MOS - Earnings call transcript Q3 2017

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Operator

Good morning, ladies and gentlemen, and welcome to The Mosaic Company's Third Quarter 2017 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. After the company's completes their prepared remarks, the lines will be opened to take your question.

Your host for today's call is Laura Gagnon, Vice President, Investor Relations of The Mosaic Company. Ms. begin. may you Gagnon,

Laura C. Gagnon

Chief welcome will third and be Rich President Officer, and call. Chief XXXX Presenting and and Vice Executive today Joc Mack, Officer. to you quarter our earnings Executive Financial Thank O'Rourke, President

mosaicco.com. senior call We to team our are prepared The available answer of are we at our available presentation after on leadership slides also questions using members have remarks. other the your during website the

differ are not We are making but may The projected the statements could statements uncertainties. financial this in future during based the Factors beliefs and our They in call. to Actual will forward-looking statements expectations from materially today's Exchange conference are with limited filed differ in and press to subject as Securities morning results and from and and this be forward-looking significant are materially Commission. management's results. release included about statements of include operating reports issued those and results results. to our that cause risks date on actual

to Now, to Joc. call over like turn the I'd

James C. O'Rourke

you for Thank earnings third our morning. Good discussion. quarter joining

Our operations. remained of margins and our well on Hurricane sales the phosphates a result demand as business improved costs. notwithstanding, continuing impacts Irma in production the third volumes strong by strong performed our driven phosphate global Potash quarter, and lower of

review additional quarter and share benefit fourth $X.XX of commentary items. third performance a will $X.XX including For the Mosaic add per earned quarter, from notable quarter guidance. Rich and our financial

by by some taken actions on significant focusing So, start Mosaic. off let me being

this as environment. any flow. Simply be can improve to important competitive actions cash as implementing business put, to and We it taking of are a profitability decisions number we company are make in Mosaic's

new leverage we intend as Our primary phosphate improving comes to business position transform to as online. global areas our leadership and profitability continue on capacity we are: focus our our focus first,

and costs ultimately executing in costs eliminating Esterhazy shafts our plans KX build unit. brine potash lower new to at Second, we our business management our are driving

of some targets improvements on us are after Vale in to by planning these each we where end operational of our Brazil detail integrated allow synergy Fertilizantes balance I'll fully reduction and actions, with the We business, combined pending dividend provide our long-term Third, acquisition closes. believe these, operations to in sheet implement the with will significant the our we optimize action taking XXXX. portfolio. asset starting achieve phosphates to are our

of Plant idle produce effective potash of at to X decision decided This ago. moves basis. on have in reducing overall our of the concentrate XXXX, production impact products a of end similar couple least We costs, optimize had one Florida years lowering City to as the assets moves year. desired of period the phosphate the City, the million we has making unit an global made capacity business requirements annual capital plant, is competitive for finished and to more a tonnes to our Those of to Plant Mosaic up marketplace.

the several making for are in We move reasons. Florida

our amongst Florida and each disproportionate of capital First, amount operations sustaining the facility is requires City cost it Plant highest a year.

need Florida City's of output, we material As and at the can able more investments increase consequence future our a a capital most our Plant of Plant will to portion tons. City, we optimize idling efficient production to be should operations market offset

improve margin expect phosphates our plant rate. gross will the We idling that

benefits the footprint. of demonstrates move this Second, global our

a deliver continue we'll to We cost so do profile. and lower will customers global to our with

while will to ramps up, venture effectively generating margins. a joint business from serve our more we Ma'aden our be other Indian As perspective and distribution able customers logistical higher

customers where advantage. in production our focus we have U.S. on will logistical we our a Americas the Additionally,

market when the preserve rather Plant City because our it, idling optionality than we to closing production want warranted. are conditions to permanently We recommence

believe to new supply supply phosphates and that additions. essentially growth with scenarios absorbing demand continue constructive, We is demand for

tons costs. that on begin our on is to expected project summer next schedule our KX and operating The potash at will budget. potash remains to give expansion and Next, producing further us reduce opportunities

to additional and constructing Mosaic's Over currently we mining eliminating mills closer in of have the combined ore to a seam, lowest potash move the are operating to mines and the $XXX believe brine be the of expect deliver to Brazil out We conveyor potash the acquisition KX we of KX for built million business costs which of cost in to historically among belt stages it Vale machines lowering mining performance will the been will management our and existing Fertilizantes, Peru. benefit expenses is early we opportunity the that lower to world the are activities. being and in drive completing America, In us we we allow year. as have South substantial improve time,

assets Our assets Vale Fertilizantes. sizable mining production Miski and joint distribution upstream the and the Mayo venture

drive business cash that the benefits will preparing are the announced. substantial transform synergies flow originally to We beyond we which

XXXX improvements in expect $XXX million annual business $XXX to least performance. cash an by We XXXX. deliver basis least at on in we we organic million additional Specifically, of savings at in $XX in can productivity on believe and an benefits synergies, million alone $XXX achieve flow million cash top in tax

procurement that of remain efficiencies, spanning on our promise operational We us to material strategy, bring the strong long-term savings assets high-quality the these by other value ideally the to encouraged situated have sourcing, acquisition which entire raw targets the will categories. chain, and are agricultural very plans focusing serve commercial achieve market. We Brazilian

X.X preserve intend our pay to our to balance to debt return moves additional roughly making down to targeted debt the cash. net EBITDA times. ratio long-term In of are we near-term, we strengthen and sheet Finally, to

target approximately As this a result, uses We our to This continually capital business million of all Once sheet we've of base. in our we $X.XX revisit per have ratios, move balance of to annual targeted we $XXX dividend analyze will dividend share. us our reduced will save conditions. from returned light per year. our

is improve competitiveness and optimization that expect With and Mack turn conditions. additional even Our operating and quarter I conditions to as to make we call ongoing market market that profitability improve. review decisions third sense can the Rich makes Rich? his for our that, you efficiency continue will the commentary, asset to maximize our including will over and

Richard L. Mack

Thank you, and Joc, good morning all. you to

large As demand. removed of Joc of mead additional noted, nutrients in start third quarter. been with in our I'll the the Phosphate expectation demand stable the with Global to key soil of the farmers business growing seek strong performed most Margins the segment. well as high replace the world. have by healthy regions crops from supply, remains

our quarter. Hurricane resulted Florida. unit. and a in effect in otherwise combined operations storm of what was previously lost phosphate operating tonnes business for lost production announced, Irma XXX,XXX The sales we very time strong tempered the The approximately As of that during impacted damaged product quarter

plants. on margin the months during business margin our can as from with quarter, of approximately note down in The the bringing for cost highlight September slide, approximately see a week's the phosphates first two gross presented $XX at for rate a our about a dealing themselves the the would operated did with the this want our $XX of a for challenges month the gross quarter I I and which worth of quarter third hurricane MicroEssentials realized that in premium to of job impact you our that the resulted being was performance of fact, during heck downtime period, In the to the in rate of preparing XX%. X%. million product. in million team

saw reach earlier to as record and are expected another be X volumes Our proved the MicroEssentials in sales year tonnes million year, compression approximately margin expected, we to this transitory. the

with described future, drive margin near-term respect keeping the we that in in mind incurred the to and improvements improvements to effect of changes. to the seeing actions, these So expenses need are phosphates, Joc be further we some to expect

expect range $XXX we of Turning the the tonnes to in $XXX be to tonne. and of to million prices volumes expect per to in X.X to the range phosphate be million shipping fourth X.X tonnes we quarter,

$X the Hurricane negative including rate is to million Irma, costs Our for in in quarter. from inventory impact which flow gross business margin fourth be single-digits, the the through upper estimated the expected will

we this we Industries to and market These call, per CF purchases XXXX. we gas, quarter quarterly expect plan flow tonne reminded quarter to will delay, take other about fourth that XXX,XXX tonnes gross you our with ammonia of effect of natural in contract margins last just our ammonia ammonia FOB reported At of a $XXX price approximately current through supply the our one pay the purchases. takes year. like about During with Louisiana our

was us ammonia in producer generate is to our time, supply contract volatility provides the over intended now, protects The While which contract economics prices. nitrogen underwater from remains us with reliable it expectation. and shared

the Turning segment. to Potash

the remains margins fact improving published result respectable realization. costs largest XXXX price by as strong generate essentially the Canpotex to reports. out through evidenced as potash Global to We continue including many the of managed suppliers, world's well according demand remainder of of sold and a are that

across For business. the production and want gross our has ago testament on But wide our the rate several in have and that hard a this of real we playbook guidance years to generated ranges made business. We improvements range had in the applying business cost end quarter, this down of operational to volumes margin potash team. and sales and also a We sure creative tremendous I higher prices forward the our top a XX%. progress phosphates made have came costs near work took our we and to a to thinking similar a impact. the to of be innovative look is emphasize

and related notable recorded and comprised expected in million of a royalty we be Canadian net province the by $XX per tonne the expense, million matter. MOP to charge of resolution. $XXX and offset also cost $XX $XX quarter, resolution impact table, positive the tonne tonne a of per tax is with since per the The in we will royalty brine cash royalty an highlighted cash collecting million items expense resource benefit, approximately we During the partially were cash penalties included the $XX a overpaid Canadian million $XX resolution management for $XX refunds to of avoid connection in expenses.

Brazil. $XXX gross to we to and we to of the proportion result cost expect the to the The made margins tonnes Colonsay high quarter. in upper of were end margin through of for teens volumes during $XXX quarter at International of Distribution flowing push of million X.X turnaround fourth the the higher range to our the out and seasonal the segment, per the quarter, being is fourth volumes earlier Esterhazy tonne. quarter a expect For to P&L decline our million In a reminder, potash the with third a we guidance this above product X.X be as year. expected range And the as decision rate or our to sales the be to range, peak higher prices in

seasonal in approximately expect $XX. We good tonnes margin normal are the in of be in of per X.X a quarter to line performance million million volumes expect expected X.X tonne patterns. Sales the to we fourth gross range and with

year Moving on to full guidance.

We on the slide. ongoing are of and brine full as result changes Other on can management. to a further focus expenses reducing seen year management estimates cost our SG&A be

completed to Vale operation the In nine after reported also underperformance challenge. performance. Clearly, XXXX specifically nor Mosaic we and how million. historically end, ammonia of Mosaic results is benefit viewing for wanted of with for a significantly a an lease the is this addition, months Vale in neither the resulted has the finance approximately barge transaction delivered $XXX cash for which address better of happy Fertilizantes which quarter I first

be and lens. business should as for cyclicality in business. that been don't Mosaic While through XXXX to that we sector an is always turbulence long-term I to medium has likely engage phosphate the believe been we optimistic there business future, We strategically and will XXXX, this examples. some believe year indicative about a when has viewed this be its can core that we absolutely especially and provide are viewed in the to subject in some

better and including Brazilian fire results, at movement and reais, compensation several prior million this than a believe the instance, plant costs We producing we ore to sense integration have fertilizer running fertilizer Fertilizantes with implemented that drive EBITDA items expenses to business accelerate diligently significant Fertilizantes Uberaba, being been obviously is which a integration flooding major apply a operational the are approach at performance, business consulting base iron Mayo, we operational there the performance. working transaction firms Vale through business. this nature. this improvements and in prioritize impacting actions and of roll-up incentive announced in and that For the faring basis an year materially Since business matter and Miski selling and on be world-class tied should Mosaic $XXX business transitory approximately when business. intend generate is Vale can model should be in of identify to is and that fact unusual with the have this that to to higher We are in The annual financial of viewed the through iron in Mosaic's capture of acquired December, of successful positive savings. is in urgency operational that ore Vale expected to appropriate that synergy acquired cycle been

message Joc's the strategic reiterate announced moves today. we regarding to like would I Finally,

of meaningful as impacts it call regardless of we to improving moves and are back These cash over our cycle of Joc? which competitive Mosaic performance management us flow his real cash lead for objectives. With on in us help Joc long-term these at employees are make in will in and We capital turn will flow, and part have leverage. financial that is thoughts. closing making the to that our to our be achieve many I'll as that, our where can turn difficult the reducing decisions improvements

James C. O'Rourke

time. our grow as your preserving across on and benefit Mosaic's from Mosaic improve. to are and over and efficient to conditions continue improvements that, Rich. future ability to we essential ability the want while and take returns. you. this bright to Thank industry profitability action long-term now very expect ensure improve competitiveness, market clear, The Operator? succeed shareholder I generate we and remains we to is long-term We we that will a be for our you, and Mosaic's understand Thank to operations focused to And we enhancing taking to questions. markets company win cycle. with expect are

Operator

Adam comes Sachs. Samuelson the from of line question first Your with Goldman

Adam Samuelson

Thank bit Good the Yes, could environment the announced Brazilian strategic associated differently, A cash and phosphate least that the Day existing you differently, how April changed with the of has restructuring capabilities dividend any if everyone. thought you're to and opportunities at and operational the differently the Brazil phosphate now actions relative of on thanks. looking little morning. a at costs for business of maybe lot morning, Wondering Analyst your the actions? this your you. in restructurings, provide

James C. O'Rourke

Look, let's guess Adam. I a go through one at Thanks these time.

Brazil start at But more We thinking to what going have Brazil. looked – go our let's we particularly on CADE with phosphates and our to that and a now we're since about got know then moved project for forward lot has we've clearly, there. see approval

from to that we higher project, a at we also look available find strategic that, we this weren't of we weren't we us or that know at but still us as in this significant believe can some synergies So as the looked to – benefits obvious that we level.

this over great expectations is that make we is drive And this the strategic to Brazil, of we our think the So, still can. most move. business always a in long-term, and

you're at that of which as margins and yes, the terms production market the In looked overall used a in same of we coming new your and any stage is we at phosphates, business number how market. using phosphates in we we're how online. really more in of ago, looked have We've the years play improve such is at looked of your playbook potash competitive the

stated ratio. I'm under X.X action comments. going we of to the that this of credit another to of couple can our market any we're always today, get make a Rich set a metrics had taking of we've dividend, conditions. stated let times debt-to-EBITDA terms By In goal ensuring

Richard L. Mack

Halloween, Thanks, Joc, happy and Adam.

been I Joc add, and it. covered today to April. it's it's I a responding would simply I think, would market environment. current versus think us to leader proactive and been I market comparing the say,

when believe going in decisions talking of And about we today actions to so, very had we're track I that and the marketplace. that has impact taking record a think a have that Mosaic the transformational positive tough are needed

Operator

of Andrews Morgan the from Your next Vincent with comes Stanley. question line

Vincent Stephen Andrews

and you to Thank well. Halloween as everyone happy

Just a the company upsize follow-up so Brazil had a a access they activities. they've is and synergies forth. after and transaction once the Oftentimes, on question, back to more closed comes information,

$XXX So working you the – of did I'm sort to us capital what just on the guess underground detail if is benefits. the curious, million the give what higher that and I you got synergies you some the work improving to is that

you us that help full the other side of if actually and books the a once you the close? look the just ground I then guess also, the upside understand, you Thanks. So have on boots there so could is potentially did deal at on stuff

James C. O'Rourke

Vincent. Sure,

Let really and then are me what start to level look a traditional calling operational There's couple at we're this improvements. from with. Those a buckets. synergies of high

some And that think the really going some those, of what I'm of you I are. actual helps to stage those give set examples, because

will So million. others, combining backhauls, sulfur, $XX is from you expect, rail, save that freight. million. ones We for buying and synergies people by the business spend and truck our – access freight port probably can VLI on combined companies that now about, two of materials, expect the the but billion by have Brazil $X all about $XX TIPLAM think synergy to have about utilizing we that freight SG&A there. in business can save there system. the ammonia distribution Likewise of rates to million rail on and system limestone, Raw Mosaic will power, normal on combined and lower working some the would We not we $X.X the a perspective, the and we instance in may

yield of through procurement the to They've year. gone their for will Fertilizantes So them credit, and already strategy will next trucks, them increasing million real year. $XX give their size of million through some our gone XXXX next about there's year that Vale $X.X yield which us improvements. has substantial areas

So a to normal because believe can very and And we the up, businesses have area-by-area for number SG&A, efficiencies benchmarked Rick we're a other those week, there great number. is I level detail. Brazil last his $XXX operational of we've our going to looked on when you we're going to numbers. at million that done of sessions longer synergies the added in we and how these of to what said, our Challenge achieve a make. I to have what answer we businesses in with amount existing are and all the get, in to and take little we've those area us add can was improvements The we $XXX just get these comfortable teams million and this the very get comprehensive to is think

So, more but we're say, as some that to we're where let there's And likely some Rich color to me more, Vincent committed well. as time give to you give at.

Richard L. Mack

Right, very for and asking a good Vincent, think I question context. you're

you approval so signing lot due the is we a after that additional you're in antitrust only ability to And course when information have diligence during amount it August. particularly targets, which XXXX with you're was transaction. hands set as got up of to have of access a happened we what's And doing these the synergy limited on had an of

some is spend opportunity amount. work a Joc there with And the obviously so highlighted. operational we've And on in-depth lot that that of consulting firms have identified external very the transformation had

out on call. numbers, right, of of the we viewing with with today's so it put for try And transaction context normally but was a close how it you're this to to the underperformance in we're and XXXX, come business bit thought little you important would

James C. O'Rourke

requires as they what have The some little just very but there. of to obviously to costs, There expected of other be we be situations. offsetting just as will in might won't that great thing get investment you mentioned, all on note other

Operator

from comes the question RBC Wong with of next Andrew Your line Markets. Capital

Andrew Wong

me Hi, good on for having call. morning. Thanks the

on a role Plant expansion Colonsay idling was Esterhazy what and you leader. next KX for similar similar come trying with Would Thanks. front like the online to to market example? to doing City be So, did year at you your something consider potash set

James C. O'Rourke

Andrew. Thanks,

way. Let me answer that this

looking at that constantly can. can best deliver the economic most we customers are how to our We we product

As such, affected. footprint not only efficiency, and we assessing that's our constantly how overall are our but

this So, future. to steps in I look done past we assume and that we the when take at you have leadership comes will the the think similar it time can in

necessarily and aware, MOP both you're take already we've Carlsbad required types that operate actions willing of As we're shutdown the to to for tonnage. margins just for and Hersey show well actions those not

Operator

Jonas question next from Bernstein. of with comes line Your the Oxgaard

Jonas I. Oxgaard

Hello. guys. My your on question Happy strategy. rock Halloween,

need you from cutting closing rock. idling City, some Florida means Are term? you of are – overseas down presumably idling Plant you're about So, that sorry, production this how less planning in you or imports on you're or the long thinking

James C. O'Rourke

Thanks, Jonas. you Happy Halloween to well. as

bit to a right what less will the is will little Four Meade South two Pasture from our an have the have we South now is Extension. years, to mining want the strategy down. mine sources as that rock moves in Fort existing areas the implication – in the new don't rock certainly But indirect, of rock or to and recognize that Extension over to existing owner be runs These we so the deposit, to require and we future either our So, the influx is us Corners move need year. need least but I next next there couple at

today, some wind So that will recognize a up Pasture, impact down. have we're to depleted ownership using build other will our of little mines Also balances. but Miski positive bit of that of rock a there, Mayo these get inventory on South as increased with inventory probably our definitely be

against supply six that and So whole flexibility can the system, say how required in our more next we only we I not at increase optimize minimize the we'll can months, how have but capital our comprehensive would system. a rock look for

Jonas I. Oxgaard

you. Thank Okay.

Operator

comes next Carson of with the from Don Susquehanna. question Your line

Donald David Carson

you. Thank

on the cycle. for question a Just phosphate your outlook

cut Chinese We've that. got to Saudi import obviously reference just yet. production a rock. Morocco signed made You've to actions OCP the in and haven't to taking capacity coming Arabia. deal But new They've with offset – online you're from

next So are of cycle? phosphate few production the how your we And over Chinese the see what's years? do general where in you view

James C. O'Rourke

But Thanks, Don. talk to China. Mike what of before I'm going made plans see from these me do let that. to expect I that, to turn we about say that we've over to irrespective

saw actions the So does by over taking we've in to market where in taken, the some of assuming be (XX:XX) the other years in presentation, are we've on color the will what words, constructive S&D as China today. the they you that, stays hand or it I'll think With the charts next we irrespective China few just for long-term Mike to give

Michael R. Rahm

All good Joc Don. Yeah. and right. Thanks, morning,

Let treat our we tonnes. in three at million me In about I XX-K, grow that a will idling Plant X% think global that XXXX, fairly a we the just look – has can about the so. or X.X over tonnes X.X if And or almost it City, million plant simple of way. produced you with shipments expect last years

capacity supply you if that tonne fill. at million to tonnes year, I come And XXX,XXX that that new the to potential on X.X until have you million new we That X will X next fill the X.X to the scheduled think a million Ma'aden that call to a to produce comes million hole. X.XX quarter, not to up, gives probably has OCP indicated of you million about so million first So, tonnes. hole up X.X will look and that's hub tonnes stream fourth believe probably about come

be from to our the best squeeze tonnes of plants plan So the world. in coming I more to try more rest the will few case, need out in there is Florida. a And operations, to optimize existing of tons think our

shifts demand jumped balance. talked the gun – year hopefully China and early or terms respect certainly we call we of With a on that up or cycle So I a admit the about supply about we bit. this an think, in forward and short, China, this made overall to recognize in

If Indonesia just on we dropping that talked exports million in whether And to the it's the about were that. due whatever. clearly, you X to early part been year this so our had fact we range Pakistan, good and demand tonne the back that world, million China to go of throughout has into X is Analyst been Day, or

X demand. that's going little global to bottom be the exporter smaller, bit of higher Custom significant rate. a that the Statistics, a X in Asian on be at structural in comment global place increases of be meet supply an the evolve major demand, impressive If into we in terms and to think some high changes industry there consistent profitable line look that phosphate operate Corrine to and the do to long-term But and one exports needs We are supplier China more at Chinese Chinese and and we probably And take is think there of do over you there very, we China think markets. our think some tonnes trends. time, to can probably that's will that very million going million more of still or analysis products to

Corrine D. Ricard

to of forget for high policy I the would level. about for evidence related end rock that a which $XX seeing the is rules government exports with got increase to rationalization, further non-integrated think in that just China add, import of very will in stringent you part made the this very, debt being very contributing rock along a of environmental comment deal. And which a I the in happening cost be is their we've high environmental We're it's should enforcement don't $XX and believe tax we the significant producers. nitrogen and And well. see a between it XXXX in compliance, the coming as market will the environmental we impacting and the clear

we've I in on rationalization cost continue both the long-term, significant been to see curve, the we think the so And impact expecting. will

Michael R. Rahm

would upward years. trending the is Arabian we little five And project Saudi there's capacity just rate in see the global over add the next the operating pipeline comes one that, new thing and on, I very after

Operator

from the comes question HSBC. with Falcao line next of Your Alexandre

Alexandre Falcao

on morning. share CapEx Hi. us you Guys, per that? the down Good to exactly, impact Florida. bit closing get I the there? a What's just wanted magnitude and tonne on impact What's color significant? on that Is with a more little the of bit if closing can COGS on on little

James C. O'Rourke

me the Let just He question. to straight that Rich has that hand detail. over to answer

Richard L. Mack

will benefits – Yeah. Alexandre, number severance City. and of and million of short-term Florida spend $XX we have capital, that's different savings quarter, of somewhere a comprised In Plant capital $XX roughly and then our a we'll see we there's it's XXXX our of fourth of as conversion that the comprised to a charge costs. reducing the in of $XX million that in come the also in we of the million assets harder would in expect vicinity cash would and expect idling result best less of working

Operator

Your next Piken the with question of Cleveland line Research. from comes Michael

Michael Leith Piken

just your Hi, wanted what on but bit for this I of late, little read type harvest fall? bit U.S. applications know has terms Yeah. little a the upcoming of a the to of been in the fall expectations expectations in have you for base any season touch sort

James C. O'Rourke

a over Michael. season but and and Thanks, and Corrine progressing. Yeah. it harvest, bit I'll fall seems people Mike Absolutely, how are focused coming about hand the little to to that's to little a still talk be fall late on the

Michael R. Rahm

you as Yeah, year. this morning, harvest the Good Yeah. is late know, Michael.

the think XX% in bin year I was As of five corn of of average about yesterday, XX%. versus the

purposes and Soybean complete, about is intents all harvest at for nearly XX%.

When I do P corn, $X and the $XX very that at in wheat still believe crop we've prices. our and expectations for of seen. remain still opens look we're So for round soybeans as new evident that for P numbers, up looking terms soybeans and farm things you demand, kind prices big it of think the removed, we fall and And and – that's good. K constructive economics interest and at $X are application we're XXXX K, beginning are

Rich is The that harvest in mentioned think those I tremendous replenish a other the so. agronomically, there we've last is need factor or that fact to soils. years And comments his had just four the

K and soil to Given plate seeing prices, stable replenish more some moderate we P are farmers and the nutrient levels. those step up of and

Corrine D. Ricard

even. these And while years in seasons we seen through harvest, with we've fall big got a some shipments really have terrific past December happening late

to looking so, And forward fall. still strong we're a

Operator

Isaacson with Ben of Scotiabank. line the from comes question next Your

Oliver Rowe

on a for have midpoint those It's consistent demand, taking affordability Rowe some could for with you forecast you as thoughts healthy XX potash a week, it? question. key drivers Thanks Corp tonnes, Ben. share Oliver inventories, and that's tonnes of Last XXXX driving of Potash offered really such or million view regional demand the for on do my

James C. O'Rourke

to going the much picture straight I'm Oliver. we of Thanks, give Mike over hand will years constructive Mike. this demand over a have for next couple pretty very the you details. potash But to and yeah,

Michael R. Rahm

One, strong. We're basically Sure. three I'd growth. very X% characterize demand it's in ways. expecting

an outlier not Over five next means. any years, by the we're

I think are at years. for next CAGR at forecasts look the X.X% you CRU five

at looking strong we're growth. So

positive Second potash. we're characteristic thing growth based growth. in applies first of the is like of the looking that looking And less to broad growth, for at we're years, kind showing very are volatile the same economic all at countries OECD kind several demand thirdly, time

took down, the at place the I going demand are six years think it last you years much terms consistent be next XXXX. in growth. three in all growth look was think years, the up, If of was to more five over years We three it

of for in our estimate specific and one that X.X seen. as tonnes certainly shipments year that's go, numbers prices far point we think we'll or the of the drivers XXXX, improvement million X.X% current end the with key As we've of

We're year, tonnes of point range million think XX we're million using next terms in shipments will go a to year. estimate we a XX.X For XX where tonnes. next of projecting million about

Operator

line Your Jeff from next question JPMorgan. the of with comes Zekauskas

Jeffrey J. Zekauskas

expenses are lower million of by or a it tonnes X to U.S. cash What more a much. much the Is $XXX how Plant in Brazil than the million? reducing net million And production in your than less very expect you X the tonnes? of closing DAP/MAP costs Thanks City? do by

James C. O'Rourke

Jeff. Thanks,

them to question your that is pretty that of talk the couple of question. there'll next be range what's your And the We to Most make was through that the up year. closing in terms run some little small hand how doing million If the is low in we mean lower can restructuring will cost There U.S. a over cost. implement? we our to be. if tonnes production of harder. obviously over about be average that terms of bit the will capital cost, charges might much half specified, up per some in X.X if of and I'll so to Mike unit Rich that of operations probably we what incur. be in might will other or years our first year we're what

I lost So tonnes of production would would a post say net-net, closure. just million under be X

Richard L. Mack

guess would I Jeff, And, add. I just

believe there Fertilizantes $XXX associated proportion some once some be more achieve. will spend to But little raw time, on talking that energy just expenditures the lot MRO then unit philosophy power categories be will a and about and the we chemicals, currently do to operating you capital or deal but the that, is purchasing upfront associated there with by significant. people to don't to I the numbers to savings by And respect you the maintained million our as that of be it's costs to mean XXXX when supplies, that Vale will wrench We along a associated But any or noted, similarly, any Fertilizantes about things start lot expenses again don't it. that when impacts savings asset possible. small I costs Vale start capital with vast the deep require per logistics, closed increasing utilization, expense of those bottlenecking get a bit of relate materials, a is will targeted dive into much more we your what think with be talking maximizing as Joc related require not as this severance certainly investment. with with that and are external are operations be And better could going categories, harvesting costs and detail that. of provide aggregating of going

come few months. more to So, in a details

Operator

with Your comes of Roberts next line the UBS. from question John

John Roberts

production getting the for what's contract you're mechanism mentioned Thank underwater cost currently, with ammonia but of you. you basis, CF is a The caught up?

James C. O'Rourke

Let give the you me hand John. that straight over there, to to details Rich

Richard L. Mack

calculation there John, money move. really what out Yeah, the is in it going at fluctuate spot – they money to prices depends going to the and ammonia as of or it's were

solely the what would today, and are. in economics, where are spot some ammonia in will I of it's not will underwater think And there movement the money. with natural of slightly it's producer so so economics the shared money yes, be price recent really we gas ammonia time, we tied producer plus where as And seen we've to over prices less it prices most of be But that of the last periods that out there and increases expect we're periods in will be couple weeks. the

James C. O'Rourke

cost we And think today this contract today ammonia be or circa $XXX. that some our announced just is to the spot will I give $XXX, last ammonia quarter specifics,

identical almost they're So, right now.

Operator

question Capital next line with comes from Joel Jackson Your of the BMO Markets.

Joel Jackson

Hi. or us right of rate of so $XXX then what's know like nine the from little months is unpack you the year about $XX a when talk with underperformance of running happy now happy are at? this the on Vale Good weren't help of? of And you're do business, a you run of and you that Vale business what businesses think of out of kind the the happened first morning. talk off to speaking speak flow the asset, we with. EBITDA Could off bit $XX little not what base that of you bit guesses the you – when million of year million running this year? cash or improvements that so you challenge, year your items, base sort ex so improvements for that million, things Can million or the $XXX of some next And is unusual business the is the

James C. O'Rourke

a a detail. over general to I'm make comments, Okay. little it of then Thanks, going Rich for to and more couple Joel. hand Look, let me

the – of Some just well this with faced Today, mine, been that unusuals still running call things up, Araxá they're let's if you they've not they're mine. their will. ramping Patrocínio year the

raise beyond to So, a big through out, issues, slowed dam it that probably year. than and Once mines the they're what expected. over there's ramp and been aware, all is you're led inefficiently some Vale running which inefficiencies one. have has rather some permitting which this To that up running to peer two actually there's permitting, of get happen some we

of say there's mentioned I Vale, and to because one of this to attention are want on detail? than couple our again. the that bunch things may So is other a got the so would compared small about company, abnormal to less that that Rich, areas, a more have do might a more some of But Rich good he'll is go in their you and deserved. little things mining operations have but I it it the talk of think

Richard L. Mack

Sure.

influencing This in and in leadership, million or the would that we of if gone been volatility, not contribution, it's a a is there's and But think we're by mining FX of Mayo, numbers ones, on the this terms on based subsidiary I year of interesting is – dollars. that. the is from in no time financial couple Joel least can probably a it and April that, both million a also foreign on production issues know have challenges the number look company's one way an below not north lot compensation iron held side of the that's in was millions asset that's there perspective tied that point There based kind context a And in ore, of in financial we so transition believe which a can't on range performance $XXX take $XXX anything the about time not years one, money our that EBITDA. improvement parent we control May had number incentive of We So, million at some the chemical best talked being some a were that their flooded, historically, the you of mining performance this Miski as we just in have multiple year so sort years chunk operations EBITDA they've from to significant at any years, structurally their low at which to any have the is been watermark has with have that XXXX. currency, is of $XXX tell Joc doubt only last And on today. do include of of that the from banking financial million side. fires $XXX see They've principal of FX had do year. are our a their of noted, period there performance of XXXX or Vale wrong, vantage operations not horizon. a or six I their has think it couple give, a at the leader for about had Fertilizantes. downtime and good we inefficient. I their Joc is that principal sale, inherently respect that and had executive, of five

top imprint on would on And that say be through hope million so, and some actions see normalized years basis, the years that's some I you question. of your be, higher, it we we're annual responsive that $XXX base a what should would base. cycle be should our the Mosaic on lower. taking, And to EBITDA

Operator

comes Bank question from of America. Steve of with next Byrne the Your line

Stephen Byrne

how globally led of in increasingly product U.S. to primarily shipment around being particular are imported increases this inventory see a – product? was world may to been year much to into curious in that the seeing of function the channel your you. P increased view I the any may much have as flowing areas higher have or U.S. as are in to And of Yes, you led K and it thank levels this demand? competitive of do you the because as

James C. O'Rourke

to prongs going Thanks, hand question. a Steve. Mike, straight over of on that to that that's I'm couple

it? ready for So, you're

Michael R. Rahm

remain on delays remained think Brazil Yeah, Okay. few of going most a strong, strong. Yeah, the demand it of is in on-farm talk variety farm Good down in farm, for you. our to in maybe Steve. reasons. economics I North good to view, America, there morning, But, a

example, prices an you of the give $XXX most from metric up tonne me Let price crop. Rabi India in a support metric tonne. They minimum their just wheat example, their for for increased took $XXX to they of

and and values farmers that P – into good At think farmer $X.XX. a nearly below Indian Indian I with than increase. that for X% translates And on-farm – well demand. K, is low $XXX wheat and paying less the urea that's time, generating market for same about of prices

do down are strong pulled given is that's channel you at particular just demand talked has been in one think good economic we've and to buy agronomic the inventories have we slow level, about, farm the inventories Corrine, India generally, I drivers worldwide on-farm any worldwide. getting Now, But increase example. that any and don't think and comments? that we see

Corrine D. Ricard

No, I would agree.

and point these think markets. Asian actually that from offers markets to this inventories and In unable even fact, of I you have India in tight at these some enough very demand had are see really some of secure strong

Operator

next Your question the comes Partners. from line Sandy Vertical Research of Klugman with

Sandy H. Klugman

run help mentioned production Louisiana operations, particular, the have Miski think the through could you Peru are what Vale transaction, shipping you'll Mayo your will this to Florida? how of an Thank the rock rock your relative of to versus morning. costs, you. you Post us in impact economics Good option close from that about more

James C. O'Rourke

to short Okay. give a this. answer Thanks, I'll Sandy. you

said earlier, As I whole still we strategy probably is call would this in flux. what rock

backhaul in check can we at as to levels because Louisiana Mayo exports Miski Mayo we recently rock though from from U.S. Peru testing blending doing material. Miski Louisiana the is most a inexpensive, as use both Gulf. it from Florida in been how the to rock have effectively quite We higher in and of bring actually a

to product Florida. So, to fairly it inexpensive from ship Peru to be tends

than As to to ship fact, it product Louisiana. I Florida Louisiana from it's to a Peru matter is from of think cheaper

market use for what sense, it's a or on that you you and you of But than source whether have, legitimate it needs give contracts rock your own with use do Mayo, in a us, lot we'll product better as best we we of whether Miski particularly a for compared purposes. particularly what it is sell for that the the to more in rock that more Louisiana. get So, understanding overall our detail of

Operator

the Juvekar Your question P.J. Citi. of next from with comes line

Daniel Jester

P.J. on everyone. for morning, Dan Jester good It's Hey,

it are going the case. think taking region I like for which China, Just XXXX. for phosphate be a world both shipments only that's that's the potash look And and the forecast at XXXX below your for shipments looks in to

like back, flagged if touch shipments a walk longer can China supportive you us kind growth comments of looks maybe on So you presentation. and outlook that fertilizer your step for Thanks. of in of you what policy bit the from through term some in government sort the

James C. O'Rourke

be number Mike growth going said, Okay, countries agriculture, are Mike. demand anymore, the broad a But to their seem over this right. not and very Obviously one their to that in improving based, it's quickly increasing country of fairly hand to it's Dan. shipments as

Michael R. Rahm

and Joc, Dan. good thanks, Yeah, morning,

big uncertainty take demand. just developments we game China develop they to much say the at bit to any indicated, I If that our of related account a think changer that's And recent have the into examine. not as onset, as demand a me terms Let they for of I think forecast continue biofuels do a capacity biofuels. that's in of

does annual and So, just the situations two let's case In view, X% how not potash. China we look different potash evolving. still the China put we're that will and in the of growth for use phosphate. see – leaders demand And rates think enough mentioned be among at relative pack, compound to our projecting the nitrogen because we aside in I and

we China of bit growing of industry, nutrient better think outlook phosphate. little demand a potash range. there's grains, developed as their it's oil the bit essentially production in may have to nutrient as improvement a of achieve think a we expanding lot in in sense case efficiency, think big as in a China. result, seeds fact, X% different phosphate they I as feed terms in X% be the use use attempt flatter demand. well phosphate, we Chinese has a have it that And So, we phosphate In balance that And for that to in of upside they

there biofuels prices a higher all happen. could change that As for with development various is could I said, that support whatnot if crops and certainly and

for So, for China phosphate growth it's potash. is very a think long-term. good stable big a force engine We

Operator

servicing just comment Credit with comes of you're Suisse. what Morocco for Thank or XXXX? competition But comment Your It you. can global you're America, especially Suisse from Christopher you. the from Parkinson Uruguay your and - more from Credit you you'll exports? Securities Can you whether Central not seeing S. the and on Ma'aden. indirectly increasing LLC seeing strategy for just on Christopher (USA) Parkinson Russia line appears your and/or in question Latin expectations Asia be Great. Argentina, next general Thank

James C. O'Rourke

into Ma'aden per We a Thanks, advantage freight India announcements. Chris. competitive as Florida because absolutely America, America Asia, think North has it why we're freight has Central that where our a Yes, substantial competitive focusing which our South and and advantage. production America into is of

I'm how and expert going a little So, our develop Corrine let, about strategy. bit to those talk

Corrine D. Ricard

Sure.

shipping advantages our hit our competitors Joc like in the to As than lots best probably Americas. a there Arabia mentioned, competition of lot freight We of served a be rather is markets it's a from well. of venture do will out our the Florida. Asian It joint in largely our while And advantage Saudi all are way expect market that for as there, us. primary freight is

And heavily the Americas strategy. on and export so, focusing our be pretty forward we'll

James C. O'Rourke

see in such as focus, with arbitrage good in America that a we say fit. those Saudi, can while be And let because me diversity we in and the production clearly production we will geographic markets have those production now North Brazil,

that that if ship really the it advantage us U.S. Ma'aden, is So, an This And those mean gives here question may we the still if it's to makes last please. that will we Asia around world. so only markets are from from sense. ship absolute doesn't our well slower, strategic a

Operator

final from with the of Your Etten Jaffray. question Tyler comes Piper line

Tyler L. Etten

are me the a you markets, could I talk in of confidence end about Brazilian ag of because Hey, lot guys. issues. and about the was sending Thanks for macro just wondering companies issues the farmer if talking here. political declining

down you're about what XXXX? Just as go thinking we market that and wondering you're seeing into how there

James C. O'Rourke

through is Tyler. But and as long-term just view anything The agriculture my the want Brazil I the relatively we one opportunity own all Mike markets opportunities for say, the in our sector and in there. is strong. let turmoil me very going seems And high that this still insulated is the let there Thanks, at believe still to there for Mike? and strong. Brazil in through is about least farmer in has week was Brazil, margins confidence well. from you to to Corrine, sell, growth in are be I'll that agriculture last talk do perspective, unaffected. confidence or been great add We the Corrine

Michael R. Rahm

We I'd projections, would Brazil range five terms near rates of the just is say of continue pack. or in that year demand our growth in to X% to top expect better. the X%

I think all of fully expect place the we are now continue. in that to trends

Just of some as I (XX:XX), now, the soybean numbers contract closed XX $XX BRL to March per BRL the almost at that's throw out think bushel reais or BRL at XX.X yesterday soybeans. closed right X.XX,

the since a If look look and and even XXXX at average back you $XX $XX. since that's XXXX, an average has take been been

in So market, been. noise it's the soybean despite as of all strong ever this economics is

hector of soybean X.X that's will that every is sector expansions continue think a area drive about we to to brought that nutrients. in and into tonne So production equal

at the all we haven't strength in the view of we no, So our of potential changed terms – don't market. Brazilian

James C. O'Rourke

its competitive going in me to today saying the continues company. can be leadership let close for by to here intend we strength of the We use market long-term to right moves most be So, the forward. any make Mosaic the position

you Have thank and for questions. that, your great with Halloween. very So a much your time

Operator

XXXX this quarter call. gentlemen, and Mosaic Company's The earnings concludes third conference Ladies

You may disconnect. now

Laura C. Gagnon	The Mosaic Co.
James C. O'Rourke	The Mosaic Co.
Richard L. Mack	The Mosaic Co.
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
Michael R. Rahm	The Mosaic Co.
Corrine D. Ricard	The Mosaic Co.
Adam Samuelson	Goldman Sachs & Co. LLC
Andrew Wong	RBC Capital Markets
Jonas I. Oxgaard	Sanford C. Bernstein & Co. LLC
Donald David Carson	Susquehanna Financial Group LLLP
Alexandre Falcao	HSBC Securities USA, Inc.
Michael Leith Piken	Cleveland Research Co. LLC
Oliver Rowe	Scotia Capital, Inc.
Jeffrey J. Zekauskas	JPMorgan Securities LLC
John Roberts	UBS Securities LLC
Joel Jackson	BMO Capital Markets (Canada)
Stephen Byrne	Bank of America Merrill Lynch
Sandy H. Klugman	Vertical Research Partners LLC
Daniel Jester	Citigroup Global Markets, Inc.
Christopher S. Parkinson	Credit Suisse Securities (NYSE:USA) LLC
Tyler L. Etten	Piper Jaffray & Co.

The Mosaic Company (MOS) 31 Oct 172017 Q3 Earnings call transcript