MOS - Earnings call transcript Q2 2018

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Operator

Good morning, ladies and gentlemen, and welcome to The Mosaic Company's Second Quarter 2018 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. After the company completes their prepared remarks, the lines will be open to take your questions.

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

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

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

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

We presenting certain measures. financial will also be non-GAAP

Our attached form as non-GAAP and important contain exhibits performance on measures. information data first filing also yesterday's X-K to release quarter press these

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

James C. O'Rourke

you second discussion. would Clint a immersed the couple quarter to and is Good joining now I he call. welcoming morning. business. CFO, fully Freeland, in start been earnings by to new with us for like Mosaic's the Thank has our Clint of months

messages business call. as company. our you conditions Our of this Fertilizantes results benefits would well across the Vale in the our quarter three take base away the as moves, and improvements the cost including many of key to like acquisition from for continuing reflect of meaningful We strategic transformation

resilience business flow, leverage First, demonstrating the cash both strong earnings Mosaic of is our the we created. and generating

of third, believe and XXXX. firm. we to and remainder will markets continue for strengthen, they deliver strong phosphates we to potash And expect remain the Second, results

items adjusting both billion, million, primarily for per For on $X.XX $X.X currency year-over-year. changes, Mosaic After earned and share. $X.XX $XX per non-cash notable up related the quarter, sequentially to net items, share or of earnings foreign sales were

also is offsetting today in begin is market tonnes Ma'aden greenfield a look have be on two, projects gradual with the production. EBITDA demand adjusted new phosphates full tight a joint a full-year X our worth noting with we its expected XXXX production with demand facilities If to strong year adjusted new capacity for production guidance. time observations ramp-up I'll share was around the or a tough and stated with We the annually. seeing earnings towards What market, supply. take phosphates. raised long new back as it per with to we're struggling coming online starting both brief the new of world gradually works absorb and year That phosphate venture several the that It million relatively Arabia of includes capacity. Saudi reach to

years. That considering year, phosphate of S&D four great In Mosaic's Mosaic, of shipments another our of predicted. Brazil. in tonnes analysts XX phosphate demand global of million production tonnes million X.X record global to Mosaic's capacity recent network acquisition new in expects next to XX included reach million have with margins their idling obviously ongoing and the industry City is industry further tightened now of highest point especially at stripping the restructuring with the addition, Chinese phosphate Plant in for

New with be will we at up a supply into keep challenged expect the pace continue market to demand. to come will growing gradually

through several the and XXXX. farmers As last a producer holding recent and In prices, picture drop momentum to remains up back we soils and global remain the potash, in continue demand large agricultural affordable well. to strong continued expect year's and into phosphate after the back a of balanced half the are nutrients record-setting commodity market replenishing Despite the first pace shipments XXXX supply following numbers. crops. demand depleted are result, prices Potash

we believe be next with to look will years. we several As coming demand over in product growth ahead, market balance the that the is new

are keeping couple eye on of a our factors. We

producer. year-to-date, phosphate Chinese high by producers Chinese because part new which and positive facilities on Mosaic stripping and Longer is experts market But continue restrictions export a a market, in there levels. First, respond as have we China. may margins higher weakens, fallen balance currency of as industrial cost environmental rise Chinese the the prices in resuming term, to to producers vertically-integrated for expect

agricultural commodity flux. Second, prices are in

impact strong these in potential on While we global key our to closely however, developments at monitor demand assess shipments, point, geographies. two and P&K their this will continue look prospects

out Soybean economics will have ample this record of local time due farmers basis. and means large expected to Brazil crop are a than a that month highly to America, fall. North harvest P&K field normal, replenish earlier they of taken weaker reais about record In the another and amounts profitable the are in to

and insight provide our on business move I'll segments. some Now, into

phosphates the margin we per from business after the benefited $XX market for prices higher than items, a tonne product. tonne, more of Margins in First, same $XX obviously generated our notable double unit, quarter per gross or year ago.

Just are transforming the though, we towards is as this important, business making progress unit.

consumed significantly our a $XX below of example, quarter, rock percentage higher an remain the Miski phosphate rock As during even costs tonne. per with Mayo

sales quarterly MicroEssentials products. of had premium record we addition, In our

well were carry of negatively sequentially logistics During sulfur costs year. the more turnaround quarter, weather-related sales to business the using of the expected molten offsetting sulfur. gross the impacted third costs impact cost prilled at higher as beginning quarter. These improved barge, margins of higher issues In potash the from volumes our into unit, our by our are costs with associated with margins as once-every-five-year higher sulfur sulfur the a

which for issues of that bodes higher the inched impact cost As year. our remainder we the very P&L we during remained controlled, and second second for the call, the flowed well discussed during profitability quarter. and earnings on our last experienced containment through quarter, first well quarter prices the during Production the

undergo typical the reminder, in turnarounds assumptions several which maintenance and embedded third will guidance. our during our is As we a quarter

soon the conveyor adjusted now more KX pro-formas KX the production and year. the term, KX. a enter KX. place business EBTIDA. and quarter and generated up year to overland it adjusted second performing cost to Fertilizantes, basis on later the continue facilities we during to about good down Paraguay into at earnings in eliminate was to are recently brine costs All This published continue We an this We million will The KX be mill. Brazil phase update in-depth of unit make Longer plan call. breakeven year. provide our progress tied commissioned we drive the of We at to also expect as management ramp at Esterhazy showed mine business Mosaic our in last previously is our eventually we well. EBITDA on next $XX

But improvement favorable improvement we phosphate and rates the business. of to prices. much came from from Some exchange resulted the work higher currency the of the are doing transform

negatively Our truckers' for by and second planned for quarter both million $XX May. were results Brazil almost impacted in nationwide strike the turnarounds in the

million strike As our tax. us quarter. volumes, production total, lost estimate the $XX lowered shipment a the earnings adjusted guidance miss volume approximately and strike, of result before In by we for to which we caused idled the

increased are bottom the XXXX. this the million They to well gross or delivered advantage $XXX the by achieve our the Regardless, executing low in monitor gives lasting several plant resolution. chemical line. end truckers $XX the to position of and synergies, of million schedule we year the continuing cost improvements the have of and at after as find us Brazil. Year-to-date, in cost to Brazil The achieve more and labor situation million closely end efficiencies work are $XX a teams process from million throughput. believe in net are $XXX We curve to hundred projects government a to competitive savings hit of mine ahead

our we already are pleased mine have costs see on XX% that basis. example, As to at almost by reduced a reais been an Tapira

in it we there achieve much likely synergies million XXXX, will be of in While done. $XXX still is is to excess believe net we

the with as devaluation published we the is The freight One which potash. quarter. employee and benefit energized key first was well currency time year fit impact soybeans Mosaic's Brazil's of this The very to Brazil. mix. delayed implementation is Clint primary Brazil changes watch minimum when rates. modest benefit entire of and morale final is sold. Brazilian of government's production of weak risks A needs high team the market a and crop the the continue I It surpass us as soybean is cost product the are of attractive product production the United on a phosphate recent to for The is are needs the reais total agricultural market. the recognized to the during Brazil saw reminding expected an net worth remains Brazil that and in is levels of point extremely States you visit. firsthand during high

of a costs addition, these proportion hedged. In are

are we to addition, the Brazilian receivables cash reais-based hedged and In close on on sheet. our balance net fully

Now, a capital. on note

performance flow. business strong prepayments customer in driving Our are good Brazilian cash

$XXX For flow. free in generated to close million cash we the quarter,

down and work using are cash towards targets. to to leverage through debt our our We some of pay returning cycle ratio

already in an we of the with XXXX. the retired million $XXX debt target have of fact, additional million quarter, achieved In by down of third paying already $XXX end our

we use Mosaic's and Our the of maintain our then capital with pleased changed. and a assets, the performance quarter. have the to and are opportunities priorities not balance In returns. see, for including assess shareholder total, investments sheet seek strong We capital sustain given remaining best we we

deliver are billion share year. benefits. optimistic financial are in our and remainder results for strong XXXX. $X.XX billion of this the and We why we strengthening to to that we the generating $X.XX $X.X for now $X.XX adjusted in EBITDA the execution for is real EPS range to That's per expect Markets adjusted range be will

many We have to business, as our attractive continues and returns market improve. position a to strategic resilient moves this generate built Mosaic

Now, Operator? we will take your questions.

Operator

Morgan Our of line Vincent from the first question Andrews from Stanley. comes

open. is line Your

Vincent Stephen Andrews

with theory, obviously fast stripping think Plant not which on Thank bring has City market. probably So, going impact you about positive in counterbalance away capacity that thought? impact exports? Chinese the as that had on potentially but some margins Plant great – you of the good sort export maybe curtailing everyone. we to the market very you temper do as how vis-à-vis morning, the would, do you in Joc, market, capacity keep China's mentioned your of helping higher How Chinese the and back City capability

James C. O'Rourke

to Sure. thoughts changes me little from Plant on we some bit our Good morning. China. And, about hand bit you. little to just of these going I'm And it and giving Corrine a you just to good City, start a think let changes higher talk Well, less is in hear of we a Vincent, decrease by will to the of overall, some utilization higher with their believe see will better that expensive trend occur believe We'll and the these do plants. exports. China slowly prices, But slower. that I the of plants the little environmental-performing definitely

really Plant terms In of has last the City, for City Plant from year. not changed criteria review

the would behind in came new that say, to on offset idling of from in the little might production been but coming was a As Plant come you fully new expected thinking we time, predicted, Clearly production place same the City still production have has next that or we couple on expecting slower than come some expect on. the of the years. that have first at will

in of offset own that offset growth also of our market, Some believe the some capacity. be by we but in by reduction is that will

anything Corrine, about want market? Chinese that, you with is So, to there say the

Corrine D. Ricard

They environmental lot some being either a and the get with River. been to to reporting protection the local work get reduced proximity and at to seeing mines try relocation of is closures discussion and of are lot still mandate updates some still they're having our river the producers evolving, that related are situation disposal around for gypsum They're of challenges. the Yangtze increased doing to too more or we've rock about has the are team a a We little production The cost and real and distance. close regularly. seen us Sure. threatened

exports. and their cost these So, total on in to and up. of go starting up We're higher add you're for they're their that's is cover structure costs economic asking having seeing producers on their to fully prices that why these really part pressure offers seeing

look the All down. effect. have run. it about anticipate year the the But you pace it MAP DAP, are margins, industry long difficult long in to stripping is we take in restructuring. down really triple to X% like with the starting for and six of course, said, but first the these really said, of you're If they exports, smaller financially run, months anticipate going of But strong that modestly, at a is Chinese healthier Joc to the

James C. O'Rourke

let And reiterate. so me just

future. restarting We see longer real that product Plant be the will that market. the today for may perceived City in need term but a that change criteria for Our don't in

Operator

Our next question.

James C. O'Rourke

question? Next

Operator

Okay sir.

Oxgaard the question next from comes Our line from of Jonas Bernstein.

open. line is Your

Jonas I. Oxgaard

Good Fertilizantes if morning, guys. question on mind. two-part you A Mosaic don't

months First earnings, steps first I the know QX you is first six you've little of is here? second the in The In math. and impressions, two-thirds second realized the next for one-third about more kind and of just half down what's there your talked your synergies a in been half. bit

Now, saying million I or mean in that half Does second have million $XXX $XX that? you're how so far. the think should another we about

James C. O'Rourke

Thank second the come math a in you. way, by I'll to back Jonas, good Okay. here, morning. the

Jonas I. Oxgaard

Morning.

James C. O'Rourke

Yeah.

at is changes we becoming as focused about of nutrition. from They're an were I Mosaic excited of Mosaic what view Mosaic extremely crop the energized first our of nutrition the about point on had my Probably, delivery a Fertilizantes, making seen the really We've how very team. and better of energized and opportunities of most are impressions employees hoped new encouraging group team. impressions that's First been crop being the or part part good perspective than have for. the think least that

encouraging. that's So, really

for. indicate, of least kind better than have what been could capture you as As or our hoped has synergy we at good

So let question. or, earnings back QX in now sorry, the come to the terms question – of me synergy

we achieve. achieve said of half we're achieve $XX million yes, $XXX of to like $XX cost and net the the we cost year, would have million, First to including gross we of synergies. more of million Net though,

at we a we're we certainly rate So, the we're next then, well good achieving us running rate than good very XXXX the we next quarter, that We're a will very will $XXX two-thirds we to positioned that. line. running encouraged $XX that. that or and about into achieve only achieve to in million. not of year, million better have the And have $XXX very give million And going do run to be for the a but at might position bottom

Operator

you. Thank

comes Our line from from of JPMorgan. next Jeff question the Zekauskas

open. Your line is

Jeffrey J. Zekauskas

your is MAP really Thanks up. show your the decrease about data, make increase what from in very phosphate the or in there the second you much. two-part in issues And costs cost MAP that DAP In export shipments? or secondly, and would are of turnaround note shipments but is about but you in by also What inflation the China other trucking quarter a DAP more a third that Brazilian It's down up you TSP operations, question. third might over carry XX%, do quarter?

James C. O'Rourke

outside in season the well turnarounds we be our the fertilizer take which the thanks, particularly of turnarounds Mike, as a second to going the bit is most into let comment in the running why question I'm over of the plants quarter. to third quarter, head Certainly, risks and main to hand in – good Jeff. shape, little we the me be Well, Sure. we need the were but quarter. about the China

lot issues, In the and anti-competitive. of the our but quarter government, bit implemented trucking trucking started, perspective strike that in people will come goods, that from certainly there unconstitutional because probably cost issue The been is by second of our biggest terms have there really it of a into of big area little we've of the it it is a the quarter tables that that while the guidance. concern believe and third impacted is covered

correctly. they believe was don't implemented that So, that

find to a So, solution call workable the government yet what really we'd is there.

freight, before we is into entered from the sales, So, which exposure that the and strike. include product main

the and we don't clarity the have for these Now, of kind rate that still we cases, of implementation need have freight table. uncertainty in

we So, unknown there have exposure is into there which incorporated our guidance.

resolution. really is one sales But it there risk of is risk that that's the just that is book clear generally, biggest is it truckers. believe got right sure don't always obviously can't because disruption of It's we've risk lack risk there risk a also good on. because an do it's trucking by a However, a now, for But we and unknown. making to works. likely. that a the we execution of and Hopefully, helps. that There's further We a plan think Brazil the

Jeffrey J. Zekauskas

you. Thank

James C. O'Rourke

sorry, China. and Oh

that Let straight me hand to Mike.

S&Ds. pretty got he's think handle a I good on the

Mike Rahm

Sure. Good Jeff. morning,

in that plants modern integrated numbers large in the have that indicative strong I see India increase costs are years. that in the really you over rebound MAP driven we are the And that supplied accelerate think mentioned reduction largely in the as by river is like. typically who that and are next in Corrine production are some first non-integrated before, they're by the higher and reflects a there. several Indian regulations XX% comply the that of exports located a as imports is in not more we're demand result, really players players half imports incurring or river environmental The the on One, changes along in expect of of year, mostly to seeing this where, a difficult China the big the being more DAP and to with. economics the drop stringent

of I things line, just bottom So, to come. it's think indicative

Operator

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

Your line open. is

Ian Bennett

Ian Bennett Hi. on This is Steve. for

that on or you there MAP production, the progressed and largest those to less comment is Thank DAP your the the pricing and will in will up switch divergences? in back levels think price be well of across any exporting competitor those MAP, you. ability Following as Can less have only your realizations but you markets how half seems on if year the as similar first remain China question, more exporting OCP not in of Jeff's and it MAP, also DAP. is

James C. O'Rourke

to about between Sure. a have talk to to price Thanks, What and products some DAP from that I'm hand will Corrine produce market those I the over this ability needs. the a MAP strong however, going the perspective production of we say, is Ian. and differences progressions. to

more about the other. than to the we're by or are So, we market ability demand one produce driven

those switching to the the all want to products we're So, do price the serve you time talk about realizations? better Corrine, market.

Corrine D. Ricard

good It's for the Ian. point. a Thanks actually question, Sure.

overall That, With a of MAP mentioned. and we less, price little increase that a City bit flexibility of a a But which that to add now got be little a our in of Mike, customers of the Plant other MicroEssentials bit facility we produce noticed bit our factors an basically want price we on seeing the the to in our market. exports DAP, a little idling We've are pricing bit out in is as you DAP increase Joc want. DAP produced the MAP do quite have a MAP have seen overall quite you production our of combined China, with product. products something? products of based able the to that to relative

Mike Rahm

by fundamentals Indian Just the very flip there's Corrine slower into year. idling strong. side, the been import given in on Plant terms of off City. this start U.S. stronger And Brazil are the a demand has DAP demand as of said, DAP to MAP exports

We up. to expect pick them

of year. I Brazil some second that expect in the recovering with the continue that I changes that we we're think MAP think And price half relationship of given some strong So, already will seeing in probably their demand import premium. prices

James C. O'Rourke

question? Next

Operator

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

is open. line Your

Ben Isaacson

about little talk a you you MicroEssentials. much. very Thank bit Can

You those volume the with in where Thanks. triangulate could doing quarter. patents stand past off future and had your expectations from with competition? from How does that maybe where are and when patent, you the come in you and and U.S. are come growth the the those this record markets what Brazil

James C. O'Rourke

Ben. Thanks,

U.S. too by that's obviously million limitations. the you the be and became up have markets. production X.X our the capacity tonnes, that we start me whatnot just limit we're in because far start the the that, Central and main frankly, Again, target second but against the production running started to Let going to We key close research market and and Brazil America developed not quite area. And U.S., to out. we're produce we soon, giving in product to hitting going

to that what's believe further. a next will the So, we're that look world to expand successful going an at around MicroEssentials. have to be we that product been for opportunity such It's there

Counsel, one of patents, over terms that In the me second. hand just to say a But in might Isaacson, I Mark let thing. General our

in-the-field our a and as in scale results in for of it produce made situation. or come do patent MicroEssentials anyone difficult and to the much me-too years without As the XX anything, of to the proven with knowledge plus how production very have of

Corrine D. Ricard

the levels markets, all Ben, so and just a it for was maintained relative thanks that having This has shows pricing and demand growing. Yeah. MAP has success production for been record sales are with been of we much quarter at noting. and the our and Overall, to MicroEssentials, strong the product. in

have turn to about think As Isaacson. Joc I'll of says, start the we're terms to in production. the to patent, going there from in over And to further growth Mark

Mark J. Isaacson

already a Even filing the in have operating the the quality us that that have will much as we have to them also made allow that patent then that make of quantities secrets to be improvements expiring be trade MicroEssentials we and years here, though in technology is the and And we knowledge we MicroEssentials in Right. patents will and been primary really, for. product, few that mentioned, Joc in can. –

Operator

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

Your line is open.

Donald David Carson

of what's on a follow-up Does lead higher a because that on of costs domestic as the you impact into up? outlined for rising go you supply your it'll Brazil, demand relative you to as we on price does expectations Rahm, through Yes. rates? operating slide into Thank higher it a rates What freight the more this unfolding phosphate P&K. side? XX new XXXX do you. umbrella in XXXX And as question see XX, and a you then for affect create some Brazil? imports A capacity starts globally and do of or freight Mike overall just for see basis as How producer

James C. O'Rourke

ahead and please. go first that, you give the part Mike, to Let's,

Mike Rahm

be Fertilizer the those deficit I you in out, certainly commodity demand have drop-off We'll crop based initial in how tonnes global for good Okay. forecasts. Thanks X.X nicely morning. Good June, move. for couple of our from tonne we side, sources. XXXX range. probably there's margins for various demand Yeah, Yeah, years prices that when that several have in increases that the very the to capacity. market we're out anticipated phosphate, well that deficit prices see demand more some particular, winding you run if world shipment in especially the from million how on to All year. next But Don. look holds same the given little lay we And up. we've continue are changes, estimates at a bit to to said note of the they from ramping bit and is the bit we're up ramp-up charts, reflect a is for given XXXX, saying plays trade situation to facilities global modest was do those of going should true some It the ag potash projections When the takes in the question. including We at maybe need from but calls a is much production tight sources in will think emphasize There of We've line revised we story see past deficit a unfolding. be look much rebounding the what XXXX, would wheat. on not a potash XXXX that think Association. new through supply with that look close X is higher well. significant And for case for basically than stimulate a they phosphate. really likely and saying additional that base. the increase And up China big of seen and I and information as for to that more at of that when continued next bottom down in XXX,XXX earnings year, what past million our a various levels end a half. least growth capacity, see year. we we will the are International you we supply reduction exports a in very those our at trim even was as also situation a others are first think little they against could And the what smaller into with in puts balanced obviously And

James C. O'Rourke

your In to the Fertilizantes Mosaic of clearly our advantages to the one of second key question, is answer Don, proximity business markets. the agricultural

So, freight is be would a for structure it in Brazil product. cost than much lower component of imported our an

proportionally As general freight advantage we and such, we freight have increase cost advantage expect that in a our would with the of freight.

Operator

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

is line open. Your

Adam Samuelson

to mix a healthy going closure on discount Nutrien import question about Between structure sales net the interested market Moroccan – amount. of think your And Thanks. continues pretty best I hear Russian on Plant American thoughts phosphate the pretty Good pricing market just structure up the was everyone. North by structure the idling the market closing A Redwater North meaningful and of end and America. of think or that in a U.S. XX export equivalents morning, own market City are by product, next is the the from back the trade you that year, over your import context? to you Yes. to persists? where the Brazil, discount plant the months do do prices and how for how at not in if or or which the evolves requirements

James C. O'Rourke

Thank Yeah. you, Adam.

increasing we're within production be not are certainly into because need imports Redwater at market. sure price. Let seeing may drive the of I'm equalize U.S. the requirements discount at of they plant to the by City, U.S. into I will have it those up is Plant me that, the Nutrien no for the and that be the Orleans of question group. market start but the saying, more of not some price that other import been suspect clearly, imports coming by need to both of rate by brought Redwater that. have time, a will those there New to Over indicates might and from the redistribution Brazil they the the fertilizers there

the So, or other go up will will the have fertilizer to in U.S. words to the than rather pay markets and other Brazil the U.S.

mean, systems to Anything we to I the that's time over market. Corrine? for these have mean work So, free add, positive think out market U.S. and

Corrine D. Ricard

No.

add would a I and thing do been is pretty in areas up. lineup and coming asked hard. pretty have export only product sales the think I These heavy you we other have own markets export pulling Mosaic's Brazil about

are few the starting lineup see more market. vessels into U.S. the We to a into

people need for want and I into Mike, up to aware think country. some tonnes do are to become you of it this draw market the move to more indicates starting add? the

Mike Rahm

year the this The a U.S. out fact implied going only phosphate XX. out has about think, came on shipments the upward. I there's on years. thing taken America, have that into at of of massive have a is significantly soil are the statistics think of I and When June add And past would and in they look in imports you The these on is record X.X I would five add complete see reflects in market the nutrients grown the the is some trending interesting North did that that the really only ended things, market. million fertilizer that that I crops America lots we picture tonnes. XXXX-XXXX that for indeed, June we thing And, North

Operator

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

Your line open. is

Andrew Wong

morning. Hi. Good

tables to what back But the the little going be of and just understand some down cost tell. can Brazil it's freight but the as uncertainty how with tell can it, and tonne you costs are how and, now, to trucker to there's difficult belabor per changed, of a bit that's much I chain? Just not the passed us and

James C. O'Rourke

the freight exposure don't is main the can incorporating is can did get into Microphone. But the level I right you once contracts, table what strike. we tell is complicated, sales the answer Andrew. clarity. I I of But that. now of rates yes, we Yeah. before can we you will extremely those Obviously, that actual part new Sorry, them. be think give and new

So, is one in a different rate, but rate. at affreightment words, contract have new table a the we at other of

which So, on or to contract old those sales the that us, they the And honor what into. question do risk $X entered the is, new they is already entered is, a try rate? with the achieve do tonne rate truckers number of we've per about

sold. our may we we and old not And quarter, of or third used go those more up see through, So, as are contracts may and first, more those.

less gets time. over exposure the less and So,

Operator

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

Your line open. is

Joel Jackson

Maybe Joc. a morning, on Good two-parter Hi. potash.

so? And Your because pretty MOP course, of turnarounds. higher next you or the over cash costs that didn't potash bit guidance. QX you year Would your second expect have of part, Of stable year. a volume last been the is raise little

partner thousand Thanks. did? Your but Any a that, few about Canpotex thinking partner, Canpotex Nutrien why hundred your didn't your by did, you raise volume, tonnes.

James C. O'Rourke

each by had MOP of cash extent also the impacted answer the were carrying will separately. Sure. some but second costs Joel, quarter those we with the to by turnarounds I both in second bit questions clearly problems the quarter. first in transport quite quarter, into thanks. over a

we costs next end the be there expect of that's where expect lower little think the the I a bit while. cost little cost high But we over clearly, is going. where So, our being to would those or

a not sure In rev could terms Other is different that volume and have that just a what's that I'm is them to revenue of you this different little up added recognition. is it recognized difference. we being guidance, is. really potash rec and see standard, Mike, where our that what We've that, the thinking what we rationale simply revenue be do behind want bit so and expect markets is to than or at said looked I Nutrien's leads know to?

Mike Rahm

thousand our that I the add, only of really tonnes. I thing would number haven't guess much. hundred I is shipment up, we took it Joel, think, revised that XXXX couple We

haven't view of changed as maybe the competitors some the our of So, market as we much have.

Operator

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

open. is line Your

Daniel Jester

is Hey. year. for It's Maybe substantially phosphates domestic so a P.J. production this India, Mike. morning, on Dan Jester everyone. in for far down Good On pretty just question

there needs India drivers that? think on of more wondering comment do is So, back? you that we can you just scenario of to a look Thanks. is as forward, or be import production some the And where if going can met domestic come with

James C. O'Rourke

it's and cost unfavorable Dan, production relative Thanks, high given were that good of like would I to well think understood Yeah, India, we pretty morning. acid. economics in the economics, them call phosphoric fabrication

think production have front significantly down the number I so. of to XXX,XXX tune of and first I tonnes don't was me. that think year the of in half or I So,

with lowered is line One production a that, tonne they we probably and about that of imports, to phosphoric we end ramp-up out million have probably the for expect several GST diversified production always on calendar production tonnes I think phosphate. months maybe a million going range. you look think done think, X.X may And recovers over that imported going have acid source see bit little Bottom and so India is X.X the of next the term a there. of bit X.X million of is little of in we we'd forward do year longer a they things tonne, the

met think don't increases, dramatically time. in we most over So, demand increase will the fabrication growing as demand we greater be And of likely see by do imports. domestic

Operator

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

Your line is open.

John Roberts

consolidating in Thank you. retail the about Nutrien talking market is possibly non-soybean Brazil.

balance Do to? participate Brazil, that your not but Mosaic where has of I'm sure sheet retail the you be in to other any retail if you wanted side, in than you even allow does distribution of your and on network have ends distribution or, parts any consolidation think begins. more further I might non-core always

James C. O'Rourke

business structure The the the that. a market call for of what quite Brazil Thanks different would John. the I retail. is than Hello, Brazil bit or North American

So, that, believe a those they first-mover just we'll core work real also distribution markets. competitive gives Brazil. that between hard what obviously to see a We but built business very our us landscape. and comment to business of our see farmers, to what again, we've on And I the as some production advantage wait can't is into say, What retail and a into business models fragmented and a synergies large in what you kind believe and say, I distribution. We type And means what lot of there. the sell it's good advantage and though, how industry and we'll we we is very a sell is very It's retails. respond competitive real would of smaller thinking. Thanks. for competitors are other or to doing competitive determine the our

Operator

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

open. is line Your

Michael Leith Piken

see but just you said Yeah. on guys I more for Hi, – on and where of little potash, talk India your wondering could about per KX to any more updates a kind you potash just settle then talk know call, I'm you're if bit China when cost a about tonne you would going just give us cash on or we might yourself follow-up contract. be see next

James C. O'Rourke

of the future one doing third quarter. to process of can more On Thanks, reason that we and a conveyor in turnaround from it And this KX from the today in on KX give about we're if be production to a start an shutting KX. Michael. projects the that more we means in at big and in about will during the KX, anything, up ramping and are we Yeah. this at you talk is tie calls KX, somewhere that turnaround which down perspective talk where update didn't let will we me

be of where the potash cost one be is world. the inflow – expect the mines KX, So, and one KX, of once particularly, we're one encouraged the that eliminate cash certainly world, going. – we in at costs we projects will efficient will very the cost KX in fully lowest with brine most

costs more We'll expectations our expectation about that's future. cash in of So, talk the there.

the the contracts In a need on both are demanding They of both of. will contracts terms in any potash Canpotex middle do I that. a public the process. rest But think potash. I that point. is of that's the tell forum. thing world contract, will will like about good in at to two is you in that need don't fertilizer. talk things some I to don't look, India-China those They Today,

of quarter volume, Our volume less think particularly of includes becoming these contracts at very term in three, I'd little least less movements good. very a bellwether. guidance from are also China. long say, is the our And I impact and our

we're going Thank on So, or impact the it where doesn't next months in have a big so. three you.

Operator

line of Parkinson from the Our Suisse. Credit last Chris question from comes

LLC is open. (USA) you. Your Suisse Credit Parkinson Securities S. line Thank Christopher -

of the inputs. LatAm a sense in development DAP/MAP, NPS can market Moroccans your of job seen versus us a other of just pretty You've particular? agronomic and give front, and developing terms Thank you. then some the other this about spread that in talk do good India and in On also African anything P term you longer current efforts front specifically any and in MicroEssentials

James C. O'Rourke

great in, the mean, has done good And Okay. of for Thanks, very concur that's I a OCP I I think developing Chris. job that market. – African Yeah. outside from the society would looking overall.

So contribution in we're general. the both and to pleased to of Africa market development the see the

somewhat Obviously, our markets. products our So MES that. products, see MicroEssentials different to we're glad to go

we and and has but relative a DAP part MAP. MAP to different Corrine to And the that some bit, make pieces inputs of has cases to this MAP, constant I'm margin terms premium maintain talk that about our spread are is In that. not let there's price DAP over really the the of two a then going MicroEssentials into inputs increased changed. in than But because we also and a into

thing. for cost So more MicroEssentials It's the basically the our is structure favorable product.

do in price, will premium Corrine, follow price time So, you at markets you products, like to over see look just particularly that Brazil. a for MicroEssentials the you but on? want can't

Corrine D. Ricard

the talk a the one there micronutrients, different each of content, for of pricing Sure. to that et within got we've products, cetera. MicroEssentials, different When so, are products relative about and sulfur we of number those group

been As And maintained. Joc or growth DAP markets, seen to has mentioned, that our pricing maintain those the MAP pricing been premium. in premium we even able to with the is have relative we've

of think new also does other products. time spend fair other asked on products. I Mosaic you about working new a amount

in developments Stay LLC on information potash - further market. some Suisse the Thank our line get we for enhanced as working and products, (USA) in of about phosphate Parkinson We develop are more tuned Credit new them, micronutrient Securities those S. have we Christopher you. products. them launched

Operator

line last from our time question the And Stephens Connelly to from of Mark we have Incorporated. take

Your line is open.

Mark Connelly

Thanks.

just and things. in CFR you Brazil, response like And second, has really expect the shifting they're be good look that curious FOB Joc, where two Just from half? I'm been. to in that costs second what you them to to brine Is the in proposed shape. these

James C. O'Rourke

system. with CFR our in move contracts the a it this to way sorry to, we risk look, from is Yeah, have – but of have, FOB not That's Brazil mitigating enter focus we we possible, be Thanks, of to let's our level or say, freight Brazil into contracts would more Yeah. to have Mark. price offerings. preference and in risk – into that uncertainty always that our a find will or

of customers So, because where got selling. certain to implement you you've I MOUs mean, easy do, to more sometimes challenging way long-term have and do a

pricing into move the So, incorporate we'll either it our risk to that have at customers or to time. our over

job the brine and cost. Now, been been team's a management brine on yes, doing a – potash doing in we've costs, great brine terms of

us we If now. guess, money really put some about improvements, helped or I for And into fair years of bit three you that, along cost years control ago. that number cost technological have good with of a four remember, brine a just management,

second controlled, Mother it. we're not to expect variation. any in is expect but do of any we solution it plays Obviously it well half but and Obviously year. is pretty role, altogether, feeling eliminate not So, Nature the variation the a good real we long-term about the do real

James C. O'Rourke

like that, our just and want is saying, reiterate to well-positioned I just sorry, with our again, by company up issues. just I'd key and wrap And, here, performance to

generating We're market performing is both better well. business business substantial transformations. of cash our a and as result Our conditions

we for it well this deliver our in good feel safe Fertilizantes positioned your continue America, accelerate be business Second, as we're as Thank you and our into Latin And of continue to sum business progress making and we're will the move third, Mosaic attention. to end extremely to up, acquisition. that year. good these returns day. continues momentum conditions improve. about Have attractive great and to To optimistic we on continue the Mosaic a

Operator

concludes today's This call. conference

now may You disconnect.

Laura C. Gagnon	The Mosaic Co.
James C. O'Rourke	The Mosaic Co.
Corrine D. Ricard	The Mosaic Co.
Mike Rahm	The Mosaic Co.
Mark J. Isaacson	The Mosaic Co.
Vincent Stephen Andrews	Morgan Stanley & Co. LLC
Jonas I. Oxgaard	Sanford C. Bernstein & Co. LLC
Jeffrey J. Zekauskas	JPMorgan Securities LLC
Ian Bennett	Bank of America Merrill Lynch
Ben Isaacson	Scotia Capital, Inc.
Donald David Carson	Susquehanna Financial Group LLLP
Adam Samuelson	Goldman Sachs & Co. LLC
Andrew Wong	RBC Capital Markets
Joel Jackson	BMO Capital Markets (Canada)
Daniel Jester	Citigroup Global Markets, Inc.
John Roberts	UBS Securities LLC
Michael Leith Piken	Cleveland Research Co. LLC
Christopher S. Parkinson	Credit Suisse Securities (NYSE:USA) LLC
Mark Connelly	Stephens, Inc.

The Mosaic Company (MOS) 7 Aug 182018 Q2 Earnings call transcript