MOS - Earnings call transcript Q3 2018

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Operator

Good morning, ladies and gentlemen, and welcome to The Mosaic Company's Third 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

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

this mosaicco.com senior from are forward-looking yesterday call the forward-looking We to results statements as call. from press team significant not projected our are of conference prepared that the The based could available subject answer to of expectations are release our statements we Commission. those at issued our Actual to in available our Securities and filed presentation after on risks operating leadership and slides about include also are management's We in questions on results. using statements today's and members making differ but date have to materially remarks. limited other during results future materially results. are will cause the be beliefs with Factors your actual in and during financial reports and The uncertainties. and website They Exchange included the differ may are statements

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

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

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

James C. O'Rourke

today. continue to momentum third joining build Mosaic's Good us morning, for Thank everyone. the quarter. you in

the as as the conditions improved benefits the results Our to market we've well strengthen many of reflect company. moves made

leverage. our Mosaic Our key operational and tremendous businesses today created has progress. made significant transformed first, are, points We've

third, a operational is growth longer term. phosphate improving. result materializing of and and improving are near our slowly. conditions, leverage both potash are market and Demand global increased we remained optimistic future, strong Second, fundamentals our while supply as about And, market

We significant strong road to map returns. cash have generate drive shareholder and a

delivered earnings despite of were net items, net Mosaic's or $X.XX were per quarter, share We $X.XX net earnings year-over-year higher ago. count. Year-to-date, share with of $XXX XX% earnings increase a $XXX our million compared year of million. the million notable For $XXX a

to results our than per significant increases indicate. on to in significant for $X.X our adjusted XXXX share annual $X.XX ago, to per Just XXXX EBITDA are transformational We focus intention to across created sheet as operations we Plant $X.X delever by billion. we guidance announced accelerated expectation guidance announced to our earnings reported business recovery phosphate and increased progress performance and related our our announced billion indicated rate market adjusted of year-to-date Fertilizantes, of expectations. leverage the our would our We our initial Today, share. reached XXXX. have the conditions range balance expected our XXXX and to success. one and for $X we good efficiency City leading remaining billion EBITDA we and a the announced we Fertilizantes, and Mosaic year increasing position of significant phosphate and robust through-cycle operational We company Mosaic at targets financial to idled Since actions, better debt-to-EBITDA synergy earnings plants. We we results clearly Overall, targets. $X announced we adjusted our from units our today's to a these range we've three and moves increased

million ago. a Year-to-date, in XXXX, adjusted in year Let's our delivered improved driver the Fertilizantes has helped business with But earnings of The performance of with has that $XX forma been the transformation real. excellent Mosaic agricultural key has of weaker million market Brazilian of $XXX by Fertilizantes, South conditions a our business. Brazilian been of and the the pro EBITDA America. Mosaic start business EBITDA compared

reach to achieving are net than We synergies we in to expect faster $XXX and savings million in $XXX now XXXX. million expected

debt efficiency. also the accretive added We visible, million mines, but Across inclusive The shares, are expected business and the Year-to-date, $X bringing XXXX. portion and we in of and net in our exclusive of our impact When end billion contingent our business ground we the and the employees the well be of operating on share, the million out plants paying earnings. acquired the ideas reserve results. has before to million potential both reach the they of on of announced innovative issuing Brazil to of for target of integration quarter the $XXX per our are the it are transformation transaction, easily upstream/downstream savings in $X.XX of to the $X the our in expect to price. energized benefits improve in third of XX purchase and

rising. market, relatively onto Moving raw remains past the Still very Margins are the year. following a phosphate prices over bit held steady increase prices a which of tight, strong. pressure fundamentals with under $XX material are

global is fruition. has record Phosphates season has to the over or full-year including past grow year-to-date several our continues slower-than-expected in early early is made up demand, supply, to in affect our Global unit, delay analysis another the seasons for business ramp-ups operating rarely almost The phosphate expect way and market outlook ago. to to our impact prices from well global market year they temporary to reduced continued sales. as business facilities, in the shipments a produced of the under for Phosphates important improving an for a team expectation which changes come adjusted America. the fall the In This requiring Transformation idling magnify and of seasonality feeling we've Chinese growth Several fact, harvest new XXXX. export. our support agricultural In an facility, tightened additions, and The improve year is have rates XXXX, guidance EBITDA, is of our of wet in turn year. the expects that quarters. compared quarter to seasonal, demand the The of Plant to remember It demand and higher these City actions cyclical. supply our providing in this twofold fall North margins. and we application is period business has but and well accelerate full fertilizer Shifts same for reflected can in as $XXX not million in conditions. market expected outpace impact

in operate, up operating X% the run We harder way changes term. for our have made year-over-year. resulting the business would structural plant much efficient to more extensive said rates have, permanent We we long with remaining we we and a

has Potash. are moving prices today as years it on Let's and move a to been tighter in The market potash up result. is than

the expectations. consistently Esterhazy excellent like demonstrates. other business segments, world-class a base three In has recently by approximately our executing ramp-up low of Supply ramp-up over disruptions year. time, supply, largely environmental its of discount our experienced KX $XX The business potash combined production the global in at per demand, began saw addition, the to tonne with we unit the its the are teams units, same at other some as our performance. growing prior safety competitors At the very day and and and mines by prices our of The according new strong slow level, with have to cost U.S. Potash driven higher before continues the disappeared. potash transformation day high

production still and progresses, management with at new efficient transition to phasing will we the and have the out ability costs lower expenses an drive KX of As mine brine KX.

In KX to shaft fact, mill this summer. conveyor belt the from tie completed in we the the KX

over call Clint and turn the to current to Now, I'd like results period to Clint? discuss guidance. Freeland near-term

Clint C. Freeland

Thanks, Joc.

in generated after EBITDA earnings share, adjusted Mosaic adjusting notable quarter, per $X.XX During the of per fully items; third $X.XX diluted million. for and $XXX share

continued on transformation these our initiatives and the cost combination driven the of improved strong market As progress across business structure noted were earlier, conditions. company by results and

million. these operations cash strong came from quarterly $XXX strong flow With earnings at

with As billion and you despite over third $X see, debt line at prepayments in the balance Mosaic in can million second down the during the a quarter of experiencing cash, paying million reversal quarter roughly $XXX million unrestricted investing customer with CapEx, in quarter, ended $XXX end $XXX the in the Brazil. year in in generate increasing the earnings we Based this billion the $X. outlook the and third expect time to-date on $X.XX for year, the to the $X.X of adjusted full for now per adjusted our are EBITDA company to to financial guidance performance We and strong earnings $X our year. share just rest of billion

particularly year-to-date and always, commitment of synergies international two That risk Mosaic's they roughly developments the to given In the quarter, as real. us this BRL generation continue guidance strong down prices year and recent quarter The outlined substantial Brazil, results, exchange a the currencies, dollar. oilseed U.S. Brazilian course earlier; markets. the over the in said, addition currency-related X.X monitor fertilizer of certain any impact meeting foreign ahead our albeit realization into as to allowed schedule. of have deleveraging in pay volatility outlook $XXX million and of may to we and continued years cash fourth normal that debt, grain to of has strength on the finished primary with of fourth trade our rate accelerated is our seasonality; reflects

note and with our While cognizant are the of sensitivity the more stability It's to the necessity metrics our industry ratio target the of important our debt all of previously-disclosed cyclical and in through-cycle strength line prices. to nature financial are cycle. now we of levels, through leverage parts for

can by to X.X For and example, change in a product turns. net adjusted $XX $XXX EBITDA EBITDA move by million per tonne debt pricing

further a philosophy program allocation As capital With changed. of continue such, debt our as balanced we said, time not evaluating to is has whether reduction intend part appropriate. over capital that

ensuring company. top a the Our be to for term priority long solid foundation continues

to invest ensure sheet financial and prudent core safe, in continue through strength and our will operation management. and We maintain flexibility efficient assets balance reliable, to they're

opportunities company also back element allocate that return the comments. efficient to of key to shareholders to a allocation mind return a program. it closing that, a is available highest Beyond risk-adjusted you, that, to in to I'll capital capital turn keeping and regular we Joc, capital balanced With the while for

James C. O'Rourke

Thank you, Clint.

years have grow the in to We expect to many ahead. opportunities

has as is Of Mosaic factors a cyclical export eye of an are and volumes. many the Brazilian phosphate earned But industry impacts very monitoring election Chinese the position the real, keep outperform. recent up moment, the on. strong as from which At well for Brazil course, we the clearly trend there to in strengthening and we're

that a talent and created to win continue and and we the long efficient, have capital term. to necessary highly the have will generate the we franchise are low-cost We confident for that we grow

take I questions, Now, operator. your will

Operator

comes of line Steve question the from first Your Byrne.

Ian Bennett

have facility that really seems when operating It now. a showing talk small like Thank on it it The contribute terms you Bennett is expectation you. production in about you just Could This Ma'aden earnings loss. little up for for to rates what bit Steve. right it full JV was earnings? equity equity and Ian a hit is of not that your would when is would Mosaic's in

James C. O'Rourke

Welcome. Thank say, If phosphate would this Okay. that in I'm the looking developments be over Ian. look, world. Ma'aden cost in of and at would long-term, you, for our largest expectations involvement the I one lowest our Ma'aden the was Ma'aden, in involvement

you to was such, very meant an quick to as we project, that a know, it's complicated not for take large ramp As early time least, up. it be with those, expect, at will it return. and And,

be producer and Ma'aden as to the you. will of go I to to earnings we expectations it. – really think come expectations our but production, Thank low-cost so, should official need a start you from see to we ramp-up, see that and full their very to And

Operator

next the Wong. from Your Andrew comes of line question

Andrew Wong

Thanks morning. Good for Hi. call. on the having me

KX, that a fully So and be provide expect maybe clarify help just term? on mine, within system you capacity, mean, bit what I can over you Thank for it up little just updates what's the that KX brine KX to term from then costs, when does conveyor the to there near and and more longer your this running, maybe the KX, you.

James C. O'Rourke

Andrew. Sure. Good morning,

and KX will up we up on X KX mentioned the KX just and say, time of that we will go commercial would conveyor of of X to So, ramping connected What as that conveyors million integrate from approximately, for KX approximately tonnes ramp be incremental which – to that the KX and the mills. the tonnes tonnes from schedule XXXX production into we've KX is are on startup same we been and some in now, timeframe. the million KX finished the of timing, have million earlier, terms slowly capable allow Each KX those ore. or KX, over it completely to product happening today of of X take XXXX in of to startup let's was is,

will to Once is reproduce allows complete, and time, that from over decommission all KX. which we what KX completely brine do KX production the will is, KX and eliminate So, from us that KX, costs.

Operator

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

Robin Fiedler

Thanks is my if of cadence This on the to in the QX and how question. both through margins into taking terms year? reduction Hi. Robin Can And for fare us XXXX do for Phosphates Thanks. margins for of rest in Joel. the walk you expect prices? and, the of feedstock you can, guidance you phosphate the

James C. O'Rourke

was Sorry, start the little the call. unclear Robin. that Could on repeat a you question? It of

Robin Fiedler

Yeah.

Sorry.

that in if business expect about and margin tonne us $XX in to per the walk in pricing in feedstock how of cadence phosphate prices So just of just through terms both margin you you QX? can the Phosphates the fare more QX gross decline and

James C. O'Rourke

Sure.

ammonia Great. But some we mentioned at prepared more price remarks, and Robin, will seasonality market. hand our I costing, do is here, is margins us this though I'll which to due material of based pressure ammonia a of having is on as end Okay. that we is do raw advantage of normal is thing most there our and tighten, due than I on – will at What these say small the competitive in Corrine. the to up mostly helps so year competitive the – this end because production on margin One beyond actually against the although tightness. prices

or outlook, me QX Mike ask comments. the give to few a Corrine let of terms In

Corrine D. Ricard

Sure. Thanks, Joc.

are a a This seasonal is the bit pretty on margin. normal We little of pressure seeing factor. price

got very a big we're been to season had have movements. have although moving, start late, volume late and We the fall that it's seeing now things

because And at the to in so, in is some movement strong the market of this that time abate the of nervousness seasonally happens shipments. starting the

margin price premium increase. which was of at a bit little other that pressure compression significant little the in bit as price is Some well of a material only of a the global as markets, American market, North raw to

into The we that we period say fill time other for that we about as virtually always get thing those I recover seasonal would that is the spring see dips winter see these seasons.

temporary seasonal to anything So, do Mike, want it's you very a setback. add? have you

Dr. Michael R. Rahm

I dropped years No. mean in years by five the seasonal and of is margins the thing add would The the only you if of in in QX the have more five rebounded I four look at five seasonal than in pattern, the last last they've drop fourth quarter.

term So, a in normal this yeah, I just would seasonal adjustment margins.

James C. O'Rourke

to in want the on beyond in you of terms do Mike, phosphate of market forward market? a give little the going the and tightness QX color just through

Dr. Michael R. Rahm

Yeah.

million about And Northern normal and XXXX. a start for Southern in of I'll If Hemisphere X.X think, you way demand the start, the there. the supply puts We're and we at I or X.X% crop. you and on look see our XXXX, on demand the that crop takes look supply as decent should growth. we far looking at interesting, see in demand metric side. seasonal additional several what's side, positioning tonnes Hemisphere as for And if

on we're We the a Geismar of or America the seeing expect Redwater the side, plant couple North shutdowns that U.S. in and with in plant. the negative

IV, number ramp-up We in venture, capacity stream joint Egypt. incremental in are the Jorf some smaller of Phosphate terms on as some as come of continued coming a the and Hub plants Ma'aden seeing on Turkey well

add balance X.X is put China. million still with X our tonne supply, exports. the changes when we could changes not roughly together all see more that decline any the in come million account up we to tonne in taking assessment and we've versus changes or a Chinese demand And So, a in that you into up in

we're is the drawn So, that what run market we phosphate, you like there phosphate where pipelines doesn't see see down. of remains another much what out get in period year this is the And deficit. world but saying

demand and of curved market. a see in equilibrium tonnes do a see some the little out in to producers few probably edges squeezing the existing reach maybe You an bit you on markets more

James C. O'Rourke

Mike. Thanks,

Operator

Don from comes of the Your line next Carson. question

Jake Lacks

on (XX:XX:XX) priorities color down reflection more your kind is This be Hi. deployment, I should of of target flow capital On next prices give today. are a a Lacks Jake there? say pay year you on Can debt Don. can cash for little your

James C. O'Rourke

business going to this talk summarize, really Well, year, our hand of a billion our impact of this fact, Jake. Thanks, pay market and with our of But Sure. earnings flow, improved us of to more in we've the This, conditions, two improvements, I'm to has operating Brazil $XXX more and mentioned, the and matter obviously, $X.X created well little which acquisition a schedule. color. Clint approximately maybe as to business. bit over been just we've to impact of to as target, ahead of allowed the kind able term of our years talk this cash some you million give loans highlights power down generate of the us over ahead some

position really allocation So, this in philosophy has put to our overall targets. us a capital and review

me let just to going about Clint our over little it been forward. thinking a hand how more give color capital So we've to on philosophy

Clint C. Freeland

Joc. Thanks, Hi, Jake. Yeah.

sure capital, through really when cycle. as the has think priority to flexible comes company our leverage strong that is the about operational profile where remain and is it I solid to be position we've a ensuring that and before, financial first liquidity the talked foundation, So, making should company's it allocating and

efficient appropriately I think assets. to core operation to maintain and it's invest safe the important our also of

we look that, risk-adjusted I Now, to would and I capital look allocate to opportunities highest return the to to think would us. beyond available

this stock. over like what to of modest that a program think our on we And pay allocation do at it's we'll looks payout it's balanced an time. also part evaluate common and continue while dividend We point, important a fairly

I earnings a flow shareholders. the our sheet, we and think, to cash expect balance going invest to when we return provide I to where continue of be balanced the to forward, capital and capital strong, strengthen expect program business grow see allocation a would regular to

and capital how think I to about that's allocation try So think our we tend program. prioritize to

James C. O'Rourke

Clint. Thanks

Operator

next Your of the Zekauskas. question line comes Jeff from

Jeffrey J. Zekauskas

tonnes Two it? payables. through? terms What's so line cash Why that X.X receivables what's or another exports up in much. of will very did decrease prepayments of you Chinese benefit? that year, your do benefit flows, your couple million million behind that of a jumped Was your hundred is think And Thanks questions. phosphate did a flow not how And a million dollars behind that? the Brazilian reversal sequentially, touch? did $XXX What next

James C. O'Rourke

Sorry, Jeff. Got the mic.

Jeffrey J. Zekauskas

Sure.

James C. O'Rourke

First those reduce of Chinese effect are both exports about. along and River. exports, about talk things Yangtze pollution government starting and and Chinese by active in phosphate. Chinese the water Chinese a of and of But also think the availability this reducing to I'm now pollution And all, the they're particularly let's cost level, to leave produce Corrine what do to but reduce going increasing air the phosphates we overall to take at to and really to see talk we to high China

So, come let question. to with and to cash that, will me hand flow I that the one Corrine, back

Corrine D. Ricard

Joc. Thanks,

export. seeing are We in a decrease Chinese

for year-to-date, exports, September, happening was While of off January a producers. Joc on small talking XX%. a exports in pressures the is things Chinese are the talking been And we've what those number that area, significantly, what in very of a environmental with that's really There seen about on result MAP happening environmental while exports. DAP about we've a about and increase the through are

against a in against that are have they because pollution. tax is have costs to that $XX The pay $XX producers to that are levied operating first been adding the the environmental tonne there their taxes

in the significant higher operating so The in costs, is sensitive because a is second happening thing has there government rock that's mining some environmentally disallowed mining reduction areas.

through National the And XX% Chinese rock that September. phosphate Statistics Bureau reports so, of is mining down

then We're nonintegrated costs see lastly, rock and others So, having of to rock be at with from China, indicating significantly. there imports risk used to purchase producers a here into also to are you are that have are raw now well. I rock integrated material. would rock mines the up starting of prices significant say, as capital And the that start shortage producers

Yangtze You've environmental their got being and X some they X are to spend are relocate farther mile to handle forced on mile are to from significant region manage that have plants differently the that being that little told differently. the capital they pollutions are other a out gypsum River within have and

is some by So, we – capital then on XXXX those investment. changes of the XXXX the timing and and end of the believe relocations the end by those and for plant

really watching be expect will watershed the environmental at producers here look believe want about you XXXX, impacts XX-month carefully anything Mike, there down. you are exports that down year a rolling a exports, we to in we we're and these be XXXX Chinese will Again, on So, exports, add? and they affecting XX%. if take these

Dr. Michael R. Rahm

XX yeah, months highlight Well, I'd XX, on September XXth total September that X.XX million XXXX. rolling the think I from tonnes was down

and So, decrease. a come specific example. talk been substantial other back there a If we has on, questions about can later are there maybe

Corrine D. Ricard

Sure.

James C. O'Rourke

running that well, leave there. bottom Jeff, we're higher is otherwise stuff and at ground, what the prices I'm line some are seeing necessarily may going Obviously, higher been not the seeing time. utilization this driving we're these have and to probably Good. plants on is one

Clint asking of and you're position. of two to cash over to is I make on this I've bit to year I'm to has got a it good you this understanding the think, you rephrase were Brazil move going clarify on trying to months that who, right. prepayments hand what if question the to us to what receivables get. flow impact pretty the our to straight is going actually just I we're Now, a up – going cash by correctly, But I'm heard from sure little

Clint C. Freeland

Thanks, Yeah. Joc.

in And the you almost reverses, gets of at in have goes sheet, what have back the where $XXX and that reduction is the that then, prepayments in P&L. the And balance of would you statement no that for where your it comes then onto cash, see which sales, balance through income transferred to start the on then cash million you the from obviously you prepayments, do, margin with I'll second extent about the that the the that flows is So, balance cash were statement $XXX flow in quarter, cash sheet. balance sheet payables. the Brazilian come Those your and our those on when out million prepayments. and end to balance

And so, in with a the have net-net, sheet. for you'll you'll $XXX reduction up prepayments, the balance but cash full end because overall million not those margin on your balance

question I would one that think I I and of believe, part balances, closed we the I payable of other your receivable things Recall January balance and the you're our our was on assume at acquisition that on, Xth. – sheet. around that looking

so, balance part delta. the effect the of onto is bringing capital of sheet working the and acquisition the that And balances

As I would particular. receivables North high in standpoint, you in particular, that look September sales in from at we say the a quarter, America, pretty in had

into booked receivables the should again that quarter. been in turn fourth have so, that would And

that So, would the receivables. story be around

of nothing payables, the really ordinary I there. think out

think it's various of I other things timing of just throughout year. and accruals the a matter

of So, say, particular there. note I nothing would

James C. O'Rourke

Clint. you, Thank Okay.

Operator

the Your next comes from Isaacson. question of line Ben

Oliver S. Rowe

yes. Oh, taking Thanks Oliver on question. Rowe Ben. my for It's for

were rupee you destruction any in you currency India? MRPs your MRPs and for acid on XXXX. there outlook India shipment further put upside slide demand demand your impacting prices rising all meaningful estimate Maybe not India's to dropped, affordability? have the from looking in shipments a phosphoric to are and/or the expect increase the if revert which phosphate So, be way, that would XX, higher to to depreciating, at Do another

James C. O'Rourke

hand to Thanks, general India I'm in we're believe, situation, probably next I Okay. going let mostly just growth. situation terms this Corrine, to a supply-constrained most any in statement. going this. And is to somewhat where is and a the of year, me Oliver. to sensitive be but make But

at I supply. have think, some do ration to you then, point, ultimate

because so only their those price And will price the think markets least to happen it movements. depending but India, could growth. that I will of movements And have that something is be affordable in ration on

not the do obviously controlled So a Corrine, a international about product to but currency want both and please? where at in talk a market there's prices some on country. that is price sold to sensitivity their market in sold little bit, you

Corrine D. Ricard

Sure.

to I it things watching sensitive see there's looking to here. demand and destruction, have yet we're very we couple of think currency a there's today. closely changes. And been It if seeing any we that evidence aren't is

they All year. of stabilized. their farmer see And And we're the to times seem throughout adjusted each MRPs have several have at purchasing. to those level, continuing

so, of we are continuing looks continuing see it demand for today, demand to seeing not strong – phosphates. And not we're as We're destruction. like to

shipments needs be seen an significant domestic have in the because increase with production also We in volume. import the some you've and XXXX with made relatively producers, that a reduction rates operating domestic the up and to

James C. O'Rourke

Okay. Thanks, Corrine.

Operator

Your the next question comes Falcao. from line of Alex

Alexandre Falcao

the massive new very Hi. just to there? from Good that X.XX BRL to morning. monitoring the is want a My shift understand government. BRL now. question is impacts regarding And of Brazil. wanted going is X.XX I There you there said synergy understand for What targets or you're and to and the made know effect I you currency forward and increase in there? of you currency a the going the going forward? of Thank that currency were the you. I that to just what exposed, you're complex have you long hedging policy you short have what guys

James C. O'Rourke

thank Okay. you. Alex,

sort it, If here there's let three want aspects me of hit got order. to in I've hit. just So, this I

all, let's on a pro-business, Mr. ran campaign. of the Bolsonaro talk election pro-agricultural First Bolsonaro. of about

elections. by during Agricultural Parliamentary the Group endorsed was Bolsonaro fact, officially In the

positive agricultural So, that perspective. an from is a

finance well we Sergio minister, make justice well appointees, nominee including been see. success I for have his Moro, both forward thing his bode say, coalitions to. very really first received, to The Brazil, happen, his in have you will however, and for one build and those so though, believe minister, I for Paulo However, nominee to early is to Guedes, look things it's little a his which

we job question and of the done $XXX ahead this synergies, million than and achieve year, team our puts was fact, you second we achieve us expect business. really what a good has The from this asked synergies million also million put thought a to we'd Brazil $XXX was schedule I going improvement, that ultimately there that but position say originally a we of $XXX in million, more of us has to achieve of about would the to our very is that and achieve took had on synergies total $XXX which matter after to what

Clint the there's about enough strategy. to of really our terms and hedging, there over a bit should hand currency I In that the I detail to think that talk little

Clint C. Freeland

Thanks, Yeah. Joc. Hi.

currency hedge from think on the standpoint, we are a the I BRL. rolling a to we extent three-month hedging that along basis So, typically

you have do some be our Longer also should against BRL at we that. volatility short-term generally of when so, against in hedge hedged we expenses. least the And BRL, term,

If lot dollar-based revenues our you are and are there of BRL-based. expenses recall, our a

is what more rolling do that us currency program are over at least the I term so, time shorter of some you the fluctuations to have time. to we And longer you a try to again term that volatility, allows to see kind navigate little again of subject but a over think

James C. O'Rourke

Thanks, Clint.

Operator

side, of just is guidance to volume I of on a side, the in wondering down Graeme Graeme you seasonal that. and call influencing like could Suisse the on next think like the give factors you it bit beginning volume of looks wondering the about the North Potash I line Phosphates (USA) the you Welds where composition Credit comes and versus at This Securities of if America Chris. maybe was on that kind particularly spoke that outlook Welds Phosphates the what - looks it of took map terms the in strength LLC for little on from strong. any color some I both question a I'm Thanks. was Your XQ. Chris Parkinson. kind that appear etcetera. be quite where you're of on then curious your side, Potash question heading where MicroEssentials, volumes And into seeing of the most just about similar

James C. O'Rourke

offset for now North start with globally, the the good Graeme. the but the might seeing end me market potash normal Clearly, the hand going of American you, we're guidance season. is over tightness to expected seasonal Okay. Thank international demand slight Corrine, of strength with which have the than to and let this right you weakness I'm at Potash. the more volume

guidance, that's do American mostly fall by Phosphates season make seasonality biggest the end season. there the to the comments? you of of normal drop in volume few want completion application a and of driven terms Brazil is Corrine, In the North probably the

Corrine D. Ricard

add Not on completely lot agree Yeah. to a there, Potash side. Joc. I the

we're season than, fall that And for a moves a with that We in fourth to winter the really moved have those issue period? winter to activity quarter. does end the all fall December getting fill and is be volume only and rather December peak just strong season, was of large normal good is limitation logistics early the year do really get January season well, exceptionally time it fill expected forecasting on December. last into move of going that going big winter shipments in volume fill the into program largely or we Phosphates winter an amount guidance that and The fill

James C. O'Rourke

Corrine. Thanks,

Operator

Your next question Jonas line Oxgaard. from comes of the

Jonas I. Oxgaard

of guys. QX morning, make trying guidance. sense Good Hi. I'm to your

So, tally And in Phosphates missing about down. is get reduction, Vale about and your guidance minus up is or end is is or QX. – EPS yet think all up, Fertilizantes or I them usually usually then your If down, but for so. your you conservative, which Am your with $X.XX you that? up, being Potash guidance a in what we yeah, implied is how should QX $X.XX something guidance I well, are I

James C. O'Rourke

if and looking I what know, to can. Sorry, see he to give on answer at to EPS you know hand Clint other by going how not as thing. I'm can try it to division – sure division guidance I'm that. we understand we each Jonas. We're a actually don't to

Clint C. Freeland

you suggest Yeah. take that clarity. Jonas, and some would it offline provide we I maybe

I think but okay. I challenge we're up having a you with understanding a think and little can somewhat we of of if follow right now, your question that's answering kind

Operator

of next comes question Adam from the Your line Samuelson.

Adam Samuelson

everyone. of Thanks. Yes. morning, Good lot A covered. ground's

about in Canadian the up talk Just world? amount And Thank there capacity or you. your next can any be you closures view the What's rest for guidance supply on assumption coming your on outlook? the the kind production K+S, of that would material Potash year early in from ex-K+S of EuroChem from shipments, and XXXX? of any incremental is assumption side,

James C. O'Rourke

to would sits the things you that that is Okay. excess supply will two years, Thanks, you – with look happen gets suppliers the We'll the American over one I ex-K+S of today Adam. only Sure. five suppliers. other the give think an North is the our and Mike The North up there market output get view of the is big the capacity out just one like the you next at increase American tighter. to will actually I used asked Really, thing I'll give overall highlight, S&D. the as

by of increase so, with I you do a to expect utilization the And few quick the rate Mike, highlight want in years. just S&D? might two that, the those next give well

Dr. Michael R. Rahm

over. actually in non-deal just in let there's in call But the published either of is or little the when disruptions a tonnes in first a it the the that We of million S&D. – taken XXXX roadshow we And There's out terms our market. terms X.X supply on probably this a changes – report changes series and Sure. carries supply talk been detail how that good look me bit that website. at of about of have

so mine ICL production midyear. amount chloride. problems their So, Werra SQM of the you K+S with in its potassium is levels rivers, versus adjoining the water know, had at closed Complex they Boulby forth. low as produce and lithium maximizing

XXX,XXX about lost So, tonnes there's of up, you that add production.

their we year this, tonnes. another Sigmundshall loss there. year is mine, be look to so half probably mine XXX,XXX there'll this Boulby produced Next year, which The half of close going K+S when at of is

up levels phosphate, we expecting potash to we prices to implies get supply tonnes X.X X.X for we're And, with see, again, we when said, add demand we that deficit the show million or of a million growth, million as X.X changes of about So, tonnes. coupled not inventories to equilibrium. and the think that bring that down remain world anytime soon, we supply that demand into pipeline very out enough and elevated run do worldwide low drawn of but

James C. O'Rourke

Thank you, Mike.

Operator

question the from Vincent Andrews. of comes Your next line

Neil Chandan Sanyal

Fertilizantes. is Vincent. couple in for of This on A calling Hi. questions Neil Mosaic

accelerated XXXX the to guided midpoint metric sequentially gross down bit capture, at $XX that being at for it the margin tonne versus tonne You a synergy segment $XX seems but is per the the per XQ.

at is second, driving opportunity number? for then, still synergies kept that that? additional for flat $XXX million. And upside what So, an Is total there were

James C. O'Rourke

Well, Okay. exclusively of Neil, has fourth the That been margin the almost change FX. quarter. a for thanks. driven first all, by let but about me been real talk There strengthening that of is whether or particularly and has real – Bolsonaro of the given stronger a election short there. not, holds of Brazilian of us after it expectation the term Fertilizantes a

of goals million. we combination We businesses. improvement synergies two the terms those out combination will but by synergies believe to necessarily the that beyond business beyond businesses. year, our In something the gain investment not the should that, fully of are the original was do said for And in thesis we brought of was, expect we that to synergies, we set they for after call conscious that increase two $XXX the last not a amount we $XXX million which we reason made we decision expected

for it as So we're that as we have going being leave a Thanks. to is. that milestone this at reason, looked

Operator

of comes next from Roberts. John question line the Your

John Ezekiel Roberts

any in in you you Brazil, challenges constraints there you. given to logistical acreage Brazil have present the does Thank meet any shift Do In and down for on? the soy shift the demand? increase to going

James C. O'Rourke

business the all Brazil agricultural huge major for areas John. And whether we support and we country are number well our supply corn crops. think or distribution soybeans, there sugarcane, have the growing our and a those. we combine new believe and coffee, business production of business is is that we the advantages market well regions, in positioned production main a one with of soybean and the Thanks, serve the that when right of are its we to distribution is as in actually serve of the well-positioned growing best positioned Look, we to farmers in business in our Brazil,

Operator

Your open, P.J. P.J. your the next line comes And of Juvekar. from question is line

P.J. Juvekar

you Can hear Hello. Sorry. me?

James C. O'Rourke

Hi, P.J.

P.J. Juvekar

you And Good from operations? demand means which expectation probably that then, year from demand this for corn, and it should North about will And what crop to record soy assume back North record that safe to down nutrient the some come removal City morning. Plant the in America. you. that is Thank given your also, secondly, plant fertilizers again? here is Is America Can ground? add for shift talk

James C. O'Rourke

on this PJ. Sure. Plant Well, City – At let me talk sorry. about Plant Thanks, stage City.

information that's we're right year-end regulators before in And about with and City, position with state able in vetted consistent federal we're the a talk City fully to forward those Let be me let with on active decision gathering really are me start And and been Plant made. not but City, Plant discussions we've will we both decisions Plant until before. and a to make and where going we're that now.

couple the weeks ground replace absolutely there fertilizer. and and and you a it an increasing more to say demand, are I need record I right. I the In what tour that on fertilizer is The meaning terms there North crops from and of more that is removing and American have American North ago, is simple that – a Corrine answer think just would of customer – were

to now, continue we And North we crops market solid. do as don't grow, expect see a demand. in while So, good as expect America huge that the rates growth we

crop places, to is else? putting the anything right agriculture both touch aspect are of demand as in we amount demand and on the helping because The the of in that hurting want and do was demand really it the marketing the saw usage this fertilizer fertilizer other right Corrine, helping fertilizer. move people is the than nutrients rather for precision of that trip for towards the you probably

Corrine D. Ricard

we've for tonnes to so, million X.X so our XXXX thing XX.X at add, tonnes for only tonnes The in range shipments I million XX.X North Sure. million would similar. and is America Phosphates for forecasted got very XXXX about

and was inventory that of little of you bit what we want Plant that on building shipments. than people would started think, Mike, bit a just about was where a loading same shipment. up to in build. do were saw front-end announced prices But After expect there relatively to the A add? a little bit a they little XXXX, the closure, optimistic a be pretty City we I it go the little side, Potash heavier normal you of flat.

Dr. Michael R. Rahm

they're the thing We've important the that, big But, another are at guess, I are before, have think, things right today think, prices economic the new last and said demand only both in corn of really that three-year are the top is middle. above as look three-year strong. perception soybeans the drivers agronomic the three the you the of add at where for prices I prices wheat if look talked would kind soybean and despite, crop I if kind remain of factor prices the at I you we range years, at range, No, and the is versus about withdrawals. corn, wheat changed, that

combined than year. So, well they taken three the the today signals for the that replace that what to and think the next have different farmers no are with years, outlook been bodes for need nutrients last out, are getting for demand I

James C. O'Rourke

to about shift. are crop growing. for we're a and agnostic pretty was just is impact which has the nitrogen of those crops to I'll corn final by great saying And end big Yeah. That both your question But us, soy demand. as on

Operator

from of the line comes question next Mark Your Connelly.

Ashish Gupta

morning. Ashish Mark. for It's Good Hi.

and up the in affected situation? changed Brazil Beyond warehouse the assets, picked your from the freight you those port assets north in and ADM. position How also have Vale assets your competitive

James C. O'Rourke

Brazil, in to of the infrastructure, infrastructure. one one is I Yeah. Look, competitive you that in port the to if been or TIPLAM. of is advantages referring Paranaguá one position two think, access good us about do is to able for one very Brazil has the the issues and what ports, of And infrastructure importer, in key competitive we access Ashish. what TIPLAM particular, to, you're key in now port state particularly Thanks, at an have and as think

of us upstream and on a that synergies with is of this So, And and importer or raw at the downstream of upstream really finished our you our the run piece look synergies but businesses. benefits statements of a better added. we've the associated certainly product a been major if also materials. helps piece has it downstream big both This at synergies, infrastructure least

Operator

line Your next the of from Michael Piken. question comes

Michael Leith Piken

on of ramp-ups to booked of or sort that some referring does in the of you you you your my and Hi. guys been answered, that Thanks. that Most maybe have capacity the amount contracts? future meant sense, those were you referring questions Were a just now. supply what competitors some tight on wanted Yeah. of the potash right of prepared get of but time in mentioned seeing terms existing you're have remarks and some of to the competitors, of China to India

James C. O'Rourke

Okay. and has might an away as the has course, of been whether which Thanks, even some or been impacted ability, come that possible tighter and then, think And have might more us supply has on is what we're Canpotex, I shutdowns Certainly, or potash. on terms one SQM's in slower example, operations of experientially ICL's environmental to market volumes obviously clear it and moving lithium terms previously what of a there Germany expected. Look, have price being supply new we in shipment well for as than a have focusing from in we're that in has it's reflected But been as would there I both. refocus up have suppliers Michael. But and also have – also, Russian expected than one there's mean and have seeing not issues that's movement. been not. had

Operator

of And the final from line question Duffy your Fischer. comes

Patrick Fischer

capital. morning. Yes. the around Good Question

need types those you your return at looked you about debt talked use So the say, you in a I little be the more would bit risk allocation And now the stock you you towards still a you that the decide was would Fertilizantes would point or would make. just that at, rate on unclear, trough? delta capital maybe or we future to a mean move Could a that is buyback, then, that side, down you what down little risk the rollover now in versus to you the highlight maybe adjustment to want through if of investments? as pay maybe you level some bit you and cycle out a does pay down need. called

James C. O'Rourke

Well, paying down highlight. of first a near-term debt a X.X:X. We of to million Okay, Duffy. and $XXX returning me ratio let set target below

Now, that's been achieved.

is, the at As are only at but cycle of are bottom the debt the we at be what cycle. longer middle the how of the throughout positioned only ratio term, we the would but cycle, not we the look top so not looking cycle, also the or instantaneous we how positioned the of

that how that So, pay through address carefully we any take really down to or not either to more we more debt. want going before and steps pay down to think we're

being do, on to we reduction, In a hand rather share terms this to some as the I cost sort. which of opposed would investment as repurchases risk say what of to capital I of return think an at could is question than would look your I shareholders Clint,

In at say the risk-adjusted of look be terms an of that does it above return, capital of for the geographic to and currency to investment much rate have make. to intelligent we etcetera, risks, risks, to would technical then for risks, have how cost be us

James C. O'Rourke

would to we to couple on key a would I like But like leave So, that, I messages. emphasize who's call. thank the before been of with our everybody

business transformed our made First, earnings We've progress. and tremendous Mosaic created potential. substantial has

is we're the long-term. efficient Thank the call. that constructive. joining momentum generating both you optimistic strong created our franchise continue grow. Secondly, we've our and expect for Phosphates short- we Simply fundamentals have highly put, and and third, Potash be market continued an And to about returns to to

Operator

This concludes call. conference today's

You may now disconnect.

Laura C. Gagnon	The Mosaic Co.
James C. O'Rourke	The Mosaic Co.
Clint C. Freeland	The Mosaic Co.
Corrine D. Ricard	The Mosaic Co.
Dr. Michael R. Rahm	The Mosaic Co.
Ian Bennett	Bank of America Merrill Lynch
Andrew Wong	RBC Capital Markets
Robin Fiedler	BMO Capital Markets (Canada)
Jake Lacks	Susquehanna Financial Group LLLP
Jeffrey J. Zekauskas	JPMorgan Securities LLC
Oliver S. Rowe	Scotiabank
Alexandre Falcao	HSBC Securities USA, Inc.
Graeme Welds	Credit Suisse Securities (NYSE:USA) LLC
Jonas I. Oxgaard	Sanford C. Bernstein & Co. LLC
Adam Samuelson	Goldman Sachs & Co. LLC
Neil Chandan Sanyal	Morgan Stanley & Co. LLC
John Ezekiel Roberts	UBS Securities LLC
P.J. Juvekar	Citigroup Global Markets, Inc.
Ashish Gupta	Stephens, Inc.
Michael Leith Piken	Cleveland Research Co. LLC
Patrick Fischer	Barclays Capital, Inc.

The Mosaic Company (MOS) 6 Nov 182018 Q3 Earnings call transcript