Here are some interesting quotes from the conference call:

Bill Doyle: Despite the turbulence around us, our company delivered the best quarter in our history. Our earnings of $3.93 per share were 39% higher then the record we set in the second quarter this year and greater then the $3.40 per share earned in all of 2007 which was a record year for our company.

We generated $1.7 billion in gross margin, more then triple last year’s third quarter. This included record gross margin in all three nutrients as we captured the benefits of a strong pricing environment. Our cash flow from operating activities prior to working capital changes reached $1.3 billion and raised our total for the first nine months of 2008 to $2.9 billion.

Whether you are in North America or China or India, there is no denying that nutritious is essential to health and happiness.

This is not an area where people are willing to cut back. If absolutely squeezed those at the margin may opt for cheaper cuts of meat, but they will not return to starch based diets. That is a long-term reality for our businesses.

Global grain inventories remain at critically low levels even though the world’s farmers have produced what is expected to be another record harvest. The world’s grain stocks to use ratio is estimated at 16.6% which compares to a 30-year average of 25.3%.

This is not a surprise to those who follow our business. As production has fallen short of consumption for most of the past decade, countries have drawn down grain inventories to dangerously low levels to satisfy growing food demand.

Now we’ll take a record crop every year just to keep pace. And it will take even greater efforts by governments, farmers, and fertilizer producers to begin the slow process of replenishing global grain inventories.

This can’t be resolved in a single crop year, in fact using some historically conservative assumptions about future demand for grain, coupled with continued production and yield improvements, it is expected that the global stocks to use ratio will remain at historically low levels for at least the next five years.

My comment: My view is that forced liquidation of quality companies like this are giving patient, rational investors like us a unique opportunity to buy into a company that is basically essential in keeping people alive. The upshot is that as Potash should weather this downturn better then most companies the stock price will really come roaring back when liquidity returns to the markets. The company is forecasting earnings of $12-13 for 2008 which puts the stock at round a 5.5 P/E. That sounds like a good risk/reward situation.

John Polomny
The Real Deal