MOS - Earnings call transcript Q1 2020

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Laura Gagnon

Thank you, and welcome to our First Quarter 2020 Earnings Presentation. I’d like to start by reminding you that the Q&A portion of this call will be available beginning at 11:00 a.m. Eastern, Tuesday, May 5, and our full slide content, including modeling assistance, is available on our website.

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

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

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

Now the I’d turn Joc. like over to to call

Joc O’Rourke

for listening you time we’re all taking and We’ve you will and to coronavirus due to Thank quarter. results our to script same Laura. we’re discussion. all to our record answers first earnings Because a pandemic, submit home this the quarter different materials approach working questions available from made the the at

always, your answer available and questions. Lucy As will be to Laura

who by I’ll great know and hope and safe of all the or economic employees, by are touched huge or start taken families our its been impact virus has Mosaic now, expressing your we minimal been have all suppliers. has my had by with pandemic lives, impact. affected, fortunate and and By you healthy. that operations directly on the COVID-XX many a people having whether

topics on markets progress agriculture continued and now I initiatives. strong conditions forward; the on our finally, COVID-XX, strategic X First, our will in cover second, current and today: impact the fertilizer its market; our and going

continue Fertilizer to a strong, markets expect are and good we year.

year. both and this global for shipments expect in phosphates growth We potash

growth demand expect prices, decades. with on been we’ve grain our line seen to oilseed in due for steady in growth, have pressure expectations While the good we modestly lower and

season in running Hemisphere, the in demand the is Northern are We peak high. and spring

even expectations. their In that fact, is retail reporting high customers outpacing demand are our

Our and to volumes were prices shipment robust, beginning respond. are April

$XX the and up and year. seen change contract. beginning we’ve China CFR balance. low the possible. per and market million is sentiment COVID-XX the a customers has where The playing pushed biofuels dampened softened MOP China following was season announcement. from contract in markets in awaited is a Several up prices Brazil’s the brought week, DAP grain to the of tonne $XX signing with price tonne of phosphate new accelerate impact Corn in like North increases, Belt as MLP the significant sentiment oilseed Midwest have the per While have factors of into a price But contract. prices America Last out better normal spring. around quarter fertilizer our otherwise, potash But the deliveries

North First, than due started to while down longer usual, last lasted brought weather, fertilizer fall’s which it late inventories. American application

are for the on our Second, compared are by the in inventories XX% years, across down low the barges in first of ago. tonnes and couple a with year a channel time river

We’re refilling application America in North driven spring in soils. warehouses nutrient-depleted high quickly to meet by to demand replenish very rates strong part fast-paced

operational our from been competitors by supplies issues. unrelated phosphate and COVID-XX Third, impacted has

down. in China. season, by India’s compared into Much total the country, domestic phosphate we China but product continues supply demand tonnes, DAP. by during changes to amounts Fourth, record down XXX,XXX believe fact, of is In production spring over have year, the excluding shipments global in India been last import strong remained offset declines of production with and finished is

year. of year make expect of the to those are compared with a China up exports not we half XXX,XXX almost the ago, some second tonnes all of but Chinese While in down tonnes

of bad shock elsewhere. their homes seem in for And North the weather finally, year finding America down tonnes are spring ‘XX, After phosphate Last into demand resulting through by over year approximately tonnes to April. imports week, importers XXX,XXX on from be which per can higher tonne standard, base potash new prices white a The build, contract form of strong for demand. given contract red China global granular. of and for published and $XXX signing prices the is with are the price helped severe

in is current spot potash we to from believe to and in the market $XX was volume We to believe and of price Brazil executed COVID-XX As every of granular environment. in will economy. our the the in impacting contract American XXXX shows pandemic continue of pricing the signing the a premium a prices. is Slide price spring typical, is effect occurred, increases reaction presentation North strongly before and Much whole here. clearly similar positive planned X see sentiment we sector

into ahead will insight minutes our and how providing out for broadly and best markets a view spend of I’ll play impacts on our season few the Mosaic.

markets only see and that can of especially corn and believe also demand XX the We not of monitoring expectations, to XX the expect that in X, risks and production but at adjust ethanol growers seen. Slide of USDA soybeans of are you actively million are acres as this up the million year, to shifting on acres X be that likely planting corn. biofuel highlighted opportunities may have to we’ve acres currently be we expectations. we As to revised reduction million equivalent

are There the rebound. Some be the as potash impacts Corns both longer of will potash demand in for Elsewhere, North see to require of prices, corn outbreak of by balanced year. could destruction from is to demand fever the America demand resulting last amounts nation would could African that phosphate. rebuild oil biofuels-related weak corn swine potential to take we following increased have to herds China, palm and continues much the which Mosaic, actual migrate and to acres and we significant soybeans, agnostic. at grown soybeans in

we’ve combined on said, outages cautious relates of little our more Patrocinio our to and direct it financial total with of our Mayo million seen quarter. to As performance we Miski the the from have at impact under impact COVID-XX in very $XX That date, business sentiment buyers. seen margin

situation markets, in our risks. supply dynamic as the well and very logistics monitoring closely are as We chain

flexible and constant of adapt communication be any providers. to ahead our high This quickly teams, to sourcing is and degree in potential and service maintaining optionality scenarios, with to means our of logistics changes. suppliers and to a Our goal be

Some finding to as of sources uncertainty. rock protect include taking extending this production Mayo currently can Miski our new expected, period as ensure outage are continue well already we sources of than against the acid finding alternative the and to we for actions needs through meet longer to phosphate of sulfur sulfuric

note to opportunities are important as is It well. we that finding

the market and the longer refining and shipments we as rail inexpensive more freight activity, seeing advantage costs. flexibility lowers that our has which taken we’re demand capacity to of impacted example, increases and availability other industries’ a product fallen, of truck to and for fuel it. lower other move while being transit availability opportunities to sulfur by Also, in our have buyers world purchase need no had were is to who around sulfuric acid For

travel, reduced positive embraced we We’ve of having G&A last technologies level we’ve curtailed and various tools longer that employees as spend over of expenses we in taxes. addition, developments promote more months the are a In travel. also seen to seeing face-to-face moderate without have and couple cash expect term, as collaboration

collecting tax Recent passed over accelerate cash refund legislation next we the years. anticipated had that few will

comes updated to been of net have refunds net our our reflect a a fortunate. million from inflow $XX result, When to approximately we a cash operations, outflow versus expectations the we’ve As it for tax year previously.

move by well, and truck, ship. and operate to we product maintain continue ability partners the chain rail, supply barge Our to

Our employees have been exceptional.

engaged shift schedules safe. of and handful at distances people other. quickly virus, none and working we office our ensured supplies critically home, been were healthy protective gear. to personal have workers equipped We of each from We kept keep keep people we the while the tested safe our with pandemic and positive adapting a that appropriate responded from We the employees Only to has for to ill. by managed

shifted fundamentally few worked just in We a days. we how

million operate help We’re over in pandemic. part food society help communities we including also relief. urgent supplies invested most doing with our needs deal We’ve with the the communities and to those where medical to $X.X

well the improving Beyond that maximize benefit so can and we COVID-XX, execute to Mosaic from responsibly markets. continues

In mines for million continues target high we’ve XXXX. to are improve. toward and our $XX we safety achieved and savings and way plants quarter, operating Our performance $XX and our are in transformational rates, of the well production at million efficiently additional savings Brazil, new our on

continues with and miner project next into month. miner operation fourth in to third gain KX the March placed the within the Our to completed momentum due be

North identifying business considerably primarily combined significant other and our performance-based is newly American opportunities, efficiency are expenses and long-term incentives. costs Our from down SG&A lower

think financial we turn over the how Now the and strength considered. scenarios liquidity Clint the we’ve about quarter, I will our to to Clint? discuss call and

Clint Freeland

Joc. Thank you,

in and volumes, quarter, we on look back number finished business, that we dynamics As prices the the there of were currencies. saw specifically around sales a product first

demand Recall, between season. those results. quarter there activity first Mosaic price three compared First, market and phosphate curtailments realizing segments in however, benefited operating spot our a a that application accelerated volumes, American an the spring dynamic to fall and of and as North and strong XX% at market industry our The quarter, the American phosphate extended this this were season led during led the strength to XXXX up to of higher prices into rebound combination potash prices volumes and Fertilizantes. North in is lag has changes in

quarter these in expect of So second beyond. we improvements would to and price the more realize market

quarter. financial directionally we farmers our results. for XX% production real an with dollar improves farmer versus certain said, volatility that dollar Mosaic this is real the currency credit business terms the obligations. benefit are U.S. had margins. first discussed create the dollar Global the it risk as by past, Brazilian the and And as may With in we’ve mindful that a depreciation and lowers our also during in to costs customers and impact on In depreciated Brazil, of

this from we have to minimal seen However, date. impact

the however, While we program dynamics the our has by depreciated that apply short-term out rolling a currency Recall, smooths hedging currency Canada, to have the Brazil, in volatility the X% less same quarter. business Canadian during volatility. where than dollar been that

the of be currency the delayed. financial somewhat our movements effect So results on will

is $XXX movements, As U.S. these accounting at losses statement. to million related a liabilities the the recorded foreign U.S. unrealized are including currency as income currency dollar-denominated quarter. $XXX currency that local during those for the impact our of from subsidiaries. intercompany Of balances of million on amount, is foreign reflected dollars When liabilities result of accounting to normal we process, converted part this

are hedges sheet part an sheets income as balance We comprehensive there’s remaining in subsidiary also offsetting adjustment back on calculating program. balance the to had relate no into notable $XX our to the $XX unrealized sheet approximately all dollars the of the these would items income treat course as the as statement. U.S. identical our the of process, and this on translated adjusted subsequently have account. and gains hedging offset million hedges notable adjusted EBITDA. treated normal is normal that the corresponding realized The when earnings benefit consolidation that note in other I mark-to-market as million in However, balance of been

As on was and share, particularly the a Mosaic’s foreign FX net million that loss quarter for currency $XXX first the which million in in loss XX, mentioned I of just $X.XX. Brazil. Slide per Adjusted XXXX million included was quarter losses $XXX $X.XX reported EBITDA totaled and or noncash EPS outlined hedging, of $XXX normal for adjusted

lack sales during At X% sales for mostly previous Sales due from were offset improving of international our first American the year, as the up potash down by lower $XXX the adjusted in to compared business, quarter contract. the the million to were first volumes $XXX China million, the quarter was North of EBITDA XXXX. period

to tonne, of cost management which including is of margin operating a of tonne, the $XX last is more our per cost gross improvement our reduction rate. tonne $XX year in cost, excluding $XX reasonable during quarter in cash cash brine brings $XXX per of XXXX of as tonne that average per while operating totaled $XX at production tonne offset first to per target notable Adjusted cost. price This below the during and brine than sustainable quarter, cost It cash tonne, the production, compared sales production. the per per were $XX cash XX%

the tonne per management and portfolio of $X business, the improvement contributed from the active the late-fall dollar surge KX the reflecting benefit, in strong in XXXX. to million start $XXX sales season. product to in the a most Canadian In success totaled resulted has of phosphates year, were the compared project. million, spring up X% over to of EBITDA of depreciation Finished volumes quarter the While applications first-quarter January the cost year adjusted first and $X

quarter $X costs However, and the the more higher would were we per these trends DAP sulfur weaker lower prices. recent With in realized accelerate results. first seen tonne are sales average quarter strengthened to pricing average by more into offset than and prices into that sales expect realized by at-the-plant have as second said, that

results normal improvement MicroEssentials this as sales America expect shift masked of MicroEssentials away first North to we itself by quarter, in this second some quarter in in sales higher-margin is into While the are from strong the the occurring. correct

costs. We continue on progress significant make to

our our with For XXXX one in cost cash Florida instance, tonne. rock $XX mining below of the quarters our $XX per delivering and of years tonne, operations reached per best target

are conversion in costs quarter costs, to the substantial cash our in the curtailments, to per operation. to to we up we’ve as rose raw our $XX back finally, full should more tonne due sulfur. those levels impact return benefits While facilities of second And primarily normal seen material

XXXX below $XX tonne recently increased While second-quarter sulfur prices average per well they our under to contracts, still are levels. have

fourth year-over-year adjusted of of reflecting first to million finished Similar cost BRL to Mosaic $XX were to in the operation, the Cash higher-margin totaling company’s Fertilizantes meaningfully margin synergy in in transformation up pricing from of X% from due to in same per In quarter to the XXXX trends, period of despite and of shift were MAP. and weakness with phosphate XXX quarter fourth currency, per volumes, XX% the compared quarter XXXX in XXXX product cash had at terms, down the EBITDA, a tonne. gross impact tonne, production XXX. real down programs. to target with costs local terms BRL improved rock million, below TSP $XX Fertilizantes phosphate and quarter cash rock compared X% adjusted our a the the the to conversion cost the strong higher-cost, EBITDA Mosaic over first $XX the of dollar

delivered terms the making dollar achieving production in period we’re the and the in closure excluding to XX versus year. $XX quarter, this $XX currency million $XXX cost toward were currency Plant $XX down million shown same Slide Potash X% weakness. reported local over EBITDA after However, cost, We’ve In were first benefits, $XX City incremental costs the before, progress less. million target. factoring million million

And Brazil total. $XX million efforts $XX the realized of million transformation

those last For benefit, that related the in Brazil. we dam Recall the expect costs see remediation material not until to million second $XX year did to quarter. become

So expect would throughout of to the those we see benefits balance this year.

totaled Slide $X.X billion March at As XX, reflected liquidity on consolidated XX.

than environment holding current more the believe we announced, previously As makes cash normal prudent.

$X.X both facilities committed million uncommitted at billion the of under accessed capital amount to Mosaic’s cash At we an our with million capital raise additional available $XXX available stood quarter, the balance working and billion the on during sheet. the end $XX So base. on committed depending cash the and revolver borrowing working to under facilities the of quarter, revolver unrestricted available $X.X uncommitted

of $XXX quarter to cost capital. April both The in a improvement million operations position as management of as million, a company’s last liquidity further working continued result cash continue from the balances the over improved build. during first month of positive Cash year $XXX was and

by for million, last normal would payables net not million. year. the during during also declined than debt rose quarter which structured note part less Brazil, in is is Mosaic, quarter, $XXX debt, the $XXX by net our that of balance I As

unwinding refunds our As of and of the and the we tax to from of rate expecting previous in cash we both excess interest international $XXX look inflow balance million domestic are up estimates the swap. in year, additional to an

of quarter. In already this received amount second fact, half we’ve over in the

CapEx that such such Brazil on said, of as retain allows the we should as our with enhancing value-enhancing options look and company KX the and adjust our as we warrant. to spend the to constructive it manage do ability remain we steps As transformation. target projects to these profile, view to liquidity, preferable circumstances kind With as cutting other cash

As we forward to we elevated move intend cash an in the maintain year, position.

that, liquidity we call However, you, should profile. and the over if I’ll normal to would uncertainty of not more diminish, With COVID-XX the accessed some, our cash Joc. to return turn expect a return all, to under around back lines

Joc O’Rourke

Mosaic and Overall, hold ahead Clint. shareholders. years major believe you, we XXXX and promise Thank the our for

critical food are and global Potash priority, very strong Our for new demand a supply better with moving phosphate as coming and a to market. demand markets security. are supply recognized limited balance, fulfilling need into products and globally

We to into XXXX the in through expect strengthening up delivering move The organization. as in is be the across we the North years, and continue several spring to market shaping XXXX. America best is Mosaic and

Our plants and mines are running efficiently.

COVID-XX all our while adapting grow. on of We strong our are maintaining costs, the managing Most operations, market reducing chain our we supply to and impacts and importantly, ultimate foundation, customers. are continues and financial

will that the food wish attention. for meet again all help farmers there for world’s and will you We demand. you to your Demand health. persist, good we be Thank

Joc O’Rourke

you By We’ll commentary, release and questions morning. so they’re so virtual in listening for and now, and to would chat. like best question, we’ve first an our night. you’ve Good we we to do or consolidated where quarter answer Thank earnings to fireside on spend other. every the our last similar received the each questions seen our hour answering

begin, I themes. key we reiterate to Before our would like

First, and is company. has will progress we’re must agriculture across delivering real The for to global operating well. strong. created and dynamic costs, the produce. COVID-XX very fertilizer making strategic our business We’ve leverage years continue and And the up performance holding lowered strong demand secondly, markets obviously for and environment, are a efficiency ahead. increased made

let’s Laura, the question. first take now, So

Laura Gagnon

questions similar at Suisse. Joc, Parkinson we’ve Berenberg Rikin received Chris and Patel from at Crédit

that of some the into be any first meant to company’s Finally, only projects are costs, cost versus quarter comment considering it’s can And updated forward? How going levels that ‘XX? goals all tonne per there year? XXXX plans sustainable accelerate for these reduction your in could cost further were on scope you on there upside, initial progress this your any segments? is Given X

Joc O’Rourke

That’s have really pursue the this Today, KX we’ll inflow we make and KX the to course, running, segue in opportunities X of year, the for we pushing having the step into really is term X. the [miners] we for over forward project projects Look, for will across these, soon eliminating mine development. difference Mosaic. few first by business, of that have being continue you potash, that this need are for big a And to at and the mine. the looking as what are can nice KX through In your Thank to we our be transformational world. the of COVID-XX close to critical a continue brine long the end in the need most efficient no costs a question.

In or terms XXXX beneficiation if -- Fertilizantes, well will. and the whether on lower, there. energy targets or And it’s those, of cost and driving cost costs of course, accelerate can we through towards of optimization freight our rock our reduction our XXXX and reductions we’re track we

using In initiative business. that next-gen costs to in or phosphates, and technology efficiency whether our we’re processing it’s automation mining next-generation initiatives, drive and our drive

are business, of the the interference difference pushing ones a across that on in term So make the despite will Mosaic. those to COVID, critical long really we

Laura Gagnon

are Joc, "How thinking PJ what And your happens continues asks, covenant? EBITDA you to at about Citi Juvekar fall? EBITDA if

Joc O’Rourke

you, Thank PJ.

above comfortably are but covenants, on We what rate here I let do give you some is interest Clint details I’ll EBITDA to our will that.

Clint Freeland

for and Joc, your Thanks, PJ, question. thanks, Okay.

calculated the as have in that rolling on you that Joc use And have As of EBITDA. It so a question certainly ratio I an coverage adjusted plenty Joc said, basis, said, which we X-quarter mind. in right focuses is really on now. room our in keep interest that ratio think

EBITDA, like compensation that share-based as mind write-downs. adjust to covenant asset gains and reported that, things our losses, is for the exchange does adjusted losses for expense is, keep similar thing foreign calculating other to in The you’re and

items you’re your So sure adjusting as just ratio. that that be those math looking at for you’re

Laura Gagnon

Bernstein. comes question next this Oxgaard from Joc, at Jonas

if You still through year. on spending the CapEx picking X in $X.X is for spent Run quarters QX, $XXX you rate guiding you’re so, in QX why? billion. but X? to Are million for billion And $X.XX up

Joc O’Rourke

a do normally flow and we make Yes, is lowest we effort in as you, cash quarter. our conscious Thank that to did Jonas. that conserve QX, cash

through And much in more in quarter. some capital try we not focused we in with spend in if But to Canada. of as the we quarter year, even COVID, can summer we as were help particularly months go that we expect spending the first the do it. So acceleration

expenditure, lot believe is in that, a to As expenditure KX our summer. necessary, And long we’ve we single you biggest going as and know, work cost work that, of run. this we’ll drive area. that go efficiency and on But lower is said that previously, the more is

yes, our assets But try we other look at In year. of quality by the we’re the of the end and what throughout to we to That terms our all the same still is of safety do time, going and means, the of minimize capital, our first have always focus. after people.

Laura Gagnon

it Chris comes question we and Parkinson to prices? netback say transportation inland think terms a in from at freight? be rates next Credit to this minor of logistics costs Suisse. seaborne tailwind should about safe FOB and Joc, How Is both could

Joc O’Rourke

Chris. you, Thank Yes.

transportation a lower providing which enjoying tailwind. bit right definitely a We’re costs now, is of

is fuel the an in rail, products, course, availability perspective. adds from us. we’re on as us cost other And more rail and that ocean freight a of much to a it transporting efficiency so not of lot there’s Of extra helping

whole helping while industry. it’s also helping freight In terms ocean freight, the of is us, ocean

competitiveness. trade, the a will probably so it the real there difference to bigger than And make is our change flows impact rather trade

Laura Gagnon

Jonas versus long-term rock This next tonne differences between question goal drivers rock And in in Can is you rock per what the for the costs is Peru? about Brazil? costs Bernstein. Oxgaard talk the What comes at Florida costs? Brazilian of from tonne per

Joc O’Rourke

Jonas, you, for Thank question. the

to we ore have to have method main to of use blast rock. and terms different is, truck move a situation. in the where sedimentary costs, we mining In a deposit the in move it’s very for And deposit, to mining igneous Brazil. use In that have draglines an shovel rock and Brazil, and Florida able large in we’re versus that reason Florida, the our we

have U.S. slightly you growing will from the a use course, our but the advantage, the have, up is of than So regions higher freight will up per don’t to cost the tonne where Uberaba will or which to always coast we Brazil have rock.

it’s So in very location, competitive.

goals as fact, a goal, this rock I BRL that that we think that good we’ll achieved we’ve and goal. year. goal term, costs having see of put out XXX per tonne. We as achieve the believe we’ve in of being Long range still Matter our

we’re So doing on rock well costs.

We continuously and that’s expect thing. to improve, good a really

a In Peru, it’s and have a so operation, it we sedimentary to of terms but shovel blast. again, truck don’t is rock,

good they between So pretty Florida costs. somewhere our They’re in have costs and costs. our Brazilian

Laura Gagnon

question from the next for Vincent results some comes Can bonded reflect? in the warehouses China? to volume potash related you volumes recognize you will the Joc, the from in Mosaic detail Andrews much When And additional Morgan the contract? your provide will Stanley. China second how quarter will sales how realize Chinese new

Joc O’Rourke

Vincent. you, recognition of Canada Thank is outside follow we sales deal and way we The through standards. potash Canpotex, with Canpotex’s revenue

So largely those warehouses funds been recognized. in have bonded

changes for will Although price that in adjustment an to recognize will we QX. be say have there I in will

they those actually Now our in terms of lot own of business. -- going the to distribution a tonnes, are directed be to

that so in and and corporate they’re final in move our those the as segment products. inventory, sale sitting make And profit so of today we will

Laura Gagnon

decide it is our Goldstein a would potash to to production, from What total have of KX? question this XXXX? production should reduce from Research, as Mosaic production capacity from is KX. for come percent we Morningstar What and multipart expected or of the all in tonnes? any total expected a Seth effective And Joc, pertains

Joc O’Rourke

Seth. Thank you,

year we’ll KX, to the and we KX. X.X end at XXXX produced we actual that the coming per million by running As in of be of out tonnes look X million expect of year, potash

plant allow and said virtually will by KX us I KX fed all mine have mine. the the KX eliminate the that to earlier, As be

far, In is, that terms million actual will million between the most tonnes of down this somewhere not have to the X certainly, underground to announced, production, exceed KX it turn produce KX, which from If year, mine. date. our tonnes should X.X we million production to be X and and of by we from expect efficient previously we’ve we production

Laura Gagnon

North next much our from Andrews QX Vincent Joc, pulled Morgan comes America at in actually How Stanley. question QX? from forward was into volume

Joc O’Rourke

you, Vincent. Thank

have volume look at if what probably it fact, year on QX volume last would In well the into QX winter QX. in QX. would a funds normally moved in impact and fall, in We so months, the late, into but late we fall bigger was late the the impacted have the continued coming and into year was the been had recognition earlier volumes, by that revenue

of from tonnes I will terms that In moving effect QX, think QX from minimal. be

As ordering is got for although a acceleration lag people we and taking recognition. revenue delivery, of there

perspective, so of been might in many the from quarter. actually the that recognition revenue recognized a have in And tons second shipped will March be

Laura Gagnon

distributor becoming next or know Steve full-service questions producer into expand the a a retain to of retail? or couple from Is the Joc, of wants Bank Mosaic Fertilizantes. larger what long-term America to it for is to Byrne growth potential bigger the Fertilizantes business.

Joc O’Rourke

Steve. you, Thank

potential MicroEssentials opportunities an avenue It continue great, a As our us grow advantage we market. through organic tremendous Mosaic a distribute there’s Fertilizantes. you’re products is or first-mover gives to for value-added inorganic either This and well in aware, think allows there Brazil. business long-term as like And Mosaic means. become that such, bigger to producer to real

in In retail of believe whether move long don’t terms the this would base, go into that strategy. we we should business where our term. more that And that’s a at this isn’t stage, really

Laura Gagnon

Stanley. Vincent next Joc, question the Morgan comes Andrews at again from

SG&A much significant impact how the With will and of in gross much how impact the line? will that Mosaic’s profit XXXX, the devaluation real

Joc O’Rourke

Vincent. you, Thank

in the to provided rate changes have We FX in appendixes. sensitivities

However, emphasize on what done is will were an I these unhedged base.

have fact So think about hedged that when we you our about think about half you have the exposure. real-based to of it,

costs our SG&A, of in of X/X real-based. terms are about In SG&A actually

to gives SG&A. that an you idea the Brazilian impact So on

Laura Gagnon

few next Phosphates segment. pertain to Joc, The our questions,

into on for So higher-than-normal in inventory are and outlook XXXX? and carry the would of XXXX the in sector Stephens from both and curtailments sulfur the sulfur hearing balance Can course Samuelson from given implications the costs. Mosaic’s for Mark global the of Sachs perspective over you through Adam input Goldman the XXXX Connelly energy interested and

Joc O’Rourke

in to we’re you, disruption suggested, having are guys. our we things a sure you a Mosaic, buffer. really of cheap have to to Thank inventory sulfur. or to a effect sulfur actually sulfuric the there’s Certainly, been of as knock-on X acid At is higher cheap-ish help supply. we our And sourcing doing industry make moving better oil secondly, terms level One, we’ve supplement then situation.

the is because Now have market, our terms overall in most worked is now, globe. that of sulfur. heavy slowed that, U.S. in sulfur But periodic in more the crude which position is down. to storm. than will because Mosaic I the remember, there world they’re other Mosaic of the think production But be in more has Gulf, while and be best probably And of deficiencies is the say one well things will better U.S. weather localized I around quite using positioned Gulf. out down, to sulfur the industries Certainly, positioned going produces right

Laura Gagnon

from have both Joc, Stephens questions related Seth Morningstar Goldstein MicroEssentials from Mark our Connelly and to product.

acres? target? MicroEssential pace much how trade-off MicroEssentials at First, you Is there or to to to levels the to affect in things would Brazil XXXX? between in reaching a probability and reach the near its crop do or application for How contribute target what And current Mosaic finally, are soy that growth corn-planted do main of expect remain needs sales XXXX? prices

Joc O’Rourke

a to I’m folks. because Rick going Thanks, one answer. I complete think he straight more to can hand give this

Richard McLellan

have crops. we to return, achieve continue focus maximizing we’re And to we crop on the Yes. the on customers and that for MicroEssentials, in prices we people good dealers that to focus the the of returns we’ve and us Thanks, And distribute agronomic where help seen as the need as well product years MicroEssentials. support we need of goals difficult, maximizing doing to to growth their for that Joc. to get see provide them in kind

as soybeans, As far the are match we’ll got crop. the farmer that corn, that and soybean corn needs the products we’ve of products of specific up the to specific to to the MicroEssentials and and canola, are needs ratio, to

Joc O’Rourke

of our up growth Brazil, expect there And Rick. somewhat growth come the North is And XX% because slower market. Thanks, we market, than me let a will that in markets. from America mature is in other add, to

Laura Gagnon

mix products? MicroEssentials-related margin MicroEssentials the this is we the other impact between commodity Joc, and have question. products or shift would expected another And mix? specialty What

Joc O’Rourke

Thanks, Joel.

number continues a a be goal over and us average of sale million X.X of final premium to an about that $XX normally MAP. about gives tonnes, DAP XXXX MicroEssentials achieving and ton Our

in So certainly our product margin is best it phosphate.

And in only the margin take terms distributor retailer, also of the we not Brazil, producer we margin, get the there. but

And margins. and by our Brazil, profitable to our most really so in far, adds it’s,

Laura Gagnon

current pricing asks, doesn’t margin have continue "What Jackson Joel under ensure phosphate BMO Joc, does levers in environment?" the to from negative territory Mosaic

Joc O’Rourke

guys. you, thank Well,

takes improve things integration answer at which business, we’re Let Certainly, doing our mining and Potash businesses. our and other phosphate the our recovery time. costs like one and next-gen me processing both the considering business. Also, of out next-gen significant will those Phosphates costs in our a rates of those

it’s It’s So with technology. goes just that not it. the stuff the all day-to-day other

stage, with we today, production. terms our no we’ve so And phosphate of and the there that production demand we At our always is we should this there matching the that are believe customers reductions, in we follow production need believe prices reductions. effectively, time. for be that In of said will needs match will

of we’re out which Phosphates cost, our of have to term. And constant I been terms such able for of inflation making the much pretty years. in XX the improve up more much to, each costs, year, a in way actually long competitive is think we’re in taking us In our overall these impact that

Laura Gagnon

margin your long-term based stripping "What view for outlook Suisse raw Parkinson cost of production out Joc, Credit of Chris marginal China?" materials and on from asks, your the forecast on assumptions is for

Joc O’Rourke

Chris. you, Thank

look we those we the on materials, raw believe and the to at we consumer. passed look basically forward are As

where balanced above is we for times, average, we we at what would probably phosphate, look a range post below at that net at to market at other be look price in times, would of which we’ve before, I Obviously, that it. long-term $XXX to said if So going a $XXX. if think that’s it’s look but the we to global that and

Laura Gagnon

my the Joc, best of multi-parts, questions. I’ve going I’m done Many move and those. to to them summarize to on market-related were

and Ben trade new question do at the think at when seaborne Seth months to frequently contract to to for And again Scotia, potash months? from up these and the will compare you warehouses? Chinese given The volumes of asked (sic) pricing, contracted first bonded outlook do in all Rikin Bernberg. the comes They’ve at another including amount [Morningstar] Isaacson what China expect expectations? did contracts you Patel reset, XX the And or price How to how India? your Goldstein XX pick and Morningside is about China

Joc O’Rourke

Thank you, guys.

these time. a one take at me Let

to is start our expect warehouses, there up will China the in material the and the all, but the quickly. go for retailers NPK And First retail that start fall. immediately. shipments bonded be will will Yes, that filling actual will very the of is almost behind plants come expectation we and what

certainly, contract China our How to the that, we I to the an we’re move We’ve does as base contract, got price But up in expectations emphasize, in low since the came is there a in. disappointed moving. that as volumes already and is settled. important the seen ability in Brazil thing get compare to will price still prices

big is forward So rest moving done, on up the prices thing get the the world. move in it work and there of really,

X The third in do million piece, up down expect be I and X.X in X.X to to, terms slightly of maybe volume tonnes. we think, China be China million for to will million they’ll of imports And around India, tonnes India, terms tonnes.

contracts. two fairly kind we those So of a big off, year and of for basically, the two them flat balance see

Laura Gagnon

And commodity did X. soft similarities are as Vincent What XXXX. contract the Joc, Slide settlement Chinese potash specifically at the the potash X U.S. dollar and Stanley, and could off addressing in next incremental refute warehouses given substantial upswing both is will that to market price industry and quarter the the sitting a today, potash to support so? in actually near-term or able Chinese volume if shipping bonded in not such particular, the a the XXXX set in material next price Slide have China argues question be comes a prices differences comparison. S&D, Morgan from Andrews the to really run that similar potash

Joc O’Rourke

Thank you, Vincent.

straight to answer you one. over this hand that me a he can Rick, and good give Let on

Richard McLellan

the And at Joc. the this prices was to and period after the the of it Yes. really market time industry remain what Thanks, kind it that lines to amazing through of saw out year and is China observed occurred The a oversupply, prolonged much fact the contract XXXX the volume sentiment entering from step soft. -- But the occurred was settlement the expectation coming of for how we almost we Vincent, China. up up. immediately,

level. if ‘XX. already higher $X can to yourself look exception years questions one the bouncing three you and weaker than this that are are potash to speaking, in at at the need range understand. Generally we And the of to than of of upticks, saw in well. overall, we current we’ve most you And see Ag are around to a happened the think, frankly, low happening where sold today the commodity what is they very to corn the were much seeing were ‘XX we But that four much also prices, time. other think I But the not dollar and -- similarities different the ask are question a And futures is as that that price COVID-XX. at then analogy remember, part, last with the we’re the uncertainty for is which, it ago positive good for commodities. today Brazil, is Brazil was that

Laura Gagnon

PJ questions and the curve. potash from Parkinson Chris both Suisse Juvekar cost on at have Crédit Citi

And per the it? near can curve? global do particular, Joc, profitable the the tonne term Russian might $XXX of for in the producers? be cost Russian potash $XXX of you tonne per at ruble CFR metric for is what discuss benefit a the Brazil think depreciation So price? your you who views And In marks

Joc O’Rourke

players guys. Russians for the left at now Brazil does Belorussians, question, question your even the CFR cash of that right of include reserves, But at sustaining the far on price. and replacing curve, not businesses, $XXX, particularly the that no you positive cetera. the cost be will cost et $XXX Thank the There’s remember, those

reasonably So it’s will sustainable I a I short believe costs the those But lower-cost at a cost. think of don’t comfortable long-term be period players time. for

Laura Gagnon

it is Stephens. advantage Mark at producer’s the market? Joc, place at Connelly or the near from following Why any significant Chinese comes to any question to tonnage

Joc O’Rourke

Thank makes warehouses to balance about you, term, contract, Mark. production contract there flowing. to it’s to sense a If there’s between put why product think a of those markets. advance some we product a keep The the in into going, isn’t anticipation certainly when question continuing bonded I some delicate near it would an product

it contract. that, was would the the did used However, of agree case, that ultimate in more and than helpful, I this delay was probably settling

Laura Gagnon

question Samuelson product X downwardly lowered following forecast shipment market. Goldman Mosaic XXXX the to about by its million The potash at broadly versus Sachs, from relative level. comes Adam a global revised February its asking tonnes forecast more

is the shipments similar was quarter than at curtailments that Given X.X the of saw in as XXXX? million we least XXXX And fourth production you tonnes in X.X in of and onstream Mosaic February? half XXXX, production half million it second of coming of expect and tonnes second now curtailment production do for XXXX lower capacity in new planning

Joc O’Rourke

example, question for the what year, XXXX, will we Yes, indefinitely. aware, we this from is down. from rates Adam. previously, carried that be was you’re last year we’ve it Thank through Vanscoy seen down there’s would earlier Nutrien’s production facility no you, into and down decided keep operating reduced And Colonsay

with the mine in that and with there view is production So few, X this we be K+S and particularly by tonnes EuroChem production a COVID-XX to that, small, albeit cuts year world, a commissioning of due only supported being by around the see This coming will also don’t the coupled supply. burdened our Petrikovsky market about incremental on Belarus. issues SQM, between of million

Mosaic’s production for match our customers’ will we production, to we maintain requirements. our As that continue with

So required. make we to will as adjustments and it’s continue demand, monitor we global will

Laura Gagnon

weather, seeing if in COVID-XX economics you’re Scotia asks related Ben or farmer to potash from Isaacson abnormal demand or any either patterns phosphate.

Joc O’Rourke

you, Ben. Thank

have by season. going now, in spring right actually normal me pretty us factor have probably always American is looks And Let a strong a to weather weather because our it the very market a saying is helping year and North in we like business. we’re start

it’s think year, and always probably us I plus But helping overall. is this weather overall, minus. So

economics, COVID-XX, stage, we In terms impacts of seen certainly, of or any this either at not from farmer those. have certainly,

us term, actually long farmer this is in all where economics activity. become One the positive and certainly factor to look they India, places helping farmer if solid and become we like economics is driving a as sentiment is Although will where Brazil weaker. purchase turmoil area farmer

Laura Gagnon

of the will what question Byrne, Joc, the prices mechanism potash is from opinion, and XXXX? for be phosphate comes reversal? And America. the Bank reason next throughout what Steve declined primary In your

Joc O’Rourke

think in the biggest a I North Thank really a the Steve. look North If bad fall there demand in XXXX and had XXXX, spring thing fall American XXXX. bad America market. late XXXX, back a of on in actually the you, shock we was

than a more year. supply-driven occurrence. anything, was it demand-driven relatively It bad normal year than through occurrence a not this spring. So mostly this be Other was more that, of should the and U.S. a

And we is we’re a seeing for so will be mechanism what good American today. reversal the believe spring, which North

Laura Gagnon

XXXX to is of end phosphate in that the be would the to have XXXX even We volume another in equal XXXX? level. What the upper from to the potash Steve, range your Joc. applications and range The thesis applied of upper XXXX XXXX missed up question is level, forecast for happened end forecast not the

Joc O’Rourke

declined, Thank shipments In demand in Steve. has and has driver production. for the phosphates, such, the reaching the so ‘XX level is that not you, primary as And China. market,

as level demand into in has XXXX, stabilized. get China see that we we Now interior

can further as growth forward. see go we we such, As

where in potash, concern one places about given certainly continued rebound Indonesia, North where demand this The prices demand Asia demand in we and ongoing have palm Brazil. seen particularly Southeast In haven’t some like seen and in area Malaysia, us year. India America, we is growth great

Laura Gagnon

on Juvekar from questions Goldman at all the Samuelson Sachs and Citi Chinese at Zekauskas ask JPMorgan, PJ Adam exports. phosphate Jeff

Chinese producers? outlook after your exports for catch up Can XXXX? is in breakeven exports what what Chinese for And export is Chinese First, COVID-XX? price

Joc O’Rourke

folks. you, Thank

aware, refocused first the in it once low the was well Hubei from Province you’re really was And then production market. production on restarted, quarter. As domestic

to made through of the we production end of And deficiency will as of that year, we tonnes As of the terms exports. exports their we X.X such, around expect tonnes be year somewhere some follow shortfall. XXX,XXX million up, Chinese the and in expect with

Laura Gagnon

Scotia Ben What Rikin Isaacson Berenberg. Patel following this are demand the And year? in China the was you Joc, of COVID-XX? what is for at by question raised seeing and impact growth at

Joc O’Rourke

stabilized, season higher indications Preliminary phosphate show while spring on DAP ending guys. has down probably demand the MAP that slightly is year-over-year, demand likely demand with up you, Thank modestly.

it’s it consumption, In appear the had is impact an doesn’t of on COVID-XX, terms too simple. reasoning think of much I that just domestic phosphate and

much on food the all, of production. First focused government Chinese very is

As a good X% bushel. example, support price corn for to is up a $X.XX

incentive the to plant. So is for good farmer that Chinese a really

Laura Gagnon

phosphates. phosphate PJ global new into year? you planting at Crédit Suisse supply in behind this supply both of more the about Joc, with term, the shorter asked Longer Juvekar them, curtailments expectation the competitors and what Citi cadence U.S. your expect Chris of post term, Parkinson do XXXX XXXX? is imports from in through And

Joc O’Rourke

you I’m our longer-term Thank to folks. this to of give Rick you, S&D. to the on expectations going straight over detail hand one

Richard McLellan

Thanks, Turkey, the Joc. through S&D we providing Egypt along in into more with to we’ll we update debottlenecking the as the an week, the once activities, and balanced production market and additions of the us. facilities and ramp-up most investor XXXX Yes. we smaller be in expect outlook. several of get much presentations, ramp-up be our But This go expected of OCP with behind frankly, XXXX

the frankly, that near-term believe those we not for Those it too vessels three to to or but two make be are worked was rapidly spring the late into there term, into season, pressure, to near the for transitory. it north and provide be as price And are advancing the will going supply. arriving,

Laura Gagnon

questions two forecast shipment the Why farm-level strong bridge potash Stanley have the and at strong than to deck. our Andrews from Adam in Morgan difference phosphate? the pertains we Vincent you shipment we farmer outlook? the is demand And Joc, between economics and Goldman benefiting tempered second, Samuelson from Brazilian And this Sachs. related more economics included can at global

Joc O’Rourke

both year. and that this estimate growth If two, the the strong has believe there’s in the as farmer we simply of between any phosphate economics potash inventory helped enter Thanks, year. guys. difference our We channel Brazilian it is

that as that we has before cases, had get channel expected higher be higher some perspective, than worked phosphate in in Brazil will whole our such, quarter have inventory. you’ve demand be And potash. Other And a a to believe shipments. first volume from certainly So for that, down really from global phosphate and that. seen results, both a the highlights we may highlight the as

Laura Gagnon

question Joc, was at by following Berenberg. Patel Rikin raised the

half by in there the impact in logistical if planting Brazilian second lessen any the of COVID-XX? put are you so, the the those would to can what As exacerbated be? of mitigating closer And year, factors issues season place draws

Joc O’Rourke

piece number respect is we Brazil and already best as with We’ve believe Thank little very actions you, seen big I a our protecting these we’ve Rikin. impact of a we business, to And such, -- to precautions taken in taken America all all and those our supply we’ve North and taken. can. but facilities, chain that as we’re in of our We’ve production partners COVID-XX.

CDC So guidelines. we’re practicing all the

We’re shift schedules. changing

making We’re don’t into carriers our from a our truck et drivers, cetera. we sure bring that of plant perspective

trying that we’re sure do we to ourselves. make everything protect So to we can

on even an meals think drivers don’t do us for people in and extraordinary their using done lot prepare so our have to advantage uninterrupted in we to trip so contact through a we arrive, COVID allow addition, Brazil, the this a for we are ports that plants. as me add, having private they lot can And our like issue. some generally let have In we’re continue already we they steps kitchens into taking

Laura Gagnon

following due under you The specialty from reports crops? of shortages fertilizer at being crops or any labor Bernstein. specialty Jonas COVID-XX. or to Are plowed comes on keep for logistical question negative We discarded impact demand from Oxgaard hearing issues seeing

Joc O’Rourke

our to we really From felt date. haven’t Thanks, perspective, any Jonas. impacts

strength Now could larger of, specialty be crop a a of this and from masking impacts sectors, much that there’s the be sector. any there is function crop demand chance the from row a negative that great could

Laura Gagnon

Goldman acreage both last question at last and submitted at Stephens, imbalance. the Samuelson Sachs Joc, night with Adam and to Connelly from comes respect Mark it’s corn

tell China what your corn acreage you gives different forecast? as herds, the be average, demand in been the XX% but under you of figure the acreage USDA? planted that in might that ahead what confidence than X-year is Can of if mentioned already we’re control. And you it’s hearing they you’re hearing? fever what African Given Also, has corn their rebuild swine us not

Joc O’Rourke

folks. I’ll you, time. Thank these a at take one

of on XX impacts acres, acres. we felt. USDA lot corn COVID-XX data was acreage the survey First this was million million around were before all, see the XX a noting of while based And

largest our customers We But have come some their initial of some have that many from seen customer to heard not will switching, base corn USDA below there too a was in from acres and there switching corn lot be beans. expectations. over our

So pretty our we think realistic. are estimates

of be African some last of the far, swine have reports fever, to there that, But just African small bear over been small-scale terms isolated. it outbreaks more slightly swine In soybeans than appears And weeks. Chinese fever thus last imported last in were the did during height of many that year soybean of mind in demise the they And expecting imports ‘XX. the outbreak. the actually China year and

So likely, classes. across they sought output maximize all their livestock to

we Q&A take away key points. session. will up With that, this you few hope wrap I a

operating COVID-XX. Our despite well business is

and Thanks for We’re remain delivering stay the for remainder healthy. excellent safe performance, optimistic be of and listening, we operating XXXX.

Laura Gagnon	Vice President, Investor Relations
Joc O’Rourke	President and Chief Executive Officer
Clint Freeland	Senior Vice President and Chief Financial Officer
Richard McLellan	Senior Vice President-Commercial

The Mosaic Company (MOS) 6 May 202020 Q1 Earnings call transcript