all amounts are in US dollars except as
otherwise noted
Nutrien Ltd. (Nutrien) (NYSE, TSX: NTR) announced today its 2019
fourth-quarter and full year 2019 results, with a net loss from
continuing operations of $48 million ($0.08 diluted loss per share)
in the fourth quarter of 2019. Fourth-quarter adjusted net earnings
was $0.09 per share and adjusted EBITDA was $664 million. Adjusted
net earnings (total and per share amounts) and adjusted EBITDA,
together with the related annual guidance, Potash adjusted EBITDA,
free cash flow and free cash flow including changes in non-cash
working capital are non-IFRS financial measures. See the “Non-IFRS
Financial Measures” section for further information.
“Nutrien’s earnings held up well in 2019 and we generated strong
free cash flow in a very tough agriculture market. We executed on
our strategic plan, growing our Retail business with several
strategic acquisitions and made great strides with the roll-out and
adoption of our leading Retail digital platform and financial
tools. Agriculture fundamentals are strengthening and grower
sentiment is positive. We expect higher planting and favorable farm
economics to support strong North American crop input demand in
2020,” commented Chuck Magro, Nutrien’s President and CEO.
“Our business is designed to provide stability in times of
market weakness, with significant leverage through a recovery in
fertilizer markets. We remain focused on optimizing our network,
allocating capital to grow our Retail business and leading our
industry in returning capital to shareholders,” added Mr.
Magro.
Highlights:
- Nutrien generated $2.2 billion in free cash flow in 2019, up 9
percent over last year, and $2.6 billion in free cash flow
including changes in non-cash working capital in 2019, which is
over three times higher than in 2018.
- Nutrien recorded a number of charges totaling $128 million this
quarter related to mergers, acquisitions and impairments, the
largest associated with the rebranding of the Australian retail
business after the Ruralco acquisition.
- Retail performed well as EBITDA increased 8 percent in the
fourth quarter and 2 percent in the full year 2019, compared to the
same periods in 2018. Nutrien’s sales, service and supply chain
strength helped to grow market share and we expect strong EBITDA
growth in 2020 due to contributions from acquisitions, improved
market conditions and organic growth.
- Potash EBITDA was down 62 percent in the fourth quarter of 2019
compared to the same period in 2018 due to lower sales volumes and
lower net realized selling prices caused by a temporary reduction
in global demand, the impact of production downtime and the
Canadian National Railway labor strike. 2019 potash adjusted EBITDA
was similar to 2018 as higher average net realized selling prices
were mostly offset by lower sales volumes.
- Nitrogen EBITDA in the fourth quarter of 2019 was 19 percent
lower than the same period last year due primarily to lower ammonia
sales volumes and a lower nitrogen net realized selling price.
Nitrogen EBITDA in 2019 increased 2 percent compared to 2018 as
lower natural gas costs in North America more than offset higher
natural gas costs in Trinidad, and higher earnings from
equity-accounted investees and the impact of IFRS 16 more than
offset lower ammonia sales volumes and lower nitrogen net realized
selling prices.
- In the fourth quarter of 2019, Nutrien increased the maximum
number of common shares that may be acquired under its current
normal course issuer bid (NCIB) to approximately 7 percent of the
outstanding common shares. Nutrien repurchased an aggregate of 36
million common shares in 2019 and 72 million common shares over the
past 24 months.
- Nutrien full-year 2020 adjusted net earnings per share and
adjusted EBITDA guidance is $1.90 to $2.60 per share and $3.8 to
$4.3 billion, respectively.
Market Outlook
Agriculture and Retail
- Recent US/China trade progress has underpinned positive
sentiment among US growers as agricultural exports to China are
expected to improve significantly both in the short and medium
term.
- The US Department of Agriculture (USDA) projects 2019/2020
global grain inventories outside of China to be at six-year lows.
US crop input demand in 2020 is expected to be supported by an
additional 14 million acres, or about a 6 percent increase, in
planted acreage.
- We expect demand for potash in Southeast Asia will be supported
by the significant improvement in palm oil prices since
mid-2019.
- Despite improved agricultural fundamentals in most key markets,
we continue to monitor the possible impacts of the Coronavirus,
drought conditions in Australia and the African Swine Fever.
Crop Nutrient Markets
- Global potash prices declined in 2019 as customers in key
offshore markets drew from inventories built by strong first-half
2019 shipments, while demand declined in North America due to
adverse weather and in Southeast Asia due to weak palm oil prices.
Global potash producers announced the equivalent of over 3 million
tonnes of estimated production curtailments to rebalance supply. We
estimate global potash deliveries were approximately 64.5 million
tonnes in 2019, down significantly from the 66.7 million tonnes in
2018.
We believe potash production curtailments
lowered inventory at the producer level, while continued grower
consumption lowered distributor inventory in key markets outside of
China. We expect global potash demand to rebound in 2020, driven by
increased planting acreage in North America, a rebound in
applications in Indonesia and Malaysia, lower beginning inventories
and strong affordability. We estimate global potash deliveries in
2020 will be between 66 to 68 million tonnes in 2020, similar to
the record global delivery levels of 2018.
- Global nitrogen prices declined in 2019, due to reduced demand
in North America driven by challenging weather conditions and lower
feedstock prices in some key producing regions. We expect nitrogen
fundamentals to improve in 2020, supported by higher North American
planting, stable demand in other key regions and limited new global
capacity.
- Dry phosphate fertilizer prices have recently improved after
reaching historically low levels in 2019, but they continue to be
impacted by increased supply from Morocco and Saudi Arabia. Some
global phosphate producers have announced curtailments to rebalance
supply and the Coronavirus could reduce Chinese export availability
in the first quarter of 2020, however, we expect low raw material
costs will be a headwind to a significant market recovery.
Financial Outlook and Guidance
Based on market factors detailed above, we are issuing 2020
adjusted net earnings guidance of $1.90 to $2.60 per share and
adjusted EBITDA guidance of $3.8 to $4.3 billion.
All guidance numbers, including those noted above and related
sensitivities are outlined in the tables below.
2020 Guidance Ranges 1
Low
High
Adjusted net earnings per share 2
$
1.90
$
2.60
Adjusted EBITDA (billions) 2
$
3.8
$
4.3
Retail EBITDA (billions)
$
1.4
$
1.5
Potash EBITDA (billions)
$
1.3
$
1.5
Nitrogen EBITDA (billions)
$
1.2
$
1.4
Phosphate EBITDA (millions)
$
180
$
250
Potash sales tonnes (millions) 3
12.3
12.7
Nitrogen sales tonnes (millions) 3
11.0
11.6
Depreciation and amortization
(billions)
$
1.8
$
1.9
Effective tax rate on continuing
operations
23
%
25
%
Sustaining capital expenditures
(billions)
$
1.0
$
1.1
Impact to
Adjusted
Adjusted
2020 Annual Assumptions &
Sensitivities 1
EBITDA
EPS4
$1/MMBtu change in NYMEX5
$
165
$
0.21
$20/tonne change in realized Potash
selling prices
$
205
$
0.25
$20/tonne change in realized Ammonia
selling prices
$
40
$
0.05
$20/tonne change in realized Urea selling
prices
$
65
$
0.09
2020 FX Rate CAD to USD
1.30
2020 NYMEX natural gas ($US/MMBtu)
$2.25
1 See the “Forward-Looking Statements”
section. 2 See the “Non-IFRS Financial Measures” section. 3
Manufactured products only. Nitrogen excludes ESN® and Rainbow
products. 4 Assumes 574 million shares outstanding. 5 Nitrogen
related impact.
Consolidated Results
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars)
2019
2018
% Change
2019
2018
% Change
Sales
3,442
3,762
(9)
20,023
19,636
2
Freight, transportation and
distribution
172
189
(9)
768
864
(11)
Cost of goods sold
2,256
2,314
(3)
13,814
13,380
3
Gross margin
1,014
1,259
(19)
5,441
5,392
1
Expenses
951
713
33
3,579
4,978
(28)
Net (loss) earnings from continuing
operations
(48)
296
n/m
992
(31)
n/m
Net earnings from discontinued
operations
-
2,906
(100)
-
3,604
(100)
Net (loss) earnings
(48)
3,202
n/m
992
3,573
(72)
EBITDA 1
499
944
(47)
3,661
2,006
83
Adjusted EBITDA 1
664
924
(28)
4,025
3,934
2
Free cash flow ("FCF") 1
138
403
(66)
2,157
1,975
9
FCF including changes in non-cash working
capital 1
2,068
1,647
26
2,647
837
216
1 See the "Non-IFRS Financial Measures"
section.
Our fourth-quarter net loss from continuing operations was
caused by the impact of a temporary slow down in global fertilizer
demand that more than offset a strong performance by Retail. 2019
net earnings from continuing operations increased compared to 2018
due to solid operational results, the continued benefit of Merger
related synergies and operational improvements and a non-cash
impairment of our New Brunswick potash facility in 2018.
Our net earnings from discontinued operations in 2018 was
related to the required divestiture of certain equity investments
in connection with the Merger.
Segment Results
In the first quarter of 2019, our Executive Leadership Team
reassessed our product groupings and decided to evaluate the
performance of ammonium sulfate as part of the Nitrogen segment,
rather than the Phosphate and Sulfate segment as previously
reported in 2018. Effective January 1, 2019, we have four
reportable operating segments: Retail, Potash, Nitrogen and
Phosphate. Comparative amounts presented on a segmented basis have
been restated accordingly. We also renamed our “Others” segment to
“Corporate and Others”.
Detailed descriptions of our operating segments can be found in
our 2018 Annual Report dated February 20, 2019 in the “Operating
Segment Performance & Outlook” section.
Our discussion of segment results set out on the following pages
is a comparison of the results for the three and twelve months
ended December 31, 2019 to the results for the three and twelve
months ended December 31, 2018, respectively and unless otherwise
noted. See Appendix A for a summary of our results for the twelve
months ended December 31, 2019 by operating segment.
Retail
Three Months Ended December
31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2019
2018
% Change
2019
2018
% Change
2019
2018
Sales
Crop nutrients 1
907
917
(1)
186
184
1
21
20
Crop protection products
635
644
(1)
281
270
4
44
42
Seed
99
103
(4)
60
56
7
61
54
Merchandise 2
211
142
49
44
27
63
21
19
Services and other
319
211
51
165
125
32
52
59
2,171
2,017
8
736
662
11
34
33
Cost of goods sold 2
1,435
1,355
6
Gross margin
736
662
11
Expenses 3
667
580
15
Earnings before finance costs and taxes
("EBIT")
69
82
(16)
Depreciation and amortization
162
132
23
EBITDA
231
214
8
1 Includes intersegment sales. See Note 2
to the unaudited condensed consolidated financial statements as at
and for the three and twelve months ended December 31, 2019
(''condensed consolidated financial statements''). 2 Certain
immaterial figures have been reclassified or grouped together for
the three months ended December 31, 2018. 3 Includes selling
expenses of $668 million (2018 – $571 million).
- EBITDA was higher in the fourth quarter and full year of
2019 as sales, service and supply chain strength helped to grow our
market share and margins. EBITDA in both periods also benefited
from strong US and Australia results and the impact from adoption
of IFRS 16, which more than offset weather-related challenges in
Canada. Gross margin and gross margin percentage increased in the
fourth quarter and full year 2019 as a result of optimization
initiatives and strategic purchasing. Selling expenses as a
proportion of sales in the full year 2019 were similar to the same
period in 2018.
- Crop nutrients sales decreased in the fourth quarter of
2019 as higher sales volumes were offset by lower selling prices.
Crop nutrients sales in 2019 increased due to higher sales volumes
and higher selling prices. Gross margin percentage increased in the
periods due to strategic purchasing and an increased mix of higher
margin specialty and proprietary products sales.
- Crop protection products sales in the fourth quarter
decreased compared to the fourth quarter of 2018 due primarily to
lower Canadian fall applications caused by early winter conditions.
Crop protection products sales in 2019 increased as US farmers made
more in-season applications due to the excessive moisture
experienced in the fall of 2018. Gross margin percentage increased
in the fourth quarter and was flat in 2019 due to favorable product
mix changes and strategic purchasing that offset the impact of
higher competition from a condensed season and higher costs for
product sourced from China.
- Seed sales in the fourth quarter were down slightly
compared to the same period in 2018 caused mostly by drought
conditions in Australia. Sales in 2019 increased compared to 2018
due to the mix of higher value corn and cotton seed sales, which
more than offset the impact of lower planted acreage in the US.
Gross margin percentage increased in the fourth quarter due to a
favorable sales mix, while gross margin percentage in 2019 was
comparable with 2018.
- Merchandise sales and gross margin increased in the
fourth quarter and full year of 2019 due to our recent acquisition
of Ruralco.
- Services and other sales were higher in the fourth
quarter and full year of 2019 due to sales from recent
acquisitions, including Ruralco, and increased US applications and
services resulting from a condensed growing season. Gross margin
percentage decreased in the quarter and full year of 2019 due to
product mix changes resulting primarily from the acquisition of
Ruralco.
Potash
Three Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018
% Change
2019
2018
% Change
2019
2018
% Change
Manufactured product 1
Net sales
North America
146
177
(18)
651
731
(11)
226
242
(7)
Offshore
204
459
(56)
1,234
2,126
(42)
164
216
(24)
350
636
(45)
1,885
2,857
(34)
186
223
(17)
Cost of goods sold
211
271
(22)
112
95
18
Gross margin - manufactured
139
365
(62)
74
128
(42)
Gross margin - other 2
-
1
(100)
Depreciation and amortization
35
32
9
Gross margin - total
139
366
(62)
Gross margin excluding depreciation
Expenses 3
56
64
(13)
and amortization - manufactured 4
109
160
(32)
EBIT
83
302
(73)
Potash cash cost of product
Depreciation and amortization
66
92
(28)
manufactured 4
82
67
22
EBITDA
149
394
(62)
1 Includes intersegment sales. See Note 2
to the condensed consolidated financial statements. 2 Includes
other potash and purchased products and is comprised of net sales
of $Nil (2018 – $1 million) less cost of goods sold of $Nil (2018 –
$Nil). 3 Includes provincial mining and other taxes of $50 million
(2018 – $56 million). 4 See the "Non-IFRS Financial Measures"
section.
- EBITDA decreased in the fourth quarter due to lower
sales volumes, lower net realized selling prices and the temporary
impacts associated with production downtime and the Canadian
National Railway labor strike. EBITDA in 2019 was higher as a
result of a non-cash impairment of our New Brunswick potash
facility in 2018. Adjusted EBITDA in 2019 was similar to
2018 as lower sales volumes and higher provincial mining taxes and
other taxes were mostly offset by higher net realized selling
prices.
- Sales volumes in North America were down in the fourth
quarter and in the full year of 2019 due to challenging US weather
conditions that negatively impacted both spring and fall
applications. Offshore sales volumes in 2019 were the second
highest on record, down only from 2018, due to strong demand in the
first half of the year. Offshore sales volumes in the fourth
quarter of 2019 decreased from the same period last year as
customers in key markets delayed purchases and/or drew upon
existing inventory.
- Net realized selling price decreased in the fourth
quarter of 2019 reflecting lower benchmark prices caused by a
temporary slowdown in global demand. Higher freight rates further
decreased North America net realized selling prices while
adjustments to Nutrien’s provisional selling price to Canpotex
lowered Offshore net realized selling prices in the quarter. Net
realized selling prices were higher in 2019 compared to 2018 due to
stronger prices through the first nine months of the year.
- Cost of goods sold per tonne increased in the fourth
quarter and full year of 2019 compared to the same periods in 2018
due to the impact of lower production volumes related to temporary
production downtime. Potash cash cost of product manufactured per
tonne increased in the fourth quarter and full year of 2019 due
primarily to the impact of lower production volumes compared to the
same periods in 2018.
Canpotex Sales by Market
(percentage of sales volumes, except
as
Three Months Ended December
31
Twelve Months Ended December
31
otherwise noted)
2019
2018
% Change
2019
2018
% Change
Latin America
31
33
(6)
31
33
(6)
Other Asian markets 1
27
28
(4)
27
31
(13)
China
17
17
-
22
18
22
India
7
14
(50)
10
10
-
Other markets
18
8
125
10
8
25
100
100
100
100
1 All Asian markets except China and
India.
Nitrogen
Three Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018 ¹
% Change
2019
2018 ¹
% Change
2019
2018 ¹
% Change
Manufactured product 2
Net sales
Ammonia
141
235
(40)
571
808
(29)
245
290
(16)
Urea
193
231
(16)
695
687
1
278
337
(18)
Solutions, nitrates and sulfates
166
180
(8)
1,096
1,016
8
152
177
(14)
500
646
(23)
2,362
2,511
(6)
212
257
(18)
Cost of goods sold
404
439
(8)
171
175
(2)
Gross margin - manufactured
96
207
(54)
41
82
(50)
Gross margin - other 3
11
17
(35)
Depreciation and amortization
60
43
40
Gross margin - total
107
224
(52)
Gross margin excluding depreciation
(Income) Expenses
(11)
11
n/m
and amortization - manufactured 4
101
125
(19)
EBIT
118
213
(45)
Ammonia controllable cash cost of
Depreciation and amortization
141
108
31
product manufactured 4
48
44
9
EBITDA
259
321
(19)
1 Restated for the reclassification of
sulfate from the Phosphate segment. See Note 2 to the condensed
consolidated financial statements.
2 Includes intersegment sales. See Note 2
to the condensed consolidated financial statements.
3 Includes other nitrogen (including ESN®
and Rainbow) and purchased products and is comprised of net sales
of $103 million (2018 – $99 million) less cost of goods sold of $92
million (2018 – $82 million).
4 See the "Non-IFRS Financial Measures"
section.
- EBITDA decreased in the fourth quarter of 2019 as lower
ammonia sales volumes and lower nitrogen net realized selling
prices more than offset the impact of lower natural gas costs.
EBITDA for 2019 increased compared to 2018 as lower natural gas
costs, higher earnings from equity-accounted investees and the
impact of adopting IFRS 16 more than offset lower sales volumes and
net realized selling prices.
- Sales volumes in the fourth quarter and full year of
2019 were down compared to the same period in 2018 as lower ammonia
sales volumes in some of our highest netback regions were only
partially offset by higher urea and solutions, nitrates and
sulfates sales volumes. Ammonia sales volumes were impacted by
compressed spring and fall application seasons in North America and
turnaround activity at our Trinidad facility.
- Net realized selling price of nitrogen was lower in the
fourth quarter and full year of 2019 as benefits from our
distribution network and product positioning were more than offset
by lower global benchmark prices.
- Cost of goods sold per tonne of nitrogen decreased in
the fourth quarter of 2019 due primarily to lower natural gas
costs. Cost of goods sold in 2019 was slightly higher compared to
2018 as lower natural gas costs in North America were offset by
higher natural gas costs in Trinidad and a lower proportion of
sales from lower cost facilities. Ammonia controllable cash cost of
product manufactured per tonne increased in the fourth quarter and
full year 2019 due to lower production volumes available for sale
resulting from turnaround activity at our Trinidad facility.
Natural Gas Prices
Three Months Ended December
31
Twelve Months Ended December
31
(US dollars per MMBtu, except as otherwise
noted)
2019
2018
% Change
2019
2018
% Change
Overall gas cost excluding realized
derivative impact
2.46
2.87
(14)
2.47
2.54
(3)
Realized derivative impact
0.06
0.14
(57)
0.11
0.29
(62)
Overall gas cost
2.52
3.01
(16)
2.58
2.83
(9)
Average NYMEX
2.50
3.64
(31)
2.63
3.09
(15)
Average AECO
1.76
1.45
21
1.22
1.19
3
- Gas costs decreased in the fourth quarter and full year 2019
compared to the same periods last year due primarily to lower gas
costs in the US and a lower realized derivative impact.
Phosphate
Three Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018 ¹
% Change
2019
2018 ¹
% Change
2019
2018 ¹
% Change
Manufactured product 2
Net sales
Fertilizer
155
255
(39)
466
601
(22)
334
423
(21)
Industrial and feed
105
106
(1)
181
207
(13)
581
513
13
260
361
(28)
647
808
(20)
403
446
(10)
Cost of goods sold
255
346
(26)
395
428
(8)
Gross margin - manufactured
5
15
(67)
8
18
(56)
Gross margin - other 3
1
(2)
n/m
Depreciation and amortization
88
66
33
Gross margin - total
6
13
(54)
Gross margin excluding depreciation
Expenses
9
13
(31)
and amortization - manufactured 4
96
84
14
EBIT
(3)
-
-
Depreciation and amortization
57
53
8
EBITDA
54
53
2
1 Restated for the reclassification of
sulfate to the Nitrogen segment. See Note 2 to the condensed
consolidated financial statements. 2 Includes intersegment sales.
See Note 2 to the condensed consolidated financial statements. 3
Includes other phosphate and purchased products and is comprised of
net sales of $27 million (2018 - $45 million) less cost of goods
sold of $26 million (2018 - $47 million). 4 See the "Non-IFRS
Financial Measures" section.
- EBITDA increased in the fourth quarter of 2019 due to
lower phosphate rock and other raw material costs that were
partially offset by lower sales volumes and lower net realized
selling prices. EBITDA decreased in 2019 relative to 2018 due
primarily to lower net realized selling prices and lower sales
volumes.
- Sales volumes decreased in the fourth quarter and the
full year of 2019 due primarily to reduced fertilizer application
in North America caused by adverse weather in both the spring and
fall application seasons. Industrial and feed sales volumes in the
same periods decreased due to the timing of sales.
- Net realized selling price decreased in the fourth
quarter and full year of 2019 compared to the same periods in 2018
as higher prices for industrial products were more than offset by
lower dry phosphate fertilizer prices.
- Cost of goods sold per tonne decreased in the fourth
quarter compared to the same period in 2018 due to benefits from
the conversion of our Redwater facility to ammonium sulfate and
lower raw material costs. Cost of goods sold per tonne increased in
the full year of 2019 due to higher non-cash asset retirement
adjustments, and lower sales volumes that more than offset lower
raw material costs.
Forward-Looking Statements
Certain statements and other information included and
incorporated by reference in this document constitute
"forward-looking information" or "forward-looking statements"
(collectively, "forward-looking statements") under applicable
securities laws (such statements are often accompanied by words
such as "anticipate", “forecast”, "expect", "believe", "may",
"will", "should", "estimate", "intend" or other similar words). All
statements in this document, other than those relating to
historical information or current conditions, are forward-looking
statements, including, but not limited to: Nutrien's 2020 annual
guidance, including expectations regarding our adjusted net
earnings per share and adjusted EBITDA (both consolidated and by
segment); capital spending expectations for 2020; expectations
regarding performance of our operating segments in 2020; our
operating segment market outlooks and market conditions for 2020,
and including anticipated supply and demand for our products and
services, expected market and industry conditions with respect to
crop nutrient application rates, planted acres, crop mix, prices
and the impact of currency fluctuations and import and export
volumes; and acquisitions and divestitures, and the expected
synergies associated with various acquisitions, including timing
thereof. These forward-looking statements are subject to a number
of assumptions, risks and uncertainties, many of which are beyond
our control, which could cause actual results to differ materially
from such forward-looking statements. As such, undue reliance
should not be placed on these forward-looking statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, this list is not exhaustive of the
factors that may affect any of the forward-looking statements and
the reader should not place an undue reliance on these assumptions
and such forward-looking statements. The additional key assumptions
that have been made include, among other things, assumptions with
respect to our ability to successfully complete, integrate and
realize the anticipated benefits of our already completed and
future acquisitions, and that we will be able to implement our
standards, controls, procedures and policies at any acquired
businesses to realize the expected synergies; that future business,
regulatory and industry conditions will be within the parameters
expected by us, including with respect to prices, margins, demand,
supply, product availability, supplier agreements, availability and
cost of labor and interest, exchange and effective tax rates; the
completion of our expansion projects on schedule, as planned and on
budget; assumptions with respect to global economic conditions and
the accuracy of our market outlook expectations for 2020 and in the
future; the adequacy of our cash generated from operations and our
ability to access our credit facilities or capital markets for
additional sources of financing; our ability to identify suitable
candidates for acquisitions and divestitures and negotiate
acceptable terms; our ability to maintain investment grade ratings
and achieve our performance targets; and the receipt, on time, of
all necessary permits, utilities and project approvals with respect
to our expansion projects and that we will have the resources
necessary to meet the projects’ approach.
Events or circumstances that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to: general global economic, market
and business conditions; failure to complete announced and future
acquisitions or divestitures at all or on the expected terms and
within the expected timeline; climate change and weather
conditions, including impacts from regional flooding and/or drought
conditions; crop planted acreage, yield and prices; the supply and
demand and price levels for our products; governmental and
regulatory requirements and actions by governmental authorities,
including changes in government policy (including tariffs, trade
restrictions and climate change initiatives), government ownership
requirements, changes in environmental, tax and other laws or
regulations and the interpretation thereof; political risks,
including civil unrest, actions by armed groups or conflict and
malicious acts including terrorism; the occurrence of a major
environmental or safety incident; innovation and cybersecurity
risks related to our systems, including our costs of addressing or
mitigating such risks; regional natural gas supply restrictions;
counterparty and sovereign risk; delays in completion of
turnarounds at our major facilities; gas supply interruptions; any
significant impairment of the carrying value of certain assets;
risks related to reputational loss; certain complications that may
arise in our mining processes; the ability to attract, engage and
retain skilled employees and strikes or other forms of work
stoppages; and other risk factors detailed from time to time in
Nutrien reports filed with the Canadian securities regulators and
the Securities and Exchange Commission in the United States.
The purpose of our expected adjusted net earnings per share,
adjusted EBITDA and EBITDA by segment guidance ranges, as well as
our adjusted net earnings per share and adjusted EBITDA price and
volume and input cost sensitivities ranges, are to assist readers
in understanding our expected and targeted financial results, and
this information may not be appropriate for other purposes.
Nutrien disclaims any intention or obligation to update or
revise any forward-looking statements in this document as a result
of new information or future events, except as may be required
under applicable Canadian securities legislation or applicable US
federal securities laws.
Terms and References
For the definitions of certain financial and non-financial terms
used in this document, as well as a list of abbreviated company
names and sources, see the “Terms”, “Abbreviated Company Names and
Sources” and “Terms and Measures” sections of our 2018 Annual
Report dated February 20, 2019. All references to per share amounts
pertain to diluted net earnings (loss) per share, "n/m" indicates
information that is not meaningful and all financial data are
stated in millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and
services, playing a critical role in helping growers around the
globe increase food production in a sustainable manner. We produce
and distribute 27 million tonnes of potash, nitrogen and phosphate
products world-wide. With this capability and our leading
agriculture retail network, we are well positioned to supply the
needs of our customers. We operate with a long-term view and are
committed to working with our stakeholders as we address our
economic, environmental and social priorities. The scale and
diversity of our integrated portfolio provides a stable earnings
base, multiple avenues for growth and the opportunity to return
capital to shareholders.
Contact us at: www.nutrien.com.
Selected financial data for download can be found in our data
tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Wednesday, February
19, 2020 at 10:00 am Eastern Time.
- Telephone Conference dial-in numbers:
- From Canada and the US 1-877-702-9274
- International 1-647-689-5529
- No access code required. Please dial in 15 minutes prior to
ensure you are placed on the call in a timely manner.
- Live Audio Webcast: Visit www.nutrien.com/investors/events
Appendix A - Selected Additional Financial Data
Twelve Months Ended December 31, 2019 Operating Segment
Results
Retail
Twelve Months Ended December
31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2019
2018
% Change
2019
2018
% Change
2019
2018
Sales
Crop nutrients 1
4,989
4,577
9
1,032
923
12
21
20
Crop protection products
4,983
4,862
2
1,173
1,155
2
24
24
Seed
1,712
1,687
1
336
333
1
20
20
Merchandise 2
598
584
2
109
103
6
18
18
Services and other
939
810
16
590
521
13
63
64
13,221
12,520
6
3,240
3,035
7
25
24
Cost of goods sold 2
9,981
9,485
5
Gross margin
3,240
3,035
7
Expenses 3
2,604
2,328
12
EBIT
636
707
(10)
Depreciation and amortization
595
499
19
EBITDA
1,231
1,206
2
1 Includes intersegment sales. See Note 2
to the condensed consolidated financial statements. 2 Certain
immaterial figures have been reclassified or grouped together for
the twelve months ended December 31, 2018. 3 Includes selling
expenses of $2,484 million (2018 – $2,303 million).
Potash
Twelve Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018
% Change
2019
2018
% Change
2019
2018
% Change
Manufactured product 1
Net sales
North America
978
1,007
(3)
4,040
4,693
(14)
242
214
13
Offshore
1,625
1,657
(2)
7,481
8,326
(10)
217
199
9
2,603
2,664
(2)
11,521
13,019
(12)
226
205
10
Cost of goods sold
1,103
1,182
(7)
96
91
5
Gross margin - manufactured
1,500
1,482
1
130
114
14
Gross margin - other 2
1
2
(50)
Depreciation and amortization
34
31
10
Gross margin - total
1,501
1,484
1
Impairment of assets
-
1,809
(100)
Gross margin excluding depreciation
Expenses 3
298
282
6
and amortization - manufactured 4
164
145
13
EBIT
1,203
(607)
n/m
Potash cash cost of product
Depreciation and amortization
390
404
(3)
manufactured 4
63
60
5
EBITDA
1,593
(203)
n/m
Adjusted EBITDA 4
1,593
1,606
(1)
1 Includes intersegment sales. See Note 2
to the condensed consolidated financial statements. 2 Includes
other potash and purchased products and is comprised of net sales
of $1 million (2018 – $3 million) less cost of goods sold of $Nil
(2018 – $1 million). 3 Includes provincial mining and other taxes
of $287 million (2018 – $244 million). 4 See the "Non-IFRS
Financial Measures" section.
Nitrogen
Twelve Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018 ¹
% Change
2019
2018 ¹
% Change
2019
2018 ¹
% Change
Manufactured product 2
Net sales
Ammonia
743
903
(18)
2,971
3,330
(11)
250
271
(8)
Urea
932
895
4
3,037
3,003
1
307
298
3
Solutions, nitrates and
sulfates
706
729
(3)
4,262
4,265
-
166
171
(3)
2,381
2,527
(6)
10,270
10,598
(3)
232
238
(3)
Cost of goods sold
1,749
1,777
(2)
170
168
1
Gross margin - manufactured
632
750
(16)
62
70
(11)
Gross margin - other 3
68
70
(3)
Depreciation and amortization
52
42
24
Gross margin - total
700
820
(15)
Gross margin excluding depreciation
(Income) Expenses
(4)
47
n/m
and amortization - manufactured 4
114
112
2
EBIT
704
773
(9)
Ammonia controllable cash cost of
Depreciation and amortization
535
442
21
product manufactured 4
45
43
5
EBITDA
1,239
1,215
2
1 Restated for the reclassification of
sulfate from the Phosphate segment. See the ''Segment Results''
section and Note 2 to the condensed consolidated financial
statements. 2 Includes intersegment sales. See Note 2 to the
condensed consolidated financial statements. 3 Includes other
nitrogen (including ESN® and Rainbow) and purchased products and is
comprised of net sales of $467 million (2018 – $438 million) less
cost of goods sold of $399 million (2018 – $368 million). 4 See the
"Non-IFRS Financial Measures" section.
Phosphate
Twelve Months Ended December
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2019
2018 ¹
% Change
2019
2018 ¹
% Change
2019
2018 ¹
% Change
Manufactured product 2
Net sales
Fertilizer
790
995
(21)
2,130
2,425
(12)
371
410
(10)
Industrial and feed
426
424
-
759
847
(10)
561
500
12
1,216
1,419
(14)
2,889
3,272
(12)
421
434
(3)
Cost of goods sold
1,218
1,329
(8)
422
406
4
Gross margin - manufactured
(2)
90
n/m
(1)
28
n/m
Gross margin - other 3
(3)
(2)
50
Depreciation and amortization
82
59
39
Gross margin - total
(5)
88
n/m
Gross margin excluding depreciation
Expenses
38
26
46
and amortization - manufactured 4
81
87
(7)
EBIT
(43)
62
n/m
Depreciation and amortization
237
193
23
EBITDA
194
255
(24)
1 Restated for the reclassification of
sulfate to the Nitrogen segment. See the ''Segment Results''
section and Note 2 to the condensed consolidated financial
statements. 2 Includes intersegment sales. See Note 2 to the
condensed consolidated financial statements. 3 Includes other
phosphate and purchased products and is comprised of net sales of
$152 million (2018 - $142 million) less cost of goods sold of $155
million (2018 - $144 million). 4 See the "Non-IFRS Financial
Measures" section.
Selected Retail measures
Three Months Ended December
31
Twelve Months Ended December
31
2019
2018
2019
2018
Proprietary products margin as a
percentage of
product line margin (%)
Crop
nutrients
15
11
23
21
Crop
protection products
8
8
34
37
Seed
11
16
38
38
All
Products
8
8
24
25
Crop nutrients sales volumes (tonnes
-
thousands)
North
America
1,558
1,543
8,812
8,547
International
559
447
2,236
2,142
Total
2,117
1,990
11,048
10,689
Crop nutrients selling price per
tonne
North
America
436
456
465
437
International
408
479
398
395
Total
428
461
452
428
Crop nutrients gross margin per
tonne
North
America
95
96
102
94
International
68
80
60
57
Total
88
92
93
86
Financial performance measures
2019 Target
2019 Actuals
Retail
EBITDA to sales (%) 1, 2
10
9
Retail
adjusted average working capital to sales (%) 1, 2
20
23
Retail
cash operating coverage ratio (%) 1, 2
60
62
Retail
normalized comparable store sales (%) 2
(1)
Retail
EBITDA per US selling location (thousands of US dollars) 1,
2
967
1
Rolling four quarters ended December 31, 2019. 2 See the "Non-IFRS Financial Measures"
section.
Selected Nitrogen measures
Three Months Ended December
31
Twelve Months Ended December
31
2019
2018
2019
2018
Sales volumes (tonnes -
thousands)
Fertilizer
1,350
1,331
5,554
5,680
Industrial and feed
1,012
1,180
4,716
4,918
Net sales (millions of US
dollars)
Fertilizer
311
359
1,466
1,444
Industrial and feed
189
287
915
1,083
Net selling price per tonne
Fertilizer
230
269
264
254
Industrial and feed
187
243
194
220
Production measures
Three Months Ended December
31
Twelve Months Ended December
31
2019
2018
2019
2018
Potash
production (Product tonnes - thousands)
1,939
3,039
11,700
12,842
Potash
shutdown weeks 1
28
7
55
39
Nitrogen
production (Ammonia tonnes - thousands) 2
1,401
1,547
6,164
6,372
Ammonia
operating rate (%) 3
94
87
91
92
Phosphate production (P2O5 tonnes -
thousands) 4
390
412
1,514
1,551
Phosphate P2O5 operating rate (%)
4
91
96
89
91
1
Represents weeks of full production shutdown, excluding the impact
of any periods of reduced operating rates and planned routine
annual maintenance shutdowns and announced workforce
reductions. 2 All figures
are provided on a gross production basis. 3 Excludes Trinidad and Joffre.
4 Excludes Redwater. Comparative
figures were restated to exclude Redwater.
Appendix B - Non-IFRS Financial Measures
We use both IFRS and certain non-IFRS financial measures to
assess performance. Non-IFRS financial measures are numerical
measures of a company’s performance, that either exclude or include
amounts that are not normally excluded or included in the most
directly comparable measures calculated and presented in accordance
with IFRS. In evaluating these measures, investors should consider
that the methodology applied in calculating such measures may
differ among companies and analysts.
Management believes the non-IFRS financial measures provide
transparent and useful supplemental information to help investors
evaluate our financial performance, financial condition and
liquidity using the same measures as management. These non-IFRS
financial measures should not be considered as a substitute for, or
superior to, measures of financial performance prepared in
accordance with IFRS.
The following section outlines our non-IFRS financial measures,
their definitions and why management uses each measure. It includes
reconciliations to the most directly comparable IFRS measures.
EBITDA, Adjusted EBITDA and Potash Adjusted EBITDA
Most directly comparable IFRS financial measure: Net
earnings (loss) from continuing operations.
Definition: EBITDA is calculated as net earnings (loss)
from continuing operations before finance costs, income taxes and
depreciation and amortization. Adjusted EBITDA is calculated as net
earnings (loss) from continuing operations before finance costs,
income taxes, depreciation and amortization, Merger and related
costs, acquisition and integration related costs, share-based
compensation, defined benefit plans curtailment gain, impairment of
assets, and foreign exchange gain/loss, net of related derivatives.
In the fourth quarter of 2019, we amended our calculations of
adjusted EBITDA and restated the comparative periods to exclude the
impact of foreign exchange gain/loss, net of related derivatives,
as foreign exchange changes are not indicative of our operating
performance. We have also amended our calculations of adjusted
EBITDA to adjust for acquisition and integration related costs for
certain acquisitions such as Ruralco. There were no similar
acquisitions in the comparative periods.
Why we use the measure and why it is useful to investors:
These are meaningful measures because they are not impacted by
long-term investment and financing decisions, but rather focus on
the performance of our day-to-day operations. These provide a
measure of our ability to service debt and to meet other payment
obligations.
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars)
2019
2018
2019
2018
Net (loss) earnings from continuing
operations
(48)
296
992
(31)
Finance costs
141
144
554
538
Income tax (recovery) expense
(30)
106
316
(93)
Depreciation and amortization
436
398
1,799
1,592
EBITDA
499
944
3,661
2,006
Merger and related costs
25
27
82
170
Acquisition and integration related
costs
16
-
16
-
Share-based compensation
9
(33)
104
116
Defined benefit plans curtailment gain
-
(6)
-
(157)
Impairment of assets
87
-
120
1,809
Foreign exchange loss (gain), net of
related derivatives
28
(8)
42
(10)
Adjusted EBITDA
664
924
4,025
3,934
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars)
2019
2018
2019
2018
Potash EBITDA
149
394
1,593
(203)
Impairment of assets
-
-
-
1,809
Potash adjusted EBITDA
149
394
1,593
1,606
Adjusted EBITDA, Adjusted Net Earnings and Adjusted Net
Earnings Per Share Guidance
This guidance is provided on a non-IFRS basis. We do not provide
a reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with IFRS due to unknown variables and the uncertainty
related to future results. These unknown variables may include
unpredictable transactions of significant value that may be
inherently difficult to determine, without unreasonable efforts.
Guidance excludes the impacts of acquisition and integration
related costs, share-based compensation and foreign exchange
gain/loss, net of related derivatives.
Adjusted Net Earnings and Adjusted Net Earnings Per
Share
Most directly comparable IFRS financial measure: Net
earnings from continuing operations and net earnings per share.
Definition: Net earnings from continuing operations
before Merger and related costs, acquisition and integration
related costs, share-based compensation, impairment of assets and
foreign exchange gain/loss (net of related derivatives), net of
tax. In the fourth quarter of 2019, we amended our calculations of
adjusted net earnings to exclude the impact of foreign exchange
gain/loss, net of derivatives, as foreign exchange changes are not
indicative of our operating performance. We have also amended our
calculations of adjusted net earnings to adjust for acquisition and
integration related costs for certain acquisitions such as
Ruralco.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations excluding
the effects of non-operating items.
Three Months Ended
December 31, 2019
Twelve Months Ended
December 31, 2019
Per
Per
(millions of US dollars, except as
otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net (loss) earnings from continuing
operations
(48)
(0.08)
992
1.70
Adjustments:
Merger and related costs
25
15
0.02
82
62
0.10
Acquisition and integration related
costs
16
11
0.02
16
12
0.02
Share-based compensation
9
6
0.01
104
79
0.14
Impairment of assets
87
53
0.09
120
91
0.16
Foreign exchange loss, net of
related derivatives
28
17
0.03
42
32
0.05
Adjusted net earnings
54
0.09
1,268
2.17
Free Cash Flow and Free Cash Flow Including Changes in
Non-Cash Working Capital
Most directly comparable IFRS financial measure: Cash
from operations before working capital changes.
Definition: Cash from operations before working capital
changes less sustaining capital expenditures and cash provided by
operating activities from discontinued operations. We also
calculate this measure including changes in non-cash working
capital.
Why we use the measure and why it is useful to investors:
For evaluation of liquidity and financial strength, and as a
component of employee remuneration calculations. These are also
useful as an indicator of our ability to service debt, meet other
payment obligations and make strategic investments. These do not
represent residual cash flow available for discretionary
expenditures.
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars)
2019
2018
2019
2018
Cash from operations before working
capital changes
489
724
3,175
3,190
Cash used in (provided by) operating
activities from
discontinued operations
-
26
-
(130)
Sustaining capital expenditures
(351)
(347)
(1,018)
(1,085)
Free cash flow
138
403
2,157
1,975
Changes in non-cash working capital
1,930
1,244
490
(1,138)
Free cash flow including changes in
non-cash
working capital
2,068
1,647
2,647
837
Potash Cash Cost of Product Manufactured (“COPM”)
Most directly comparable IFRS financial measure: Cost of
goods sold (“COGS”) for the Potash segment.
Definition: Potash COGS for the period excluding
depreciation and amortization expense and inventory and other
adjustments divided by the production tonnes for the period.
Why we use the measure and why it is useful to investors:
To assess operational performance. Potash cash COPM excludes the
effects of production from other periods and long-term investment
decisions, supporting a focus on the performance of our day-to-day
operations.
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars, except as
otherwise noted)
2019
2018
2019
2018
Total COGS - Potash
211
271
1,103
1,183
Change in inventory
11
33
10
(5)
Other adjustments
-
(4)
(16)
(14)
COPM
222
300
1,097
1,164
Depreciation and amortization included in
COPM
(63)
(98)
(355)
(391)
Cash COPM
159
202
742
773
Production tonnes (tonnes - thousands)
1,939
3,039
11,700
12,842
Potash cash COPM per tonne
82
67
63
60
Ammonia Controllable Cash COPM
Most directly comparable IFRS financial measure: COGS for
the Nitrogen segment.
Definition: The total of COGS for the Nitrogen segment
excluding depreciation and amortization expense included in COGS,
cash COGS for products other than ammonia, other adjustments, and
natural gas and steam costs, divided by net ammonia production
tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Ammonia controllable cash COPM
excludes the effects of production from other periods, the costs of
natural gas and steam, and long-term investment decisions,
supporting a focus on the performance of our day-to-day
operations.
Three Months Ended December
31
Twelve Months Ended December
31
(millions of US dollars, except as
otherwise noted)
2019
2018
2019
2018
Total COGS - Nitrogen
496
521
2,148
2,145
Depreciation and amortization in COGS
(122)
(108)
(462)
(442)
Cash COGS for products other than
ammonia
(274)
(286)
(1,226)
(1,212)
Ammonia
Total cash COGS before other
adjustments
100
127
460
491
Other adjustments 1
(22)
-
(57)
(28)
Total cash COPM
78
127
403
463
Natural gas and steam costs
(52)
(90)
(273)
(321)
Controllable cash COPM
26
37
130
142
Production tonnes (net tonnes 2 -
thousands)
544
843
2,887
3,320
Ammonia controllable cash COPM per
tonne
48
44
45
43
1 Includes changes in inventory balances
and other adjustments.
2 Ammonia tonnes available for sale, as
not upgraded to other Nitrogen products.
Gross Margin Excluding Depreciation and Amortization Per
Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross
margin.
Definition: Gross margin from manufactured products per
tonne less depreciation and amortization per tonne. Reconciliations
are provided in the “Segment Results” section and “Appendix A –
Selected Additional Financial Data”.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations, which
excludes the effects of items that primarily reflect the impact of
long-term investment and financing decisions.
Retail EBITDA to Sales
Most directly comparable IFRS financial measure: Retail
EBITDA divided by Retail sales.
Definition: Retail EBITDA divided by Retail sales for the
last four rolling quarters.
Why we use the measure and why it is useful to investors:
To evaluate operational efficiency. A higher or lower percentage
represents increased or decreased efficiency, respectively.
Rolling four quarters ended
December 31, 2019
(millions of US dollars, except as
otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Total
EBITDA
(26)
836
190
231
1,231
Sales
2,039
6,512
2,499
2,171
13,221
EBITDA to Sales (%)
9
Retail Adjusted Average Working Capital to Sales
Most directly comparable IFRS financial measure: (Current
assets minus current liabilities for Retail) divided by Retail
sales.
Definition: Retail average working capital divided by
Retail sales for the last four rolling quarters excluding working
capital acquired in the quarter certain recent acquisitions, such
as Ruralco, were completed.
Why we use the measure and why it is useful to investors:
To evaluate operational efficiency. A lower or higher percentage
represents increased or decreased efficiency, respectively.
Rolling four quarters ended
December 31, 2019
(millions of US dollars, except as
otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Average/Total
Working capital
3,190
3,741
3,699
1,759
Working capital from certain recent
acquisitions
-
-
(75)
(138)
Adjusted working capital
3,190
3,741
3,624
1,621
3,044
Sales
2,039
6,512
2,499
2,171
13,221
Adjusted average working capital to
sales (%)
23
Retail Cash Operating Coverage Ratio
Most directly comparable IFRS financial measure: Retail
operating expenses 1 as a percentage of Retail gross margin.
Definition: Retail operating expenses excluding
depreciation and amortization expense, divided by Retail gross
margin excluding depreciation and amortization expense in cost of
goods sold for the last four rolling quarters.
Why we use the measure and why it is useful to investors:
To understand the costs and underlying economics of our Retail
operations and to assess our Retail operating performance and
ability to generate free cash flow.
Rolling four quarters ended
December 31, 2019
(millions of US dollars, except as
otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Total
Gross margin
409
1,440
655
736
3,240
Depreciation and amortization in cost of
goods sold
2
1
2
2
7
Gross margin excluding depreciation and
amortization
411
1,441
657
738
3,247
Operating expenses
571
749
617
667
2,604
Depreciation and amortization in operating
expenses
(132)
(143)
(150)
(160)
(585)
Operating expenses excluding depreciation
and amortization
439
606
467
507
2,019
Cash operating coverage ratio
(%)
62
1 Includes Retail expenses below gross
margin including selling expenses, general and administrative
expenses and other (income) expenses.
Retail EBITDA per US Selling Location
Most directly comparable IFRS financial measure: Retail
US EBITDA.
Definition: Total Retail US EBITDA for the last four
rolling quarters adjusted for acquisitions in those quarters,
divided by the number of US locations that have generated sales in
the last four rolling quarters adjusted for acquired locations.
Why we use the measure and why it is useful to investors:
To assess our US Retail operating performance. Includes locations
we have owned for more than 12 months.
Rolling four quarters ended
December 31, 2019
(millions of US dollars, except as
otherwise noted)
Q1 2019
Q2 2019
Q3 2019
Q4 2019
Total
US EBITDA
(58)
672
142
143
899
Adjustments for acquisitions
(27)
US EBITDA adjusted for acquisitions
872
Number of US selling locations adjusted
for acquisitions
902
EBITDA per US selling location
(thousands of US dollars)
967
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail
sales from comparable base as a component of total Retail
sales.
Definition: Prior year comparable store sales adjusted
for published potash, nitrogen and phosphate benchmark prices and
foreign exchange rates used in the current year. We retain sales of
closed locations in the comparable base if the closed location is
in close proximity to an existing location, unless we plan to exit
the market area or are unable to economically or logistically serve
it. We do not adjust for temporary closures, expansions or
renovations of stores.
Why we use the measure and why it is useful to investors:
To evaluate sales growth by adjusting for fluctuations in commodity
prices and foreign exchange rates. Includes locations we have owned
for more than 12 months.
Twelve Months Ended December
31
(millions of US dollars, except as
otherwise noted)
2019
2018
Sales from comparable base
Current period
12,568
12,253
Prior period
12,520
1
12,103
Comparable store sales (%)
0
1
Prior period normalized for benchmark
prices and foreign exchange rates
12,636
1
12,363
Normalized comparable store sales
(%)
(1)
(1)
1 Certain immaterial figures have been
reclassified for 2018.
Condensed Consolidated Financial Statements
Unaudited in millions of dollars except as otherwise
noted
Condensed Consolidated Statements of (Loss) Earnings
Three Months Ended
Twelve Months Ended
December 31
December 31
2019
2018
2019
2018
Note 1
Note 1
SALES
Note 2
3,442
3,762
20,023
19,636
Freight, transportation and
distribution
172
189
768
864
Cost of goods sold
2,256
2,314
13,814
13,380
GROSS MARGIN
1,014
1,259
5,441
5,392
Selling expenses
670
579
2,505
2,337
General and administrative expenses
117
111
404
423
Provincial mining and other taxes
39
58
292
250
Share-based compensation expense
(recovery)
9
(33)
104
116
Impairment of assets
87
-
120
1,809
Other expenses (income)
29
(2)
154
43
EARNINGS BEFORE FINANCE COSTS AND
INCOME TAXES
63
546
1,862
414
Finance costs
141
144
554
538
(LOSS) EARNINGS BEFORE INCOME
TAXES
(78)
402
1,308
(124)
Income tax (recovery) expense
(30)
106
316
(93)
NET (LOSS) EARNINGS FROM CONTINUING
OPERATIONS
(48)
296
992
(31)
Net earnings from discontinued
operations
-
2,906
-
3,604
NET (LOSS) EARNINGS
(48)
3,202
992
3,573
NET (LOSS) EARNINGS PER SHARE FROM
CONTINUING OPERATIONS
Basic
(0.08)
0.48
1.70
(0.05)
Diluted
(0.08)
0.48
1.70
(0.05)
NET EARNINGS PER SHARE FROM
DISCONTINUED OPERATIONS
Basic
-
4.75
-
5.77
Diluted
-
4.74
-
5.77
NET (LOSS) EARNINGS PER SHARE
("EPS")
Basic
(0.08)
5.23
1.70
5.72
Diluted
(0.08)
5.22
1.70
5.72
Weighted average shares outstanding for
basic EPS
572,916,000
612,151,000
582,269,000
624,900,000
Weighted average shares outstanding for
diluted EPS
572,916,000
612,947,000
583,102,000
624,900,000
Condensed Consolidated Statements of Comprehensive
Income
Three Months Ended
Twelve Months Ended
December 31
December 31
(Net of related income taxes)
2019
2018
2019
2018
NET (LOSS) EARNINGS
(48)
3,202
992
3,573
Other comprehensive income (loss)
Items that will not be reclassified to net
(loss) earnings:
Net actuarial gain (loss) on defined
benefit plans
7
(2)
7
54
Net fair value gain (loss) on
investments
1
(20)
(25)
(99)
Items that have been or may be
subsequently reclassified to
net (loss) earnings:
Gain (loss) on currency translation of
foreign operations
83
(103)
47
(249)
Other
2
(3)
7
(8)
OTHER COMPREHENSIVE INCOME
(LOSS)
93
(128)
36
(302)
COMPREHENSIVE INCOME
45
3,074
1,028
3,271
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Twelve Months Ended
December 31
December 31
2019
2018
2019
2018
Note 1
Note 1
OPERATING ACTIVITIES
Net (loss) earnings
(48)
3,202
992
3,573
Adjustments for:
Depreciation and amortization
436
398
1,799
1,592
Share-based compensation
9
(33)
104
116
Impairment of assets
87
-
120
1,809
(Recovery of) provision for deferred
income tax
(1)
(232)
177
(290)
Gain on sale of investments in Sociedad
Quimica y Minera de
Chile S.A. ("SQM") and Arab Potash
Company
-
(3,558)
-
(4,399)
Income tax related to the sale of the
investment in SQM
-
977
-
977
Other long-term liabilities and
miscellaneous
6
(30)
(17)
(188)
Cash from operations before working
capital changes
489
724
3,175
3,190
Changes in non-cash operating working
capital:
Receivables
1,363
1,351
(64)
(153)
Inventories
(1,049)
(1,011)
190
(887)
Prepaid expenses and other current
assets
(1,039)
(176)
(238)
561
Payables and accrued charges
2,655
1,080
602
(659)
CASH PROVIDED BY OPERATING
ACTIVITIES
2,419
1,968
3,665
2,052
INVESTING ACTIVITIES
Additions to property, plant and
equipment
(551)
(492)
(1,728)
(1,405)
Additions to intangible assets
(45)
(51)
(163)
(102)
Business acquisitions, net of cash
acquired
(74)
(48)
(911)
(433)
Proceeds from disposal of discontinued
operations, net of tax
-
3,561
55
5,394
Purchase of investments
(34)
(12)
(198)
(135)
Cash acquired in Merger
-
-
-
466
Other
39
26
147
102
CASH (USED IN) PROVIDED BY INVESTING
ACTIVITIES
(665)
2,984
(2,798)
3,887
FINANCING ACTIVITIES
Transaction costs on long-term debt
-
-
(29)
(21)
(Repayment of) proceeds from short-term
debt, net
(1,318)
(4,141)
216
(927)
Proceeds from long-term debt
-
-
1,510
-
Repayment of long-term debt
-
(4)
(1,010)
(12)
Repayment of principal portion of lease
liabilities
(68)
-
(234)
-
Dividends paid
(258)
(244)
(1,022)
(952)
Repurchase of common shares
-
(137)
(1,930)
(1,800)
Issuance of common shares
2
-
20
7
CASH USED IN FINANCING
ACTIVITIES
(1,642)
(4,526)
(2,479)
(3,705)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND
CASH EQUIVALENTS
(9)
(14)
(31)
(36)
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS
103
412
(1,643)
2,198
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
568
1,902
2,314
116
CASH AND CASH EQUIVALENTS – END OF
PERIOD
671
2,314
671
2,314
Cash and cash equivalents comprised
of:
Cash
532
1,506
532
1,506
Short-term investments
139
808
139
808
671
2,314
671
2,314
SUPPLEMENTAL CASH FLOWS
INFORMATION
Interest paid
152
141
505
507
Income taxes paid
28
1,032
29
1,155
Total cash outflow for leases
92
-
345
-
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Changes in Shareholders’
Equity
Accumulated Other Comprehensive
(Loss) Income ("AOCI")
Net
Actuarial
Loss on
Net Fair
Gain on
Currency
Value
Defined
Translation
Share
Contributed
Gain (Loss) on
Benefit
of Foreign
Total
Retained
Total
Capital
Surplus
Investments
Plans 1
Operations
Other
AOCI
Earnings
Equity 2
BALANCE – DECEMBER 31, 2017
1,806
230
73
-
(2)
(46)
25
6,242
8,303
Merger impact
15,898
7
-
-
-
-
-
(1)
15,904
Net earnings
-
-
-
-
-
-
-
3,573
3,573
Other comprehensive (loss) income
-
-
(99)
54
(249)
(8)
(302)
-
(302)
Shares repurchased
(998)
(23)
-
-
-
-
-
(831)
(1,852)
Dividends declared
-
-
-
-
-
-
-
(1,273)
(1,273)
Effect of share-based compensation
including issuance of
common shares
34
17
-
-
-
-
-
-
51
Transfer of net loss on sale of
investment
-
-
19
-
-
-
19
(19)
-
Transfer of net loss on cash flow
hedges
-
-
-
-
-
21
21
-
21
Transfer of net actuarial gain on defined
benefit plans
-
-
-
(54)
-
-
(54)
54
-
BALANCE – DECEMBER 31, 2018
16,740
231
(7)
-
(251)
(33)
(291)
7,745
24,425
Net earnings
-
-
-
-
-
-
-
992
992
Other comprehensive (loss) income
-
-
(25)
7
47
7
36
-
36
Shares repurchased
(992)
-
-
-
-
-
-
(886)
(1,878)
Dividends declared
-
-
-
-
-
-
-
(754)
(754)
Effect of share-based compensation
including issuance of
common shares
23
17
-
-
-
-
-
-
40
Transfer of net loss on investment
-
-
3
-
-
-
3
(3)
-
Transfer of net loss on cash flow
hedges
-
-
-
-
-
8
8
-
8
Transfer of net actuarial gain on defined
benefit plans
-
-
-
(7)
-
-
(7)
7
-
BALANCE – DECEMBER 31, 2019
15,771
248
(29)
-
(204)
(18)
(251)
7,101
22,869
1 Any amounts incurred during a period
were closed out to retained earnings at each period-end. Therefore,
no balance exists at the beginning or end of period.
2 All equity transactions were
attributable to common shareholders.
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Balance Sheets
As at
December 31, 2019
December 31, 2018
ASSETS
Current assets
Cash and cash equivalents
671
2,314
Receivables
3,542
3,342
Inventories
4,975
4,917
Prepaid expenses and other current
assets
1,477
1,089
10,665
11,662
Non-current assets
Property, plant and equipment
Note 1
20,335
18,796
Goodwill
11,986
11,431
Other intangible assets
2,428
2,210
Investments
821
878
Other assets
564
525
TOTAL ASSETS
46,799
45,502
LIABILITIES
Current liabilities
Short-term debt
976
629
Current portion of long-term debt
502
995
Current portion of lease liabilities
Note 1
214
8
Payables and accrued charges
7,437
6,703
9,129
8,335
Non-current liabilities
Long-term debt
8,553
7,579
Lease liabilities
Note 1
859
12
Deferred income tax liabilities
3,145
2,907
Pension and other post-retirement benefit
liabilities
433
395
Asset retirement obligations and accrued
environmental costs
1,650
1,673
Other non-current liabilities
161
176
TOTAL LIABILITIES
23,930
21,077
SHAREHOLDERS’ EQUITY
Share capital
15,771
16,740
Contributed surplus
248
231
Accumulated other comprehensive loss
(251)
(291)
Retained earnings
7,101
7,745
TOTAL SHAREHOLDERS’ EQUITY
22,869
24,425
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
46,799
45,502
(See Notes to the Condensed Consolidated
Financial Statements)
Notes to the Condensed Consolidated Financial
Statements
As at and for the Three and Twelve Months Ended December 31,
2019
NOTE 1 BASIS OF
PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, known as
“Nutrien”, “we”, “us, “our” or the “Company”) is the world’s
largest provider of crop inputs and services. Nutrien plays a
critical role in helping growers around the globe increase food
production in a sustainable manner. Disclosures related to the
merger of Potash Corporation of Saskatchewan Inc. and Agrium Inc.
(the “Merger”) can be found in Note 3 of our 2018 annual
consolidated financial statements.
Our accounting policies are in accordance with International
Financial Reporting Standards as issued by the International
Accounting Standards Board (“IFRS”). The accounting policies and
methods of computation used in preparing these unaudited condensed
consolidated financial statements are consistent with those used in
the preparation of our 2018 annual consolidated financial
statements, with the exception of IFRS 16, “Leases” (“IFRS 16”),
which was adopted effective January 1, 2019, and resulted in an
increase to property, plant and equipment and recognition of lease
liabilities of approximately $1 billion at January 1, 2019. Other
impacts from adoption of IFRS 16 are disclosed in Note 13 of our
first quarter 2019 unaudited condensed consolidated financial
statements.
These unaudited condensed consolidated financial statements
include the accounts of Nutrien and its subsidiaries; however, they
do not include all disclosures normally provided in annual
consolidated financial statements and should be read in conjunction
with our 2018 annual consolidated financial statements. Our 2019
annual consolidated financial statements which are expected to be
issued in February 2020 will include additional information under
IFRS.
Certain immaterial 2018 figures have been reclassified or
grouped together in the condensed consolidated statements of
earnings, condensed consolidated statements of cash flows, and in
the segment information.
In management’s opinion, the unaudited condensed consolidated
financial statements include all adjustments necessary to fairly
present such information in all material respects.
NOTE 2 SEGMENT
INFORMATION
The Company’s four reportable operating segments are: Retail,
Potash, Nitrogen and Phosphate. The Retail segment distributes crop
nutrients, crop protection products, seed and merchandise, and
provides services directly to growers through a network of farm
centers in North and South America and Australia. The Potash,
Nitrogen and Phosphate segments are differentiated by the chemical
nutrient contained in the products that each produces. In the first
quarter of 2019, our Chief Operating Decision Maker reassessed
product groupings and decided to evaluate the performance of
ammonium sulfate as part of the Nitrogen segment, rather than the
Phosphate and Sulfate segment, as previously reported in our 2018
annual consolidated financial statements. Comparative amounts for
the Nitrogen and Phosphate segments were restated, including
EBITDA, which is calculated as net earnings (loss) from continuing
operations before finance costs, income taxes and depreciation and
amortization. For the three months ended December 31, 2018,
Nitrogen reflected increases of $30, $8 and $12 in sales, gross
margin and EBITDA, respectively, and for the twelve months ended
December 31, 2018, Nitrogen reflected increases of $121, $40 and
$53 in sales, gross margin and EBITDA, respectively, as well as
$377 in assets as at December 31, 2018, with corresponding
decreases in Phosphate. In addition, the “Others” segment was
renamed to “Corporate and Others”.
Three Months Ended December
31, 2019
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third
party
2,161
374
575
298
34
-
3,442
–
intersegment
10
29
125
43
-
(207)
-
Sales
–
total
2,171
403
700
341
34
(207)
3,442
Freight,
transportation and distribution
-
53
97
54
-
(32)
172
Net
sales
2,171
350
603
287
34
(175)
3,270
Cost of
goods sold
1,435
211
496
281
34
(201)
2,256
Gross
margin
736
139
107
6
-
26
1,014
Selling
expenses
668
2
4
-
(4)
-
670
General
and administrative expenses
30
6
4
4
73
-
117
Provincial mining and other taxes
-
50
-
-
(11)
-
39
Share-based compensation expense
-
-
-
-
9
-
9
Impairment of assets
-
-
-
-
87
-
87
Other
(income) expenses
(31)
(2)
(19)
5
76
-
29
Earnings
(loss) before finance costs and
income
taxes
69
83
118
(3)
(230)
26
63
Depreciation and amortization
162
66
141
57
10
-
436
EBITDA
231
149
259
54
(220)
26
499
Assets –
at December 31, 2019
19,990
11,696
10,991
2,198
2,129
(205)
46,799
Three Months Ended December
31, 2018
Corporate
Retail
Potash
Nitrogen 1
Phosphate 1
and Others
Eliminations
Consolidated
Sales
– third party
2,003
648
675
399
37
-
3,762
– intersegment
14
40
164
65
-
(283)
-
Sales
– total
2,017
688
839
464
37
(283)
3,762
Freight, transportation and
distribution
-
51
94
58
-
(14)
189
Net sales
2,017
637
745
406
37
(269)
3,573
Cost of goods sold
1,355
271
521
393
37
(263)
2,314
Gross margin
662
366
224
13
-
(6)
1,259
Selling expenses
571
5
8
2
(7)
-
579
General and administrative expenses
27
2
3
3
76
-
111
Provincial mining and other taxes
-
56
1
-
1
-
58
Share-based compensation recovery
-
-
-
-
(33)
-
(33)
Other (income) expenses
(18)
1
(1)
8
8
-
(2)
Earnings (loss) before finance costs
and
income taxes
82
302
213
-
(45)
(6)
546
Depreciation and amortization
132
92
108
53
13
-
398
EBITDA
214
394
321
53
(32)
(6)
944
Assets – at December 31, 2018
17,964
11,710
10,386
2,406
3,678
(642)
45,502
1 Comparative figures have been restated
to reflect the change in the sulfate product grouping from
Phosphate and Sulfate to Nitrogen.
Twelve Months Ended December
31, 2019
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third
party
13,183
2,702
2,608
1,397
133
-
20,023
–
intersegment
38
207
612
203
-
(1,060)
-
Sales
–
total
13,221
2,909
3,220
1,600
133
(1,060)
20,023
Freight,
transportation and distribution
-
305
372
232
-
(141)
768
Net
sales
13,221
2,604
2,848
1,368
133
(919)
19,255
Cost of
goods sold
9,981
1,103
2,148
1,373
133
(924)
13,814
Gross
margin
3,240
1,501
700
(5)
-
5
5,441
Selling
expenses
2,484
9
25
5
(18)
-
2,505
General
and administrative expenses
112
6
15
7
264
-
404
Provincial mining and other taxes
-
287
2
1
2
-
292
Share-based compensation expense
-
-
-
-
104
-
104
Impairment of assets
-
-
-
-
120
-
120
Other
expenses (income)
8
(4)
(46)
25
171
-
154
Earnings
(loss) before finance costs and
income
taxes
636
1,203
704
(43)
(643)
5
1,862
Depreciation and amortization
595
390
535
237
42
-
1,799
EBITDA
1,231
1,593
1,239
194
(601)
5
3,661
Assets –
at December 31, 2019
19,990
11,696
10,991
2,198
2,129
(205)
46,799
Twelve Months Ended December
31, 2018
Corporate
Retail
Potash
Nitrogen 1
Phosphate 1
and Others
Eliminations
Consolidated
Sales
– third party
12,470
2,796
2,712
1,508
150
-
19,636
– intersegment
50
220
626
268
-
(1,164)
-
Sales
– total
12,520
3,016
3,338
1,776
150
(1,164)
19,636
Freight, transportation and
distribution
-
349
373
215
-
(73)
864
Net sales
12,520
2,667
2,965
1,561
150
(1,091)
18,772
Cost of goods sold
9,485
1,183
2,145
1,473
150
(1,056)
13,380
Gross margin
3,035
1,484
820
88
-
(35)
5,392
Selling expenses
2,303
14
32
10
(22)
-
2,337
General and administrative expenses
100
10
20
9
284
-
423
Provincial mining and other taxes
-
244
3
1
2
-
250
Share-based compensation expense
-
-
-
-
116
-
116
Impairment of assets
-
1,809
-
-
-
-
1,809
Other (income) expenses
(75)
14
(8)
6
106
-
43
Earnings (loss) before finance costs
and
income taxes
707
(607)
773
62
(486)
(35)
414
Depreciation and amortization
499
404
442
193
54
-
1,592
EBITDA
1,206
(203)
1,215
255
(432)
(35)
2,006
Assets – at December 31, 2018
17,964
11,710
10,386
2,406
3,678
(642)
45,502
1 Comparative figures have been restated
to reflect the change in the sulfate product grouping from
Phosphate and Sulfate to Nitrogen.
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version on businesswire.com: https://www.businesswire.com/news/home/20200218006128/en/
Investor and Media Relations: Richard Downey Vice
President, Investor & Corporate Relations (403) 225-7357
Investors@nutrien.com
Investor Relations Tim Mizuno Senior Manager, Investor
Relations (306) 933-8548
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