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Mosaic Company: Q3 2015 Earnings Call

The following excerpt is from the company's SEC filing.

Company▲

Ticker▲

Event Type▲

PARTICIPANTS

Corporate Participants

Laura C. Gagnon

– Vice President Investor Relations, The Mosaic Co.

James O’Rourke

– President and Chief Executive Officer, The Mosaic Co.

Richard L. Mack

– Executive Vice President and Chief Financial Officer, The Mosaic Co.

Richard N. McLellan

– Senior Vice President-Commercial, The Mosaic Co.

Michael Rahm

– VP-Market Analysis & Strategic Planning, The Mosaic Co.

Walter F. Precourt

– Senior Vice President-Potash Operations, The Mosaic Co.

Other Participants

Andrew Wong

– Analyst, RBC Capital Markets

Ben Isaacson

– Analyst, Scotiabank Global Banking and Markets

Joel Jackson

– Analyst, BMO Capital Markets (Canada)

Jacob Bout

– Analyst, CIBC World Markets, Inc.

Adam Samuelson

– Analyst, Goldman Sachs & Co.

Sandy Klugman

– Analyst, Vertical Research Partners

Stephen Byrne

– Analyst, Bank of America Merrill Lynch

Don Carson

– Analyst, Susquehanna Financial Group LLLP

Jeffrey J. Zekauskas

– Analyst, JPMorgan Securities LLC

Yonah Weisz

– Analyst, HSBC Bank Plc (Tel Aviv Branch)

Daniel Jester

– Analyst, Citigroup Global Markets, Inc. (Broker)

Neel Kumar

– Analyst, Morgan Stanley & Co. LLC

Jonas Oxgaard

– Analyst, Sanford C. Bernstein & Co. LLC

MANAGEMENT DISCUSSION SECTION

Operator: Good morning, ladies and gentlemen, and welcome to The Mosaic Company’s Third Quarter 2015 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 opened to take your questions.

Your host for today’s call is Laura Gagnon, Vice President, Investor Relations of The Mosaic Company. Ms. Gagnon, you may begin.

Laura C. Gagnon, Vice President Investor Relations

Thank you and welcome to our third quarter 2015 earnings call. Presenting today will be Joc O’Rourke, President and Chief Executive Officer; and Rich Mack, Executive 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 mosaicco.com.

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Q3 2015 Earnings Call

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 this morning and in our reports filed with the Securities and Exchange Commission.

Now, I’d like to turn it over to Joc.

James O’Rourke, President and Chief Executive Officer

Good morning and thank you for joining our third quarter earnings conversation. This morning, I will discuss current market conditions, and then Rich Mack will review our financials and provide our guidance. Before we take your questions, I will provide closing remarks.

Mosaic delivered solid results in our seasonally slow third quarter despite a variety of market based challenges. There are three points I want you to know. First, demand for our products remains strong in most parts of the world. We understand investor concerns regarding future potash supply and I will address the supply and demand picture for you shortly. Second, Mosaic continues to execute at a very high level and effectively allocate capital. We are focused on capturing the value of our investments. To put it simply, we believe Mosaic is in an excellent position with significant upside when market sentiments and conditions improve. And third, Mosaic has displayed market leadership and a thoughtful production philosophy for many years. We will continue to pursue a strategy to maximize value.

For the quarter Mosaic earned $160 million on net sales of $2.1 billion, compared with earnings of $202 million on net sales of $2.3 billion in the third quarter of 2014. We reported earnings per share of $0.45 this quarter compared to $0.54 a year ago.

Adjusted for notable items, primarily the non-cash impact of foreign exchange rates, Mosaic’s earnings increased over 10% to $0.62 per share, compared to $0.56 per share last year. Our higher year-over-year adjusted earnings per share despite tougher markets reflect successful cost control efforts, the lower share count resulting from our active share repurchase activities and a lower effective tax rate.

So let me turn to the markets, which are quite different from country-to-country, and from product-to-product. The one constant around the world however, for both potash and phosphate is that demand remains strong. We expect total global phosphate shipments to set a new record, and total global potash shipments to decline slightly this year compared with last year’s record. That is an important point, demand for fertilizer is underpinned by demand for food and we have no doubt that this demand will continue to grow along with world population.

Even if supply outpaces demand for a short period of time, demand will continue its steady upward trajectory. We’re seeing this now in the day-to-day operations of farmers all around the world.

Going into each of the last several application seasons, market sentiment...


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