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Potash of Saskatchewan (POT) Jochen E. Tilk on Q1 2016 Results - Earnings Call Transcript

Potash Corp. of Saskatchewan, Inc. (NYSE:POT)

Q1 2016 Earnings Call

April 28, 2016 1:00 pm ET

Executives

Denita C. Stann - Vice President-Investor & Public Relations

Jochen E. Tilk - President, Chief Executive Officer & Director

Stephen Dowdle - President, PCS Sales, Potash Corp. of Saskatchewan, Inc.

Mark F. Fracchia - President-Potash Division

Wayne R. Brownlee - Chief Financial Officer, Treasurer & Executive VP

Analysts

Mark Connelly - CLSA Americas LLC

Jacob Bout - CIBC World Markets, Inc.

Ben Isaacson - Scotia Capital, Inc. (Broker)

Sandy H. Klugman - Vertical Research Partners LLC

Adam L. Samuelson - Goldman Sachs & Co.

Christopher S. Parkinson - Credit Suisse Securities (NYSE:USA) LLC (Broker)

John Roberts - UBS Securities LLC

Michael Leith Piken - Cleveland Research Co. LLC

Vincent Stephen Andrews - Morgan Stanley & Co. LLC

Joel Jackson - BMO Capital Markets (Canada)

Peter Prattas - AltaCorp Capital, Inc.

P.J. Juvekar - Citigroup Global Markets, Inc. (Broker)

Andrew Wong - RBC Dominion Securities, Inc.

Steve Byrne - Bank of America Merrill Lynch

Jonas Oxgaard - Sanford C. Bernstein & Co. LLC

Operator

Good afternoon, ladies and gentlemen. Thank you for standing by. Welcome to the Potash Corp. First Quarter 2016 Earnings Conference Call. I would like to remind everyone that the conference call is being recorded on Thursday, April 28, 2016 at 1 PM Eastern.

I will now turn the conference over to Denita Stann, Senior Vice President, Investor and Public Relations. Please go ahead.

Denita C. Stann - Vice President-Investor & Public Relations

Thank you, Anastasia. Good afternoon, everyone, and thank you for joining us. Welcome to our first quarter earnings call. In the room with us today we have Jochen Tilk, our President and CEO; Wayne Brownlee, our Executive Vice President and Chief Financial Officer; Stephen Dowdle, President of PCS Sales; Mark Fracchia, President of PCS Potash; Raef Sully, President of PCS Nitrogen and Phosphate; and Joe Podwika, Senior Vice President and General Counsel.

I'd like to welcome all those who are listening in and remind people that we are live on our website. I would also like to remind everyone that today's call may include forward-looking statements. These statements are given as of the date of this call and involve risks and uncertainties. A number of factors and assumptions were applied in the formulation of these statements and actual results could differ materially. For additional information with respect to forward-looking statements, factors and assumptions, we direct you to our news release and our most recent Form 10-K. Also, today's news release, which is posted on our website, includes a reconciliation of certain non-IFRS financial measures to their most directly comparable IFRS measures.

I'll now turn the call over to Jochen for some comments and then we'll go to questions.

Jochen E. Tilk - President, Chief Executive Officer & Director

Thank you, Denita. Good afternoon and thank you for joining our call. We appreciate the opportunity to discuss our first quarter performance and what we see ahead for our company. Price pressure across all three nutrients was a key contributor to weaker first quarter earnings, although it is important to note that our earnings of $0.09 per share included $0.06 of notable charges, which puts us closer to the midrange of our guidance for this quarter.

Q1 Potash earnings were impacted by both price and volume, largely due to reluctant engagement, as customers tried to gauge further price trends and the deferral of new China contracts. Potash gross margin of $88 million for the quarter trailed 2015's total, given weaker prices and lower offshore sales volumes. As a direct consequence of steps we took to adhere to our potash strategy, our results also included $32 million in severance charges related to the indefinite suspension of our New Brunswick operations and higher costs related to production curtailments in Saskatchewan.