The Mosaic Company is holding their fourth quarter and full year 2023 earnings conference call. The call will begin with opening comments from CEO Bruce Bodine, followed by a fireside chat and open Q&A. Other executives, including the CFO and EVP of Commercial, will also be available to answer questions. The company will be making forward-looking statements and presenting non-GAAP financial measures, and participants are reminded to refer to the press release and SEC reports for more information. The new CEO, Bruce Bodine, acknowledges the previous CEO's contributions and expresses gratitude for his leadership.

In the second paragraph, the speaker discusses the success of Mosaic under Joc's leadership, including expanding into Brazil and completing the world's largest potash mine. They also mention the strong phosphate market and expected demand recovery in potash. The company is taking actions to improve returns and remains committed to prudent capital allocation. In 2023, Mosaic generated strong revenue and invested in the business, refinanced debt, and returned money to shareholders. The market experienced extreme volatility in 2022, but demand has returned in key markets in 2023.

The long-term outlook for global grain and oilseed supply and demand is positive, driven by population and income growth as well as increasing demand for renewable fuels. Short-term fundamentals also look promising due to ongoing weather challenges in key growing regions. While there is a lot of focus on corn and soybeans, other crops are also experiencing tightening stock-to-use ratios, leading to strong demand for fertilizer. In North America, a long fall application season and solid winter fill activity have resulted in low inventories and strong demand for fertilizer. In Brazil, favorable barter ratios for soybeans and corn are contributing to strong demand.

The outlook for Mosaic's fertilizer shipments in 2024 is positive due to favorable ag commodity and fertilizer demand drivers, particularly in phosphate markets. China's export restrictions and tighter environmental oversight have contributed to a tight global supply of phosphate. The competition for phosphate molecules is increasing, and limited capacity additions suggest market fundamentals will remain constructive. In the potash market, supply is currently adequate to meet demand, and Mosaic plans to curtail production at Colonsay. The company's fourth quarter results for 2023 include revenue of $3.1 billion, adjusted EBITDA of $646 million, and adjusted earnings per share of $0.71. The potash business generated $322 million of adjusted EBITDA on sales volumes of 2.6 million tonnes. Overall, Mosaic is focused on meeting customer needs, executing their business strategy, and delivering value to shareholders.

In the fourth quarter, Canpotex had a strong finish with sales volumes meeting initial guidance. For the first quarter of 2024, they expect sales volumes and prices to remain steady. In South America, they had strong operating results despite weather-related challenges and expect margins to decrease in the first quarter due to seasonality. Canpotex executed their capital allocation strategy in 2023 and their balance sheet remains optimized. They spent $1.4 billion in CapEx and made progress on their investment projects.

In 2024, the company's top strategic initiatives include driving down costs, increasing resilience and flexibility, improving production volumes, expanding their presence in Brazil, growing non-commodity products, and remaining disciplined in their capital allocation strategy. They also plan to achieve $150 million in annual savings and extend patent protection for their MicroEssentials Pro product.

The company expects to reduce capital spending in 2024 and return excess cash to shareholders. The outlook for agriculture and fertilizer markets is positive, and the company has a strategic plan to optimize returns and grow. The CEO looks forward to updating on progress throughout the year. In response to common questions, the company addresses the diverging market dynamics of potash and phosphates, with phosphates being strong and potash finding its way. Phosphate markets are positive due to strong demand and low inventories, and the company's outlook for the year remains positive.

The article discusses the current state of the phosphate and potash fertilizer markets in India, China, and Southeast Asia. Subsidy rates for phosphate fertilizers have increased due to strong demand and low inventories. China is limiting exports to ensure domestic supply and meet rising industrial demand. Potash supply constraints from Belarus and Russia are expected to improve in 2024, while demand remains stable in North America and Southeast Asia. In China, fertilizer stock-to-use ratio is normal, but inventories may need to remain higher to meet strategic reserve goals.

The article discusses the current state of the global potash market and predicts a need for continued high import volumes due to lower Chinese domestic production and increased demand. The company, Mosaic, plans to increase phosphate production and improve margins through increased MicroEssentials volumes. In the potash segment, Mosaic will focus on flexibility and cost management, including curtailing production at certain sites and investing in projects to increase product mix flexibility.

The company's focus on cost reduction and optimization of investments will allow them to adjust their product mix and respond to market changes effectively. They have taken early action to destock excess inventory and expect record or near record fertilizer shipments in 2024. CapEx spending will decline by $200 million this year and is expected to continue to decrease in the future.

Bruce Bodine discusses the decline in capital expenditures due to the completion of high-returning projects, with a further reduction expected in 2025. During the Q&A session, Steve Byrne asks about the forecast for global shipments of phosphate and potash, which appear to be lower than expected given the reported deficit in consumption. Bruce and Jenny address this by mentioning the under-application of fertilizer and the bullish outlook for record shipments in these markets.

Jenny Wang and Steve discuss the demand for P&K in the soil and the impact of under applications on potash yield. They project a higher demand for 2024 due to the need for growers to replenish nutrients. They also mention a recovery in smaller markets in Asia and Latin America after two years of under application. The next question asks about the decision to curtail production at Colonsay and the levels of demand and price needed to restart it. The response states that potash supply is currently adequate to meet demand and the decision to curtail production was not based on one factor.

The company is evaluating the flexibility within their network, considering market and customer demands as well as shareholder value. They are optimistic about demand recovery for potash in 2024 and have shut down their Colonsay mine temporarily. They plan to quickly restore production when market demand returns and shareholder value is determined. The focus is on maximizing value from their two low-cost production facilities. The demand for potash has been strong, particularly in North America, China, India, and Brazil.

The company expects continued growth in potash demand in Brazil and India in 2024, with a recovery in other smaller markets. They believe they are at or close to the price bottom in the market and have seen some major price recovery in Brazil. The company is focused on meeting customer demand and maximizing value for shareholders. In regards to phosphates, supply is extremely tight and this is driving strong margins for the company, with restrictions out of China contributing to the tight supply.

The speaker discusses the strong performance of the company over the past decade and expects it to continue, with potential pricing bubbles due to seasonality. They also mention the production of phosphate in Morocco and the uncertainty surrounding imports into the US market. A team is closely monitoring the situation and there has been a recovery in phosphate fertilizer exports but a reduction in phosphate rock exports. Overall, there is expected to be a stable supply from OCP in 2024.

The speaker believes that despite the high prices for phosphate, farmers will not cut back on their use of it due to the affordability of other nutrients and the overall economic situation. Additionally, corn and soybean demand only accounts for a small portion of global fertilizer demand.

The company is expecting to return to an 8 million tonne annual run rate for phosphate production in the next few quarters. This is a strategic focus for the company due to the high demand and limited supply in the market. Last year, two sulfur plants in Louisiana went down, impacting production in the second half of the year. The company is confident in their ability to reach this goal.

The company has had some recent maintenance issues, but they have now returned to full service. They are gradually increasing production and expect to reach their target of 2 million tonnes by the end of the year. This will result in a cost improvement of $20 to $25 per tonne. The company also plans to implement cost reduction initiatives, including reducing G&A spending and managing working capital and CapEx.

The speaker discusses the benefits of the company's partnership with Ma'aden, including market access and intelligence. They also mention the possibility of future investment, but it is not a top priority at the moment. The joint venture has been successful and continues to be a valuable part of the company's portfolio.

Clint Freeland discusses the economic aspects of the company and mentions that they received a cash dividend last year, but a large portion of their earnings went towards paying down debt. He also mentions that they earn income from marketing fees and selling tons. He explains that this is the reason for the difference between equity earnings and cash received. The next question is about the working capital requirement for 2024 and Bruce Bodine responds that there was a significant release last year, but they may see working capital investment in the future.

The speaker, Clint Freeland, discusses the company's focus on managing working capital and its success compared to others in the industry. He notes that the changes in working capital over the past few years have been driven by the price environment and the company's distribution business in Brazil. They are working to improve inventory turnover and manage payables and receivables to reduce the amount of working capital needed. The company has also set up funding alternatives to mitigate seasonal fluctuations in working capital.

The speaker is discussing the phosphate margins and how they are affected by price environment. They mention that they are trying to be thoughtful about funding and not just using cash. The next question is about the sequential gross margin move and how it compares to the first quarter. The speaker explains that there may be a little bit of expansion, but costs are still a drag due to the turnaround schedule. They also mention their advantaged position on ammonia and access to low-cost sulfur, which helps differentiate them from the industry. They believe that stripping margins and gross margins will still be good.

The speaker reiterates the key messages of the call, including the strong global phosphate market, emerging potash demand, plans to optimize operations, and unchanged capital allocation strategy. They also mention a recent turnaround and investments in their converter for higher reliability in ammonia sourcing.

The company's main focus is on achieving profitable returns and distributing excess cash to shareholders. The speaker thanks everyone for participating in the call and wishes them a safe day. The operator then ends the call, thanking everyone for attending and allowing them to disconnect.

This summary was generated with AI and may contain some inaccuracies.