Investor Update

Nov 9, 2020

Slides

Good morning, everyone, and thank you for joining us today at the second of four company hosted presentations. Each of these chapters was created to provide you with better insights into our strategy and operational focus areas. Before we begin, please review the Safe Harbor and familiarize yourself with our conference capabilities, especially the Q and A box on your screen. You may enter a question at any time, and we will address them at the end of this presentation. Now Mosaic is a mission driven and strategy driven organization. We take each of these seriously and ensure every Mosaic employee is aligned, focused and driving towards the same outcomes. Earlier this year, we introduced six refreshed strategic priorities that set the foundation for our decisions and actions over the next five years. What you've seen from Mosaic is a positive, measurable and real impact of these efforts. Results like this just don't happen by chance. We have made exceptional progress transforming our business. We are exceeding our financial and operational targets, and we are outperforming many of our expectations despite a global pandemic and fertilizer prices that are still recovering. Today, we are looking ahead to a positive 2021 with a strong financial foundation, high quality, well placed assets and a leadership presence in our key agricultural markets. Now in September, Bruce Bodine and Karen Swagger reviewed two of Mosaic's strategic priorities, the North American transformation and our drive for functional efficiency and collaboration. Today, Corinne Ricard will provide an in-depth review of our third strategic priority, the South American growth engine. Now this name is a perfect fit for the opportunity ahead in Brazil. We have concrete plans to accelerate the growth of our distribution business in this fast growing market, while also transforming production. Together, these actions have the potential to generate over $250,000,000 in EBITDA growth from our 2019 base through to 2023. With that, I'd like to pass the meeting over to Karim, our Senior Vice President of Mosaic Fertilizantes. She will walk us through the details of our Brazil business. Karim? Thanks, Chuck. Brazil has become a highly attractive country for agribusiness. The government is encouraging agribusiness through tax exemptions on agricultural exports, and annual crop plans provide low interest loans to small farmers. There's a strong focus on building infrastructure, including rail logistics systems, investments in ports and continued road improvements throughout the country. The government has a reform agenda, enacting competitive labor laws, and the independent central bank maintains low interest rates and inflation is within the bank's targets. It is a very promising time for agribusiness in Brazil, and these factors are really benefiting Mosaic Fertilizantes' business. We'll see that in the following presentation. So you see here, Brazil makes an important contribution to the global grains production. It is the world's largest producer and exporter of soybeans, sugar, coffee, citrus and poultry, and is highly ranked in the production and the exports of corn, ethanol, cotton, pork and beef. Today, agribusiness represents 22% of Brazil's GDP. The Agribusiness exports totaled $96,000,000,000 last year. That amount represents over 43% of Brazil's total exports. And the trade data on this chart shows that the sector's importance overall in the trade balance of the country is significant. Here, we see the tremendous growth in grains production with a 5.05% compound annual growth rate sustained over a twenty year period. It's interesting to note that the grains production is accelerating faster than the planted acres, and there are a couple of reasons for this. First, it's due in part to the trend towards double cropping, which is contributing more efficiency in the agricultural production system. Double cropping has been growing at 6.3% compound annual growth rates. Technology improvements are also helping to get this improved productivity, with new input products like MicroEssentials allowing greater yields for farmers on their existing acres. Farm revenue from agribusiness, both cropping and livestock production, have grown to record levels in 2020 and are projected to move even higher into 2021. These higher prices, when compared with the price of fertilizer, is giving us an affordability ratio between ag commodity prices and fertilizer prices. And this ratio is something that the market tracks very closely, and it's quite favorable for farmers today and into next year. Higher profitability for agricultural products have given strong signals to farmers to increase their planted acres, grow their double cropping and invest in performance fertilizer products such as MicroEssentials. The excellent economics that we see today are signaling farmers to lock in their margins by selling their grain for the 2021 harvest and forward purchasing their fertilizer. Our sales activity levels for next year are telling us that another good year lies ahead. This exceptional environment for agriculture has led to a strong and growing fertilizer market in Brazil. Forecast for fertilizer demand put the overall market at 38,500,000 metric tons for 2020. Demand growth has been steady in Brazil. We see here that over a twenty year period, there's been a 4.26% compound annual growth rate for fertilizer demand, placing Brazil as the top market for growth globally. Beyond the good news of overall fertilizer demand and the high rate of growth, it's really important to note that 70% of that demand is for potash and phosphate products because of the high proportion of soybean production here in Brazil. This is a particularly good fit for Mosaic given our global production assets. Now I'd like to take a turn to look at Mosaic Fertilizantes' position within this important market. We produce 69% of the in country phosphate production, and we're the only domestic potash producer within the country. Mosaic Fertilizantes, through our production and distribution business, access 24% of the market. Now where is all that fertilizer used in the country? Well, demand in Brazil is most intense in the West Central and Southern regions of the country. You can see on this map, which details the percentage of the total country's fertilizer consumption by state, that the darker colors indicate states where you have higher usage rates of fertilizer. Now if we are going to overlay Mosaic Fertilizantes production and distribution assets, you can see that we are well located. First, our phosphate mines at Capira, Catalao, Eraxa, Petroceno and Cagatea. Next, you'll see our phosphate production at Petalao, Eraxa, Ubaraba and Cagatea and also our potash mine in Sergipe. Then our warehouses and blending operations, which are located in the regions with the highest fertilizer demand. And finally, our port operations located in Paranaghua, Santos and Paraguay. The locations of these assets provide a significant advantage for Mosaic Fertilizantes. In the peak season, typical transportation costs to discharge imported product at a port and to reach farms all the way into Mato Grosso can be upwards of $32 a metric ton. Mosaic Fertilizantes domestic production enjoys a $14 a ton locational advantage over imported products. Altogether, our assets are exceptionally well positioned to serve the top Brazilian fertilizer market areas. Now before we talk about Mosaic Fertilizantes business and specifics, it's important to understand the market structure of fertilizer trade within Brazil. Domestic production represents only about 25% of fertilizer demand within the country, while imported products fulfill 75% of the demand. And as the market demand is growing within Brazil, we will be even more dependent upon imports. 95% of these nutrients move into the blender network, where different nutrients are combined in order to create finished fertilizer products. More than half of these blended products move directly to large farmers, while a small portion moves through the traditional dealer networks in Brazil. Now Mosaic participates in both the business to business channel and the business to consumer channel, and both channels are very important to us. We believe that this market approach is synergistic and provides overall benefits to our strategy. We have strong insight into farm economics because of our relationships with very large farmers. And we understand the needs of retail dealers and large cooperative systems because of our important relationships with these customers. Now who else is in this market with us? In terms of our competitors who have distribution businesses within Brazil, Mosaic, Yara and Fertipar have significant presence and are growing consistently. Urochem has entered the market with their acquisition of TokenTEAM, and they are growing. And they stated their plans to grow through acquisition and new construction. Harringer has partially recovered some of the volume that they lost in 2019. And then there is a great number of much smaller dealers in the market making up the balance of these shipments. Now some of you are bound to ask about Nutrien. They do have they have made some retail investments, and they've indicated their interest to grow in Brazil in the retail segment through acquisitions and constructions of new retail distribution assets. And they are growing an important customer to Mosaic Fertilizantes. With the strong environment in Brazil, our assets are very well positioned to take advantage of the favorable environment. We have been developing our strategy for Mosaic in Brazil. And in this strategy, we intend to deliver growth in our distribution business, and we will continue to transform our production business, growing it selectively. We have clear focus to grow our distribution business, and I'll speak about that first. Over the next five years, with the target to grow faster in the marketed Fortef growth rate, you see here that the market experts are calling for about a 2% growth rate in the fertilizer market over the next five years. We intend to more than double that rate of growth by fully utilizing our existing blending capacity. And with some selective acquisition, as small dealers are choosing to consolidate, it's possible we could reach as high as a 10% growth rate. We will also be doubling our Performance Product volumes with MicroEssentials reaching 2,000,000 metric tons. We can achieve this growth by building on our digital interactions with our customers. Today, we provide agronomic training and information online, but we can move beyond this to further reach new customers in new markets. We'll be using digital connections to support our Performance Products growth as well. This will allow us maximizing our asset capacity utilization. Today, we have approximately 2,000,000 metric tons of available blending capacity, which we plan to ramp up for full utilization by 2023. And finally, we'll be selectively pursuing other growth opportunities, if they make sense, after we've achieved full capacity utilization on our blending assets. In the second major portion of our strategy, we will be continuing the aggressive journey of transformation and growing our production business. We will make selective investments to strengthen core assets, focusing on the locations that have the highest cash generation potential. And we'll continue our transformation programs to increase efficiency in our operations, lowering our costs through appropriate investments and developing our top line opportunities. And we'll fully develop the many co products markets, which are possible as a byproduct of our production processes. Important co products like gypsum and magnetite have the potential to become significant in the coming years, providing additional revenue and most importantly, reducing the costs associated with the waste management at our production facilities. Now transformation has become an important part of our culture. We've been at this journey since the day we integrated the fertilizer production assets with our distribution business. And frankly, we've gotten pretty good at it. Our employees are bringing forward thousands of ideas each year. And through a systematic process of evaluation, we determine their potential and the best ones are selected for implementation. At any given time, our teams are evaluating, implementing and tracking the results on thousands of projects that we've deployed through this transformation process. It's important to note that the transformation initiatives include cost reduction ideas. But beyond that, there are top line initiatives, which are adding to the revenues, things like new approaches to pricing, new product introductions and co products. The first round of our transformation program was targeting $275,000,000 of benefits by the year 2020. In reality, the team realized $330,000,000 of benefits in 2019, dollars 55,000,000 more and one year faster than the original goals. So at the beginning of 2020, we aligned on another round of transformation and set a new goal to capture an additional $200,000,000 by 2022. We expect to realize $100,000,000 of benefits from this program in 2020, again, accelerating on the pace of transformation faster than our original expectations. Now it's important to remember that these transformation benefits are measured against the base starting point and report these savings in U. S. Dollars, meaning any deterioration in foreign exchange rates we are overcoming to deliver on these stated goals. And I would note, we have a very strict governance process in place to validate the gains as reported. Now I'd like to give you a little bit of insight into some of these initiatives that we're pursuing in our commercial and operations areas. First, we'll talk about the production and the operations area. We're leveraging our phosphate operations knowledge from our North American business to automate and improve our concentrate operations, Improved process controls with added automation can ensure that our plants are operating at their peak efficiently consistently. We're improving the phosphate mass recovery from our mines through improved operations of our beneficiation plant. Again, improved process control and added automation can improve the mineral recoveries of those operations. We are implementing a predictive maintenance system to minimize unplanned downtime due to equipment interruptions, and this will improve the reliability and ultimately, the operating rate in our mines and our plants. Finally, we're implementing a fleet and diesel management system, which will lower our costs and improve the efficiency of our heavy mobile equipment. In the commercial area, we also have a number of initiatives. We're completing a price optimization project, which is really a suite of tools, which standardize the process to calculate prices, reducing the time for us to develop a quotation for our customers and helping to streamline the contract entry into our SAP system. There are several algorithms that are applied to the pricing data to identify opportunities where we should adjust prices. Secondly, we're enhancing our digital customer strategy to improve our connection to our customers, providing agronomic training, product demonstrations and helping to generate sales leads, which we pass on to our dealer customers. We're implementing a trucking optimization program, which allows for improved scheduling for truck loading. This is greatly reducing waiting times and our transportation costs. And finally, we're developing new products and co products from our operations that have the potential to generate earnings and to reduce costs. Gypsum is a very good example here. We have increased our gypsum sales to 5,500,000 metric tons per year. These sales greatly reduce the need to build future gypsum stacks at our facilities, while at the same time providing a desirable phosphate and sulfur product to farmers. Now looking in more detail at the impact all of these programs in the transformation area will have on our cost structures. Looking at mark costs, in this chart, you'll see the incremental EBITDA each year from these transformation programs as well as some other initiatives. And you can see that only a modest level of capital is required each year for these programs. In the bubble chart, you'll see the progress that we've made on our rock cost to date, with 2020 rock costs coming in at BRL $3.24 per ton. We will reach our 2021 goals for cash rock costs of BRL $3.20 per ton. And we have established a new goal for 2023 of BRL $3.15 per ton. Similarly, here, you see the impact of the transformation programs on the phosphate conversion costs and the incremental EBITDA generated from these programs. Again, a modest level of incremental capital will be required to achieve these results. In the bubble chart, you'll see the progress already made on phosphate cash conversion costs, with our 2020 at BRL302 per ton. We will achieve our 2021 goal of BRL280 per ton. And in 2023, you will see these costs up just a little bit to BRL290 per ton. We plan to be producing a different product mix by 2023 with more higher analysis products and PK products, which do have a slightly higher cost, but deliver a higher margin. When we look at the total results of transformation and growth initiatives, we can see the impact on our incremental EBITDA each year until 2023. In 2020, we have improvements in our operations, improvements in our commercial results and we have other cost savings initiatives, all adding up to 100,000,000 of incremental EBITDA in 2020. For 2021 through 2023, you will see continued impact of transformation improvements as well as growth in our distribution business. And by 2023, we will deliver in USD230 million per year of incremental EBITDA, accomplished through modest incremental capital expenditure spread over the same time period. Finally, I'd like to highlight the ESG programs that we have implemented within Mosaic Fertilizantes. We have mobilized our employees and volunteers to support our COVID-nineteen response, helping 84 communities in 26 cities across Brazil, benefiting 110,000 people overall. We've distributed hygiene kits and PPE. We've donated medical supplies, including COVID tests for communities as well as donating hospital equipment. We're also continuing our work to ensure that our tailings dam safety management procedures exceed the state and federal regulations. Earlier this year, Mosaic announced its new sustainability targets with the 2025 horizon. And in Brazil, we're fully reflecting this work into every aspect of our business, focusing on such priority areas as health and safety, diversity and inclusion, climate change, water and wastewater, dams and gypsum management and soil health. Finally, we're providing ongoing support to local communities in the areas of food security, clean water, education and local development, all through the Mosaic Institute. I hope you can see that the excellent environment for agribusiness in Brazil and how well positioned Mosaic Fertilizantes is to take advantage of this environment. Now, I'll turn it back to Joc for some final comments. Joc? Thanks, Karim. I think you can see from what you've just heard how excited we are about the opportunity ahead for Mosaic and our customers in Brazil and for all the reasons you've just heard today. When you add the strong momentum in Brazil to the growth in our North American businesses we described on September 18, we see over $700,000,000 in annual EBITDA growth by 2023, driven solely by our own actions. We'll leave it up to you to overlay our market based assumptions on top of those. Now based on what we control within four years from 2019 to 2023, we expect to drive a cumulative addition of over $2,000,000,000 of adjusted EBITDA, a sound proxy for cash flow with gross capital expenditures including Esterhazy K3 of around $485,000,000 this would simply put us at an incremental $1,500,000,000 of cash flow based on the transformation and our growth initiatives across our businesses. Now before we open it up for questions, I'd like to remind you of our upcoming strategy presentations. On December 10, we'll shift to sustainability with two key strategy focus topics. First, act responsibly and then the second, grow and strengthen our product portfolio. We'll talk about our product portfolio highlighting our performance products and we'll talk about our 13 new ESG targets that we rolled out this summer. In a presentation in the New Year, Clint Freeland will address our final strategic priority, which is to optimize operating assets and capital management. At the same time, Clint will also review the combined financial implications of the strategy based on where we were at the 2020. When complete, we hope to have a clear understanding for you about Mosaic's path forward, including the actions we will take to drive superior shareholder value. Now, let's open it up for questions. Paul? Thanks, Joc. Just a reminder to look for the chat box on your screen and enter questions there. Lara and I are compiling all the questions and hope to get to as many as we can over the next few minutes. If we can't get to any questions, please follow-up with us after the call. Just a few seconds and we'll get started. Joc, our first question comes from Ben Isaacson at Scotia Capital. He asks, how do you see different parts of the Brazilian fertilizer chain evolving over the next five years? Will there be consolidation, new entrants coming in, any market share swings? Okay. Thanks, Ben. I'm going to let Corinne have a shot at this. But yes, let me say, I think there definitely is going to have to be some consolidation in Brazil. We have some very strong large players like ourselves in Lera. And then we have some other smaller players and third party, of course. But we have some other smaller players that probably will shift out over time and then new market entrants, just like as Corinne mentioned, Eurocamp. Corinne, do you want to talk how you see that market kind of developing over the next five years? I would really agree with your comments, Jack. I think that some of the smaller players are choosing to change their focus, potentially exiting the business. And we do see that there are some advantages to the size and base that we have in our business. So I think there will be some opportunities for some growth in that area. Yes. I just want to emphasize the ownership of infrastructure, warehousing and whatnot makes a big, big difference in this business. So it's hard for a small player to really compete with the larger players. Our next question comes from Mark Connelly at Stephens. With the strength in Brazil farmer income, do you expect micronutrient growth to significantly outpace commodity phosphate demand growth? Which Brazil crops and regions are showing the best micronutrient growth? Yes. Thanks. Karim, do you want to just take this? I mean, definitely, we see great growth for MicroEssentials. Do you want to talk about the specialty products? Sure. Absolutely. All of performance products are growing at a faster rate than the commodity products today. Our forecasts have embedded in them about an 8% compound annual growth rate around these performance products. MicroEssentials is part of it, but we also have Aspire, KMAG and NPK products that we're producing that are growing more rapidly as farmers are deciding to invest more in order to reach higher yields at these economics. Our next question comes from John Roberts at UBS. He asks, Morocco and Russia are expected to increase their phosphate exports to Brazil. Will that be primarily through small distributors that control less than 20% of the market? Or do they have any partnerships with the larger distribution competitors to Frito's Anches? Yes. Thanks for that, John. And again, we'll Kern and I will hand this off. There's no question, each of the major suppliers around the world are looking for new ways to get into Brazil. And in that, we have a great first mover advantage, but there are some other large players. Morocco is still the largest importer of phosphates into Brazil and likely that will continue. They sell to both Yara, Vertibar and probably many other of the smaller players. And then you have EuroChem who's actually building capacity and FossAgro who again sells through many of the other players and the minor players, very many. Yes. I would concur, Jack. I think that all of the global producers are looking for their relationships to be solidified in Brazil. We're seeing partnerships with MaDin as well, partnering with Eora and some of the large distributors in the country. So most of the large producers globally have got key relationships with some of the large distributors as well as some of the smaller distributors within Brazil. Our next question comes from Steve Byrne at Bank of America. He asks, how will your business evolve as highway and rail access to the Amazon improves? Sorry, Paul, I couldn't hear you properly. Could you repeat that? Sure. Steve Byrne is asking how our business will evolve as highway and rail access to the Amazon improves? Okay. Thanks. Steve, thanks for the question. Again, I think we all look at this the industry is probably moving into the Southwest and continuing to grow towards the Southwest as pasture land gets moved into farmland. The Amazon itself is an area where we would like to see protected. We wouldn't like to see people go in there. But certainly, there is a transportation route from the North. And as that develops, that will help produce better economics for the farmland in that Southwest part of this country. We have a question from Andrew Wong at RBC. The Fertilizantes transformation has been really impressive with a lot of what seemed like small or medium improvements that have added up. It sounds like a lot of the initiatives are from employee driven ideas. What incentives have been put in place to encourage employees to keep bringing ideas forward? And how many of these projects are there still in the queue? Andrew, I'm going to let Karim talk a little bit about those programs. But while it's obviously in their best interest with normal competitiveness and whatnot to do better, we haven't had any big specific incentive programs for the rank and file employees. It's driven by their own competitiveness, pride and culture. Bren, do you want to? Sure. Yes. Our employees are invested in the overall success of the business. And so we certainly, in our normal performance measurements for their incentive programs, have our overall cash costs as well as overall profitability, but there is nothing specific about the transformation alone. But I would say they are aligned well with the overall success of the business. And in terms of the number of projects, there are still thousands of projects that we are tracking and implementing. And we are really impressed with the rate of new ideas that keep coming in. As I mentioned, even the new program, which we just announced a year ago, we're already running well ahead of pace. And it's because of the rate of ideas that are coming up from our employees. And again, these are small a few midsized projects, but mostly small related projects, as you can see from the relatively modest level of capital required to implement them. Ben Isaacson asks, do you have any interest in investing further downstream in Brazil, and in particular, at the dealer or retail level in order to capture and control the full value chain? Yes. Thanks, Ben. Let me touch on that one again, Corinne, if you have more to add. But as we see the market, the large farmers were already delivering directly to a lot of the large farmers. When you get down to the retail level in Brazil, from our perspective, you have a lot of complications that are more difficult than maybe in another environment. And those are credit, particularly a lot of small, small retailers who really aren't any bigger than the big farmers. So from our perspective, we think we're participating in the right part of that value chain and the incremental value of going downstream from there is pretty minor and recognized too. The one place where we do deal with directly with the farmers in a more holistic way is through barter, but we do that through the big grain companies of ADM and Cargill. Brayne, do you want to talk about that a little? Yes. I would say that the retail segment in Brazil requires great expertise in all inputs, which is not something that we have a background in. It's a higher working capital business. And our focus has really been on helping those dealers in the market succeed by bringing them performance products and reliable access to commodity fertilizer products. And we have had great success in building our market presence through them and through those distribution systems. We've had a few questions come in about potash production in Brazil. The first is from Joel Jackson asking when we expect potash production to be shut down or what year we expect potash production to be shut down and what the impact on EBITDA would be as well as on pricing? As a follow-up, he asked if there's any way to extend the reserve base life there and what investment would be needed to do so? Well, thanks, Joel and all. Yes, first of all, I think I'm going to hand that straight to Corinne. We are doing a lot of work on how we can extend that property. While it's not a large property, it's been a good little generator and it is very much an important property for us. Brent, do you want to talk about Yes. Sure, Jack. What I would say, Joel, is that the potash asset today is a small production facility that has a good generation of EBITDA for us. As Joc said, we're evaluating the opportunities to extend the underground mining at that site. We believe we can extend that underground mining until 2026. And so we'll do further evaluation to see if there's potential beyond that time period, beyond 2026. If there was no production from that site, it's about a $50,000,000 impact. But again, we believe we can push that off at least till 2026, and we're exploring pushing it further. The only follow-up there for the folks is this is these are we're now talking about our strategy and intention rather than something specifically in our plan, yet to be determined. Ben Isaacson follows up on this asking if we've heard of any others that are looking to develop new potash mines in Brazil. And is this something that the government wants and is providing incentives for? Yes. Ken. Yes, this is something that definitely the government wants. I don't think there's any really great new potash deposits that people are close to developing. Karen, are you aware of any? I'm not sure I'm aware of any big ones or any significant ones that are out there. There's no concessions that are economically viable today. It would take very different pricing situation to be able to make those viable. So no, we're not aware of any projects that are imminent and any government support that's happening for any projects. But certainly, the government would like to see more self sufficiency in fertilizer. Vincent Andrews from Morgan Stanley asks, is there any potential to increase gross phosphate mine production in Brazil? Corinne, go ahead. Yes. I think what we're targeting, Vincent, is improved efficiency. There will be some small volume expansion opportunities as we debottleneck, but these are relatively minor projects, and they're envisioned in our transformation efforts that you saw. A follow-up from Vincent. He asks how much it costs to construct a blend facility and how long it takes? How long does it cost how much does it cost to build a blend facility? Is that the question, Paul? That's right, John. Much does it cost to construct a blend facility? I guess we do have some information on our Sariso plant. I'm not sure I have the exact cost details on that. Yes. A brand new construction for a blend plant might be BRL40 million. But I'd like to emphasize, we have 2,000,000 tons of blended blending capacity that's available for us to optimize first before we would need to grow. The market has quite a bit of excessive blend capacity already. Jonas Oxgaard asks, is there room to consolidate the Brazilian distribution market further? And could you quantify the benefit from doing so, if any at all? Thanks, Jonas. Again, Karim, why don't you this is all good for you. Sure. Yes, there are a number of smaller blenders and dealers out there that are operating in this market, as we showed when we looked at that competitor's slide. And there will be opportunities for consolidation in this area as some of them choose to exit their businesses. And we'll be looking at these opportunities as they come up. Our first priority, though, is to grow our existing asset utilization. Michael Piken of Cleveland Research asks, does our growth in Brazilian distribution impact the future of Canpotex? Going to take that through, Michael. Does it well, certainly, we are becoming a bigger and bigger customer of Canpotex. And so does it impact Canpotex? I guess as the biggest customer, we are pretty critical for Campotex, only in Brazil, but also in India and China now where we have significant distribution of product. Another question from Ben Isaacson. He asks, do you expect the Brazilian real to revert to the mean over time? And if so, what will that mean for farmer profitability and farmer enthusiasm to spend on discretionary crop inputs? Yes. Thanks, Ben. I guess a long time ago, I've learned not to try and forecast currencies. It's a no win game for sure. We have put in, I believe in a number of documents the sensitivity to the Brazilian real. Clint, do you want to talk a little bit about that sensitivity? Yes. Ben, as we look at the impact of the real on our EBITDA from the business, I think what we've talked about is sensitivity on an annual basis, on an unhedged basis for every 0.1 move in the real versus the dollar, that's about a $21,000,000 impact to our Brazil businesses EBITDA. Keep in mind, though that we do tend to hedge quite a bit of that exposure. And so you should assume we're about 50% hedged at any one time. I would only add that fertilizer economics in Brazil are always viewed in that barter ratio, in that affordability index or comparability between grain price and fertilizer price. And fertilizer is not a discretionary item in Brazil. With these tropical cultures and the intensive nature of the agriculture here, fertilizer is not a discretionary purchase. And so we see farmer affordability in that ratio and barter ratio still remaining very successful. We have another question from Jonas Oxgaard at Bernstein. What is the tangible benefit from integrating phosphate production with distribution? And assuming there is a benefit, would that imply a benefit from integrating nitrogen production? Okay. Thanks, Jonas. Bryn, do you want to take that? I think there's some let me start by saying there is some tremendous benefits that we've seen in terms of transportation and logistics being able to sell better through our production business. But Karin, do you want to go through? Yes. Absolutely, Jack. The integration of these businesses has a lot of advantage. Partly on the information side, which I talked about, we have good information and insight to what's really happening in the market, and we can bring that back to our production business. And our production side, that information is really valuable. We have great insight to seasonality. We have the ability to smooth out the logistics seasonality peaks and valleys by having our own storage at our distribution assets. And so those kinds of advantages are pretty significant for us. I think in terms of nitrogen, it's really more of a question for North America. Given 70% of the fertilizer demand in Brazil is for phosphates and potash products, we wouldn't really see it as having the same connection nitrogen as having the same connection. But Jacques, I don't know if you want to comment more broadly on nitrogen. I think that's fair. We haven't been we aren't a major nitrogen producer today. And so we don't believe that we're necessarily the right people to run nitrogen plants. We think that the big nitrogen producers are probably more efficient because they have that global footprint. Our next question comes from Vincent Andrews at Morgan Stanley. And he asks, you spoke a lot about analytics and digitization. How far along with those tools are you in Brazil versus North America? Corrine, I'm going to hand it straight to you to talk about that. Sure. I would say that as it relates to the customer facing digital interactions, we're probably further ahead than North America. We have quite a few more programs that are designed for specialty education that we're deploying online around performance products, around balanced nutrition. And so we've got pretty extensive programs there in terms of the customer facing programs. Within our operations, I would say we're probably behind North America. These assets have some work to be done on the basic automation and process controls before we'd really benefit from sort of that next gen operational digital type of transformation environment. But we are watching carefully and learning from the North American experience in that regard. I think, Vincent, that's another just a highlight point is there's places where Brazil is pioneering, let's say, in data analytics and markets, particularly looking at pricing data and trying to really understand the pricing dynamic in different parts of the country. And so in North America, we're learning from that. And likewise, as we look at data analytics from our advanced process control systems in The U. S, Brazil is learning from that. So it's one of the benefits of a larger footprint. Jacques, our last question comes from John Roberts at UBS. K plus S, Gaffaire and Nutrien all had major agricultural asset write downs last week. Write downs are often seen as forward looking signals about a worsening outlook. Do you see those write downs as more backward looking or company specific? He's trying to square that with Mosaic's upbeat outlook. Yes. Thanks, John. I mean, I definitely look at this and say, these are fundamental asset write downs. And if you look at Nutrien, and again, I'm not the one to really comment on Nutrien Nutrien in general. But if I look at that, I'm assuming that the trigger was something that they took to the Board, maybe it was an update on their reserves or something like that. And their markets are a little different in that they sell a lot of purified phosphoric acid into the market. So that industrial market may have slowed down more, I'm not sure. But in general, you're looking at fairly short life set of assets there in the system. And then if you look at the K plus that's a completely different issue in that you start looking at their German operations, which again are coming to their end of their life, and you can really see where it's difficult. And then even their Bethune where they've been relatively unsuccessful at bringing that thing up to production. So it's such an asset specific issue that when you get into low part of the market, you're going to start to see those of the woodwork from time to time. Now Paul, I'm told there might be another question still on the books. Yes. In fact, we actually just got two questions. So we'll go ahead and address those. Is from Jonas Oxgaard at Bernstein. He asked, would there be room to leverage your logistics assets to also distribute siege and or crop protection chemicals? Yes. Thanks, Jonas. I mean, that's a topic we've discussed a lot. We think we have a pretty good platform to bring in new products. And we're sort of dipping our toe in the water on that. But yes, think over the in the future, we're going to be able to use our distribution network to bring in a lot of other products that will add value to that system. And Steve Byrne from Bank of America asks, transportation of fertilizer and grain has been a consistent challenge in Brazil. What is your outlook for an improvement in the rail infrastructure to reduce the reliance on trucking? Yes. Thanks, Steve. All I can say there is probably don't hold your breath. This is something that comes slowly. There has been improvements. But overall, I mean, that's one of our competitive advantages. You really have to be in that country and you have to have upcountry assets. You have to be able to move stuff as efficiently as you can within the system. But it's going to be a long time before Brazil is, I would say, as efficient as The U. S. In terms of transport. But they're it is getting better. There are improvements. But that all certainly takes time. Okay. If that's the question, I'd just like to summarize. To do that, I just want to reiterate, based on what we control within the next four years from 2019 to 2023, we expect to drive a cumulative additional benefit of over $2,000,000,000 of adjusted EBITDA. And that's a pretty sound proxy for improved cash flow. And if you consider our growth capital, which included Esterhazy K3 of about CAD500 million, we would have an incremental CAD1.5 billion of cash flow based on the transformation and our growth initiatives across all of our business. So with that, I'd like to thank you for your attention today. Please go out, have a safe and healthy day. Goodbye.