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Section 1: 8-K (8-K - 2018 Q2 EARNINGS CALL TRANSCRIPT AND SLIDES AND Q3 INV PRESENTATION)

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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
 
FORM 8-K
 
 
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 2018
 
 
THE MOSAIC COMPANY
(Exact name of registrant as specified in its charter)
 
 
 
 
Delaware
 
001-32327
 
20-1026454
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
3033 Campus Drive
Suite E490
Plymouth, Minnesota
 
 
 
 
 
55441
(Address of principal executive offices)
 
(Zip Code)
Registrant’s telephone number, including area code: (800) 918-8270
Not applicable
(Former Name or Former Address, if Changed Since Last Report)
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934.
¨ Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ¨
 
 




Item 2.02.
Results of Operations.
The following information is being “furnished” in accordance with General Instruction B.2. of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended (the “Securities Act”), or the Exchange Act, except as expressly set forth by specific reference in such filing:
 
On August 7, 2018, The Mosaic Company ("Mosaic") hosted a conference call discussing its financial results for the quarter ended June 30, 2018. Furnished herewith as Exhibits 99.1 and 99.2 and incorporated by reference herein are copies of the transcript of the conference call and slides that were shown during the webcast of the conference call.

Furnished herewith as Exhibit 99.3 and incorporated by reference herein is a copy of a presentation entitled “Investor Information - Third Quarter 2018.”
Item 9.01.
9.01. Financial Statements and Exhibits.
(d) Exhibits.
Reference is made to the Exhibit Index hereto with respect to the exhibits furnished herewith. The following exhibits are being “furnished” in accordance with General Instruction B.2. of Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act or the Exchange Act, except as expressly set forth by specific reference in such filing.
Exhibit No.
  
Description
 
 
 
99.1
  
 
 
 
99.2
  
 
 
 
99.3
 
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
 
 
THE MOSAIC COMPANY
 
 
 
 
Date: August 13, 2018
 
 
 
By:
 
/s/ Mark J. Isaacson
 
 
 
 
Name:
 
Mark J. Isaacson
 
 
 
 
Title:
 
Senior Vice President, General Counsel
 
 
 
 
 
 
and Corporate Secretary



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Section 2: EX-99.1 (EXHIBIT 99.1 - 2018 Q2 EARNINGS CALL TRANSCRIPT)

exhibit9912018q2earnings
The Mosaic Company Moderator: Gagnon, Laura August 7, 2018 08:00 AM CT Operator: Good morning, ladies and gentlemen and welcome to The Mosaic Company Second Quarter 2018 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. Ms. Gagnon, you may begin. Laura Gagnon: Thank you and welcome to our second quarter 2018 earnings call. Presenting today, will be Joc O'Rourke, President, and Chief Executive 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. 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 first quarter press release and performance data attached as exhibits to yesterday's form 8K 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 second quarter earnings discussion. I would like to start by welcoming Clint Freeland, Mosaic's new CFO to the call. Clint has been with us a couple of months now and he is fully immersed in the business. Our results for the quarter reflect continuing improvements in business conditions as well as meaningful benefits of our many strategic moves including the acquisition of Vale Fertilizantes and the transformation of our cost base across the company. We would like you to take away three key messages from this call. First, Mosaic is generating strong cash flow demonstrating both the resilience of our business and the earnings leverage we created. Second, we expect to deliver strong results for the remainder of 2018, and third, phosphates and potash markets continue to strengthen and we believe they will remain firm. For the quarter, net earnings were $68 million or $0.18 per share after adjusting for notable items, primarily non-cash items related to foreign currency changes Mosaic earns $0.40 per share on sales of 2.2 billion up both sequentially and year over year. We have also raised both the full year adjusted EBITDA and adjusted earnings per share guidance. I'll begin with brief observations on the market, starting with phosphates. If we look back a year or two, 2018 was expected to be a tough year for phosphates with several new production facilities coming on line around the world and demand struggling to absorb the new production.


 
What we're seeing today is a relatively tight phosphate market with strong demand offsetting the gradual ramp up of new supply. It is worth noting that new green field projects take a long time to reach full production capacity. That includes our joint venture with Ma'aden in Saudi Arabia as it gradually works towards it stated capacity of 3 million tons annually. In addition, Mosaic's idling of Plant City and ongoing restructuring of the Chinese industry have further tighten the S & D with phosphate industry stripping margins, now at their highest point in four years. That obviously is great for Mosaic especially considering the 4.5 million tons of phosphate production capacity included in our recent acquisition in Brazil. Mosaic's global network of analyst expects global phosphate demand to reach another new record next year with 70 to 72 million tons of shipments predicted. New supply will continue to gradually come into the market at a pace we expect will be challenged to keep up with growing demand. As a result, we expect the phosphate market momentum to continue into 2019. In potash, the global supply and demand picture remains balanced and the prices are holding up well. Potash demand and producer shipments through the first half of 2018 continued at a strong pace following last year's record setting numbers. Despite the recent drop in agricultural commodity prices, nutrients remain affordable and farmers are replenishing depleted soils after several back to back large crops. As we look ahead, we believe demand growth will be in balance with the new product that is coming to market over the next several years. We are keeping our eye on a couple factors.


 
First, Chinese phosphate exports have fallen year to date in part because of new environmental restrictions on industrial facilities in China, but as market prices and stripping margins rise and the Chinese currency weakens, producers there may respond by resuming higher export levels. Longer term, we continue to expect high costs Chinese producers to balance the market which is a positive for Mosaic as a vertically integrated producer. Second, agricultural commodity prices are in flux while we will continue to closely monitor these developments and assess their potential impact on global P & K shipments. At this point however, demand prospects look strong in our two key geographies. Soybean economics are highly profitable in Brazil due to weaker REI and a record local basis. In North America, farmers are expected to harvest another large crop about a month earlier than normal and that means they will have ample time to replenish the record amounts of P & K taken out of the field this fall. Now, I'll move on and provide some insight into our business segments. First, in the phosphates business unit we generated gross margin of $67 per ton or $70 per ton after notable items more than double the same quarter a year ago. Margins obviously benefited from higher market prices for our product. Just as important though, is the progress we're making towards transforming this business unit. As an example, even with a significantly higher percentage of Miski Mayo rock consumed during the quarter our phosphate rock costs remain below $60 per ton.


 
In addition, we had record quarterly sales of our MicroEssentials premium products. During the quarter, our margins were negatively impacted by costs associated with a once-every-five-year turnaround of our molten sulfur barge as well as higher sulfur cost from using more periled sulfur. These higher sulfur costs are expected to carry into the third quarter. In the potash business unit, our gross margins improved sequentially with higher sales volumes offsetting the cost impact of weather related logistics issues at the beginning of the year. As we discussed on our last earnings call, we experienced containment issues during the first quarter and that impact flowed through the P & L during the second quarter. Production costs during the second quarter remained very well controlled and prices inched higher, which bodes well for our profitability for the remainder of the year. As a reminder, we will undergo several typical maintenance turnarounds during the third quarter, which is embedded in our assumptions and our guidance. We continue to make good progress at K3. We recently commissioned the overland conveyor and it will soon be tied into the K2 mill. All facilities are now in place to enter the production phase later this year. We plan to provide a more in depth update on K3 at our next earnings call. Longer term, we expect to continue to drive unit costs down as we ramp up our Esterhazy K3 mine and eventually eliminate brine management costs at K2. Mosaic Fertilizantes, our business in Brazil and Paraguay is also performing well.


 
The previously published pro formas showed the business was about break even on adjusted EBITDA basis during the second quarter of last year. This year, we generated $55 million of adjusted EBITDA. Some of the improvement came from favorable currency exchange rates and higher phosphate prices, but much of the improvement resulted from the work we are doing to transform the business. Our results in Brazil for the second quarter were negatively impacted by almost $40 million for both plan turn arounds and the nationwide trucker strike in May. As a result of the strike, we idled production and lost shipment volumes which caused us to miss our volume guidance for the quarter. In total, we estimate the strike lowered adjusted earnings by approximately $11 million before tax. We're continuing to monitor the situation closely as the government and the truckers work to find a more lasting resolution. Regardless, we believe our position at the low end of the delivered cost curve gives us a competitive advantage in Brazil. The teams in Brazil are well ahead of schedule to achieve $100 million in net savings this year and 275 million by the end of 2020. They are executing several hundred projects from labor efficiencies, to mine process improvements, and increased chemical plant through put. Year to date, $56 million of gross synergies or $34 million, after cost to achieve, have hit the bottom line. As an example, we are pleased to see that costs at our Tapira mine have already been reduced by almost 30% on a Real basis. While we believe it is likely, we will achieve net synergies in excess of $100 million in 2018 there is still much to be done.


 
One of the key risks we continue to watch is the implementation of the government's published minimum freight rates. The entire Brazil team is energized and employee morale is very high as Clint and I saw firsthand during a recent visit. It is worth reminding you that Brazil remains an extremely attractive agricultural market. Brazil is expected to surpass the United States in total soybean production for the first time this year and the market needs fit well with Mosaic's product mix. Brazil's primary crop of soybeans needs high levels of phosphate and potash. A final point on Brazil, the weak Brazilian Real was a modest net benefit to us during the quarter. The benefit of currency devaluation are delayed as the changes impact the cost of production which are recognized when the product is sold. In addition, a proportion of these costs are hedged. In addition, we are close to fully hedged on the REI based cash and net receivables on our Brazilian balance sheet. Now, a note on Capital, our strong business performance in Brazilian customer prepayments are driving good cash flow. For the quarter, we generated close to $600 million in free cash flow. We're using some of our cash to pay down debt and work towards returning to our through cycle leverage ratio targets. In fact, with an additional $200 million of debt retired already in the third quarter, we have already achieved our target of paying down $500 million by the end of 2018. Our capital priorities have not changed. We seek to maintain a strong balance sheet and sustain our assets and then we assess the best use of remaining capital giving the opportunities we see including investments and shareholder returns.


 
In total, we are pleased with Mosaic's performance for the quarter. We're optimistic that we will deliver strong results for the remainder of 2018. Markets are strengthening and our execution is generating real financial benefits. That's why we now expect to be in the 1.80 to $1.95 billion range for adjusted EBITDA and in the $1.45 to $1.80 per share range for adjusted EPS this year. We have built a resilient business and our many strategic moves position Mosaic to generate attractive returns as this market continues to improve. Now, we will take your questions, operator. Operator: At this time, I would like to remind everyone in order to ask a question press start then the number one on your telephone keypad. Again, that's star then the number one on your telephone keypad, we'll pause for just a moment to compile the Q & A roster. Our first question comes from the line of Vincent Andrews from Morgan Stanley your line is open. Vincent Andrews: Thank you and good morning everyone, Joc, you know you mentioned you know the higher stripping margins potentially helping you know sort of keep some the Chinese capacity in the export market. How do you think about that vis-a'-vis your capability to bring back Plant City which was in theory you know probably temper China's exports? You know obviously, curtailing plant city had you know have a great impact on the market very positive back in the market but how do you counter balance that with you know maybe the Chinese capacity not going away as fast as we thought.


 
Joc O'Rourke: Sure, good morning, Vincent good to hear from you. Well let me start by just giving you a little bit of our thoughts on Plant City and I'm going to hand it to Corrine to just talk a little bit about some of these changes in China. We do believe that with these higher prices the changes will occur a little slower. We'll see higher utilization of some of the better environmental performing plants and the less expensive plants but overall, I think we believe the trend is definitely that China will slowly decrease their exports. In terms of Plant City, the criteria for Plant City review has really not changed from last year. As you say, thinking behind idling Plant City in the first place came from expecting to offset some of the new production that was coming on. Clearly that new productions come on a little slower than we would have expected or might have been predicted but at the same time, we still fully expect that production will come on in the next couple of years. Some of that will be offset by growth in the market but we also believe some of that is offset by our own reduction in capacity. So with that, Corrine is there anything you want to say about the Chinese market. Corrine Ricard: Sure, you know we still are seeing a lot of discussion about the environmental protection mandate that we've seen around the Yangtze river. The situation is still evolving and our local team has been doing a lot of work to try and get updates for us regularly. They are reporting reduced rock production at some of the mines and increased costs related to the gypsum disposal and some producers are having real proximity challenges.


 
They are too close to the river and they're being threatened with either closures or relocation to get a little more distance. So that economic pressure in total on these producers is really starting to add up. We're seeing their cost structure go up and they're having to fully cover their costs and that's part of why you're seeing these higher asking prices on their offers for exports. If you look at DAP map and triple exports, they are down for the first six months of the year modestly about 4% down, but it is starting to take effect. All that said of course, with these strong stripping margin it is really difficult to anticipate the pace of the restructuring but like Joc said in the long run we anticipate you're going to have really a smaller but financially healthier Chinese industry in the long run. Joc O'Rourke: And so let me just reiterate, our criteria for restarting Plant City will be a real perceived longer term need for that product in the market. We don't see that today but that may change in the future. Operator: Our next question comes from the line of Jonas Oxgaard from Bernstein your line is open. Jonas Oxgaard: Morning guys, two part question on Mosaic Fertilizantes if you don't mind. The first is just first impressions, know you've been down there for six months what what's your next steps here. The second is little bit more mass, in your Q1 earnings you talked about one third of the realize synergies in the first half and two thirds in the second half now you're saying 56 million so far. Does that mean we have another 112 million in second half or how should I think about that? Joc O'Rourke: Okay, I'll come back to the math in a second here Jonas by the way good morning thank you. First impressions first of Mosaic for Fertilizantes I


 
think, you know our first impressions have been that the opportunities were at least as good or better than what we had hoped for. We've seen an extremely energized team probably most encouraging perspective from my point of view is how energized the new Mosaic employees are about making the changes and really becoming a part of the Mosaic team. They're very excited about being part of a group that's focused on crop nutrition and delivery of crop nutrition, so that's really encouraging. As you kind of indicate, our synergy capture has been at least as good or better than what we could have hoped for. So now let me come back to the Q1 earnings question in terms of our, sorry the synergy question. First half of the year, yes we have $56 million of gross synergies net of cost to achieve though were more like 34 and we said we would achieve 100 including that of the cost to achieve. So two thirds of the next year we have, or next quarter we have to achieve about 66 million to the bottom line and we're certainly running at a rate that will give us that and then we're encouraged that we might do better than that. We're running at a very good run right and we'll be very well positioned not only for achieving the 100 but for going into 2019 in a very good position to choose the 175. Operator: Thank you, our next question comes from the line of Jeff Zekauskas from JP Morgan your line is open. Jeff Zekauskas: Thanks very much, it's really a two part question. In your China phosphate export data, what you show is DAP up about 10% but MAP down by about a third and TSP is also up.


 
What do you make of the decrease in MAP shipments but the increase in DAP shipments? And secondly, in the third quarter in your Brazilian operations are there more turnaround costs or trucking issues or other cost inflation that you might note that would carry over from the second quarter. Joc O'Rourke: Sure, thanks, Jeff I'm going to hand the China question over to Mike but let me comment a little bit about the - particularly the risks in the third quarter. Certainly, most of the turnarounds were in the second quarter as we head into the main fertilizer season, we need our plants to be running well and be in good shape which is why we take for the turnarounds outside of the quarter. In terms of the trucking issues, the big issue there from our perspective is that the strike that started it really impacted second quarter and it will probably come a little bit in the third quarter because of cost of goods but we've certainly covered that in our guidance. The biggest area of concern is there is - while the trucking tables have been implemented by the government, a lot of people believe it is unconstitutional and anti-competitive so they don't believe that was implemented correctly. So the government has yet to find really, what we call a workable solution there so the main exposure is from product sales which include freight and that we entered into before the strike. Now in these cases, we still have uncertainty and don't have the kind of clarity we need for the implementation of that freight rate table so there is a known exposure there which we have incorporated into our guidance.


 
However, there's also the risk because there is a lack of a clear resolution there's always a risk of further disruption by the truckers. We don't think that's likely but we do believe it is a risk and it's one rest that we can't really plan for because it is obviously an unknown. Hopefully that helps but generally the biggest risks to Brazil right now, we've got a good book of sales on it's just execution and making sure that that trucking works. Thank you and sorry China let me hand that straight to Mike I think he's got a pretty good handle on the S & Ds. Mike Rahm: Sure, good morning Jeff, you know I think the numbers that you see in the first half are really indicative of the changes that we expect to accelerate in China over the next several years. One, the increase in DAP import is driven largely by you know the strong demand in India or rebound in Indian imports this year and that is being supplied by typically large integrated players who, you know have more modern plants that are not located on the river and the like. The big drop in MAP production really reflects you know some of the economics of the nonintegrated players that are mostly along the river or as Corrine mentioned before they're incurring higher costs and more stringent environmental regulations that are difficult to comply with and as a result, we're seeing you know 33% reduction in exports there. So bottom line I think just indicative of things to come. Operator: Your next question comes from the line of Steve Byrne from Bank of America Merrill Lynch your line is open. Steve Byrne: Hi, this is Ian Bennett on for Steve following up on the back of Jeff's question, it seems that not only China is exporting less MAP but also your largest competitor in OCP is exporting less MAP and more DAP. Can you comment on your price realizations across DAP and MPA how those have progressed in the first half of the year and the ability to


 
switch production? As well as if you think those markets will remain in similar pricing levels or they'll be any divergences thank you. Joc O'Rourke: Sure, thanks Ian I'm going to hand this over to Corrine to talk about the price differences between MAP and DAP and some of those progressions. What I will say however is from a production perspective; we have a strong ability to produce the products that the market needs. So we're were driven more by market demand than we are about the ability to produce one or the other. So we're switching those products all the time to better serve the market. Corrine, do you want to talk about the price realizations? Corrine Ricard: Sure, I thanks for the question Ian it's actually a good point with the idling of our Plant City facility which produced quite a bit and DAP. We have seen a little bit of an increase in the DAP price relative to MAP overall in our market. That combined with the other factors that you noticed a little less MAP exports out of China. We are seeing a little bit of an increase in DAP price overall as Joc mentioned. We've got the flexibility to be able to produce the products that our customers want but we do have quite a bit of production on our MicroEssentials products now and that is basically a MAP based pricing product. Mike you want to add something? Mike Rahm: Just in terms of fundamentals as Corrine said, there's a stronger a DAP import demand by the US given the idling of Plant City. Indian DAP demand has been very strong and on the flip side, MAP exports into Brazil are off to a slower start this year. We expect them to pick up so I think we're seeing some changes in that price relationship already with MAP prices recovering some of their premium and I think you know that probably will continue given the strong import demand that we expect in Brazil second half of the year.


 
Operator: Your next question comes from the line of Ben Isaacson from Scotiabank your line is open. Ben Isaacson: Thank you very much, can you talk a little bit about MicroEssentials you had record volume this past quarter? How are those markets doing in Brazil and the US and where does growth come from in the future and maybe you could triangulate that with where you stand with the patents and when those come off patent, what are your expectations from the competition thanks? Joc O'Rourke: Thanks Ben, let me start by just giving you the main markets. We obviously started in the US because that's our key market and we developed a product in the research and what not in the US. Brazil and Central America became the second target area and, you know frankly quite soon we're going to be running up against production limitations again. We have capacity to produce close to 2.5 million tons but that - we're going to start hitting that production limit not too far out. So we're going to have to look at what's next for MicroEssentials, it's been such a successful product around the world but we believe that there will be an opportunity to expand that further. In terms of the patents, I might just hand that over to Mark Isaacson, our General Counsel in a second but let me say one thing. As much as anything, our knowledge and how to produce in the scale of production of MicroEssentials plus the proven 10 years of proven in the field results have made it very difficult for anyone to come and do a "me too" with or without the patent situation. Corrine Ricard: Yep, and thanks so much for noting this was a record production and sales quarter for MicroEssentials and it just shows the success that we're having with the product.


 
Overall, pricing has been maintained at the levels relative to MAP in all of our markets and demand has been strong and growing as Joc says we're going to have to start to think about the further growth from there in production. And in terms of the patent, I'll turn over to Mark Isaacson. Mark Isaacson: Right even though the primary MicroEssentials patent will be expiring in a few years here, we also have improvements have been made to that product that we'll be filing patents for and that we have already. And as Joc mentioned really much of the MicroEssentials technology is in trade secrets and in operating knowledge that allow us to make them into quantities and the quality that we can. Operator: Your next question comes from the line of Don Carson from Susquehanna your line is open. Don Carson: Yes, thank you question for Michael you know on slide 17 and18 you outline your demand expectations for P & K. What do you see on the supply side? How do you see operating reach globally unfolding as we go through '18 into '19 and then some of this new capacity starts up and then just as a follow up on Brazil, what's the overall impact of rising freight rates? Does that affect you more as a domestic producer or does it create a higher price umbrella because it'll lead to higher freight costs on a relative basis for imports of phosphate into Brazil? Joc O'Rourke: Mike, you go ahead and give the first part to that please Mike Rahm: Okay, yeah Don thanks for the question good morning you know if you look at those charts, there's certainly a very good demand story unfolding.


 
You know I should note that we have revised up our shipment estimates for the past couple of years based on you know a new trade information from various sources including the international fertilizer association. And when you look at our projections for 2019, you know they are - they do reflect a bit more modest growth from a much higher base and I would emphasize that those are our initial forecasts. We'll see how demand plays out in particular how agricultural commodity prices move. You know, we've seen a big drop off in June but they are rebounding very nicely given a much smaller global crop than what was anticipated especially for wheat. When you lay that up against increases in capacity in the case of phosphates, you know we basically see a deficit in 2018. First half, we think that deficit was close to half of million tons you know for the year it could be in that 700 to million ton range and what we've said in the past several earnings calls is that, you know we're not saying the world is going to run out of phosphate. All we're saying is that prices and margins need to probably increase as they have to levels that maybe trim a little bit of demand and also stimulate a little bit more supply from various sources. And for 2019, when we look at those changes given what we think will be a significant reduction and exports from China next year. You know we think that a deficit situation likely will continue well into 2019 even with the continued ramp up of the additional capacity and the same really holds true for potash as well. You know, there are some puts and takes obviously on the supply side with some facilities winding down production and others you know ramping up but the bottom line is we see a balanced to tight situation in the global potash market through at least the end of next year.


 
And the answer to your second question Don, you know clearly one of the advantages of our Mosaic Fertilizantes business is that the proximity to the key agricultural markets. Freight is a much lower component of our cost structure in Brazil than it would be for an imported product as such we expected in general we have a freight advantage and proportionally our freight advantage would increase with the cost of freight. Operator: Your next question comes from the line of Adam Samuelson from Goldman Sachs your line is open. Adam Samuelson: Hi, yes good morning everyone a question on phosphates in North America between the closure of, or idling of Plant City and Nutrien closing the Red Water plant by the end of the year. The north American market import requirements are going up by a pretty meaningful amount. I just - interested to hear your thoughts on the market structure and pricing structure where the US continues to trade at a pretty healthy discount to the export prices or import equivalent in Brazil which is not the best network - net back market from Moroccan or Russian product. And how you think the market structure evolves over the next 18 months if that discount persists. I mean - and how you think about your own sales mix in that context. Joc O'Rourke: Thank you Adam, yeah let me start by saying clearly the import requirements into the US are increasing by both Red Water and Plant City there's no question of that. I suspect some of the Red Water plant may be made up by other production within the Nutrien group. I'm not sure of that but it's certainly indicates that there will be a need for more imports and those imports have not been coming into the US


 
market at the rate they might need to because of the discount that we're seeing at the New Orleans price. Over time, they will have to equalize those price to drive the redistribution of fertilizers from the Brazil markets. So in other words the US will have to pay up or the fertilizer will go to the Brazil and other markets rather than the US. So I mean free market system mean these have to work out over time and we think that's positive for the US market. Anything to add Corrine? Corrine Ricard: No, I think the only thing I would add is you know you asked about Mosaic's owned export sales and we do have a pretty heavy export wind up coming up. These markets in Brazil and other areas have been pulling product pretty hard. We are starting to see a few more vessels into the wind up into the US market. I think it indicates people are starting to become aware of the need for this market to move up and draw some more tons into the country. Mike, do you want to add? Mike Rahm: The only thing I would add is that June statistics came out and we have a complete picture for the 2017, '18 fertilize year that ended on June 30th and indeed we did see record phosphate imports into the US of about 2.5 million tons. The only thing I would add on North America is that there are some really interesting things I think going on in the market. When you look at implied shipments in North America, they are trending upward and I think that reflects the fact that these massive crops have taken lots of nutrients out of the soil and this is a market that has grown significantly in the past five years.


 
Operator: Your next question comes from the line is Andrew Wong from RBC Capital Markets your line is open. Andrew Wong: Hey, good morning just going back to Brazil not to belabor it but as I understand there are some uncertainty with the trucker tables. And as of now it's a little bit difficult to tell but can you just tell us what the freight costs are per ton and how that's changed and how much of the cost can be passed down the chain? Joc O'Rourke: Sorry Andrew microphone yeah I can answer part of that. Obviously, the actual table is extremely complicated and I don't think we can give you that level of clarity but what I can tell you is yes once we get new contracts, those will be incorporating the new freight rates into them but the main exposure right now was sales we did before the strike. So in other words, we have contracted freight at one rate but the new table is at a different rate. So the question is do the truckers honor the old rate which they entered a contract with us or do they try to achieve the new rate and what that number is, is about $6 per ton of risk on those sales we've already entered into. So we may or may not see those and as we go through first our third quarter more and more of those old contracts are used up and sold so the exposure gets less and less over time. Operator: Your next question comes from the line of Joel Jackson from BMO Capital Markets your line is open. Joel Jackson: Hi, good morning Joc maybe a two parter on potash your MOP cash cost have been pretty stable the last year. Would you expect that over the next year or so of course, Q3 is a little bit higher because of turnaround? Then second part you didn't raise your potash volume guidance your Canpotex partner, Nutrien did buy a few hundred thousand tons. Any


 
thinking about that why you didn't raise your volume but your Canpotex partner did thanks? Joc O'Rourke: Sure, Joel thanks I will answer each of those questions quite a bit separately. MOP cash costs were clearly impacted to some extent by both turnarounds in the second quarter but also by the problems we had with transport in the first quarter carrying over into the second quarter. So I think that's the high end of where we would expect our costs to be over the next little while but clearly, those costs being there or a little bit lower is where we expect the costs going. In terms of potash volume guidance, we have a different revrec standards. So it could be just that what's being recognized as revenue is a little bit different and that leads to the that difference. Other than that, I'm not really sure I know what Nutrien's rationale is or what the thinking behind that is. We've simply looked at our markets and added them up and said this is where we expect to see revenue recognition. Mike, do you want to?- Mike: I guess the only thing I would add Joel is that we really haven't revised our 2018 shipment number that much. We took it up I think a couple hundred thousand tons so we haven't changed our view of the market maybe as much as some of the competitors have. Operator: Your next question comes from the line of PJ Juvekar from Citi your line is open. PJ Juvekar: Hey, good morning everyone it's Dan Jester on for PJ. Maybe just a question for Mike on phosphates in India mesic production is down pretty substantially so far this year. So just wondering if you can comment on some of the drivers of that and as we look forward you think India is going to be met with more


 
import needs or is there a scenario where that domestic production can come back thanks. Joc O'Rourke: Thanks Dan and good morning yeah I think it's, you know pretty well understood that production economics in India we would like to call them fabrication economics were unfavorable given the high relative cost of phosphoric acid. So I think you know production you know first half of the year was down by significantly. I think to the tune of 500 thousand tons or so I don't have that number in front of me. One of the things they have done is they have lowered the GST on imported phosphoric acid so that we think you know going forward you may see a little bit of a ramp up of production there. Bottom line is you know we expect about 5.5 million tons of imports and we do think that production probably recovers a little bit over the next several months and we probably end the calendar year with production in that maybe 4.2 - 4.3 million ton range. And I think you know longer term India is always going to look for a diversified source of phosphates so we don't you know we don't see domestic fabrication growing dramatically over time and as demand increases, we do think most of the increase in demand likely will be met by greater imports. Operator: Your next question comes from the line of John Roberts from UBS your line is open. John Roberts: Thank you, Nutrien is talking about possibly consolidating the non-soy bean retail market in Brazil. I think if Mosaic is more distribution than retail in Brazil but I'm not always sure where distribution ends and retail begins.


 
Do you have any parts of your network that might be non-core or on the other side does your balance sheet even allow you to participate in any further consolidation if you wanted to? Joc O'Rourke: Hello John, thanks for that, the structure of the Brazil business or the Brazil market is quite a bit different than what I would call the north American retail. So as you say, it's kind of hard to determine what is retail and what is distribution. We sell to a lot of very large farmers but we also sell into some smaller retails it's a very fragmented type of industry there and again, I can't comment on what our competitors are doing or thinking. What I would say though is you know we believe we've built a very good competitive business in Brazil. We believe the synergies between our distribution business and our production business gives us a real competitive advantage and a real first mover advantage into those core markets. And the other models for that, we'll just wait and see and see how they work and we'll obviously respond to what that means to the competitive landscape, thanks. Operator: Your next question comes from the line of Michael Piken from Cleveland Research your line is open. Michael Piken: Yeah, hi I'm just wondering if you guys could give us a little bit more - I know you said you going to talk more about K3 on your next call but you know just talk about kind of where you see yourself on a cash cost per ton for potash. And then follow up would be just any updates on when we might see India or China settle a potash contract. Joc O'Rourke: Thanks Michael, yeah on K3 let me give you an update on where we're at and we will talk more about this in future calls. And the reason we


 
didn't talk about it today is more that if anything we are in the process of shutting down and doing a turnaround at K2. And one of the big projects during that turnaround will be to tie in the conveyor from K3 to K2 which means that we can start ramping up K3 from a production perspective somewhere in this third quarter. So we're very encouraged with where that is going. K3 we fully expect will be one and particularly once we eliminate the brine inflow costs at K2, K3 will be one of the lowest cost, cash cost projects in the world certainly one the most efficient potash mines in the world. So that's our expectation there, we'll talk more about expectations of cash costs in the future. In terms of the India China contract, look two things on that they both will need fertilizer they both will need potash at some point. Today, those contracts are in process, I don't like to talk about any contracts that Canpotex is in the middle of. I don't think that's a good thing to do in a in a public forum but I will tell you that the rest of the world is demanding potash, our volume movements are very good, and I think the impact of these contracts long term is becoming less and less of a bellwether. I'd also say at least in our quarter three, our guidance includes very little volume particularly from China so it's it doesn't have a big impact on where we're going in the next three months or so, thank you. Operator: Our last question comes from the line of Chris Parkinson from Credit Suisse your line is open. Chris Parkinson: Thank you, say the Moroccans do a pretty good job developing in African market in terms of NPS and some other inputs.


 
On this front, can you just talk about MicroEssentials current spread verses DAP MAP and then also give us a sense of any of your other longer term agronomic development efforts specifically on the P front and anything in LATAM and India in particular thank you. Joc O'Rourke: Okay, thanks Chris yeah would concur that - I mean from the outside looking in OCP has done a very good job of developing the African market and you know I think that's great for society overall. So we're pleased to see both the development of the market and the contribution to Africa in general. So we're glad to see that you know obviously our our MicroEssentials products go to somewhat different markets. In terms of the spread over DAP and MAP, there's really two pieces to that and I'm going to let Corrine talk about this a bit but we maintain a price relative to MAP and that has a constant premium in some cases that has not changed. But then, when we also make part of our increased margin is because the inputs into MicroEssentials are different than the inputs into DAP and MA. So the cost structure is more favorable for our MicroEssentials product is basically the thing. So you can't just look at price but you will see over time a price premium for the MicroEssentials products particularly in markets like Brazil. Corrine do you want to follow that on? Corrine Ricard: Sure, you know when we talk about MicroEssentials, there are a number of different products within that group of products, and so we've got different pricing for each one of those relative to the micronutrients, the sulfur content, etcetera.


 
As Joc mentioned, the pricing premium is relative to MAP or DAP has been maintained and even with our growth that we've seen in the markets, we have been able to maintain those pricing premiums. I think you also asked about other new products Mosaic does spend a fair amount of time working on other new products. We have launched some new micronutrient enhanced potash products and we are working on further developments in our phosphate line of products stay tuned for more information about those as we develop them, get them in the market. Operator: And we have time to take a last question from the line of Mark Connelly form Stephens Incorporated your line is open. Mark Connelly: Thanks just two things Joc you proposed shifting from FOB to CFR in Brazil and I'm just curious what the response to that has been and second these brine costs look like they're in really good shape is that where you expected to be in the second half. Joc O'Rourke: Yeah thanks Mark yeah look our preference with this level of uncertainty will be to enter into more CFR contracts in Brazil or sorry FOB contracts in Brazil to let’s say move the freight risk from our system. That's not always possible but that is a focus we would have and we have to find a way of mitigating that risk or we have to price it into our offerings. So I mean easy to do sometimes more challenging to implement because you do have MOUs and long term customers where you've got a certain way of selling. So we'll either have to incorporate it into our pricing or move that risk over to our customers it's time. Now in terms of brine costs, yes we've


 
been doing a - the potash team's been doing a great job on brine management and brine cost. If you remember, we put a fair bit of money into some technological improvements. I guess about three or four years ago and that along with just good cost management has really helped us control that brine costs for a number of years now so we're feeling pretty good about it. Obviously, the long term solution is to eliminate it all together but it is well controlled and we do not expect any real variation obviously mother nature plays a role but we do not expect any real variation in the second half the year. Oh, and sorry and just with that, I'd just like to wrap up by saying, you know again our company is well position here and I want to just reiterate our key for performance issues. Our business is performing well, we're generating substantial cash as a result of both better market conditions and our business transformations. Second, we're making extremely good progress on our Mosaic Fertilizantes business in Latin America and we continue to feel good about the acquisition. And third, we're optimistic that our momentum will continue and accelerate as we move into the end of this year. To sum it up, Mosaic continues to be well positioned to deliver attractive returns as these business conditions continue to improve. Thank you for your attention, have a great and safe day. Operator: This concludes today's conference call you may now disconnect.


 
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Section 3: EX-99.2 (EXHIBIT 99.2 - 2018 Q2 EARNINGS CALL PRESENTATION)

exhibit9922018q2earnings
The Mosaic Company Earnings Conference Call – Second Quarter 2018 Joc O’Rourke, President and Chief Executive Officer Presenters: Laura Gagnon, Vice President Investor Relations Date: August 7, 2018


 
Forward Looking Statements This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the anticipated benefits and synergies of our acquisition of the global phosphate and potash operations of Vale S.A. previously conducted through Vale Fertilizantes S.A. (which, when combined with our legacy distribution business in Brazil, is now known as Mosaic Fertilizantes) (the “Transaction”), other proposed or pending future transactions or strategic plans and other statements about future financial and operating results. Such statements are based upon the current beliefs and expectations of The Mosaic Company’s management and are subject to significant risks and uncertainties. These risks and uncertainties include, but are not limited to: difficulties with realization of the benefits and synergies of the Transaction, including the risks that the acquired business may not be integrated successfully or that the anticipated synergies or cost or capital expenditure savings from the Transaction may not be fully realized or may take longer to realize than expected, including because of political and economic instability in Brazil or changes in government policy in Brazil such as higher costs associated with the new freight tables; the predictability and volatility of, and customer expectations about, agriculture, fertilizer, raw material, energy and transportation markets that are subject to competitive and other pressures and economic and credit market conditions; the level of inventories in the distribution channels for crop nutrients; the effect of future product innovations or development of new technologies on demand for our products; changes in foreign currency and exchange rates; international trade risks and other risks associated with Mosaic’s international operations and those of joint ventures in which Mosaic participates, including the performance of the Wa’ad Al Shamal Phosphate Company (also known as MWSPC), the ability of MWSPC to obtain additional planned funding in acceptable amounts and upon acceptable terms, the timely development and commencement of operations of production facilities in the Kingdom of Saudi Arabia, and the future success of current plansforMWSPC and any future changes in those plans; the risk that protests against natural resource companies in Peru extend to or impact the Miski Mayo mine, which is operated by an entity in which we are the majority owner; difficulties with realization of the benefits of our long term natural gas based pricing ammonia supply agreement with CF Industries, Inc., including the risk that the cost savings initially anticipated from the agreement may not be fully realized over its term or that the price of natural gas or ammonia during the term are at levels at which the pricing is disadvantageous to Mosaic; customer defaults; the effects of Mosaic’s decisions to exit business operations or locations; changes in government policy; changes in environmental and other governmental regulation, including expansion of the types and extent of water resources regulated under federal law, carbon taxes or other greenhouse gas regulation, implementation of numeric water quality standards for the discharge of nutrients into Florida waterways or efforts to reduce the flow of excess nutrients into the Mississippi River basin, the Gulf of Mexico or elsewhere; further developments in judicial or administrative proceedings, or complaints that Mosaic’s operations are adversely impacting nearby farms, business operations or properties; difficulties or delays in receiving, increased costs of or challenges to necessary governmental permits or approvals or increased financial assurance requirements; resolution of global tax audit activity; the effectiveness of Mosaic’s processes for managing its strategic priorities; adverse weather conditions affecting operations in Central Florida, the Mississippi River basin, the Gulf Coast of the United States, Canada or Brazil, and including potential hurricanes, excess heat, cold, snow, rainfall or drought; actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental regulation, Canadian resources taxes and royalties, or the costs of the MWSPC, its existing or future funding and Mosaic’s commitments in support of such funding; reduction of Mosaic’s available cash and liquidity, and increased leverage, due to its use of cash and/or available debt capacity to fund financial assurance requirements and strategic investments; brine inflows at Mosaic’s Esterhazy, Saskatchewan, potash mine or other potash shaft mines; other accidents and disruptions involving Mosaic’s operations, including potential mine fires, floods, explosions, seismic events, sinkholes or releases of hazardous or volatile chemicals; and risks associated with cyber security, including reputational loss; as well as other risks and uncertainties reported from time to time in The Mosaic Company’s reports filed with the Securities and Exchange Commission. Actual results may differ from those set forth in the forward-looking statements. 2


 
Non-GAAP Financial Measures This presentation includes certain non-GAAP financial measures, including EBITDA, adjusted EBITDA, adjusted gross margins, adjusted earnings per share. For important information regarding the non-GAAP measures we present, see “Non-GAAP Financial Measures” in our August 6, 2018 earnings release and the performance data for the second quarter of 2018 that is available on our website at www.mosaicco.com in the “Financial Information – Quarterly Earnings” section under the “Investors” tab. The earnings release and performance data are also furnished as exhibits to our Current Report on Form 8-K dated August 6, 2018. We are not providing forward looking guidance for U.S. GAAP reported diluted net earnings per share or a quantitative reconciliation of forward-looking non-GAAP EPS, adjusted Gross Margins and adjusted EBITDA. Please see “Non-GAAP Financial Measures” in our August 6, 2018 earnings release for additional information. 3


 
Executive Summary Raising full year guidance: adjusted EBITDA(1) to $1.80 - 1.95 billion; adjusted EPS(1) to $1.45 - $1.80 ▪ Second quarter adjusted EBITDA(1) of $461 million and first half 2018 of $833 million Strong Cash ▪ Second quarter adjusted EPS(1) of $0.40 and first half 2018 of $0.60 Flow and Earnings ▪ Year to date cash flow from operations above $700 million • Paid down ~$500 million in debt as of 8/1/2018, well ahead of communicated $700 million pay-down target by end of 2020 ▪ Solid execution across three business units: Constructive • Cash costs of mined Florida rock down at $36 per tonne Outlook and • MOP cash costs of production flat at $85 per tonne Solid Execution ▪ Expect market momentum to continue through 2018 ▪ Remarkable progress on Mosaic Fertilizantes transformation: Transformation • Actions taken in H1’2018 alone expected to deliver well over $100 million in run-rate EBITDA contribution progress • $56 million of year-to-date realized gross synergies, $34 million net of costs to achieve (1) See Non-GAAP Financial Measures for additional information 4


 
Improving Market Conditions: Phosphates Benchmark DAP Stripping Margin MMT Product Global Phosphate Shipments $ Tonne Calculated from Published Weekly Spot Prices DAP/MAP/NPS/TSP 70-72 350 73 Source: CRU and Mosaic 70.0 70 325 68 300 65 275 63 250 60 225 58 Source: Argus 200 55 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 10 11 12 13 14 15 16 17 18E 19F 5


 
Improving Market Conditions: Potash Potash Prices $ Tonne KCl Global Potash Shipments Million Tonnes KCl 475 70 67-69 450 Source: IFA, CRU and Mosaic 66.9 425 68 400 65 375 63 350 60 325 300 58 275 55 250 53 225 Source: Argus 200 50 175 48 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 10 11 12 13 14 15 16 17 18E 19F fob NOLA fob U.S. Corn Belt c&f Brazil c&f SE Asia 6


 
Q2 2018 Results Overview Finished Product Commentary and Highlights: • Phosphates: • Phosphates: Volume − 2.3 million tonnes − Blended rock costs below $60 per tonne Finished • Potash: − Florida cash costs of mined rock at $36 per tonne Product − 2.4 million tonnes − Adjusted gross margin negatively impacted by higher sulfur Sales • Mosaic Fertilizantes: costs and includes a negative impact from the sulfur barge Volume − 1.8 million tonnes, ~300k tonne turnaround negative impact from truckers’ • Potash: strike − As expected, margins negatively impacted by carry-over from weather related containment issues in Q1 − MOP cash costs of production at $85 tonne • Phosphates: − K3 ramp up on schedule and on budget − GAAP: $67 per tonne • Mosaic Fertilizantes: − Adjusted: $70 per tonne(1) − Significant improvement in profitability relative to pro-forma Gross Margin • Potash: Q2’17 GAAP and − GAAP: $56 per tonne − Tapira mined rock costs down ~30%, excluding BRL benefits Adjusted − Adjusted: $58 per tonne(1) − Gross margin includes an estimated $11 million negative impact of trucker strike in Brazil • Mosaic Fertilizantes: − GAAP: $29 per tonne (1)See Non-GAAP Financial Measures for additional information. Phosphate and Potash adjustments include $6 7 million and $4 million negative impacts respectively from the refinement of our weighted average inventory costing


 
Mosaic Fertilizantes Transformation on Track Mosaic Fertilizantes Transformation Actions taken in H1’18 Categories P&L Impact (US$ M) $300 expected to generate solidy over $100M of run-rate value Operations $19M $250 Commercial $14M $200 Procurement $6M $150 Supply Chain $10M $100 Organization $7M $50 Cost to Achieve $22M 2018 First Half $- P&L Impact $34M 2018E 2019E 2020E


 
Mosaic Fertilizantes: Well Positioned Brazil Plant Nutrient Use 2015-17 Average Nitrogen Million Tonnes Soybean Production 28% Potash 130 39% 120 110 100 90 P&K 80 accounts for Phosphate 70 Source: ANDA 33% ~2/3rds of all 60 Brazil 50 U.S. Plant Nutrient Use 40 2014/15-16/17 Average Nutrient Use 30 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18E Potash Crop Year Beginning in 23% Source: USDA USA Brazil Brazil expected to overtake US in soybean Nitrogen production in 2018/19 crop year 57% Phosphate 20% 9 Source: TFI/AAFPCO


 
Mosaic: Deleveraging Progress Short And Long Term Debt (in millions) $5,300 $5,200 $5,100 $5,000 $4,900 $4,800 $4,700 $4,600 $4,500 $4,400 $4,300 2017 Q1'18 Q2'18 End 2020 Target Achieved ~$500 million debt pay down targeted for 2018 by August 1 *See Additional Detail in the Appendix 10


 
Capital Allocation Philosophy 11


 
Appendix 12


 
Mosaic: Deleveraging Progress Dollars in Millions Dec 2017 Mar 2018 Jun 2018 Short‐term debt $                       6  $                    72  $                    20  Long‐term debt (including current portion) 5,222  5,074  4,798 * Net cash & cash equivalents 2,154  659  835 * Net debt 3,074  4,487  3,983  Net debt to adjusted EBITDA(1) 2.5  2.6  2.2  Calculation to align with stated targets: Short‐term debt $                       6  $                    72  $                    20  Long‐term debt (including current portion) 5,222  5,074  4,798 * Operating Leases 342  627  627 ** Ma'aden JV Guarantee 140  140  140  Net stated targeted cash & cash equivalents 500  500  500 *** Net debt $              5,210  $              5,413  $              5,085  Actual Adjusted EBITDA(1) $              1,207  Midpoint of Adjusted EBITDA Guidance(1) $              1,700  $              1,800  Net debt to adjusted EBITDA aligned to stated targets(1) 4.3 3.2 2.8 * Adjusted for July and August 2018 prepayment of $111 million against our outstanding term loan and payment of $89 million in maturing bonds. ** Operating leases are treated as debt. This is calculated as annual rent expense multiplied by 3x. *** Net debt only considers our targeted cash liquidity buffer of $500 million (1)See Non-GAAP Financial Measures for additional information 13


 
Full Year 2018 Guidance Consolidated Full-Year Guidance 2018 Adjusted EBITDA(1) $1.80 to $1.95 billion Adjusted Earnings Per Share(1) $1.45 to $1.80* Total SG&A $325 to $350 million Capital Expenditures $900 million to $1.1 billion *Reflects an increase of 34 million shares (to 386 million shares) as a result of the completion of the Vale Fertilizantes acquisition. (1)See Non-GAAP Financial Measures for additional information 14


 
Full Year 2018 Assumptions Consolidated Full-Year Assumptions 2018 Effective Tax Rate Mid 20% range Phosphates Sales Volume (mm tonnes*) 8.3 – 8.9 Potash Sales Volume (mm tonnes**) 8.3 – 8.9 Mosaic Fertilizantes Sales Volume (mm tonnes*) 8.7 – 9.5 * Tonnes = finished product tonnes ** Full year sales volume reflects ~400,000 tonne reduction from Canpotex’ change in revenue recognition. 15


 
Third Quarter 2018 Expectations Third Quarter Expectations 2018 Phosphates Sales Volume (mm tonnes) 2.1 – 2.4 Phosphates Adjusted Gross Margin(1) / Tonne $75 - $85 Potash Sales Volume (mm tonnes) 2.2 - 2.5 Potash Adjusted Gross Margin(1) / Tonne $55 - $65 Mosaic Fertilizantes Sales Volume (mm tonnes) 3.2 – 3.6 Mosaic Fertilizantes Adjusted Gross Margin(1) / Tonne $35 - $45 Corporate and Other Adjusted Gross Margin(1) $0 - $15 million (1)See Non-GAAP Financial Measures for additional information 16


 
Global Phosphate Shipment Forecasts by Region (August 2018) Source: IFA, CRU and Mosaic DAP / MAP / NPS* / Low High (Numbers may not sum to total due to rounding) TSP (Million Tonnes) 2016 2017R 2018F 2019F 2019F Comments We have downgraded our forecast for 2018 by nearly 1.0 mmt, given our most recent data on use during the spring season. It is from this lower base that we look for stabilization of domestic phosphate demand after several years of China 18.5 17.7 16.9 16.7 17.0 decline (from a peak of 21.8 mmt in 2014, a decline of 22% over the past 4 years). As expected, low inventories as the start of the year prompted a big import program (Jan-Jun imports of 2.5 mmt are nearly double the pace seen last year). With domestic production for H1 down by ~750,000 tonnes y-o-y, we expect imports to remain strong through 2018, coming in at around 5.5 mmt (versus 4.1mmt in 2017), though inventories are India 9.3 9.5 9.8 9.8 10.1 expected to end the year at low levels. Demand across this region remains robust driven by favorable policy changes, generally profitable farm economics, and mostly normal weather. We expect recent trends to continue in 2019, although early indications of a developing El Niño Other Asia/Oceania 8.3 9.3 9.7 9.9 10.2 is a yellow flag. Our 2018 estimate is at the top end of our expectations on strong shipments in H1, though the drought conditions Europe and FSU 5.8 6.2 6.0 6.1 6.3 across much of the region coupled with potential destocking of the distribution pipeline could threaten H2 volumes. Farm economics continue to look very attractive on the strength of Brazilian soybean export prices and a weakened currency, though FX volatility and uncertainty surrounding truck freight tariffs have kept 2018 shipment growth in check. We expect that inventories will end the year well below average on the slow pace of imports (down 10% y-o-y through Brazil 7.8 8.2 8.5 8.7 9.0 June) and strong on-farm demand, leading to an acceleration of shipment growth in 2019. We have revised higher our 2017 shipment estimate on updated trade statistics, but have left our 2018 estimate little- Other Latin America 3.8 3.6 3.7 3.7 3.9 changed with continued profitable farm economics. On-farm demand held firm in spring 2018 despite spring arriving late in some parts, and we expect that shipments will also be robust in the fall, as the early maturation of this year’s crops should lead to a long, open season. This has the North America 9.4 9.9 10.1 9.8 10.1 potential to pull forward some volumes from spring 2019. Our forecasts for Africa have been revised upwards for 2017, which carries through to a higher estimate for 2018, as Other 4.7 4.9 5.2 5.3 5.4 growth in African demand continues to surprise to the upside. At 70.0 mmt, our point estimate for 2018 remains right in the middle of our previous guidance of 69-71 mmt. Excluding China, this represents an increase of 1.6 mmt or 3.1% from an upwardly-revised estimate for 2017. Our first call on 2019 shipments is 70-72 mmt, with a current point estimate in the middle of the range. Excluding China, this adds Total 67.7 69.2 70.0 70.0 72.0 another nearly 2% or 1.0 mmt to the lofty 2018 tally. * NPS products included in this analysis are those with a combined N and P O nutrient content of 45 units or greater. 2 5 17


 
Global Potash Shipment Forecasts by Region (August 2018) Source: IFA, CRU and Mosaic Muriate of Potash Low High (Numbers may not sum to total due to rounding) Million Tonnes (KCl) 2016 2017R 2018F 2019F 2019F Comments Shipments are projected to rebound to 15.4 mmt in 2018 (~7.5 mmt production plus ~7.9 mmt of net imports). Demand is expected to increase modestly in 2019 as a result of lower-but-still-high domestic crop prices, moderate potash prices and China 14.0 14.7 15.4 15.5 15.7 the push to boost domestic crop/soybean production. Shipments are forecast to remain steady in the 4.6 mmt range. High minimum support prices for key crops and another normal monsoon underpin steady on-farm use, but the increase in the MRP to offset a lower subsidy, weaker rupee, and India 3.9 4.6 4.6 4.4 4.6 higher potash prices is expected to limit demand gains. 2017 shipments were revised up based on IFA statistics released in May. Shipments are expected to hold near this level through 2019. Expectations of a normal monsoon and steady rice prices support demand, but lower palm oil prices as Indonesia+Malaysia 4.7 5.4 5.3 5.3 5.5 well as some hints of an El Nino are a yellow flag. Demand continues to grow rapidly in this region. Across-the-board gains have occurred, but increases in Bangladesh, Thailand, and Vietnam are noteworthy. Demand is buoyed by the combination of generally good weather, favorable Other Asia 4.8 5.0 5.4 5.5 5.7 policies, OK crop prices and continued moderate K prices. European shipments are projected to stay stable at around 4.8 mmt, but the severe drought this summer in some W. Europe 5.0 4.8 4.8 4.7 4.9 countries could threaten 2019 demand. Shipments increased again in 2018 following big harvests in most parts of the region last year. Mostly favorable weather and weaker currencies have propelled crop production. That coupled with moderate K prices has underpinned demand. E. Europe+FSU 4.6 5.1 5.3 5.4 5.6 The severe drought this summer could constrain growth in 2019. Shipments are expected to blast through the 10.0 mmt mark this year and then notch a tick higher in 2019 due to continued good weather and positive agronomic and economic demand drivers. Soybean economics remain profitable Brazil 9.3 9.7 10.3 10.5 10.7 despite lower CME prices due to a weaker real and a record local basis. Shipments in the rest of Latin America look to remain stable due to generally favorable farm economics and a mostly OK Other L. America 2.8 2.9 2.8 2.8 3.0 weather outlook at this point. The 2017 surge resulted from a strong fall application season and early positioning of 2018 needs ahead of announced price increases. Shipments so far this year have remained strong, reflecting expectations of solid on-farm use. N. America 9.4 10.5 9.9 9.7 9.9 Shipments are projected to settle in the 9.7-9.9 mmt range. Africa accounts for much of the recent and projected gains in the rest of the world, but other regions such as Oceania Other 2.4 3.0 3.1 3.2 3.4 have registered notable increases. After the big jump last year, shipments are forecast to increase moderately this year. 2017 shipments were revised up from 65.0 to 65.6 mmt, so the increase last year now stands at a whopping 7.7% or 4.7 mmt. Shipments this year are projected to add 1.3 mmt to this record tally, a gain of another 2.1%. Our initial forecasts Total 60.9 65.6 66.9 67.0 69.0 by region for 2019 sum to 67-69 mmt. 18


 
China Phosphate Exports Source: IFA, CRU and Mosaic (Numbers may not sum to total due to rounding) Million Tonnes China Phosphate Exports China Phosphate Exports 12 1000 Tonnes Jan-Jun Source: China Customsc 3,000 10 2,500 8 2,000 6 1,500 4 1,000 2 500 0 0 10 11 12 13 14 15 16 17 2015 2016 2017 2018 DAP MAP TSP DAP MAP TSP China Phosphate Exports January-June 2018 vs. 2017 1000 Tonnes 2015 2016 2017 2018 Change Pct Chg DAP 2,823 2,088 2,266 2,485 219 9.7% MAP 1,392 825 1,357 908 -449 -33.1% TSP 461 300 413 467 55 13.3% Total 4,677 3,213 4,035 3,861 -175 -4.3% Source: China Customs and Mosaic 19


 
Vale Fertilizantes Earn Out Example 2018 EARNOUT CALCULATION PER SHAREHOLDERS PURCHASE AGREEMENT US:BRL FX Rate MAP CFR Brazil Price 2018 Average FX Rate*                          3.49 2018 Average MAP Price*                           428 Target Average FX Rate                          4.05 Target Average MAP Price                           410 Difference                        (0.56) Difference 18 Denominator                          0.05 Denominator                             10 Multiple                      (11.25) Multiple                          1.80 Earnout Pool ($MM)                             10 Earnout Pool ($MM) 25 FX Rate Earnout ($MM)                         (112) MAP Price Earnout ($MM) 45 Total Earnout ($MM) ($67) *YTD through July 2018 • Average FX rate is calculated using the weekly PTAX dollar buy and sell rate as published by the Central Bank of Brazil. • 2018 Target Average FX rate is 4.05 • 2019 Target Average FX rate is 4.15 • Average MAP price is calculated using the weekly MAP C&F Brazil price as published by CRU. • 2018 Target Average MAP price is $410 • 2019 Target Average MAP price is $420 20


 
Sensitivity Table: Estimated Full Year Impacts ($ in millions) Impacts to PL: Adjusted EBITDA ∆(1) Adjusted EPS ∆(1) Average MOP Price --> $10/mt $85 $0.14 Average DAP Stripping Margin --> $10/mt $85 $0.17 Potash Sales Volume --> 100k mt $11 $0.02 Phosphates Sales Volume --> 100k mt $10 $0.02 Canadian Dollar Change -->$0.01 $14 $0.03 Brazilian Real Change --> $0.10 $23 $0.05 (1)See Non-GAAP Financial Measures for additional information 21


 
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Section 4: EX-99.3 (EXHIBIT 99.3 - 2018 Q3 INVESTORS PRESENTATION)

exhibit993investorinform
Laura Gagnon Vice President Investor Relations Tel 763-577-8213 Cell 612-201-7550 laura.gagnon@mosaicco.com Anton Pshon Director Investor Relations Tel 763-577-2876 Investor Cell 612-834-0988 Information anton.pshon@mosaicco.com Third Quarter 2018 1


 
Safe Harbor Statement This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about the anticipated benefits and synergies of our acquisition of the global phosphate and potash operations of Vale S.A. previously conducted through Vale Fertilizantes S.A. (which, when combined with our legacy distribution business in Brazil, is now known as Mosaic Fertilizantes) (the “Transaction”), other proposed or pending future transactions or strategic plans and other statements about future financial and operating results. Such statements are based upon the current beliefs and expectations of The Mosaic Company’s management and are subject to significant risks and uncertainties. These risks and uncertainties include, but are not limited to: difficulties with realization of the benefits and synergies of the Transaction, including the risks that the acquired business may not be integrated successfully or that the anticipated synergies or cost or capital expenditure savings from the Transaction may not be fully realized or may take longer to realize than expected, including because of political and economic instability in Brazil or changes in government policy in Brazil such as higher costs associatedwiththenew freight tables; the predictability and volatility of, and customer expectations about, agriculture, fertilizer, raw material, energy and transportation markets that are subject to competitive and other pressures and economic and credit market conditions; the level of inventories in the distribution channels for crop nutrients; the effect of future product innovations or development of new technologies on demand for our products; changes in foreign currency and exchange rates; international trade risks and other risks associated with Mosaic’s international operations and those of joint ventures in which Mosaic participates, including the performance of the Wa’ad Al Shamal Phosphate Company (also known as MWSPC), the ability of MWSPC to obtain additional planned funding in acceptable amounts and upon acceptable terms, the timely development and commencement of operations of production facilities in the Kingdom of Saudi Arabia, and the future success of current plans for MWSPC and any future changes in those plans; the risk that protests against natural resource companies in Peru extend to or impact the Miski Mayo mine, which is operated by an entity in which we are the majority owner; difficulties with realization of the benefits of our long term natural gas based pricing ammonia supply agreement with CF Industries, Inc., including the risk that the cost savings initially anticipated from the agreement may not be fully realized over its term or that the price of natural gas or ammonia during the term are at levels at which the pricing is disadvantageous to Mosaic; customer defaults; the effects of Mosaic’s decisions to exit business operations or locations; changes in government policy; changes in environmental and other governmental regulation, including expansion of the types and extent of water resources regulated under federal law, carbon taxes or other greenhouse gas regulation, implementation of numeric water quality standards for the discharge of nutrients into Florida waterways or efforts to reduce the flow of excess nutrients into the Mississippi River basin, the Gulf of Mexicoorelsewhere; further developments in judicial or administrative proceedings, or complaints that Mosaic’s operations are adversely impacting nearby farms, business operations or properties; difficulties or delays in receiving, increased costs of or challenges to necessary governmental permits or approvals or increased financial assurance requirements; resolution of global tax audit activity; the effectiveness of Mosaic’s processes for managing its strategic priorities; adverse weather conditions affecting operations in Central Florida, the Mississippi River basin, the Gulf Coast of the United States, Canada or Brazil, and including potential hurricanes, excess heat, cold, snow, rainfall or drought; actual costs of various items differing from management’s current estimates, including, among others, asset retirement, environmental remediation, reclamation or other environmental regulation, Canadian resources taxes and royalties, or the costs of the MWSPC, its existing or future funding and Mosaic’s commitments in support of such funding; reduction of Mosaic’s available cash and liquidity, and increased leverage, due to its use of cash and/or available debt capacity to fund financial assurance requirements and strategic investments; brine inflows at Mosaic’s Esterhazy, Saskatchewan, potash mine or other potash shaft mines; other accidents and disruptions involving Mosaic’s operations, including potential mine fires, floods, explosions, seismic events, sinkholes or releases of hazardous or volatile chemicals; and risks associated with cyber security, including reputational loss; as well as other risks and uncertainties reported from time to time in The Mosaic Company’s reports filed with the Securities and Exchange Commission. Actual results may differ from those set forth in the forward-looking statements. 2


 
The Mosaic Company Overview 3


 
Executive Summary Raising full year guidance: adjusted EBITDA(1) to $1.80 - 1.95 billion; adjusted EPS(1) to $1.45 - $1.80 ▪ Second quarter adjusted EBITDA(1) of $461 million and first half 2018 of $833 million Strong Cash ▪ Second quarter adjusted EPS(1) of $0.40 and first half 2018 of $0.60 Flow and Earnings ▪ Year to date cash flow from operations above $700 million • Paid down ~$500 million in debt as of 8/1/2018, well ahead of communicated $700 million pay-down target by end of 2020 ▪ Solid execution across three business units: Constructive Outlook and • Cash costs of mined Florida rock down at $36 per tonne Solid • MOP cash costs of production flat at $85 per tonne Execution ▪ Expect market momentum to continue through 2018 ▪ Remarkable progress on Mosaic Fertilizantes transformation: Transformation • Actions taken in H1’2018 alone expected to deliver well over $100 million in run-rate EBITDA contribution progress • $56 million of year-to-date realized gross synergies, $34 million net of costs to achieve (1) See Non-GAAP Financial Measures for additional information 4


 
Mosaic Assets: Global, Long Life, Low Cost Phosphate Production Potash Production Distribution Facilities Joint Ventures 55


 
Transformation: Idled Plant City $/Tonne Conversion Costs Mined Rock Costs $/Tonne $50 $80 $70 $40 $60 $30 $50 $20 $40 2014 2015 2016 2017 Q1 Q2 2014 2015 2016 2017 Q1 Q2 2018 2018 2018 2018 Cash Production Costs Cash Conversion Costs * Phosphate cash conversion costs are reflective of actual costs, excluding realized mark-to-market gains and losses. These costs are captured in inventory 6 and are not necessarily reflective of costs included in costs of goods sold for the period.


 
Transformation: Anticipated S&D Impact of Idling Plant City Million Tonnes DAP/MAP/NPS Global Phosphate Capacity vs. Shipments 3 Cumulative Change 2018-2020 Cumulative Net Capacity Growth 2 Cumulative Demand Growth 1 0 -1 18F 19F 20F Source: CRU and Mosaic Tightened phosphate supply & demand even without expected China capacity rationalization 7


 
Transformation in Potash: Asset Optimization and Cost Control $ Per Tonne $140 $120 $100 $80 $60 $40 $20 $- 2013 2014 2015 2016 2017 Q1 2018 Q2 2018 MOP Cash Production Costs Per Tonne* Brine *MOP cash production costs are reflective of actual costs during the quarter, excluding CRT and realized mark-to-market gains and 8 losses. These costs are captured in inventory and are not necessarily reflective of costs included in costs of goods sold for the period.


 
Transformation in Potash: Expected Elimination of Brine Management Costs Esterhazy Expected Cash Production $/Tonne 16,000 Costs Below $50 per Tonne 90 14,000 80 12,000 70 10,000 8,000 60 6,000 50 4,000 Thousand Ore Tonnes Cash Production Costs 40 2,000 0 30 2013 2016 2017F 2018F 2019F 2020F 2021F 2022F 2023F 2024F 2025F Cash Production Costs / Tonne K1/K2 Ore K3 Ore 9 Forecast as of April 12, 2017 *MOP cash production costs are reflective of actual costs during the quarter, excluding CRT and realized mark-to-market gains and losses. These costs are captured in inventory and are not necessarily reflective of costs included in costs of goods sold for the period.


 
Mosaic Fertilizantes: Well Positioned Brazil Plant Nutrient Use 2015-17 Average Nitrogen Million Tonnes Soybean Production 28% 130 Potash 39% 110 90 P&K Phosphat e accounts for 70 Source: ANDA 33% ~2/3rds of all U.S. Plant Nutrient Use Brazil 50 2014/15-16/17 Average Nutrient Use 30 Potash 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18E Crop Year Beginning in 23% Source: USDA USA Brazil Brazil expected to overtake US in soybean Nitrogen production in 2018/19 crop year Phosphate 57% 20% 10 Source: TFI/AAFPCO


 
Mosaic Fertilizantes Transformation on Track Mosaic Fertilizantes Transformation Actions taken in H1’18 Categories P&L Impact (US$ M) expected to generate solidy $300 over $100M of run-rate value Operations $19M $250 Commercial $14M $200 Procurement $6M $150 Supply Chain $10M $100 Organization $7M $50 Cost to Achieve $22M 2018 First Half $- P&L Impact $34M 2018E 2019E 2020E


 
Visible Cost Controls $ Per Tonne Selling, General & Administrative Expenses 20 18 16 Includes acquisition of Vale Fertilizantes operations as of 14 January 8, 2018. 12 10 8 2013 2014 2015 2016 2017 2018F 12 *Tonnes do not include the intra-segment volume eliminations, which are negative impacting SG&A/Tonne metric starting in 2018 as a result of the Vale Fertilizantes acquisition


 
Mosaic: Deleveraging Progress Short And Long Term Debt (in millions) $5,400 $5,200 $5,000 $4,800 $4,600 $4,400 $4,200 2017 Q1'18 Q2'18 End 2020 Target Achieved ~$500 million debt pay down targeted for 2018 by August 1 *See Additional Detail in the Appendix 13


 
Capital Allocation Philosophy Further accelerated debt repayment in 2018 14


 
Markets Agricultural Outlook


 
A Price Meltdown, a Bounce, and a Drop New Crop Corn Price New Crop Wheat Price New Crop Soybean Price US$ Daily Close Dec 18 Contract US$ Daily Close Sep 18 Contract US$ Daily Clos e Nov 18 Contr act BU BU BU 4.30 6.00 10.75 Source: CME (KC HRW) Source: CME 10.50 4.20 5.75 10.25 4.10 10.00 5.50 4.00 9.75 3.90 5.25 9.50 3.80 9.25 5.00 9.00 3.70 8.75 4.75 3.60 8.50 Source: CME 3.50 4.50 8.25 Sep-17 Dec-17 Mar-18 Jun-18 Sep-17 Dec-17 Mar-18 Jun-18 Sep-17 Dec-17 Mar-18 Jun-18 The December 2018 corn contract dropped to The September HRW wheat price declined to The November soybean contract closed at $8.34 $3.53 per bushel on July 11, a decline of 17% or $4.71 per bushel on July 2, off 20% or $1.15 from per bushel on July 13, plunging 21% or $2.19 in 33 73 cents from a peak of $4.27 on May 23. The its May 3 peak of $5.68 despite signs of crop trading sessions from its May 25 peak of $10.54. contract closed at $3.72 on August 10, recovering problems in several key exporting regions. The The collapse was mostly a reaction to the first 19 cents or about one-quarter of the decline. September contract settled at $5.60 on August 10, shots of the U.S.-China trade war on July 6. The Lower course grain crop estimates worldwide lifted clawing back almost 80% of the recent plunge. new crop contract settled at $8.62 on August 10, prices in July, but a bearish August 10 WASDE Prices have rebounded in response to recent up just 28 cents or 13% from the recent summer report and prospects for a “big-crops-get-bigger” estimates of drought-shriveled harvests in Europe, low. Expectations for a prolonged U.S.-China trade U.S. corn harvest still overhang the market. Russia, Ukraine, and Australia this year. war coupled with an extremely bearish August 10 WASDE report ended the recent mini-rally.


 
Agricultural Fundamentals Begin to Tighten as Demand Catches Up to Supply World Less China Grain and Oilseed Stocks Mil Tonnes Percent . A big step-up in global production since 2012/13 450 22% Source: USDA August 10, 2018 425 21% . But continued strong and steady demand growth 400 20% 375 19% . Inventories ex China decline in 2017/18 350 18% 325 17% . Stocks as a percentage of use projected to drop to the 300 16% low end of the 16%-19% range by the end of 2018/19 275 15% 250 14% 225 13% . More details in the July issue of Market Mosaic 200 12% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F . The Food Story is not in vogue but it still is intact Stocks Percent of Use Available on the Mosaic website at: www.mosaicco.com/resources/market_mosaic.htm


 
Positive Agronomic & Economic Demand Drivers Record Harvests Remove Record Amounts of P&K Plant Nutrients Still Affordable Bil Tonnes World Grain and Oilseed Production and Use Plant Nutrient Affordability 3.4 Plant Nutrient Price Index / Crop Price Index Source: USDA August 2018 1.00 3.2 Less Affordable 0.90 3.0 2.8 0.80 2.6 0.70 2.4 0.60 2.2 0.50 2.0 More Affordable 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F Source: Weekly Price Publications, CME, USDA, AAPFCO, Mosaic Crop Year Beginning in 0.40 Production Stoop 1 (2.2) Stoop 2 (2.4) 10 11 12 13 14 15 16 17 18 Stoop 3 (2.7) Stoop 4 (3.1) Use Affordability Metric Average 2010-17 Estimated World Grain & Oilseed Nutrient Removal 2007-12 2013-17 Percent Stoop Stoop Mil Tonnes (2.74 bmt) (3,06 bmt) Change Change N Removal 59.3 66.2 6.9 11.6% P2O5 Removal 22.9 25.4 2.5 10.9% K2O Removal 19.2 21.5 2.2 11.7% Source: USDA, IPNI, M osaic


 
The U.S.-China Soybean War Battlefield Statistics for the first  half of this year show  Brazil and the United States are the  The USA supplies the majority of Chinese  that Brazil exports  dominant exporters of soybeans to China,  imports following its harvest or from  were up 5% or 2.3  2017 China Soybean Imports accounting for 87% of the 95.5 million  November through March.  South  million tonnes, despite  95.5 Million Tonnes Other tonnes imported last year.   China Soybean Imports Monthly Share by Origin American producers account for the bulk  5.2 the recent truckers  2013-17 Average of Chinese imports following their harvest  Argentina 6% strike and on‐going  6.6 100% or from April through October. 7% uncertainties about  90% truck freight rates. 80% 2018 Brazil Soybean Exports 70% January-June Year-to-Date 46.3 Million Tonnes Other Brazil 6.1 60% 13% 50.9 Thailand 53% 50% 0.6 USA 1% 32.9 40% Europe 34% 3.6 30% 8% 20% 2017 Brazil Soybean Exports 68.2 Million Tonnes 10% Other (38) China 7.6 35.9 Source: China Customs via GTIS 0% 78% 11% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Thailand 1.7 USA Brazil Argentina Other 2% MIl Tonnes China Cumulative Soybean Imports China is the largest  destination for Brazil  Europe China soybean imports during  100 soybean exports,  5.1 Source: China Customs via GTIS the first half of this year  8% 90 accounting for 79% of the  totaled 44.9 million tonnes,  80 68.2 million tonnes  one boatload greater than  exported in 2017. 70 the same period last year.   60 2017 U.S. Soybean Exports 50 China 55.3 Million Tonnes 53.8 40 Other (69) 79% 30 10.7 19% 2018 U.S. Soybean Exports Source: SECEX via GTIS January-June Year-to-Date 20 21.7 Million Tonnes 10 Other Japan 5.6 Statistics for the first  26% 0 2.3 half of 2018 show that  Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 4% China Japan 7.6 U.S. exports were up  Indonesia 1.2 35% 2016 2017 2018 China also is the largest  2.4 China 5% slightly, but shipments  destination for U.S. exports,  4% 31.7 Indonesia to China were down  58% 1.3 accounting for 58% of the 55.3  Mexico 6% 2.0 million tonnes  3.9 Egypt million tonnes exported in 2017.   Europe while shipments to  7% 1.6 Mexico The numbers also show that  7% 2.1 2.4 Europe 10% 11% other destinations  Europe is no China. 4.3 were up. 8% Source: U.S. Department of Commerce via GTIS


 
Assessment of How the Trade War Plays Out ▪ China likely will still import ~95 million tonnes of soybeans this year despite recent claims of an expected 10 million tonne drop (implying 2018 LH imports of just 40.6 million tonnes or a drop of 20% from last year). ▪ China will draw down inventories, grow more, maximize imports from Brazil and elsewhere, import more soybean meal and protein substitutes in order to minimize U.S. soybean imports. ▪ Imports from the United States likely will be needed to meet demand due to seasonality and logistical constraints in both Brazil and China as well as smaller supplies from Argentina this year. ▪ Recent development such as the $12 billion farm aid package, trade talks with the EU, and plans to boost the tariff rate from 10% to 25% on the next $200 billion tranche of Chinese imports indicate that the Trump administration is prepared for drawn-out negotiations. ▪ The ultimate resolution to the dispute likely will include a commitment by China to increase imports of U.S. agricultural products in order to reduce its U.S. trade surplus.


 
Markets Brazil


 
An Agricultural Powerhouse Change in Brazil Grain and OIlseed Producton 2000-2018 Brazil Grain and Oilseed Production +143.5 Million Tonnes Other MT Ha 8.0 16 Leading Crops 6% 250 Source: USDA Soybeans 225 81.0 56% 200 Corn 54.5 175 38% 150 Source: USDA 125 100 Change in Brazil Harvested Area 2000-2018 75 +28.5 Million Hectares Other 50 0.2 Corn 1% 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F 4.7 16% Grain and oilseed production has more than doubled since the turn of the century. Soybeans and corn have accounted for 94% of the gain in output and nearly all of the increase in harvested area during this period. The increase so far this century exceeds the largest crop ever produced in Argentina! Soybeans 23.6 Source: USDA 83%


 
A Soybean Powerhouse Mil Tonnes Brazil Soybean Production Mil HA Brazil Soybean Area MT HA Brazil Soybean Average Yield 130 40 3.60 Source: USDA Source: USDA 120 Source: USDA 3.40 35 110 MT HA BU AC 3.20 2.5 37.2 100 30 3.2 47.6 3.4 50.6 90 3.00 80 25 2.80 70 2.60 20 60 2.40 50 15 40 2.20 30 10 2.00 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F Change in Brazil Soybean Production Mil Tonnes Brazil Soybean Exports 2000-2017 70 Source: SECEX via GTIS 60 Soybean production has tripled so far this century. 50 Increases in harvested area accounted for nearly Yield Gain 70% of the increase while yield gains accounted 31% 40 for the other 30%. Average soybean yields in 30 Brazil are in line with those of the United States. 20 Area The increase in exports to China captured about Increase two-thirds of the increase in soybean production. 69% 10 0 Source: USDA 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 China Other


 
Brazilian Farmers Benefit from the Argentine Drought, a Weaker Real, and the U.S.-China Trade War Mil Tonnes Argentina Soybean Production MT HA Brazilian Real Cents Bu Soybean Premium to CME Price at Paranaguá R/USD Daily Rate 65 3.4 Port 4.25 250 Source: USDA 225 60 3.2 4.00 Source: Forex 200 55 3.0 3.75 175 50 2.8 3.50 150 45 2.6 3.25 125 100 40 2.4 3.00 75 2.75 35 2.2 50 2.50 30 2.0 25 2.25 25 1.8 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E 2.00 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Crop Year Beginning In Jan-14 Jul-14 Jan-15 Jul-15 Jan-16 Jul-16 Jan-17 Jul-17 Jan-18 Jul-18 Production Average Yield Average 2014 -2017 2018 Soybean Premium at Paranaguá Port Four-Year USD Bu 2018 Average Change January $0.64 $0.36 77% February $0.64 $0.34 91% March $0.88 $0.29 204% April $1.40 $0.38 265% May $0.91 $0.53 72% June $1.31 $0.87 50% July $2.26 $1.21 87%


 
An Emerging Corn Powerhouse Mil Tonnes Brazil Corn Production Mil HA Brazil Corn Harvested Area MT HA Brazil Corn Average Yield 100 18 6.0 Source: USDA Source: USDA Source: USDA 90 17 5.5 80 16 5.0 MT HA BU AC 70 15 3.00 48 4.5 5.50 88 60 14 7.00 112 4.0 50 13 3.5 40 12 30 11 3.0 20 10 2.5 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E 18F 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E18F Change in Brazil Corn Production Mil Tonnes Brazil Corn Exports Corn production has more than doubled so far this 2000-2017 35 century with nearly all the increase from the Source: USDA Area second or Safrinha crop that follows soybeans in Increase 30 the Midwest region. Increases in yields accounted 20% 25 for 80% of the gain in output while additional harvested area accounted for the other 20%. 20 Average corn yields in Brazil still lag those in the United States. Exports captured about one-half of 15 the increase in corn production during this period. 10 Brazil output has significant upside due to Yield Gain 5 expected increases in soybean area as well as the 80% Source: USDA potential for significant yield improvements. The 0 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17E 18F key will be more profitable economics from the development of interior uses such as livestock and ethanol production.


 
A Plant Nutrient Powerhouse Mil Tonnes Brazil Total Plant Nutrient Shipments Mil Tonnes Brazil Plant Nutrient Product Shipments Product 4.5 37.5 Min/Max Range (2013-2017) Source: ANDA Source: ANDA, Mosaic 4.0 2018 35.0 7-Yr Olympic Average 32.5 3.5 30.0 3.0 27.5 2.5 25.0 2.0 22.5 20.0 1.5 17.5 1.0 15.0 0.5 12.5 0.0 10.0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 17 18 19 Plant nutrient use has more than doubled since the turn of the century. The truckers’ strike reduced May shipments, but June shipments Demand increased at a compound annual growth rate (CAGR) of 4.4% recovered nicely. First-half shipments totaled 12.8 mmt, down 2% from from 2000 to 2017. a year ago. We expect strong second-half shipments of 22.4 mmt, up 7% from the same period last year. Our Brazilian team projects that plant nutrient shipments will increase 3.1% or 1.1 mmt to 35.2 million tonnes this year. Shipments are Shipments during the second half of the year typically are almost two projected to increase another 2.8% or 1.0 mmt to 36.2 million in 2019. times greater than first half shipments.


 
Mosaic is Logistically Advantaged to Key Growing Areas • Exposure to the Cerrado region • Just-in-time deliveries • Long-term relationship with customers • Integrated logistics


 
Post Transformation: Competitive Delivered Basis Brazil MAP Cost Curve 2021 Forecast Delivered Upcountry Mosaic Uberaba 0 1,000 2,000 3,000 4,000 5,000 Source: Mosaic Thousand Tonnes


 
Markets Potash Outlook


 
Prices Continue to Trend Up Potash Prices $ Tonne KCl 475 450 425 400 . Strong broad-based demand growth 375 350 325 . Optimized/restructured operations 300 275 . No immediate threat from new capacity 250 225 Source: Argus 200 175 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 fob NOLA fob U.S. Corn Belt c&f Brazil c&f SE Asia


 
Strong, Broad-Based and Less Volatile Demand Growth Mil Tonnes KCl Global Potash Shipments 67-69 70.0 . Global KCl shipments now are projected to increase 2.7% or Source: IFA, CRU and Mosaic 66.9 67.5 1.8 million tonnes to 66.9 million this year. That follows the 6.9% or 4.2 million tonne recovery in shipments in 2017. 65.0 . In its outlook report released at the end of February, CRU 62.5 estimated that MOP shipments totaled 65.5 million tonnes in 60.0 2017 and projected that shipments would increase to 66.6 million tonnes this year. 57.5 . Our first look at 2019 resulted in a shipment forecast in the 67- 55.0 69 million ton range with a point estimate in the middle at 67.9 million. 52.5 . If our estimate for 2018 is on target, global shipments will have 50.0 grown at a CAGR of 2.9% since 2010, although growth rate 47.5 has fluctuated meaningfully until the last two years. 10 11 12 13 14 15 16 17 18E 19F


 
Strong and Broad-Based Demand Growth Mil Tonnes Brazil MOP Shipments Mil Tonnes China MOP Shipments KCl KCl Chinese shipments also are 11.0 18.0 Source: ANDA, Mosaic and Company Reports trending up due to record crop 10.5 Source: CRU and Mosaic 16.0 10.0 Brazil demand continues its production as well as efforts to 9.5 upward march driven mainly by 14.0 improve nutrient balance. Higher 9.0 12.0 8.5 steady increases in soybean domestic MOP production met 10.0 8.0 production. Shipments are much of the recent growth, but 7.5 forecast to breach the 10 million 8.0 7.0 domestic output likely has 6.0 6.5 tonne mark this year. plateaued, implying strong growth 4.0 6.0 10 11 12 13 14 15 16 17 18E 19F 10 11 12 13 14 15 16 17 18E 19F in import demand. Mil Tonnes North American MOP Shipments Mil Tonnes India MOP Shipments KCl KCl 6.5 India shipments are beginning to 11.0 North American shipments surged Source: FAI, IFA, and Mosaic Source: IPNI, DOC and Mosaic 6.0 10.5 recover following 2010/11 subsidy to 10.5 million tonnes KCl in 2017 5.5 10.0 changes that resulted in a near due to a strong fall application 5.0 9.5 tripling of retail potash prices. 9.0 season and early positioning of 4.5 Higher crop support prices and 8.5 2018 needs. On-farm demand is 4.0 8.0 3.5 the likelihood of near normal expected to stay stable this year, 7.5 3.0 monsoon rainfall also are aiding 7.0 but shipments are projected to 2.5 6.5 2.0 the recovery. 10 11 12 13 14 15 16 17 18E 19F drop to about 9.9 mmt. 10 11 12 13 14 15 16 17 18E 19F Mil Tonnes Mil Tonnes Rest of World MOP Shipments Malaysia+Indonesia MOP Shipments Indonesian and Malaysian KCl KCl 6.0 23.0 Source: IFA and Mosaic shipments also have trended 5.5 Source: IFA, CRU and Mosaic 22.0 Shipments outside the “Big Six” 5.0 upward with surges in 2011 and 21.0 countries/regions have taken off 4.5 2014. Gains are driven mostly by 4.0 20.0 led mostly by other Asian and 3.5 increases in palm oil production, 19.0 other Latin American countries as 3.0 but positive rice profitability also 18.0 well as a doubling of African use 2.5 17.0 2.0 has helped to underpin potash 1.5 16.0 during the last five years (albeit use in this region as well as in 1.0 15.0 from a low starting point). 10 11 12 13 14 15 16 17 18E 19F other Asian countries. 10 11 12 13 14 15 16 17 18E 19F Indonesia Malaysia


 
Global Potash Shipment Forecasts by Region (August 2018) Source: IFA, CRU and Mosaic (Numbers may not sum to total due to rounding)


 
Likely Supply and Demand Changes 2018-20 Potential Potash Supply and Demand Changes Excluding Canada Mil Tonnes KCl 2018 2019 2020 Projected Shipment Changes 1.36 0.95 1.29 ← A strong and broad-based gain is estimated for 2018 followed by a more Percent Change 2.1% 1.4% 1.9% modest increase in 2019 due mainly to flat or lower shipments in the United States and a bit slower growth in other regions. Potential Supply Changes 0.52 0.81 1.64 ← There are several puts and takes on the supply side. ICL ended KCl production at its UK Boulby mine around mid-year and K+S will close its ICL Boulby Closure -0.20 0.00 0.00 Sigmundshall mine at the end of 2018. SQM is developing deposits to SQM Maximizing Lithium Production -0.25 -0.10 0.00 maximize lithium production at the expense of KCl output. These changes K+S Sigmundshall Closure 0.00 -0.45 0.00 offset at least part of the expected output from the ramp up of the three Garlyk Ramp-Up 0.00 0.03 0.06 greenfield projects. However, it now looks like output from the K+S, EuroChem, and Turkmenistan projects will fall well short of advertised K+S Bethune Ramp-Up 0.55 0.70 0.30 production this year. In addition, recent reports indicate that increased rates Eurochem Usolskiy+Volgakaliy Ramp-Up 0.40 0.60 1.25 of fresh water inflows at the Uralkali S2 mine may now exceed pumping and Miscellaneous Changes (e.g. Bolivia) 0.02 0.03 0.03 disposal capacities and could threaten production at this mine (not included). S/D Surplus (+)/Deficit (-) -0.84 -0.15 0.35 ← Based on these assumption, the global market looks tight to balanced through 2020. Output especially from the two EuroChem mines begins to Source: Mosaic outpace demand growth in 2020, barring further capacity rationalization.


 
Record Canpotex Exports Required to Meet Record Demand Mil Tonnes Canpotex Exports Canpotex Sales by Destination KCl Calendar Year 2015-17 Average 12 Source: Canpotex 11 Rest of 10 World Brazil 13% 25% 9 Other Asia 8 16% 7 India China 6 10% 18% 5 Indo/Mala 2010 2011 2012 2013 2014 2015 2016 2017 18% . Canpotex exported a record 11.6 million tons in 2017 in order to meet the big jump in global demand last year. . Exports are projected to increase to another record this year. Shipments likely will climb to 12.0-12.5 million tonnes in 2018.


 
Five-Year Outlook: Strong, Broad-Based and Less Volatile Demand Growth the Key Feature MMT MOP Global Potash Shipments Change in Potash Shipments 2017 vs. 2010 Change in Potash Shipments 2023 vs. 2017 80 China 7.5% Brazil 3.9% Source: Mosaic, CRU Brazil 5.2% 75 China 2.3% Other Asia/Oceania 5.0% Other Asia/Oceania 3.7% 70 3.8% Indonesia/Malaysia Europe/FSU 1.9% North America 1.4% 65 India 3.1% 9.3% Africa Africa 8.0% 60 Other Latin Amer 2.1% Indonesia/Malaysia 1.2% Europe/FSU 0.2% 55 Other Latin Amer 1.5% Rest of World 1.7% Rest of World 1.1% 50 India -3.9% North America -1.2% -2.0 -1.0 0.0 1.0 2.0 3.0 4.0 5.0 6.0 Mil Tonnes KCl -1.0 -0.5 0.0 0.5 1.0 1.5 2.0 2.5 3.0 45 Mil Tonnes KCl 10 11 12 13 14 15 16 17 18E 23F (Percentage is CAGR) Source: Mosaic and CRU Outlook February 2018 (Percentage is CAGR) Source: Mosaic and CRU Febrary 2018 Actual High Forecast Low Forecast Likely Forecast CRU - February 2018 . By our most recent count, global shipments increased 3.1% per year or 12.4 million tonnes from 2010 to Global Potash Shipments 2017. Growth was erratic with most of the gain coming in 2014 and 2017. Shipments increased in four Mosaic Scenario CRU years and decreased in three years. India was a drag on growth due to subsidy cuts and a tripling of retail Mil Tonnes KCl Low Likely High Feb 18 MOP prices in 2010/11. 2010 Shipments na 53.1 na 53.6 . Shipments are forecast to increase 2.2% per year or 9.0 million tonnes from 2017 to 2023. Demand 2017 Shipments na 65.6 na 65.5 drivers continue to look positive, and strong and less volatile growth is expected during the next five years Change 2010-17 na 12.4 na 11.9 CAGR 2010-17 na 3.1% na 2.9% given more moderate and stable potash prices as well as continued strong agricultural commodity prices. 2023 Forecast 73.1 74.6 76.2 74.9 An expected rebound in Indian shipments and continued growth in Brazil and China are key features of our Change 2017-23 7.5 9.0 10.6 9.4 forecast. CAGR 2017-23 1.8% 2.2% 2.5% 2.7% . The traditional growth geographies - Brazil, China, India, Indonesia, and Malaysia account for about two- Source: Mosaic, CRU Potash Outlook February 2018. CRU forecast is for 2022. thirds of the projected gain from 2017 to 2023, but other regions such as other Asian countries, the former Soviet Union (FSU), and Africa are expected to post notable increases during the next five years.


 
Demand Growth Projected to Keep Pace with the Likely Ramp-Up of New Capacity Mil Tonnes Global Potash Capacity vs. Shipments Mil Tonnes Global Potash Supply and Demand Op Rate KCl Cumulative Change 2016-23 KCl MOP Capacity, Production and Operating Rate 16.0 90 95.0% Source: IFA, CRU and Mosaic 14.0 80 92.5% 90.0% 12.0 70 87.5% 10.0 60 85.0% 50 8.0 82.5% 40 6.0 80.0% 30 4.0 77.5% 20 75.0% 2.0 10 Source: Company Reports, CRU and Mosaic 72.5% 0.0 0 70.0% 2017 2018E 2019F 2020F 2021F 2022F 2023F 10 11 12 13 14 15 16 17 18E 19F 20F 21F 22F 23F Greenfield Brownfield Likely Low CRU Operational Capacity Production Operating Rate . We project no chronic or severe long term supply and demand imbalance. Global operational capacity is projected to increase 10.6 million tonnes KCl or from 72.5 million in 2017 to 83.1 million in 2023. . The global operating rate is forecast to dip from 91% in 2017 to 90% in 2018-20 before increasing to nearly 92% in 2021-22. The continued ramp up of new greenfield and brownfield capacity is projected to reduce the global rate to about 90% by the end of the forecast period. . This analysis assumes that global demand will grow 2.2% per year from 2017 to 2023 and that the four greenfield projects in Turkmenistan, Saskatchewan and Russia (2) will ramp up based on our assessment of reasonable start up rates.


 
Factors to Watch ▪ Agricultural commodity prices • Farm or food crisis and impact on potash demand? ▪ FSU production • Can they maintain 2017 rates in 2018 and beyond? Is Uralkali S2 at risk? ▪ Ramp-up of new capacity • Slower-than-expected or faster-than-expected? ▪ Competitor strategies and behaviors ▪ Currency risks/opportunities and macroeconomic/political shocks • Devaluation or appreciation of the key 6R potash currencies? (Ruble, RMB, Real, Rupee, Rupiah, Ringgit) • Global trade dynamics


 
2021 Cost Curve Forecast 2021 MOP Cost Curve fob Mine at Effective Capacity Brine 0 10,000 20,000 30,000 40,000 50,000 60,000 70,000 80,000 Thousand Tonnes Capacity Source: CRU, Mosaic


 
Markets Phosphate Outlook


 
Phosphate Margins Move Up in Response to Constructive Fundamental Developments Benchmark DAP Stripping Margin $ Tonne Calculated from Published Weekly Spot Prices 350 325 . Strong, broad-based and less volatile demand growth 300 . Supply adjustments take hold including the temporary idling of Mosaic’s Plant City facility as well 275 as a small decline in Chinese exports 250 . Slower-than-expected ramp-up of new capacity 225 . A shift in sentiment Source: Argus 200 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18


 
Nearly All of the Margin Gain is the Result of Higher Phosphate Prices Phosphate Prices Ammonia Weekly Raw Materials Prices Sulphur $ Tonne Published Spot Prices $ Tonne c&f Tampa $ LT 550 700 175 525 $655 in November 2014 500 600 150 $147 in 2015 Q1 475 450 500 125 425 $121 in 2018 Q3 400 100 400 $310 in August 2018 375 300 75 350 325 200 50 300 Source: Argus Source: Argus 275 100 25 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 Jan-14 Jan-15 Jan-16 Jan-17 Jan-18 DAP NOLA MAP Brazil DAP China Ammonia Sulphur


 
Strong, Broad-Based and Less Volatile Demand Growth . Shipments of the leading finished phosphate products increased 2.1% or 1.4 million tonnes to 69.2 million in 2017 and are projected to increase another 1.2% MMT Pr oduc t Global Phosphate Shipments or 0.8 million to 70.0 million tonnes this year. DA P/MA P/NPS/TS P 70-72 . A first look at 2019 indicates that shipments likely will increase to 70-72 million 72.5 tonnes with a point estimate of 70.8 million, a 1.2% or 0.8 million tonne gain. Source: CRU and Mosaic 70.0 70.0 . China has been a drag on global shipments for the past few years. Excluding China, demand increased 6.4% or 3.0 million tonnes in 2016 and 4.5% or 2.2 67.5 million tonnes in 2017. We project shipments outside China will increase 3.1% or 1.6 million tonnes this year and 1.8% or almost 1.0 million tonnes in 2019. 65.0 . Our initial estimates for 2019 are a bit cautious due to: 1) lower crop prices, 2) 62.5 higher phosphate prices, 3) drought and lower crop production in some regions, and 4) policy/political uncertainties (e.g. the U.S.-China trade war and the new 60.0 Malaysian government’s support for agriculture). . Excluding China, global shipments have increased at a CAGR of 2.9% or 9.2 57.5 million tonnes since 2010. Going forward we expect that Chinese shipments will stabilize at close to 17 million tonnes. 55.0 10 11 12 13 14 15 16 17 18E 19F . Growth outside China is led by a recovery in India, and strong and steady gains in other geographies including Brazil, the rest of Latin America, Southeast Asia, the former Soviet Union and Africa.


 
Broad-Based Demand Growth Indian shipments plummeted Mil China DAP/MAP/NPS/TSP Shipments Mil India DAP/MAP/NPS/TSP Shipments Tonnes Chinese shipments peaked at Tonnes following changes in the subsidy 24.0 12.0 Source: CRU and Mosaic more than 21 million tonnes in Source: CRU and Mosaic and a doubling of retail DAP prices 21.0 2013. Growth was driven by high 11.0 18.0 in 2010/11. Poor monsoons also support prices for leading crops 10.0 15.0 contributed to weak demand. 12.0 such as corn and a build-up of 9.0 Shipments are beginning to recover 9.0 strategic reserves. Shipments are 8.0 given high local crop prices, more 6.0 expected to stabilize in the 17 moderate phosphate prices, a 3.0 7.0 million tonne neighborhood in the larger subsidy, and prospects for 0.0 6.0 10 11 12 13 14 15 16 17 18E 19F new economic/policy environment. 10 11 12 13 14 15 16 17 18E 19F another average monsoon this year. DAP MAP NPS TSP DAP MAP TSP Mil Brazil DAP/MAP/NPS/TSP Shipments Mil Latin America less Brazil Shipments in the rest of Latin Tonnes Tonnes DAP/MAP/NPS/TSP Shipments 9.0 4.0 Source: CRU, ANDA and Mosaic Phosphate demand in Brazil Source: CRU and Mosaic America surged in 2016, led by 8.0 3.5 large gains in Argentina following 7.0 continues its strong upward trend 6.0 driven mainly by steady increases 3.0 the elimination or reduction of grain 5.0 in soybean production. The 2.5 export taxes. Demand dropped off 4.0 but remained at elevated levels in 3.0 growth in NPS shipments – 2.0 2.0 mostly Mosaic’s MicroEssentials® 2017. Shipments are expected to 1.5 1.0 – is noteworthy. post a solid gain this year due to 0.0 1.0 10 11 12 13 14 15 16 17 18E 19F 10 11 12 13 14 15 16 17 18E 19F generally profitable farm economics DAP MAP NPS TSP DAP MAP NPS TSP throughout the region. Mil Asia/Oceania less China and India Mil Africa+FSU DAP/MAP/NPS/TSP Shipments Tonnes DAP/MAP/NPS/TSP Shipments Shipments in the rest of Asia have Tonnes African demand is taking off (and 10.0 6.0 increased significantly since 2013. Source: CRU and Mosaic these statistics exclude NPKs) due Source: CRU and Mosaic 5.5 9.0 The biggest gains were in 5.0 to good public-private sector 8.0 4.5 Pakistan and Vietnam, but most 4.0 programs to boost productivity. In 7.0 countries registered increases 3.5 addition, the pace of recovery in the 6.0 3.0 during this period. Profitable farm 2.5 former Soviet Union is picking up in 5.0 economics due to steady crop 2.0 response to moderate crop prices, 4.0 1.5 1.0 weak currencies and a run of 3.0 prices and moderate phosphate 10 11 12 13 14 15 16 17 18E 19F 0.5 generally good harvests. DAP MAP NPS TSP costs underpin demand growth. 10 11 12 13 14 15 16 17 18E 19F DAP MAP NPS TSP


 
Global Phosphate Shipment Forecasts by Region (August 2018) Source: CRU and Mosaic. Numbers may not sum to total due to rounding. * NPS products included in this analysis are those with a combined N and P2O5 nutrient content of 45 units or greater.


 
Supply Adjustments are Taking Hold . Mosaic’s idling of its Plant City facility in December 2017 impacted both fundamentals and sentiment. . Later start-up and slower ramp-up of new capacity in Moroccan and Saudi Arabia. . We estimate that Chinese phosphate exports during the first half of this year were off 175,000 tonnes and the 12- month rolling total was down almost 400,000 tonnes at the end of June. MAP exports from non-integrated producers along the Yangtze river were impacted the most by more stringent environmental regulations. Mil Tonnes China Phosphate Exports China Phosphate Exports Mil Tonnes China Phosphate Exports 1000 Tonnes DA P/MA P/TSP 12 Jan-Jun Rolling 12-Month Total Source: China Customsc 3,000 12.0 Source: China Customs and Mosaic 10 11.5 2,500 8 11.0 2,000 10.5 6 1,500 10.0 4 1,000 9.5 2 500 9.0 8.5 0 0 10 11 12 13 14 15 16 17 2015 2016 2017 2018 8.0 DAP MAP TSP DAP MAP TSP 2015 2016 2017 2018 China Phosphate Exports January-June 2018 vs. 2017 1000 Tonnes 2015 2016 2017 2018 Change Pct Chg DAP 2,823 2,088 2,266 2,485 219 9.7% MAP 1,392 825 1,357 908 -449 -33.1% TSP 461 300 413 467 55 13.3% Total 4,677 3,213 4,035 3,861 -175 -4.3% Source: China Customs and Mosaic


 
Fundamentals Math - 2018 Phosphate S/D Incremental Changes, H1 2018 Phosphate S/D Incremental Changes, H2 2018 Phosphate S/D Incremental Changes, 2018 Mil Tonnes DAP/MAP/NPS/TSP - equivalent Mil Tonnes DAP/MAP/NPS/TSP - equivalent Mil Tonnes DAP/MAP/NPS/TSP - equivalent Shipment Increase 0.50 Shipment Increase 0.34 Shipment Increase 0.84 Plant City Idling -0.64 Plant City Idling -0.63 Plant City Idling -1.26 OCP JPH 3 Ramp-Up 0.15 OCP JPH 3 Ramp-Up 0.35 OCP JPH 3 Ramp-Up 0.50 OCP JPH 4 Start-Up 0.00 OCP JPH 4 Start-Up 0.20 OCP JPH 4 Start-Up 0.20 OCP Debottlenecking 0.00 OCP Debottlenecking 0.20 OCP Debottleneck ing 0.20 MWSPC Ramp-Up 0.79 MWSPC Ramp-Up 0.51 MWSPC Ramp-Up 1.30 GCT Sfax Closure -0.07 GCT Sfax Closure -0.07 GCT Sfax Closure -0.13 Phosagro Debottleneck ing 0.17 Phosagro Debottleneck ing 0.11 Phosagro Debottleneck ing 0.28 Misc Downtime (Tun.,S.Af.,Aus.) -0.15 Misc Downtime (Tun.,S.Af.,Aus.) 0.00 Misc Downtime (Tun.,S.Af.,Aus.) -0.15 Sterlite Shutdown (India) -0.02 Sterlite Shutdown (India) -0.25 Sterlite Shutdown (India) -0.28 Turk ey/Egypt Greenfields 0.00 Turkey/Egypt Greenfields 0.00 Turk ey/Egypt Greenfields 0.00 Chinese Exports -0.17 Chinese Exports 0.17 -0.30 -0.78 Chinese Exports 0.00 -0.48 -0.95 Supply Changes 0.06 Supply Changes 0.60 0.13 -0.35 Supply Changes 0.66 0.18 -0.29 Incremental Supply Incremental Supply Incremental Supply Surplus (+) or Deficit (-) -0.45 Surplus (+) or Deficit (-) 0.27 -0.21 -0.69 Surplus (+) or Deficit (-) -0.18 -0.66 -1.13 Supply and demand changes this year likely will result in a deficit that is expected to support prices and margins at levels that will curb a bit of demand growth and boost production and exports from current producers.


 
Fundamentals Math - 2019 Phosphate S/D Incremental Changes, H1 2019 Phosphate S/D Incremental Changes, H2 2019 Phosphate S/D Incremental Changes, 2019 Mil Tonnes DAP/MAP/NPS/TSP - equivalent Mil Tonnes DAP/MAP/NPS/TSP - equivalent Mil Tonnes DAP/MAP/NPS/TSP - equivalent Shipment Increase 0.41 Shipment Increase 0.41 Shipment Increase 0.83 Redwater Closure -0.15 Redwater Closure -0.30 Redwater Closure -0.45 OCP JPH 4 Ramp-Up 0.20 OCP JPH 4 Ramp-Up 0.30 OCP JPH 4 Ramp-Up 0.50 OCP Debottlenecking 0.15 OCP Debottlenecking 0.15 OCP Debottleneck ing 0.30 MWSPC Ramp-Up 0.11 MWSPC Ramp-Up 0.39 MWSPC Ramp-Up 0.50 GCT M'dilla Start-Up 0.07 GCT M'dilla Start-Up 0.15 GCT M'dilla Start-Up 0.22 Misc Recovery (Tun.,S.Af.,Aus.) 0.15 Misc Recovery (Tun.,S.Af.,Aus.) 0.00 Misc Recovery (Tun.,S.Af.,Aus.) 0.15 Yara-Galvani Start-Up 0.03 Yara-Galvani Start-Up 0.08 Yara-Galvani Start-Up 0.10 Sterlite Shutdown (India) -0.20 Sterlite Shutdown (India) 0.00 Sterlite Shutdown (India) -0.20 NTR Geismar Closure -0.08 NTR Geismar Closure -0.08 NTR Geismar Closure -0.15 Turk ey/Egypt Greenfields 0.12 Turkey/Egypt Greenfields 0.18 Turk ey/Egypt Greenfields 0.30 Chinese Exports -0.17 -0.33 -0.50 Chinese Exports -0.17 -0.33 -0.50 Chinese Exports -0.33 -0.66 -1.00 Supply Changes 0.23 0.07 -0.10 Supply Changes 0.71 0.54 0.37 Supply Changes 0.94 0.61 0.27 Incremental Supply Incremental Supply Incremental Supply Surplus (+) or Deficit (-) -0.18 -0.34 -0.51 Surplus (+) or Deficit (-) 0.29 0.13 -0.04 Surplus (+) or Deficit (-) 0.11 -0.22 -0.56 Expected changes in supply and demand likely will result in another deficit in 2019, particularly if environmental regulations significantly reduce Chinese production and exports. We do not expect the world to run out of phosphate any time soon, but this situation is expected to support prices and margins at levels that trim some demand and boost production and exports in order for the global market to reach an equilibrium.


 
Five-Year Outlook: Positive Demand Outlook Global Phosphate Shipments Change in Phosphate Shipments 2017 vs. 2010 Change in Phosphate Shipments 2023F vs. 2017 MMT DA P/MA P/NPS/TSP 80 Source: Mosaic and CRU Phosphate Outlook July 2018 Brazil 6.7% India 3.1% 75 Other Asia + Oceania 4.7% Brazil 3.3% North America 3.0% Other Asia + Oceania 2.7% 70 Europe/FSU 3.7% Africa 6.5% Africa 8.8% Other Latin Am 3.5% 65 Other Latin Am 3.0% Mideast/Other 2.1% Mideast/Other -1.2% Europe/FSU 0.8% 60 China -0.2% North America -0.2% India -2.9% China -0.9% 55 10 11 12 13 14 15 16 17E 18F 19F 22F 23F MMT DA P/MA P/ NPS /TS-3.0 P -2.0 -1.0 0.0 1.0 2.0 3.0 -1.0 0.0 1.0 2.0 (Percentage is CAGR) MMT DA P/MA P/ NPS /TS P Actual Range Low Forecast Likely Forecast CRU - July 2018 Source: Mosaic and CRU Phosphate Outlook July 2018(Percentage is CAGR) Source: Mosaic and CRU Phosphate Outlook July 2018 Global Phosphate Shipments . By our most recent count, global shipments of the leading phosphate products increased 1.8% per year Mosaic Scenario CRU or 8.1 million tonnes from 2010 to 2017. India was a drag on demand with shipments dropping 2.2 Mil Tonnes DAP/MAP/NPS/TSP Low Likely High Jul 2018 million tonnes during this period due to subsidy cuts that resulted in a doubling of retail phosphate 2010 Shipments 61.1 61.0 prices. Demand declined slightly in China with shipments increasing significantly during the first half of 2017 Shipments 69.2 72.3 this period but then declining during the second half. Change 2010-17 8.1 11.3 CAGR 2010-17 1.8% 2.5% . Shipments are forecast to increase 1.6% per year or 6.9 million tonnes from 2017 to 2023. Indian 2023 Forecast 73.2 76.1 77.5 78.5 demand is expected to recover due to generally favorable farm economics/demand and a workable Change 2017-23 4.1 6.9 8.3 6.2 subsidy. Chinese shipments are projected to stabilize following another drop in 2018. Brazil, Other CAGR 2017-23 1.0% 1.6% 1.9% 1.4% Asian countries and Africa are projected to post strong gains during this period. Source: Mosaic and CRU Phosphate Outlook July 2018 . CRU projects that demand will grow at 1.4% from 2017 to 2022, but that mostly is the result of their much higher baseline demand estimate for 2017.


 
Five-Year Outlook: CRU Forecasts (July 2018) Mil Tonnes Global Phosphate Supply and Demand Opr Global PhosAcid Capacity by Country Global PhosAcid Capacity by Year MMT P2O5 MMT P2O5 P2O5 Acid Capacity, Production and Operating Rate Rate 70 90% 63 63 Source: CRU July 2018 62 0.1 62 0.6 1.1 0.6 60 85% 61 61 -0.0 0.4 60 60 0.7 50 80% 2.1 59 59 1.1 40 75% 58 58 57 61.4 57 61.4 30 70% 56 56 58.8 58.8 55 55 20 65% 54 54 53 53 10 60% Source: CRU July 2018 Source: CRU July 2018 52 52 0 55% 2017 Morocco Saudi China Other 2022F 2017 2018F 2019F 2020F 2021F 2022F 2022F 10 11 12 13 14 15 16 17E 18F 19F 20F 21F 22F Arabia Capacity Production Operating Rate . CRU projects that global phosphoric acid capacity will increase 2.6 million tonnes P2O5 from 58.8 million in 2017 to 61.4 million in 2022. Morocco and Saudi Arabia account for all of the net increase, and the bulk of new capacity is expected online by the end of 2019. . OCP is expected to add 2.1 million tonnes P2O5 from the ramp-up of JPHs 3&4 (0.6 mmt), the addition of Line F (0.5 mmt), the debottlenecking other Jorf lines (0.5 mmt), the start-up of the Laayoune project in Western Sahara in mid-2020 (0.3 mmt) and the start-up of JPH 5 in 2022 ((0.2 mmt). The increase in Saudi Arabia is from the ramp up of the Ma’aden Wa’ad al Shamal Phosphate Company (MWSPC) JV. The next big wave of expansions in both Morocco and Saudi Arabia are not expected on line until after the forecast period. . CRU assumes Chinese phosphoric acid capacity will shrink 600,000 tonnes P2O5 as a result of industry restructuring and the enforcement of more stringent environmental regulations during this period. Several capacity changes are expected in the rest of the world, but the combined 1.6 million projected increase in Russia, Egypt, Turkey, Tunisia, Indonesia and Brazil is mostly offset by expected closures in North America (1.5 mmt). . CRU estimates that the global operating rate dips this year due to a rapid ramp up of new capacity in Morocco and Saudi Arabia this year. The rate then trends upward during the rest of the forecast period.


 
Factors to Watch ▪ Agricultural commodity prices • Food or farm crisis and impact on phosphate demand? ▪ Ramp-up of new capacity • Slower-than-expected or faster-than-expected? ▪ China: demand growth and restructuring of the phosphate industry • Significant closures due to environmental regulations or continued government lifelines? ▪ Competitor strategies and behaviors • Price over volume or volume over price? ▪ Raw materials costs • Demand booster or inhibitor and relative advantage or disadvantage? ▪ Currency risks/opportunities and macroeconomic/political shocks • Devaluation or appreciation of key phosphate currencies? (Real, Rupee, RMB, Ruble, Dirham) • Trade war or peace?


 
2021 Cost Curve Forecast 2021 DAP Cost Curve fob Plant at Effective Capacity MOS LA MOS FL Chinese Producers Source: CRU, Mosaic


 
Appendix: Deleveraging Progress Dollars in Millions Dec 2017 Mar 2018 Jun 2018 Short‐term debt $                       6  $                    72  $                    20  Long‐term debt (including current portion) 5,222  5,074  4,798  * Net cash & cash equivalents 2,154  659  835  * Net debt 3,074  4,487  3,983  Net debt to adjusted EBITDA(1) 2.5  2.6  2.2  Calculation to align with stated targets: Short‐term debt $                       6  $                    72  $                    20  Long‐term debt (including current portion) 5,222  5,074  4,798  * Operating Leases 342  627  627  ** Ma'aden JV Guarantee 140  140  140  Net stated targeted cash & cash equivalents 500  500  500  *** Net debt $              5,210  $              5,413  $              5,085  Actual Adjusted EBITDA(1) $              1,207  Midpoint of Adjusted EBITDA Guidance(1) $              1,700  $              1,800  Net debt to adjusted EBITDA aligned to stated targets(1) 4.3 3.2 2.8 * Adjusted for July and August 2018 prepayment of $111 million against our outstanding term loan and payment of $89 million in maturing bonds. ** Operating leases are treated as debt. This is calculated as annual rent expense multiplied by 3x. *** Net debt only considers our targeted cash liquidity buffer of $500 million (1)See Non-GAAP Financial Measures for additional information 53


 
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