The Mosaic Company (MOS) 4 Aug 202020 Q2 Earnings call transcript

Company Profile

Participants

Laura Gagnon	Vice President of Investor Relations
Joc O’Rourke	President & Chief Executive Officer
Clint Freeland	Senior Vice President & Chief Financial Officer
Adam Samuelson	Goldman Sachs
Chris Parkinson	Credit Suisse
Michael Piken	Cleveland Research
John Roberts	UBS
Jonas Oxgaard	Bernstein
Ben Isaacson	Scotia
PJ Juvekar	Citi
Mark Connelly	Stephens
Joel Jackson	BMO
Steve Byrne	Bank of America-Merrill Lynch
Vincent Andrews	Morgan Stanley

Call transcript

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Operator

Good morning, ladies and gentlemen and welcome to The Mosaic Company's Second Quarter 2020 Earnings Fireside Chat. 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 Gagnon

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

received Q&A host permitting. session, a questions session by followed addressing question-and-answer will night, a time We the prepared last short live

close mosaicco.com. our of earnings All available at our website yesterday market materials on are after released

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

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

to information Our commentary X-K measures. yesterday's the website as filing, well data press our and important contain our on posted as these Form exhibits as quarter also release second attached quarter to on performance non-GAAP

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

Joc O’Rourke

our we're we our team potash prices prices past adjusted five structure We succeeding up adjusted million even in down Mosaic flow and just KX we'll for generated and the even than straight million are, we operations. expectations, realized in our higher to quarter, EBITDA realized quarter from already XX% your of on the we performance cost the on KX Good $XX morning. with to shafts sheet $XXX accelerated was generation key to our Thank brief and five expected; first the phosphate over Even the our change. very achieved points you we've invest this by delivered the the cost than for result tonne increasing. above joining cash The In EBITDA good $XX us balance of seven the while get our debt very comments, our definition billion. $XXX questions. targets. from quarter, retaining today. in $X work is I'll momentum We cash of down paid to tonne quarter structured start of then earlier per about quarter transform with before our franchise; a is XXXX continue a milestone consensus strengthen per cash hitting KX This payables and the connecting short-term potash, mill. in major project, years in

targets of production Fertilizantes continue these performance broad-based per cash of communities transformation beneficiation. our the excellent to target and year cost shareholders, our Mosaic last business. you, targets use all XX% employees, the and costs mining from Phosphates than aggressive cost these we over customers achieving below our well rock the of new despite targets social achieved further reduce drive lower our realizing we've environmental, an We the lowest tonne and to to over our to decade. hitting benefits benefits. targeted cost quarter, weakening had and to of We real, And a as and from brine the full and distances commitment will we increasing as act reaffirmed our year, management drove efforts, our in real-based cash responsibly. announced cost governance with to across both

efforts cash savings. flow additional accelerating to The reflect we clearly quarter's transform. and future We are are continuing date and our to earnings driving

Mosaic strategy. as significant base, million the to we with another future. execute deliver than leverage improving, is earnings before more ever in we have competitive savings above XXXX expect the continue to $XXX fertilizer our We and to markets

questions. your take we'll Now,

Laura Gagnon

start Joc, received Adam with we I'm going some on Goldman questions to cost. Sachs Samuelson asked. from

Adam Samuelson

quarter on number opportunities cost metric outcomes? much each to key do its the if costs? target spend its see And, incremental what key you level a achieve Mosaic be ahead so, further How KPIs. XXXX of of In second on capital incremental was reduce of necessary those to would

Joc O’Rourke

Thanks for your question, Adam.

our across said targets million from and $XXX earlier, new of company, improvements those American we million coming have additional million administrative. and the As North coming that our from $XXX include Brazil of $XXX we've operation

in to Some of KX where are we the can that go is continue Brazil, automation drive up, to our where efficiencies in And then of course, eliminate it cost areas we we forward we improve as as America, allowing business; management believe improve make operation obviously gains where big our of potash. we ramp in North brine cost. us both we'll and a which and lot phosphates

importantly, And detail bring we when to more that's going this our forward, as we Day, what see you So, of lot look on all -- able in of Analyst we a expect to look and our color be opportunities to give September still. to we like.

Laura Gagnon

Credit from asked. Suisse Parkinson Chris Joc,

Chris Parkinson

structural would environment? in numerous phosphate? clearly shaft back, normalized including how more U.S. in you you much your take KX how You're thinking on the be And could in cost base brine Brazil a Fertilizantes and rock costs cost done about and initiatives platform. actually are a ahead inflow, your comfortably phosphate But step especially

Joc O’Rourke

we've mind exchange Yes. had somewhat also Brazil, We've improvements these in benefits driven keep our Thank but high where in use by particularly Chris. to some certainly we're Canada. you, utilization. in fully able cost to good rate, are quarter a from important that It's and had assets

the continue term those going us are are we're have stay real to long going and though, to those been with and and the to differences structural those. Over continue improve going to

value KX, delivering for look be Those major term. are our the Brazil are and changes at long that temporary mining So, not which projects those Esterhazy if the structural transformation, we include next-gen we'll differences. true

Laura Gagnon

Research Joc, from asked. Michael Cleveland Piken

Michael Piken

$XXX to exceeding You mentioned are in on can XXXX. exceed your non-market this for XXXX? growth in segments go how Which expectations and number that you higher are your million track

Joc O’Rourke

Hello Michael.

clarify. me Let

not we XXXX. in but XXXX, expect that million did in we spent $XXX were repeat actual Our to items

on those key is idling so some of cost now outside the And the our items, that's Plant and happened structure. City of

Brazilian Our is $XX a are million completed of that the Equally, now and KX now from tonnes behind dams, has the ramp-up than better cost work million which gotten us. now expected, year we've Esterhazy, we the delivering project. one of we

million, flowed $XX And through that million. So, Brazil already at $XX of has our were $XXX already transformation that us. then of that million to part we're over of in benefit

will that original talked $XXX and and beyond see million we about. be above So, that we complete pretty savings as much ongoing

Laura Gagnon

Suisse expect Joc, large our for Chris changes petition. Seth a countervailing seeks Goldstein of number the a our the on their should questions other favor, better supply. on Morningstar, from of terms potential Credit of outcomes changes are from they outcome in Parkinson potential regulation Russian of update U.S. is if And landed playing In field? an U.S. in leveling costs? what asked Morocco successful the import in and understanding to duty words, duties what the

Joc O’Rourke

Thank you, gentlemen.

free believe saying, by and we trade. start fair in me Let

environmental costs We address energy and proper imports meet in having reason the imbalances this we not on subsidies standards. access our petition and to while to environmental the believe, unequal benefit However, on requirements with competitors associated adequate was government standards. to low place first rock and from highlight unfair to filed artificially

if fair that duties also is what Commerce have Commission. determine We forward and will the done any, such, that? say to put will Clint, place the the to trade create as Trade what a of judge level Department have be do this we in And anything and to on put to to International add you of They situation. merits need

Clint Freeland

Yes. No, Joc.

year the the million year. schedule in the are Keep the non-market second to benefit we ahead spread was through fourth spent really mind $XX think on of million I We $XXX right. realization you're in remediation quarter. certainly dam that that of on this last

we So million realize the balance the about rest the quarter in realized of should year. throughout benefit the and second in $XX

Laura Gagnon

Roberts know. UBS would like John to from Joc,

John Roberts

or to response basis from customers phosphates had Can you duty review have any the countervailing And for position? your competitors? you

Joc O’Rourke

John. you, Thank

Our comments the clearly our competitors concerned out the other any public or out laid And the is ask go those that documents. in you clearly basis from is petition would in to customers or of documents. the I Also groups for laid public those.

suggest I would you So go there.

position really case. Commission Our Trade are what is the are International clearly the this that of that Department Commerce and ones decide merits of will the the

terms of to we believe that people what some in wait as talk think their merit. make understand how that and up opened see our I clearly, up has competitors mostly for end new this But to we'll forward. says Now come some outside they're why in the We concerned ITC opportunities in to the are going about And to supply. have all we'd supply. to put get it its customers, of

Laura Gagnon

Joc, and we to asking other received several implications flows trade questions about markets.

Samuelson you and market others impact duties on risk Adam Brazil? import next think how and to markets, six of over trade XX Specifically, seven do U.S. notably see flow other the countervailing phosphate? potential net of the share we major Morocco about months, potential in impacts Russian asked: Do competition of rising

Joc O’Rourke

Joel. and Mike Thanks,

highlighted No, is current first. and last global people that to anything pricing a countervailing tight. Let's demand. we this reflective change was The do All duties don't supply market. if of will trade and market the we answer only flow. this think the resulting question is impact probably market tight And will

So take the what's before economics the causing which lower we began supply, tight shape to petition. farm well Favorable and filed market?

to including U.S. new altered Russian Moroccan assume which However, and on it the to be be flows and reasonable is will or suppliers into jurisdictions shifted trade Brazil suppliers other other wherever. could markets will product and some the coming be focusing that the

Laura Gagnon

two asked namely. respect Oxgaard Jonas Bernstein the questions petition from technical with more to

Jonas Oxgaard

trade retroactive is Mosaic? final the is for will there If line benefit on complaint complaint? And decision the time to upheld, be a what Mosaic the

Joc O’Rourke

So Jonas. look, thank you,

DOC two retroactively first me depend level the upon duties case from imports will applied are ruling. these of the the the countries Whether of from until filing clarify. preliminary Let

imports be that at QX retroactive duty. been assessing XXXX. And expect the if a case will We finalized look in point has there at to excessive they

Laura Gagnon

going move to I'm on Isaacson phosphate Joc, from questions Scotia asked. Ben to about operations. now

Ben Isaacson

how there And cash cost that was year-over-year the due of is transformational On versus these And to cost more down? bring $XX how are favorable geology? wiggle tonne Florida $XX in room of how falling much rock improvements? that from per sustainable to efforts much to mine

Joc O’Rourke

combination We've certainly reduce Thank But streamline and have to at rates assets cost. utilization automate centralize you, improvements cost factors. helped also our Clearly several our running operations, helped. elevated and that's are processes our Ben. our mining a been of efforts

enhance year our into one basically begin mentioned, operations which our the operation control a establishment new And in be introduce further the adjustments automation As mining structure. central for and long-term we mining functions certain savings. previously large really as savings cost center structures, will mining the see and -- cost transportation for of end all operation, start we to of accelerate improvements by incorporate collapsing from management of to should our real

Laura Gagnon

from Juvekar also Citi PJ Joc, asked.

PJ Juvekar

DAP your production up With benefit per cost the $XX have at the be the better what of quarter? recent tonne higher could of ramped in pricing, the rise tonnes over absorption And you from third in mine?

Joc O’Rourke

a tonnage say to utilization impact, Thanks But rates that those of that's really story will and mentioned. can have as rates I utilization going for the look expect forward, we higher high question, continue. the only at part PJ. QX as tonnage High we've but -- we beneficial

the because of do rest we and high to structurally better both costs expect So year the of see utilization. throughout

Laura Gagnon

we Joc, have from question Samuelson from Sachs. Adam Goldman a also

Adam Samuelson

or to specialty in is a phosphate being not? marked above percentage why XX% high Fertilizantes this to recent of shipments shipments substantially new coincident quarters, quarterly rose Why and MicroEssentials with sustainable? With

Joc O’Rourke

of been driver. and major MicroEssentials' in hit to in Brazil The Adam. has K-Mag record to quarter MicroEssentials sales two Among you, and shipments these highs Thank the XXXX. came record Aspire close growth a

showing brings I we the driven the over value on will growth is the for of next to that believe and continue by also their returns positive investments. growers MicroEssentials to North Mosaic MicroEssentials Fertilizantes quarter them have Now America. the reemphasize

and to growers using start so going our MicroEssentials that going believe So more these people customers to the we see sustainable and the they're the distributors they're is that as product. to very bringing real are using keep value this benefit to do and

Laura Gagnon

multipart to three analysts Joc, operations. our submitted questions related potash

Chris Parkinson asked. first So

Chris Parkinson

of lows. be prices the while about potash XXXX your in first to are half thought environment may improving changes mix? and demand half that well talk process rate modestly assumptions drive their The spot how off Can you for in mine your operating second appears

Joc O’Rourke

Thanks, Chris.

and As now you the up. the obvious in accelerated costs management mine of has ramps and both on with know brine we've development spending impact declining the future an KX this as

Plaine, position strong KX, Belle recorded Beyond more we to lowest a continue its decade. from than in cost which see results

annual to take of of forward, we industry. capacity mines move lowest the of seven the over in million only we're owning with two As some tonnes going costs advantage in with and production the world of X

optimize Colonsay So it as cost our requires the future. operation from if we the intend we see the KX running future, look production and and coming to mines like to the in only higher Belle from really market Plaine

Laura Gagnon

from Joc, question another Jonas to comes of you Oxgaard Bernstein.

Jonas Oxgaard

potash over be? lowered a would cost your tonne of volume much you per fixed On bit larger how costs was In volume? simply cost fair a your that what XX% reduction spreading but fixed a basis

Joc O’Rourke

spread Good our no question, Jonas. There volume costs. helps is out that the larger question

will KX decline $X and for savings over the management XXXX accelerated year. clear is We Brine However, as costs move we structural shift changes of in be completed brine will to by one are we to a KX. will and of are eliminated this continue we QX that completely the costs underground believe XXXX. our accounted management reduction area into long-term. think changing tonne as there mining that fundamentally be

So cost should and of lot structural as reduction actually you be for the with is see a us our can long-term.

Laura Gagnon

Citi asked. Juvekar PJ from Joc,

PJ Juvekar

updated What from shut kind of KX is mill? the what now sending savings potash KX? time KX down to the do and you KX to And expect line ore

Joc O’Rourke

Thank PJ. you,

going one our in perspective. be the KX sending KX the project operating eliminate our the That meaning, be mines production KX big from we'll XXXX start shaft. KX the be operating from We shafts to be will expect end a and perspective to and inflow KX production we're that of really only be At will point, only and by and early shutting a complete, two plant brine will of that then shafts actually potash down end to XXXX.

Laura Gagnon

how is the Chinese think in to prior of this shipments Also, were half can interested a warehouse how second contract him quarter? our year were the bonded he strong in Vincent for Joc, potash already of agreements? shipments should given Andrews second the accounting about in remind we contract in shipments that

Joc O’Rourke

did referred I QX And strong to QX. have well Thank Canpotex, I quarter shipments discussions you, Vincent. Yes full into we book they in and for if our a one. think going order have fairly with even

North domestically, good strong a believe second the half. internationally in America. shipments be I So the expecting will And we're fall in

So shipments as there expecting strong we're well.

second So is half from perspective, our pretty looking potash from strong a our perspective.

a In throw in terms that? year. of half, can first discuss the to shipments over we the to first our it bonded I'd to explain the just recced of you in to Clint, China half Clint about rev that the bit little shipments like warehouse

Clint Freeland

Sure, Joc. Good morning, Vincent.

is a with a consolidated until basis, we recognize to party. third sold So on don't product that to revenue start

party. distribution we was since on been the our sold that for segment based of to a rise price that recognized segment recognize completed. our not that an basis the completed However, a a finally had the Once and to revenue on we product when to third in set an until gave that But business basis, recognize the they Potash do on sent but product estimate only, adjustment. adjustment a – to sells contract do on on product was it's transaction when distribution pricing segment that's the level in contract China. And consolidated because again we revenue won't the Canpotex business was that revenue China,

Joc O’Rourke

clarification, Thanks for Clint. that

Laura Gagnon

Joc, Fertilizantes. to on about going I'm Mosaic questions move now to

in Mark of questions John similar including Stephens and from volumes from have Roberts Brazil. We the about Connelly four analysts timing UBS asked

John Roberts

year appeared margin to to July? the reported borrowed you than just an year's decelerating quarter? an trends much, buying ahead the June Is likely significantly to well that specifically, next Brazilian are be lower reflect we year May are to And while quarter? be closer April and higher have those a How quarter volumes third been into were and are having schedule. so has Or prior quarter in see the far, been ago. much last do inputs think of the outstanding reduction offsetting timing? And widely year farmers third to from within month,

Joc O’Rourke

million in in as XX are some to the And our products of reflect tonnes. analysis share gravitate slightly up and year to Great is question. volumes towards believe generally figure, that did as high-value economics. forward demand market we favorable The the we farm a be strong to input year-over-year such But half result of expected take MicroEssentials. purchases, as beginning farmers higher products first

Laura Gagnon

Connelly Mark Joc, Stephens asked. at

Mark Connelly

break volumes? improvement structural Brazil dramatic should in operational normal repeat the cost cost costs that and did change How improvement out volume-driven between in with

Joc O’Rourke

Thank you, Mark.

Let impact me running reduced change and also negatively rate. last year, own have shut has impacted that operations volume regulations we're saying supply. from access our improvements. operations raw our That down allowed couple This materials of our access. were benefiting a at down of more by to full year us to for in us by operations rock And start the to this required

that a So has helped overall bit. little

So about a-third volume those costs what related. are of probably

our improvements structures. are of management, overall changes others cost to structural The inventory to freight, our planning our our course and

the the and long-term integration overall to seeing benefit business million the is end of I we $XXX running we're that think see starting full or though year. so how we're of benefit changes to of announced Brazil last at

Laura Gagnon

Joc, a PJ Juvekar currency. has question about

PJ Juvekar

significantly versus the was you? real volatility U.S. was quarter year-over-year dollar the in And impact in that Mosaic the XXXX. of what did the impact specifically Fertilizantes? down on second Brazilian The How quarter

Joc O’Rourke

impact the on of like Brazilian two that things. course those has first the changed about aspects farmer talk to And PJ. real is Thanks really I'd of the of economics.

by fertilizers growth of Brazilian the farmer. the economics bigger for ability segment the that driven their I to and is continuous buy is largely agriculture improvement great think the actually

we first the to talk about the want Brazilian place that's where has helped real us. so And

In that understand real us there tend the cost so that to will put terms impact. was in of our allows see improvement. to what's underlying targets performance we Obviously, you based some our positive real

you'll we cost cost we Though just we're would advantage say business in the focus because I whether I -- that a of see or back definite overall in in our is to that million $XX think about and like sensitivities point improving you'll the our real sorry stuff the really us of on of notice improvements PJ out real-based real. the year back look because tells unhedged. But I'd currency. basically to the amounts our saw taking what $X.XX if a you move also more the at

So year's think last to us as about the hedged if about easy real it's do we being XX% costs. to reconciliation fairly

Laura Gagnon

Joc, another Mosaic respect Ben Isaacson from we question to have with Fertilizantes.

Ben Isaacson

Mosaic Fertilizantes relates how the to year-over-year. and of you strength this have between business higher your Can notably been mix and volumes strategic sales MicroEssentials it commodity walk tonnes? through

Joc O’Rourke

volume The I've before, Again summer Ben. the dollar of was a farm ratios and repeat. of but Thanks Brazil. demand. The in barter of crop economics said anticipation really a result growth excellent versus this strengthening improvement I'll U.S. strong in real the

have So, products robust both XXXX of versus in ago. quarter two shown performance increases and commodity year a

Laura Gagnon

Joc, asked Chris update. for COVID-XX a His question is. Parkinson's

Chris Parkinson

fertilizer affecting environment an fairly give has as any in as Can a during is periodically headwinds the of logistical demand been which ports application complex logistics and us the the system. midst the on foresee season? peak you Brazil well update outbreak COVID-XX you

Joc O’Rourke

of our we've mitigate own level had been operations to procedures and although And of point of on community sure cases we to number start we've of the the our let's Chris. number Brazil. a we transmission this have Look because not make spread. instituted high from operations impacted in Thanks a

have country perspective been that general and Sorry by an logistics we in then believe overall unaffected COVID. we from

customers favorable general continued And where our been to have places see we a around we've But strong product that and going in there's and demand impacts that COVID, from to with obviously, be got customer. able local perspective foreign work impact. to economics the product kept our again demand the to relatively moving Now, we've driven us. little end by despite to

Laura Gagnon

Fertilizantes Joel The from Jackson. received we question last on Mosaic comes

Joel Jackson

than How market versus was the concerns? was conditions versus margin much COVID-related from gross of QX second results gain of versus share because two tailwinds years. Fertilizantes' of quarter pull-forward that the the double in a exchange logistics foreign more gain prior market

Joc O’Rourke

couple Thanks, our second factors. of Joel. in I as the would in Brazil, a quarter summarize results

the the First all, of rate, at exchange pricing. it's offset in change we if looked perfectly probably almost

year. is, the our result So of solely and the reversal of costs some we actual results almost own down in we that what see of last the actions, saw,

Laura Gagnon

received priorities free repurchases? you and a asked, cash be buying of questions countervailing debt focused the cash we debt you uses some 'Beyond uses over with to address use cash capital on are the Juvekar Roberts asked, back duty sheet, moving down buyback potential And talk capital Joc, forward? in flow gross, of Would please of 'what priorities, on what be And from could of the free discuss decision flow. especially you cash, both of second dividend primarily approved can XXXX? improved share prevents the PJ allocation John can handful about balance paying of half level, these questions? Joc, your stock?

Joc O’Rourke

gentlemen. thank Yeah, you,

And Our are capital we've to said in priorities past. continue be the what they unchanged.

maintain Our the first to is business. priority

our plan, to Next we've priority had. we metrics. maintains have investment-grade as continue that, do normal And capital to

shareholders. we debt lower next of to come due, next And over the are after KX All doing $X to couple future generation. continue years, that, billion acceleration. the cash few the in of allocation projects three any not then the bonds about And countervailing what impacted, like by in way then, when capital years. duties. be on key returning And by expect capital some flow depending of acceleration, We our the will have so, Esterhazy these

Laura Gagnon

from balance you paid you pay And couple they a Mosaic XXXX include, $XXX in analyst be buy-side and its and describe also will keep to maturity? short-term plan debt, indicated still XXXX? can the cash included in what's We've of billion does down that $X of a had questions million about

Joc O’Rourke

we did rest financing we to to the revolver. executing all the And our balance increase pay of the down and inventory Since of from the some out we time that the our of this billion, year of revolver this by in million for $X our throughout on paid the question. of Thanks taking money down some At short-term debt, first debt. year. $XXX will cash continue start rest

Laura Gagnon

on rate about questions, move our Isaacson we Ben market-related tax outlook. asked to Before

Ben Isaacson

is your should be rate expected And Why Trump under presidency? how effective rate think or tax the in to mid-to-high about this we XXs? Biden a

Joc O’Rourke

Thank you, Ben.

by earnings Let explain me part is Canada, that, for Clint, Brazil overall. The the to higher of reason this to first U.S. negative over create and -- and the hand the details I'm rate start our is jurisdictions income U.S. saying will it a the our tax three to rate being higher why between in of tax the the mix actually going

Clint Freeland

earnings Ben right, Joc. And Thanks, really comes us. to mix phenomenon that's an it Yeah. for down

is, recall, our business rate our G&A United you And when but not Phosphates is tax GAAP that, corporate so If into the also look based only at and States interest incorporated the results you on expense our forth. by jurisdiction.

jurisdiction. skew of Brazil that that it our how on this our rate improve some So, moves we that that begin tax then, there in when like, notable the times seen to factor foreign income we've rate. as begins affects skew you've then things the When year, and And currency that's start the turns our the And and negative. seen, schedule, mark-to-market, pre-tax some can have of highest to it. that in U.S. are items to you

But year. those somewhere as well, really would mid to effective call of in payments would to things we rates the that tax so different that. rate rate influence So much add this I attention in high an that basis, high One, that and your on a all that's tax And unusually XXs. longer-term cash for that begins then, also tax be expect rate to resulting than I'd our combination two are then things. of

in financial of up we tax matter As small effective our this refund fact expect a year, so statements. cash to the very rate different than tax a with end

Laura Gagnon

market Now asked. let's Mike on move Piken to related questions.

Michael Piken

If comment point? downstream you this inventories where the see in our at the could and fill U.S. U.S. summer on in programs we

Joc O’Rourke

Thank you, Michael.

in the fairly the of they're think season. probably discussions XX% with our had fill for here In both programs range potash U.S. I had that customers recent full and successful in we've that in phosphates the suggest fall we've

reasonably will be the fall in fall. customers healthy shape for going towards buying increased into there So that part, the But most our are season.

Laura Gagnon

for looking insight is volumes. into future Byrne Steve

Steve Byrne

are in through the you third quarter? volumes Do How in higher the any a July the for segments trending of the year? rest of you for each of month basis? see expectation on the volumes year-over-year And

Joc O’Rourke

full largely Thanks, phosphate QX potash. our as for Steve. having would I characterize both order books and

the And so recognition well. for it in are good will quarter will reasonably we and U.S. delivery be we a a where matter that global fall markets determine of and But revenue three. expect are running

should stable And So rest of the for both good a phosphates volume. the then both. and we see in year, potash, also we expect volumes relatively normal for QX

Laura Gagnon

and into Joc, implications. Mark insight oilseed Connelly would like grain price

Mark Connelly

their are higher P&K material is soybeans the for earnings to sustained How grain the important in and prices? near through stay current XXXX Mosaic's market? higher If you there is room current oilseed price do think of outlook any prices, corn prices and at/or

Joc O’Rourke

Mark. farmers do the tend grain you, But work oilseed to prices more implications have Clearly Thank and in to for on general, a us. plant. their lot needs

So what's are also we oilseeds number more planted. us few grain a fertilize. that to products of remember the and is the just planting intentions, And important acres a lot of

what balance demand no would does the look and something the as for and but So to it say impact, on on really depends oilseed. direct P&K global supply is market impact there It grain indirect I like on and opposed whole the pricing. what what our an has

Laura Gagnon

about know Morgan to our from wants Andrews forecast. Stanley Vincent market

Vincent Andrews

years forward P&K lumpiness, just not Given potash pattern phosphate, lumpiness that going CAGRs? of some rather more the shipments forecast last than than XX why show

Joc O’Rourke

simply We some on And Thanks, course weather. and into the the business are inventory tend Vincent. of really of to go impossible factors lumpiness movements that because globally of our growth annual to forecast other forecast. those are

and phosphates difference impacts on You scale. made the weather potash a growth the the U.S. in fundamental XXXX, both saw of to global in a rate

it really we have will there but on that as go at lumpiness So forward. recognize averages, be look we to

Laura Gagnon

I'm Isaacson. going on from is some on one questions Ben to move to phosphates. This

Ben Isaacson

$XX The finished Mosaic's amount relationship How selling how we by should per $XXX. $XXX times think product yet this benchmark forward? Why? think from about price to to we MAP $XXX fell or could tonne $XX almost that by -- this by so average going price three selling fell

Joc O’Rourke

and Thanks significantly. Ben. of selling average are potash here which the we based sell, is urea the both all down Fertilizantes answer is that price on including components the The simply in in blends,

you look that you we sell. be blends in could at into all So that to forward, three our relationship take have that when going products account

Laura Gagnon

Ben also asked.

Ben Isaacson

stripping have seeing flat quarter. this the to second remaining in margin? started July to DAP Phosphates through margins flow segment throughout the you after improve largely Are

Joc O’Rourke

Thank after stripping that, you, do that and -- is we we because track get transport as Ben, materials margin revenue. what of the really is again. DAP cost raw

of really directly related course, overall margin is our this to almost So, flows stripping An margins. profitability. improvement in into directly our

Laura Gagnon

to would Samuelson Adam know. like

Adam Samuelson

key see and MAP prices U.S. What benchmarks? versus DAP as does NOLA, offshore equilibrium the Mosaic of

Joc O’Rourke

there's being And what more transport will expect have markets in would fair been is, would trade the Adam. at similar adjusted the than say exactly where the duty last see other I a countervailing that expect what Thank you you real that's in And increase NOLA look if if really prices global imports, that's we readjust prices case, happen a price other being a under I there prices. is, seen other you, the would cost. after they what NOLA can for to you equal All three say we years it market. that market to see historically

Laura Gagnon

its Byrne outlook, would relationship into insight Joc, our demand phosphate inventory and to more global swings. Steve like

Steve Byrne

what phosphate of shipments XXXX? the reflect global underlying is was in million And estimate Did builds? below channel your it it consumption inventory of Specifically, of XX tonnes?

Joc O’Rourke

build into Brazilian Louisiana coming inventory We year. slightly same is, largely kept particular and the months in. But some Likewise, coming high. probably operation number for the say have very in imports what quarter I cleared the was the this of moved of Thank still And you, low last of of in and the that Steve. inventory of normal phosphates XXXX, the probably I to question we season and year, the If in very reasons. there a U.S., a move inventory, this have was into in particularly high the all area mean was an third as we buildup of year. look second for above of global the in was out there down will a poor inventory in U.S. was our from there no first this U.S. year, at quarter a we that shut inventory maybe inventory

Laura Gagnon

question a he in asked. Joc, related also

Steve Byrne

for shipment reason in phosphate the Are normalized level inventory forecast XXXX? the increased is

Joc O’Rourke

Yeah. Steve. Thanks,

any In year, XXXX. terms should market really in per X% off, as of the growth that other growth what normal levels we pretty is see and inventory in the so expect be XXXX, type leveled much we annual

Laura Gagnon

on would economics. our farmer Andrews opinion like Vincent

Vincent Andrews

run-up He in asked given the recent applications? U.S. you all about DAP fall are farmers concerned prices deferring

Joc O’Rourke

on farmers needs. year. our their been you precision experience with and at of look every uncertainty, fertilizers -- Vincent. today more the on to they're And according fields amount the put will fertilizer Look, spring their if put with Thanks, right that agriculture, likely frankly has COVID to even the

phosphate prices, the running overall and a piece frankly, of small So are very farm. also a of cost

look most pricing don't prices at very their I it also that oilseed at phosphate believe prices are when look will application. are. you highlight change and and I'd farmers where grain But that phosphate So, still have affordable

we should most a year, So expect demand. with we seasons, an early would expect fall as arbitrator And have main be that weather will good crop this of with fall. we expecting the maturity

Laura Gagnon

have related we questions China to Joc, phosphate. three and

Andrews First asked. Vincent

Vincent Andrews

will be What in are assume? If that would higher Chinese lower DAP or assumption exports? happen XXXX XXXX? And does second Chinese second of anticipate DAP to what DAP half than do half your the prices the what price exports you

Joc O’Rourke

Thanks, Vincent. of Chinese half exports year. over tonnes XXX,XXX about the were first lower year last the from by

little but the move exports And think we part is limitations. out forecast in there China In about base the a year we coming of tonnes bit issue might we a for the that Now, is XXX,XXX there for prices calls will other availability coming a in don't And fairly significant into to I second words, strong than expectations, reason the higher more fall. export domestic as be And demand big incent our expect see of be upside is higher. pricing this are We'll upside. few lower. the end half. international Chinese if extra tonnes little

lower are if be lower obviously, even they than what could Now, expectations, now. prices our are volumes the than

Laura Gagnon

Byrne Goldstein and both Steve Seth Joc, asked production. about

Specifically, next what in the expect years? several outlook and And over reduced is for China and exports the status phosphate you at do production the facilities specific lower Tunisia?

Joc O’Rourke

a River that the of particularly resulted towards been in polluting in the higher hit along of seen first production me the well-known shift down first. plants, There's shutting we've and some have China half the let declines Yangtze Well, some, year.

I Chinese of lowering Chinese will we've exports lower and the and that we'll seen we terms a over volume normal. of trend a establish is the In of what production. mean seeing bottoming Chinese we we're think domestic now maintain next new export years, demand

have come to of they So with demand. lowering meet that a exports as will domestic

last same This put a XXXX appear For plant we it's that expectations go Current also the produced decade, them which rock about well. important of and a of the so somewhat about Tunisia, rate for them over average context. resurgence to overstated. of expect lead means we production. XXX,XXX DAP five to protest an They years. for to forward stay were over plugged would run shuttering as the certainly would as in has it will Tunisia TSP of tonnes have in But production

Laura Gagnon

oil prices potash palm palm in potash in Goldstein in changes on palm of Asia? increased in of oil section lag What Seth Byrne demand last demand the resulted Southeast oil in rebound Southeast the is the asked Steve potash and to between global Joc markets. relates about the pricing Asia? has questions demand and impact in And movements potash. typical

Joc O’Rourke

for The be oil palm is And palm plantations. for gentlemen. potash an that prices. important know you, demand adding have potash. oil reasons in palm recently they we production their is, oil seen will Thank to And we improvement what

increased a that is see So its to say we fairly wouldn't demand relationship. as I direct that levels. normal we see demand, but back we getting see

a longer for term for terms domestic In of optimism demand is and helping terms biofuels recovery. demand of in export

see and Indonesia. potash particularly we demand all of region, Malaysia things for Asia in better that the should a So mean these Southeast

Laura Gagnon

Ben stand particularly inventories global in and would China. like both potash Jackson regions to Isaacson where various Joel in understand the

Joc O’Rourke

there's at know But we of believe Thank you, relatively of there's We as look move inventory. there's gentlemen. about we X.X a the sort China inventories If bifurcation million we at inland. low port. tonnes

NPKs so movements port levels the the market, the we're bringing plants we domestic seeing demand of those expect normal to compared for start inventory And that are out NPK that about a will strong the levels last do assuming as now year. in down to arrivals

Laura Gagnon

geographies? and potash Byrne demand and are in What interested forecast in in Connelly Steve is driving specific demand potash both Mark acceleration the other growth. your

Joc O’Rourke

Thanks. I wouldn't of say acceleration forecasting demand. an we're potash actually

steady you we long-term demand it, from believe growth potash Our on a to if what is we at And trend. trend staying out be just stay still think XXXX around of I fairly take X%. that

Laura Gagnon

In the expect balance related range, Or ends market? of supply to do the your increased you end a in demand question the toward tighten? would see high if up market you

Joc O’Rourke

Volgakaliy delays seem actually would these demand the production this given two EuroChem's, of guess the Usolskiy. high requires that in it But seen the should the ramp-ups expectation. recent at I of new projects end in the One years particularly we've Well guess tighten if I on ramp-ups on and comes things. market success our

Laura Gagnon

over year case also is three for a the And what question the pricing period? bull last to related five potash

Joc O’Rourke

a first, Belorussia. probably could modest ramp-up the would There's expect Russia projects utilization that maybe appreciate in of prices. rise prices. really goes years time. over particularly the and is factors would create to and prices the we potash That where same number three the slower the five of assets utilization which already ones to higher I've in And bull a slightly is were a at rate what and Thanks. But of suggest mentioned next in assets in XXXX North they American of say the a up run more

Laura Gagnon

economics U.S. offset Another Are strong the that MLP off-loads Brazilian enough disconnect continued Ben between both Adam in potash and Asian pricing the weakness trends be to have Samuelson between Southeast question that They're rallied to and in Brazilian regions? MLP versus second Isaacson. prices from related lower. other quarter about this asking

Joc O’Rourke

economics really market helping at to farm present certainly continue. that we outstanding Thanks. pricing are which underpin and expect in is that Brazilian to

our a is demand prices that it Asian that then that. For important a in is U.S. slow typical well the Southeast this And impact prices. also to I demand that program markets, commodity period I'd seasonally first after fill will remember like summer to of was that and potash received. it's think and see necessarily markets highlight rebound and extremely following for

have We now completed pre-submitted questions. our

would open Operator? I now the to so it Q&A. do is to And audience live for like up

Operator

[Operator the Instructions] Sachs. First line from question of Samuelson comes Adam Goldman from

open. Your line is

Adam Samuelson

morning, Good Thanks. Yes. everyone.

question and So lack or limit U.S. that own farmer farmer wanted payments you to given been just would year trying long-term published kind support big kind support above where upper affordability that? especially, thereof income follow metric the both about that I the experienced year think and think risks guess now average. to this on in And about on next to if programs see of from government have last? up I And were your on just And an you phosphates. the affordability Joc of you

Joc O’Rourke

XXXX got you look at from and at I'd yes, we'd what to we welcome. phosphates is, but if bit done ratio, things certainly we're feel the But and for Thanks stable. bean. crop a people prices prices $X.XX between lot I on $X first all, and you've probably look at this of that be to -- say prices. for think little how think, phosphate December December have XXXX a closer and I much, to relationship corn and two looking Adam And incomes There's you prices imports. a And farmer whatnot as keep least say governments payments not pushing at potash certainly potash -- about so while support

So that into they're if they sold going to there see forward some market. on reasonable prices

the a So ratio direct standard get good you crop they'd fertilizer. incented go the could it easily in use not terms demand. But between a the deviation two, be and materially affect I'd above say that and have to relationship of

Operator

you. Thank

of Bank Byrne Steve comes from of from line America. question the Next

Your open. is line

Steve Byrne

whether duty Brazil. in wanted impact month sales that? you on countervailing for I out following ask update update Any or during on any on And Yes. an your petitions. not just saw July imports of your just to hear phosphate gypstacks the of gypsum the

Joc O’Rourke

Steve. Thanks Sure.

talk OCP First of low somebody an July. number have or you sort understand on customers understanding either up the a back to be I the importers, and the our all, products risks risk. some of picking what Russian are down. the importing we imports of yes, who in to July in to of is -- terms to exact our in understanding the that step was lot and did get might countervailing get I But believe and duty much a were them to certainly get how took back definitely

come So and into in we however Mexico. couple don't they I did from places see have back of we the products the Australia will a know. step July. Whether market Egypt in coming months What seen next is in back and like new

got to writing. Steve I me the to does some second in my was part say, it what give So there your somebody is question there, I missed change. of ask

Operator

Suisse. the comes of Chris The from line Credit Thank Parkinson next you. question of

is line open. Your

Chris Parkinson

you very much. Thank Great.

which the or Do and process in new phosphate now these just mentioned DAP has is I ends should Chinese Morocco tonnes obviously that of few kind that XXX,XXX the the on Egypt. exports we market effects over Saudi the in tail expect really were availability, have of last of you a been Turkey believe a can on Tunisian fair. already terms of ramps. supply you guess, don't or full you there so expect our much already the in terms thought Saudis. Moroccans isolate felt felt the kind just of the And process previous -- ramps has even mines of really and you that But years year-on-year in and a couple be So down, basis of

let's assessment you kind Thank SD years? much. aggregate the your of three Just of over to two the what's very next say

Joc O’Rourke

Yes. Thanks, Chris.

I has is a I producing think saw projects I their all their and PhosAgro OCP debottlenecking is but has other -- and Saudi million tonnes expecting exporting assuming, And to maybe do. left XXXX I higher of been coming of mean been materially, those X.X little target number. for are that about a they come reach it extra little there what's the bit still think or ramp-up. was to is some and yet out.

coming next to ramp-ups be PhosAgro. tonnes offsetting really couple overall, Saudis whatever of then it world say is from new out any from the of I that small possibly So closures are But would there for the the And than we've with Morocco basically now brings and the seen. the could of some bit PhosAgro. coming rest down in small of from in increases a years little addition more

Operator

at time. this further No you. Thank question

Joc O’Rourke

just you thought to pre-submitted Well if healthy. to like conclude first themes I'd questions, But of realized I'd set results no products. call, say Mosaic reiterate there for key was are good for which low prices very our of our to other questions despite here. our like very strong the generated you a thank all in. had questions I brought We

the Our ahead. substantial, structural starting savings in savings we efforts and are additional long-term transformation expect deliver to drive cost to years really

continue improve are prices Our balance strong paid to debt markets Fertilizer and to we rising. flows. as sheet and generated continues down strengthen cash

environment. and navigating a has are for our is COVID-XX competitive to impacts ever have we the in and resilient built more leverage been with price So successfully We than Mosaic minimal it earnings situation business summary, rising significant

and improvement on company. being looking are we a our towards competitive So very forward continued journey to success continued

and hope So day, to the a in Have we great thank to you talk joining call. person you for soon.

Operator

participating. this concludes conference Thank today's for you gentlemen, and Ladies call.

disconnect. day. Have now a may You great

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