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.
We share that point of view. In fact, while there are a number of potential outcomes for the 2013-2014 crop, the likely place from our vantage point builds back only one half of the inventory drawdown this year, leaving commodity prices at elevated levels.
I would remind you that agricultural commodity forecasters were signaling similar expectations at this time last year and farmers responded by planting 96 million acres of corn in North America. As we all know, the big anticipated crop withered and prices leapt to new heights. Farmers nevertheless delivered the second largest global crop in history last year, and the world still consume more grains and oil seeds than produced. So, my message is this, the world needs everything its agricultural land can produce, while volatility will always exist in our markets, this simple fact, more people need more food will not change.
So, our outlook for the long-term remains strongly positive. Even as we face challenges, of course the challenges are ever-changing. Three months ago, we had no potash contract with India. We just completed a protracted contract negotiation with China and lower Mississippi River levels with threatening the supply chain. All those issues have now been resolved.
To help you understand the challenges we face today, I'll describe in more detail the dynamics affecting the potash and phosphate markets. In potash, the market is on track to reach our forecast for global shipments in 2013. In fact, we believe shipments will reach the upper end of our expected 55 million tonne to 57 million tonne range. The contracts with India and China provided a better-than-expected base loan for demand, established a floor for prices and should reduce inventories to low levels. The expectation of a strong spring planting season further improved short-term sentiment.
Our operating rates reflect the improved conditions. Mosaic's potash mines operated 78% of capacity during the quarter and we expect operating rates to increase in the fourth quarter as we continue to meet the better-than-expected demand from China and India. We expect potash prices to remain in the current range until we see how fundamentals play out later this year. Our 3 million tonnes of ongoing potash expansions are proceeding as planned. Overall, they remain on budget and on time. That said, we are continuing to evaluate the remaining 2 million tonnes of expansions and expect to make a decision to proceed or delay sometime this calendar year. The phosphate market remains balanced. We are seeing outstanding demand in the Western Hemisphere and as supply has tightened we have seen Tampa export prices improve by $50 per tonne from their lows. The story is more difficult in Eastern Hemisphere, where Indian subsidy policy continues to hurt soil health and fertilizer sales. We don't expect the Indian buyers to come back to the market until the end of our fiscal 2013. Longer term, our outlook for the phosphate business is positive as the joint venture we announced last week illustrates. We are thrilled that Ma'aden invited us to participate as an equity partner for the second phosphate project, validating our technical knowledge, industry expertise and positive global reputation. It is important to highlight that this new project has long been incorporated into industry's supply expectations.
This investment has many benefits for Mosaic. It supports our growth strategy and partially meets the growing demand from our international distribution operations. It is expected to generate attractive returns. It gives us access to very low cost phosphate production. It provides more cost-effective access to India and other Asian markets. It gives us opportunities to participate in future modern expansions, and it further diversifies our sources of products.
It's important to note that this project is part of our phosphate growth strategy and does not change our plans for our Florida and Louisiana phosphate business. The rock and fertilizer we produced in the U.S. remain critical to Mosaic and to the world's farmers. Once the modern operations are in production, which we anticipate to begin in late 2016, we also would be able to allocate more of our domestic production to North America and South America. In turn, we should be able to generate higher netbacks from these operations. Our domestic facilities will also continue to be the source of our innovative higher-margin MicroEssentials product.
Before I call upon Larry, I'd like to highlight some recent external recognition we've received. For the second straight year, we were named to Ethisphere Institute's list of the World's Most Ethical Companies, and we are the only large agricultural company on the list. We're proud of this achievement because it demonstrates that we're living up to our values of excellence, integrity sustainability and connectivity.
Now, I'll ask Larry to talk through our thoughts on capital allocation and provide updated guidance. After that, I will conclude with some further thoughts on the outlook. Larry?
Lawrence W. Stranghoener - EVP and CFO: Thank you, Jim and good morning. We have been traveling to meet with investors frequently over the past few months and we've heard one refrain rise above all others. You want to understand our capital allocation policies and just what we intend to do with our balance sheet. So, rather than go through our quarterly numbers in detail, I'll provide as much insight as I can, on capital.
We have been working to refine our financial policies to align them with the updated strategic priorities we revealed last fall and to ensure that we effectively operate as a fully independent company following the final completion of the cargo transaction. The policy work is nearly complete and we are planning to provide more detail before the end of the fiscal year.
In the meantime, I can give you some previews. While we will always seek to retain our investment grade ratings and a reasonable liquidity cushion, you should expect a substantially more efficient balance sheet in the future, by more efficient, I mean we would carry less cash and more debt.
To get to that more efficient balance sheet, we would like to return excess capital to shareholders through share repurchases which become possible when tax restrictions expire in late May. To remind you, there are 129 million Class A restricted shares in three tranches each with 43 million shares. These tranches are expected to be sold or convert to common in each of the next three years beginning this summer. It is possible, but by no means given that we could negotiate an accelerated release of all of those shares. Our initial focus will be on the first 43 million shares per the existing agreement. We look forward to initiating discussions regarding those shares this summer. We have the financial flexibility both available cash and unused debt capacity and importantly the desire to consider a repurchase of some or all of those shares as well as other options. The repurchase of shares in the open market becomes an option when split-off related restrictions fall away in November.
It is important for you to understand that we cannot engage in any discussions regarding the restricted shares for another two months, and we may not have a resolution or agreement until later in the summer.
Turning to financial flexibility, note that our quarter end cash balance stood at $3.3 billion, and we expect strong cash flow generation in our fourth fiscal quarter to further increase our cash available for repurchases. However, there are some existing calls on our cash or debt capacity, and I would like to remind you of a couple of our previous comments and ongoing 10-Q and 10-K disclosures. First, we believe a reasonable liquidity buffer will include approximately $750 million in cash, as well as available committed lines of credit. Second, we have also disclosed that a portion of our cash would be taxed if repatriated. Today that cash totals approximately $600 million exposed to a 35% U.S. tax rate with both a cash and income statement impact. This cash is available without penalty to fund non-U.S. investments such as the Ma'aden joint venture and to provide a portion of our liquidity buffer.
Finally, in connection with the RCRA enforcement matter that has been ongoing for several years, we may choose to establish a trust to pre-fund existing phosphate asset retirement obligations which would result in a restricted cash balance of approximately $600 million. This would be simply funding an existing liability and would have no P&L impact. Note that we may elect to fund the trust by issuing debt given attractive borrowing rates. This matter has not yet been finalized and likely will not reach a conclusion until the end of this calendar year.
All told of course, we have substantial cash and borrowing capacity and we look forward to deploying it. After achieving our targeted balance sheet, our cash flow priorities will not change. Our first priority will continue to be investments for organic growth, like our current committed potash expansions which are expected to produce strong long-term returns for shareholders. Second, as our joint venture with Ma'aden demonstrates, we seek strategic investment opportunities. As always, we will only enter into an acquisition or joint venture if we believe the transaction meets our return hurdles and fits with our strategy and culture.
To summarize, Mosaic is in excellent financial condition and we clearly understand the significant opportunity and importance of returning capital to shareholders. Your patience is much appreciated as we work through a complicated but ultimately constructive process. I want to repeat, do not look for a transaction announcement from us in late May, as that is only the kickoff date for discussions with the other parties to any transaction.
Now, I'll turn to guidance. We expect fourth quarter potash sales volumes to be in the range of 2.3 million to 2.6 million tonnes compared with actual volumes of 2.0 million tonnes in the fourth quarter of last year. If we reach the top end of this range, our potash shipments would set a new quarterly record. We expect average realized potash prices to be in the range of $350 to $380 per ton, which reflects a substantially higher mix of lower-priced standard product. The gross margin rate for the potash segment is expected to be in the range of 40% to 45%. Clearly, this would be a step-down from prior years as higher operating rates are expected to be offset by lower prices.
While we continue to aggressively focus on expense management and maintaining our cost curve position, year-over-year margins are also being impacted by higher depreciation, as we bring our new capital investments online and higher labor costs, as we have staffed up for our new capacity. Our operating rate in potash during the fourth quarter is expected to be above 85%. Brand management expenses are expected to be in the range of $245 million to $260 million for the year.
In phosphates, sales volumes are expected to range from 2.6 million to 2.9 million tonnes for the final fiscal quarter of the year, about in line with last year's volumes. We expect our realized prices for DAP to range from $475 to $505 per ton, roughly in line with the prior quarter. We also expect the gross margin rate to be about flat with the third quarter. Mosaic's phosphates operating rate is expected to exceed 85% of capacity during the fourth quarter.
Now, I will turn the call back to Jim for his concluding comments.
James T. Prokopanko - President and CEO: Thank you, Larry. Here in North America the searing drought of 2012 lingers in some regions. But these early days of spring are bringing renewed optimism and farmers are planning for an abundant crop. If you're concerned that I am on the verge of tearing up over birds chirping and seedlings reaching for the sun, we are not. Solid economics lie at the heart of the expectations for a big crop.
Grain and oil seed prices remain elevated for many reasons; weather conditions and government policies, for example; but none as important as old fashioned supply and demand. In 2012, the world once again produced less grain and oil seed than it consumed, despite the second-largest global crop on record. You know the numbers, 9 billion people by 2050, a net addition of 75 million people per year and very little expected increase in land use for agriculture. Demand is on a steady line pointing upwards and food production has got to keep up. The world's farmers simply cannot feed the population without good crop nutrition. As we've seen recently short-term volatility in prices and in supply and demand will always exist in our complex global markets. But the short-term does not change our story our promise or our mission. We are well on our way to being the world's leading crop nutrition company and that is an enviable and encouraging position for all our constituents. It is also a stern responsibility helping the world grow the food it needs is no small task, but Mosaic has the global reach and the expertise to make an important contribution to deliver benefits to global food security, while delivering rewards to our shareholders.
Now, we'd be happy to take your questions. Operator?
Operator: Vincent Andrews, Morgan Stanley.
Vincent Andrews - Morgan Stanley: Could you just talk about as you evaluate the potash expansion, that's not Board approved yet. What do you need to see going forward or what are you going to analyze or what are the big decision points that are going to make you decide to either go forward or not go forward?
James T. Prokopanko - President and CEO: Good morning, Vincent, Jim Prokopanko here. Good to have you on this call. You're right. We are taking that under a final consideration now. We're looking – and I'll ask Joc to add a few comments. But principally a matter of what the costs are looking like. We are concluding our final cost outlooks as you'd be aware. Saskatchewan is a hot economy, with all the energy and other basic material industries booming, and so we're seeing some cost pressures come into these projects. So looking at the matter of the final costs to build out the projects that we still have on the drawing boards, and take a look at where some of these other projects in the industry are going. You've seen some changes in the planned outlook. Vale has backed away from its Rio Colorado project for reasons of costs that have bloomed on them and take a final look and balance by the end of this summer. Joc, do you want to add anything?
James 'Joc' O'Rourke - EVP - Operations and COO: I think the only thing I could add is, we are in the process of finalizing the cost, looking at the construction environment in Saskatchewan, but the key thing for us is, and we've always said that these projects have on-rounds and off-rounds. I don't think it's a matter of, if we're going to do the projects. It's a matter of what's the right timing for Mosaic, so if we make a decision, it will be on the timing. So, we'll be talking about delaying, not finally cancelling a project.
Operator: Joel Jackson, BMO Capital Markets.
Joel Jackson - BMO Capital Markets: I'll ask a couple of questions about Foschem in India. What I want to know is, it seems like, because you're giving guidance that you don't expect the Indian import market to really return to the end of your fiscal year, so around May, we've seen some spot deals happening in India. So, is your sense that the Indian market is changing this year to a more spot for DAP and as part of that, also longer term, what's the future of Foschem with you now investing in the modern project and maybe changing how you market around the world?
James T. Prokopanko - President and CEO: I'm going to ask Rick to address that, but I'll just lead off with, we're seeing recovery in the Indian economy. There's definitely some impacts, negative impacts from the changes in their subsidy program, but we've seen a good return to potash demand, phosphate's a little iffy, and I'm going to ask Rick to speak to that.
Richard N. McLellan - SVP, Commercial: So, your two questions. The first, on Foschem in India, I think that we'll see longer term contracts entered into in India. So, we're not seeing a change to a spot market. Our guys were there last week, visited with them, there's a belief in three things, that the inventory they have will carry them through until probably near June, second that to get product moving into place so that they can take the 5.5 million tonnes roughly of DAP, they need for imports will lead the start in May and everyone is sitting there waiting for the government to come forward with what the subsidy programs are going to be. The expectation was as that those were to be last week, expectation now is as we'll see them next week as the government gets themselves set after some people. And so, we expect India will come in. It will be an orderly buy and there's no question they want the tonnes that we have allocated towards them. The second part on Foschem is a question that we've been asked, but I think the key thing is as we see no changes coming and that to think about it a product that will come from Ma'aden is four years out, that's a long time.
Operator: Bill Carroll, UBS.
Bill Carroll - UBS: Once the Ma'aden JV gets going how much your geographic phosphate mix change that is to expect the Ma'aden output to go mainly to India and Asia while the Florida and the Miski Mayo product will be marketed predominantly in North and South America and then how might be the overall phosphate cost structure change because of the new project?
James T. Prokopanko - President and CEO: I think what I heard on the first part of the question was what is going to happen with the Ma'aden tonnes that come on as Rick mentioned they are going to be four years off, those tonnes are going to be cost advantage given its location to -- into Asia what that would do is leave more of Mosaic products available in North America and the Western Hemisphere and then to Latin America. Now it's not all going to be run purely that way, the tonnes don't all move in one lump sum to one geography they move all year along. So it's generally going to be Ma'aden tonnes directed to Asia, cost advantage for freight reasons. Our tonnes there's nobody that could lay in phosphate cheaper into Latin America or North America than Mosaic can. The next question is about the cost structure I'm going to ask Larry to talk about that.
Lawrence W. Stranghoener - EVP and CFO: One of the great appeals of the Ma'aden investment is that we believe we will be investing in what will end up being the lowest cost phosphate production operation in the world and in this business as you know being at the low end of the cost curve ultimately wins and so that was a key part of the strategy for us. We're delighted with the partnership we've struck with modern Ma'aden and with SABIC and we believe this project will generate very good returns for our shareholders.
Operator: Mark Connelly, CLSA.
Kurt - CLSA: Good morning. This is (Kurt) filling in for Mark. Do you expect the logistical issues in the ports in South America to any way affect your fertilizer shipments?
James T. Prokopanko - President and CEO: Hello, Kurt. With Rich McLellan just came back from Brazil last week he's the best to answer that.
Richard N. McLellan - SVP, Commercial: Good morning, Kurt, fairly good question. I don't think until you get to Brazil you fully understand the logistical issues that are being faced there. So your question about -- well first I'll describe what I saw and what I heard had a chance to visit it to get to our Paranagua facility and the truck lineups there, which are normally long in harvest like we're in right now are much worse than they were other years and then happen to visit with the farmer in – who was probably 400 kilometers from the port, his trucks have been in line for I think seven days and he did not expect them to move for another two days. There is some real gridlock going into ports and it's causing some extremely increased pricing -- costs for both the farmer and people operating there. I think the one thing that's good about what we see happening with the Brazil market is that people believe that the market is going to be a big market and so buying is being much more spread out than it was last year. They realize they can't just come in and in expect just-in-time shipments. So, that's -- there's a positive outcome it's that. The issue though is if Brazil needs significant investment in ports, in rail capacity and in roads and it's clear that the government understand that but taking it to action is going to be something that's going to have to happen for them to continue to grow like they have,
Operator: Adam Samuelson, Goldman Sachs.
Adam Samuelson - Goldman Sachs: I was hoping to get some color on the fiscal fourth quarter phosphate margin guidance, at the midpoint of the range you've guided volumes up sequentially and prices really only down five $5 a tonne, you've also outlined an outlook for lower ammonia costs and lower sulfur costs at least based on the purchase cost and that are realized in the fiscal third quarter, coupled with more -- another quarter of optimized held for (indiscernible) production maybe bridge how phosphate margins are still only flat sequentially in the fiscal fourth quarter?
Lawrence W. Stranghoener - EVP and CFO: Adam, it is Larry. All of the trends you mentioned are true and yet they are not strong trends. And so what we are seeing is the likelihood of relatively flat performance in phosphates in the fourth quarter. Prices maybe down slightly, you are right ammonia cost maybe down slightly. We are continuing to see progress on rock cost. But when we put the whole mix together what we are seeing is the likelihood of relatively flat gross margins. As you know some of the raw material cost trends take some time to work their way fully through the P&L and so while we are pleased by the trends we are seeing, we don't expect to see the full impact of those recent trends already in our fourth quarter P&L fully. So, positive directions, but perhaps not as meaningful change as we might like to see just in this coming fourth quarter.
Operator: P.J. Juvekar, Citi.
P.J. Juvekar - Citi: The issues with Ma'aden I were that some of the rock quality was quite poor due to impurity which caused Ma'aden I to ramp up slowly. So, what can you tell us about Ma'aden II project and the rock quality there? And does it compare to your Florida or Peru mines and does this impact your Miski Mayo II expansion?
James T. Prokopanko - President and CEO: We can't really say much about Ma'aden I, we've not had an involvement in that, engagement in that then it is best to ask the Ma'aden folks how that's coming along. It is a 3 million tonne plant, I can tell you that. Our sense is that producing a net 2 million tonne a year range and I have little doubt that by the end of this calendar year or sooner, they're going to have the capacity if they chose to run it at the 3 million tonne range. The Ma'aden 2 mine is a separate project and part of the investment we are making along with the granulation plant, and we are – until we start developing that mine, we won't know for certain. But I'm going to ask Joc to tell – speak to some of the issues that we may face in mining that reserve.
James 'Joc' O'Rourke - EVP - Operations and COO: So, PJ, basically, we are just starting out in terms of really evaluating long-term processing for the rock and everything. So, a lot of rock quality isn't what necessarily is in the ore. It's how you process it. So, I think that's one of the things that Mosaic bring to the table, the experience with a range of rocks and rock types and also a range of experiences with respect to how to process that rock into final product. So, in terms of the rock quality, we see the rock quality is good from what we've seen so far. It's not the same as Florida, it's different, but in some areas, it's better, some areas it's not as good as Florida, but all rocks are slightly different. Your second part of your question in terms of what does it mean for Miski Mayo, I recognize that Miski Mayo is a rock mine which complements our Florida operations. So the Miski Mayo is quite separate, and we will be producing a phosphate product like that et cetera, whereas Miski Mayo, we use the rock for our Florida operations. So, they really don't compete in that sense or they have a very separate strategic purpose for Mosaic. So we will – we are committed to diversifying our rock sources in Florida, and if the economics and the long-term focus of Miski Mayo supports that commitment to Florida, we may go ahead with it despite (indiscernible).
Operator: Christopher Parkinson, Credit Suisse.
Christopher Parkinson - Credit Suisse: You mentioned you saw some or you're seeing some improving sentiment in most of your geographies. Can you offer some more color on which geographies in particular you saw this for potash and where you've seen the biggest material differences versus what you've seen in January?
James T. Prokopanko - President and CEO: I'm going to ask Mike Rahm and Rick McLellan; Mike Rahm our (economist) and strategy leader to speak to that.
Dr. Michael Rahm - VP of Market and Strategic Analysis: Generally, it's been widespread improvement in most geographies. As you probably know, we're guiding total MOP shipments in the range of 55 million and 57 million tonnes through the first – nearly through the first quarter of calendar year 2013. Our estimates are now at the high end of the range. Starting in the Americas, we're seeing just outstanding shipments in North America, this past fall, the middle or the quarter here in the December, Jan, Feb period was a little bit slower. We saw an uptick late in the quarter, prospects I think for our final f fiscal quarter as we've indicated in the guidance are very good. Brazil is probably going to float with 8 million tonnes of imports this year. Some of the Asian markets after a big drop off in Indonesia and Malaysia, we think there's a very good rebound there, and if you look at the two big contract markets, like China, first half, China if you include the option, tonnage has contracted for about 3 million tonnes by vessel, and if they continue to import 200,000 to 250,000 tonnes per month by rail you can add up about 4 million to 4.5 million tonnes of imports by China in the first half of the year and I think that either indicates their front end loading, their purchases are or maybe we're on the brink of seeing China break out of that 6 million to 6.5 million tonne import appetite. And even in India, India has contracted for close to 4 million tonnes of product, and we have guided I think in the past 3.2 to 3.7 with 3.5 midpoint estimate or point estimate. So, even India is exceeding our expectations in terms of contracting. So, put that all together, I think, probably an underappreciated story is the emergence of a very strong rebound in global potash shipments in 2013.
Operator: Kevin McCarthy, Bank of America-Merrill Lynch.
Kevin McCarthy - Bank of America-Merrill Lynch: Larry, if you look couple of years ahead, let's say, beyond (Cargill) trust episode in Mosaic's history. Is there a particular leverage ratio or range of leverage where you would feel comfortable striking a balance between running the balance sheet more efficiently and maintaining your investment grade status. Would it be one times EBITDA in terms of net debt or two times or somewhere in between? How would you evaluate what is appropriate to maximize the efficiency?
Lawrence W. Stranghoener - EVP and CFO: Kevin, we are just going through the final process of finalizing that policy, reviewing with the board and we look forward to sharing it sometime in the mid-May timeframe we think, and we'll give you a much more exact idea at that point in time. I think for now I would just remind you of what we said in our prepared comments. We recognize that we've got the opportunity to put more debt on the balance sheet. We intend to do so and we intend to use some of the cash that's on our balance sheet. So we will certainly have a more efficient balance sheet going forward. I think if you simply look at what the typical credit agency, the rating agency's metrics are for BBB companies, you would typically see anywhere from 2 to 3 times debt to EBITDA leverage as being typical for AAA or BBB companies. I think in our industry, they'd be a little bit more conservative than that, and so we'll use those guidelines as we finalize this policy, but please be a little bit patient, give us a little more time and look for us to provide you more detail in the mid-May timeframe.
Operator: Don Carson, Susquehanna Financial.
Don Carson - Susquehanna Financial: I wanted to follow up with Mike Rahm just on your potash comments. Mike, you indicated that we're seeing a strong volume recovery globally this year, but it seems in some of the spot markets like Brazil, Southeast Asia and more importantly the U.S., we're not seeing any price momentum. So, why is it that this volume recovery isn't leading to more price momentum in the domestic market in particular, and just as part B of my question, perspective planting is coming in a few hours, Mike, what's your view – the USDA has this very big recovery in production and ending stocks this year, but with the return to trend line yields, just wondered what your view of that forecast is?
Dr. Michael Rahm - VP of Market and Strategic Analysis: Good morning Don. Well, I guess, I would take exception to the view that potash prices haven't moved. If you look at what's happened in Brazil, right after the settlement of the China contract, in the 400 range and the Indian contract in the 427 range, price has traded down in Brazil, the most active spot market into the 410 to 420 range, and today, product is moving into that market at 440 and offers for the April, May, June period (indiscernible) slide of their big important period are up in the 450 to 460 range so, we've always said the larger than expected baseload contracts to China and India, probably set the stage for fundamentals to play out, and then as they play out and we see this rebound in demand this year, we are seeing some decent price appreciation. In North America, we think these, the recent developments have set a floor under North American prices, which had traded at a premium to some of the international values and so I think when we look at the projected stocks of North American producers, while they remain elevated today with the export sales on the books by Canpotex plus the outlook for a very strong fourth fiscal quarter for Mosaic, we see those inventories getting pulled down to normal levels. So, I think that will help support the price momentum that we see right now. In terms of the U.S. acreage report, we're all excited about the release here in a few hours. In terms of acreage, we're sort of in that 97 million to 97.5 million acre range. I think the consensus is right in that range as well. As far as the expected yield, I think the short answer to that is no one knows what that's going to be. We went back and looked at what's happened to yields following the last three major droughts in 1983, 1988 and again in 1993 and in each of the years following those droughts we saw very strong rebound back to trend. So, I think yield is going to depend largely on rainfall and growing degree days this summer and I think that's the bottom line. I'd like some of the analysts' views that everyone is growing a very large crop in their spreadsheets and we are not going to know what's going to happen until we see how weather plays out. So, it's far too early, I think, to make a call. I think one of the things that's happened is that with the improvement in moisture conditions there is less concern about drought, but that has raised the whole other set of issues we are looking at a late spring as everyone is aware. I think last week rather than ice melting and (indiscernible) ice was forming and now the first barge is expected to arrive in St. Paul somewhere during the week of April 20. So, we sort of transitioned here from a concern about drought to late planting, the potential for serious flooding in many parts of North America and bottom line is that to a great extent our fate is in the hands of mother nature and we simply don't know how that's going to play out yet.
Operator: Ben Isaacson, Scotia Bank.
Ben Isaacson - Scotia Bank: Jim, maybe you can just provide some color as to how the JV with Ma'aden evolved and how that was formed? And then I was also a little bit unclear, did they ask you for technical expertise on the first phase and you said no or they did not ask you? And then, finally, what is the timing on the Bayovar phase 2 decision?
James T. Prokopanko - President and CEO: I'll take your first two questions and I'm going to ask Joc to refer – to answer the Bayovar, Miski Mayo second question. Important, and you raised it, to understand that this is a joint venture investment. This isn't a purely an equity investment. We are making an equity investment, but we do have claim to 25% of the product that will come through that joint – through the joint venture, and we will sell that product to customers as we choose to. That will be similar for the partners SABIC as well as Ma'aden Fertilizer, they will sell their share of the fertilizer. The revenues go to the joint venture and we share in that profit, and that's how it's going to work. This has nothing to do with phase 1. This is strictly the phase 2 project which is going to be in approximate 3.5 million tonnes of finished phosphate fertilizer. And phase 1 will just be kept right out of it. You asked a question how did we get involved in it? This, we've known the Ma'aden people for some while. Phase 1 just didn't happen. The two organizations didn't get together on that. That was well down the road when those opportunities were there. As far as technical expertise, we have an understanding between two parties, more details yet to be ironed out, but we will be making contributions through know-how and personnel in the design and operation of the Phase II facility. Now, I'm going to move this over to Joc to talk about the timing on Miski Mayo.
James 'Joc' O'Rourke - EVP - Operations and COO: In terms of the Bayovar 2 or the Miski Mayo expansion I think it's almost too early to talk about that recognize we have two joint venture partners in that project. We are just getting wrapped up to the design rate for Phase I, we have a lot of what I would call bedding in or stabilizing of Phase I, making sure that, that's running well, at which the three joint venture partners are more doing the engineering and design but at that point, the three joint venture partners will look seriously at the economics and the future of Bayovar 2 including market questions, so, that's probably a ways off yet before we make that decision.
James T. Prokopanko - President and CEO: I just want to add another item to the Ma'aden Phase II project and you will be hearing more details as we get further into the finalizing any of the details that are involved but there'll be a Board of the Ma'aden Phase II, we're going to have, I guess we will have two members on the Board, SABIC will have one, Ma'aden will have, I think four or five and so, we're going to be quite involved in the management operations and direction event of that investment.
Operator: David Begleiter, Deutsche Bank.
David Begleiter - Deutsche Bank: Jim, I know you're still doing your cost work on the last 2 million tonnes of the potash expansion, but can you give us a rough estimate of how much more expensive that could be than the first 3 million tonnes and the last 2 million tonnes is delayed, this CapEx approach of $1 billion in 2015?
James T. Prokopanko - President and CEO: David you asked the question if I have this right what is the difference in per unit cost for Phase 2, is that correct?
David Begleiter - Deutsche Bank: Correct
James T. Prokopanko - President and CEO: Yeah, that was the next deferred base these are the higher cost based projects. The ones we commenced with and started with were the lower approved unit CapEx sots, the easier projects if you will and the quicker projects. As we go further down, these projects become more complex, become more expensive and the only guidance we've given is blended all-in the 5 million tonnes that we've talked about is going to be in the $5 billion range. So, you're averaging $1000 $1200 to a tonne, these latter projects are going to be more than the $1000 a tonne – more than the $1000 a tonne average so to speak and some of these were $500 to $600 tonne projects, there were some $1500 tonne projects. So it's difficult to say and we're not prepared to say what these latter projects are, but suffice to say even these latter projects and certainly the earlier projects these are far better than anything you'd expect with the greenfield and probably in the range of at worst case half the cost of the greenfield project. David you had a second part, if it's delayed what would CapEx for 2015 be and I'm going to ask Larry to speak to that.
Lawrence W. Stranghoener - EVP and CFO: I'd suggest that we're trying to give some more guidance on financial policy in mid-May, at that time we'll also give some more highlights with respect to long-term CapEx Plans. But just keep a couple of things in mind. One is that sustaining capital requirements are probably in the $7 million to $8 million annual range. We will likely face the opportunity to build two new phosphate rock mines beginning later in the decade to the tune of $1 billion dollar each spread out over a number of years. As many of you, we are still on the final decision-making stages on a new ammonia plant. So, there are a number of items in our CapEx plans that we'll be giving more clarity on sometime before the end of this fiscal year. So, my point is, just because we maybe delaying if we choose to do so, our potash expansions, I don't want people to think that our capital expenditures are likely to be declining dramatically. We'll give you more color on that soon.
Operator: Mark Gulley, BGC Financial.
Mark Gulley - BGC Financial: Larry, let me try another balance sheet question recognizing that we'll get more detail in a couple of months. If I look at the math that you went through with respect to uses of cash short-term, If I start off with the cash balance of $3.3 billion, the buffers that you talked about added up to roughly $2 billion I think. So therefore, what that suggests that cash available for share repurchases is going to be in that $1.3 billion area.
Lawrence W. Stranghoener - EVP and CFO: I think, Mark, that we're looking at only cash available for share repurchases. We've got this great opportunity to rebalance the balance sheet with increased debt. And so, we'll be looking for a combination of debts and available cash for share repurchases, much of our decision will depend upon circumstances at the time and what is the price of the stock what is the cost to borrow, what is the aptitude of the other parties to this transaction to participate and so, I can't give you any more detail or anymore precision at this point in time. I would simply emphasize the point that we've made many times, and I'll repeat that we have very deliberately built a strong balance sheet to allow us to take advantage of the opportunities we're going to have this summer and that whether we're looking at cash on hand, available cash or debt capacity, we've got ample opportunity to return capital to shareholders as well as to continue to invest in our business for growth and for returns.
Operator: Michael Piken, Cleveland Research.
Michael Piken - Cleveland Research: I was wondering if you guys could give an update sort of on the Faustina ammonia potential expansion project and kind of your thoughts in terms of what some of your competitors do and whether that might influence your decision at all and some of the other factors you're considering, thanks.
James T. Prokopanko - President and CEO: Hello Michael. The ammonia expansion you heard us talk about. I think we're one of the earliest out of the gates on that, and it's become a crowded field since then. The point that we're at is that we're continuing our feed or front-end engineering design work. We're going to have that wrapped up over the next, I think, 90 days, we'll be complete. This is a large project. The price range would be for 1 million tonnes of additional ammonia production which is a combination of greenfield ammonia plant and debottlenecking expansion of our current approximate 0.5 million tonnes of production. It's going to range we think between $1 billion and $1.2 billion, that's a lot of money. So once we have the final numbers, and that's just our practice, for major expansions like this, we like to have a high confidence in what the final cost is going to be before we make the final call. There has been more to be seen on that. There has been a big gold rush mentality on nitrogen. U.S. imports about 7 million tonnes to 8 million tonnes of ammonia a year given the price spread between marginal cost of production, which is Russian gas into Ukrainian plants, that's about equivalent to $8, $9 MMBTU gas prices so U.S. has a considerable, considerable advantage. So, 7 million or 8 million tonnes are imported into U.S. I expect the economics working we are going to see 7 million to 8 million tonnes of new capacity come into the U.S. These are long lead time projects. If we made a decision today we expect it is going to be upwards of four years before we get the first tonne of the project out considering all permitting and construction costs. So, giving you a long story here to say that it's a long lead time, a lot of things can change. So, looking at the final cost over the next few months get a better sense of who is really serious about making these serious billion-dollar plus investments and we'll make the call later in the summer.
Operator: Matthew Korn, Barclay’s Equity Research.
Matthew Korn - Barclay's Equity Research: We've talked a little bit about the positive outlook you are seeing for global potash shipments relative to your earlier projections in the mid 50 million tonne level. How are indications looking for phosphate shipments globally? I believe you'd forecast somewhere around 63 million, 65 million tonnes before largely predicated on demand in the Americas?
Dr. Michael Rahm - VP of Market and Strategic Analysis: This is Mike Rahm. In terms of our global phosphate shipment forecast we have not changed that we are still in that 63 million, 65 million range through the first quarter of the year, basis our current point estimate we are kind of right in the middle that range. I think with the exception of India, it's pretty much the same story. Starting in the Americas, North American phosphate shipments have just been phenomenal, frankly. If you look at the numbers from last fall they are well above the 7-year average, well above the maximum of the 7-year high-low range. We had good follow-through during our third fiscal quarter and we think the fourth fiscal quarter will be about average. So, extraordinarily, good shipments in North America. Same story in Brazil, as you know that last year total fertilizer shipments there were 29.5 million tonnes we think that will increase to 31 million tonnes we expect that Brazil will import more than 4 million tonnes of phosphate products a record, seeing good demand in most of the other Asian markets. So, we are on track to hit that 63 million, 65 million range, I believe. One thing I'd like to mention that it kind of relates to Don's earlier question is that even with a good rebound in global yields this year I think an important point is to note that I think there is some pent-up demand. If you looked at the chart in our presentation that showed global grain and oilseed stocks you saw the big drawdown that occurred – that is occurring in 2012, '13 that drawdown assumes a very modest increase in grain and oilseed used. In fact, if you look at the projected growth in grain and oilseed used in 2012, '13, it's 0.6% and that followed the previous four years when grain and oil seed demand grew at 2.2%, 2.3%, 2.3%, 2.6% per year. So, I think even if we get a very, very good supply response, what we're going to see I think is that, some point of grain prices begin to come down or moderate a bit, I think there's a potential for an unleashing of this pent-up demand, and the fact that crop nutrients remain highly affordable simply underpins our forecast for record P&K shipments this year.
Operator: Jeff Zekauskas, JPMorgan.
Jeff Zekauskas - JPMorgan: I've a question for Mike. In your potash shipment expectation of 55 million to 57 million tonnes for the industry, what's your China number?
Dr. Michael Rahm - VP of Market and Strategic Analysis: Our forecast for China I believe, are for imports of about 6.5 million tonnes and their domestic production will probably be in the range of 4 million tonnes. So, call it 10 to 11, and as I noted before, if you look at what they have contracted for the first half of a year, it's just probably in the 4 million to 4.5 million tonne range. So, that's a number we're watching very carefully that we think that there could be some upside in that forecast if things play out the way we think they could. With that, I'm going to conclude our call and reiterate a few of the key messages we want to leave you with. First, agricultural fundamentals remained very strong here in North America and elsewhere around the world. Second, we are seeing strong global demand for our products. Third, we have substantial cash and borrowing capacity and we look forward to deploying it in the year ahead and you are going to hear much more about that later this fiscal year sometime in May. And finally, we have got great confidence in Mosaic's future. Our critical mission of helping the world grow the food it need bears very substantial promise for our customers, our employees, our communities and of course for our shareholders. Thanks very much. Have a great weekend.
Operator: Ladies and gentlemen, thank you for joining. This concludes today's conference call. You may now disconnect.