http://www.morningstar.com/earnings/50309348-mosaic-co-mos-q3-2013.aspx

Mosaic Co MOS
Q3 2013 Earnings Call Transcript

Transcript Call Date 03/28/2013

Operator: Good morning, ladies and gentlemen and welcome to The Mosaic Company's Third Quarter 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?

Laura Gagnon - VP, IR: Thank you, and welcome to our third quarter fiscal year 2013 earnings call. Presenting today will be Jim Prokopanko, President and Chief Executive Officer, and Larry Stranghoener, Executive Vice President and Chief Financial Officer. We also have members of our senior leadership team available to answer your questions after our prepared remarks.

After my introductory comments, Jim will share our views on current and future market conditions. Larry will discuss capital management as well as provide insight into our future expectation. The presentation slides we are using during the call are available on our website at Mosaicco.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, March 28, 2013, 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 Jim.

James T. Prokopanko - President and CEO: Good morning. Thank you for joining our third quarter earnings discussion. The quarter played out essentially how we expected it would. The potash market we opened with product flowing once again to India and China, and those flows facilitated increased demand in North America late in the quarter.

At the same time, the phosphate market remained in balance. As you're well aware, our fiscal third quarter is typically our slowest of the year. So, this morning, we'll focus more on our outlook than on the quarter.

Before we get to that, I'll review the numbers quickly. For the quarter, we reported operating earnings of $419 million on net sales of $2.2 billion, both up slightly over a year ago. The potash business unit contributed $216 million in operating earnings and the phosphate business unit contributed $197 million. In total, we reported earnings per share of $0.81 or $0.88 per share, excluding the notable items compared with $0.64 a share a year ago. We generated $371 million in operating cash flow during the quarter and we continue to maintain a strong cash position with $3.3 billion of cash on hand.

Now, I'll spend some time on our forward view. First, agricultural fundamentals remain strong around the globe. This bodes well for the world's growing population and also for Mosaic. Even with the expected bumper crop in Brazil and other parts of South America, food supply is fragile, as a result, farmers preparing for spring in North America have many incentives to plant every available acre and to wring out maximum yields from every field. Commodity prices have declined modestly as futures markets recognized the potential for a big 2013 crop. The prices remain high relative to historical norms. In part, that's because many analysts do not expect yields to return to their trend level this year and because there's significant pent-up demand worldwide for grains and oil seeds.

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