Good morning, ladies and gentlemen. And welcome to The Mosaic Company’s Third Quarter 2019 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode. After the company completes their prepared remarks, the lines will be open to take your questions. Your host for today’s call is Laura Gagnon, Vice President, Investor Relations of The Mosaic Company. Mrs. Gagnon, you may begin.

Thank you. And welcome to our third quarter 2019 earnings call. Presenting today will be Joc O’Rourke, President and Chief Executive Officer; and Clint Freeland, Senior Vice President and Chief Financial Officer. We also have other members of the senior leadership team available to answer your questions after our prepared remarks. The presentation slides we are using during the call are available on our website at mossaicco.com. We will be making forward-looking statements during this conference call. The statements include, but are not limited to, statements about future financial and operating results. They are based on management’s beliefs and expectations as of today’s date and are subject to significant risks and uncertainties. Actual results may differ materially from projected results. Factors that could cause actual results to differ materially from those in the forward-looking statements are included in our press release issued yesterday and in our reports filed with the Securities and Exchange Commission. We will also be presenting certain non-GAAP financial measures. Our third quarter press release and performance data attached as exhibits to yesterday’s Form 8-K filing also contain important information on these non-GAAP measures. Now, I’d like to turn the call over to Joc. Joc O’Rourke: Good morning. Thank you for joining our third quarter earnings discussion. Yesterday after the market closed we released third quarter results which continued to reflect known challenges, with fertilizer prices impacted by high channel inventories in North America and slowing potash shipments into Asia. With that said, we are beginning to see developments in the market that are constructive on both these points. First, fertilizer is now being applied in North America. We expect a shortened but aggressive application season, which is needed to reduce channel inventories and set the stage for a strong spring season. Second, India recently settled its…

Thank you, Joc. Good morning, everyone. And thank you for joining our call. Adjusted EBITDA for the quarter was $366 million and adjusted earnings per share were $0.08. The company generated close to $500 million in cash from operations, with half of that cash being reinvested in our business and the majority of the balance being returned to shareholders through dividends and share repurchases. Cash balances end the quarter at $641 million. On a segment basis, solid performance in potash and Mosaic Fertilizantes was offset by continued weakness in phosphates primarily due to downward pressure on market prices. The potash business unit performed well. Volumes were at the midpoint of the range and adjusted gross margin per tonne came in strong as both prices and costs were better than expected. While we were pleased with third quarter results in potash, we do see challenges in the fourth quarter specifically around volumes as we await completion of the China contract. In phosphates, while volumes were on the low end of our range adjusted gross margin per tonne remained at negative $6. As a $13 per tonne benefit from lower raw material costs was offset by declines in average sales prices. Mosaic Fertilizantes continued its strong performance with adjusted gross margin per ton of $39 reflecting strong distribution margins and favorable product mix. Global phosphate price pressures did not impact Mosaic Fertilizantes as much as our phosphate segment. As the Brazilian product mix is more diversified and its distribution business generates more consistent margins. Sales volume during the quarter were initially delayed due to dry weather, but are now progressing well and we expect to finish the year strong. We continue to expect Brazil to set another record for total fertilizer shipments this year. And finally, there were a few items worth…

[Operator Instructions] Your first question comes from the line of Christopher Parkinson from Credit Suisse. Your line is open.

Good morning guys. This is Lucas Beaumont for Chris. Could you please walk us through your stripped margin outlook for ‘20 and ‘21 all of the moving parts and what’s the best way to think about your margin outlook heading into next year, especially given the lower sulfur pricing. Joc O’Rourke: Sorry. Good morning, Lucas, early mic problem. Welcome. I am going to hand this over to Corrine to give you some information on that, but our expectations is as the price -- as the market starts moving, that indeed prices will follow the volume. And as we move into the year, we are going to see the lag on our sulfur and ammonia plant prices catch up. And so we expect an inflection in our pricing, which really will move over better margins for next year. Let me give this to Corrine to answer.

All right. Thanks Joc. I think it’s important to note what we have a decrease in margins today, these are largely unpublished prices based on extremely low volumes. Literally one barge is effecting price trade. So don’t really reflect the market. That being said, I think, it’s probably most productive for us to talk about what are the things that indicate an inflection in pricing that will cause a movement in the other direction and get prices moving again. Historically, those inflection points have come when you see market prices that reach the marginal costs for producers or cash costs that’s currently happening today. And you see idling as a result. We have certainly seen closures such as Mosaic plant city. But also you know, nutrient, the [inaudible] and others are taking a curtailments. You see a second cause of a major inflection is a demand resurgence and given the weather results from last year and what we believe will be a high corn crop this next year, we expect to see strong demand. We are seeing that in other markets as well now India, China. China has stabilized than Brazil. And then third, you will often see a market consolidation or a discipline in the industry, and we are seeing that with some curtailed production, as well as some consolidations that are happening in rationalization in China. So, overall, the three things that primarily drive these inflection points are happening today. And so we really do believe the bottom is in and we should see resurgence to the normal seasonal pattern of upstream in margins as we get into the spring season and see volume moving.

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

Yes. Thank you. Good morning everyone. So, question on the phosphate market and maybe it’s keying off of something, Corrine, you just said in your response there about market structure and you have seen this big import flow into NOLA and you are seeing these indexing of OSP and Saudi tonnage to barge prices, which can be influenced by traders. And just from a market structure perspective, I mean, just can you talk about what Mosaic can do to combat this? And then on the marginal cost, I mean, Corrine, I just want to be clear. I mean, are you actually seeing capacity closures in China? Just from a marginal cost perspective, it doesn’t seem like there’s actual supply rationalization happening amongst the major exploiters. Just a little bit more color that would be helpful. Thank you. Joc O’Rourke: I pass this to Corrine, but I will make a couple of comments. First of all, let me say, what’s going on in the NOLA market is quite disconnected from either what’s going on upcountry or what we are selling for. So it is a market manipulation play and I guess it takes two to tango, but the importers are allowing itself. That is that piece. But in terms of the upcountry market, it really isn’t what we are playing with it. A very low volume market that’s being a single barge or a couple of barges being traded to set an index price. Once real volume starts moving, that goes away very quickly as it has in the past. Corrine, do you want to talk a little more on that.

Sure. We have seen a lot of imports come in. There’s no doubt about that and the index pricing, that Joc and all of the publications I have talked a lot about are a clear indication that there are a lot of games being played on pricing. I think it’s important to note, the only one who’s selling a lot of tons at these kinds of prices are our international competitors. Our domestic customers at this point have their inventories full. They have got a regular supply of product and our sales largely are happening out of places like our Pine Bend warehouse, rail delivered into other markets. And so while these index prices do have an impact on sentiment overall and general market trend, they don’t really reflect what we are selling at, but more what others are selling at. In terms of your China question, I would say that we are seeing closures in China. But we have talked before about the depressed economic environment that they are facing, as well as the environmental and regulatory decisions that are having an impact on those Chinese producers. We see rock production year-to-date is down 9.2% in China. Their costs are up on gypsum disposal. Their ammonia costs are up because of environmental air quality requirements. And with the currency corrections that you are seeing, their cost thresholds on average today are about $310 to $315 on an FOB basis for exports. So, we are trading today below those costs levels. And I think that, it’s absolutely going have an impact. We are seeing producers facing decisions about whether or not they will close and relocate those plants more than a couple of kilometers off the river in these economics, those are tough choices to make. We just saw an announcement by SinaChem about the closure of the fooling plant, which is about a million and a half tons of capacity. And while they may decide to relocate or reconfigure that plant, you know, those plans are more than three years away and right now what’s happening is a closure of that plant. So, yes, we are believing -- we do believe that economic factors, as well as these environmental pressures are pushing for rationalization in the phosphate industry in China.

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

Hi. Good morning. Joc O’Rourke: Good morning, Jonas.

Can you talk a little bit more about the expectation of volumes next year and how much pent up demand do we actually have in the soil at this point? What can we expect out of North America and China particularly? Joc O’Rourke: Well, I think, in simple terms for North America, we are looking at a corn planting of 93 million acres next year. We are looking at soybean planting of 85 million acres, which should bode well to taking North American demand up to at least where it was in previous years and then beyond that to make up what might have been missed. And I think in both nutrients there’s been up to a million tons of missed a product going on the ground. So I think in both those cases, we should see very good demand in North America. In terms of China, we are seeing good internal demands starting and we see that sort of balancing off at 15 million tonnes of demand of phosphates internally in the domestic market. And the other one we expect is we expect good potash imports next year into China. So overall, we are expecting a big jump or a good jump in overall potash around the world up to, let’s say, an average of 67 million tonnes and probably around 69 million tonnes for phosphates around the world. So both of those are a big jump up and really should drive the inventory out of the system as it exists today. I am going to hand it over to Corrine for a few extra detailed comments.

Sure. Thanks, Joc. Yeah. I would say that we have a real step up we expect in global shipments. Demand is solid in most all regions. We have seen a good recovery in Malaysia Indonesia with palm prices and expect to see good potash demand there. Our single point estimate you can even see in the presentations on potash, our single point estimate is more like 68 million tonnes for global shipments. But that could be as high as 69 million tonnes. And then that is up about 3 million tonnes on potash shipments for the year. And then on phosphates we have a single point estimate of about 70 million tonnes could be as high as 71 million tonnes up a couple million tonnes on phosphates as well. So good demand expectations from us.

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

Hi. Good morning, everyone. Your phosphate margins I have obviously been negative for the last few quarters. How long are you willing to let the business run kind of at that level before you want to take different actions here? It doesn’t seem like a lot of your offshore competitors are taking the same kind of downtime and pain that you have been willing to do to try to balance inventory? Thanks.

Good morning, Joel, and thank you. Look, the way we are looking at this today is we have capacity for what we believe is the demand coming up in the next year. And so, we expect that capacity to be fairly well utilized. So, we believe our Louisiana operations are basically essential to meet that new demand in 2020. And also worth noting that while our Louisiana operations, our highest cost is location on the Mississippi River is integrated ammonia operations and access to low cost high quality sulfur from the Gulf really make it pretty competitive on a delivered cost basis and make an integral part of our potash -- our phosphate portfolio. So, the other thing is, Louisiana makes a lot of our micro essential. So as we look at this going forward, we think this is a temporary seasonal thing. And we expect we are going to need that production in the near-term. In terms of how our competitors are responding I am not going to comment on their actions. I will say Mosaic though takes the approach that we always follow value rather than volume and we are matching what we think is our customers demand. And we don’t intend to go below that, but we do intend to make sure that we don’t oversupply a market that doesn’t need it.

Your next question comes from the line of Mark Connelly with Stephens Incorporated. Your line is open.

Thank you. Joc, early in the K3 project said that under certain conditions, it would continue to operate the old mine at reduced rates. Are you going to be keeping any of K1 and K2 on a maintenance schedule for potential use or is that going to be shut for good? Joc O’Rourke: Yeah. Thanks for that, Mark. Let me start off by saying the K3 project has been a real execution win for Mosaic. Our Canadian team has just found, incredible new ways to modularize the assembly of underground miners and other equipment and this is really what’s allowed us to accelerate this project. As such, what we are looking at today is a very successful project that will reach its total capacity a couple of years ahead of our original schedule. As such, we don’t see a need for the K1 and K2 mines after 2022 and the reason for that is we have capacity for milling, but we will be constrained by that milling capacity with the capacity of K3. So, it really the acceleration has changed the need for any increase or lengthening of the K1 and K2 mines.

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

Thank you. On Slide 20 where you gave selected items to 2020. Do you have any early thoughts on modern for 2020? Joc O’Rourke: Yeah. Yeah. So, thanks John. Yeah. Modern is a little more difficult to predict for 2020 the capacity will go up in 2020 driving their overall costs down. But really it depends on the phosphate market on how much the contribution is going to be on modern. We really don’t expect a lot of equity earnings in 2020, if any, and that’s because if you look at the sort of run rate this year, their loss will be probably in the $200 million range. So if even if you take that to a new capacity, they have got to improve their efficiencies before we are going to see any real equity earnings.

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

Hey. Good morning. So I am just going back to the phosphates. I am trying to understand how the phosphate cost curve looks today versus pricing and maybe just focusing on DAP. We have heard about phosphate rock price cuts in China. Obviously, sulfur and ammonia prices are lower and all those are pass-throughs, but that affects that pricing. Maybe -- if you could just help quantify where you see the marginal cost curve today because it obviously moves a lot? Joc O’Rourke: Okay. Thanks, Andrew. Let me go back to Corrine. I mean, I think, Corrine said that the average cash cost in China today is about $315 a tonne and that’s taking into account the RMB moves, the ammonia moves sulfur and rock costs. What that means though, is that’s an average that means 50% of all Chinese production is basically underwater at these prices. I just mentioned modern and while modern will be cash positive, with their high level of debt repayments that project is not making money, which would mean their overall breakeven is more in the range of $350 plus. So if you look at it where is the marginal cost producer, I am saying the marginal cost producer is probably certainly above that $315 and $320 range and likely well up into the $400 range for a non-integrated Indian producer maybe the Mexican producers and some of the Chinese producers.

Your next question comes from PJ Juvekar from Citi. Your line is open.

Yeah. Hi. Good morning, Joc, Miski Mayo is one of your high cost mines to some extent, as phosphate sales have of slowdown. Is that a mine that you could potentially slowdown. I know you have some contractual terms there, but what can you do there and was the opportunity to lower costs? Joc O’Rourke: PJ, let me say, Miski Mayo is probably disadvantaged on a delivered basis because of the transport obviously to Louisiana. But again, it tends to give us a good opportunity to keep Louisiana going preserve rock in Florida and if you work that out overall, it’s a pretty good asset for us. Now, what I will say there, though is, they are making, since we have taken over that joint venture, we have made great progress on reducing costs and I intend on the in the future to set some real targets there for reduce costs. So we would like to make Miski Mayo a real integral part of our overall production plans. And to do that, though, I -- we agree we need to really work hard on reducing the cost of that operation.

Your next question comes from Ben Isaacson from Scotia Bank. Your line is open.

Good morning. Thank you. I am trying to understand the difference between expected shipments and underlying demand. And I was hoping maybe Andy you can talk a little bit about in key markets where phosphate inventories or stocks are versus kind of where comfortable levels should be or have been historically? Joc O’Rourke: I will let Corrine answer a bit of that. But I would say look, we know that North American inventories are high. We believe that in country inventories for both potash and phosphate are reasonable in India. We believe both in country inventories for phosphate and potash are below normal in China right now. So while the port inventories for potash are high in China. We believe in country inventories are actually quite low, which means that you will see the port inventories move into countries quite quickly. So, overall, across the globe, and I am sorry, in Brazil, we are seeing phosphate inventories are down a couple of percent by the year end and potash inventories up a little bit. So, overall, we don’t think the inventories are that out of whack. And what we will say here is, as well is, with low prices, people tend to deplete their inventories. And during rising prices, they tend to build up their inventories. So we believe the inventories are being depleted. So what’s going on the ground is probably exceeding what is actually being delivered in these markets right now. Corrine, do you have anything to add to that?

Not too much to add, Joc. I think it’s a good point that there’s a natural tendency to destock when prices are falling. Nobody wants to try to figure out what that bottom price level is. And so we are seeing some destocking in some markets. Some got caught quite long with the weather changes and they are working off those inventories. And we have seen some channel stuffing by some of the -- our international competitors, putting it into traders and markets trying to position. But in country, places like China, the in-country potash inventory levels out at the NPK plants et cetera, we believe are pretty low. And so there is some real movement for tonnage to go when we see that demand volume kick back in. Joc O’Rourke: And just let me reiterate there as well. We have people on the ground with our distribution businesses. And, clearly, in North America, Brazil, India and China, which are our major markets. So we have a pretty good handle on what’s moving in country compared to maybe some of our competitors.

Your next question comes from Steve Byrne from Bank of America. Your line is open.

Hi. So -- this is Matthew [ph] on for Steve by the way. But you talked a little bit about inventories. Clearly, North America, they are bloated. But if we are looking into 2020, really forecasting a pretty modest increase for shipments into country despite what’s been a pretty poor year for applications. So, again, is this just elevated channel inventories or why don’t you foresee a better rebound in North America applications next year? Joc O’Rourke: I think we do expect a big -- sorry, Matthew, welcome. We do expect a big rebound in North American application. But I think you hit it on the head there. There’s a lot of channel inventory right now. Many of our customers are full. And it’s not unusual to be full going into spring. But we are full for a couple of seasons now. So that is unusual. So we expect that that inventory has to move out of the system first and then the actual shipments from those producers can start.

The next question comes from Michael Piken from Cleveland Research. Your line is open.

Yeah. Hi. I was wondering if you could talk a little bit about how we should be forecasting your ammonia costs for the coming quarters, given that Faustina [ph] is currently shut down and how we should be thinking about that going into 2020 as well? Joc O’Rourke: Thanks, Michael. I will touch this and maybe Corrine might touch it a little bit as well. But here’s how our normal ammonia supply works. We buy about a third on the open market, we receive about a third with our CF contract and we make about a third with our own production. Now, clearly, our -- in terms of cost right now, the lowest cost is our own production. And then our market cost is second, and CF is in today’s market significantly higher than that. I think the CF market is in the $350 range today, with natural gas prices where they are. So what you will see with the ammonia plant down is that we will have a higher waiting of the market price, which is in the mid-200s and a higher waiting of the CF price, which is in the 350 range, and a lower waiting of our own production. So that will increase our cost above market at this stage. In 2020 -- at the start of 2020, we will have unloading or loading facilities at our dock in Louisiana, which will allow us to take the ammonia from Faustina and move it to our Florida operations, which will really give us a big cost advantage and allow us to utilize that ammonia much more effectively.

Your next question comes from Vincent Andrews from Morgan Stanley. Your line is open.

I think what I heard earlier was your plan on starting the phosphate assets pretty much for the beginning of the year, given the demand that you are forecasting. When do you think you will bring the potash assets back online? Is there any risk to remain offline in the first quarter? Joc O’Rourke: Thanks. Thanks, Vincent. Yes. Our intentions are, at this stage, that Louisiana would probably come up year-end or early in the New Year, depending on how the fall season is going and what we see is a need there. In terms of the Colonsay and the potash, the tradeoff there will be, both will be twofold. One will be how is the potash market developing? Do we have a Chinese contract? Has that shipment started? Have the -- we have seen good increases in pricing for palm oil, do we see higher shipments into Malaysia and Indonesia from Canpotex? So if those Canpotex shipments start, that will lead us to favor bringing Colonsay up. At the same time, our K3, as we keep saying, is coming up faster than we expected. So if we can meet the need with the lower cost K3 product that will probably be where we would focus.

And the last question comes from Don Carson from Susquehanna Financial. Your line is open.

Yes. Thank you. Just a couple of questions on potash. One, can you talk a bit about potash pricing in the domestic market? I know you raise prices post the completion of summer. Are you actually seeing any of those higher prices being realized currently? And Joc, if you could just clarify what’s the future of Colonsay once K3 is up and running, given its cost structure relative to K3 and even K1 and K2? Joc O’Rourke: Thanks, Don. Let me take the second question, first. Look, Colonsay is a good asset in the potash markets that we had, maybe even five years ago Colonsay was a very good profitable operation. Today, with the new structure and K3 coming up, Colonsay is going to definitely be our swing plant. And as such, we wanted there to be available when we need it. But at the same time, if we can supply from Esterhazy and Del Plain [ph], we feel that’s a more economic way to supply the market needs. So it really is going to depend on how fast the market grows. I mean, current projections from CRU and stuff says that probably Colonsay will be running intermittently in the next little while rather than steadily. But more to come on that and final decisions will be made probably in the early next year. In terms of potash pricing, in the market, I think, maybe Corrine best answer that.

Sure. We did get good participation in our summer fill program and got a lot of products sold for that time period. We even posted prices higher as we normally do after a fill program. I would say, it has been difficult to get those prices to stick. We have seen a lot of pressure from our domestic competitors who seemed to have accepted much lower prices. And we have continued to make sales. Today, Corn Belt warehouse price is in that $270, $280-ish kind of range. Joc O’Rourke: Okay. Well, with that, I’d like to conclude our call. I know you have a lot of other calls today and I’d like to reiterate our key points. While 2019 has been a challenging year for North American agriculture, Mosaic has maintained its focus on the things we can really control. We have made tremendous progress. We have accelerated K3 mine again, which will lead to significant savings and a highly efficient potash operation. We have idled productions to help balance supply and demand. The transformations of our potash and phosphate businesses, as well as our corporate functions are ongoing, and they are delivering real bottomline results. And we are driving remarkable improvements in our Mosaic Fertilizantes business in Brazil. All these efforts have Mosaic positioned well to benefit from improving market conditions. We expect agricultural fundamentals to strengthen further, and we expect strong global demand and rising prices for both phosphates and potash, as we move into 2022. We are highly optimistic that business conditions will improve and the Mosaic will be there to deliver strong returns as that happens. Thank you for joining us this morning, and have a great day.

Ladies and gentlemen, this concludes today’s conference call. Thank you for participating. You may now disconnect.