Revising full-year guidance to reflect factors
impacting offshore potash sales through Canpotex and lower global
potash prices than previously anticipated. Announcing strategic
actions expected to reduce controllable costs and enhance free cash
flow.
All amounts are in US dollars except as otherwise noted
Nutrien Ltd. (TSX and NYSE: NTR) announced today its second
quarter 2023 results, with net earnings of $448 million ($0.89
diluted net earnings per share), which includes non-cash
impairments of $465 million primarily related to our South American
Retail goodwill and $233 million related to our Phosphate property,
plant and equipment. Second quarter 2023 adjusted net earnings per
share1 was $2.53 and adjusted EBITDA1 was $2.5 billion.
“Nutrien’s results have been impacted by unprecedented
volatility in global crop input markets over the last 18 months. We
continue to see demand strengthen in our key markets, in particular
North America, however the process of recovery has been more uneven
in offshore markets,” commented Ken Seitz, Nutrien’s President and
CEO.
“We are announcing a number of strategic actions to reduce our
controllable costs and enhance free cash flow in 2023 and beyond.
This includes an indefinite pause of our potash ramp up and
suspension of work on our Geismar clean ammonia project. These
actions, along with other operational efficiency initiatives,
demonstrate our commitment to disciplined capital allocation and
focus on long-term value creation,” added Mr. Seitz.
Financial Highlights2:
- Generated net earnings of $1.0 billion ($2.03 diluted net
earnings per share) and adjusted EBITDA1 of $3.9 billion ($3.63
adjusted net earnings per share) in the first half of 2023, down
significantly from the record levels achieved in the first half of
2022. This was primarily due to lower net realized fertilizer
prices, offshore Potash sales volumes and Nutrien Ag Solutions
(“Retail”) earnings.
- Retail adjusted EBITDA declined to $1.1 billion in the second
quarter primarily due to lower gross margin for crop nutrients and
crop protection products. North American crop nutrient sales
volumes were up 16 percent in the second quarter compared to the
same period in the prior year and per-tonne margins in the US
returned to more normalized levels. Crop protection margins were
pressured by lower prices for certain commodity products and the
impact of selling through higher cost inventory.
- Potash adjusted EBITDA declined to $654 million in the second
quarter as weaker net realized selling prices and lower offshore
sales volumes more than offset higher North American sales volumes.
Lower demand from customers in Asia was partially offset by
increased Canpotex sales volumes to Brazil.
- Nitrogen adjusted EBITDA declined to $569 million in the second
quarter due to lower net realized selling prices for all major
nitrogen products, which more than offset higher sales volumes and
lower gas costs.
- Recognized a $465 million non-cash impairment primarily to
goodwill relating to our South American Retail assets in the second
quarter of 2023, mainly due to the impact of crop input price
volatility, more moderate long-term growth assumptions, and higher
interest rates. Nutrien also recognized a $233 million non-cash
impairment in Phosphate relating to our White Springs property,
plant and equipment due to the volatility of forecasted phosphate
margins.
- Repurchased approximately 13.4 million shares year-to-date as
of June 30, 2023, under our normal course issuer bid programs, for
approximately $1.0 billion. Cash used for dividends and share
repurchases in the first half totaled $1.6 billion.
- Full year 2023 adjusted EBITDA and adjusted net earnings per
share guidance1 was revised to $5.5 to $6.7 billion and $3.85 to
$5.60 per share, respectively.
1.
These (and any related guidance, if applicable) are non-IFRS
financial measures. See the “Non-IFRS Financial Measures” section
for further information.
2.
Our discussion of highlights set out on this page is a
comparison of the results for the three and six months ended June
30, 2023 to the results for the three and six months ended June 30,
2022, unless otherwise noted.
Strategic Actions:
- Indefinitely pausing the ramp-up of our annual potash
production capability to 18 million tonnes in response to market
conditions, following the completion of in-flight projects in the
second half of 2023.
- Suspending work on our proposed 1.2 million tonne Geismar clean
ammonia project. This decision is due to an increase in expected
capital costs compared to our initial estimates, continued
uncertainty on the timing of emerging uses for clean ammonia, and
the prioritization of other capital allocation alternatives.
- Reducing planned capital expenditures across smaller investment
projects in our Retail business and deferring the timing of capital
spend on select Nitrogen brownfield projects as we prioritize
capital and provide flexibility on future allocation
alternatives.
- Expecting to lower capital expenditures by approximately $200
million in 2023 and targeting a $100 million reduction in expenses
compared to our previous estimates. We now expect total capital
expenditures of $2.8 billion in 2023, with further reductions
anticipated in 2024.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD&A”)
is the responsibility of management and is dated as of August 2,
2023. The Board of Directors (“Board”) of Nutrien carries out its
responsibility for review of this disclosure principally through
its Audit Committee, composed entirely of independent directors.
The Audit Committee reviews and, prior to its publication, approves
this disclosure pursuant to the authority delegated to it by the
Board. The term “Nutrien” refers to Nutrien Ltd. and the terms
“we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien
and, as applicable, Nutrien and its direct and indirect
subsidiaries on a consolidated basis. Additional information
relating to Nutrien (which, except as otherwise noted, is not
incorporated by reference herein), including our annual report
dated February 16, 2023 (“2022 Annual Report”), which includes our
annual audited consolidated financial statements and MD&A, and
our annual information form dated February 16, 2023, each for the
year ended December 31, 2022, can be found on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. No update is provided to
the disclosure in our 2022 annual MD&A except for material
information since the date of our annual MD&A. The Company is a
foreign private issuer under the rules and regulations of the US
Securities and Exchange Commission (the “SEC”).
This MD&A is based on and should be read in conjunction with
the Company’s unaudited interim condensed consolidated financial
statements as at and for the three and six months ended June 30,
2023 (“interim financial statements”) based on International
Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board and prepared in accordance
with International Accounting Standard (“IAS”) 34 “Interim
Financial Reporting”, unless otherwise noted. This MD&A
contains certain non-IFRS financial measures and ratios and
forward-looking statements, which are described in the “Non-IFRS
Financial Measures” and the “Forward-Looking Statements” sections,
respectively.
Market Outlook and Guidance
Agriculture and Retail
- Weather and geopolitical challenges are contributing to tight
global grain and oilseed supply and providing support for prices.
The US Midwest has experienced some of the driest conditions on
record this growing season, which has reduced expected yield
potential to below trend. Crop production and export volumes from
Ukraine continue to be negatively impacted by the war, with
Russia’s cancelation of the Black Sea grain deal creating
additional supply uncertainty.
- Crop prices have been volatile, but remain historically high,
with new crop corn, wheat, and soybean prices 15 to 20 percent
above the ten-year average. Fertilizer affordability has improved
significantly compared to the previous year due to the continued
strength in crop prices and reduction in fertilizer prices.
- Dry conditions in North America have impacted in-season
nitrogen and crop protection applications. Crop development is
currently tracking ahead of schedule, which could support an
extended fall application window for crop inputs.
- Brazilian grain and oilseed prices were pressured by the record
crop size and limitations in logistics and export capacity.
However, the demand for Brazilian soybeans is expected to remain
robust and higher international prices are expected to support a
two to three percent increase in planted acreage. We believe
Brazilian growers have purchased a lower-than-normal proportion of
inputs for this time of year, which should support strong demand
leading into their spring planting season that starts in
September.
- Australian crop production has benefitted from timely
precipitation and has been supportive of crop input demand.
Crop Nutrient Markets
- Global potash prices weakened through the second quarter of
2023, driven by continued destocking in offshore markets and the
uncertainty created by the delay in the Chinese potash contract. We
have seen stronger engagement in offshore spot markets, led by
Brazil, following the settlement of the Chinese potash contract in
June 2023. We believe channel inventories in North America ended
the first half at multi-year lows and are seeing strong demand in
the third quarter.
- We project potash exports from Russia to be down 3.0 to 4.0
million tonnes and from Belarus down 4.0 to 5.0 million tonnes
compared to 2021 levels. We expect Canadian potash exports will be
constrained by logistical challenges primarily due to the strike at
the Port of Vancouver and as a result, we have lowered our
projected global shipment range for 2023 to between 63 and 65
million tonnes.
- Global urea and nitrate prices have strengthened in the third
quarter of 2023 driven by increased demand and supply constraints,
including plant turnarounds and reduced Egyptian gas supplies.
Ammonia prices have been impacted by lower-than-expected European
natural gas prices, weak downstream industrial demand, and reduced
imports by phosphate producers. However, we expect ammonia markets
to strengthen during the balance of the year due to low global
inventories, continued supply constraints, and higher values for
other nitrogen products.
- Dry phosphate prices declined throughout the second quarter of
2023, but channel inventories were low to end the North American
spring season and demand has strengthened in the second half.
Sulfur prices remain historically low compared to finished
phosphate prices, which in combination with lower ammonia prices
has offset a portion of the price declines.
Financial Guidance
- Based on market factors detailed above, we are revising
full-year 2023 adjusted EBITDA guidance1 to $5.5 to $6.7 billion
and full-year 2023 adjusted net earnings guidance1 to $3.85 to
$5.60 per share. We now project cash provided by operations of $4.4
to $4.9 billion, which reflects expectations of lower
earnings.
- Retail adjusted EBITDA guidance was lowered primarily to
reflect incremental pressure on crop input margins in South America
and the impact of dry conditions in North America.
- Potash adjusted EBITDA guidance was lowered due to decreased
global potash prices and lower offshore sales volumes, which are
impacted by logistical challenges created by the strike at the port
of Vancouver and an outage at Canpotex’s Portland terminal.
- Nitrogen adjusted EBITDA guidance was revised primarily to
reflect lower forecasted ammonia benchmark prices, partially offset
by the expectation for lower natural gas prices.
- Effective tax rate on adjusted earnings guidance was increased
mainly due to the second quarter impacts of the impairments.
1.
These (and any related guidance, if
applicable) are non-IFRS financial measures. See the “Non-IFRS
Financial Measures” section for further information.
All guidance numbers, including those noted above are outlined
in the table below. Refer to page 56 of Nutrien’s 2022 Annual
Report for related assumptions and sensitivities, except as set
forth below.
Guidance Ranges 1 as
of
August 2, 2023
May 10, 2023
(billions of US dollars, except as
otherwise noted)
Low
High
Low
High
Adjusted net earnings per share (in US
dollars) 2,3
3.85
5.60
5.50
7.50
Adjusted EBITDA 2
5.5
6.7
6.5
8.0
Retail adjusted EBITDA
1.45
1.60
1.60
1.75
Potash adjusted EBITDA
2.00
2.50
2.65
3.35
Nitrogen adjusted EBITDA
1.80
2.30
1.95
2.55
Phosphate adjusted EBITDA (in millions of
US dollars)
500
600
550
700
Potash sales tonnes (millions) 4
12.6
13.2
13.5
14.3
Nitrogen sales tonnes (millions) 4
10.8
11.2
10.8
11.4
Depreciation and amortization
2.1
2.2
2.1
2.2
Effective tax rate on adjusted earnings
(%)
25.5
26.0
23.5
24.0
1 See the "Forward-Looking Statements"
section.
2 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
3 Assumes 497 million shares outstanding
for August 2, 2023 adjusted net EPS guidance.
4 Manufactured product only. Nitrogen
sales tonnes includes ESN® products.
Consolidated Results
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
2023
2022
% Change
Sales
11,654
14,506
(20
)
17,761
22,163
(20
)
Freight, transportation and
distribution
252
221
14
451
424
6
Cost of goods sold
8,236
8,286
(1
)
12,231
12,483
(2
)
Gross margin
3,166
5,999
(47
)
5,079
9,256
(45
)
Expenses
2,038
1,054
93
3,012
2,312
30
Net earnings
448
3,601
(88
)
1,024
4,986
(79
)
Adjusted EBITDA 1
2,478
4,993
(50
)
3,899
7,608
(49
)
Diluted net earnings per share
0.89
6.51
(86
)
2.03
8.99
(77
)
Adjusted net earnings per share 1
2.53
5.85
(57
)
3.63
8.53
(57
)
Cash provided by operating activities
2,243
2,558
(12
)
1,385
2,496
(45
)
Cash used in investing activities
(858
)
(517
)
66
(1,552
)
(974
)
59
Cash used for dividends and share
repurchases 2
(413
)
(1,228
)
(66
)
(1,556
)
(2,127
)
(27
)
1 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
2 This is a supplementary financial
measure. See the "Other Financial Measures" section.
Net earnings and adjusted EBITDA decreased in the second quarter
and first half of 2023 compared to the same periods in 2022, mainly
due to lower net realized selling prices in all segments, weaker
offshore Potash sales volumes, and lower Retail gross margin for
crop nutrients and crop protection products. This was partially
offset by decreased cost of goods sold from lower natural gas and
royalty costs, lower provincial mining taxes, and higher sales
volumes in Nitrogen and Retail crop nutrients. In the second
quarter of 2023, we recorded a non-cash impairment of $465 million
primarily related to our South American Retail goodwill and $233
million related to our White Springs property, plant and equipment,
which impacted net earnings. The decrease in cash provided by
operating activities in the second quarter and first half compared
to the same periods in 2022 was primarily due to lower earnings
across all segments.
Segment Results
Our discussion of segment results set out on the following pages
is a comparison of the results for the three and six months ended
June 30, 2023 to the results for the three and six months ended
June 30, 2022, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended June
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
3,986
4,548
(12
)
629
911
(31
)
16
20
Crop protection products
3,070
2,983
3
673
805
(16
)
22
27
Seed
1,428
1,269
13
265
283
(6
)
19
22
Merchandise
273
280
(3
)
47
51
(8
)
17
18
Nutrien Financial
122
91
34
122
91
34
100
100
Services and other
308
310
(1
)
254
258
(2
)
82
83
Nutrien Financial elimination 1
(59
)
(59
)
‐
(59
)
(59
)
‐
100
100
9,128
9,422
(3
)
1,931
2,340
(17
)
21
25
Cost of goods sold
7,197
7,082
2
Gross margin
1,931
2,340
(17
)
Expenses 2,3
1,520
1,088
40
Earnings before finance costs and taxes
("EBIT")
411
1,252
(67
)
Depreciation and amortization
188
175
7
EBITDA
599
1,427
(58
)
Adjustments 3
468
‐
n/m
Adjusted EBITDA
1,067
1,427
(25
)
1 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
2 Includes selling expenses of $971
million (2022 – $1,013 million).
3 Includes impairment of assets of $465
million (2022 – nil). See Notes 2 and 3 to the interim financial
statements.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
5,321
6,135
(13
)
770
1,203
(36
)
14
20
Crop protection products
4,224
4,370
(3
)
881
1,087
(19
)
21
25
Seed
1,935
1,727
12
337
349
(3
)
17
20
Merchandise
519
514
1
91
92
(1
)
18
18
Nutrien Financial
179
140
28
179
140
28
100
100
Services and other
456
485
(6
)
372
402
(7
)
82
83
Nutrien Financial elimination
(84
)
(88
)
(5
)
(84
)
(88
)
(5
)
100
100
12,550
13,283
(6
)
2,546
3,185
(20
)
20
24
Cost of goods sold
10,004
10,098
(1
)
Gross margin
2,546
3,185
(20
)
Expenses 1,2
2,350
1,843
28
EBIT
196
1,342
(85
)
Depreciation and amortization
369
344
7
EBITDA
565
1,686
(66
)
Adjustments 2
468
(19
)
n/m
Adjusted EBITDA
1,033
1,667
(38
)
1 Includes selling expenses of $1,736
million (2022 – $1,735 million).
2 Includes impairment of assets of $465
million (2022 – nil). See Notes 2 and 3 to the interim financial
statements.
- Retail adjusted EBITDA was lower in the second quarter
and first half of 2023 compared to the record levels achieved in
2022 primarily due to lower gross margin for both crop nutrients
and crop protection products. Selling expenses declined in the
second quarter of 2023 due to lower incentive payments, partially
offset by increased expenses resulting from acquisitions completed
in 2022 and inflation. We recognized a $465 million non-cash
impairment primarily to goodwill relating to our South American
Retail assets in the second quarter of 2023, mainly due to the
impact of crop input price volatility, more moderate long-term
growth assumptions, and higher interest rates.
- Crop nutrients sales decreased in the second quarter and
first half of 2023 primarily due to lower selling prices across all
regions compared to the exceptionally strong periods in 2022. While
crop nutrients margins and gross margin per tonne decreased
compared to the same periods, we continued to see growth in
proprietary nutritional products and US crop nutrient margins
increased significantly compared to the first quarter of 2023 as we
worked through high-cost inventory. Sales volumes increased for
both the second quarter and first half compared to the prior year,
supported by higher planted acreage and a return to more normalized
application rates in North America. Dry conditions across the US
Midwest in May and early June of 2023 impacted some late season
application of nitrogen products.
- Crop protection products sales were marginally higher in
the second quarter of 2023, but down during the first half of the
year due to decreased prices for certain commodity products
compared to the historically strong comparable period in 2022. This
also impacted gross margin in the second quarter and first half in
addition to the impact of selling through higher cost inventory.
Dry conditions in the US Midwest impacted demand for certain crop
protection products during the second quarter.
- Seed sales increased in the second quarter and first
half of 2023 primarily due to increased corn sales in the US Corn
Belt and Southern states. Gross margin for the same periods
decreased mainly due to competitive pricing pressures.
- Nutrien Financial sales increased in the second quarter
and first half of 2023 due to higher utilization of our financing
offerings in the US as well as the launch of our digitally-enabled
financing program in Australia, called NPay.
Potash
Three Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
469
680
(31
)
1,226
933
31
383
729
(47
)
Offshore
540
1,988
(73
)
2,156
2,776
(22
)
250
716
(65
)
1,009
2,668
(62
)
3,382
3,709
(9
)
298
719
(59
)
Cost of goods sold
353
399
(12
)
104
107
(3
)
Gross margin – total
656
2,269
(71
)
194
612
(68
)
Expenses ¹
117
372
(69
)
Depreciation and amortization
34
35
(3
)
EBIT
539
1,897
(72
)
Gross margin excluding depreciation
Depreciation and amortization
115
130
(12
)
and amortization – manufactured 2
228
647
(65
)
EBITDA / Adjusted EBITDA
654
2,027
(68
)
Potash controllable cash cost of
product manufactured 2
60
52
15
1 Includes provincial mining taxes of $104
million (2022 – $362 million).
2 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
812
1,513
(46
)
2,080
2,151
(3
)
391
703
(44
)
Offshore
1,199
3,005
(60
)
3,938
4,601
(14
)
304
653
(53
)
2,011
4,518
(55
)
6,018
6,752
(11
)
334
669
(50
)
Cost of goods sold
658
704
(7
)
109
104
5
Gross margin – total
1,353
3,814
(65
)
225
565
(60
)
Expenses ¹
235
623
(62
)
Depreciation and amortization
35
36
(2
)
EBIT
1,118
3,191
(65
)
Gross margin excluding depreciation
Depreciation and amortization
212
242
(12
)
and amortization – manufactured
260
601
(57
)
EBITDA / Adjusted EBITDA
1,330
3,433
(61
)
Potash controllable cash cost of
product manufactured
61
51
20
1 Includes provincial mining taxes of $223
million (2022 – $611 million).
- Potash adjusted EBITDA declined in the second quarter
and first half of 2023 due to lower net realized selling prices and
offshore sales volumes. Nutrien is indefinitely pausing the ramp-up
of its annual potash production capability to 18 million tonnes in
response to market conditions, following the completion of
in-flight projects in the second half of 2023.
- Sales volumes in North America were the highest second
quarter on record. Offshore sales volumes declined in the second
quarter and first half 2023 due to reduced shipments to customers
in Asia, partially offset by record first half Canpotex sales
volumes to Brazil.
- Net realized selling price decreased in the second
quarter and first half of 2023 compared to the historically strong
periods in 2022, due to a decline in benchmark prices and higher
logistics costs related to an outage at Canpotex’s Portland port
facility.
- Cost of goods sold per tonne decreased in the second
quarter of 2023 primarily due to lower royalties. First half cost
of goods sold per tonne was higher primarily due to lower
production volumes and increased maintenance activities.
Canpotex Sales by Market
(percentage of sales volumes, except
as
Three Months Ended June
30
Six Months Ended June
30
otherwise noted)
2023
2022
Change
2023
2022
Change
Latin America
55
40
15
46
36
10
Other Asian markets 1
19
28
(9
)
28
35
(7
)
Other markets
10
11
(1
)
12
11
1
India
10
9
1
6
6
‐
China
6
12
(6
)
8
12
(4
)
100
100
100
100
1 All Asian markets except China and
India.
Nitrogen
Three Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
332
743
(55
)
681
643
6
488
1,157
(58
)
Urea and ESN® 1
450
678
(34
)
952
894
6
472
757
(38
)
Solutions, nitrates and sulfates
333
536
(38
)
1,312
1,142
15
254
469
(46
)
1,115
1,957
(43
)
2,945
2,679
10
379
730
(48
)
Cost of goods sold 1
697
911
(23
)
237
339
(30
)
Gross margin – manufactured
418
1,046
(60
)
142
391
(64
)
Gross margin – other 1,2
(19
)
12
n/m
Depreciation and amortization1
55
52
6
Gross margin – total
399
1,058
(62
)
Gross margin excluding depreciation
(Income) expenses 3
(8
)
(43
)
(81
)
and amortization – manufactured 4
197
443
(56
)
EBIT
407
1,101
(63
)
Ammonia controllable cash cost of
Depreciation and amortization
162
139
17
product manufactured 4
55
58
(5
)
EBITDA / Adjusted EBITDA
569
1,240
(54
)
1 Certain immaterial 2022 figures have
been reclassified.
2 Includes other nitrogen and purchased
products and comprises net sales of $101 million (2022 – $272
million) less cost of goods sold of $120 million (2022 – $260
million).
3 Includes earnings from equity-accounted
investees of $31 million (2022 – $76 million).
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
717
1,303
(45
)
1,215
1,238
(2
)
591
1,052
(44
)
Urea and ESN® 1
911
1,193
(24
)
1,699
1,545
10
536
772
(31
)
Solutions, nitrates and sulfates
666
975
(32
)
2,388
2,221
8
279
439
(36
)
2,294
3,471
(34
)
5,302
5,004
6
433
693
(38
)
Cost of goods sold 1
1,345
1,583
(15
)
254
316
(20
)
Gross margin – manufactured
949
1,888
(50
)
179
377
(53
)
Gross margin – other 1,2
(9
)
30
n/m
Depreciation and amortization
56
52
7
Gross margin – total
940
1,918
(51
)
Gross margin excluding depreciation
(Income) expenses 3
(9
)
(55
)
(84
)
and amortization – manufactured
235
429
(45
)
EBIT
949
1,973
(52
)
Ammonia controllable cash cost of
Depreciation and amortization
296
262
13
product manufactured
59
57
4
EBITDA / Adjusted EBITDA
1,245
2,235
(44
)
1 Certain immaterial 2022 figures have
been reclassified.
2 Includes other nitrogen and purchased
products and comprises net sales of $234 million (2022 – $499
million) less cost of goods sold of $243 million (2022 – $469
million).
3 Includes earnings from equity-accounted
investees of $61 million (2022 – $113 million).
- Nitrogen adjusted EBITDA decreased in the second quarter
and first half of 2023 due to lower net realized selling prices for
all major nitrogen products, which more than offset higher sales
volumes and lower natural gas costs. During the second quarter of
2023 our ammonia operating rate decreased to 85 percent 1,
primarily due to increased turnaround activity. Nutrien is
suspending work on its proposed 1.2 million tonne Geismar clean
ammonia project due to an increase in expected capital costs
compared to our initial estimates and continued uncertainty on the
timing of emerging uses for clean ammonia. We are also deferring
the timing of expenditures on select Nitrogen brownfield expansions
as we prioritize capital and provide flexibility on future
allocation alternatives.
- Sales volumes were higher in the second quarter and
first half of 2023 primarily due to increased demand for nitrates
and sulfates and strong spring seasonal demand for Urea and ESN®,
which more than offset lower ammonia production in Trinidad caused
by natural gas curtailments and additional turnaround activity at
our North American plants.
- Net realized selling price in the second quarter and
first half of 2023 was lower for all major nitrogen products
primarily due to weaker benchmark prices resulting from lower
energy prices in key nitrogen producing regions.
- Cost of goods sold per tonne decreased in the second
quarter and first half of 2023 primarily due to lower natural gas
costs. Ammonia controllable cash cost of product manufactured
increased for the first half mainly due to higher input costs and
lower production.
Natural Gas Prices in Cost of Production
Three Months Ended June
30
Six Months Ended June
30
(US dollars per MMBtu, except as otherwise
noted)
2023
2022
% Change
2023
2022
% Change
Overall gas cost excluding realized
derivative impact
2.76
8.54
(68
)
3.85
7.72
(50
)
Realized derivative impact
(0.02
)
(0.06
)
(67
)
(0.01
)
(0.04
)
(75
)
Overall gas cost
2.74
8.48
(68
)
3.84
7.68
(50
)
Average NYMEX
2.10
7.17
(71
)
2.76
6.06
(54
)
Average AECO
1.74
4.95
(65
)
2.47
4.28
(42
)
- Natural gas prices in our cost of production decreased
in the second quarter and first half of 2023 as a result of lower
North American gas index prices and decreased natural gas costs in
Trinidad, where our natural gas prices are linked to ammonia
benchmark prices.
1.
Excludes Trinidad and Joffre.
Phosphate
Three Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
254
325
(22
)
426
366
16
595
888
(33
)
Industrial and feed
176
189
(7
)
160
190
(16
)
1,100
996
10
430
514
(16
)
586
556
5
732
925
(21
)
Cost of goods sold
377
352
7
643
634
1
Gross margin - manufactured
53
162
(67
)
89
291
(69
)
Gross margin – other 1
(4
)
(6
)
(33
)
Depreciation and amortization
121
74
64
Gross margin – total
49
156
(69
)
Gross margin excluding depreciation
Expenses (income) ²
240
(437
)
n/m
and amortization – manufactured 3
210
365
(42
)
EBIT
(191
)
593
n/m
Depreciation and amortization
71
41
73
EBITDA
(120
)
634
n/m
Adjustments 2
233
(450
)
n/m
Adjusted EBITDA
113
184
(39
)
1 Includes other phosphate and purchased
products and comprises net sales of $72 million (2022 – $76
million) less cost of goods sold of $76 million
(2022 – $82 million).
2 Includes impairment of assets of $233
million (2022 - reversal of impairment of assets of $(450)
million). See Notes 2 and 3 to the interim financial
statements.
3 This is a non-IFRS financial measure.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
518
718
(28
)
814
826
(1
)
636
869
(27
)
Industrial and feed
358
359
‐
320
381
(16
)
1,118
943
19
876
1,077
(19
)
1,134
1,207
(6
)
772
892
(13
)
Cost of goods sold
734
712
3
647
589
10
Gross margin – manufactured
142
365
(61
)
125
303
(59
)
Gross margin – other 1
(6
)
(2
)
200
Depreciation and amortization
122
68
79
Gross margin – total
136
363
(63
)
Gross margin excluding depreciation
Expenses (income) ²
257
(428
)
n/m
and amortization – manufactured
247
371
(33
)
EBIT
(121
)
791
n/m
Depreciation and amortization
138
82
68
EBITDA
17
873
(98
)
Adjustments 2
233
(450
)
n/m
Adjusted EBITDA
250
423
(41
)
1 Includes other phosphate and purchased
products and comprises net sales of $140 million (2022 – $148
million) less cost of goods sold of $146 million (2022 – $150
million).
2 Includes impairment of assets of $233
million (2022 - reversal of impairment of assets of $(450)
million). See Notes 2 and 3 to the interim financial
statements.
- Phosphate adjusted EBITDA decreased in the second
quarter and first half of 2023 due to lower net realized prices for
fertilizer products. We recognized a $233 million non-cash
impairment of our White Springs property, plant and equipment
during the second quarter of 2023, while we had an impairment
reversal for our Aurora property, plant and equipment of $450
million in the same period in 2022. This impairment and reversal of
impairment reflects the volatility of forecasted phosphate margins.
We have completed our planned turnarounds, continue to focus on
reliability initiatives, and expect operating rates to increase
through the remainder of 2023.
- Sales volumes increased in the second quarter of 2023
due to increased demand for dry phosphate fertilizer. First half
sales volumes were lower than the previous year primarily due to
lower production impacting our industrial and feed sales.
- Net realized selling price decreased in the second
quarter and first half of 2023 due to lower fertilizer net realized
selling prices, partially offset by increases to industrial net
realized selling prices, which reflects the typical lag in
industrial price realizations relative to spot fertilizer
prices.
- Cost of goods sold per tonne increased in the second
quarter and first half due to higher depreciation from impairment
reversals in 2022 and lower production, partially offset by lower
ammonia and sulfur costs.
Corporate and Others
(millions of US dollars, except as
otherwise
Three Months Ended June
30
Six Months Ended June
30
noted)
2023
2022
% Change
2023
2022
% Change
Selling expense recovery
(2
)
(2
)
‐
(4
)
(4
)
‐
General and administrative expenses
88
77
14
172
147
17
Share-based compensation (recovery)
expense
(64
)
(52
)
23
(49
)
83
n/m
Other expenses
151
48
215
70
101
(31
)
EBIT
(173
)
(71
)
144
(189
)
(327
)
(42
)
Depreciation and amortization
20
20
‐
37
36
3
EBITDA
(153
)
(51
)
200
(152
)
(291
)
(48
)
Adjustments 1
93
(7
)
n/m
79
167
(53
)
Adjusted EBITDA
(60
)
(58
)
3
(73
)
(124
)
(41
)
1 See Note 2 to the interim financial
statements. Includes loss on Blue Chip Swaps of $92 million for the
three and six months ended June 30 (2022 - nil).
- Share-based compensation recovery was higher in the
second quarter of 2023 compared to the same period in 2022 due to a
larger decrease in the fair value of our share-based awards. The
fair value takes into consideration several factors such as our
share price movement, our performance relative to our peer group
and return on our invested capital. We recorded a recovery in the
first half of 2023 due to a decrease in the fair value of these
awards compared to an expense for the comparative period in 2022
reflecting the increase in fair value.
- Other expenses were higher in the second quarter
compared to the same period in 2022 due to a $92 million loss on
Blue Chip Swaps incurred through trade transactions to remit cash
from Argentina. The loss is a result of the significant divergence
between the Blue Chip Swap market exchange rate and the official
Argentinian Central Bank rate. The first half of 2023 also included
an $80 million gain from amendments to our other post-retirement
benefit plans, which resulted from design plan changes.
Eliminations
- Eliminations are not part of the Corporate and Others segment.
The recovery of gross margin between operating segments of $131
million for the second quarter of 2023 was lower than the recovery
of $176 million in the same period of 2022 as crop input selling
prices and margins related to our intersegment sales decreased. For
the first half of 2023, there was a recovery of $104 million
compared to an elimination of $(24) million in the same period in
2022. This variance is due to the timing of release of intersegment
inventories held by our Retail segment.
Finance Costs, Income Taxes and Other Comprehensive
Income
(millions of US dollars, except as
otherwise
Three Months Ended June
30
Six Months Ended June
30
noted)
2023
2022
% Change
2023
2022
% Change
Finance costs
204
130
57
374
239
56
Income tax expense
476
1,214
(61
)
669
1,719
(61
)
Other comprehensive income (loss)
68
(242
)
n/m
70
(66
)
n/m
- Finance costs were higher in the second quarter of 2023
compared to the same period in 2022 mainly due to higher interest
on short-term debt from increased commercial paper interest rates
and a higher average balance in our short-term and long-term
debt.
- Income tax expense was lower in the second quarter and
first half of 2023 as a result of lower earnings compared to the
same periods in 2022. The effective tax rates for the second
quarter and first half of 2023 were 51 percent and 40 percent
compared to 25 percent for both comparative periods in 2022. The
increase in effective tax rates was a result of the impacts of the
impairments, the loss on Blue Chip Swaps and a change in
recognition of deferred income taxes in 2023.
- Other comprehensive income was higher primarily driven
by changes in the currency translation of our foreign operations.
In the second quarter and first half of 2023, we had gains on
foreign currency translation of our Retail foreign operations
mainly due to the appreciation of the Brazilian and Canadian
currencies relative to the US dollar. For the comparative periods
in 2022, we had losses mainly due to the depreciation of the
Australian and Canadian currencies relative to the US dollar.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our
capital allocation strategy. We believe that our internally
generated cash flow, supplemented by available borrowings under new
or existing financing sources, if necessary, will be sufficient to
meet our anticipated capital expenditures, planned growth and
development activities, and other cash requirements for the
foreseeable future. Refer to the “Capital Structure and Management”
section for details on our existing long-term debt and credit
facilities.
Sources and Uses of Cash
(millions of US dollars, except as
otherwise
Three Months Ended June
30
Six Months Ended June
30
noted)
2023
2022
% Change
2023
2022
% Change
Cash provided by operating activities
2,243
2,558
(12
)
1,385
2,496
(45
)
Cash used in investing activities
(858
)
(517
)
66
(1,552
)
(974
)
59
Cash (used in) provided by financing
activities
(2,124
)
(1,878
)
13
5
(1,290
)
n/m
Effect of exchange rate changes on cash
and cash equivalents
3
(29
)
n/m
(2
)
(20
)
(90
)
(Decrease) increase in cash and cash
equivalents
(736
)
134
n/m
(164
)
212
n/m
Cash provided by operating
activities
- Cash provided by operating activities in the second quarter and
first half of 2023 was lower compared to the same periods in 2022
primarily due to lower net realized selling prices across all
segments compared to historically strong benchmark prices in
2022.
Cash used in investing
activities
- Cash used in investing activities in the second quarter and
first half of 2023 was higher compared to the same periods in 2022
mainly due to increased maintenance and turnaround activities as we
continue to prioritize sustaining our assets to maintain safe and
reliable operations. We also had higher investing capital
expenditures to expand current operations and support operational
efficiencies.
Cash (used in) provided by financing
activities
- Cash used in financing activities in the second quarter of 2023
was higher compared to the same period in 2022 due to the repayment
of the $500 million notes at maturity and higher short-term debt
repayments, partially offset by lower share repurchases.
- Cash provided by financing activities in the first half of 2023
was due to the issuance of $1,500 million of notes in the first
quarter of 2023 and proceeds from short-term debt which were
partially offset by the repayment of the $500 million notes at
maturity and share repurchases. Cash used in financing activities
in the first half of 2022 was primarily due to significant share
repurchases slightly offset by proceeds from short-term
debt.
Financial Condition Review
The following balance sheet categories contain variances that
are considered material:
As at
(millions of US dollars, except as
otherwise noted)
June 30, 2023
December 31, 2022
$ Change
% Change
Assets
Receivables
8,595
6,194
2,401
39
Inventories
6,062
7,632
(1,570
)
(21
)
Prepaid expenses and other current
assets
602
1,615
(1,013
)
(63
)
Goodwill
12,077
12,368
(291
)
(2
)
Liabilities and Equity
Short-term debt
2,922
2,142
780
36
Current portion of long-term debt
44
542
(498
)
(92
)
Payables and accrued charges
9,470
11,291
(1,821
)
(16
)
Long-term debt
9,498
8,040
1,458
18
Share capital
13,835
14,172
(337
)
(2
)
- Receivables increased primarily due to the seasonality
of Retail sales and a strategic extension of credit terms to our
Retail customers. This was partially offset by lower receivables in
our Potash and Nitrogen segments as selling prices decreased from
the historically strong period in 2022.
- Inventories decreased due to seasonal Retail sales.
Generally, we build up our inventory levels in North America at
year-end in preparation for the next year’s upcoming planting and
application seasons.
- Prepaid expenses and other current assets decreased due
to the seasonal drawdown of prepaid inventories (primarily seed and
crop protection products) during the spring planting and
application seasons in North America.
- Goodwill decreased due to the goodwill impairment
related to our Retail - South America group of cash generating
units (“CGUs”), partially offset by an increase in goodwill
recognized from recent acquisitions.
- Short-term debt increased due to additional commercial
paper issuances for our seasonal working capital requirements.
- Current portion of long-term debt decreased due to the
repayment of $500 million of notes at maturity in the second
quarter of 2023.
- Payables and accrued charges decreased primarily as a
result of lower customer prepayments in North America as Retail
customers took delivery of prepaid sales. This also decreased from
income tax payments made in the first half of 2023 related to the
2022 tax balance.
- Long-term debt increased due to the issuance of $1,500
million of notes in the first quarter of 2023.
- Share capital decreased primarily as a result of shares
repurchased in first half of 2023 under our normal course issuer
bid programs.
Capital Structure and Management
Principal Debt Instruments
As part of the normal course of business, we closely monitor our
liquidity position. We use a combination of cash generated from
operations and short-term and long-term debt to finance our
operations. We were in compliance with our debt covenants and did
not have any changes to our credit ratings in the six months ended
June 30, 2023.
As at June 30, 2023
(millions of US dollars, except as
Outstanding and
Committed
otherwise noted)
Rate of Interest (%)
Total Facility Limit
Short-Term Debt
Long-Term Debt
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit
facility
n/a
2,000
‐
‐
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities
1,310
South America 1
1.2 - 23.1
588
151
Australia
5.1
100
‐
Other
4.1
89
3
Commercial paper
5.4 - 5.8
2,038
‐
Other short-term and long-term debt
n/a
107
2
Total
2,922
156
1 Our credit facilities are
either denominated in local currency or US dollars. The range of
interest rates for South America excludes our local currency
denominated Argentina facility with an interest rate of 92.4
percent and a minimal outstanding balance as at June 30, 2023.
The amount available under the commercial paper program is
limited to the undrawn availability of backup funds under the
$4,500 million unsecured revolving term credit facility and excess
cash invested in highly liquid securities.
Our long-term debt consists primarily of notes and debentures.
See the “Capital Structure and Management” section of our 2022
Annual Report for information on balances, rates and maturities for
our notes and debentures. During the first six months of 2023, we
issued notes of $1,500 million and repaid the $500 million 1.900
percent notes upon maturity on May 13, 2023. See Note 8 to the
interim financial statements.
Outstanding Share Data
As at August 1, 2023
Common shares
494,508,425
Options to purchase common shares
3,327,351
For more information on our capital structure and management,
see Note 24 to our 2022 annual consolidated financial
statements.
Quarterly Results
(millions of US dollars, except as
otherwise noted)
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Sales
11,654
6,107
7,533
8,188
14,506
7,657
7,267
6,024
Net earnings
448
576
1,118
1,583
3,601
1,385
1,207
726
Net earnings attributable to equity
holders of Nutrien
440
571
1,112
1,577
3,593
1,378
1,201
717
Net earnings per share attributable to
equity holders of Nutrien
Basic
0.89
1.14
2.15
2.95
6.53
2.49
2.11
1.26
Diluted
0.89
1.14
2.15
2.94
6.51
2.49
2.11
1.25
Seasonality in our business results from increased demand for
products during the planting season. Crop input sales are generally
higher in the spring and fall application seasons. The results of
this seasonality have a corresponding effect on receivables from
customers and rebates receivables, inventories, prepaid expenses
and other current assets, and trade payables. Our short-term debt
also fluctuates during the year to meet working capital
requirements. Crop input inventories are normally accumulated
leading up to each application season. Our cash collections
generally occur after the application season is complete, while
customer prepayments made to us are typically concentrated in
December and January and inventory prepayments paid to our
suppliers are typically concentrated in the period from November to
January. Feed and industrial sales are more evenly distributed
throughout the year.
Our earnings are significantly affected by fertilizer benchmark
prices, which have been volatile over the last two years and are
affected by demand-supply conditions, grower affordability and
weather.
In the second quarter of 2023, we recorded non-cash impairment
of assets totaling to $698 million. This is comprised of an
impairment of our Phosphate White Springs property, plant and
equipment of $233 million and an impairment of our South American
Retail assets of $465 million primarily related to goodwill. In the
second and third quarters of 2022, earnings were impacted by $450
million and $330 million non-cash impairment reversals at Aurora
and White Springs CGUs, respectively, of property, plant and
equipment in the Phosphate segment. The impairments and reversal of
impairments in our Phosphate segment reflect the volatility of
forecasted phosphate margins while the impairment related to the
Retail South America group of CGUs is mainly due to the impact of
crop input price volatility, more moderate long-term growth
assumptions and higher interest rates. In the fourth quarter of
2021, earnings were impacted by a $142 million loss resulting from
the early extinguishment of long-term debt.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2022
Annual Report. We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the Audit
Committee of the Board. Our critical accounting estimates are
discussed on page 65 of our 2022 Annual Report. Other than the
critical accounting estimates discussed below, there were no
material changes in the three or six months ended June 30, 2023 to
our critical accounting estimates.
Impairment of Assets
Long-Lived Asset Impairment and Reversals
During the three and six months ended June 30, 2023, we
identified an impairment trigger for our Phosphate CGUs, White
Springs and Aurora, primarily as a result of the decrease in our
forecasted phosphate margins. As a result of the impairment
analysis, we recorded an impairment of property, plant and
equipment amounting to $233 million at our White Springs CGU as the
recoverable amount was less than its carrying value. The White
Springs CGU has a shorter expected mine life and is therefore more
sensitive to changes in short and medium-term forecasted phosphate
margins. We determined there was no impairment for our Aurora CGU.
Refer to Note 3 to the interim financial statements for additional
information.
The following table highlights sensitivities to the recoverable
amounts which could result in additional impairment losses or
reversals of the previously recorded losses (relating to the White
Springs CGU). The sensitivities have been calculated independently
of changes in other key variables. Dollar amounts are in millions,
except as otherwise noted.
Change to Recoverable Amount
($)
Key Assumptions as at June 30,
2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period
($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
Goodwill and Intangible Assets Impairment
Recent acquisitions in Brazil resulted in goodwill being
recognized for our Retail – South America group of CGUs. Goodwill
is more susceptible to impairment risk if business operating
results or economic conditions deteriorate and we anticipate not
meeting our forecasts. During the three and six months ended June
30, 2023, we revised our forecasted EBITDA for the Retail – South
America group of CGUs which triggered an impairment analysis. Due
to the impact of crop input price volatility, more moderate
long-term growth assumptions and higher interest rates, we have
lowered our product margin expectations and deferred certain of our
planned strategic investments. As a result, this reduced our
forecasted earnings and growth. As at June 30, 2023, the Retail –
South America group of CGUs recoverable amount was lower than its
carrying amount. As a result, we fully impaired goodwill of $422
million and recorded a $43 million impairment of intangible assets
for a total of $465 million for the Retail – South America group of
CGUs. Refer to Note 3 to the interim financial statements for
additional information.
The following table highlights sensitivities to the recoverable
amount which could have resulted in additional impairment against
the carrying amount of intangible assets and property, plant and
equipment. The sensitivities have been calculated independently of
changes in other key variables. Dollar amounts are in millions,
except as otherwise noted.
Decrease to
Key Assumptions
Change in Key
Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast
period ($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
Controls and Procedures
Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended, and National Instrument 52-109 Certification of
Disclosure in Issuers’ Annual and Interim Filings. Internal control
over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in
accordance with IFRS. Any system of internal control over financial
reporting, no matter how well designed, has inherent limitations.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
There has been no change in our internal control over financial
reporting during the three months ended June 30, 2023 that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this
document, including within the “Market Outlook and Guidance”
section, constitute “forward-looking information” or
“forward-looking statements” (collectively, “forward-looking
statements”) under applicable securities laws (such statements are
often accompanied by words such as “anticipate”, “forecast”,
“expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend”
or other similar words). All statements in this document, other
than those relating to historical information or current
conditions, are forward-looking statements, including, but not
limited to: Nutrien's business strategies, plans, prospects and
opportunities; Nutrien's revised 2023 full-year guidance, including
expectations regarding our adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment), Potash sales tonnes,
Nitrogen sales tonnes, depreciation and amortization and effective
tax rate on adjusted earnings; our expectations for annual potash
capability and ability to adjust operations according to market
demand; our projections for cash from operations; expectations
regarding our growth and capital allocation intentions and
strategies, including our forecasts relating to goodwill
impairment; expectations and forecasts relating to our Aurora and
White Springs CGUs and the reversals and impairments (as
applicable) associated therewith; our advancement of strategic
growth initiatives; capital spending expectations for 2023 and
beyond, including expectations for lower capital expenditures and
reduced expenses; expectations regarding Retail inventory levels in
North America; expectations regarding performance of our operating
segments in 2023, including our plans to ramp up production and the
anticipated effects of the strike at the Port of Vancouver; our
operating segment market outlooks and our expectations for market
conditions and fundamentals in 2023 and beyond, and the anticipated
supply and demand for our products and services, expected market
and industry conditions with respect to crop nutrient application
rates, planted acres, grower crop investment, crop mix, production
volumes and expenses, shipments, consumption, prices, operating
rates and the impact of seasonality, including drought conditions,
import and export volumes, economic sanctions, operating rates,
inventories, exports, crop development, natural gas curtailments
and the war between Ukraine and Russia; the negotiation of sales
contracts; timing and impacts of plant turnarounds; acquisitions
and divestitures and the anticipated benefits thereof; and
expectations in connection with our ability to deliver long-term
returns to shareholders. These forward-looking statements are
subject to a number of assumptions, risks and uncertainties, many
of which are beyond our control, which could cause actual results
to differ materially from such forward-looking statements. As such,
undue reliance should not be placed on these forward-looking
statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, having regard to our experience and our
perception of historical trends, this list is not exhaustive of the
factors that may affect any of the forward-looking statements and
the reader should not place undue reliance on these assumptions and
such forward-looking statements. Current conditions, economic and
otherwise, render assumptions, although reasonable when made,
subject to greater uncertainty. The additional key assumptions that
have been made include, among other things, assumptions with
respect to our ability to successfully complete, integrate and
realize the anticipated benefits of our already completed and
future acquisitions and divestitures, and that we will be able to
implement our standards, controls, procedures and policies in
respect of any acquired businesses and to realize the expected
synergies on the anticipated timeline or at all; that future
business, regulatory and industry conditions will be within the
parameters expected by us, including with respect to prices,
expenses, margins, demand, supply, product availability, shipments,
consumption, weather conditions, supplier agreements, availability,
inventory levels, exports, crop development and cost of labor and
interest, exchange and effective tax rates; assumptions with
respect to global economic conditions and the accuracy of our
market outlook expectations for 2023 and in the future; our
expectations for fertilizer prices to stabilize near mid-cycle
values in 2023; assumptions related to our Retail South America
group of CGUs goodwill and intangible asset impairment; assumptions
related to the calculation of recoverable amount of our Aurora and
White Springs CGUs, including internal sales and input price
forecasts, discount rate, long-term growth rate and end of expected
mine life; assumptions with respect to our intention to complete
share repurchases under our normal course issuer bid programs,
including the funding of such share repurchases, existing and
future market conditions, including with respect to the price of
our common shares, and compliance with respect to applicable
limitations under securities laws and regulations and stock
exchange policies; expectations relating to the effects of the
strike at the Port of Vancouver; our expectations regarding the
impacts, direct and indirect, of the war between Ukraine and Russia
on, among other things, global supply and demand, including for
crop nutrients, energy and commodity prices, global interest rates,
supply chains and the global macroeconomic environment, including
inflation; the adequacy of our cash generated from operations and
our ability to access our credit facilities or capital markets for
additional sources of financing; our ability to identify suitable
candidates for acquisitions and divestitures and negotiate
acceptable terms; our ability to maintain investment grade ratings
and achieve our performance targets; our ability to successfully
negotiate sales and other contracts; and our ability to
successfully implement new initiatives and programs.
Events or circumstances that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to: general global economic, market
and business conditions; failure to complete announced and future
acquisitions or divestitures at all or on the expected terms and
within the expected timeline; seasonality; climate change and
weather conditions, including impacts from regional flooding and/or
drought conditions; crop planted acreage, yield and prices; the
supply and demand and price levels for our products; governmental
and regulatory requirements and actions by governmental
authorities, including changes in government policy (including
tariffs, trade restrictions and climate change initiatives),
government ownership requirements, changes in environmental, tax
and other laws or regulations and the interpretation thereof;
political risks, including civil unrest, actions by armed groups or
conflict and malicious acts including terrorism; the occurrence of
a major environmental or safety incident; innovation and
cybersecurity risks related to our systems, including our costs of
addressing or mitigating such risks; counterparty and sovereign
risk; delays in completion of turnarounds at our major facilities;
interruptions of or constraints in availability of key inputs,
including natural gas and sulfur; any significant impairment of the
carrying amount of certain assets; the risk that rising interest
rates and/or deteriorated business operating results may result in
the further impairment of assets or goodwill attributed to certain
of our cash generating units; 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; the war between Ukraine and
Russia and its potential impact on, among other things, global
market conditions and supply and demand, including for crop
nutrients, energy and commodity prices, interest rates, supply
chains and the global economy generally; our ability to execute on
our strategies related to environmental, social and governance
matters, and achieve related expectations, targets and commitments;
and other risk factors detailed from time to time in Nutrien
reports filed with the Canadian securities regulators and the SEC
in the United States.
The purpose of our 2023 adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment), capital
expenditures, operating expenses, cash provided by operations,
depreciation and amortization and effective tax rate on adjusted
earnings guidance ranges are to assist readers in understanding our
expected and targeted financial results, and this information may
not be appropriate for other purposes.
The forward-looking statements in this document are made as of
the date hereof and Nutrien disclaims any intention or obligation
to update or revise any forward-looking statements in this document
as a result of new information or future events, except as may be
required under applicable Canadian securities legislation or
applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms
used in this document, as well as a list of abbreviated company
names and sources, see the “Terms & Definitions” section of our
2022 Annual Report. All references to per share amounts pertain to
diluted net earnings (loss) per share, “n/m” indicates information
that is not meaningful, and all financial amounts are stated in
millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and
services, helping to safely and sustainably feed a growing world.
We operate a world-class network of production, distribution and
retail facilities that positions us to efficiently serve the needs
of growers. We focus on creating long-term value for all
stakeholders by advancing our key environmental, social and
governance priorities.
More information about Nutrien can be found at
www.nutrien.com.
Selected financial data for download can be found in our data
tool at www.nutrien.com/investors/interactive-datatool Such data is
not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, August 3,
2023 at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
- From Canada and the US 1-888-886-7786
- International 1-416-764-8658
- 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/2023-q2-earnings-conference-call
Appendix A - Selected Additional Financial Data
Selected Retail Measures
Three Months Ended June
30
Six Months Ended June
30
2023
2022
2023
2022
Proprietary products gross margin
(millions of US dollars)
Crop nutrients
214
197
268
241
Crop protection products
253
317
327
428
Seed
113
126
143
152
Merchandise
3
3
6
6
All products
583
643
744
827
Proprietary products margin as a
percentage of product line margin (%)
Crop nutrients
34
22
35
20
Crop protection products
38
39
37
39
Seed
42
46
42
44
Merchandise
7
6
7
6
All products
30
28
29
26
Crop nutrients sales volumes (tonnes –
thousands)
North America
4,599
3,978
5,794
5,220
International
1,133
1,017
1,977
1,950
Total
5,732
4,995
7,771
7,170
Crop nutrients selling price per
tonne
North America
735
940
736
923
International
536
795
535
676
Total
695
911
685
856
Crop nutrients gross margin per
tonne
North America
131
202
123
198
International
26
105
29
86
Total
110
182
99
168
Financial performance measures
2023
2022
Retail adjusted EBITDA margin (%) 1, 2
8
12
Retail adjusted EBITDA per US selling
location (thousands of US dollars) 1, 2, 3
1,516
1,897
Retail adjusted average working capital to
sales (%) 1, 4
20
15
Retail adjusted average working capital to
sales excluding Nutrien Financial (%) 1, 4
3
1
Nutrien Financial adjusted net interest
margin (%) 1, 4
6.6
7.0
Retail cash operating coverage ratio (%)
1, 4
64
54
1 Rolling four quarters ended June 30,
2023 and 2022.
2 These are supplementary financial
measures. See the “Other Financial Measures" section.
3 Excluding acquisitions.
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Nutrien Financial
As at June 30, 2023
As at
December
31, 2022
(millions of US dollars)
Current
<31 Days
Past Due
31–90 Days
Past Due
>90 Days
Past Due
Gross Receivables
Allowance1
Net Receivables
Net Receivables
North America
3,648
194
54
109
4,005
(43)
3,962
2,007
International
644
53
20
47
764
(10)
754
662
Nutrien Financial receivables
4,292
247
74
156
4,769
(53)
4,716
2,669
1 Bad debt expense on the above
receivables for the six months ended June 30, 2023 was $30 million
(2022 – $8 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended June
30
Six Months Ended June
30
2023
2022
2023
2022
Sales volumes (tonnes –
thousands)
Fertilizer 1
1,866
1,537
3,114
2,690
Industrial and feed
1,079
1,142
2,188
2,314
Net sales (millions of US
dollars)
Fertilizer 1
826
1,197
1,507
2,023
Industrial and feed
289
760
787
1,448
Net selling price per tonne
Fertilizer 1
443
777
484
751
Industrial and feed
267
666
360
626
1 Certain immaterial 2022 figures have
been reclassified.
Production Measures
Three Months Ended June
30
Six Months Ended June
30
2023
2022
2023
2022
Potash production (Product tonnes –
thousands)
3,237
3,621
6,325
7,324
Potash shutdown weeks 1
1
5
5
5
Ammonia production – total 2
1,249
1,473
2,680
2,876
Ammonia production – adjusted 2, 3
931
1,048
1,968
2,006
Ammonia operating rate (%) 3
85
96
90
92
P2O5 production (P2O5 tonnes –
thousands)
331
350
672
728
P2O5 operating rate (%)
78
82
80
86
1 Represents weeks of full production
shutdown, including inventory adjustments and unplanned events,
excluding the impact of any periods of reduced operating rates,
planned routine annual maintenance shutdowns and announced
workforce reductions.
2 All figures are provided on a gross
production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B - Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial
measures to assess performance. Non-IFRS financial measures are
financial measures disclosed by the Company that (a) depict
historical or expected future financial performance, financial
position or cash flow of the Company, (b) with respect to their
composition, exclude amounts that are included in, or include
amounts that are excluded from, the composition of the most
directly comparable financial measure disclosed in the primary
financial statements of the Company, (c) are not disclosed in the
financial statements of the Company and (d) are not a ratio,
fraction, percentage or similar representation. Non-IFRS ratios are
financial measures disclosed by the Company that are in the form of
a ratio, fraction, percentage or similar representation that has a
non-IFRS financial measure as one or more of its components, and
that are not disclosed in the financial statements of the
Company.
These non-IFRS financial measures and non-IFRS ratios are not
standardized financial measures under IFRS and, therefore, are
unlikely to be comparable to similar financial measures presented
by other companies. Management believes these non-IFRS financial
measures and non-IFRS ratios provide transparent and useful
supplemental information to help investors evaluate our financial
performance, financial condition and liquidity using the same
measures as management. These non-IFRS financial measures and
non-IFRS ratios should not be considered as a substitute for, or
superior to, measures of financial performance prepared in
accordance with IFRS.
The following section outlines our non-IFRS financial measures
and non-IFRS ratios, their compositions, and why management uses
each measure. It also includes reconciliations to the most directly
comparable IFRS measures. Except as otherwise described herein, our
non-IFRS financial measures and non-IFRS ratios are calculated on a
consistent basis from period to period and are adjusted for
specific items in each period, as applicable. As additional
non-recurring or unusual items arise in the future, we generally
exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net
earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, depreciation and
amortization, share-based compensation and certain foreign exchange
gain/loss (net of related derivatives). We also adjust this measure
for the following other income and expenses that are excluded when
management evaluates the performance of our day-to-day operations:
integration and restructuring related costs, impairment or reversal
of impairment of assets, COVID-19 related expenses, gain or loss on
disposal of certain businesses and investments, asset retirement
obligations (“ARO”) and accrued environmental costs (“ERL”) related
to our non-operating sites, and loss on remitting cash from certain
foreign jurisdictions (e.g. Blue Chip Swaps). In 2023, we amended
our calculation of adjusted EBITDA to adjust for the asset
retirement obligations and accrued environmental costs related to
our non-operating sites and the loss on remitting cash from certain
foreign jurisdictions. We do not consider these to be part of our
day-to-day operations. There were no similar income and expense in
the comparative periods.
Why we use the measure and why it is useful to investors:
It is not impacted by long-term investment and financing decisions,
but rather focuses on the performance of our day-to-day operations.
It provides a measure of our ability to service debt and to meet
other payment obligations, and as a component of employee
remuneration calculations.
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars)
2023
2022
2023
2022
Net earnings
448
3,601
1,024
4,986
Finance costs
204
130
374
239
Income tax expense
476
1,214
669
1,719
Depreciation and amortization
556
505
1,052
966
EBITDA 1
1,684
5,450
3,119
7,910
Share-based compensation (recovery)
expense
(64)
(52)
(49)
83
Foreign exchange loss, net of related
derivatives
52
31
18
56
Integration and restructuring related
costs
10
11
15
20
Impairment (reversal of impairment) of
assets
698
(450)
698
(450)
COVID-19 related expenses 2
‐
3
‐
8
Gain on disposal of investment
‐
‐
‐
(19)
ARO/ERL expense for non-operating sites
3
6
‐
6
‐
Loss on Blue Chip Swaps
92
‐
92
‐
Adjusted EBITDA
2,478
4,993
3,899
7,608
1 EBITDA is calculated as net earnings
before finance costs, income taxes, and depreciation and
amortization.
2 COVID-19 related expenses primarily
consist of increased cleaning and sanitization costs, the purchase
of personal protective equipment, discretionary supplemental
employee costs, and costs related to construction delays from
access limitations and other government restrictions.
3 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
Adjusted Net Earnings and Adjusted Net Earnings Per
Share
Most directly comparable IFRS financial measure: Net
earnings (loss) and net earnings (loss) per share.
Definition: Adjusted net earnings and related per share
information are calculated as net earnings (loss) before
share-based compensation and certain foreign exchange gain/loss
(net of related derivatives), net of tax. We also adjust this
measure for the following other income and expenses (net of tax)
that are excluded when management evaluates the performance of our
day-to-day operations: certain integration and restructuring
related costs, impairment or reversal of impairment of assets,
COVID-19 related expenses (including those recorded under finance
costs), gain or loss on disposal of certain businesses and
investments, gain or loss on early extinguishment of debt or on
settlement of derivatives due to discontinuance of hedge
accounting, asset retirement obligations and accrued environmental
costs related to our non-operating sites, loss on remitting cash
from certain foreign jurisdictions (e.g. Blue Chip Swaps) and
change in recognition of tax losses and deductible temporary
differences related to impairments. In 2023, we amended our
calculation of adjusted net earnings and adjusted net earnings per
share to adjust for the asset retirement obligations and accrued
environmental costs related to our non-operating sites the loss on
remitting cash from certain foreign jurisdictions and the change in
recognition of Retail – South America tax losses and deductible
temporary differences. We do not consider these to be part of our
day-to-day operations. There were no similar income and expense in
the comparative periods. We generally apply the annual forecasted
effective tax rate to our adjustments during the year and, at
year-end, we apply the actual effective tax rate. If the effective
tax rate is significantly different from our forecasted effective
tax rate due to adjustments or discrete tax impacts, we apply a tax
rate that excludes those items. For material adjustments, we apply
a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations and is used
as a component of employee remuneration calculations.
Three Months Ended
June 30, 2023
Six Months Ended
June 30, 2023
Per
Per
(millions of US dollars, except as
otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
440
0.89
1,011
2.03
Adjustments:
Share-based compensation recovery
(64
)
(49
)
(0.11
)
(49
)
(37
)
(0.08
)
Foreign exchange loss, net of related
derivatives
52
40
0.08
18
14
0.02
Integration and restructuring related
costs
10
8
0.02
15
11
0.02
Impairment of assets
698
653
1.32
698
653
1.32
ARO/ERL expense for non-operating sites
1
6
5
0.01
6
5
0.01
Loss on Blue Chip Swaps
92
92
0.19
92
92
0.18
Change in recognition of deferred tax
assets
66
66
0.13
66
66
0.13
Adjusted net earnings
1,255
2.53
1,815
3.63
1 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
Three Months Ended
June 30, 2022
Six Months Ended
June 30, 2022
Per
Per
(millions of US dollars, except as
otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
3,593
6.51
4,971
8.99
Adjustments:
Share-based compensation (recovery)
expense
(52
)
(39
)
(0.07
)
83
62
0.11
Foreign exchange loss, net of related
derivatives
31
23
0.04
56
42
0.07
Integration and restructuring related
costs
11
8
0.01
20
15
0.02
Reversal of impairment of assets
(450
)
(354
)
(0.64
)
(450
)
(354
)
(0.64
)
COVID-19 related expenses
3
2
‐
8
6
0.01
Gain on disposal of investment
‐
‐
‐
(19
)
(14
)
(0.03
)
Adjusted net earnings
3,233
5.85
4,728
8.53
Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per
Share Guidance
Adjusted EBITDA and adjusted net earnings per share guidance are
forward-looking non-IFRS financial measures. We do not provide a
reconciliation of such forward-looking measures to the most
directly comparable financial measures calculated and presented in
accordance with IFRS because a meaningful or accurate calculation
of reconciling items and the information is not available without
unreasonable effort due to unknown variables, including the timing
and amount of certain reconciling items, and the uncertainty
related to future results. These unknown variables may include
unpredictable transactions of significant value that may be
inherently difficult to determine without unreasonable efforts. The
probable significance of such unavailable information, which could
be material to future results, cannot be addressed. Guidance for
adjusted EBITDA and adjusted net earnings per share excludes
certain items such as, but not limited to, the impacts of
share-based compensation, certain foreign exchange gain/loss (net
of related derivatives), integration and restructuring related
costs, impairment or reversal of impairment of assets, COVID-19
related expenses (including those recorded under finance costs),
gain or loss on disposal of certain businesses and investments,
gain or loss on early extinguishment of debt or on settlement of
derivatives due to discontinuance of hedge accounting, asset
retirement obligations and accrued environmental costs related to
our non-operating sites, loss on remitting cash from certain
foreign jurisdictions (e.g. Blue Chip Swaps) and the change in
recognition of Retail – South America tax losses and deductible
temporary differences.
Gross Margin Excluding Depreciation and Amortization Per
Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross
margin.
Definition: Gross margin per tonne less depreciation and
amortization per tonne for manufactured products. Reconciliations
are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations, which
excludes the effects of items that primarily reflect the impact of
long-term investment and financing decisions.
Potash Controllable Cash Cost of Product Manufactured
(“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of
goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and
amortization expense included in COPM, royalties, natural gas costs
and carbon taxes, change in inventory, and other adjustments,
divided by potash production tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Potash controllable cash COPM
excludes the effects of production from other periods and the
impacts of our long-term investment decisions. Potash controllable
cash COPM also excludes royalties and natural gas costs and carbon
taxes, which management does not consider controllable, as they are
primarily driven by regulatory and market conditions.
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2023
2022
2023
2022
Total COGS – Potash
353
399
658
704
Change in inventory
(14
)
(5
)
26
72
Other adjustments 1
(9
)
(9
)
(17
)
(24
)
COPM
330
385
667
752
Depreciation and amortization in COPM
(101
)
(114
)
(201
)
(233
)
Royalties in COPM
(26
)
(63
)
(57
)
(108
)
Natural gas costs and carbon taxes in
COPM
(9
)
(19
)
(25
)
(36
)
Controllable cash COPM
194
189
384
375
Production tonnes (tonnes – thousands)
3,237
3,621
6,325
7,324
Potash controllable cash COPM per
tonne
60
52
61
51
1 Other adjustments include unallocated
production overhead that is recognized as part of cost of goods
sold but is not included in the measurement of inventory and
changes in inventory balances.
Ammonia Controllable Cash COPM Per Tonne
Most directly comparable IFRS financial measure: Total
manufactured COGS for the Nitrogen segment.
Definition: Total Nitrogen COGS excluding depreciation
and amortization expense included in COGS, cash COGS for products
other than ammonia, other adjustments, and natural gas and steam
costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Ammonia controllable cash COPM
excludes the effects of production from other periods, the costs of
natural gas and steam, and long-term investment decisions,
supporting a focus on the performance of our day-to-day
operations.
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2023
2022
2023
2022
Total Manufactured COGS – Nitrogen 1
697
911
1,345
1,583
Total Other COGS – Nitrogen 1
120
260
243
469
Total COGS – Nitrogen
817
1,171
1,588
2,052
Depreciation and amortization in COGS
(139
)
(115
)
(247
)
(217
)
Cash COGS for products other than
ammonia
(513
)
(748
)
(984
)
(1,272
)
Ammonia
Total cash COGS before other
adjustments
165
308
357
563
Other adjustments 2
(66
)
(78
)
(134
)
(114
)
Total cash COPM
99
230
223
449
Natural gas and steam costs in COPM
(73
)
(195
)
(158
)
(376
)
Controllable cash COPM
26
35
65
73
Production tonnes (net tonnes 3 –
thousands)
474
606
1,102
1,280
Ammonia controllable cash COPM per
tonne
55
58
59
57
1 Certain immaterial 2022 figures have
been reclassified.
2 Other adjustments include unallocated
production overhead that is recognized as part of cost of goods
sold but is not included in the measurement of inventory and
changes in inventory balances.
3 Ammonia tonnes available for sale, as
not upgraded to other nitrogen products.
Retail Adjusted Average Working Capital to Sales and Retail
Adjusted Average Working Capital to Sales Excluding Nutrien
Financial
Definition: Retail adjusted average working capital
divided by Retail adjusted sales for the last four rolling
quarters. We exclude in our calculations the sales and working
capital of certain acquisitions during the first year following the
acquisition. We also look at this metric excluding Nutrien
Financial revenue and working capital.
Why we use the measure and why it is useful to investors:
To evaluate operational efficiency. A lower or higher percentage
represents increased or decreased efficiency, respectively. The
metric excluding Nutrien Financial shows the impact that the
working capital of Nutrien Financial has on the ratio.
Rolling four quarters ended
June 30, 2023
(millions of US dollars, except as
otherwise noted)
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Average/Total
Current assets
11,262
11,668
13,000
11,983
Current liabilities
(5,889
)
(8,708
)
(8,980
)
(8,246
)
Working capital
5,373
2,960
4,020
3,737
4,023
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
5,373
2,960
4,020
3,737
4,023
Nutrien Financial working capital
(3,898
)
(2,669
)
(2,283
)
(4,716
)
Adjusted working capital excluding Nutrien
Financial
1,475
291
1,737
(979
)
631
Sales
3,980
4,087
3,422
9,128
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,980
4,087
3,422
9,128
20,617
Nutrien Financial revenue
(65
)
(62
)
(57
)
(122
)
Adjusted sales excluding Nutrien
Financial
3,915
4,025
3,365
9,006
20,311
Adjusted average working capital to
sales (%)
20
Adjusted average working capital to
sales excluding Nutrien Financial (%)
3
Rolling four quarters ended June
30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Average/Total
Current assets
8,945
9,924
12,392
12,487
Current liabilities
(5,062
)
(7,828
)
(9,223
)
(9,177
)
Working capital
3,883
2,096
3,169
3,310
3,115
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
3,883
2,096
3,169
3,310
3,115
Nutrien Financial working capital
(2,820
)
(2,150
)
(2,274
)
(4,404
)
Adjusted working capital excluding Nutrien
Financial
1,063
(54
)
895
(1,094
)
203
Sales
3,347
3,878
3,861
9,422
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,347
3,878
3,861
9,422
20,508
Nutrien Financial revenue
(54
)
(51
)
(49
)
(91
)
Adjusted sales excluding Nutrien
Financial
3,293
3,827
3,812
9,331
20,263
Adjusted average working capital to sales
(%)
15
Adjusted average working capital to sales
excluding Nutrien Financial (%)
1
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed
interest expense divided by average Nutrien Financial net
receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors:
Used by credit rating agencies and other users to evaluate the
financial performance of Nutrien Financial.
Rolling four quarters ended
June 30, 2023
(millions of US dollars, except as
otherwise noted)
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Total/Average
Nutrien Financial revenue
65
62
57
122
Deemed interest expense 1
(12
)
(11
)
(20
)
(39
)
Net interest
53
51
37
83
224
Average Nutrien Financial net
receivables
3,898
2,669
2,283
4,716
3,392
Nutrien Financial adjusted net interest
margin (%)
6.6
Rolling four quarters ended June
30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Total/Average
Nutrien Financial revenue
54
51
49
91
Deemed interest expense 1
(10
)
(12
)
(6
)
(12
)
Net interest
44
39
43
79
205
Average Nutrien Financial net
receivables
2,820
2,150
2,274
4,404
2,912
Nutrien Financial adjusted net interest
margin (%)
7.0
1 Average borrowing rate applied to the
notional debt required to fund the portfolio of receivables from
customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative,
and other expenses (income), excluding depreciation and
amortization expense, divided by Retail gross margin excluding
depreciation and amortization expense in cost of goods sold, for
the last four rolling quarters.
Why we use the measure and why it is useful to investors:
To understand the costs and underlying economics of our Retail
operations and to assess our Retail operating performance and
ability to generate free cash flow.
Rolling four quarters ended
June 30, 2023
(millions of US dollars, except as
otherwise noted)
Q3 2022
Q4 2022
Q1 2023
Q2 2023
Total
Selling expenses
821
836
765
971
3,393
General and administrative expenses
50
51
50
55
206
Other expenses
19
1
15
29
64
Operating expenses
890
888
830
1,055
3,663
Depreciation and amortization in operating
expenses
(204
)
(198
)
(179
)
(185
)
(766
)
Operating expenses excluding depreciation
and amortization
686
690
651
870
2,897
Gross margin
917
1,077
615
1,931
4,540
Depreciation and amortization in cost of
goods sold
2
4
2
3
11
Gross margin excluding depreciation and
amortization
919
1,081
617
1,934
4,551
Cash operating coverage ratio (%)
64
Rolling four quarters ended June
30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Total
Selling expenses
746
848
722
1,013
3,329
General and administrative expenses
45
43
45
54
187
Other expenses (income)
17
20
(12
)
21
46
Operating expenses
808
911
755
1,088
3,562
Depreciation and amortization in operating
expenses
(180
)
(173
)
(167
)
(171
)
(691
)
Operating expenses excluding depreciation
and amortization
628
738
588
917
2,871
Gross margin
917
1,173
845
2,340
5,275
Depreciation and amortization in cost of
goods sold
2
5
2
4
13
Gross margin excluding depreciation and
amortization
919
1,178
847
2,344
5,288
Cash operating coverage ratio (%)
54
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures
disclosed by the Company that (a) are, or are intended to be,
disclosed on a periodic basis to depict the historical or expected
future financial performance, financial position or cash flow of
the Company, (b) are not disclosed in the financial statements of
the Company, (c) are not non-IFRS financial measures, and (d) are
not non-IFRS ratios.
The following section provides an explanation of the composition
of those supplementary financial measures if not previously
provided.
Retail adjusted EBITDA margin: Retail adjusted EBITDA
divided by Retail sales for the last four rolling quarters.
Retail adjusted EBITDA per US selling location:
Calculated as total Retail US adjusted EBITDA for the last four
rolling quarters, representing the organic EBITDA component, which
excludes acquisitions in those quarters, divided by the number of
US locations that have generated sales in the last four rolling
quarters, adjusted for acquired locations in those quarters.
Cash used for dividends and share repurchases (shareholder
returns): Calculated as dividends paid to Nutrien’s
shareholders plus repurchase of common shares as reflected in the
condensed consolidated statements of cash flows. This measure is
useful as it represents return of capital to shareholders.
Condensed Consolidated Financial Statements
Unaudited in millions of US dollars except as otherwise
noted
Condensed Consolidated Statements of Earnings
Three Months Ended
Six Months Ended
June 30
June 30
Note
2023
2022
2023
2022
SALES
2
11,654
14,506
17,761
22,163
Freight, transportation and
distribution
252
221
451
424
Cost of goods sold
8,236
8,286
12,231
12,483
GROSS MARGIN
3,166
5,999
5,079
9,256
Selling expenses
979
1,017
1,749
1,744
General and administrative expenses
157
140
302
266
Provincial mining taxes
104
362
223
611
Share-based compensation (recovery)
expense
(64
)
(52
)
(49
)
83
Impairment (reversal of impairment) of
assets
3
698
(450
)
698
(450
)
Other expenses
4
164
37
89
58
EARNINGS BEFORE FINANCE COSTS AND
INCOME TAXES
1,128
4,945
2,067
6,944
Finance costs
204
130
374
239
EARNINGS BEFORE INCOME TAXES
924
4,815
1,693
6,705
Income tax expense
5
476
1,214
669
1,719
NET EARNINGS
448
3,601
1,024
4,986
Attributable to
Equity holders of Nutrien
440
3,593
1,011
4,971
Non-controlling interest
8
8
13
15
NET EARNINGS
448
3,601
1,024
4,986
NET EARNINGS PER SHARE ATTRIBUTABLE TO
EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
0.89
6.53
2.03
9.02
Diluted
0.89
6.51
2.03
8.99
Weighted average shares outstanding for
basic EPS
495,379,000
550,048,000
498,261,000
551,335,000
Weighted average shares outstanding for
diluted EPS
495,932,000
551,659,000
499,059,000
553,198,000
Condensed Consolidated Statements of Comprehensive
Income
Three Months Ended
Six Months Ended
June 30
June 30
(Net of related income taxes)
2023
2022
2023
2022
NET EARNINGS
448
3,601
1,024
4,986
Other comprehensive income (loss)
Items that will not be reclassified to net
earnings:
Net actuarial (loss) gain on defined
benefit plans
‐
‐
(3
)
1
Net fair value gain (loss) on
investments
6
(38
)
11
(7
)
Items that have been or may be
subsequently reclassified to net earnings:
Gain (loss) on currency translation of
foreign operations
49
(209
)
50
(81
)
Other
13
5
12
21
OTHER COMPREHENSIVE INCOME
(LOSS)
68
(242
)
70
(66
)
COMPREHENSIVE INCOME
516
3,359
1,094
4,920
Attributable to
Equity holders of Nutrien
508
3,352
1,081
4,906
Non-controlling interest
8
7
13
14
COMPREHENSIVE INCOME
516
3,359
1,094
4,920
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Six Months Ended
June 30
June 30
Note
2023
2022
2023
2022
Note 1
Note 1
OPERATING ACTIVITIES
Net earnings
448
3,601
1,024
4,986
Adjustments for:
Depreciation and amortization
556
505
1,052
966
Share-based compensation (recovery)
expense
(64
)
(52
)
(49
)
83
Impairment (reversal of impairment) of
assets
3
698
(450
)
698
(450
)
Provision for (recovery of) deferred
income tax
100
(53
)
121
(8
)
Net (undistributed) distributed earnings
of equity-accounted investees
(23
)
(19
)
140
(58
)
Gain on amendments to other
post-retirement pension plans
‐
‐
(80
)
‐
Loss on Blue Chip Swaps
4
92
‐
92
‐
Long-term income tax receivables and
payables
(18
)
120
(90
)
130
Other long-term assets, liabilities and
miscellaneous
91
17
98
28
Cash from operations before working
capital changes
1,880
3,669
3,006
5,677
Changes in non-cash operating working
capital:
Receivables
(2,653
)
(3,933
)
(2,118
)
(4,842
)
Inventories
3,728
1,748
1,560
(861
)
Prepaid expenses and other current
assets
337
340
1,012
1,062
Payables and accrued charges
(1,049
)
734
(2,075
)
1,460
CASH PROVIDED BY OPERATING
ACTIVITIES
2,243
2,558
1,385
2,496
INVESTING ACTIVITIES
Capital expenditures 1
(775
)
(477
)
(1,225
)
(828
)
Business acquisitions, net of cash
acquired
(5
)
(27
)
(116
)
(68
)
Proceeds from sales of Blue Chip Swaps,
net of purchases
(92
)
‐
(92
)
‐
Net changes in non-cash working
capital
(4
)
(9
)
(104
)
(108
)
Other
18
(4
)
(15
)
30
CASH USED IN INVESTING
ACTIVITIES
(858
)
(517
)
(1,552
)
(974
)
FINANCING ACTIVITIES
(Repayment of) proceeds from short-term
debt, net
7
(1,105
)
(604
)
768
850
Proceeds from long-term debt
8
‐
41
1,500
41
Repayment of long-term debt
8
(500
)
(26
)
(517
)
(28
)
Repayment of principal portion of lease
liabilities
(100
)
(94
)
(187
)
(173
)
Dividends paid to Nutrien's
shareholders
9
(263
)
(264
)
(509
)
(521
)
Repurchase of common shares
9
(150
)
(964
)
(1,047
)
(1,606
)
Issuance of common shares
3
38
31
164
Other
(9
)
(5
)
(34
)
(17
)
CASH (USED IN) PROVIDED BY FINANCING
ACTIVITIES
(2,124
)
(1,878
)
5
(1,290
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
3
(29
)
(2
)
(20
)
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
(736
)
134
(164
)
212
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
1,473
577
901
499
CASH AND CASH EQUIVALENTS – END OF
PERIOD
737
711
737
711
Cash and cash equivalents is composed
of:
Cash
724
628
724
628
Short-term investments
13
83
13
83
737
711
737
711
SUPPLEMENTAL CASH FLOWS
INFORMATION
Interest paid
227
150
325
200
Income taxes paid
270
396
1,589
1,185
Total cash outflow for leases
129
121
248
228
1 Includes additions to property, plant
and equipment, and intangible assets for the three months ended
June 30, 2023 of $721 and $54 (2022 – $427 and $50), respectively,
and for the six months ended June 30, 2023 of $1,132 and $93 (2022
– $733 and $95), respectively.
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Changes in Shareholders’
Equity
Accumulated Other
Comprehensive
(Loss) Income ("AOCI")
(Loss) gain on
Currency
Equity
Number of
Translation
Holders
Non-
Common
Share
Contributed
of Foreign
Total
Retained
of
Controlling
Total
Shares
Capital
Surplus
Operations
Other
AOCI
Earnings
Nutrien
Interest
Equity
BALANCE – DECEMBER 31, 2021
557,492,516
15,457
149
(176
)
30
(146
)
8,192
23,652
47
23,699
Net earnings
‐
‐
‐
‐
‐
‐
4,971
4,971
15
4,986
Other comprehensive (loss) income
‐
‐
‐
(80
)
15
(65
)
‐
(65
)
(1
)
(66
)
Shares repurchased (Note 9)
(19,360,408
)
(539
)
(22
)
‐
‐
‐
(1,075
)
(1,636
)
‐
(1,636
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(526
)
(526
)
‐
(526
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(17
)
(17
)
Effect of share-based compensation
including issuance of common shares
2,994,221
197
(22
)
‐
‐
‐
‐
175
‐
175
Transfer of net gain on cash flow
hedges
‐
‐
‐
‐
(2
)
(2
)
‐
(2
)
‐
(2
)
Transfer of net actuarial gain on defined
benefit plans
‐
‐
‐
‐
(1
)
(1
)
1
‐
‐
‐
BALANCE – JUNE 30, 2022
541,126,329
15,115
105
(256
)
42
(214
)
11,563
26,569
44
26,613
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374
)
(17
)
(391
)
11,928
25,818
45
25,863
Net earnings
‐
‐
‐
‐
‐
‐
1,011
1,011
13
1,024
Other comprehensive income
‐
‐
‐
50
20
70
‐
70
‐
70
Shares repurchased (Note 9)
(13,378,189
)
(374
)
(26
)
‐
‐
‐
(600
)
(1,000
)
‐
(1,000
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(527
)
(527
)
‐
(527
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(13
)
(13
)
Effect of share-based compensation
including issuance of common shares
628,402
37
(3
)
‐
‐
‐
‐
34
‐
34
Transfer of net gain on sale of
investment
‐
‐
‐
‐
(14
)
(14
)
14
‐
‐
‐
Transfer of net loss on cash flow
hedges
‐
‐
‐
‐
9
9
‐
9
‐
9
Transfer of net actuarial loss on defined
benefit plans
‐
‐
‐
‐
3
3
(3
)
‐
‐
‐
Other
‐
‐
‐
(2
)
‐
(2
)
‐
(2
)
‐
(2
)
BALANCE – JUNE 30, 2023
494,496,318
13,835
80
(326
)
1
(325
)
11,823
25,413
45
25,458
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Balance Sheets
June 30
December 31
As at
Note
2023
2022
2022
ASSETS
Current assets
Cash and cash equivalents
737
711
901
Receivables
8,595
10,171
6,194
Inventories
6,062
7,160
7,632
Prepaid expenses and other current
assets
602
615
1,615
15,996
18,657
16,342
Non-current assets
Property, plant and equipment
3
21,920
20,492
21,767
Goodwill
3
12,077
12,213
12,368
Intangible assets
3
2,252
2,283
2,297
Investments
708
731
843
Other assets
973
859
969
TOTAL ASSETS
53,926
55,235
54,586
LIABILITIES
Current liabilities
Short-term debt
7
2,922
2,403
2,142
Current portion of long-term debt
8
44
1,028
542
Current portion of lease liabilities
301
303
305
Payables and accrued charges
9,470
11,682
11,291
12,737
15,416
14,280
Non-current liabilities
Long-term debt
8
9,498
7,056
8,040
Lease liabilities
861
913
899
Deferred income tax liabilities
5
3,584
3,253
3,547
Pension and other post-retirement benefit
liabilities
245
422
319
Asset retirement obligations and accrued
environmental costs
1,379
1,376
1,403
Other non-current liabilities
164
186
235
TOTAL LIABILITIES
28,468
28,622
28,723
SHAREHOLDERS’ EQUITY
Share capital
9
13,835
15,115
14,172
Contributed surplus
80
105
109
Accumulated other comprehensive loss
(325
)
(214
)
(391
)
Retained earnings
11,823
11,563
11,928
Equity holders of Nutrien
25,413
26,569
25,818
Non-controlling interest
45
44
45
TOTAL SHAREHOLDERS’ EQUITY
25,458
26,613
25,863
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
53,926
55,235
54,586
(See Notes to the Condensed Consolidated
Financial Statements)
Notes to the Condensed Consolidated Financial
Statements
As at and for the Three and Six Months Ended June 30,
2023
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”,
“we”, “us”, “our” or “the Company”) is the world’s largest provider
of crop inputs and services. Nutrien plays a critical role in
helping growers around the globe increase food production in a
sustainable manner.
These unaudited interim condensed consolidated financial
statements (“interim financial statements”) are based on
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board and have been prepared
in accordance with IAS 34, “Interim Financial Reporting”. The
accounting policies and methods of computation used in preparing
these interim financial statements are materially consistent with
those used in the preparation of our 2022 annual consolidated
financial statements. These interim financial statements include
the accounts of Nutrien and its subsidiaries; however, they do not
include all disclosures normally provided in annual consolidated
financial statements and should be read in conjunction with our
2022 annual consolidated financial statements.
Certain immaterial 2022 figures have been reclassified in the
condensed consolidated statements of cash flows.
In management’s opinion, the interim financial statements
include all adjustments necessary to fairly present such
information in all material respects. Interim results are not
necessarily indicative of the results expected for any other
interim period or the fiscal year.
These interim financial statements were authorized by the Audit
Committee of the Board of Directors for issue on August 2,
2023.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag
Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail
segment distributes crop nutrients, crop protection products, seed
and merchandise, and it provides services directly to growers
through a network of farm centers in North America, South America
and Australia. The Potash, Nitrogen and Phosphate segments are
differentiated by the chemical nutrient contained in the products
that each produces.
Three Months Ended June 30,
2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
9,127
976
1,065
486
‐
‐
11,654
– intersegment
1
140
306
74
‐
(521
)
‐
Sales
– total
9,128
1,116
1,371
560
‐
(521
)
11,654
Freight, transportation and
distribution
‐
107
155
58
‐
(68
)
252
Net sales
9,128
1,009
1,216
502
‐
(453
)
11,402
Cost of goods sold
7,197
353
817
453
‐
(584
)
8,236
Gross margin
1,931
656
399
49
‐
131
3,166
Selling expenses
971
3
7
2
(2
)
(2
)
979
General and administrative expenses
55
5
5
4
88
‐
157
Provincial mining taxes
‐
104
‐
‐
‐
‐
104
Share-based compensation recovery
‐
‐
‐
‐
(64
)
‐
(64
)
Impairment of assets
465
‐
‐
233
‐
‐
698
Other expenses (income)
29
5
(20
)
1
151
(2
)
164
Earnings (loss) before finance costs and
income taxes
411
539
407
(191
)
(173
)
135
1,128
Depreciation and amortization
188
115
162
71
20
‐
556
EBITDA 1
599
654
569
(120
)
(153
)
135
1,684
Integration and restructuring related
costs
3
‐
‐
‐
7
‐
10
Share-based compensation recovery
‐
‐
‐
‐
(64
)
‐
(64
)
Impairment of assets
465
‐
‐
233
‐
‐
698
ARO/ERL expense for non-operating sites
2
‐
‐
‐
‐
6
‐
6
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
52
‐
52
Loss on Blue Chip Swaps
‐
‐
‐
‐
92
‐
92
Adjusted EBITDA
1,067
654
569
113
(60
)
135
2,478
Assets – at June 30, 2023
24,465
13,629
11,474
2,429
2,692
(763
)
53,926
1 EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, and depreciation and
amortization.
2 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
Three Months Ended June 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
9,377
2,667
1,915
547
‐
‐
14,506
– intersegment
45
78
446
98
‐
(667
)
‐
Sales
– total
9,422
2,745
2,361
645
‐
(667
)
14,506
Freight, transportation and
distribution
‐
77
132
55
‐
(43
)
221
Net sales
9,422
2,668
2,229
590
‐
(624
)
14,285
Cost of goods sold
7,082
399
1,171
434
‐
(800
)
8,286
Gross margin
2,340
2,269
1,058
156
‐
176
5,999
Selling expenses
1,013
3
7
2
(2
)
(6
)
1,017
General and administrative expenses
54
2
4
3
77
‐
140
Provincial mining taxes
‐
362
‐
‐
‐
‐
362
Share-based compensation recovery
‐
‐
‐
‐
(52
)
‐
(52
)
Reversal of impairment of assets
‐
‐
‐
(450
)
‐
‐
(450
)
Other expenses (income)
21
5
(54
)
8
48
9
37
Earnings (loss) before finance costs and
income taxes
1,252
1,897
1,101
593
(71
)
173
4,945
Depreciation and amortization
175
130
139
41
20
‐
505
EBITDA
1,427
2,027
1,240
634
(51
)
173
5,450
Integration and restructuring related
costs
‐
‐
‐
‐
11
‐
11
Share-based compensation recovery
‐
‐
‐
‐
(52
)
‐
(52
)
Reversal of impairment of assets
‐
‐
‐
(450
)
‐
‐
(450
)
COVID-19 related expenses
‐
‐
‐
‐
3
‐
3
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
31
‐
31
Adjusted EBITDA
1,427
2,027
1,240
184
(58
)
173
4,993
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Six Months Ended June 30,
2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
12,549
1,999
2,219
994
‐
‐
17,761
– intersegment
1
194
570
138
‐
(903
)
‐
Sales
– total
12,550
2,193
2,789
1,132
‐
(903
)
17,761
Freight, transportation and
distribution
‐
182
261
116
‐
(108
)
451
Net sales
12,550
2,011
2,528
1,016
‐
(795
)
17,310
Cost of goods sold
10,004
658
1,588
880
‐
(899
)
12,231
Gross margin
2,546
1,353
940
136
‐
104
5,079
Selling expenses
1,736
6
15
4
(4
)
(8
)
1,749
General and administrative expenses
105
8
10
7
172
‐
302
Provincial mining taxes
‐
223
‐
‐
‐
‐
223
Share-based compensation recovery
‐
‐
‐
‐
(49
)
‐
(49
)
Impairment of assets
465
‐
‐
233
‐
‐
698
Other expenses (income)
44
(2
)
(34
)
13
70
(2
)
89
Earnings (loss) before finance costs
and
income taxes
196
1,118
949
(121
)
(189
)
114
2,067
Depreciation and amortization
369
212
296
138
37
‐
1,052
EBITDA
565
1,330
1,245
17
(152
)
114
3,119
Integration and restructuring related
costs
3
‐
‐
‐
12
‐
15
Share-based compensation recovery
‐
‐
‐
‐
(49
)
‐
(49
)
Impairment of assets
465
‐
‐
233
‐
‐
698
ARO/ERL expense for non-operating
sites
‐
‐
‐
‐
6
‐
6
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
18
‐
18
Loss on Blue Chip Swaps
‐
‐
‐
‐
92
‐
92
Adjusted EBITDA
1,033
1,330
1,245
250
(73
)
114
3,899
Assets – at June 30, 2023
24,465
13,629
11,474
2,429
2,692
(763
)
53,926
Six Months Ended June 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
13,210
4,377
3,412
1,164
‐
‐
22,163
– intersegment
73
312
785
177
‐
(1,347
)
‐
Sales
– total
13,283
4,689
4,197
1,341
‐
(1,347
)
22,163
Freight, transportation and
distribution
‐
171
227
116
‐
(90
)
424
Net sales
13,283
4,518
3,970
1,225
‐
(1,257
)
21,739
Cost of goods sold
10,098
704
2,052
862
‐
(1,233
)
12,483
Gross margin
3,185
3,814
1,918
363
‐
(24
)
9,256
Selling expenses
1,735
6
15
4
(4
)
(12
)
1,744
General and administrative expenses
99
4
10
6
147
‐
266
Provincial mining taxes
‐
611
‐
‐
‐
‐
611
Share-based compensation expense
‐
‐
‐
‐
83
‐
83
Reversal of impairment of assets
‐
‐
‐
(450
)
‐
‐
(450
)
Other expenses (income)
9
2
(80
)
12
101
14
58
Earnings (loss) before finance costs
and
income taxes
1,342
3,191
1,973
791
(327
)
(26
)
6,944
Depreciation and amortization
344
242
262
82
36
‐
966
EBITDA
1,686
3,433
2,235
873
(291
)
(26
)
7,910
Integration and restructuring related
costs
‐
‐
‐
‐
20
‐
20
Share-based compensation expense
‐
‐
‐
‐
83
‐
83
Reversal of impairment of assets
‐
‐
‐
(450
)
‐
‐
(450
)
COVID-19 related expenses
‐
‐
‐
‐
8
‐
8
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
56
‐
56
Gain on disposal of investment
(19
)
‐
‐
‐
‐
‐
(19
)
Adjusted EBITDA
1,667
3,433
2,235
423
(124
)
(26
)
7,608
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Three Months Ended
Six Months Ended
June 30
June 30
2023
2022
2023
2022
Retail sales by product line
Crop nutrients
3,986
4,548
5,321
6,135
Crop protection products
3,070
2,983
4,224
4,370
Seed
1,428
1,269
1,935
1,727
Merchandise
273
280
519
514
Nutrien Financial
122
91
179
140
Services and other
308
310
456
485
Nutrien Financial elimination 1
(59
)
(59
)
(84
)
(88
)
9,128
9,422
12,550
13,283
Potash sales by geography
Manufactured product
North America
577
757
994
1,684
Offshore 2
539
1,988
1,199
3,005
1,116
2,745
2,193
4,689
Nitrogen sales by product line
Manufactured product
Ammonia
389
786
805
1,377
Urea and ESN® 3
490
719
981
1,259
Solutions, nitrates and sulfates
381
578
752
1,052
Other nitrogen and purchased products
3
111
278
251
509
1,371
2,361
2,789
4,197
Phosphate sales by product line
Manufactured product
Fertilizer
289
358
591
790
Industrial and feed
189
204
384
388
Other phosphate and purchased products
82
83
157
163
560
645
1,132
1,341
1 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
2 Relates to Canpotex Limited ("Canpotex")
(Note 11) and includes provisional pricing adjustments for the
three months ended June 30, 2023 of $(173) (2022 – $191) and the
six months ended June 30, 2023 of $(320) (2022 – $253).
3 Certain immaterial 2022 figures have
been reclassified.
NOTE 3 IMPAIRMENT (REVERSAL OF IMPAIRMENT) OF ASSETS
We recorded the following impairment (reversal of impairment) of
assets in the condensed consolidated statements of earnings:
Three and Six Months
Ended
June 30
Segment
Category
2023
2022
Retail
Goodwill
422
‐
Intangible assets
43
‐
Phosphate
Property, plant and equipment
233
(450
)
Impairment (reversal of
impairment) of assets
698
(450
)
Property, Plant and Equipment
During the three and six months ended June 30, 2023, we
identified an impairment trigger for our Phosphate cash generating
units (“CGUs”), White Springs and Aurora, primarily as a result of
the decrease in our forecasted phosphate margins. We completed our
impairment analysis for these CGUs.
We recorded an impairment at our White Springs CGU based on the
following:
Pre-tax impairment loss ($)
233
Pre-tax recoverable amount ($)
504
Valuation methodology
Value in use
Valuation technique
Pre-tax discounted cash flow to
end of expected mine life
Key assumptions
End of expected mine life (proven and
probable reserves) (year) 1
2032
Pre-tax discount rate 2 (%)
15.6
Post-tax discount rate 2 (%)
12.0
Forecasted EBITDA 3 ($)
720
1 The White Springs CGU has a shorter
expected mine life and is therefore more sensitive to changes in
short and medium-term forecasted phosphate margins.
2 Discount rate used in the previous
measurement was 12.0 percent (pre-tax - 15.2 percent).
3 Forecasted EBITDA to 2028.
For the Aurora CGU, we determined that there was no impairment.
The carrying amount of the Aurora CGU was $1,660 (2022 - $1,650
after impairment reversal) compared to the recoverable amount of
$2,000. During the three and six months ended June 30, 2022, we
recorded an impairment reversal of $450 at our Aurora CGU as a
result of increased pricing forecast that reflected the
macroeconomic environment at the time. The Aurora CGU recoverable
value was based on fair value less costs of disposal (“FVLCD”) (a
level 3 measurement) using after-tax discounted cash flows (using a
five-year projection plus a terminal year to the end of expected
mine life). For additional information relating to the reversal of
the impairment, including the key assumptions used in the
calculation, see Note 13 of the 2022 annual consolidated financial
statements.
The recoverable amount of our Aurora and White Springs CGU used
the following key assumptions: our forecasted EBITDA, discount
rate, long-term growth rate and end of expected mine life. We used
key assumptions that were based on historical data and estimates of
future results from internal sources, independent third-party price
benchmarks, and mineral reserve technical reports, as well as
industry and market trends.
Phosphate Sensitivities
The following table highlights sensitivities to the recoverable
amounts which could result in additional impairment losses or
reversals of the previously recorded losses (relating to the White
Springs CGU). The sensitivities have been calculated independently
of changes in other key variables.
Change to Recoverable Amount
($)
Key Assumptions as at June 30,
2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period
($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
Goodwill and Intangible Assets
During the three and six months ended June 30, 2023, we revised
our forecasted EBITDA for the Retail – South America group of CGUs
which triggered an impairment analysis. Due to the impact of crop
input price volatility, more moderate long-term growth assumptions
and higher interest rates, we have lowered our product margin
expectations and deferred certain of our planned strategic
investments. As a result, this reduced our forecasted earnings and
growth.
Retail - South America group of
CGUs
June 30, 2023
Carrying amount
1,496
Recoverable amount
1,031
Impairment recognized relating to:
Goodwill 1
422
Intangible assets
43
1 Includes $197 relating to our
acquisition of Casa do Adubo S.A., which is equal to the cost and
accumulated impairment as at June 30, 2023.
After the recognition of the impairment, goodwill for the South
America group of CGUs is nil. We used the FVLCD methodology based
on after-tax discounted cash flows (10-year projections plus a
terminal value) and incorporated assumptions an independent market
participant would apply. We adjusted discount rates for the country
risk premium in which we expect to generate cash flows. We used
comparative market multiples to ensure discounted cash flow results
are reasonable.
The key assumptions with the greatest influence on the
calculation of the recoverable amount are the discount rate,
terminal growth rate and forecasted EBITDA. The key forecast
assumptions were based on historical data and our estimates of
future results from internal sources considering industry and
market trends.
As at
Key Assumptions Used in
Impairment Model
June 30, 2023
Terminal growth rate (%)
6.0
Forecasted EBITDA over forecast
period ($)
4,300
Discount rate 1 (%)
16.6
1 Discount rate used in the
previous measurement was 16.0 percent, which was included as part
of our Retail - International group of CGUs.
The following table highlights sensitivities to the recoverable
amount which could have resulted in additional impairment against
the carrying amount of intangible assets and property, plant and
equipment. The sensitivities have been calculated independently of
changes in other key variables.
Decrease to
Key Assumptions
Change in Key
Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast
period ($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
NOTE 4 OTHER EXPENSES (INCOME)
Three Months Ended
Six Months Ended
June 30
June 30
2023
2022
2023
2022
Integration and restructuring related
costs
10
11
15
20
Foreign exchange loss, net of related
derivatives
52
31
18
56
Earnings of equity-accounted investees
(35
)
(77
)
(72
)
(118
)
Bad debt expense
30
14
39
14
COVID-19 related expenses
‐
3
‐
8
Gain on disposal of investment
‐
‐
‐
(19
)
Project feasibility costs
21
17
34
29
Customer prepayment costs
12
9
26
22
Loss on Blue Chip Swaps
92
‐
92
‐
Gain on amendments to other
post-retirement pension plans
‐
‐
(80
)
‐
Other (income) expenses
(18
)
29
17
46
164
37
89
58
The Central Bank of Argentina maintains certain currency
controls that limit our ability to remit cash from Argentina. Blue
Chip Swaps are trade transactions that effectively allow companies
to transfer US dollars out of Argentina. Through this mechanism, we
incurred a loss of $92 from the purchase of securities denominated
in Argentine peso and corresponding sale in US dollars during the
three and six months ended June 30, 2023. The loss is a result of
the significant divergence between the Blue Chip Swap market
exchange rate and the official Argentinian Central Bank rate.
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate
was determined for each taxing jurisdiction and applied
individually to the interim period pre-tax earnings for each
jurisdiction.
Three Months Ended
Six Months Ended
June 30
June 30
2023
2022
2023
2022
Income tax expense
476
1,214
669
1,719
Actual effective tax rate on earnings
(%)
39
25
32
26
Actual effective tax rate including
discrete items (%)
51
25
40
25
Discrete tax adjustments that impacted the
tax rate
114
12
132
20
The following table summarizes the income tax balances within
the condensed consolidated balance sheets:
Income Tax Assets and Liabilities
Balance Sheet Location
As at June 30, 2023
As at December 31, 2022
Income tax assets
Current
Receivables
380
144
Non-current
Other assets
125
54
Deferred income tax assets
Other assets
367
448
Total income tax assets
872
646
Income tax liabilities
Current
Payables and accrued charges
186
899
Non-current
Other non-current liabilities
28
46
Deferred income tax liabilities
Deferred income tax liabilities
3,584
3,547
Total income tax liabilities
3,798
4,492
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to
approximate amounts for which the instruments could be exchanged in
a current arm’s-length transaction between knowledgeable, willing
parties. The valuation policies and procedures for financial
reporting purposes are determined by our finance department. There
have been no changes to our valuation methods presented in Note 10
of the 2022 annual consolidated financial statements and those
valuation methods have been applied in these interim financial
statements.
The following table presents our fair value hierarchy for
financial instruments carried at fair value on a recurring basis or
measured at amortized cost and require fair value disclosure. The
table does not include fair value information for financial
instruments that are measured using their carrying amount as a
reasonable approximation of fair value.
June 30, 2023
December 31, 2022
Carrying
Carrying
Financial assets (liabilities) measured
at
Amount
Level 1
Level 2
Level 3
Amount
Level 1
Level 2
Level 3
Fair value on a recurring basis
1
Derivative instrument assets
22
‐
22
‐
7
‐
7
‐
Other current financial assets -
marketable securities 2
156
30
126
‐
148
19
129
‐
Investments at FVTOCI 3
197
187
‐
10
200
190
‐
10
Derivative instrument liabilities
(66
)
‐
(66
)
‐
(35
)
‐
(35
)
‐
Amortized cost
Current portion of long-term debt
Notes and debentures
‐
‐
‐
‐
(500
)
(493
)
‐
‐
Fixed and floating rate debt
(44
)
‐
(44
)
‐
(42
)
‐
(42
)
‐
Long-term debt
Notes and debentures
(9,386
)
(6,502
)
(2,211
)
‐
(7,910
)
(3,581
)
(3,656
)
‐
Fixed and floating rate debt
(112
)
‐
(112
)
‐
(130
)
‐
(130
)
‐
1 During the periods ended June 30, 2023
and December 31, 2022, there were no transfers between levels for
financial instruments measured at fair value on a recurring
basis.
2 Marketable securities consist of equity
and fixed income securities.
3 Investments at fair value through other
comprehensive income ("FVTOCI") is primarily comprised of shares in
Sinofert Holdings Ltd.
NOTE 7 SHORT-TERM DEBT
Rate of
Interest (%)
Total Facility Limit as at
June 30, 2023
As at
June 30, 2023
As at
December 31, 2022
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit
facility
n/a
2,000
‐
500
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities 1
1,310
South America 2
1.3 - 13.2
588
453
Australia
5.1
100
190
Other
4.1
89
9
Commercial paper
5.4 - 5.8
2,038
783
Other short-term debt
n/a
107
207
2,922
2,142
1 Total facility limit amounts include
some facilities with maturities in excess of one year.
2 Our credit facilities are either
denominated in local currency or US dollars. The range of interest
rates for South America excludes our local currency denominated
Argentina facility with an interest rate of 92.4 percent and a
minimal outstanding balance as at June 30, 2023.
NOTE 8 LONG-TERM DEBT
Six Months Ended
June 30
Rate of interest (%)
Maturity
Amount
Notes repaid 2023
1.900
May 13, 2023
500
Notes issued 2023
4.900
March 27, 2028
750
Notes issued 2023
5.800
March 27, 2053
750
1,500
The notes issued in the six months ended June 30, 2023, are
unsecured, rank equally with our existing unsecured debt, and have
no sinking fund requirements prior to maturity. Each series is
redeemable and has various provisions for redemption prior to
maturity, at our option, at specified prices.
NOTE 9 SHARE CAPITAL
Share Repurchase Programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2021 Normal Course Issuer Bid
March 1, 2021
February 28, 2022
28,468,448
5
22,186,395
2022 Normal Course Issuer Bid
March 1, 2022
February 7, 2023
55,111,110
10
55,111,110
2023 Normal Course Issuer Bid 1
March 1, 2023
February 29, 2024
24,962,194
5
5,375,397
1 The 2023 normal course issuer bid will
expire earlier than the date above if we acquire the maximum number
of common shares allowable or otherwise decide not to make any
further repurchases.
Purchases under the normal course issuer bids were, or may be,
made through open market purchases at market prices as well as by
other means permitted by applicable securities laws, including
private agreements.
The following table summarizes our share repurchase activities
during the period:
Three Months Ended
Six Months Ended
June 30
June 30
2023
2022
2023
2022
Number of common shares repurchased for
cancellation
1,626,899
11,712,173
13,378,189
19,360,408
Average price per share (US dollars)
61.47
89.51
74.73
84.48
Total cost
101
1,049
1,000
1,636
Dividends Declared
We declared a dividend per share of $0.53 (2022 – $0.48) during
the three months ended June 30, 2023, payable on July 14, 2023 to
shareholders of record on June 30, 2023.
NOTE 10 SEASONALITY
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher in the spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. The results of this seasonality have a corresponding effect
on receivables from customers and rebates receivables, inventories,
prepaid expenses and other current assets, and trade payables. Our
short-term debt also fluctuates during the year to meet working
capital requirements. Our cash collections generally occur after
the application season is complete, while customer prepayments made
to us are typically concentrated in December and January and
inventory prepayments paid to our suppliers are typically
concentrated in the period from November to January. Feed and
industrial sales are more evenly distributed throughout the
year.
NOTE 11 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively
through Canpotex. Canpotex sells potash to buyers in export markets
pursuant to term and spot contracts at agreed upon prices. Our
total revenue is recognized at the amount received from Canpotex
representing proceeds from their sale of potash, less net costs of
Canpotex. Sales to Canpotex are shown in Note 2.
As at
June 30, 2023
December 31, 2022
Receivables from Canpotex
421
866
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version on businesswire.com: https://www.businesswire.com/news/home/20230728544370/en/
Investor Relations: Jeff Holzman Vice President, Investor
Relations (306) 933-8545 Investors@nutrien.com Media
Relations: Megan Fielding Vice President, Brand & Culture
Communications (403) 797-3015
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