MOSAIC CO

We define liquidity as the ability to generate or access adequate amounts of cash to meet current cash needs. We remain committed to a disciplined capital allocation strategy and assess our liquidity in terms of our ability to fund working capital requirements, fund sustaining and opportunistic capital projects, pursue strategic opportunities and make capital management decisions, which include making payments on and issuing indebtedness and making distributions to our stockholders, either in the form of share repurchases or dividends. Our liquidity is subject to general economic, financial, competitive and other factors that are beyond our control.

We have a target liquidity buffer of up to $3.0 billion, including cash and available credit facilities. We expect our liquidity to fluctuate from time to time, especially in the first quarter of each year, to manage through the seasonality of our business. 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 stockholders, including paying our dividend. During 2023, we returned capital to our stockholders through share repurchases of $756.0 million and by paying dividends of $351.6 million. Our Board of Directors also approved an increase to our annual dividend to $0.84 per share, beginning with the dividend declared on December 15, 2023.

As of December 31, 2023, we had cash and cash equivalents of $348.8 million, marketable securities held in trusts to fund future obligations of $683.6 million, long-term debt including current maturities of $3.4 billion, short-term debt of $399.7 million and stockholders’ equity of $12.4 billion. In addition, we had $399.9 million of commercial arrangements for certain customer purchases in Brazil through structured payable arrangements, as discussed in Note 11 of our Notes to Consolidated Financial Statements.

All of our cash and cash equivalents are diversified in highly rated investment vehicles. Our cash and cash equivalents are held either in the U.S. or held by non-U.S. subsidiaries and are not subject to significant foreign currency exposures, as the majority are held in investments denominated in U.S. dollars as of December 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 funds held by non-U.S. subsidiaries back to the U.S., aside from withholding taxes.

Sources and Uses of Cash

As of December 31, 2023, we had cash and cash equivalents and restricted cash of $348.8 million. Funds generated by operating activities, available cash and cash equivalents and our revolving credit facility continue to be our most significant sources of liquidity. We believe funds generated from the expected results of operations and available cash, cash equivalents and borrowings, either under our revolving credit facility or through long-term borrowings, will be sufficient to finance our operations, including our expansion plans, existing strategic initiatives and expected dividend payments for the foreseeable future. We expect our capital expenditures to be approximately $1.2 billion in 2024. There can be no assurance, however, that we will continue to generate cash flows at or above current levels. At December 31, 2023, we had $2.49 billion available under our $2.5 billion revolving credit facility. See Note 11 of our Notes to Consolidated Financial Statements for additional information relating to our financing arrangements, which is hereby incorporated by reference.

We have certain contractual obligations that require us to make cash payments on a scheduled basis. These include, among other things, long-term debt payments, interest payments, operating leases, unconditional purchase obligations and funding requirements of pension and postretirement obligations. Our long-term debt has maturities ranging from one year to 19 years. Unconditional purchase obligations are our largest contractual cash obligations. These include obligations for contracts to purchase raw materials such as sulfur, ammonia, phosphate rock and natural gas, obligations to purchase raw materials for our international distribution activities, and maintenance and services. Other large cash obligations are our AROs and other environmental obligations, primarily related to our Phosphates and Mosaic Fertilizantes segments. We expect to fund our AROs and other environmental obligations, purchase obligations, long-term debt and capital expenditures with a combination of operating cash flows, cash and cash equivalents and borrowings.

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The following is a summary of our material contractual cash obligations as of December 31, 2023:

(a)Long-term debt primarily consists of unsecured notes, finance leases, unsecured debentures and secured notes.

(b)Based on interest rates and debt balances as of December 31, 2023.

(c)Based on prevailing market prices as of December 31, 2023. For additional information related to our purchase commitments, see Note 22 of our Notes to Consolidated Financial Statements.

(d)The 2024 pension plan payments are based on minimum funding requirements. For years thereafter, pension plan payments are based on expected benefits paid. The postretirement plan payments are based on projected benefit payments. The above amounts include our North America and Brazil plans.

See Off-Balance Sheet Arrangements and Obligations below for more information on other environmental obligations.

Summary of Cash Flows

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 financing activities for calendar years 2023, 2022 and 2021:

Operating Activities

In 2023, net cash flow from operating activities provided us with a significant source of liquidity. For the year ended December 31, 2023, net cash provided by operating activities was $2.4 billion, compared to $3.9 billion in the prior year. Our results of operations, after non-cash adjustments to net earnings, contributed $2.0 billion to cash flows from operating activities during 2023, compared to $4.9 billion during 2022. During 2023, we had a favorable change in assets and liabilities of $401.7 million, compared to an unfavorable change of $992.5 million during 2022.

The change in assets and liabilities for the year ended December 31, 2023, was primarily driven by favorable changes in accounts receivable of $526.3 million and inventories of $1.1 billion, partially offset by unfavorable impacts from changes in accounts payable and accrued liabilities of $1.1 billion and other current and noncurrent assets of $239.2 million. The change in accounts receivable was driven primarily by lower selling prices at the end of the current year compared to the prior year. The change in inventories was driven primarily by a decrease in raw material prices and a decrease in inventory volumes, across our segments. These changes were partially offset by a decrease in accounts payable and accrued liabilities which was primarily driven by a decrease in customer prepayments in Brazil and a decrease in raw material purchase prices. The increase in current and noncurrent assets was primarily due to an increase in taxes receivable and cloud computing costs in the current year.

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Investing Activities

Net cash used in investing activities for the year ended December 31, 2023, was comparable to the same period a year ago at $1.3 billion, primarily driven by capital expenditures of $1.4 billion in 2023. During 2023, we also completed the sale of the Resort for net proceeds of $158.4 million and 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 was $1.5 billion for the year ended December 31, 2023, compared to $2.7 billion in the prior year. In 2023, we made repurchases of our common stock of $756.0 million and paid dividends of $393.1 million. We also made net payments on our long-term debt of $95.3 million and had net payments on structured accounts payable of $384.7 million. In 2023, we also received net proceeds from short-term borrowings of $175.1 million.

Debt Instruments, Guarantees and Related Covenants

See Note 11 and Note 16 of our Notes to Consolidated Financial Statements for additional information relating to our financing arrangements and fair value measurements, which is hereby incorporated by reference.

Financial Assurance Requirements

In addition to various operational and environmental regulations primarily related to our Phosphates segment, we incur liabilities for reclamation activities under which we are subject to financial assurance requirements. In various jurisdictions in which we operate, particularly Florida and Louisiana, we are required to pass a financial strength test or provide credit support, typically in the form of cash deposits, surety bonds or letters of credit. See Other Commercial Commitments under Off-Balance Sheet Arrangements and Obligations and Note 22 of our Notes to Consolidated Financial Statements for additional information about these requirements, which is hereby incorporated by reference.