three operating segments. This summary covers the year ended December 31, 2022, compared primarily with 2021; the filing does not provide clear standalone fourth-quarter financial results.
Financial performance
| Metric | FY2022 | FY2021 |
|---|---|---|
| Net sales | $19.13 billion | $12.36 billion |
| Gross margin | $5.76 billion; 30.1% | $3.20 billion; 25.9% |
| Operating earnings | $4.79 billion | $2.47 billion |
| Net earnings attributable to Mosaic | $3.58 billion | $1.63 billion |
| Diluted EPS | $10.06 | $4.27 |
| Cash from operating activities | $3.94 billion | $2.19 billion |
| Capital expenditures | $1.25 billion | $1.29 billion |
Net sales rose 55%, gross margin 80%, and net earnings attributable to Mosaic 120%. Management attributed the improvement principally to higher realized fertilizer prices amid tight global supply and demand, including reduced exports from Belarus and Russia, the Russia-Ukraine conflict, and Chinese phosphate export restrictions. Higher input costs and lower sales volumes partly offset the gains.
- Phosphates: Sales of $6.18 billion and gross margin of $1.76 billion, up 26% and 35%, respectively. Average finished-product selling price increased 48% to $913 per tonne, while finished-product sales volume fell 15% to 6.56 million tonnes. Higher sulfur and ammonia costs, operational downtime and Hurricane Ian weighed on results.
- Potash: Sales of $5.21 billion and gross margin of $2.84 billion, up 98% and 169%. Average selling price doubled to $643 per tonne; sales volume was nearly flat at 8.10 million tonnes. Canadian resource taxes rose to $928 million from $260 million.
- Mosaic Fertilizantes: Sales of $8.29 billion and gross margin of $1.05 billion, up 63% and 24%. Average selling price rose 74% to $878 per tonne, while sales volume declined 7% to 9.44 million tonnes. Higher product, raw-material and production costs constrained margin.
Financial position and capital allocation
At year-end, Mosaic reported $735 million of cash and cash equivalents, $6.56 billion of current assets and $5.53 billion of current liabilities. Long-term debt, including current maturities, was $3.40 billion; short-term debt was $225 million. The company also had $752 million of structured accounts payable arrangements. It reported $12.19 billion of total equity and $2.49 billion available under its $2.5 billion revolving credit facility. Operating cash flow increased to $3.94 billion, while cash used in investing was $1.26 billion and cash used in financing was $2.68 billion. Working-capital changes, especially a $750 million inventory increase, reduced operating cash flow.
Mosaic repurchased about $1.7 billion of shares in 2022 and paid $236 million in dividends. The regular annual dividend was increased to $0.80 per share. It repaid $550 million of 3.25% notes at maturity in November. Management’s 2023 capital-expenditure outlook was $1.3–$1.4 billion.
Outlook, risks and unusual items
- Management said available cash, expected operating cash flow and borrowing capacity should fund operations, planned capital spending and expected dividends for the next 12 months. The filing provides no specific fertilizer-price or earnings guidance.
- Key exposures include fertilizer-price and demand cycles, farmer economics, weather and seasonality, raw-material and energy prices, freight availability, foreign exchange, and international political and trade conditions. The company highlighted ongoing Russia-Ukraine-related market disruption and inflation and supply-chain pressures.
- CF exercised its contractual right to end the ammonia supply agreement in its current form effective January 1, 2025. Mosaic said it expects adequate alternative ammonia supply at competitive prices.
- Environmental and reclamation obligations are significant: accrued environmental matters were $186 million; recorded asset-retirement obligations were $1.91 billion, with undiscounted estimated ARO cash outflows of $4.12 billion. The New Wales facility had a stack cavity and liner tear; a $73 million repair reserve was recorded, with further financial impacts not yet estimable. Environmental capital and reclamation, closure and water-treatment spending were forecast at approximately $300 million and $180 million, respectively, for 2023.
- Other matters include litigation and regulatory proceedings, permitting risk, potential tailings or water-management incidents, and brine-inflow risks at potash mines. The 2022 results included approximately $350 million of negative notable items, net of tax, including environmental-reserve and ARO revisions, pension-settlement and trust-security losses, and Hurricane Ian costs; a $98 million foreign-currency transaction gain partly offset these items.
- After year-end, Mosaic sold Streamsong Resort and approximately 7,000 acres for $160 million, approved a $300 million accelerated share repurchase, and declared a $0.25-per-share special dividend for March 2023.
KPMG issued unqualified opinions on the consolidated financial statements and internal control over financial reporting.
Important facts for investors to verify
- Whether fertilizer prices and volumes remain supportive as customer purchasing, farmer economics and global supply conditions change.
- Potash resource-tax exposure and execution of the Esterhazy K3 transition after K1 and K2 closures.
- Ammonia supply arrangements after January 1, 2025, and sensitivity to sulfur, ammonia, energy and freight costs.
- Progress and final costs for New Wales repairs, environmental reserves, AROs, reclamation and related financial-assurance requirements.
- Liquidity and capital-allocation plans against $1.3–$1.4 billion of expected 2023 capital expenditures, debt maturities and planned shareholder returns.
- Developments in permitting, legal proceedings, foreign operations and other contingencies; the filing notes that outcomes and potential costs may differ from current estimates.