NYSE, TSX: NTR
SASKATOON, August 1, 2018 /PRNewswire/ - Nutrien Ltd.
(Nutrien) announced today its 2018 second-quarter results, with net
earnings from continuing operations of $741
million1 ($1.172 earnings per share) and
EBITDA3 of $1.5
billion.
HIGHLIGHTS
- Nutrien's second-quarter adjusted net earnings was $1.48 per share4, adjusted for
purchase price allocation ($0.02 per
share), merger-related costs ($0.02
per share), share-based compensation ($0.10 per share) and dividend income from
discontinued operations ($0.17 per
share). Second-quarter adjusted EBITDA5 was $1.6 billion, adjusted for merger-related costs
and share-based compensation.
- Retail first-half EBITDA was up 10 percent over last
year4 as a result of strong seed and crop protection
product margins and excellent demand for crop inputs in the second
quarter, demonstrating the value of our distribution network in a
compressed season.
- Potash segment EBITDA was 34 percent higher in the first half
of 2018 compared to the same period last year4 due to
higher realized prices, strong offshore sales volumes and lower
production costs.
- Nitrogen EBITDA improved by 17 percent in the first half of
2018 compared to the same period last year4 as a result
of lower production costs, higher urea prices and increased sales
volumes.
- Nutrien full-year 2018 adjusted annual earnings per share and
adjusted consolidated EBITDA guidance were raised to $2.40 to $2.70
earnings per share and $3.7 to
$4.0 billion, respectively (up from
$2.20 to $2.60 earnings per share and $3.3 to $3.7
billion). The adjusted annual earnings per share guidance
includes approximately $100 million
in additional annual depreciation and amortization in phosphate and
sulfate, related to the conversion of our Redwater phosphate facility to produce ammonia
sulfate.
- Nutrien repurchased 29.3 million shares under its normal course
issuer bid program year-to-date.
- Nutrien enhanced its digital ag and omni-channel offering with
the recently announced acquisitions of Waypoint Analytical, Inc.
and Agrible, Inc.
- Nutrien decided to close its small phosphate facility at
Geismar, Louisiana, by the end of
2018 and will no longer require offshore phosphate rock imports
starting in 2019.
- Nutrien agreed to sell its Sociedad Química y Minera de Chile
S.A. (SQM) series A shares and its stake in Arab Potash Company
(APC), and closed the auction of its SQM series B shares. Total net
proceeds of required equity divestments are expected to be
approximately $5 billion by the end
of 2018.
- Nutrien has achieved $246 million
in run-rate synergies as at June 30,
2018 and now expects to achieve $350
million in run-rate synergies by the end of 2018, up from
the initial estimate of $250
million.
"Nutrien delivered strong second quarter and first half results,
demonstrating the value of our integrated business model and
extensive supply chain capabilities, in what was a very compressed
spring application season. We also advanced our strategic plan,
making significant progress on selling the remaining equity
investments, repurchasing our shares and growing our Retail
business," commented Chuck Magro,
Nutrien's President and CEO. "We have raised our annual guidance
due to firm market fundamentals; this, combined with our rapid pace
of synergy realization and a strong balance sheet, will provide us
with numerous options to enhance shareholder value," added Mr.
Magro.
MARKET OUTLOOK
Agriculture and Crop Input Fundamentals
- Most U.S. crop prices have declined over the past quarter,
driven by a combination of favorable U.S. crop prospects and
uncertainty over escalating trade restrictions.
- The U.S. Department of Agriculture (USDA) is projecting an 11
percent decline in global grain ending stocks relative to last
year. Key supportive fundamentals include an estimated 23
percent decline in projected U.S. corn ending stocks
year-over-year, an 18 million tonne reduction in Russian wheat
production and a significant decline in Argentine corn and soybean
production in 2017/18.
- U.S. corn and soybean condition ratings continue to be above
average. As a result, growers have invested in plant health and
nutritional products to preserve yield potential.
- U.S. crops are developing at a significantly faster than
average rate. This is expected to be positive for the fall
fertilizer application window, but is still dependent on weather
conditions through the fall season.
- Crop protection demand in the third quarter has been supported
by missed pre-seed burn-off and resulting increased weed pressure
in the U.S.
- Western Canada and
Australia have recently received
timely precipitation, which has provided support to crop input
demand, however, there continues to be dry areas in both
regions.
Potash
- Strong global potash demand in major spot markets has
maintained tight supply and provided support for potash prices.
Many global exporters are reportedly sold out until the fourth
quarter of 2018. We increased our projection of 2018 global
potash shipments between 65 and 67 million tonnes.
- Global potash projects continue to ramp-up, but in most cases
at a slower pace than anticipated and the impact of this
incremental production has been more than offset by strong demand
and reduced production from some regions.
- Demand for summer fill in North
America has been strong and indicates the potential for a
robust fall application season.
- Brazilian agricultural fundamentals are strong, driven by
supportive local soybean prices; however, there is uncertainty
about the cost of inland freight as a result of truckers' disputes.
While there have been some shipping bottlenecks, there have been
improvements in recent weeks and we expect a strong application
season driven by increased soybean area.
Nitrogen
- Tight urea supply in China,
closures of ammonia and urea capacity in Ukraine, uncertainty regarding Iranian
nitrogen availability and seasonal maintenance shut-downs have more
than offset capacity additions, providing support for nitrogen
prices.
- In addition to tighter supply from existing producers, there
are fewer projects under construction in 2018 and they are
experiencing delays, which has been particularly supportive of
ammonia prices of late.
- North American nitrogen supplies were lower than estimated
demand in the 2017/18 fertilizer year, driven by a more than 25
percent decline in offshore imports year-over-year.
- Higher production costs for marginal producers are also
supporting nitrogen prices as natural gas prices in Europe are up between 35 and 50 percent
year-over-year, while anthracite coal prices in China are up approximately
25 percent.
Phosphate and Sulfate
- Slower than expected ramp-up of new capacity, combined with
plant closures and higher raw material costs year-over-year,
continue to support phosphate prices.
FINANCIAL OUTLOOK AND GUIDANCE
Taking the above factors into consideration, we have revised our
annual guidance ranges as follows:
We raised our guidance range for Potash sales volumes and
EBITDA to 12.3 to 12.8 million tonnes and $1.4 to $1.6
billion, respectively. Nitrogen sales volumes are now
expected to be 10.3 to 10.7 million tonnes and we raised the
bottom end of our EBITDA guidance range from $1.0 billion to $1.1
billion. Phosphate EBITDA guidance has increased to
$0.2 to $0.3
billion (up from $0.2 to
$0.25 billion).
Our effective tax rate on continuing operations range has
been increased to 23 to 25 percent due to changes in forecasted
earnings mix.
Dividend income from investments in APC and SQM is recorded net
of tax in discontinued operations and is now expected to
approximate $130 million. This is
included in our adjusted annual earnings per share guidance,
but is not included in adjusted consolidated EBITDA guidance.
Based on these factors, we are increasing our full-year 2018
adjusted earnings guidance to $2.40
to $2.70 per share (previously
$2.20 to $2.60 per share) and adjusted consolidated EBITDA
guidance to $3.7 to $4.0 billion (previously $3.3 to $3.7
billion).
Excluded from guidance are expected costs to achieve these
ongoing synergies of $50 to
$75 million, share-based compensation
as well as the impact of incremental depreciation and amortization
of $150 to $225 million resulting from the fair valuing of
Agrium's assets and liabilities as of January 1, 2018 in accordance with purchase
accounting.
All annual guidance numbers, including those noted above, are
outlined in the table below:
|
|
|
2018 Guidance
Ranges
|
|
|
|
|
|
(Annual Guidance,
except where noted)
|
Low
|
High
|
Adjusted annual
earnings per share
|
$2.40
|
$2.70
|
Adjusted
Consolidated EBITDA (billions)
|
$3.7
|
$4.0
|
Retail EBITDA
(billions)
|
$1.2
|
$1.3
|
Potash EBITDA
(billions)
|
$1.4
|
$1.6
|
Nitrogen EBITDA
(billions)
|
$1.1
|
$1.2
|
Phosphate and
Sulfate EBITDA (billions)
|
$0.2
|
$0.3
|
Potash sales
tonnes (millions) (a)
|
12.3
|
12.8
|
Nitrogen sales
tonnes (millions) (a)
|
10.3
|
10.7
|
Depreciation and
amortization including purchase price allocation impact
(billions)
|
$1.5
|
$1.7
|
Integration and
synergy costs (millions)
|
$50
|
$75
|
Effective tax rate
on continuing operations
|
23%
|
25%
|
Sustaining capital
expenditures (billions)
|
$1.0
|
$1.1
|
|
|
|
|
|
|
2018 Annual
Assumptions & Sensitivities
|
|
|
|
|
|
FX rate CAD to
USD
|
|
$1.28
|
NYMEX natural gas
($US/MMBtu)
|
|
$2.90
|
$1/MMBtu increase
in NYMEX ($/share) (b)
|
|
$(0.20)
|
$20/tonne change
in realized Potash selling prices
($/share)(b)
|
|
$0.26
|
$20/tonne change
in realized Ammonia selling prices
($/share)(b)
|
|
$0.06
|
$20/tonne change
in realized Urea selling prices
($/share)(b)
|
|
$0.09
|
|
|
(a)
|
Potash and nitrogen
sales tonnes include manufactured product only. Nitrogen sales
tonnes exclude ESN® and Rainbow products.
|
(b)
|
Sensitivities are
calculated pre-synergies resulting from the merger.
|
SECOND-QUARTER RESULTS
The comparative figures throughout this release are the
historical combined results of legacy Potash Corporation of
Saskatchewan Inc. (PotashCorp) and Agrium Inc. (Agrium) for the
three and six months ended June 30,
2017 and are considered to be non-IFRS measures. For
International Financial Reporting Standards (IFRS) purposes, the
comparative amounts are the results of legacy PotashCorp, which is
the accounting acquirer. Compared to the IFRS figures, the change
is the result of the merger involving Agrium and PotashCorp. Refer
to the Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental Information section.
Consolidated
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
Sales
|
8,145
|
7,348
|
797
|
Freight,
transportation and distribution
|
(214)
|
(234)
|
20
|
Cost of goods
sold
|
(5,800)
|
(5,323)
|
(477)
|
Gross
margin
|
2,131
|
1,791
|
340
|
Expenses
|
(980)
|
(796)
|
(184)
|
Net earnings from
continuing operations
|
741
|
705
|
36
|
Nutrien second-quarter net earnings from continuing operations
totaled $741 million, up from the
$705 million earned in the second
quarter of 2017. Results for the quarter were supported by record
EBITDA in Retail and higher prices and strong volumes across our
crop nutrient business segments. Depreciation and amortization
increased by $45 million this
quarter, in part due to the purchase price allocation (PPA) impact.
The comparative amount of PotashCorp for IFRS purposes is detailed
in the financial report of Nutrien for the second quarter of 2018
and its management's discussion and analysis for the same period,
both of which will be made available under Nutrien's profile,
provided on SEDAR at www.sedar.com and on EDGAR at www.sec.gov in
August 2018.
Retail
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
Sales
|
6,342
|
5,707
|
635
|
Cost of goods
sold
|
(4,910)
|
(4,408)
|
(502)
|
Gross
margin
|
1,432
|
1,299
|
133
|
EBIT6
|
764
|
689
|
75
|
EBITDA
|
886
|
760
|
126
|
Selling and
general and administrative expenses
|
(682)
|
(602)
|
(80)
|
- EBITDA – Second-quarter Retail EBITDA reached a record
of $886 million, a 17 percent
increase from the same period last year.
- North American Retail EBITDA increased by $89 million this quarter compared to the same
period last year, as crop input demand surged following a delayed
spring season in the U.S. and Canada. International Retail EBITDA was up 42
percent year-over-year (excluding foreign exchange gains) due to
higher nutrient and livestock sales. Year-to-date, normalized
comparable store sales4 is up 1 percent.
- Selling and general and administrative expenses – Retail
selling and general and administrative expenses increased by 13
percent this quarter compared to the same period in 2017, primarily
due to higher depreciation and amortization expense as a result of
the PPA. Selling expenses as a percentage of sales was 11 percent
this quarter, similar to the same quarter last year as higher
depreciation and amortization expense is offset by higher
sales.
|
|
|
Three months ended
June 30
|
|
Sales
|
|
Gross
margin
|
|
Gross
margin
(%)
|
(millions of U.S.
dollars, except where noted)
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Crop
nutrients
|
2,326
|
1,989
|
337
|
|
474
|
419
|
55
|
|
20
|
21
|
Crop protection
products
|
2,358
|
2,236
|
122
|
|
521
|
485
|
36
|
|
22
|
22
|
Seed
|
1,183
|
1,080
|
103
|
|
219
|
199
|
20
|
|
19
|
18
|
Merchandise
|
201
|
175
|
26
|
|
26
|
27
|
(1)
|
|
13
|
15
|
Services and
other
|
274
|
227
|
47
|
|
192
|
169
|
23
|
|
70
|
74
|
- Crop nutrients – Second-quarter sales increased 17
percent compared to the same period last year as deliveries to all
key regions were higher year-over-year. First-half sales volumes
were up 7 percent versus the same period last year. Gross margin
increased 13 percent this quarter while gross margin per tonne was
flat due to higher costs associated with delivering higher volumes
in a condensed period.
- Crop protection products – Sales in the quarter were 5
percent higher than in the same period last year despite wet
weather challenges in the U.S. and dry weather in Australia. Gross margin was up 7 percent this
quarter over the same period last year and percentage gross margins
were up slightly for both the quarter and the half compared to 2017
levels.
- Seed – Sales in the second quarter increased 10 percent
from the same period in 2017, due to strong demand in the U.S. and
Canada following the delayed
planting season. Gross margin also increased 10 percent due to the
increased volume while gross margin rates increased 1 percentage
point due to a larger proportion of proprietary sales.
- Merchandise – Sales increased 15 percent in the second
quarter due to higher fuel sales in Canada and higher animal health and fencing
sales volumes in Australia. Gross
margin rates decreased by 2 percentage points during the quarter
due to lower margins on Canadian fuel sales.
- Services and other – Sales increased by 21 percent and
gross margin by 14 percent this quarter compared to the same period
last year, due to higher livestock export shipments and wool
commissions in Australia. Gross
margin rates decreased due to the mix of services and products
sold.
Potash
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
Net
sales4
|
638
|
535
|
103
|
Cost of goods
sold
|
(274)
|
(273)
|
(1)
|
Gross
margin
|
364
|
262
|
102
|
EBIT
|
293
|
204
|
89
|
EBITDA
|
386
|
292
|
94
|
Provincial mining
taxes
|
(62)
|
(46)
|
(16)
|
- EBITDA – Potash EBITDA was 32 percent higher in the
quarter compared to the same period last year due to a combination
of strong offshore sales volumes, increased realized selling prices
and a lower cost of goods sold per tonne.
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
North
America
|
1,030
|
1,029
|
1
|
Offshore
|
2,149
|
2,046
|
103
|
Total
|
3,179
|
3,075
|
104
|
Net selling price
($/tonne)
|
|
|
-
|
North
America
|
216
|
198
|
18
|
Offshore
|
194
|
161
|
33
|
Average
|
201
|
174
|
27
|
Cost of goods sold
($/tonne)
|
(86)
|
(89)
|
3
|
Gross margin
($/tonne)
|
115
|
85
|
30
|
Depreciation and
amortization ($/tonne)
|
29
|
29
|
-
|
Gross margin
excluding depreciation and amortization
($/tonne)4
|
144
|
114
|
30
|
- Volumes – Sales volumes were up due to strong offshore
demand and a higher Canpotex Limited (Canpotex) allocation compared
to the second quarter of 2017. The largest portion of Canpotex's
volumes for the quarter were sold to Latin America (32 percent), China and India (21 percent and 9 percent, respectively)
and other Asian markets (29 percent).
- Price – Offshore and domestic selling prices were
markedly higher in the second quarter due to strong global demand.
Our weighted average realized potash selling price was up 16
percent from the second quarter in 2017.
- Costs – Cost per tonne of product sold was 3 percent
lower compared to the prior year's second quarter, due to a larger
proportion of supply produced at our lowest cost facilities and
realized synergies.
Nitrogen
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
Net
sales
|
856
|
820
|
36
|
Cost of goods
sold
|
(595)
|
(624)
|
29
|
Gross
margin
|
261
|
196
|
65
|
EBIT
|
250
|
184
|
66
|
EBITDA
|
335
|
260
|
75
|
- EBITDA – Total nitrogen EBITDA in the quarter was up 29
percent as lower production costs, higher urea prices and increased
sales volumes more than offset lower realized prices for
ammonia.
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
Ammonia
|
1,028
|
1,064
|
(36)
|
Urea
|
901
|
751
|
150
|
Solutions and
nitrates
|
1,133
|
1,008
|
125
|
Total
|
3,062
|
2,823
|
239
|
Net selling price
($/tonne)
|
|
|
-
|
Ammonia
|
263
|
303
|
(40)
|
Urea
|
281
|
239
|
42
|
Solutions and
nitrates
|
167
|
163
|
4
|
Average
|
233
|
236
|
(3)
|
Cost of goods sold
($/tonne)
|
(155)
|
(172)
|
17
|
Gross margin
($/tonne)
|
78
|
64
|
14
|
Depreciation and
amortization ($/tonne)
|
28
|
27
|
1
|
Gross margin
excluding depreciation and amortization ($/tonne)
|
106
|
91
|
15
|
- Volumes – Total nitrogen sales volumes were up 8 percent
in the second quarter as higher urea, solutions and nitrates sales
more than offset lower ammonia sales. Ammonia sales volumes
decreased due to the continued ramp-up of our urea expansion
project at Borger, Texas, as well
as higher urea production at our Trinidad facility, which reduced net ammonia
available for sale. Urea, solutions and nitrates sales volumes were
up 16 percent year-over-year on a combined basis as a result of the
increased upgrade to urea and strong operating rates across the
business.
- Price – Higher realized prices for urea, solutions and
nitrates mostly offset lower realized prices for ammonia caused by
lower Tampa ammonia benchmark
prices and lower natural gas costs. Our weighted average realized
selling price for nitrogen was down 1 percent from the second
quarter of 2017.
- Costs – Cost of goods sold per tonne of nitrogen was 10
percent lower than the second quarter of 2017 due to significantly
lower natural gas costs and higher production volumes which were
used to allocate fixed costs. Depreciation and amortization per
tonne was flat year-over-year resulting from year-to-date
adjustments to the PPA, which remains provisional until
December 31, 2018 when valuation
adjustments must be finalized. Second-quarter AECO gas prices
continue to be favorable to our cost position, with prices
$1.25/MMBtu lower than the same
period in 2017.
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(U.S. dollars per
MMBtu)
|
|
|
|
Overall gas cost
excluding realized derivative impact
|
2.20
|
2.88
|
(0.68)
|
Realized
derivative impact
|
0.38
|
0.29
|
0.09
|
Overall gas
cost
|
2.58
|
3.17
|
(0.59)
|
Average
NYMEX
|
2.80
|
3.18
|
(0.38)
|
Average
AECO
|
0.80
|
2.05
|
(1.25)
|
Phosphate and Sulfate
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
Net
sales
|
394
|
317
|
77
|
Cost of goods
sold
|
(352)
|
(315)
|
(37)
|
Gross
margin
|
42
|
2
|
40
|
EBIT
|
39
|
(5)
|
44
|
EBITDA
|
81
|
57
|
24
|
- EBITDA – Total phosphate and sulfate EBITDA was up 42
percent from the second quarter in 2017 as a result of increased
sales volumes at higher realized prices, which more than offset
increased sulfur costs.
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
Fertilizer
|
569
|
472
|
97
|
Industrial and
feed
|
191
|
210
|
(19)
|
Ammonium
sulfate
|
87
|
111
|
(24)
|
Total
|
847
|
793
|
54
|
Net selling price
($/tonne)
|
|
|
|
Fertilizer
|
410
|
355
|
55
|
Industrial and
feed
|
513
|
501
|
12
|
Ammonium
sulfate
|
271
|
259
|
12
|
Average
|
419
|
380
|
39
|
Cost of goods sold
($/tonne)
|
(371)
|
(380)
|
9
|
Gross margin
($/tonne)
|
48
|
-
|
48
|
Depreciation and
amortization ($/tonne)
|
50
|
78
|
(28)
|
Gross margin
excluding depreciation and amortization
($/tonne)
|
98
|
78
|
20
|
- Volumes – Total phosphate sales volumes in the quarter
were 7 percent higher than the second quarter of 2017, supported by
strong global fertilizer demand and increased production levels at
our phosphate facilities.
- Price – The average combined realized selling price for
fertilizer, industrial and feed and ammonium sulfate was up 10
percent in the quarter due to strong global phosphate demand and
higher global sulfur benchmark prices.
- Costs – Cost of goods sold per tonne was 2 percent lower
than the second quarter of 2017 due to lower depreciation and
amortization from a lower carrying value of U.S. phosphate assets
as a result of impairments in 2017.
Other
|
|
|
Three months ended
June 30
|
|
2018
Actual
|
2017
Combined
|
Change
|
(millions of U.S.
dollars)
|
|
|
|
General and
administrative expenses
|
(147)
|
(63)
|
(84)
|
Other
expenses
|
(81)
|
(49)
|
(32)
|
Finance
costs
|
(133)
|
(126)
|
(7)
|
Income tax
expense
|
(277)
|
(164)
|
(113)
|
- General and administrative expenses were higher compared
to the second quarter of 2017 due primarily to an increase in our
share-based compensation expense by $82
million as a result of a higher Nutrien share price, an
improvement in our relative ranking in total shareholder return and
progress towards synergy targets.
- Tax - Ordinary earnings for the three months ended
June 30, 2018 were higher as compared
to the same period in 2017. In addition, in second-quarter 2017, a
deferred tax recovery of $68 million
was recorded as a result of a Saskatchewan income tax rate decrease. As a
result of these two items, income tax expense increased for the
three months ended June 30, 2018 as
compared to the same period last year.
SYNERGIES
Synergy Program Commitments
|
|
|
Category
|
December 31, 2019
Synergy
Run Rate – Initial
Target
|
Synergy Run Rate
Achieved
to June 30,
2018
|
Distribution and
retail integration/optimization
|
~$150
million
|
$68
million
|
Production
optimization
|
~$125
million
|
$60
million
|
SG&A
optimization
|
~$125
million
|
$75
million
|
Procurement
|
~$100
million
|
$43
million
|
Total
|
$500 million
|
$246
million
|
- Nutrien has achieved synergies ahead of schedule, capturing
$246 million in run-rate synergies as
at June 30, 2018. We now expect to
achieve $350 million in run-rate
synergies by the end of 2018, up from the initial estimate of
$250 million.
Notes
1. All amounts are stated in U.S.
dollars.
2. All references to per-share amounts pertain to
diluted net earnings per share.
3. Earnings before interest, taxes, depreciation, and
amortization (EBITDA) is calculated as net earnings from continuing
operations before finance costs, income tax (expense) recovery,
depreciation and amortization. This is a non-IFRS measure. Refer to
Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental Information.
4. This is a non-IFRS measure. Refer to Selected
Non-IFRS Financial Measures and Reconciliations and Supplemental
Information.
5. Adjusted EBITDA is calculated as net earnings from
continuing operations before finance costs, income tax (expense)
recovery, depreciation and amortization and adjusted for
merger-related costs and share-based compensation expense. This is
a Non-IFRS measure. Refer to Selected Non-IFRS Financial Measures
and Reconciliations and Supplemental Information.
6. Earnings before interest and taxes (EBIT) is calculated as net
earnings from continuing operations before finance costs and income
tax (expense) recovery.
About Nutrien
Nutrien is the world's largest provider of crop inputs and
services, playing a critical role in helping growers increase food
production in a sustainable manner. We produce and distribute over
26 million tonnes of potash, nitrogen and phosphate and sulfate
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. For further information visit us at
www.nutrien.com.
Forward-Looking Statements
Certain statements and other information included in this
news release 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 news release, other
than those relating to historical information or current
conditions, are forward-looking statements, including, but not
limited to: Nutrien's 2018 annual and second-half guidance,
including expectations regarding our adjusted diluted earnings per
share and EBITDA (both adjusted consolidated and by segment);
expectations regarding net proceeds to be realized from the
on-going sale of equity interests; capital spending expectations
for 2018; expectations regarding performance of our business
segments in 2018; our market outlook for 2018, including potash,
nitrogen and phosphate and sulfate outlook 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;
expectations regarding completion of previously announced expansion
projects (including timing and volumes of production associated
therewith) and acquisitions and divestitures; and the expected
synergies associated with the merger of Agrium and PotashCorp,
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 Nutrien believes 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 Nutrien's ability to successfully integrate and realize
the anticipated benefits of its already completed (including the
merger of Agrium and PotashCorp) 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 Nutrien, 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 2018 and in the future (including
as outlined under "Market Outlook"); 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; ability to maintain
investment grade rating and achieve our performance targets;
assumptions in respect of our ability to sell equity positions,
including the ability to find suitable buyers at expected prices
and successfully complete such transactions in a timely manner; 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; the failure to successfully integrate and
realize the expected synergies associated with the merger of Agrium
and PotashCorp, including within the expected timeframe; 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, 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 security risks
related to our systems; the inability to find suitable buyers for
our equity positions and counterparty and transaction risk
associated therewith; regional natural gas supply restrictions;
counterparty and sovereign risk; delays in completion of
turnarounds at our major facilities; gas supply interruptions at
our Egyptian and Argentinian facilities; 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 Agrium, PotashCorp and
Nutrien reports filed with the Canadian securities regulators and
the Securities and Exchange Commission in the United States, including those disclosed
in Nutrien's business acquisition report dated February 20, 2018, related to the merger of
Agrium and PotashCorp.
The purpose of our expected adjusted diluted earnings per
share, adjusted consolidated EBITDA and EBITDA by segment guidance
range is 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 U.S. federal securities laws or applicable
Canadian securities legislation.
FOR FURTHER INFORMATION:
Investor and Media Relations:
Richard Downey
Vice President, Investor & Corporate Relations
(403) 225-7357
Investors@nutrien.com
Investor Relations:
Jeff
Holzman
Senior Director, Investor Relations
(306) 933-8545
Todd Coakwell
Director, Investor Relations
(403) 225-7437
Contact us at: www.nutrien.com
____________________________________________________________________________________________________________________
Nutrien will host a Conference Call on Thursday, August 2, 2018 at 10:00 am Eastern Time.
Telephone Conference: Dial-in numbers:
- From Canada and the U.S.
1-877-269-7756
- 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
https://www.nutrien.com/investors/events/2018-q2-earnings-conference-call
Nutrien
Ltd.
Condensed
Consolidated Statements of Earnings
(in millions of US
dollars except as otherwise noted)
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Note
11)
|
|
(Note
11)
|
|
|
|
|
|
Sales (Note
3)
|
$
|
8,145
|
$
|
1,120
|
$
|
11,840
|
$
|
2,232
|
Freight,
transportation and distribution
|
(214)
|
(116)
|
(422)
|
(249)
|
Cost of goods sold
(Note 3)
|
(5,800)
|
(744)
|
(8,440)
|
(1,450)
|
Gross
Margin
|
2,131
|
260
|
2,978
|
533
|
Selling
expenses
|
(666)
|
(8)
|
(1,198)
|
(17)
|
General and
administrative expenses
|
(179)
|
(40)
|
(298)
|
(81)
|
Provincial mining and
other taxes
|
(65)
|
(43)
|
(113)
|
(76)
|
Earnings of
equity-accounted investees
|
4
|
3
|
11
|
3
|
Other expenses (Note
4)
|
(74)
|
(23)
|
(153)
|
(38)
|
Earnings before
Finance Costs and Income Taxes
|
1,151
|
149
|
1,227
|
324
|
Finance
costs
|
(133)
|
(61)
|
(252)
|
(120)
|
Earnings before
Income Taxes
|
1,018
|
88
|
975
|
204
|
Income tax (expense)
recovery (Note 5)
|
(277)
|
64
|
(235)
|
54
|
Net Earnings from
Continuing Operations
|
741
|
152
|
740
|
258
|
Net earnings from
discontinued operations (Note 6)
|
675
|
49
|
675
|
92
|
Net
Earnings
|
$
|
1,416
|
$
|
201
|
$
|
1,415
|
$
|
350
|
|
|
|
|
|
Net Earnings per
Share from Continuing Operations
|
|
|
|
|
|
Basic
|
$
|
1.18
|
$
|
0.18
|
$
|
1.16
|
$
|
0.31
|
|
Diluted
|
$
|
1.17
|
$
|
0.18
|
$
|
1.16
|
$
|
0.31
|
|
|
|
|
|
|
Net Earnings per
Share from Continuing and Discontinued Operations
|
|
|
|
|
|
Basic
|
$
|
2.25
|
$
|
0.24
|
$
|
2.22
|
$
|
0.42
|
|
Diluted
|
$
|
2.24
|
$
|
0.24
|
$
|
2.22
|
$
|
0.42
|
|
|
|
|
|
|
Dividends Declared
per Share
|
$
|
0.40
|
$
|
0.10
|
$
|
0.80
|
$
|
0.20
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (Note 2)
|
|
|
|
|
|
Basic
|
630,548,000
|
840,060,000
|
636,438,000
|
839,959,000
|
|
Diluted
|
631,073,000
|
840,124,000
|
636,971,000
|
840,111,000
|
|
|
|
|
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
Nutrien
Ltd.
Condensed
Consolidated Statements of Comprehensive Income
(in millions of US
dollars)
(unaudited)
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
(Net of related
income taxes)
|
|
(Note
11)
|
|
(Note
11)
|
|
|
|
|
|
Net
Earnings
|
$
|
1,416
|
$
|
201
|
$
|
1,415
|
$
|
350
|
Other Comprehensive
(Loss) Income
|
|
|
|
|
|
Items that will not
be reclassified to net earnings:
|
|
|
|
|
|
|
Net actuarial (loss)
gain on defined benefit plans(1)
|
(1)
|
-
|
56
|
-
|
|
|
Financial instruments
measured at FVTOCI (2)
|
|
|
|
|
|
|
|
Net fair value (loss)
gain on investments
|
(10)
|
60
|
(93)
|
93
|
|
Items that have been
or may be subsequently reclassified to
|
|
|
|
|
|
|
net
earnings:
|
|
|
|
|
|
|
Cash flow
hedges
|
|
|
|
|
|
Net fair value gain
(loss) during the period (3)
|
3
|
(2)
|
1
|
(7)
|
|
|
|
Reclassification of
net loss to earnings (4)
|
-
|
11
|
-
|
19
|
|
|
Foreign currency
translation
|
|
|
|
|
|
|
|
Loss on translation
of net foreign operations
|
(97)
|
-
|
(138)
|
-
|
|
|
Equity-accounted
investees
|
|
|
|
|
|
|
|
Share of other
comprehensive (loss) income
|
-
|
-
|
(1)
|
3
|
Other
Comprehensive (Loss) Income
|
(105)
|
69
|
(175)
|
108
|
Comprehensive
Income
|
$
|
1,311
|
$
|
270
|
$
|
1,240
|
$
|
458
|
|
|
(1)
|
Net of income taxes
of $1 (2017 – $NIL) for the three months ended June 30, 2018 and
$(16) (2017 – $NIL) for the six months ended June 30,
2018.
|
(2)
|
As at June 30, 2018,
financial instruments measured at fair value through other
comprehensive income ("FVTOCI") are comprised of shares in Sinofert
Holdings Limited ("Sinofert") and other (June 30, 2017 - Israel
Chemicals Ltd. ("ICL"), Sinofert and other). The company's
investment in ICL was classified as held for sale at December 31,
2017 and the divestiture of all equity interests in ICL was
completed on January 24, 2018.
|
(3)
|
Cash flow hedges are
comprised of natural gas derivative instruments and were net of
income taxes of $(1) (2017 - $1) for the three months ended June
30, 2018 and $NIL (2017 - $4) for the six months ended June 30,
2018.
|
(4)
|
Net of income taxes
of $NIL (2017 - $(6)) for the three months ended June 30, 2018 and
$NIL (2017 - $(11)) for the six months ended June 30,
2018.
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
Condensed
Consolidated Statements of Cash Flows
(in millions of US
dollars)
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
June
30
|
June
30
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
Net
earnings
|
$
|
1,416
|
$
|
201
|
$
|
1,415
|
$
|
350
|
Adjustments to
reconcile net earnings to cash
|
|
|
|
|
|
provided by operating
activities (Note 7)
|
(107)
|
151
|
294
|
295
|
Changes in non-cash
operating working capital (Note 7)
|
(708)
|
(24)
|
(1,448)
|
(94)
|
Cash provided by
operating activities
|
601
|
328
|
261
|
551
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Cash acquired in
Merger (Note 2)
|
-
|
-
|
466
|
-
|
Business
acquisitions, net of cash acquired
|
(60)
|
-
|
(245)
|
-
|
Additions to
property, plant and equipment
|
(323)
|
(128)
|
(561)
|
(261)
|
Proceeds from
disposal of discontinued operations (Note 6)
|
1,067
|
-
|
1,819
|
-
|
Purchase of
investments
|
(108)
|
-
|
(108)
|
-
|
Other
|
10
|
(2)
|
11
|
(1)
|
Cash provided by
(used in) investing activities
|
586
|
(130)
|
1,382
|
(262)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Finance costs on
long-term debt
|
(15)
|
-
|
(21)
|
(1)
|
Proceeds from
(repayment of) short-term debt
|
1,399
|
(81)
|
1,895
|
(60)
|
Repayment of
long-term debt
|
(6)
|
-
|
(6)
|
-
|
Dividends
paid
|
(255)
|
(82)
|
(460)
|
(164)
|
Repurchase of common
shares (Note 9)
|
(803)
|
-
|
(1,204)
|
-
|
Issuance of common
shares
|
1
|
-
|
2
|
1
|
Cash provided by
(used in) financing activities
|
321
|
(163)
|
206
|
(224)
|
Effect of exchange
rate changes on cash and cash equivalents
|
(12)
|
-
|
(9)
|
-
|
Increase in Cash
and Cash Equivalents
|
1,496
|
35
|
1,840
|
65
|
Cash and Cash
Equivalents, Beginning of Period
|
460
|
62
|
116
|
32
|
Cash and Cash
Equivalents, End of Period
|
$
|
1,956
|
$
|
97
|
$
|
1,956
|
$
|
97
|
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
Cash
|
$
|
595
|
$
|
28
|
$
|
595
|
$
|
28
|
|
Short-term
investments
|
1,361
|
69
|
1,361
|
69
|
|
|
$
|
1,956
|
$
|
97
|
$
|
1,956
|
$
|
97
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
Condensed
Consolidated Statement of Changes in Shareholders'
Equity
(in millions of US
dollars)
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
Comprehensive (Loss) Income
|
|
|
|
|
Share
Capital
|
Contributed
Surplus
|
Net fair
value
loss on
investments
(1),(2)
|
Net (loss)
gain
on
derivatives
designated
as
cash flow
hedges
|
Net
actuarial
gain on
defined
benefit plans
(3)
|
Translation
loss
of net
foreign
operations
(Note 11)
|
Comprehensive
loss
of
equity-accounted
investees
(Note 11)
|
Total
Accumulated
Other
Comprehensive
Income
(Loss)
|
Retained
Earnings
|
Total
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December
31, 2017
|
$
|
1,806
|
$
|
230
|
$
|
73
|
$
|
(43)
|
$
|
-
|
$
|
(2)
|
$
|
(3)
|
$
|
25
|
$
|
6,242
|
$
|
8,303
|
Merger impact (Note
2, Note 9)
|
15,898
|
7
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
15,904
|
Net
earnings
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1,415
|
1,415
|
Other comprehensive
(loss) income
|
-
|
-
|
(93)
|
1
|
56
|
(138)
|
(1)
|
(175)
|
-
|
(175)
|
Shares
repurchased
|
(685)
|
(23)
|
-
|
-
|
-
|
-
|
-
|
-
|
(561)
|
(1,269)
|
Dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(507)
|
(507)
|
Effect of share-based
compensation
|
|
|
|
|
|
|
|
|
|
|
|
including issuance of
common shares
|
5
|
9
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
14
|
Transfer of net
actuarial gain on
|
|
|
|
|
|
|
|
|
|
|
|
defined benefit
plans
|
-
|
-
|
-
|
-
|
(56)
|
|
|
(56)
|
56
|
-
|
Transfer of net loss
on sale
|
|
|
|
|
|
|
|
|
|
|
|
of
investment
|
-
|
-
|
19
|
-
|
-
|
-
|
-
|
19
|
(19)
|
-
|
Transfer of net loss
on cash flow hedges (4)
|
-
|
-
|
-
|
15
|
-
|
-
|
-
|
15
|
-
|
15
|
Balance - June 30,
2018
|
$
|
17,024
|
$
|
223
|
$
|
(1)
|
$
|
(27)
|
$
|
-
|
$
|
(140)
|
$
|
(4)
|
$
|
(172)
|
$
|
6,625
|
$
|
23,700
|
|
|
(1)
|
The company adopted
IFRS 9 "Financial Instruments" in 2018 and reclassified
available-for-sale investments as financial instruments measured at
FVTOCI.
|
(2)
|
The company divested
its equity interests in the investment in ICL on January 24, 2018.
The loss on sale of ICL of $(19) was transferred to retained
earnings at June 30, 2018. The cumulative net unrealized gain at
December 31, 2017 was $4.
|
(3)
|
Any amounts incurred
during a period are closed out to retained earnings at each
period-end. Therefore, no balance exists at the beginning or end of
period.
|
(4)
|
Net of income taxes
of $(2) for the three months ended June 30, 2018 and $(4) for the
six months ended June 30, 2018.
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
Condensed
Consolidated Balance Sheets
(in millions of US
dollars except share amounts)
(unaudited)
|
|
|
|
As at
|
|
June
30
2018
(Note
2)
|
December
31
2017
(Note
11)
|
|
|
|
|
|
Assets
|
|
|
|
Current
assets
|
|
|
|
|
Cash and cash
equivalents
|
$
|
1,956
|
$
|
116
|
|
|
Receivables
|
4,746
|
489
|
|
|
Inventories
|
4,089
|
788
|
|
|
Prepaid expenses and
other current assets
|
323
|
72
|
|
|
|
11,114
|
1,465
|
|
|
Assets held for sale
(Note 6)
|
945
|
1,858
|
|
|
|
12,059
|
3,323
|
|
Non-current
assets
|
|
|
|
|
Property, plant and
equipment
|
20,450
|
12,971
|
|
|
Goodwill (Note
2)
|
10,990
|
97
|
|
|
Other intangible
assets
|
2,277
|
69
|
|
|
Investments
|
862
|
292
|
|
|
Other
assets
|
432
|
246
|
Total
Assets
|
$
|
47,070
|
$
|
16,998
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
Current
liabilities
|
|
|
|
|
Short-term debt (Note
8)
|
$
|
3,459
|
$
|
730
|
|
|
Current portion of
long-term debt (Note 8)
|
1,018
|
-
|
|
|
Payables and accrued
charges
|
5,923
|
836
|
|
|
|
10,400
|
1,566
|
|
|
Deferred income tax
liabilities on assets held for sale (Note 6)
|
28
|
36
|
|
|
|
10,428
|
1,602
|
|
Non-current
liabilities
|
|
|
|
|
Long-term debt (Note
8)
|
7,586
|
3,711
|
|
|
Deferred income tax
liabilities
|
3,017
|
2,205
|
|
|
Pension and other
post-retirement benefit liabilities
|
530
|
440
|
|
|
Asset retirement
obligations and accrued environmental costs
|
1,617
|
651
|
|
|
Other non-current
liabilities
|
192
|
86
|
Total
Liabilities
|
23,370
|
8,695
|
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
Share capital (Note
9)
|
17,024
|
1,806
|
|
|
Unlimited
authorization of common shares without par value; issued and
outstanding 619,364,958 and 840,223,041 at June 30, 2018 and
December 31, 2017, respectively
|
|
|
|
Contributed
surplus
|
223
|
230
|
|
Accumulated other
comprehensive (loss) income
|
(172)
|
25
|
|
Retained
earnings
|
6,625
|
6,242
|
Total
Shareholders' Equity
|
23,700
|
8,303
|
Total Liabilities
and Shareholders' Equity
|
$
|
47,070
|
$
|
16,998
|
|
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
Nutrien Ltd.
Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Six Months Ended June 30, 2018
(in millions of US dollars except as otherwise noted)
(unaudited)
1. Significant Accounting Policies
On January 1, 2018, Potash
Corporation of Saskatchewan Inc. ("PotashCorp") and Agrium Inc.
("Agrium") combined their businesses in a transaction by way of a
plan of arrangement (the "Merger") by becoming wholly-owned
subsidiaries of a new parent company named Nutrien Ltd.
(collectively with its subsidiaries, known as "Nutrien" or "the
company" except to the extent the context otherwise requires).
Nutrien is the world's largest provider of crop inputs and
services.
The company's 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 interim condensed consolidated financial statements are
consistent with those used in the preparation of Nutrien's first
quarter 2018 unaudited condensed consolidated first
quarter financial statements ("first quarter financial
statements"). PotashCorp is the acquirer for accounting purposes,
and as a result, figures and related notes for 2017 and prior
reflect the historical operations of PotashCorp. The financial
statements and related notes of Nutrien in 2018 and beyond reflect
the consolidated operations of Nutrien.
These unaudited interim 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 the company's first quarter financial statements.
Further, while the financial figures included in this preliminary
interim results news release have been computed in accordance with
IFRS applicable to interim periods, this news release does not
contain sufficient information to constitute an interim financial
report as that term is defined in International Accounting Standard
("IAS") 34, "Interim Financial Reporting". The company expects to
file an interim financial report that complies with IAS 34 in its
2018 second quarter report in August
2018.
In management's opinion, the unaudited interim condensed
consolidated financial statements include all adjustments necessary
to present fairly such information in all material respects.
Interim results are not necessarily indicative of the results
expected for the fiscal year.
2. Merger of Equals
As described in Note 1, PotashCorp and Agrium combined
their businesses in a merger of equals. Further information
relating to the merger of equals was previously described in Note 2
of the company's first quarter financial statements.
The company has engaged independent valuation experts to assist
in determining the fair value of certain assets acquired and
liabilities assumed and related deferred income tax impacts in
connection with the Merger. The purchase price allocation is not
final as the company is continuing to obtain and verify information
required to determine the fair value of certain assets and
liabilities and the amount of deferred income taxes arising on
their recognition. The company estimated the preliminary purchase
price allocation as of the date of the Merger based on information
that was available and continues to adjust those estimates as new
information becomes available that existed at the date of
acquisition. The company expects to finalize the amounts recognized
as it obtains the information necessary to complete the analysis,
and in any event, not later than December
31, 2018.
Due to the inherent complexity associated with valuations and
the timing of the Merger, the numbers below are provisional.
Further adjustments to the fair values presented in the following
table may occur:
|
|
Preliminary
fair value
as
previously
reported
(1)
|
Adjustments
(2)
|
Estimated
fair
value as
at
June 30,
2018
|
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
466
|
$
|
-
|
$
|
466
|
|
Receivables
|
2,424
|
(2)
|
2,422
|
|
Inventories
|
3,321
|
(18)
|
3,303
|
|
Prepaid expenses and
other current assets
|
1,124
|
-
|
1,124
|
|
Assets held for
sale
|
105
|
(10)
|
95
|
|
Property, plant and
equipment
|
7,783
|
(217)
|
7,566
|
|
Goodwill
|
10,455
|
382
|
10,837
|
|
Other intangible
assets
|
2,318
|
30
|
2,348
|
|
Investments
|
522
|
6
|
528
|
|
Other
assets
|
123
|
-
|
123
|
Total
Assets
|
28,641
|
171
|
28,812
|
|
|
|
|
|
|
Short-term
debt
|
$
|
867
|
$
|
-
|
$
|
867
|
|
Payables and accrued
charges
|
5,223
|
3
|
5,226
|
|
Long-term
debt
|
4,941
|
-
|
4,941
|
|
Deferred income tax
liabilities
|
498
|
(6)
|
492
|
|
Pension and other
post-retirement benefits liabilities
|
142
|
-
|
142
|
|
Asset retirement
obligations and accrued environmental costs
|
888
|
167
|
1,055
|
|
Other non-current
liabilities
|
72
|
7
|
79
|
Total
Liabilities
|
12,631
|
171
|
12,802
|
Net assets
(consideration for the Merger)
|
$
|
16,010
|
$
|
-
|
$
|
16,010
|
(1)
|
As previously
reported in the company's first quarter financial
statements.
|
(2)
|
The company recorded
adjustments to the preliminary fair value in the second quarter of
2018 to reflect facts and circumstances in existence as of the date
of acquisition. These adjustments primarily related to changes in
preliminary valuation assumptions, including recording of accrued
retirement obligations and refinement of property, plant and
equipment and intangibles estimates based on new information
available that existed at the date of acquisition. All measurement
period adjustments were offset against goodwill.
|
3. Segment Information
The company has four reportable operating segments: retail,
potash, nitrogen and phosphate and sulfate. 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
and sulfate segments are differentiated by the chemical nutrient
contained in the products that each produces.
|
Three Months Ended
June 30, 2018
|
|
Retail
|
Potash
|
Nitrogen
|
Phosphate
and
Sulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
$
|
6,331
|
$
|
666
|
$
|
781
|
$
|
367
|
$
|
-
|
$
|
-
|
$
|
8,145
|
|
- intersegment
|
11
|
50
|
188
|
79
|
-
|
(328)
|
-
|
Sales
|
- total
|
6,342
|
716
|
969
|
446
|
-
|
(328)
|
8,145
|
Freight,
transportation and distribution
|
-
|
(78)
|
(113)
|
(52)
|
-
|
29
|
(214)
|
Net sales
|
6,342
|
638
|
856
|
394
|
-
|
(299)
|
|
Cost of goods
sold
|
(4,910)
|
(274)
|
(595)
|
(352)
|
-
|
331
|
(5,800)
|
Gross
margin
|
1,432
|
364
|
261
|
42
|
-
|
32
|
2,131
|
|
Selling
expenses
|
(657)
|
(3)
|
(8)
|
(2)
|
4
|
-
|
(666)
|
|
General and
administrative expenses
|
(25)
|
(2)
|
(4)
|
(1)
|
(147)
|
-
|
(179)
|
|
Provincial mining and
other taxes
|
-
|
(62)
|
(1)
|
(1)
|
(1)
|
-
|
(65)
|
|
Earnings of
equity-accounted
|
|
|
|
|
|
|
|
|
|
investees
|
3
|
-
|
3
|
-
|
(2)
|
-
|
4
|
|
Other income
(expenses)
|
11
|
(4)
|
(1)
|
1
|
(81)
|
-
|
(74)
|
Earnings before
finance costs and
|
|
|
|
|
|
|
|
|
income
taxes
|
764
|
293
|
250
|
39
|
(227)
|
32
|
1,151
|
Depreciation and
amortization
|
122
|
93
|
85
|
42
|
14
|
-
|
356
|
EBITDA
(1)
|
886
|
386
|
335
|
81
|
(213)
|
32
|
1,507
|
(1) See
reconciliation of non-IFRS measure in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
|
|
|
Three Months Ended
June 30, 2017
|
|
|
|
Potash
|
Nitrogen
|
Phosphate
and
Sulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
$
|
461
|
$
|
384
|
$
|
275
|
$
|
-
|
$
|
-
|
$
|
1,120
|
|
-
intersegment
|
-
|
17
|
-
|
-
|
(17)
|
-
|
Sales -
total
|
461
|
401
|
275
|
-
|
(17)
|
1,120
|
Freight,
transportation and distribution
|
(50)
|
(32)
|
(34)
|
-
|
-
|
(116)
|
Net sales
|
411
|
369
|
241
|
-
|
(17)
|
|
Cost of goods
sold
|
(193)
|
(301)
|
(267)
|
-
|
17
|
(744)
|
Gross
margin
|
218
|
68
|
(26)
|
-
|
-
|
260
|
|
Selling
expenses
|
(2)
|
(4)
|
(2)
|
-
|
-
|
(8)
|
|
General and
administrative expenses
|
(2)
|
(1)
|
(1)
|
(36)
|
-
|
(40)
|
|
Provincial mining and
other taxes
|
(43)
|
-
|
-
|
-
|
-
|
(43)
|
|
Earnings of
equity-accounted
|
|
|
|
|
|
|
|
|
investees
|
-
|
2
|
-
|
1
|
-
|
3
|
|
Other
expenses
|
(5)
|
(2)
|
(1)
|
(15)
|
-
|
(23)
|
|
|
|
|
|
|
|
Earnings before
finance costs and income taxes
|
166
|
63
|
(30)
|
(50)
|
-
|
149
|
Depreciation and
amortization
|
56
|
47
|
56
|
9
|
-
|
168
|
EBITDA
|
222
|
110
|
26
|
(41)
|
-
|
317
|
|
|
|
Six Months Ended
June 30, 2018
|
|
|
|
Retail
|
Potash
|
Nitrogen
|
Phosphate
andSulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
$
|
8,419
|
$
|
1,268
|
$
|
1,405
|
$
|
748
|
$
|
-
|
$
|
-
|
$
|
11,840
|
|
-
intersegment
|
22
|
118
|
310
|
160
|
-
|
(610)
|
-
|
Sales -
total
|
8,441
|
1,386
|
1,715
|
908
|
-
|
(610)
|
11,840
|
Freight,
transportation and distribution
|
-
|
(173)
|
(187)
|
(110)
|
-
|
48
|
(422)
|
Net sales
|
8,441
|
1,213
|
1,528
|
798
|
-
|
(562)
|
|
Cost of goods
sold
|
(6,601)
|
(554)
|
(1,119)
|
(727)
|
-
|
561
|
(8,440)
|
Gross
margin
|
1,840
|
659
|
409
|
71
|
-
|
(1)
|
2,978
|
|
Selling
expenses
|
(1,180)
|
(6)
|
(16)
|
(5)
|
9
|
-
|
(1,198)
|
|
General and
administrative expenses
|
(48)
|
(5)
|
(10)
|
(4)
|
(231)
|
-
|
(298)
|
|
Provincial mining and
other taxes
|
-
|
(110)
|
(1)
|
(1)
|
(1)
|
-
|
(113)
|
|
Earnings of
equity-accounted
|
|
|
|
|
|
|
|
|
|
investees
|
5
|
-
|
7
|
-
|
(1)
|
-
|
11
|
|
Other income
(expenses)
|
14
|
(8)
|
(7)
|
1
|
(153)
|
-
|
(153)
|
Earnings before
finance costs and
|
|
|
|
|
|
|
|
|
income
taxes
|
631
|
530
|
382
|
62
|
(377)
|
(1)
|
1,227
|
Depreciation and
amortization
|
245
|
184
|
214
|
93
|
31
|
-
|
767
|
EBITDA
|
876
|
714
|
596
|
155
|
(346)
|
(1)
|
1,994
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2017
|
|
|
|
|
Potash
|
Nitrogen
|
Phosphate
and Sulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
|
$
|
890
|
$
|
759
|
$
|
583
|
$
|
-
|
$
|
-
|
$
|
2,232
|
|
-
intersegment
|
|
-
|
39
|
-
|
-
|
(39)
|
-
|
Sales -
total
|
|
890
|
798
|
583
|
-
|
(39)
|
2,232
|
Freight,
transportation and distribution
|
|
(114)
|
(64)
|
(71)
|
-
|
-
|
(249)
|
Net sales
|
|
776
|
734
|
512
|
-
|
(39)
|
|
Cost of goods
sold
|
|
(393)
|
(569)
|
(527)
|
-
|
39
|
(1,450)
|
Gross
margin
|
|
383
|
165
|
(15)
|
-
|
-
|
533
|
|
Selling
expenses
|
|
(4)
|
(8)
|
(4)
|
(1)
|
-
|
(17)
|
|
General and
administrative expenses
|
|
(4)
|
(2)
|
(2)
|
(73)
|
-
|
(81)
|
|
Provincial mining and
other taxes
|
|
(76)
|
-
|
-
|
-
|
-
|
(76)
|
|
Earnings of
equity-accounted
|
|
|
|
|
|
|
|
|
|
investees
|
|
-
|
2
|
-
|
1
|
-
|
3
|
|
Other
expenses
|
|
(10)
|
(4)
|
(2)
|
(22)
|
-
|
(38)
|
Earnings before
finance costs and
|
|
|
|
|
|
|
|
|
income
taxes
|
|
289
|
153
|
(23)
|
(95)
|
-
|
324
|
Depreciation and
amortization
|
|
111
|
97
|
114
|
18
|
-
|
340
|
EBITDA
|
|
400
|
250
|
91
|
(77)
|
-
|
664
|
4. Other Expenses
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Note
11)
|
|
(Note
11)
|
Foreign exchange
(loss) gain
|
$
|
-
|
$
|
(9)
|
$
|
2
|
$
|
(8)
|
Merger and related
costs
|
(15)
|
(14)
|
(81)
|
(23)
|
Other
expenses
|
(59)
|
-
|
(74)
|
(7)
|
|
$
|
(74)
|
$
|
(23)
|
$
|
(153)
|
$
|
(38)
|
5. Income Tax (Expense) Recovery
A separate estimated average annual effective tax rate was
determined for each taxing jurisdiction and applied individually to
the interim period pre-tax income from continuing operations of
each jurisdiction.
Income Tax Related to Continuing Operations
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
Income tax (expense)
recovery
|
$
|
(277)
|
$
|
64
|
$
|
(235)
|
$
|
54
|
Actual effective tax
rate on ordinary earnings
|
27%
|
9%
|
24%
|
11%
|
Actual effective tax
rate including discrete items
|
27%
|
(72%)
|
24%
|
(27%)
|
Discrete tax
adjustments that impacted the tax rate
|
$
|
(1)
|
$
|
71
|
$
|
2
|
$
|
76
|
The actual effective tax rate on ordinary earnings for the three
and six months ended June 30, 2018
increased compared to the same periods last year primarily due to
significantly higher income in high tax jurisdictions. Tax
adjustments included a deferred tax recovery of $68 in the second quarter of 2017 resulting from
a Saskatchewan income tax rate
decrease.
6. Discontinued Operations
The company's investments in Sociedad Quimica y Minera de Chile
S.A. ("SQM"), ICL and Arab Potash Company ("APC") were classified
as held for sale and as discontinued operations in December 2017, due to regulatory requirements to
dispose of these investments in connection with the Merger. The
company's share of earnings, dividend income and associated income
tax (expense) recovery pertaining to these investments were
reclassified from earnings before income taxes and income tax
(expense) recovery to net earnings from discontinued operations on
the condensed consolidated statement of earnings.
For the six months
ended June 30, 2018:
|
|
|
|
|
|
|
|
|
|
Impact of Sale
on:
|
|
Proceeds
|
(Loss)
Gain
on
Sale
|
Net
of
Income
taxes
|
AOCI
|
Net
Earnings
and
Retained
Earnings
|
Sale of shares in
ICL(1)
|
$
|
685
|
$
|
(19)
|
$
|
-
|
$
|
(19)
|
$
|
-
|
Sale of Conda
(2)
|
73
|
-
|
-
|
-
|
-
|
Sale of shares in SQM
(3)
|
1,061
|
841
|
586
|
-
|
586
|
Total
|
$
|
1,819
|
$
|
822
|
$
|
586
|
$
|
(19)
|
$
|
586
|
(1)
|
In the first quarter
of 2018, the company completed the sale of its equity interests in
ICL through a private secondary offering.
|
(2)
|
In the first quarter
of 2018, the company completed the sale of its Conda phosphate
operations.
|
(3)
|
In the second quarter
of 2018, the company completed the sale of a portion of its equity
interest in SQM.
|
On May 17, 2018, the company
entered into an agreement with a third party for the sale of its
remaining equity interest in SQM for approximately $4,066 before taxes and closing costs. The
agreement is subject to customary closing conditions (including
applicable regulatory approvals) and is expected to close by the
fourth quarter of 2018.
On July 23, 2018, the company
entered into an agreement with a third party for the sale of the
company's equity interest in APC for approximately $502. The agreement is subject to customary
closing conditions (including applicable regulatory approvals) and
is expected to close by the fourth quarter of 2018.
Net Earnings
from Discontinued Operations
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
Share of earnings of
SQM and APC (1)
|
$
|
-
|
$
|
47
|
$
|
-
|
$
|
85
|
Dividend income of
SQM, APC and ICL (1)
|
126
|
4
|
126
|
12
|
Gain on disposal of
investment in SQM
|
841
|
-
|
841
|
-
|
Income tax expense
(2)
|
(292)
|
(2)
|
(292)
|
(5)
|
Net earnings from
discontinued operations
|
$
|
675
|
$
|
49
|
$
|
675
|
$
|
92
|
|
|
|
|
|
Net Earnings per
Share from Discontinued Operations
|
|
|
|
|
|
Basic
|
$
|
1.07
|
$
|
0.06
|
$
|
1.06
|
$
|
0.11
|
|
Diluted
|
$
|
1.07
|
$
|
0.06
|
$
|
1.06
|
$
|
0.11
|
(1)
|
The company's
investments in SQM and APC were classified as discontinued
operations at December 1, 2017 and December 31, 2017, respectively,
and, as a result, equity accounting in respect of these investments
ceased after such dates.
|
(2)
|
For 2018, income tax
expense is comprised of $255 relating to the disposals of certain
SQM shares including the planned repatriation of the net proceeds,
and $37 relating to earnings from discontinued operations ($19 for
the planned repatriation of dividend income received from SQM and
$18 for the planned repatriation of the remaining excess cash
available in Chile).
|
Cash flows from
Discontinued Operations
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
June
30
|
June
30
|
|
|
2018
|
2017
|
2018
|
2017
|
Operating
Activities
|
|
|
|
|
|
Dividends from
discontinued operations
|
$
|
126
|
$
|
88
|
$
|
126
|
$
|
95
|
Cash provided by
operating activities
|
$
|
126
|
$
|
88
|
$
|
126
|
$
|
95
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
Proceeds from
disposal of discontinued operations
|
$
|
1,067
|
$
|
-
|
$
|
1,819
|
$
|
-
|
Cash provided by
investing activities
|
$
|
1,067
|
$
|
-
|
$
|
1,819
|
$
|
-
|
7. Consolidated Statements of Cash Flows
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
|
June
30
|
June
30
|
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
(Note
11)
|
|
(Note
11)
|
Reconciliation of
cash provided by operating activities
|
|
|
|
|
Net
earnings
|
$
|
1,416
|
$
|
201
|
$
|
1,415
|
$
|
350
|
Adjustments to
reconcile net earnings to cash provided by
|
|
|
|
|
operating
activities
|
|
|
|
|
|
Gain on sale of
investment in SQM
|
(841)
|
-
|
(841)
|
-
|
|
Depreciation and
amortization
|
356
|
168
|
767
|
340
|
|
Net (undistributed)
distributed earnings of equity-accounted investees
|
(2)
|
35
|
(8)
|
(2)
|
|
Share-based
compensation
|
82
|
2
|
98
|
7
|
|
Provision for
(recovery of) deferred income tax
|
306
|
(82)
|
298
|
(96)
|
|
Asset retirement
obligations and accrued environmental costs
|
(10)
|
3
|
(28)
|
2
|
|
Other long-term
liabilities and miscellaneous
|
2
|
25
|
8
|
44
|
|
Subtotal of
adjustments
|
(107)
|
151
|
294
|
295
|
|
|
|
|
|
|
|
|
Changes in
non-cash operating working capital
|
|
|
|
|
|
Receivables
|
(1,644)
|
23
|
(1,831)
|
38
|
|
Inventories
|
1,696
|
(9)
|
(5)
|
(58)
|
|
Prepaid expenses and
other current assets
|
209
|
(9)
|
854
|
(14)
|
|
Payables and accrued
charges
|
(969)
|
(29)
|
(466)
|
(60)
|
|
Subtotal of changes
in non-cash operating working capital
|
(708)
|
(24)
|
(1,448)
|
(94)
|
Cash provided by
operating activities
|
$
|
601
|
$
|
328
|
$
|
261
|
$
|
551
|
|
|
|
|
|
|
|
Supplemental cash
flows disclosure
|
|
|
|
|
|
|
Interest
paid
|
$
|
127
|
$
|
74
|
$
|
241
|
$
|
103
|
|
|
Income taxes
paid
|
$
|
67
|
$
|
38
|
$
|
96
|
$
|
53
|
8. Debt
In the second quarter of 2018, the company launched a commercial
paper program having an aggregate authorized amount of $4,500. Nutrien has discontinued new issuances
under the legacy commercial paper programs of PotashCorp and
Agrium.
In the second quarter of 2018, the company replaced the existing
$3,500 unsecured revolving credit
facility and the $2,500
multi-jurisdictional unsecured revolving credit facility with a new
Nutrien $4,500 unsecured revolving
cred it facility ("Nutrien Credit Facility "). The Nutrien Credit
Facility matures April 10, 2023,
subject to extension at the request of Nutrien provided that the
resulting maturity date shall not exceed five years from the date
specified in the request. Principal covenants and events of default
under the Nutrien Credit Facility include a debt to capital ratio
of less than or equal to 0.65:1 and other customary events of
default and covenant provisions. Non-compliance with such covenants
could result in accelerated repayment and/or termination of the
credit facility.
In the second quarter of 2018, the company exchanged an
aggregate of $7,578 of legacy
companies' senior notes and debentures for the same amount of new
notes issued by Nutrien (the "Nutrien Notes"). The Nutrien Notes
have interest rates and maturities identical to those of the
applicable exchanged series of senior notes or debentures. A small
portion of senior notes and debentures, excluding the 7.800 percent
debentures due in 2027 (the "2027 debentures"), were not exchanged
and remain outstanding with the issuing subsidiary. The indentures
governing these remaining senior notes and debentures have been
amended to eliminate certain covenants and events of default
provisions. In addition, none of the 2027 debentures were
exchanged, but debt holders consented to amend the financial
reporting covenant in the indenture governing the 2027 debentures
to allow Nutrien's financial reports, rather than the reports of
the issuing subsidiary, to satisfy the reporting obligations
thereunder.
The debt exchange is accounted for as a modification of debt
without substantial modification of terms as the financial terms of
the Nutrien Notes were identical to the exchanged senior notes and
debentures and there is no substantial difference between the
present value of cash flows under the Nutrien Notes compared to the
notes and debentures. Accordingly, there is no gain or loss on the
exchange. The transaction costs from the debt exchange of
$19 were recorded to the carrying
amount of the long-term debt and will be amortized over the life of
the Nutrien Notes.
Further information relating to the Nutrien Notes was previously
described in Note 21 of the company's first quarter financial
statements.
9. Share Capital
On February 20, 2018, the
company's Board of Directors approved a share repurchase program of
up to five percent of the company's outstanding common shares over
a one-year period through a normal course issuer bid. Purchases
under the normal course issuer bid will be made through open market
purchases at market price, as well as by other means as may be
permitted by applicable securities regulatory authorities,
including private agreements. Purchases of common shares commenced
on February 23, 2018 and will expire
on the earlier of February 22, 2019,
the date on which the company has acquired the maximum number of
common shares allowable or the date on which the company determines
not to make any further repurchases.
The company repurchased for cancellation 15,616,536 common
shares during the three months ended June
30, 2018, at a cost of $812
and an average price per share of $52.00. During the six months ended June 30, 2018, the company repurchased for
cancellation 24,938,123 common shares at a cost of $1,269 and an average price per share of
$50.88. The repurchase resulted in a
reduction of share capital of $685,
and the excess of net cost over the average book value of the
shares was recorded as a reduction of contributed surplus of
$23 and a reduction of retained
earnings of $561.
As of July 31, 2018, an additional
4,400,000 common shares were repurchased for cancellation at a
cost of $235 and an average price per
share of $53.31.
10. Share-Based Compensation
During the six months ended June 30,
2018, the company issued stock options under its 2018 Stock
Option Plan and performance share units ("PSUs") and restricted
share units ("RSUs") under its 2018 PSU/RSU plan and deferred share
units ("DSUs") under its 2018 DSU Plan, in each case to eligible
employees or directors. Total compensation expense for all
share-based compensation plans was $82 (2017 - $3) for
the three months ended June 30,
2018 and $98 (2017 -
$9) for the six months ended
June 30, 2018. Information on stock
options, PSUs, RSUs, DSUs and stock appreciation rights ("SARs"),
including assumed legacy awards, is summarized below:
|
|
|
Units Granted
in 2018
|
Units
Outstanding as
at June 30, 2018
|
Stock
Options
|
|
|
1,875,162
|
10,507,105
|
PSUs
|
|
|
623,643
|
1,967,398
|
RSUs
|
|
|
444,001
|
768,310
|
DSUs
|
|
|
30,315
|
536,210
|
SARs
|
|
|
-
|
2,662,224
|
11. Comparative Figures
As described in Note 1, the comparative figures are PotashCorp
only. To conform with Nutrien's new method of presentation and as a
result of discontinued operations described in Note 6, comparative
figures were reclassified as follows, with no impact to net
earnings.
Condensed
Consolidated Statements of Earnings
|
|
|
|
|
|
Three Months Ended
June 30, 2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
|
Reported after
Reclassifications
|
|
|
Cost of goods
sold
|
$
|
(749)
|
$
|
5
|
|
$
|
(744)
|
Selling and
administrative expenses
|
(48)
|
48
|
|
-
|
Selling
expenses
|
-
|
(8)
|
|
(8)
|
General and
administrative expenses
|
-
|
(40)
|
|
(40)
|
Provincial mining and
other taxes
|
(44)
|
1
|
|
(43)
|
Earnings of
equity-accounted investees
|
49
|
(46)
|
(1)
|
3
|
Dividend
income
|
4
|
(4)
|
(1)
|
-
|
Other
expenses
|
(16)
|
(7)
|
|
(23)
|
Income
taxes
|
62
|
2
|
(1)
|
64
|
Net earnings from
discontinued operations
|
-
|
49
|
(1)
|
49
|
|
$
|
(742)
|
$
|
-
|
|
(742)
|
(1)
Includes reclassifications as a result of discontinued operations
described in Note 6.
|
|
|
|
|
|
|
|
Six Months Ended
June 30, 2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
|
Reported after
Reclassifications
|
|
|
Cost of goods
sold
|
$
|
(1,460)
|
$
|
10
|
|
$
|
(1,450)
|
Selling and
administrative expenses
|
(98)
|
98
|
|
-
|
Selling
expenses
|
-
|
(17)
|
|
(17)
|
General and
administrative expenses
|
-
|
(81)
|
|
(81)
|
Provincial mining and
other taxes
|
(78)
|
2
|
|
(76)
|
Earnings of
equity-accounted investees
|
88
|
(85)
|
(1)
|
3
|
Dividend
income
|
12
|
(12)
|
(1)
|
-
|
Other
expenses
|
(26)
|
(12)
|
|
(38)
|
Income
taxes
|
49
|
5
|
(1)
|
54
|
Net earnings from
discontinued operations
|
-
|
92
|
(1)
|
92
|
|
$
|
(1,513)
|
$
|
-
|
|
$
|
(1,513)
|
(1)
Includes reclassifications as a result of discontinued operations
described in Note 6.
|
|
|
|
|
|
Condensed
Consolidated Statement of Comprehensive Income
|
|
|
|
|
|
Six Months Ended
June 30, 2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
|
Reported after
Reclassifications
|
|
|
Other
|
$
|
3
|
$
|
(3)
|
|
$
|
-
|
Loss on translation
of net foreign operations
|
-
|
-
|
|
-
|
Equity-accounted
investees
|
|
|
|
|
|
Share of other
comprehensive income
|
-
|
3
|
|
3
|
|
$
|
3
|
$
|
-
|
|
$
|
3
|
|
|
|
|
|
Condensed
Consolidated Statements of Cash Flows
|
|
|
|
|
|
Three Months Ended
June 30, 2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
|
Reported after
Reclassifications
|
|
|
Pension and other
post-retirement benefits
|
$
|
18
|
$
|
(18)
|
|
$
|
-
|
Other long-term
liabilities and miscellaneous
|
7
|
18
|
|
25
|
|
$
|
25
|
$
|
-
|
|
$
|
25
|
|
|
|
|
|
|
Six Months Ended
June 30, 2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
|
Reported after
Reclassifications
|
|
|
Pension and other
post-retirement benefits
|
$
|
33
|
$
|
(33)
|
|
$
|
-
|
Other long-term
liabilities and miscellaneous
|
11
|
33
|
|
44
|
|
$
|
44
|
$
|
-
|
|
$
|
44
|
Condensed
Consolidated Statement of Shareholders' Equity
|
|
As at December 31,
2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
Reported after
Reclassifications
|
|
|
Other
|
$
|
(5)
|
$
|
5
|
$
|
-
|
Translation loss of
net foreign operations
|
-
|
(2)
|
(2)
|
Comprehensive loss of
equity-accounted investees
|
-
|
(3)
|
(3)
|
|
$
|
(5)
|
$
|
-
|
$
|
(5)
|
|
|
|
|
Condensed
Consolidated Balance Sheet
|
|
|
|
|
As at December 31,
2017
|
|
Previously
Reported
|
Reclassification
Amounts
|
Reported after
Reclassifications
|
|
|
Intangible
assets
|
$
|
166
|
$
|
(166)
|
$
|
-
|
Goodwill
|
-
|
97
|
97
|
Other intangible
assets
|
-
|
69
|
69
|
|
$
|
166
|
$
|
-
|
$
|
166
|
|
|
|
|
Investments in
equity-accounted investees
|
$
|
30
|
$
|
(30)
|
$
|
-
|
Available-for-sale
investments
|
262
|
(262)
|
-
|
Investments
|
-
|
292
|
292
|
|
$
|
292
|
$
|
-
|
$
|
292
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
|
730
|
$
|
(730)
|
$
|
-
|
Short-term
debt
|
-
|
730
|
730
|
|
$
|
730
|
$
|
-
|
$
|
730
|
|
|
|
|
Payables and accrued
charges
|
$
|
807
|
$
|
29
|
$
|
836
|
Current portion of
derivative instrument liabilities
|
29
|
(29)
|
-
|
|
$
|
836
|
$
|
-
|
$
|
836
|
|
|
|
|
Other non-current
liabilities
|
$
|
51
|
$
|
35
|
$
|
86
|
Derivative instrument
liabilities
|
35
|
(35)
|
-
|
|
$
|
86
|
$
|
-
|
$
|
86
|
12. Subsequent Events
Subsequent to June 30, 2018, the
company assessed the Argentinian economy to be hyperinflationary as
the cumulative inflation rate in Argentina over three years exceeded 100
percent. Other factors indicating a hyperinflationary economy were
present, including a significant depreciation of the Argentine peso
and an increase in local interest rates by the Banco Central de la
República Argentina, which has
been granted a $50,000 stand-by
support facility by the International Monetary Fund.
A wholly-owned subsidiary of the company, Agroservicios
Pampeanos S.A. ("ASP"), is a crop input retailer based in
Argentina with the Argentine peso
as its functional currency. As of June 30,
2018, the carrying values of the assets and liabilities of
ASP amounted to approximately $200
and $180, respectively. The company
also has a 50 percent interest in Profertil S.A. ("Profertil"),
which owns a nitrogen facility in Bahia
Blanca, Argentina. The
company's investment in Profertil is accounted for under the equity
method, with a carrying value of $179
as of the financial position date. The functional currency of
Profertil is the US Dollar.
In light of the changes in the economic environment in
Argentina, the company expects to
apply hyperinflation accounting to its affected operations
beginning July 1, 2018. Under
hyperinflation accounting, the financial results, cash flows and
financial position of the affected operations are restated, using a
general price index, for changes in the general purchasing power of
the functional currency so that all amounts are presented in terms
of the measuring unit current at the end of the reporting period.
The company is assessing the impact that this would have on its
financial position and its results of operations.
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
June
30
|
June
30
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)
(1)
|
Retail Sales (US $
millions)
|
|
|
|
|
|
Crop
nutrients
|
$
|
2,326
|
$
|
1,989
|
$
|
3,010
|
$
|
2,703
|
|
Crop protection
products
|
2,358
|
2,236
|
3,132
|
3,108
|
|
Seed
|
1,183
|
1,080
|
1,524
|
1,462
|
|
Merchandise
|
201
|
175
|
350
|
309
|
|
Services and
other
|
274
|
227
|
425
|
365
|
|
Sales
|
$
|
6,342
|
$
|
5,707
|
$
|
8,441
|
$
|
7,947
|
|
|
|
|
|
|
Retail Gross
Margin (US $ millions)
|
|
|
|
|
|
Crop
nutrients
|
$
|
474
|
$
|
419
|
$
|
597
|
$
|
560
|
|
Crop protection
products
|
521
|
485
|
649
|
615
|
|
Seed
|
219
|
199
|
263
|
253
|
|
Merchandise
|
26
|
27
|
49
|
49
|
|
Services and
other
|
192
|
169
|
282
|
256
|
|
Gross
Margin
|
$
|
1,432
|
$
|
1,299
|
$
|
1,840
|
$
|
1,733
|
|
|
|
|
|
|
Crop Nutrients
Sales Volumes (tonnes - thousands)
|
|
|
|
|
|
North
America
|
4,774
|
4,249
|
6,059
|
5,739
|
|
International
|
732
|
648
|
1,150
|
1,000
|
|
Crop Nutrients Sales
Volumes
|
5,506
|
4,897
|
7,209
|
6,739
|
|
|
|
|
|
|
Crop Nutrients
Sales Price per Tonne
|
|
|
|
|
|
North
America
|
$
|
429
|
$
|
415
|
$
|
428
|
$
|
413
|
|
International
|
379
|
351
|
361
|
332
|
|
Crop Nutrients Sales
Price per Tonne
|
$
|
423
|
$
|
406
|
$
|
418
|
$
|
401
|
|
|
|
|
|
|
Crop Nutrients
Gross Margin per Tonne
|
|
|
|
|
|
North
America
|
$
|
92
|
$
|
94
|
$
|
91
|
$
|
93
|
|
International
|
48
|
28
|
43
|
29
|
|
Crop Nutrients Gross
Margin per Tonne
|
$
|
86
|
$
|
86
|
$
|
83
|
$
|
83
|
|
|
|
|
|
|
Retail Store Sales
Metrics (%)
|
|
|
|
|
|
Comparable store
sales
|
|
|
3%
|
-5%
|
|
Normalized comparable
store sales (1)
|
|
|
1%
|
-1%
|
|
|
|
|
|
|
Proprietary
products sales as a percentage of product line sales
|
|
|
|
|
|
Crop
nutrients
|
9%
|
9%
|
9%
|
9%
|
|
Crop protection
products
|
27%
|
27%
|
27%
|
26%
|
|
Seed
|
30%
|
29%
|
27%
|
26%
|
|
All
Products
|
19%
|
19%
|
18%
|
18%
|
|
|
|
|
|
|
Retail Financial
Measures (%)
|
|
|
|
|
|
|
|
|
|
Rolling four
quarters June
30, 2018(2)
|
|
|
|
|
Target
(3)
|
Actuals
|
EBITDA to
sales
|
|
|
10%
|
10%
|
Average working
capital to sales
|
|
|
19%
|
19%
|
Cash operating
coverage ratio
|
|
|
59%
|
60%
|
(1)
|
Represents
information for legacy Agrium in 2017. Legacy PotashCorp did not
have retail operations. Normalized comparable store sales is
considered non-IFRS measure. See reconciliations and descriptions
of this non-IFRS measure in the Selected Non-IFRS Financial
Measures and Reconciliations and Supplemental Information
section.
|
(2)
|
EBITDA to sales,
average working capital to sales and cash operating coverage
ratio are considered non-IFRS measures. See reconciliations and
descriptions of these non-IFRS measures in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
(3)
|
Targets are for the
2018 calendar year.
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
|
June
30
|
June
30
|
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)
(1)
|
|
|
|
|
|
|
|
Potash Sales
Volumes (tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
1,030
|
1,029
|
2,284
|
2,266
|
|
|
Offshore
|
2,149
|
2,046
|
4,020
|
3,624
|
|
Sales Volumes -
Manufactured
|
3,179
|
3,075
|
6,304
|
5,890
|
|
|
|
|
|
|
|
Potash Net Sales
(US $ millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
$
|
222
|
$
|
205
|
$
|
472
|
$
|
434
|
|
|
Offshore
|
416
|
330
|
740
|
566
|
|
Other potash and
purchased products
|
-
|
-
|
1
|
4
|
|
Net Sales
(1)
|
$
|
638
|
$
|
535
|
$
|
1,213
|
$
|
1,004
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Net Selling Price
per Tonne
|
|
|
|
|
|
|
North
America
|
$
|
216
|
$
|
198
|
$
|
207
|
$
|
191
|
|
|
Offshore
|
$
|
194
|
$
|
161
|
$
|
184
|
$
|
156
|
|
|
Average
|
$
|
201
|
$
|
174
|
$
|
192
|
$
|
170
|
|
Cost of Goods Sold
per Tonne
|
$
|
(86)
|
$
|
(89)
|
$
|
(88)
|
$
|
(91)
|
|
Gross Margin per
Tonne
|
$
|
115
|
$
|
85
|
$
|
104
|
$
|
79
|
|
Depreciation and
Amortization per Tonne
|
$
|
29
|
$
|
29
|
$
|
29
|
$
|
29
|
|
Gross Margin
excluding Depreciation and Amortization per Tonne
(1)
|
$
|
144
|
$
|
114
|
$
|
133
|
$
|
108
|
(1)
Combined historical results of legacy PotashCorp and legacy Agrium,
net sales and gross margin excluding depreciation and amortization
are considered non-IFRS measures. See reconciliations and
descriptions of these non-IFRS measures in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
|
June
30
|
June
30
|
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)
(1)
|
|
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
$
|
2.58
|
$
|
3.17
|
$
|
2.80
|
$
|
3.19
|
Nitrogen Sales
Volumes (tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
|
1,028
|
1,064
|
1,772
|
1,879
|
|
|
Urea
|
901
|
751
|
1,625
|
1,432
|
|
|
Solutions and
nitrates
|
1,133
|
1,008
|
1,968
|
1,893
|
|
Sales Volumes -
Manufactured
|
3,062
|
2,823
|
5,365
|
5,204
|
|
|
|
|
|
|
|
|
Fertilizer
|
1,699
|
1,633
|
2,889
|
2,800
|
|
Industrial and
Feed
|
1,363
|
1,190
|
2,476
|
2,404
|
|
Sales Volumes -
Manufactured
|
3,062
|
2,823
|
5,365
|
5,204
|
|
|
|
|
|
|
|
Nitrogen Net Sales
(US $ millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
|
$
|
270
|
$
|
322
|
$
|
478
|
$
|
554
|
|
|
Urea
|
254
|
179
|
466
|
369
|
|
|
Solutions and
nitrates
|
189
|
165
|
326
|
314
|
|
Other nitrogen and
purchased products
|
143
|
154
|
258
|
289
|
|
Net Sales
(1)
|
$
|
856
|
$
|
820
|
$
|
1,528
|
$
|
1,526
|
|
|
|
|
|
|
|
|
Fertilizer
|
$
|
437
|
$
|
396
|
$
|
742
|
$
|
680
|
|
Industrial and
Feed
|
276
|
270
|
528
|
557
|
|
Other nitrogen and
purchased products
|
143
|
154
|
258
|
289
|
|
Net Sales
(1)
|
$
|
856
|
$
|
820
|
$
|
1,528
|
$
|
1,526
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Net Selling Price
per Tonne
|
|
|
|
|
|
|
Ammonia
|
$
|
263
|
$
|
303
|
$
|
270
|
$
|
295
|
|
|
Urea
|
$
|
281
|
$
|
239
|
$
|
287
|
$
|
258
|
|
|
Solutions and
nitrates
|
$
|
167
|
$
|
163
|
$
|
166
|
$
|
166
|
|
|
Average
|
$
|
233
|
$
|
236
|
$
|
237
|
$
|
238
|
|
|
Fertilizer
|
$
|
257
|
$
|
242
|
$
|
257
|
$
|
243
|
|
|
Industrial and
Feed
|
$
|
203
|
$
|
227
|
$
|
213
|
$
|
231
|
|
|
Average
|
$
|
233
|
$
|
236
|
$
|
237
|
$
|
238
|
|
Cost of Goods Sold
per Tonne
|
$
|
(155)
|
$
|
(172)
|
$
|
(167)
|
$
|
(170)
|
|
Gross Margin per
Tonne
|
$
|
78
|
$
|
64
|
$
|
70
|
$
|
68
|
|
Depreciation and
Amortization per Tonne
|
$
|
28
|
$
|
27
|
$
|
40
|
$
|
28
|
|
Gross Margin
excluding Depreciation and Amortization per Tonne
(1)
|
$
|
106
|
$
|
91
|
$
|
110
|
$
|
96
|
(1)
Combined historical results of legacy PotashCorp and legacy Agrium,
net sales and gross margin excluding depreciation and amortization
are considered non-IFRS measures. See reconciliations and
descriptions of these non-IFRS measures in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
|
|
June
30
|
June
30
|
|
|
|
2018
|
2017
|
2018
|
2017
|
|
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)(1)
|
|
|
|
|
|
|
|
Phosphate and
Sulfate Sales Volumes (tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
569
|
472
|
1,174
|
978
|
|
|
Industrial and
Feed
|
191
|
210
|
412
|
449
|
|
|
Ammonium
sulfate
|
87
|
111
|
159
|
199
|
|
Sales Volumes -
Manufactured
|
847
|
793
|
1,745
|
1,626
|
|
|
|
|
|
|
|
Phosphate and
Sulfate Net Sales (US $ millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
$
|
233
|
$
|
168
|
$
|
473
|
$
|
358
|
|
|
Industrial and
Feed
|
98
|
105
|
204
|
223
|
|
|
Ammonium
sulfate
|
23
|
29
|
41
|
49
|
|
Other phosphate and
purchased products
|
40
|
15
|
80
|
26
|
|
Net Sales
(1)
|
$
|
394
|
$
|
317
|
$
|
798
|
$
|
656
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Net Selling Price
per Tonne
|
|
|
|
|
|
|
Fertilizer
|
$
|
410
|
$
|
355
|
$
|
403
|
$
|
366
|
|
|
Industrial and
Feed
|
$
|
513
|
$
|
501
|
$
|
495
|
$
|
496
|
|
|
Ammonium
sulfate
|
$
|
271
|
$
|
259
|
$
|
257
|
$
|
245
|
|
|
Average
|
$
|
419
|
$
|
380
|
$
|
412
|
$
|
387
|
|
Cost of Goods Sold
per Tonne
|
$
|
(371)
|
$
|
(380)
|
$
|
(372)
|
$
|
(367)
|
|
Gross Margin per
Tonne
|
$
|
48
|
$
|
-
|
$
|
40
|
$
|
20
|
|
Depreciation and
Amortization per Tonne
|
$
|
50
|
$
|
78
|
$
|
53
|
$
|
78
|
|
Gross Margin
excluding Depreciation and Amortization per Tonne
(1)
|
$
|
98
|
$
|
78
|
$
|
93
|
$
|
98
|
(1)
Combined historical results of legacy PotashCorp and legacy Agrium,
net sales and gross margin excluding depreciation and amortization
are considered non-IFRS measures. See reconciliations and
descriptions of these non-IFRS measures in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
Nutrien
Ltd.
|
Selected
Additional Data
|
(unaudited)
|
|
|
|
|
Exchange Rate
(Cdn$/US$)
|
|
|
|
|
|
|
|
2018
|
2017
|
December
31
|
|
|
|
1.2545
|
June 30
|
|
|
1.3168
|
1.2977
|
Second-quarter
average conversion rate
|
|
|
1.2879
|
1.3478
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Nutrien)
(3)
|
|
(Nutrien)
(3)
|
|
|
|
|
|
Production
|
|
|
|
|
Potash production
(Product Tonnes - thousands)
|
3,162
|
3,473
|
6,660
|
6,591
|
Potash shutdown weeks
(1)
|
18
|
4
|
24
|
12
|
Nitrogen production
(Ammonia Tonnes - thousands)
|
1,594
|
1,488
|
3,274
|
3,091
|
Ammonia operating
rate (2)
|
90%
|
86%
|
93%
|
90%
|
Phosphate production
(P2O5 Tonnes - thousands)
|
434
|
409
|
900
|
809
|
Phosphate
P2O5operating
rate
|
85%
|
80%
|
89%
|
80%
|
|
|
(1)
|
Represents weeks of
full production shutdown; excludes the impact of any periods of
reduced operating rates and planned routine annual maintenance
shutdowns and announced workforce reductions.
|
(2)
|
Excludes Trinidad and
Joffre.
|
(3)
|
Amount presented is
the combined historical results of legacy PotashCorp and legacy
Agrium.
|
Nutrien Ltd.
Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental Information
(in millions of US dollars except percentage and per share
amounts)
(unaudited)
Generally, a non-IFRS financial measure is a numerical measure
of a company's performance, cash flows or financial position that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with IFRS. Adjusted net earnings (in total
and per share), consolidated EBITDA, adjusted EBITDA, adjusted
EBITDA margin, free cash flow, gross margin excluding depreciation
and amortization per tonne and combined Nutrien historical
information for 2017 described as Nutrien are not measures of
financial performance (nor do they have standardized meanings)
under IFRS. In evaluating these measures, investors should consider
that the methodology applied in calculating such measures may
differ among companies and analysts. Retail EBITDA to sales, retail
working capital to sales, retail cash operating coverage ratio, and
normalized comparable store sales are considered to be non-IFRS
financial measures as they are calculated using the rolling four
quarters.
The company uses both IFRS and certain non-IFRS measures to
assess operational performance, as a valuation measurement and as a
component of employee remuneration. Management believes these
non-IFRS measures provide useful supplemental information to
investors in order that they may evaluate Nutrien's financial
performance using the same measures as management. Management
believes that, as a result, the investor is afforded greater
transparency in assessing the financial performance of the company.
These non-IFRS financial measures should not be considered as a
substitute for, nor superior to, measures of financial performance
prepared in accordance with IFRS.
A. ADJUSTED NET EARNINGS, EBITDA, ADJUSTED
EBITDA, ADJUSTED EBITDA MARGIN and RETAIL EBITDA TO SALES
Set forth below is a reconciliation of "adjusted net earnings"
(in total and per share) to net earnings from continuing operations
(in total and per share). Adjusted net earnings is calculated as
net earnings from continuing operations before purchase price
allocation, Merger and related costs, share-based
compensation and dividend income from discontinued operations net
of tax. Nutrien uses adjusted net earnings to assess operational
performance. Management believes adjusted net earnings to be an
important measure as it excludes the effects of non-operating items
supporting a focus on the performance of the company's day-to-day
operations. As compared to net earnings from continuing operations
according to IFRS, this measure is limited in that it does not
reflect the periodic costs of charges associated with the purchase
price allocation, Merger and related costs, share-based
compensation or dividend income from discontinued operations net of
tax. Given the significance of share-based compensation adjustments
in the second quarter and in the first half of 2018, combined with
management's belief that these transactions do not reflect the
day-to-day operations of the company, adjusted net earnings (in
total and per share) were revised in the second quarter of 2018.
Management evaluates such items through other financial measures
such as cash flow used in operating activities. The company
believes that this measurement is useful as a valuation
measurement.
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
2018
|
June 30,
2018
|
|
Increase
|
Net
earnings from
continuing
operations
impact
|
Per
share
|
Increase
|
Net earnings
from
continuing
operations
impact
|
Per
share
|
Net earnings from
continuing operations
|
|
$
|
741
|
$
|
1.17
|
|
$
|
740
|
$
|
1.16
|
Adjustments:
|
|
|
|
|
|
|
|
Purchase price
allocation
|
$
|
14
|
10
|
0.02
|
$
|
88
|
67
|
0.11
|
|
Merger and related
costs
|
15
|
11
|
0.02
|
81
|
62
|
0.10
|
|
Share-based
compensation
|
82
|
60
|
0.10
|
98
|
74
|
0.12
|
|
Dividend income of
SQM and APC
|
126
|
107
|
0.17
|
126
|
107
|
0.17
|
Adjusted net
earnings
|
|
$
|
929
|
$
|
1.48
|
|
$
|
1,050
|
$
|
1.66
|
Set forth below is a reconciliation of "EBITDA" and "adjusted
EBITDA" to net earnings from continuing operations and retail
"EBITDA" to retail sales for the last four rolling quarters. EBITDA
and retail EBITDA are calculated as net earnings from continuing
operations before finance costs, income tax expense and
depreciation and amortization. Adjusted EBITDA is calculated as net
earnings from continuing operations before finance costs, income
tax expense and depreciation and amortization, Merger and related
costs and share-based compensation. Retail EBITDA to retail sales
is calculated as retail EBITDA divided by retail sales for the last
four rolling quarters, which does not have any directly comparable
IFRS measure. Nutrien uses EBITDA as a supplemental financial
measure of its operational performance. Management believes EBITDA,
adjusted EBITDA, retail EBITDA and retail EBITDA to sales to be
important measures as they exclude the effects of items that
primarily reflect the impact of long-term investment and financing
decisions, rather than the performance of the company's day-to-day
operations. As compared to net earnings from continuing operations
according to IFRS, these measures are limited in that they do not
reflect the periodic costs of certain capitalized tangible and
intangible assets used in generating revenues in the company's
business, the charges associated with Merger and related costs and
selected corporate expenses. Given the significance of share-based
compensation adjustments in the second quarter and in the first
half of 2018, combined with management's belief that these
transactions do not reflect the day-to-day operations of the
company, adjusted EBITDA calculations were revised in the second
quarter of 2018. The comparative figures have also been restated as
a result of this change. Management evaluates such items through
other financial measures such as capital expenditures, cash flow
provided by operating activities and capital management ratios. The
company believes that these measurements are useful to measure a
company's ability to service debt and to meet other payment
obligations or as a valuation measurement.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided
by net sales (sales less freight, transportation and distribution).
Management believes comparing adjusted EBITDA to net sales earned
(net of costs to deliver product) is an important indicator of
efficiency. In addition to the limitations given below in using
adjusted EBITDA as compared to net earnings from continuing
operations and adjusted EBITDA margin as compared to net earnings
from continuing operations as a percentage of sales is also limited
in that freight, transportation and distribution costs are incurred
and valued independently of sales. Adjusted EBITDA also includes
earnings from equity investees from continuing operations whose
sales are not included in consolidated sales. Management evaluates
these items individually on the consolidated statements of
earnings.
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)
(1)
|
Net earnings from
continuing operations
|
$
|
741
|
$
|
705
|
$
|
740
|
$
|
802
|
Finance
costs
|
133
|
126
|
252
|
244
|
Income tax
expense
|
277
|
164
|
235
|
171
|
Depreciation and
amortization
|
356
|
311
|
767
|
610
|
EBITDA
|
$
|
1,507
|
$
|
1,306
|
$
|
1,994
|
$
|
1,827
|
Merger and related
costs
|
15
|
29
|
81
|
54
|
Share-based
compensation
|
82
|
-
|
98
|
9
|
Adjusted
EBITDA
|
$
|
1,604
|
$
|
1,335
|
$
|
2,173
|
$
|
1,890
|
(1)Amount
presented is the combined historical results of legacy PotashCorp
and legacy Agrium.
|
|
|
|
|
|
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Nutrien)
(1)
|
|
(Nutrien)(1)
|
Sales
|
$
|
8,145
|
$
|
7,348
|
$
|
11,840
|
$
|
11,085
|
Freight,
transportation and distribution
|
(214)
|
(234)
|
(422)
|
(449)
|
Net
sales
|
$
|
7,931
|
$
|
7,114
|
$
|
11,418
|
$
|
10,636
|
(1) Amount
presented is the combined historical results of legacy PotashCorp
and legacy Agrium.
|
|
|
|
|
|
Net earnings from
continuing operations as a percentage of sales
|
9%
|
10%
|
6%
|
7%
|
Adjusted EBITDA
margin
|
20%
|
19%
|
19%
|
18%
|
Retail EBITDA to sales is calculated as retail EBITDA divided by
retail sales for the last four rolling quarters. Management
believes comparing retail EBITDA to sales earned is an important
indicator of efficiency and retail's operational performance.
|
Rolling four
quarters ended June 30, 2018
|
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Q2
2018
|
Total
|
Retail
EBITDA
|
$
|
105
|
$
|
241
|
$
|
(10)
|
$
|
886
|
$
|
1,222
|
Retail
Sales
|
2,067
|
2,089
|
2,099
|
6,342
|
12,597
|
(1)Represents information for legacy
Agrium in 2017. Legacy PotashCorp did not have retail
operations.
|
|
|
|
|
|
|
EBITDA to
Sales
|
|
|
|
|
10%
|
B. FREE CASH FLOW
Set forth below is a reconciliation of "free cash flow" to cash
provided by operating activities, the most directly comparable
financial measure calculated and presented in accordance with IFRS.
The company uses free cash flow as a supplemental financial measure
in its evaluation of liquidity and financial strength. Free cash
flow is calculated as cash provided by operating activities less
sustaining capital expenditures, cash provided by operating
activities from discontinued operations and changes in non-cash
operating working capital. Sustaining capital expenditures include
the cost of replacements and betterments for the company's
facilities. Management believes that adjusting principally for the
swings in non-cash operating working capital items due to
seasonality or other timing issues and sustaining capital
expenditures assists management in the long-term assessment of
liquidity and financial strength. Management also believes that
this measurement is useful as an indicator of its ability to
service its debt, meet other payment obligations and make strategic
investments. Readers should be aware that free cash flow does not
represent residual cash flow available for discretionary
expenditures.
|
Three Months
Ended
|
Six Months
Ended
|
|
June
30
|
June
30
|
|
2018
|
2017
|
2018
|
2017
|
|
|
(Nutrien)(1)
|
|
(Nutrien)
(1)
|
Cash provided by
operating activities
|
$
|
601
|
$
|
213
|
$
|
261
|
$
|
614
|
Cash provided by
operating activities from discontinued operations
|
(126)
|
(88)
|
(126)
|
(95)
|
Sustaining capital
expenditures
|
(250)
|
(170)
|
(433)
|
(293)
|
Changes in non-cash
operating working capital
|
708
|
1,086
|
1,448
|
1,056
|
Free cash
flow
|
$
|
933
|
$
|
1,041
|
$
|
1,150
|
$
|
1,282
|
(1) Amount
presented is the combined historical results of legacy PotashCorp
and legacy Agrium.
|
|
C. SELECTED RETAIL METRICS
Set forth below is a reconciliation of retail's "average working
capital to sales". The company uses retail average working capital
to sales to evaluate operational efficiency. Retail's average
working capital to sales is calculated as the average working
capital divided by sales for the last four rolling quarters.
Management believes that adjusting principally for the swings in
operating working capital items due to seasonality and other timing
issues assists management in the long-term assessment of liquidity
and financial strength. Management also believes that this
measurement is useful as a lower or higher percentage represents
increased or decreased efficiency, respectively.
|
|
|
Rolling four
quarters ended June 30, 2018
|
|
|
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Q2
2018
|
Average/Total
|
Working
capital
|
|
$
|
2,841
|
$
|
1,587
|
$
|
1,781
|
$
|
3,170
|
$
|
2,345
|
Sales
|
|
2,067
|
2,089
|
2,099
|
6,342
|
12,597
|
(1)
Represents information for legacy Agrium in 2017. Legacy PotashCorp
did not have retail operations.
|
|
|
|
|
|
|
|
|
Average working
capital to sales
|
|
|
|
|
|
19%
|
Set forth below is a reconciliation of retail's "cash operating
coverage ratio", which assists management and investors in
understanding the costs and underlying economics of the company's
operations and assessing the company's operating performance and
the company's ability to generate free cash flow from our segments
and overall as a company. Cash operating coverage ratio represents
gross margin excluding depreciation and amortization in cost of
goods sold less EBITDA, divided by gross margin excluding
depreciation and amortization expense.
|
|
Rolling four
quarters ended June 30, 2018
|
|
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Q2
2018
|
Total
|
Gross
margin
|
$
|
518
|
$
|
695
|
$
|
408
|
$
|
1,432
|
$
|
3,053
|
Depreciation and
amortization in cost of goods sold
|
3
|
1
|
2
|
2
|
8
|
Gross margin
excluding depreciation and amortization
|
$
|
521
|
$
|
696
|
$
|
410
|
$
|
1,434
|
$
|
3,061
|
EBITDA
|
$
|
105
|
$
|
241
|
$
|
(10)
|
$
|
886
|
$
|
1,222
|
Operating expenses
excluding depreciation and amortization
|
$
|
416
|
$
|
455
|
$
|
420
|
$
|
548
|
$
|
1,839
|
(1)
Represents information for legacy Agrium in 2017. Legacy PotashCorp
did not have retail operations.
|
|
|
|
|
|
|
|
Cash operating
coverage ratio (%)
|
|
|
|
|
60%
|
Set forth below is a reconciliation of retail's"normalized
comparable store sales", which allows users of the comparable store
sales metric to evaluate sales growth by adjusting for fluctuations
in commodity prices and foreign exchange rates. Included are
locations owned by the company for more than 12 months. Comparable
store sales are calculated as the change in the current period
retail location sales compared to the prior period. The company
retains sales of closed locations in the comparable base if the
closed location is in close proximity to an existing location,
unless the company plans to exit the market area or are unable to
economically or logistically serve it. The company does not adjust
for temporary closures, expansions or renovations of stores.
Normalized comparable store sales is determined by adjusting prior
year comparable store sales for published potash, nitrogen and
phosphate benchmark prices and foreign exchange rates used in the
current year.
|
Six Months
Ended
|
|
June
30
|
|
2018
|
2017
|
|
|
(Nutrien)
(1)
|
Sales from
comparable base
|
|
|
|
Current
period
|
$
|
8,166
|
$
|
7,713
|
|
Prior
period
|
7,947
|
8,081
|
|
Comparable store
sales (%)
|
3%
|
-5%
|
|
Prior period
normalized for benchmark prices and foreign exchange
rates
|
8,109
|
7,753
|
|
Normalized
comparable store sales (%)
|
1%
|
-1%
|
(1)
Represents information for legacy Agrium in 2017. Legacy PotashCorp
did not have retail operations.
|
D. GROSS MARGIN EXCLUDING DEPRECIATION AND AMORTIZATION
PER TONNE
Nutrien uses "gross margin excluding depreciation and
amortization per tonne" for the company's potash,
nitrogen and phosphate and sulfate segments as a measure of
operational performance. Management believes gross margin excluding
depreciation and amortization to be an important measure as it
excludes the effects of items that primarily reflect the impact of
long-term investment and financing decisions, rather than the
performance of the company's day-to-day operations. The
reconciliation of gross margin per tonne to gross margin
excluding depreciation and amortization per tonne for the
company's nutrients are included in the Selected Financial
Data section.
E. NUTRIEN COMBINED 2017 HISTORICAL
INFORMATION
Nutrien uses non-IFRS combined historical information in the
evaluation of its operations and financial position. This
information is useful as it provides a measure of what the combined
results may have been had PotashCorp and Agrium merged on
January 1, 2017. The combined
historical results for Nutrien were calculated by adding the
historical IFRS financial statements prepared by PotashCorp and
Agrium and then eliminating intercompany transactions and
reclassifying line items to conform with Nutrien's financial
statement presentation. This combined historical information does
not include, among other things, estimated cost synergies,
adjustments related to restructuring or integration activities,
adjustments related to the purchase price allocation
("PPA") and the impact of discontinued operations.
The combined historical information may differ from the Nutrien
pro forma earnings and balance sheet presented in the company's
business acquisition report dated February
20, 2018 as the pro forma information therein required
certain adjustments under applicable securities laws and accounting
standards that the company believes do not provide as useful a
measure as the combined historical financial information. The
primary differences in the statement of earnings were the pro forma
finance costs were reduced by the amortization of the change in
carrying amount of Agrium's debt resulting from the PPA and the pro
forma other expenses were adjusted to remove any Merger related
costs. There were no comparable adjustments in the combined
historical financial information. The primary differences in the
balance sheet were the pro forma adjusted for the estimated
proceeds from the sale of SQM, APC, ICL and Agrium's Conda Idaho
phosphate production facility and adjacent phosphate mineral rights
at December 31, 2017 while there was
no adjustment in the combined historical financial information and
the PPA in the pro forma was largely allocated to goodwill as fewer
provisional fair value adjustments were known at the time of its
preparation.
Refer to the Appendix starting on page 33 of the company's first
quarter interim report for the Nutrien combined historical balance
sheet as at December 31, 2017 and the
Nutrien combined historical statement of earnings and EBITDA for
the three months ended June 30, 2017.
Below is the combined historical segment EBITDA for the six months
ended June 30, 2017, as this
information was not previously provided.
|
Six Months
Ended June 30, 2017
|
|
|
|
|
Phosphate
|
|
|
|
|
Retail
|
Potash
|
Nitrogen
|
and
Sulfate
|
Others
|
Eliminations
|
Nutrien
|
Sales
|
$
|
7,947
|
$
|
1,172
|
$
|
1,719
|
$
|
744
|
$
|
-
|
$
|
(497)
|
$
|
11,085
|
Freight,
transportation and distribution
|
-
|
(168)
|
(193)
|
(88)
|
-
|
-
|
(449)
|
Net Sales
|
7,947
|
1,004
|
1,526
|
656
|
-
|
(497)
|
|
Cost of goods
sold
|
(6,214)
|
(542)
|
(1,142)
|
(620)
|
-
|
511
|
(8,007)
|
Gross
Margin
|
1,733
|
462
|
384
|
36
|
-
|
14
|
2,629
|
Selling
expenses
|
(1,022)
|
(7)
|
(16)
|
(5)
|
8
|
-
|
(1,042)
|
General and
administrative expenses
|
(53)
|
(2)
|
(5)
|
(6)
|
(136)
|
-
|
(202)
|
Provincial mining and
other taxes
|
-
|
(82)
|
-
|
-
|
-
|
-
|
(82)
|
Earnings of
equity-accounted investees
|
10
|
-
|
22
|
-
|
-
|
-
|
32
|
Other
expenses
|
(11)
|
(11)
|
(19)
|
(5)
|
(72)
|
-
|
(118)
|
Earnings (loss)
before finance costs and income taxes
|
657
|
360
|
366
|
20
|
(200)
|
14
|
1,217
|
Finance
costs
|
-
|
-
|
-
|
-
|
(244)
|
-
|
(244)
|
Earnings (loss)
before income taxes
|
657
|
360
|
366
|
20
|
(444)
|
14
|
973
|
Income
taxes
|
-
|
-
|
-
|
-
|
(171)
|
-
|
(171)
|
Net earnings (loss)
from continuing operations
|
657
|
360
|
366
|
20
|
(615)
|
14
|
802
|
Finance
costs
|
-
|
-
|
-
|
-
|
244
|
-
|
244
|
Income
taxes
|
-
|
-
|
-
|
-
|
171
|
-
|
171
|
Depreciation and
amortization
|
142
|
172
|
144
|
125
|
27
|
-
|
610
|
EBITDA
|
$
|
799
|
$
|
532
|
$
|
510
|
$
|
145
|
$
|
(173)
|
$
|
14
|
$
|
1,827
|
Retail
|
|
|
Six Months
Ended June 30, 2017
|
|
Historical
|
Historical
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
External
|
$
|
-
|
$
|
7,921
|
$
|
-
|
|
$
|
7,921
|
|
Intersegment
|
-
|
26
|
-
|
|
26
|
Total
Sales
|
-
|
7,947
|
-
|
|
7,947
|
Cost of goods
sold
|
-
|
(6,214)
|
-
|
|
(6,214)
|
Gross
Margin
|
-
|
1,733
|
-
|
|
1,733
|
Selling
expenses
|
-
|
(1,022)
|
-
|
|
(1,022)
|
General and
administrative expenses
|
-
|
(53)
|
-
|
|
(53)
|
Earnings of
equity-accounted investees
|
-
|
10
|
-
|
|
10
|
Other income
(expenses)
|
-
|
11
|
(22)
|
(1)
|
(11)
|
Earnings before
finance costs and income taxes
|
-
|
679
|
(22)
|
|
657
|
Depreciation and
amortization
|
-
|
142
|
-
|
|
142
|
EBITDA
|
$
|
-
|
$
|
821
|
$
|
(22)
|
|
$
|
799
|
(1)
Finance costs associated with retail operations will be allocated
to retail segment, and presented in other income
(expenses).
|
Potash
|
Six Months
Ended June 30, 2017
|
|
Historical
|
Historical
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
External
|
$
|
890
|
$
|
206
|
$
|
-
|
|
$
|
1,096
|
|
Intersegment
|
-
|
76
|
-
|
|
76
|
Total
Sales
|
890
|
282
|
-
|
|
1,172
|
Freight,
transportation and distribution
|
(114)
|
-
|
(54)
|
(1)
|
(168)
|
Net Sales
|
776
|
282
|
(54)
|
|
1,004
|
Cost of goods
sold
|
(403)
|
(203)
|
64
|
(1),
(4)
|
(542)
|
Gross
Margin
|
373
|
79
|
10
|
|
462
|
Selling
expenses
|
-
|
(3)
|
(4)
|
(4)
|
(7)
|
General and
administrative expenses
|
-
|
(2)
|
-
|
(3),
(4)
|
(2)
|
Provincial mining and
other taxes
|
(78)
|
-
|
(4)
|
(2),
(4)
|
(82)
|
Other
expenses
|
-
|
(7)
|
(4)
|
(2),
(4)
|
(11)
|
Earnings before
finance costs and income taxes
|
295
|
67
|
(2)
|
|
360
|
Depreciation and
amortization
|
111
|
61
|
-
|
|
172
|
EBITDA
|
$
|
406
|
$
|
128
|
$
|
(2)
|
|
$
|
532
|
(1) To
separately present legacy Agrium direct and indirect freight
costs.
|
(2)
To separately present legacy Agrium provincial mining
taxes.
|
(3)
To reclassify legacy Agrium costs related to business support
functions to others.
|
(4) To
allocate legacy PotashCorp all others segment selling and
administrative expenses to segment.
|
Nitrogen
|
|
Six Months
Ended June 30, 2017
|
|
|
Historical
|
Historical
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
External
|
|
$
|
759
|
$
|
459
|
$
|
235
|
(2)
|
$
|
1,453
|
|
Intersegment
|
|
39
|
149
|
78
|
(2),
(4)
|
266
|
Total
Sales
|
|
798
|
608
|
313
|
|
1,719
|
Freight,
transportation and distribution
|
|
(64)
|
-
|
(129)
|
(1)
|
(193)
|
Net Sales
|
|
734
|
608
|
184
|
|
1,526
|
Cost of goods
sold
|
|
(569)
|
(418)
|
(155)
|
(1), (2),
(4)
|
(1,142)
|
Gross
Margin
|
|
165
|
190
|
29
|
|
384
|
Selling
expenses
|
|
-
|
(6)
|
(10)
|
(2),
(5)
|
(16)
|
General and
administrative expenses
|
|
-
|
(5)
|
-
|
(2), (3),
(5)
|
(5)
|
Earnings of
equity-accounted investees
|
|
-
|
-
|
22
|
(2),
(5)
|
22
|
Other
expenses
|
|
-
|
(15)
|
(4)
|
(2),
(5)
|
(19)
|
Earnings before
finance costs and income taxes
|
165
|
164
|
37
|
|
366
|
Depreciation and
amortization
|
|
97
|
42
|
5
|
(2),
(4)
|
144
|
EBITDA
|
|
$
|
262
|
$
|
206
|
$
|
42
|
|
$
|
510
|
(1) To
separately present legacy Agrium direct and indirect freight
costs.
|
(2) To
reclassify legacy wholesale other Agrium segment between nitrogen
and phosphate and sulfate.
|
(3) To
reclassify legacy Agrium costs related to business support
functions to others.
|
(4) To
record profit on legacy Agrium transfers of ammonia to phosphate
and sulfate segment not previously recorded.
|
(5) To
allocate legacy PotashCorp all others selling and administrative
expenses to segment.
|
Phosphate and Sulfate
|
|
|
Six Months
Ended June 30, 2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
583
|
$
|
176
|
$
|
(105)
|
(2), (3),
(6)
|
$
|
654
|
|
Intersegment
|
|
|
-
|
95
|
(5)
|
(2),
(3)
|
90
|
Total
Sales
|
|
|
583
|
271
|
(110)
|
|
744
|
Freight,
transportation and distribution
|
|
|
(71)
|
-
|
(17)
|
(1), (3),
(6)
|
(88)
|
Net Sales
|
|
|
512
|
271
|
(127)
|
|
656
|
Cost of goods
sold
|
|
|
(527)
|
(256)
|
163
|
(1), (2), (3),
(4), (6)
|
(620)
|
Gross
Margin
|
|
|
(15)
|
15
|
36
|
|
36
|
Selling
expenses
|
|
|
-
|
(2)
|
(3)
|
(3),
(5)
|
(5)
|
General and
administrative expenses
|
|
|
-
|
(2)
|
(4)
|
(2),
(5)
|
(6)
|
Other
expenses
|
|
|
-
|
(4)
|
(1)
|
(2),
(5)
|
(5)
|
(Loss) earnings
before finance costs and income taxes
|
(15)
|
7
|
28
|
|
20
|
Depreciation and
amortization
|
|
|
114
|
33
|
(22)
|
(2), (3),
(4)
|
125
|
EBITDA
|
|
|
$
|
99
|
$
|
40
|
$
|
6
|
|
$
|
145
|
(1) To
separately present legacy Agrium direct and indirect freight
costs.
|
(2) To
reclassify legacy wholesale other Agrium segment between nitrogen
and phosphate and sulfate.
|
(3) To
remove the operating results of Conda from legacy Agrium historical
financial statements.
|
(4) To
record incremental cost on legacy Agrium transfers of ammonia to
phosphate and sulfate segment not previously recorded.
|
(5) To
allocate legacy PotashCorp all others selling and administrative
expenses to the segments.
|
(6) To
reclassify certain phosphate products to others segment.
|
Others
|
|
|
Six Months
Ended June 30,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
-
|
$
|
-
|
$
|
-
|
|
$
|
-
|
|
Intersegment
|
|
|
-
|
(431)
|
(66)
|
(1), (2), (9),
(11)
|
(497)
|
Total
Sales
|
|
|
-
|
(431)
|
(66)
|
|
(497)
|
Freight,
transportation and distribution
|
|
|
-
|
-
|
-
|
|
-
|
Net Sales
|
|
|
-
|
(431)
|
(66)
|
|
(497)
|
Cost of goods
sold
|
|
|
-
|
445
|
66
|
(1), (2), (9),
(11)
|
511
|
Gross
Margin
|
|
|
-
|
14
|
-
|
|
14
|
Selling and
administrative expenses
|
|
|
(98)
|
-
|
98
|
(10)
|
-
|
Selling
expenses
|
|
|
-
|
9
|
(1)
|
(10)
|
8
|
General and
administrative expenses
|
|
|
-
|
(55)
|
(81)
|
(4), (5),
(10)
|
(136)
|
Share-based
payments
|
|
|
-
|
-
|
-
|
(4)
|
-
|
Earnings of
equity-accounted investees
|
|
|
88
|
(1)
|
(87)
|
(7),
(10)
|
-
|
Dividend
income
|
|
|
12
|
-
|
(12)
|
(8)
|
-
|
Other
expenses
|
|
|
(26)
|
(39)
|
(7)
|
(10),
(12)
|
(72)
|
Loss before finance
costs
|
|
|
|
|
|
|
|
|
and income
taxes
|
|
|
(24)
|
(72)
|
(90)
|
|
(186)
|
Finance
costs
|
|
|
(120)
|
(47)
|
(77)
|
(3),
(6)
|
(244)
|
Finance costs related
to long-term debt
|
|
|
-
|
(99)
|
99
|
(6)
|
-
|
Loss before
income taxes
|
|
|
(144)
|
(218)
|
(68)
|
|
(430)
|
Income tax expense
(recovery)
|
|
|
49
|
(219)
|
(1)
|
(7)(11)
|
(171)
|
Net loss from
continuing operations
|
|
|
(95)
|
(437)
|
(69)
|
|
(601)
|
Finance
costs
|
|
|
120
|
47
|
77
|
(3),
(6)
|
244
|
Finance costs related
to long-term debt
|
|
|
-
|
99
|
(99)
|
(6)
|
-
|
Income
taxes
|
|
|
(49)
|
219
|
1
|
(7),
(11)
|
171
|
Depreciation and
amortization
|
|
|
18
|
9
|
-
|
|
27
|
EBITDA
|
|
|
$
|
(6)
|
$
|
(63)
|
$
|
(90)
|
|
$
|
(159)
|
(1) To
eliminate sales made from legacy PotashCorp to legacy
Agrium.
|
(2) To
eliminate incremental sales and cost of goods sold related to
ammonia transfers to phosphate and sulfate
segment.
|
(3)
Finance costs associated with retail operations will be allocated
to retail segment, and presented in other expenses.
|
(4) To
reclassify legacy Agrium's share-based payments to general and
administrative expenses.
|
(5) To
reclassify legacy Agrium costs related to business support
functions to others.
|
(6) To
reclassify finance costs related to long-term debt to finance
costs.
|
(7) To
eliminate the earnings of legacy PotashCorp's investments in SQM
and APC.
|
(8) To
eliminate the earnings of legacy PotashCorp's investment in
ICL.
|
(9) To
eliminate legacy PotashCorp intersegment sales between nitrogen and
phosphate and sulfate.
|
(10) To
allocate legacy PotashCorp all others segment selling and
administrative expenses to segments.
|
(11) To
remove intersegment sales related to Conda.
|
(12) To
reclassify certain phosphate products to others segment.
|
View original
content:http://www.prnewswire.com/news-releases/nutriens-2nd-quarter-and-1st-half-results-demonstrate-strength-in-a-compressed-season-300690630.html
SOURCE Nutrien Ltd.