Nutrien Reports First Quarter 2024 Results
Nutrien Ltd. (TSX and NYSE: NTR) announced today its first quarter 2024 results, with net earnings of $165 million ($0.32 diluted net earnings per share). First quarter 2024 adjusted EBITDA1 was $1.1 billion and adjusted net earnings per share1 was $0.46.
“We continued to see strong crop input demand, a normalization of product margins for our North American Retail business and increased global potash shipments in the first quarter. Our results highlighted the capabilities of our flexible, low-cost production assets and downstream distribution network to efficiently supply our customers’ needs,” commented Ken Seitz, Nutrien’s President and CEO.
“We expect growth in Retail earnings and fertilizer sales volumes compared to the prior year and have maintained our 2024 guidance ranges. Our focus remains on strengthening our capability to serve growers and enhancing our core businesses to improve the quality of our earnings and free cash flow,” added Mr. Seitz.
Highlights2:
Generated net earnings of $165 million and adjusted EBITDA of $1.1 billion in the first quarter of 2024, down from the same period in 2023 primarily due to lower net fertilizer selling prices. This was partially offset by increased Retail earnings, higher fertilizer sales volumes and lower natural gas costs. Nutrien Ag Solutions (“Retail”) adjusted EBITDA increased to $77 million in the first quarter of 2024 primarily due to higher gross margin for crop nutrients and crop protection products supported by strong grower demand and a normalization of product margins in North America. Potash adjusted EBITDA declined to $530 million in the first quarter of 2024 due to lower net selling prices, which more than offset higher sales volumes. We increased potash production, supported by continued advancement of mine automation initiatives, and reduced our controllable cash cost of product manufactured per tonne. Nitrogen adjusted EBITDA declined to $464 million in the first quarter of 2024 due to lower net selling prices for all major nitrogen products, which more than offset higher sales volumes and lower natural gas costs. Ammonia production increased in the first quarter, driven by higher utilization rates in Trinidad. Initiated a process to divest our Retail assets in Argentina, Chile, and Uruguay to provide greater focus on our core Retail businesses and enhance the quality of earnings and free cash flow.This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section. Our discussion of highlights set out on this page is a comparison of the results for the three months ended March 31, 2024 to the results for the three months ended March 31, 2023, unless otherwise noted.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD”) is the responsibility of management and is dated as of May 8, 2024. 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 22, 2024 (“2023 Annual Report”), which includes our annual audited consolidated financial statements and MD, and our annual information form dated February 22, 2024, each for the year ended December 31, 2023, can be found on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. No update is provided to the disclosure in our 2023 annual MD except for material information since the date of our annual MD The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).
This MD 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 months ended March 31, 2024 (“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 contains certain non-GAAP financial measures and ratios and forward-looking statements, which are described in the “Non-GAAP Financial Measures” and the “Forward-Looking Statements” sections, respectively.
Market Outlook and Guidance
Agriculture and Retail Markets
We expect US corn plantings of approximately 90 million acres in 2024 and soybean plantings of approximately 87 million acres. US planting progress is in line with historical average levels and fertilizer application rates have been strong. Wet weather has recently delayed planting progress and fertilizer application in the Corn Belt. Brazilian growers are finalizing their soybean harvest, and favorable weather conditions resulted in safrinha corn planted area exceeding initial expectations. Soybean margins are expected to improve from the compressed levels in 2023 and support growth in planted acreage and crop input demand in the second half of 2024. Australian soil moisture conditions vary regionally but remain supportive for this upcoming growing season and the Indian monsoon is projected to produce average to above-average precipitation, supporting yield potential and grower demand for crop inputs.Crop Nutrient Markets
Global potash supply and demand has been relatively balanced as increased shipments have been required to meet historically strong demand in the first quarter. We have maintained our 2024 full-year potash shipment forecast of 68 to 71 million tonnes. We are seeing strong potash demand in North America for the spring application season as channel inventories were tight to start 2024. Potash demand in Southeast Asia has been supported by lower inventory levels compared to the prior year and favorable economics for key crops such as oil palm and rice. China’s potash imports remained strong in the first quarter of 2024 supported by a step-change in domestic consumption but are expected to decline on a full-year basis compared to the record levels in 2023. Global nitrogen markets have fluctuated in 2024 driven by seasonal buying patterns, production outages and uncertainty over Chinese urea export restrictions and India’s urea import requirements. The US nitrogen supply and demand balance remains relatively tight, in particular for ammonia and UAN, with net nitrogen imports down 21 percent on a fertilizer year basis compared to the historical average. Phosphate fertilizer prices remained firm through the first quarter of 2024 due to strong demand in the Northern Hemisphere, supportive Indian DAP purchases, Chinese export restrictions and production outages. Prices have softened in the second quarter driven primarily by lower seasonal demand.Financial and Operational Guidance
We are maintaining our Retail adjusted EBITDA and fertilizer sales volume guidance ranges as market fundamentals and operational performance have been in line with our previous expectations. Retail adjusted EBITDA guidance of $1.65 to $1.85 billion reflects expectations for increased crop nutrient sales volumes and margins for our North American business in the first half of 2024 and improved crop input margins in Brazil during the second half of the year. Guidance assumes a full year of earnings from our Retail assets in Argentina, Chile and Uruguay. Potash sales volumes guidance of 13.0 to 13.8 million tonnes assumes a more even split between first and second half volumes compared to the prior year. Nitrogen sales volumes guidance of 10.6 to 11.2 million tonnes assumes higher operating rates at our North American and Trinidad plants and growth in sales of upgraded products such as urea and nitrogen solutions. Effective tax rate on adjusted earnings guidance was lowered primarily due to a change to our expected geographic mix of earnings.All guidance numbers, including those noted above are outlined in the table below. Refer to page 65 of Nutrien’s 2023 Annual Report for related assumptions and sensitivities.
2024 Guidance Ranges 1 as of
May 8, 2024
February 21, 2024
(billions of US dollars, except as otherwise noted)
Low
High
Low
High
Retail adjusted EBITDA
1.65
1.85
1.65
1.85
Potash sales volumes (million tonnes) 2
13.0
13.8
13.0
13.8
Nitrogen sales volumes (million tonnes) 2
10.6
11.2
10.6
11.2
Phosphate sales volumes (million tonnes) 2
2.6
2.8
2.6
2.8
Depreciation and amortization
2.2
2.3
2.2
2.3
Finance costs
0.75
0.85
0.75
0.85
Effective tax rate on adjusted earnings (%)
23.0
25.0
24.0
26.0
Capital expenditures 3
2.2
2.3
2.2
2.3
1 See the “Forward-Looking Statements” section.
2 Manufactured product only.
3 Comprised of sustaining capital expenditures, investing capital expenditures and mine development and pre-stripping capital expenditures which are supplementary financial measures. See the “Other Financial Measures” section.
Consolidated Results
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Sales
5,389
6,107
(12)
Gross margin
1,537
1,913
(20)
Expenses
1,118
974
15
Net earnings
165
576
(71)
Adjusted EBITDA 1
1,055
1,421
(26)
Diluted net earnings per share
0.32
1.14
(72)
Adjusted net earnings per share 1
0.46
1.11
(59)
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
Net earnings and adjusted EBITDA decreased in the first quarter of 2024 compared to the same period in 2023, primarily due to lower net fertilizer selling prices. This was partially offset by increased Retail earnings, higher fertilizer sales volumes and lower natural gas costs. Expenses increased mainly due to higher foreign exchange losses primarily from our Retail – South America region in the first quarter of 2024 and an $80 million gain recognized in the first quarter of 2023 due to post-retirement benefit plan amendments.
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three months ended March 31, 2024 to the results for the three months ended March 31, 2023, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Sales
3,308
3,422
(3)
Cost of goods sold
2,561
2,807
(9)
Gross margin
747
615
21
Adjusted EBITDA 1
77
(34)
n/m
1 See Note 2 to the interim financial statements.
Retail adjusted EBITDA increased in the first quarter of 2024 primarily due to higher gross margin for crop nutrients and crop protection products supported by strong grower demand and a normalization of product margins in North America. Gross margin of our proprietary products increased in the first quarter driven primarily by our crop nutritional and biostimulant product lines, as we continued to expand our differentiated product offering and manufacturing capacity.
Three Months Ended March 31
Sales
Gross Margin
(millions of US dollars)
2024
2023
2024
2023
Crop nutrients
1,309
1,335
254
141
Crop protection products
1,114
1,154
234
208
Seed
485
507
59
72
Services and other
156
148
125
118
Merchandise
200
246
31
44
Nutrien Financial
66
57
66
57
Nutrien Financial elimination
(22)
(25)
(22)
(25)
Total
3,308
3,422
747
615
Crop nutrients sales decreased in the first quarter of 2024 due to lower selling prices, partially offset by higher sales volumes across all regions. Gross margin increased in the first quarter due to higher per-tonne margins and higher sales volumes resulting from a more typical start to spring applications in the US compared to 2023. Crop protection products sales were lower in the first quarter of 2024 primarily due to lower selling prices. Gross margin increased compared to the first quarter of 2023, which was impacted by the sell through of higher cost inventory. Seed sales and gross margin decreased in the first quarter of 2024 primarily due to lower sales volumes and competitive market prices in the US, as growers delayed crop selection decisions in some regions. Nutrien Financial sales and gross margin increased in the first quarter of 2024 due to higher financing offering rates and expanded program participation from growers in the US and Australia.Supplemental Data
Three Months Ended March 31
Gross Margin
% of Product Line 1
(millions of US dollars, except as otherwise noted)
2024
2023
2024
2023
Proprietary products
Crop nutrients
70
54
28
38
Crop protection products
83
74
36
36
Seed
17
30
29
42
Merchandise
3
3
9
6
Total
173
161
23
26
1 Represents percentage of proprietary product margins over total product line gross margin.
Sales Volumes
(tonnes - thousands)
Gross Margin / Tonne
(US dollars)
2024
2023
2024
2023
Crop nutrients
North America
1,464
1,195
139
94
International
918
845
55
35
Total
2,382
2,040
106
69
(percentages)
March 31, 2024
December 31, 2023
Financial performance measures 1, 2
Cash operating coverage ratio
66
68
Adjusted average working capital to sales
19
19
Adjusted average working capital to sales excluding Nutrien Financial
nil
1
Nutrien Financial adjusted net interest margin
5.2
5.2
1 Rolling four quarters.
2 These are non-GAAP financial measures. See the “Non-GAAP Financial Measures” section.
Potash
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Net sales
813
1,002
(19)
Cost of goods sold
358
305
17
Gross margin
455
697
(35)
Adjusted EBITDA 1
530
676
(22)
1 See Note 2 to the interim financial statements.
Potash adjusted EBITDA declined in the first quarter of 2024 due to lower net selling prices, which more than offset higher sales volumes. We increased potash production in the first quarter, supported by continued advancement of mine automation initiatives, which helped to meet customer demand and reduced our controllable cash cost of product manufactured1 to $56 per tonne.Manufactured product
Three Months Ended
March 31
($ / tonne, except as otherwise noted)
2024
2023
Sales volumes (tonnes - thousands)
North America
1,307
854
Offshore
2,106
1,782
Total sales volumes
3,413
2,636
Net selling price
North America
310
401
Offshore
193
370
Average selling price
238
380
Cost of goods sold
105
115
Gross margin
133
265
Depreciation and amortization
43
37
Gross margin excluding depreciation and amortization 1
176
302
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
Sales volumes increased in North America in the first quarter of 2024 due to low channel inventory and more normal buying behaviors compared to the same period in 2023. Offshore sales volumes were higher compared to the same period in the prior year driven by increased demand in major offshore markets. Net selling price per tonne decreased in the first quarter of 2024 due to a decline in benchmark prices compared to the strong prices in the first quarter of 2023. Cost of goods sold per tonne decreased in the first quarter of 2024 mainly due to higher production volumes and lower royalties.Supplemental Data
Three Months Ended
March 31
2024
2023
Production volumes (tonnes – thousands)
3,565
3,088
Potash controllable cash cost of product manufactured per tonne 1
56
62
Canpotex sales by market (percentage of sales volumes)
Latin America
32
35
Other Asian markets 2
33
38
China
20
12
India
3
2
Other markets
12
13
Total
100
100
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
2 All Asian markets except China and India.
Nitrogen
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Net sales
911
1,312
(31)
Cost of goods sold
604
771
(22)
Gross margin
307
541
(43)
Adjusted EBITDA 1
464
676
(31)
1 See Note 2 to the interim financial statements.
Nitrogen adjusted EBITDA declined in the first quarter of 2024 due to lower net selling prices for all major nitrogen products, which more than offset higher sales volumes and lower natural gas costs. Ammonia production increased in the first quarter supporting product mix optimization and increased downstream urea and UAN production.Manufactured product
Three Months Ended
March 31
($ / tonne, except as otherwise noted)
2024
2023
Sales volumes (tonnes - thousands)
Ammonia
517
534
Urea and ESN®
775
747
Solutions, nitrates and sulfates
1,215
1,076
Total sales volumes
2,507
2,357
Net selling price
Ammonia
403
721
Urea and ESN®
432
617
Solutions, nitrates and sulfates
226
310
Average net selling price
326
500
Cost of goods sold
207
275
Gross margin
119
225
Depreciation and amortization
54
57
Gross margin excluding depreciation and amortization 1
173
282
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
Sales volumes were higher in the first quarter of 2024 primarily due to higher urea and UAN production and strong fertilizer demand, partially offset by lower ammonia sales due to product mix optimization. Net selling price per tonne was lower in the first quarter of 2024 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 first quarter of 2024 mainly due to lower natural gas costs.Supplemental Data
Three Months Ended
March 31
2024
2023
Sales volumes (tonnes – thousands)
Fertilizer
1,423
1,248
Industrial and feed
1,084
1,109
Production volumes (tonnes – thousands)
Ammonia production – total 1
1,452
1,431
Ammonia production – adjusted 1, 2
1,018
1,037
Ammonia operating rate (%) 2
92
95
Natural gas costs (US dollars per MMBtu)
Overall natural gas cost excluding realized derivative impact
3.16
4.85
Realized derivative impact 3
0.04
‐
Overall natural gas cost
3.20
4.85
1 All figures are provided on a gross production basis in thousands of product tonnes.
2 Excludes Trinidad and Joffre.
3 Includes realized derivative impacts recorded as part of cost of goods sold or other income and expenses. Refer to Note 3 to the interim financial statements.
Phosphate
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Net sales
437
514
(15)
Cost of goods sold
372
427
(13)
Gross margin
65
87
(25)
Adjusted EBITDA 1
121
137
(12)
1 See Note 2 to the interim financial statements.
Phosphate adjusted EBITDA decreased in the first quarter of 2024 primarily due to lower net selling prices, partially offset by higher sales volumes and lower ammonia and sulfur input costs. Production increased in the first quarter due to improved reliability at our Aurora plant.Manufactured product
Three Months Ended
March 31
($ / tonne, except as otherwise noted)
2024
2023
Sales volumes (tonnes - thousands)
Fertilizer
447
388
Industrial and feed
173
160
Total sales volumes
620
548
Net selling price
Fertilizer
627
682
Industrial and feed
848
1,136
Average net selling price
689
814
Cost of goods sold
580
651
Gross margin
109
163
Depreciation and amortization
113
122
Gross margin excluding depreciation and amortization 1
222
285
1 This is a non-GAAP financial measure. See the “Non-GAAP Financial Measures” section.
Sales volumes increased in the first quarter of 2024 due to higher production and strong demand across fertilizer, industrial and feed products. Net selling price per tonne decreased in the first quarter of 2024 due to lower fertilizer benchmark prices and lower industrial and feed net selling prices which reflect the typical lag in price realizations relative to benchmark prices. Cost of goods sold per tonne decreased in the first quarter of 2024 mainly due to lower ammonia and sulfur input costs.Supplemental Data
Three Months Ended
March 31
2024
2023
Production volumes (P2O5 tonnes – thousands)
352
341
P2O5 operating rate (%)
83
81
Corporate and Others and Eliminations
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Corporate and Others
Selling expenses (recovery)
(2)
(2)
‐
General and administrative expenses
89
84
6
Share-based compensation expense
6
15
(60)
Other expenses (income)
97
(81)
n/m
Adjusted EBITDA 1
(101)
(13)
677
Eliminations
Gross margin
(37)
(27)
37
Adjusted EBITDA 1
(36)
(21)
71
1 See Note 2 to the interim financial statements.
Other expenses (income) was an expense in the first quarter of 2024 compared to income in the same period in 2023 due to higher foreign exchange losses primarily from our Retail – South America region in the first quarter of 2024 and an $80 million gain recognized in the first quarter of 2023 due to post-retirement benefit plan amendments.Finance Costs, Income Taxes and Other Comprehensive (Loss) Income
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Finance costs
179
170
5
Income tax expense
75
193
(61)
Actual effective tax rate including discrete items (%)
31
25
24
Other comprehensive (loss) income
(102)
2
n/m
Income tax expense was lower in the first quarter of 2024 primarily as a result of lower earnings compared to the same period in 2023. We did not record the tax benefit on South America losses in the first quarter of 2024 as the recognition criteria to record deferred tax assets was not met. This resulted in a higher effective tax rate for the first quarter of 2024. Other comprehensive (loss) income was a loss in the first quarter of 2024 primarily driven by changes in the currency translation of our Retail foreign operations primarily due to depreciation of 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
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2024
2023
% Change
Cash used in operating activities
(487)
(858)
(43)
Cash used in investing activities
(494)
(694)
(29)
Cash provided by financing activities
548
2,129
(74)
Cash used for dividends and share repurchases 1
(261)
(1,143)
(77)
1 This is a supplementary financial measure. See the “Other Financial Measures” section.
Cash used in
operating activities
Cash used in
investing activities
Cash provided by
financing activities
Cash used for
dividends and share
repurchases
Financial Condition Review
The following is a comparison of balance sheet categories that are considered material:
As at
(millions of US dollars, except as otherwise noted)
March 31, 2024
December 31, 2023
$ Change
% Change
Assets
Cash and cash equivalents
496
941
(445)
(47)
Receivables
5,561
5,398
163
3
Inventories
8,188
6,336
1,852
29
Prepaid expenses and other current assets
905
1,495
(590)
(39)
Property, plant and equipment
22,410
22,461
(51)
‐
Liabilities and Equity
Short-term debt
2,835
1,815
1,020
56
Payables and accrued charges
9,431
9,467
(36)
‐
Retained earnings
11,423
11,531
(108)
(1)
Explanations for changes in Cash and cash equivalents are in the “Sources and Uses of Cash” section. Receivables remained consistent as the increase in receivables due to the seasonality of our Retail sales was offset by faster collection of our Potash receivables. Inventories increased due to the seasonality of our Retail segment and the larger portion of its operations in North America. Our inventory levels build up in the last quarter of the year and peaks in the first quarter of the year, while we draw inventories in the succeeding quarters. Prepaid expenses and other current assets decreased due to Retail taking delivery of prepaid inventories in preparation for the spring planting and application seasons in North America. Property, plant and equipment decreased due to depreciation more than offsetting capital expenditures in the first quarter of 2024. Short-term debt increased due to higher drawdowns on our credit facilities based on our working capital requirements driven by the seasonality of our business. Payables and accrued charges remained consistent, as we have higher customer prepayment balances which were partially offset by lower costs to purchase and produce our inventories and lower capital expenditures accruals. Retained earnings decreased as dividends declared exceeded net earnings.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 continually evaluate various financing arrangements and may seek to engage in transactions from time to time when market and other conditions are favorable. We were in compliance with our debt covenants and did not have any changes to our credit ratings for the three months ended March 31, 2024.
Capital Structure (Debt and Equity)
(millions of US dollars)
March 31, 2024
December 31, 2023
Short-term debt
2,835
1,815
Current portion of long-term debt
513
512
Current portion of lease liabilities
346
327
Long-term debt
8,910
8,913
Lease liabilities
1,034
999
Shareholders' equity
24,996
25,201
Commercial Paper, Credit Facilities and Other Debt
We have several credit facilities available in the jurisdictions where we operate. We also have a commercial paper program, which is limited to the undrawn amount under our $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities. As at March 31, 2024, we had $1,963 million of commercial paper outstanding.
As at March 31, 2024, $240 million in letters of credit were outstanding and committed, with $118 million of remaining credit available under our dedicated letter of credit facilities.
On March 7, 2024, we entered into an uncommitted $500 million accounts receivable repurchase facility, under which we drew borrowings of $100 million as at March 31, 2024. See Note 6 to the interim financial statements for a further description of this facility.
In March 2024, we filed a base shelf prospectus in Canada and the US qualifying the issuance, subject to approval of the Board of Directors, of common shares, debt securities and other securities during a period of 25 months from March 22, 2024.
Outstanding Share Data
As at May 7, 2024
Common shares
494,628,434
Options to purchase common shares
3,752,004
For more information on our capital structure and management, see Note 24 to the consolidated financial statements in our 2023 Annual Report.
Quarterly Results
(millions of US dollars, except as otherwise noted)
Q1 2024
Q4 2023
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Sales
5,389
5,664
5,631
11,654
6,107
7,533
8,188
14,506
Net earnings
165
176
82
448
576
1,118
1,583
3,601
Net earnings attributable to equity holders of Nutrien
158
172
75
440
571
1,112
1,577
3,593
Net earnings per share attributable to equity holders of Nutrien
Basic
0.32
0.35
0.15
0.89
1.14
2.15
2.95
6.53
Diluted
0.32
0.35
0.15
0.89
1.14
2.15
2.94
6.51
Our quarterly earnings are significantly affected by the seasonality of our business, fertilizer benchmark prices, which have been volatile over the last two years and are affected by demand-supply conditions, grower affordability and weather. See Note 8 to the interim financial statements.
The following table describes certain items that impacted our quarterly earnings:
Quarter
Transaction or Event
Q2 2023
$698 million non-cash impairment of assets comprised of a $233 million non-cash impairment of our Phosphate White Springs property, plant and equipment due to a decrease in our forecasted phosphate margins and a $465 million non-cash impairment of our Retail – South America assets primarily related to goodwill mainly due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates which lowered our forecasted earnings.
Q3 2022
$330 million reversal of non-cash impairment of our Phosphate White Springs property, plant and equipment related to higher forecasted global prices and a more favorable outlook for phosphate margins.
Q2 2022
$450 million reversal of non-cash impairment of our Phosphate Aurora property, plant and equipment related to higher forecasted global prices and a more favorable outlook for phosphate margins.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2023 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 pages 72 to 74 of our 2023 Annual Report. There were no material changes to our critical accounting estimates for the three months ended March 31, 2024.
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 March 31, 2024 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”, “project”, “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 2024 full-year guidance, including expectations regarding Retail adjusted EBITDA, Potash sales volumes, Nitrogen sales volumes, Phosphate sales volumes, depreciation and amortization, finance costs, effective tax rate and capital expenditures; our projections to generate strong cash from operations; expectations regarding our capital allocation intentions and strategies; our ability to advance strategic initiatives and high value growth investments, including expectations regarding our ability to serve growers, maintain a low-cost position of fertilizer production assets and increase free cash flow; capital spending expectations for 2024 and beyond; expectations regarding our ability to generate and enhance free cash flow; expectations regarding performance of our operating segments in 2024, including increased fertilizer sales volumes and growth in Retail earnings; our operating segment market outlooks and our expectations for market conditions and fundamentals in 2024 and beyond, and the anticipated supply and demand for our products and services, expected market, industry and growing conditions with respect to crop nutrient application rates, planted acres, grower crop investment, crop mix, including the need to replenish soil nutrient levels, production volumes and expenses, shipments, natural gas costs and availability, consumption, prices, operating rates and the impact of seasonality, import and export volumes, economic sanctions and restrictions, operating rates, inventories, crop development and natural gas curtailments; the negotiation of sales contracts; 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 in relation to the operation of our business as currently planned and our ability to achieve our business objectives include, among other things, assumptions with respect to: our ability to successfully implement our business strategies, growth and capital allocation investments and initiatives that we will conduct our operations and achieve results of operations as anticipated; 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, including the current El Niño weather pattern, supplier agreements, product distribution agreements, inventory levels, exports, crop development and cost of labor and interest, exchange and effective tax rates; potash demand growth in offshore markets and normalization of Canpotex port operations; global economic conditions and the accuracy of our market outlook expectations for 2024 and in the future; assumptions related to our assessment of recoverable amount estimates of our assets, including in relation to our Retail - South America group of CGUs goodwill and intangible asset impairments; 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; our intention to complete share repurchases under our normal course issuer bid programs, including Toronto Stock Exchange approval, 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 and assumptions related to our ability to fund our dividends at the current level; our expectations regarding the impacts, direct and indirect, of certain geopolitical conflicts, including the war in Eastern Europe and the conflict in the Middle East 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; assumptions regarding future markets for clean ammonia; 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 achieve expected results of our business strategy, capital allocation initiatives or results of operations; 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 the current El Niño weather pattern (and transition to El Niña weather pattern), 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, antitrust and other laws or regulations and the interpretation thereof; political or military risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism and industrial espionage; our ability to access sufficient, cost-effective and timely transportation, distribution and storage of products (including potential rail transportation and port disruptions due to labor strikes and/or work stoppages or other similar actions); the occurrence of a major environmental or safety incident or becoming subject to legal or regulatory proceedings; 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 or challenges related to our major facilities that are out of our control; 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; geopolitical conflicts, including the war in Eastern Europe and the conflict in the Middle East, and their 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 Securities and Exchange Commission in the United States.
The purpose of our Retail adjusted EBITDA, depreciation and amortization, finance costs, effective tax rate and capital expenditures 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 2023 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 a leading 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 ag retail facilities that positions us to efficiently serve the needs of growers. We focus on creating long-term value by prioritizing investments that strengthen the advantages of our integrated business and by maintaining access to the resources and the relationships with stakeholders needed to achieve our goals.
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, May 9, 2024 at 10:00 a.m. Eastern Time.
Telephone conference dial-in numbers:
From Canada and the US 1-800-717-1738 International 1-646-307-1865 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/2024-q1-earnings-conference-call
Non-GAAP Financial Measures
We use both International Financial Reporting Standards (“IFRS”) measures and certain non-GAAP financial measures to assess performance. Non-GAAP 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-GAAP 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-GAAP financial measure as one or more of its components, and that are not disclosed in the financial statements of the Company.
These non-GAAP financial measures and non-GAAP 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-GAAP financial measures and non-GAAP 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-GAAP financial measures and non-GAAP 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-GAAP financial measures and non-GAAP 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-GAAP financial measures and non-GAAP 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, 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).
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 March 31
(millions of US dollars)
2024
2023
Net earnings
165
576
Finance costs
179
170
Income tax expense
75
193
Depreciation and amortization
565
496
EBITDA 1
984
1,435
Adjustments:
Share-based compensation expense
6
15
Foreign exchange loss (gain), net of related derivatives
43
(34)
ARO/ERL expense for non-operating sites
3
‐
Loss on Blue Chip Swaps
19
‐
Integration and restructuring related costs
‐
5
Adjusted EBITDA
1,055
1,421
1 EBITDA is calculated as net earnings before finance costs, income taxes, and depreciation and amortization.
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) and diluted 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, 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), change in recognition of tax losses and deductible temporary differences related to impairments and certain changes to tax declarations (e.g., “Swiss Tax Reform adjustment”). We generally apply the annual forecasted effective tax rate to specific adjustments during the year, and at year-end, we apply the actual effective tax rate.
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
March 31, 2024
Per
Increases
Diluted
(millions of US dollars, except as otherwise noted)
(Decreases)
Post-Tax
Share
Net earnings attributable to equity holders of Nutrien
158
0.32
Adjustments:
Share-based compensation expense
6
5
0.01
Foreign exchange loss, net of related derivatives
43
46
0.09
ARO/ERL expense for non-operating sites
3
2
‐
Loss on Blue Chip Swaps
19
19
0.04
Adjusted net earnings
230
0.46
Three Months Ended
March 31, 2023
Per
Increases
Diluted
(millions of US dollars, except as otherwise noted)
(Decreases)
Post-Tax
Share
Net earnings attributable to equity holders of Nutrien
571
1.14
Adjustments:
Share-based compensation expense
15
11
0.01
Foreign exchange gain, net of related derivatives
(34)
(25)
(0.05)
Integration and restructuring related costs
5
4
0.01
Adjusted net earnings
561
1.11
Gross Margin Excluding Depreciation and Amortization Per Tonne – Manufactured Product
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, supporting a focus on the performance of our day-to-day operations. 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 March 31
(millions of US dollars, except as otherwise noted)
2024
2023
Total COGS – Potash
358
305
Change in inventory
28
40
Other adjustments 1
(3)
(8)
COPM
383
337
Depreciation and amortization in COPM
(153)
(100)
Royalties in COPM
(19)
(31)
Natural gas costs and carbon taxes in COPM
(12)
(16)
Controllable cash COPM
199
190
Production tonnes (tonnes – thousands)
3,565
3,088
Potash controllable cash COPM per tonne
56
62
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.
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 others to evaluate the financial performance of Nutrien Financial.
Rolling four quarters ended March 31, 2024
(millions of US dollars, except as otherwise noted)
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Total/Average
Nutrien Financial revenue
122
73
70
66
Deemed interest expense 1
(39)
(41)
(36)
(27)
Net interest
83
32
34
39
188
Average Nutrien Financial net receivables
4,716
4,353
2,893
2,489
3,613
Nutrien Financial adjusted net interest margin (%)
5.2
Rolling four quarters ended December 31, 2023
(millions of US dollars, except as otherwise noted)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Total/Average
Nutrien Financial revenue
57
122
73
70
Deemed interest expense 1
(20)
(39)
(41)
(36)
Net interest
37
83
32
34
186
Average Nutrien Financial net receivables
2,283
4,716
4,353
2,893
3,561
Nutrien Financial adjusted net interest margin (%)
5.2
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 March 31, 2024
(millions of US dollars, except as otherwise noted)
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Total
Selling expenses
971
798
841
790
3,400
General and administrative expenses
55
57
55
52
219
Other expenses
29
37
77
22
165
Operating expenses
1,055
892
973
864
3,784
Depreciation and amortization in operating expenses
(185)
(186)
(199)
(190)
(760)
Operating expenses excluding depreciation and amortization
870
706
774
674
3,024
Gross margin
1,931
895
989
747
4,562
Depreciation and amortization in cost of goods sold
3
3
2
4
12
Gross margin excluding depreciation and amortization
1,934
898
991
751
4,574
Cash operating coverage ratio (%)
66
Rolling four quarters ended December 31, 2023
(millions of US dollars, except as otherwise noted)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Total
Selling expenses
765
971
798
841
3,375
General and administrative expenses
50
55
57
55
217
Other expenses
15
29
37
77
158
Operating expenses
830
1,055
892
973
3,750
Depreciation and amortization in operating expenses
(179)
(185)
(186)
(199)
(749)
Operating expenses excluding depreciation and amortization
651
870
706
774
3,001
Gross margin
615
1,931
895
989
4,430
Depreciation and amortization in cost of goods sold
2
3
3
2
10
Gross margin excluding depreciation and amortization
617
1,934
898
991
4,440
Cash operating coverage ratio (%)
68
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 March 31, 2024
(millions of US dollars, except as otherwise noted)
Q2 2023
Q3 2023
Q4 2023
Q1 2024
Average/Total
Current assets
11,983
10,398
10,498
11,821
Current liabilities
(8,246)
(5,228)
(8,210)
(8,401)
Working capital
3,737
5,170
2,288
3,420
3,654
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
3,737
5,170
2,288
3,420
3,654
Nutrien Financial working capital
(4,716)
(4,353)
(2,893)
(2,489)
Adjusted working capital excluding Nutrien Financial
(979)
817
(605)
931
41
Sales
9,128
3,490
3,502
3,308
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
9,128
3,490
3,502
3,308
19,428
Nutrien Financial revenue
(122)
(73)
(70)
(66)
Adjusted sales excluding Nutrien Financial
9,006
3,417
3,432
3,242
19,097
Adjusted average working capital to sales (%)
19
Adjusted average working capital to sales excluding Nutrien Financial (%)
nil
Rolling four quarters ended December 31, 2023
(millions of US dollars, except as otherwise noted)
Q1 2023
Q2 2023
Q3 2023
Q4 2023
Average/Total
Current assets
13,000
11,983
10,398
10,498
Current liabilities
(8,980)
(8,246)
(5,228)
(8,210)
Working capital
4,020
3,737
5,170
2,288
3,804
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
4,020
3,737
5,170
2,288
3,804
Nutrien Financial working capital
(2,283)
(4,716)
(4,353)
(2,893)
Adjusted working capital excluding Nutrien Financial
1,737
(979)
817
(605)
243
Sales
3,422
9,128
3,490
3,502
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,422
9,128
3,490
3,502
19,542
Nutrien Financial revenue
(57)
(122)
(73)
(70)
Adjusted sales excluding Nutrien Financial
3,365
9,006
3,417
3,432
19,220
Adjusted average working capital to sales (%)
19
Adjusted average working capital to sales excluding Nutrien Financial (%)
1
Other Financial Measures
Selected Additional Financial Data
Nutrien Financial
As at March 31, 2024
As at
December
31, 2023
(millions of US dollars)
Current
31 Days
Past Due
31–90
Days
Past Due
>90 Days
Past Due
Gross
Receivables
Allowance 1
Net
Receivables
Net
Receivables
North America
1,275
91
254
146
1,766
(48)
1,718
2,206
International
598
47
78
58
781
(10)
771
687
Nutrien Financial receivables
1,873
138
332
204
2,547
(58)
2,489
2,893
1 Bad debt expense on the above receivables for the three months ended March 31, 2024 and 2023 were $9 million and $1 million, respectively, in the Retail segment.
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-GAAP financial measures, and (d) are not non-GAAP ratios.
The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.
Sustaining capital expenditures: Represents capital expenditures that are required to sustain operations at existing levels and include major repairs and maintenance and plant turnarounds.
Investing capital expenditures: Represents capital expenditures related to significant expansions of current operations or to create cost savings (synergies). Investing capital expenditures excludes capital outlays for business acquisitions and equity-accounted investees.
Mine development and pre-stripping capital expenditures: Represents capital expenditures that are required for activities to open new areas underground and/or develop a mine or ore body to allow for future production mining and activities required to prepare and/or access the ore, i.e., removal of an overburden that allows access to the ore.
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 unaudited condensed consolidated statements of cash flows. This measure is useful as it represents return of capital to shareholders.
Condensed Consolidated Financial Statements
Unaudited
Condensed Consolidated Statements of Earnings
Three Months Ended
March 31
(millions of US dollars, except as otherwise noted)
Note
2024
2023
SALES
2, 9
5,389
6,107
Freight, transportation and distribution
238
199
Cost of goods sold
3,614
3,995
GROSS MARGIN
1,537
1,913
Selling expenses
794
770
General and administrative expenses
154
145
Provincial mining taxes
68
119
Share-based compensation expense
6
15
Other expenses (income)
3
96
(75)
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
419
939
Finance costs
179
170
EARNINGS BEFORE INCOME TAXES
240
769
Income tax expense
4
75
193
NET EARNINGS
165
576
Attributable to
Equity holders of Nutrien
158
571
Non-controlling interest
7
5
NET EARNINGS
165
576
NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
0.32
1.14
Diluted
0.32
1.14
Weighted average shares outstanding for basic EPS
494,570,000
501,175,000
Weighted average shares outstanding for diluted EPS
494,792,000
502,220,000
Condensed Consolidated Statements of Comprehensive Income
Three Months Ended
March 31
(millions of US dollars)
2024
2023
NET EARNINGS
165
576
Other comprehensive (loss) income
Items that will not be reclassified to net earnings:
Net actuarial loss on defined benefit plans
‐
(3)
Net fair value (loss) gain on investments
(18)
5
Items that have been or may be subsequently reclassified to net earnings:
(Loss) gain on currency translation of foreign operations
(66)
1
Other
(18)
(1)
OTHER COMPREHENSIVE (LOSS) INCOME
(102)
2
COMPREHENSIVE INCOME
63
578
Attributable to
Equity holders of Nutrien
57
573
Non-controlling interest
6
5
COMPREHENSIVE INCOME
63
578
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31
(millions of US dollars)
Note
2024
2023
Note 1
OPERATING ACTIVITIES
Net earnings
165
576
Adjustments for:
Depreciation and amortization
565
496
Share-based compensation expense
6
15
Provision for deferred income tax
28
21
Net (undistributed) distributed earnings of equity-accounted investees
(50)
163
Gain on amendments to other post-retirement pension plans
3
‐
(80)
Loss on Blue Chip Swaps
3
19
‐
Long-term income tax receivables and payables
43
(72)
Other long-term assets, liabilities and miscellaneous
64
7
Cash from operations before working capital changes
840
1,126
Changes in non-cash operating working capital:
Receivables
(257)
535
Inventories and prepaid expenses and other current assets
(1,330)
(1,493)
Payables and accrued charges
260
(1,026)
CASH USED IN OPERATING ACTIVITIES
(487)
(858)
INVESTING ACTIVITIES
Capital expenditures 1
(373)
(465)
Business acquisitions, net of cash acquired
‐
(111)
Proceeds from sales of Blue Chip Swaps, net of purchases
3
(19)
‐
Net changes in non-cash working capital
(90)
(100)
Other
(12)
(18)
CASH USED IN INVESTING ACTIVITIES
(494)
(694)
FINANCING ACTIVITIES
Proceeds from debt with maturity periods within three months, net
926
1,873
Proceeds from debt
‐
1,500
Repayment of debt
(14)
(17)
Repayment of principal portion of lease liabilities
(96)
(87)
Dividends paid to Nutrien's shareholders
(261)
(246)
Repurchase of common shares
‐
(897)
Issuance of common shares
1
28
Other
(8)
(25)
CASH PROVIDED BY FINANCING ACTIVITIES
548
2,129
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(12)
(5)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(445)
572
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
941
901
CASH AND CASH EQUIVALENTS – END OF PERIOD
496
1,473
Cash and cash equivalents is composed of:
Cash
422
361
Short-term investments
74
1,112
496
1,473
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid
132
98
Income taxes paid
50
1,319
Total cash outflow for leases
131
119
1 Includes additions to property, plant and equipment, and intangible assets for the three months ended March 31, 2024 of $338 million and $35 million (2023 – $422 million and $43 million).
(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
Number of
Translation
Holders
Non-
Common
Share
Contributed
of Foreign
Total
Retained
of
Controlling
Total
(millions of US dollars, except as otherwise noted)
Shares
Surplus
Operations
Other
AOCI
Earnings
Nutrien
Interest
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374)
(17)
(391)
11,928
25,818
45
25,863
Net earnings
‐
‐
‐
‐
‐
‐
571
571
5
576
Other comprehensive income
‐
‐
‐
1
1
2
‐
2
‐
2
Shares repurchased
(11,751,290)
(328)
‐
‐
‐
‐
(571)
(899)
‐
(899)
Dividends declared - $0.53/share
‐
‐
‐
‐
‐
‐
(265)
(265)
‐
(265)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(6)
(6)
Effect of share-based compensation including issuance of
common shares
579,208
34
(3)
‐
‐
‐
‐
31
‐
31
Transfer of net loss on cash flow hedges
‐
‐
‐
‐
5
5
‐
5
‐
5
Transfer of net actuarial loss on defined benefit plans
‐
‐
‐
‐
3
3
(3)
‐
‐
‐
Other
‐
‐
‐
(2)
‐
(2)
‐
(2)
‐
(2)
BALANCE – MARCH 31, 2023
496,074,023
13,878
106
(375)
(8)
(383)
11,660
25,261
44
25,305
BALANCE – DECEMBER 31, 2023
494,551,730
13,838
83
(286)
(10)
(296)
11,531
25,156
45
25,201
Net earnings
‐
‐
‐
‐
‐
‐
158
158
7
165
Other comprehensive loss
‐
‐
‐
(65)
(36)
(101)
‐
(101)
(1)
(102)
Dividends declared - $0.54/share
‐
‐
‐
‐
‐
‐
(266)
(266)
‐
(266)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(8)
(8)
Effect of share-based compensation including issuance of
common shares
37,199
2
2
‐
‐
‐
‐
4
‐
4
Transfer of net loss on cash flow hedges
‐
‐
‐
‐
2
2
‐
2
‐
2
BALANCE – MARCH 31, 2024
494,588,929
13,840
85
(351)
(44)
(395)
11,423
24,953
43
24,996
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Balance Sheets
March 31
December 31
As at (millions of US dollars)
Note
2024
2023
2023
ASSETS
Current assets
Cash and cash equivalents
496
1,473
941
Receivables
6, 9
5,561
6,009
5,398
Inventories
8,188
9,852
6,336
Prepaid expenses and other current assets
905
937
1,495
15,150
18,271
14,170
Non-current assets
Property, plant and equipment
22,410
21,832
22,461
12,083
12,433
12,114
Intangible assets
2,165
2,292
2,217
Investments
768
686
736
Other assets
999
1,078
1,051
TOTAL ASSETS
53,575
56,592
52,749
LIABILITIES
Current liabilities
Short-term debt
6
2,835
4,013
1,815
Current portion of long-term debt
513
545
512
Current portion of lease liabilities
346
306
327
Payables and accrued charges
9,431
10,611
9,467
13,125
15,475
12,121
Non-current liabilities
Long-term debt
8,910
9,510
8,913
Lease liabilities
1,034
880
999
Deferred income tax liabilities
3,601
3,603
3,574
Pension and other post-retirement benefit liabilities
246
242
252
Asset retirement obligations and accrued environmental costs
1,485
1,389
1,489
Other non-current liabilities
178
188
200
TOTAL LIABILITIES
28,579
31,287
27,548
SHAREHOLDERS’ EQUITY
Share capital
13,840
13,878
13,838
Contributed surplus
85
106
83
Accumulated other comprehensive loss
(395)
(383)
(296)
Retained earnings
11,423
11,660
11,531
Equity holders of Nutrien
24,953
25,261
25,156
Non-controlling interest
43
44
45
TOTAL SHAREHOLDERS’ EQUITY
24,996
25,305
25,201
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
53,575
56,592
52,749
(See Notes to the Condensed Consolidated Financial Statements)
Notes to the Condensed Consolidated Financial Statements
As at and for the Three Months Ended March 31, 2024
Note 1 Basis of presentation
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”, “we”, “us”, “our” or “the Company”) is a leading 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 2023 annual audited consolidated financial statements, as well as any amended standards adopted in 2024 that we previously disclosed. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual audited consolidated financial statements and should be read in conjunction with our 2023 annual audited consolidated financial statements. Certain immaterial 2023 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 May 8, 2024.
Note 2 Segment information
We have four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise. Retail 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 March 31, 2024
Corporate
(millions of US dollars)
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,308
821
846
414
‐
‐
5,389
– intersegment
‐
106
182
85
‐
(373)
‐
Sales
– total
3,308
927
1,028
499
‐
(373)
5,389
Freight, transportation and distribution 1
‐
114
117
62
‐
(55)
238
Net sales
3,308
813
911
437
‐
(318)
5,151
Cost of goods sold
2,561
358
604
372
‐
(281)
3,614
Gross margin
747
455
307
65
‐
(37)
1,537
Selling expenses
790
3
7
2
(2)
(6)
794
General and administrative expenses
52
4
5
4
89
‐
154
Provincial mining taxes
‐
68
‐
‐
‐
‐
68
Share-based compensation expense
‐
‐
‐
‐
6
‐
6
Other expenses (income)
22
(3)
(33)
8
97
5
96
(Loss) earnings before finance costs and income taxes
(117)
383
328
51
(190)
(36)
419
Depreciation and amortization
194
147
136
70
18
‐
565
EBITDA 2
77
530
464
121
(172)
(36)
984
Share-based compensation expense
‐
‐
‐
‐
6
‐
6
ARO/ERL expense for non-operating sites 3
‐
‐
‐
‐
3
‐
3
Foreign exchange loss, net of related derivatives
‐
‐
‐
‐
43
‐
43
Loss on Blue Chip Swaps
‐
‐
‐
‐
19
‐
19
Adjusted EBITDA
77
530
464
121
(101)
(36)
1,055
Assets – as at March 31, 2024
24,273
13,562
11,606
2,420
2,326
(612)
53,575
1 Potash freight, transportation and distribution only applies to our North American potash sales volumes.
2 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.
3 ARO/ERL refers to asset retirement obligations and accrued environmental costs.
Three Months Ended March 31, 2023
Corporate
(millions of US dollars)
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,422
1,023
1,154
508
‐
‐
6,107
– intersegment
‐
54
264
64
‐
(382)
‐
Sales
– total
3,422
1,077
1,418
572
‐
(382)
6,107
Freight, transportation and distribution
‐
75
106
58
‐
(40)
199
Net sales
3,422
1,002
1,312
514
‐
(342)
5,908
Cost of goods sold
2,807
305
771
427
‐
(315)
3,995
Gross margin
615
697
541
87
‐
(27)
1,913
Selling expenses
765
3
8
2
(2)
(6)
770
General and administrative expenses
50
3
5
3
84
‐
145
Provincial mining taxes
‐
119
‐
‐
‐
‐
119
Share-based compensation expense
‐
‐
‐
‐
15
‐
15
Other expenses (income)
15
(7)
(14)
12
(81)
‐
(75)
(Loss) earnings before finance costs and income taxes
(215)
579
542
70
(16)
(21)
939
Depreciation and amortization
181
97
134
67
17
‐
496
EBITDA
(34)
676
676
137
1
(21)
1,435
Integration and restructuring related costs
‐
‐
‐
‐
5
‐
5
Share-based compensation expense
‐
‐
‐
‐
15
‐
15
Foreign exchange gain, net of related derivatives
‐
‐
‐
‐
(34)
‐
(34)
Adjusted EBITDA
(34)
676
676
137
(13)
(21)
1,421
Assets – as at December 31, 2023
23,056
13,571
11,466
2,438
2,818
(600)
52,749
Three Months Ended
March 31
(millions of US dollars)
2024
2023
Retail sales by product line
Crop nutrients
1,309
1,335
Crop protection products
1,114
1,154
Seed
485
507
Services and other
156
148
Merchandise
200
246
Nutrien Financial
66
57
Nutrien Financial elimination 1
(22)
(25)
3,308
3,422
Potash sales by geography
Manufactured product
North America
520
417
Offshore 2
407
660
927
1,077
Nitrogen sales by product line
Manufactured product
Ammonia
244
416
Urea and ESN®
366
491
Solutions, nitrates and sulfates
319
371
Other nitrogen and purchased products
99
140
1,028
1,418
Phosphate sales by product line
Manufactured product
Fertilizer
321
302
Industrial and feed
167
195
Other phosphate and purchased products
11
75
499
572
1 Represents elimination of the interest and service fees charged by Nutrien Financial to Retail branches.
2 Relates to Canpotex Limited (“Canpotex”) (see Note 9) and includes provisional pricing adjustments for the three months ended March 31, 2024 of $12 million (2023 – $(147) million).
Note 3 Other expenses (income)
Three Months Ended
March 31
(millions of US dollars)
2024
2023
Integration and restructuring related costs
‐
5
Foreign exchange loss (gain), net of related derivatives
43
(34)
Earnings of equity-accounted investees
(51)
(37)
Bad debt expense
13
9
Project feasibility costs
15
13
Customer prepayment costs
16
14
Loss on natural gas derivatives not designated as hedge ¹
3
‐
Loss on Blue Chip Swaps
19
‐
ARO/ERL expense for non-operating sites
3
‐
Gain on amendments to other post-retirement pension plans
‐
(80)
Other expenses
35
35
96
(75)
1 Relates to unrealized loss for the three months ended March 31, 2024 (2023 – $nil).
Argentina has certain currency controls in place that limit our ability to settle our foreign currency-denominated obligations or remit cash out of Argentina. A Blue Chip Swap is a financial mechanism in Argentina that effectively allows companies to transact in US dollars. In the first quarter of 2024, we incurred a loss on these transactions due to the significant divergence between the Blue Chip Swap market exchange rate and the official Argentinian Central Bank rate.
Note 4 Income taxes
A separate estimated average annual effective income tax rate was determined and applied individually to the interim period pre-tax earnings for each taxing jurisdiction.
Three Months Ended
March 31
(millions of US dollars, except as otherwise noted)
2024
2023
Actual effective tax rate on earnings (%)
30
23
Actual effective tax rate including discrete items (%)
31
25
Discrete tax adjustments that impacted the tax rate
3
18
Note 5 Financial instruments
Natural Gas Derivatives
In 2024, we increased our use of natural gas derivatives to lock-in commodity prices. Our risk management strategies and accounting policies for derivatives that are designated and qualify as cash flow hedges are consistent with those disclosed in Note 10 and Note 30 of our annual consolidated financial statements, respectively. For derivatives that do not quality as cash flow hedges, any gains or losses are recorded in net earnings in the current period.
We assess whether our derivative hedging transactions are expected to be or were highly effective, both at the hedge’s inception and on an ongoing basis, in offsetting changes in fair values of hedged items.
Hedging Transaction
Measurement of Ineffectiveness
Potential Sources of Ineffectiveness
New York Mercantile
Exchange (“NYMEX”)
natural gas hedges
Assessed on a prospective and retrospective basis using regression analyses
Changes in:
• timing of forecast transactions
• volume delivered
• our credit risk or the credit risk of a counterparty
As at March 31, 2024
Maturities
Average
Fair Value of
(millions of US dollars, except as otherwise noted)
Notional 1
(year)
Contract Price 2
Assets (Liabilities)
Derivatives not designated as hedges
NYMEX call options
43
2024
2.77
7
Derivatives designated as hedges
NYMEX swaps
36
2024
2.64
(9)
1 In millions of Metric Million British Thermal Units (“MMBtu”).
2 US dollars per MMBtu.
Note 6 Short-term debt
On March 7, 2024, we entered into an uncommitted $500 million accounts receivable repurchase facility (the “repurchase facility”), where we may sell certain receivables from customers to a financial institution and agree to repurchase those receivables at a future date. When we draw under this repurchase facility, the receivables from customers remain on our condensed consolidated balance sheet as we control and retain substantially all of the risks and rewards associated with the receivables. As at March 31, 2024, $111 million in receivables from customers were pledged to the repurchase facility and $100 million of borrowings were included in short-term debt with variable interest accruing based on a margin and the Secured Overnight Financing Rate.
Note 7 Capital management
In March 2024, we filed a base shelf prospectus in Canada and the US qualifying the issuance, subject to the approval of the Board of Directors, of common shares, debt securities and other securities during a period of 25 months from March 22, 2024.
Note 8 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 9 Related party transactions
We sell potash outside Canada and the US exclusively through Canpotex. Canpotex sells potash to buyers, including Nutrien, 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.
As at (millions of US dollars)
March 31, 2024
December 31, 2023
Receivables from Canpotex
148
162
Note 10 Accounting policies, estimates and judgments
IFRS 18, “Presentation and Disclosure in Financial Statements” (“IFRS 18”), which was issued on April 9, 2024, would supersede IAS 1, “Presentation of Financial Statements” and increase the comparability of financial statements by enhancing principles on aggregation and disaggregation. IFRS 18 will be effective January 1, 2027, and will also apply to comparative information. We are reviewing the standard to determine the potential impact.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240503690845/en/