Nutrien Reports Fourth Quarter and Full-Year 2022 Results
Nutrien Ltd. (TSX and NYSE: NTR) announced today its fourth quarter 2022 results, with net earnings of $1.1 billion ($2.15 diluted net earnings per share). Fourth quarter 2022 adjusted net earnings per share1 was $2.02 and adjusted EBITDA1 was $2.1 billion.
“Geopolitical events caused an unprecedented level of supply disruption and market volatility across agriculture, energy and fertilizer markets in 2022. Nutrien delivered record net earnings and cash flow in this environment due to the advantages of our world-class production, distribution and retail network. We returned $5.6 billion to shareholders, invested in our global Retail network and advanced a number of long-term strategic initiatives that position our company for future growth and sustainability,” commented Ken Seitz, Nutrien’s President and CEO.
“The outlook for our business is strong as we expect global supply issues to persist and demand for crop inputs to increase in 2023. We remain disciplined in our capital allocation approach as we position the company to best serve the needs of our customers, while delivering meaningful returns for our shareholders,” added Mr. Seitz.
Highlights:
Nutrien generated net earnings of $7.7 billion ($14.18 diluted net earnings per share) and adjusted EBITDA1 of $12.2 billion in 2022 supported by higher realized fertilizer prices and record Nutrien Ag Solutions (“Retail”) performance, more than offsetting a reduction in fertilizer sales volumes. Cash provided by operating activities increased to $8.1 billion in 2022, more than doubling the prior year’s total. Nutrien repurchased 53 million shares in 2022 and an additional 8 million shares in 2023, completing its normal course issuer bid (“NCIB”) in early February 2023. Nutrien’s Board of Directors approved a 10 percent increase in the quarterly dividend to $0.53 per share and approved the purchase of up to 5 percent of Nutrien’s outstanding common shares over a twelve-month period through a NCIB. The NCIB is subject to acceptance by the Toronto Stock Exchange. Nutrien allocated $1.2 billion of growth capital1 (cash used in investing activities of $2.9 billion) in 2022 to advance strategic initiatives across our Retail, Potash and Nitrogen businesses. This included expanding our Retail network by completing 21 acquisitions in Brazil, the US and Australia for a total investment of approximately $400 million. Retail delivered record adjusted EBITDA of $2.3 billion for the full year of 2022, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio1 as at December 31, 2022 improved to 55 percent compared to 58 percent for the same period in 2021 driven by higher margins. Potash adjusted EBITDA of $5.8 billion for the full year of 2022 more than doubled compared to the prior year due to higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes. Nitrogen full year 2022 adjusted EBITDA of $3.9 billion increased 70 percent compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower sales volumes. Nutrien issued full-year 2023 adjusted EBITDA and adjusted net earnings per share guidance1 of $8.4 to $10.0 billion and $8.45 to $10.65 per share, respectively. Nutrien is adjusting the ramp up timing of its existing low-cost potash capacity to optimize capital expenditures in-line with the pace of expected demand recovery in 2023 and beyond. We will maintain a flexible approach and now expect to reach 18 million tonnes of annual operational capability in 2026. Nutrien continues to believe long-term fundamentals support the need for our low-cost, incremental potash capability and there is significant value in having flexibility to increase production when the market needs it.1. These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.
Market Outlook and Guidance
Agriculture and Retail
Agricultural fundamentals remain strong and are supported by the lowest global grain stocks-to-use ratio in over 25 years. We expect Ukrainian crop production and exports will continue to be constrained by the impact of the war with Russia and believe it will take more than one growing season to alleviate the supply risk from the market. Spot prices for corn, soybeans, and wheat are up 25 to 50 percent compared to the 10-year average, which supports grower returns and provides an incentive to increase crop production in 2023. We anticipate US major crop acreage will increase by approximately 4 percent in 2023, assuming a more normal planting window compared to the spring of 2022. We expect corn plantings to increase to 91 to 93 million acres in 2023, which is supportive of crop input demand. Brazilian grower economics for soybeans and corn are strong, which we expect will support another year of above-trend acreage growth. Safrinha corn planting and crop input purchases have been delayed due to wet weather, but we expect strong demand as the planting season progresses. Australian growers have benefitted from multiple years of above-average yields and historically high crop prices, positioning them very well financially entering 2023. We expect another year of strong crop production and input demand assuming favorable weather conditions.Crop Nutrient Markets
We believe potash inventories have been drawn down in Brazil and the US following a historic decline in the pace of potash shipments in the second half of 2022. We have seen improved potash demand in early 2023, however buyers continue to take a cautious approach to managing inventories that could lead to a more condensed shipment period as we approach the primary application seasons. Our estimate for global potash shipments in 2023 is 63 to 67 million tonnes, which is still constrained compared to the historical trend demand estimated at around 70 million tonnes. Belarus potash shipments in 2023 are projected to be down 40 to 60 percent and Russian shipments down 15 to 30 percent compared to 2021. We anticipate the reduction in supply will be most apparent in the first quarter of 2023 compared to the same period in 2022, as both Belarusian and Russian exports were heavily weighted to early 2022 before sanctions and export restrictions were imposed. Global nitrogen prices have declined since the beginning of 2023 due to lower European natural gas prices and buyer deferrals. We expect European natural gas prices to be volatile throughout the year and around 30 percent of the region’s nitrogen capacity is currently offline. North American natural gas prices remain highly competitive compared to European and Asian natural gas prices and we expect Henry Hub spot prices between $2.50 to $4.50 per MMBtu in 2023. We anticipate nitrogen supply constraints will persist in 2023, including lower Russian ammonia exports, reduced European operating rates and continued Chinese urea export restrictions. We expect a tight US supply and demand balance ahead of the 2023 spring season due to higher corn acreage and increased US nitrogen exports over the past six months. We expect Chinese phosphate export restrictions to be in place until at least April 2023, anticipate improved demand in North America and Brazil, and the continuation of strong demand in India. Phosphate product margins are expected to be supported by lower raw material sulfur prices due to reduced operating rates and demand in China.Financial Guidance
Based on market factors detailed above, we are issuing full-year 2023 adjusted EBITDA guidance of $8.4 to $10.0 billion and full-year 2023 adjusted net earnings guidance of $8.45 to $10.65 per share.
Retail adjusted EBITDA guidance assumes strong demand for crop inputs in each of the markets we serve. We expect gross margins for crop nutrients and crop protection products will be lower compared to the record levels achieved in 2022. Potash sales tonnes guidance of 13.8 to 14.6 million tonnes assumes increased demand in our key markets of North America and Brazil and continued global supply constraints in 2023. We have maintained capability to increase sales volumes to our previous expectation of approximately 15 million tonnes if we see stronger demand in the market. Nitrogen sales tonnes guidance of 10.8 to 11.4 million tonnes assumes higher operating rates at our North American plants and a continuation of gas curtailments in Trinidad in 2023. Nitrogen sales tonnes guidance includes 300,000 to 350,000 tonnes of projected ESN® product sales that prior to 2023 were included in the other product category.All guidance numbers, including those noted above and related sensitives are outlined in the table below.
2023 Guidance Ranges 1
(billions of US dollars, except as otherwise noted)
Low
High
Adjusted net earnings per share in US dollars (“Adjusted EPS”)2,3
8.45
10.65
Adjusted EBITDA 2
8.4
10.0
Retail adjusted EBITDA
1.85
2.05
Potash adjusted EBITDA
3.7
4.5
Nitrogen adjusted EBITDA
2.5
3.2
Phosphate adjusted EBITDA (in millions of US dollars)
550
750
Potash sales tonnes (millions) 4
13.8
14.6
Nitrogen sales tonnes (millions) 4
10.8
11.4
Depreciation and amortization
2.1
2.2
Effective tax rate on adjusted earnings (%)
23.5
24.5
Impact to
2023 Annual Assumptions & Sensitivities 1
Adjusted
Adjusted
(millions of US dollars, except EPS amounts or as otherwise noted)
EBITDA
EPS 3
$1/MMBtu change in NYMEX 5
180
0.27
$25/tonne change in realized potash selling prices
300
0.45
$25/tonne change in realized ammonia selling prices
50
0.07
$25/tonne change in realized urea selling prices
80
0.12
2023 average Canadian to US dollar exchange rate
1.33
2023 NYMEX natural gas (US dollars per MMBtu)
~$3.50
1. See the “Forward-Looking Statements” section.
2. These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.
3. Assumes 503 million shares outstanding for all EPS guidance and sensitivities. 4. Manufactured products only. Nitrogen sales tonnes guidance includes ESN® products that prior to 2023 were included in the other category. 5. Nitrogen related impact.Consolidated Results
Three Months Ended December 31
Twelve Months Ended December 31
(millions of US dollars, except as otherwise noted)
2022
2021
% Change
2022
2021
% Change
Sales
7,533
7,267
4
37,884
27,712
37
Freight, transportation and distribution
244
198
23
872
851
2
Cost of goods sold
4,383
3,863
13
21,588
17,452
24
Gross margin
2,906
3,206
(9)
15,424
9,409
64
Expenses
1,247
1,379
(10)
4,615
4,628
‐
Net earnings
1,118
1,207
(7)
7,687
3,179
142
Adjusted EBITDA 1
2,095
2,463
(15)
12,170
7,126
71
Diluted net earnings per share
2.15
2.11
2
14.18
5.52
157
Adjusted net earnings per share 1
2.02
2.47
(18)
13.19
6.23
112
Cash provided by operating activities
4,736
3,637
30
8,110
3,886
109
1. These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Net earnings and adjusted EBITDA increased for the full year of 2022 compared to the same periods in 2021, due to higher net realized selling prices resulting primarily from global supply uncertainties across our nutrient businesses and strong Retail performance. Net earnings and adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period in 2021, due to lower sales volumes partially offset by higher net realized selling prices. In 2022, we recorded a non-cash impairment reversal of $780 million related to our Phosphate operations, which positively impacted net earnings. Cost of goods sold increased in the fourth quarter and full year of 2022 due to higher input costs, in particular higher cost of inventory, natural gas and sulfur. Cash provided by operating activities increased in the full year of 2022 compared to the same period in 2021 primarily due to higher net earnings and increased in the fourth quarter of 2022 compared to the same period in 2021 due to a higher release of working capital.
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three and twelve months ended December 31, 2022 to the results for the three and twelve months ended December 31, 2021, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended December 31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
Sales
Crop nutrients
2,320
2,035
14
349
428
(18)
15
21
Crop protection products
981
1,113
(12)
413
414
‐
42
37
Seed
251
189
33
46
57
(19)
18
30
Merchandise
264
270
(2)
41
45
(9)
16
17
Nutrien Financial
62
51
22
62
51
22
100
100
Services and other 1
237
243
(2)
194
201
(3)
82
83
Nutrien Financial elimination 1, 2
(28)
(23)
22
(28)
(23)
22
100
100
4,087
3,878
5
1,077
1,173
(8)
26
30
Cost of goods sold
3,010
2,705
11
Gross margin
1,077
1,173
(8)
Expenses 3
888
911
(3)
Earnings before finance costs and taxes ("EBIT")
189
262
(28)
Depreciation and amortization
202
178
13
EBITDA
391
440
(11)
Adjustments 4
‐
2
(100)
Adjusted EBITDA
391
442
(12)
1. Certain immaterial figures have been reclassified for the three months ended December 31, 2021.
2. Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
3. Includes selling expenses of $836 million (2021 – $848 million).
4. See Note 2 to the unaudited condensed consolidated financial statements.
Twelve Months Ended December 31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
Sales
Crop nutrients
10,060
7,290
38
1,766
1,597
11
18
22
Crop protection products
7,067
6,333
12
1,936
1,551
25
27
24
Seed
2,112
2,008
5
428
419
2
20
21
Merchandise
1,019
1,033
(1)
174
172
1
17
17
Nutrien Financial
267
189
41
267
189
41
100
100
Services and other 1
966
980
(1)
749
771
(3)
78
79
Nutrien Financial elimination 1
(141)
(99)
42
(141)
(99)
42
100
100
21,350
17,734
20
5,179
4,600
13
24
26
Cost of goods sold
16,171
13,134
23
Gross margin
5,179
4,600
13
Expenses 2
3,621
3,378
7
EBIT
1,558
1,222
27
Depreciation and amortization
752
706
7
EBITDA
2,310
1,928
20
Adjustments 3
(17)
11
n/m
Adjusted EBITDA
2,293
1,939
18
1. Certain immaterial figures have been reclassified for the twelve months ended December 31, 2021.
2. Includes selling expenses of $3,392 million (2021 – $3,124 million).
3. See Note 2 to the unaudited condensed consolidated financial statements.
Adjusted EBITDA for the full year of 2022 increased due to higher sales and gross margins across nearly all product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary product margins. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the prior year’s record results as strong sales prices in most product categories were offset by lower volumes and higher cost inventory. Our Retail cash operating coverage ratio1 improved as at December 31, 2022 to 55 percent from 58 percent in the same period in 2021 due to higher gross margin. Crop nutrients sales increased in the fourth quarter and the full year of 2022 due to higher selling prices. Gross margin increased for the full year of 2022 compared to the same period last year due to strategic procurement and the timing of inventory purchasing in the first half of 2022, with a decrease in the fourth quarter of 2022 due to higher cost inventory. Sales volumes decreased for the full year 2022 due to reduced application resulting from a delayed planting season in North America and stronger fourth quarter engagement in 2021 in a rising price environment, slightly offset by increased South American volumes attributed to recent acquisitions. Crop protection products sales and gross margin increased for the full year of 2022, particularly in North America, due to higher selling prices along with increased sales and gross margin in proprietary products. Gross margin was flat in the fourth quarter as higher sales pricing and a favorable sales mix in North America offset a decline in sales volumes compared to a very strong period of demand in the fourth quarter of 2021. Gross margin as a percentage of sales increased for the full year of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment. Seed sales increased in the fourth quarter and the full year of 2022 due to higher pricing along with strong North America corn sales, Latin America soybean sales and Australia canola sales. Gross margin increased for the full year of 2022 due to higher pricing with a decrease in the fourth quarter of 2022 attributed to the timing and mix of seed sales compared to the same period in 2021. Merchandise gross margin increased for the full year of 2022 due to strong margin performance in Australia animal management, farm services and general merchandise, with a decrease in the fourth quarter of 2022 due to an unfavorable foreign exchange rate impact on Australian dollars. Nutrien Financial sales increased in the fourth quarter and full year of 2022 due to higher utilization and adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing. Services and other sales and gross margin decreased in the fourth quarter and full year of 2022 mainly due to lower livestock volumes in Australia, along with an unfavorable foreign exchange rate impact on Australian dollars. Fourth quarter 2022 sales benefited from improved selling rates on North American custom application services. 1. These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.Potash
Three Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
North America
536
497
8
959
1,002
(4)
560
494
13
Offshore
841
923
(9)
1,659
2,054
(19)
506
450
12
1,377
1,420
(3)
2,618
3,056
(14)
526
465
13
Cost of goods sold
310
305
2
118
100
18
Gross margin – total
1,067
1,115
(4)
408
365
12
Expenses 1
198
179
11
Depreciation and amortization
34
38
(11)
EBIT
869
936
(7)
Gross margin excluding depreciation
Depreciation and amortization
89
117
(24)
and amortization – manufactured 2
442
403
10
EBITDA/ Adjusted EBITDA
958
1,053
(9)
Potash controllable cash cost of
product manufactured 2
65
52
25
1. Includes provincial mining taxes of $190 million (2021 – $173 million).
2. These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Twelve Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
North America
2,485
1,638
52
3,729
5,159
(28)
667
317
110
Offshore
5,414
2,398
126
8,808
8,466
4
615
283
117
7,899
4,036
96
12,537
13,625
(8)
630
296
113
Cost of goods sold
1,400
1,285
9
112
94
19
Gross margin – total
6,499
2,751
136
518
202
156
Expenses 1
1,173
512
129
Depreciation and amortization
35
36
(1)
EBIT
5,326
2,239
138
Gross margin excluding depreciation
Depreciation and amortization
443
488
(9)
and amortization – manufactured
553
238
133
EBITDA
5,769
2,727
112
Potash controllable cash cost of
Adjustments 2
‐
9
(100)
product manufactured
58
52
12
Adjusted EBITDA
5,769
2,736
111
1. Includes provincial mining taxes of $1,149 million (2021 – $466 million).
2. See Note 2 to the unaudited condensed consolidated financial statements.
Adjusted EBITDA increased in the full year of 2022 due to higher net realized selling prices and strong offshore sales volumes, which more than offset lower North American sales volumes, higher royalties and provincial mining taxes. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period last year mainly due to lower volumes from cautious purchasing in a declining price environment, partially offset by higher net realized selling prices. Sales volumes decreased for the full year of 2022 due to a compressed North American spring application season that resulted in high inventory carry-over and cautious purchasing in key markets during the second half of 2022. Offshore sales volumes were the highest of any full year period on record due to reduced supply from Eastern Europe. Net realized selling price increased in the fourth quarter and full year of 2022 due to the impact of reduced supply from Eastern Europe. Net realized selling prices decreased from the third quarter of 2022 due to a decline in benchmark pricing. Cost of goods sold per tonne in 2022 increased primarily due to higher royalties resulting from increased net realized selling prices. Potash controllable cash cost of product manufactured increased due to lower production volumes and a pull forward of maintenance activities in the second half of 2022.Canpotex Sales by Market
(percentage of sales volumes, except as
Three Months Ended December 31
Twelve Months Ended December 31
otherwise noted)
2022
2021
Change
2022
2021
Change
Latin America
28
37
(9)
34
38
(4)
Other Asian markets 1
35
34
1
34
35
(1)
China
16
12
4
14
11
3
Other markets
10
11
(1)
10
10
‐
India
11
6
5
8
6
2
100
100
100
100
1. All Asian markets except China and India.
Nitrogen
Three Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Ammonia
689
519
33
776
790
(2)
887
656
35
Urea
463
552
(16)
705
824
(14)
657
670
(2)
Solutions, nitrates and sulfates
389
385
1
1,056
1,221
(14)
368
316
16
1,541
1,456
6
2,537
2,835
(11)
607
514
18
Cost of goods sold
846
725
17
333
256
30
Gross margin – manufactured
695
731
(5)
274
258
6
Gross margin – other 1
4
23
(83)
Depreciation and amortization
61
52
17
Gross margin – total
699
754
(7)
Gross margin excluding depreciation
Expenses (income) ²
13
(2)
n/m
and amortization – manufactured 4
335
310
8
EBIT
686
756
(9)
Ammonia controllable cash cost of
Depreciation and amortization
155
148
5
product manufactured 4
57
45
27
EBITDA
841
904
(7)
Adjustments 3
‐
17
(100)
Adjusted EBITDA
841
921
(9)
1. Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $251 million (2021 – $193 million) less cost of goods sold of $247 million (2021 – $170 million).
2. Includes earnings from equity-accounted investees of $41 million (2021 – $41 million).
3. See Note 2 to the unaudited condensed consolidated financial statements.
4. These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Twelve Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Ammonia
2,641
1,393
90
2,715
2,919
(7)
973
477
104
Urea
1,920
1,463
31
2,757
3,059
(10)
696
478
46
Solutions, nitrates and sulfates
1,829
1,128
62
4,551
4,747
(4)
402
238
69
6,390
3,984
60
10,023
10,725
(7)
638
371
72
Cost of goods sold
3,197
2,353
36
319
219
46
Gross margin – manufactured
3,193
1,631
96
319
152
110
Gross margin – other 1
88
95
(7)
Depreciation and amortization
56
52
7
Gross margin – total
3,281
1,726
90
Gross margin excluding depreciation
(Income) expenses ²
(92)
(3)
n/m
and amortization – manufactured
375
204
84
EBIT
3,373
1,729
95
Ammonia controllable cash cost of
Depreciation and amortization
558
557
‐
product manufactured
59
50
18
EBITDA
3,931
2,286
72
Adjustments 3
‐
22
(100)
Adjusted EBITDA
3,931
2,308
70
1. Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $1,143 million (2021 – $705 million) less cost of goods sold of $1,055 million (2021 – $610 million).
2. Includes earnings from equity-accounted investees of $233 million (2021 – $76 million).
3. See Note 2 to the unaudited condensed consolidated financial statements.
Adjusted EBITDA increased in the full year of 2022 primarily due to higher net realized selling prices and higher earnings from equity-accounted investees, which more than offset higher natural gas costs and lower sales volumes. Adjusted EBITDA in the fourth quarter of 2022 decreased as lower sales volumes more than offset an increase in net realized selling prices. Sales volumes decreased in the fourth quarter primarily due to Trinidad gas curtailments, unplanned plant outages that included the impact of extreme cold weather in the quarter and cautious buying activity. Full-year sales volumes were also impacted by a compressed North American spring application season. Net realized selling price was higher in the fourth quarter and full year of 2022 due to strong benchmark prices, in particular for ammonia, resulting from tight global supply and higher energy prices in key nitrogen producing regions. Cost of goods sold per tonne in the fourth quarter and full year of 2022 increased primarily due to higher natural gas, raw material and other input costs. Ammonia controllable cash cost of product manufactured increased in the fourth quarter and full year of 2022 due to lower production volumes and higher input costs, mainly electricity costs.Natural Gas Prices in Cost of Production
Three Months Ended December 31
Twelve Months Ended December 31
(US dollars per MMBtu, except as otherwise noted)
2022
2021
% Change
2022
2021
% Change
Overall gas cost excluding realized derivative impact
7.49
6.43
16
7.82
4.60
70
Realized derivative impact
(0.05)
(0.03)
67
(0.05)
0.01
n/m
Overall gas cost
7.44
6.40
16
7.77
4.61
69
Average NYMEX
6.26
5.83
7
6.64
3.84
73
Average AECO
4.11
3.93
5
4.28
2.84
51
Natural gas prices in our cost of production increased in the fourth quarter and full year of 2022 as a result of higher North American gas index prices and increased gas costs in Trinidad, where our gas prices are linked to ammonia benchmark prices.Phosphate
Three Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Fertilizer
274
377
(27)
391
509
(23)
700
741
(6)
Industrial and feed
155
155
‐
140
202
(31)
1,107
766
45
429
532
(19)
531
711
(25)
807
749
8
Cost of goods sold
405
374
8
762
526
45
Gross margin - manufactured
24
158
(85)
45
223
(80)
Gross margin – other 1
(8)
5
n/m
Depreciation and amortization
109
55
99
Gross margin – total
16
163
(90)
Gross margin excluding depreciation
Expenses
46
10
360
and amortization – manufactured 3
154
278
(44)
EBIT
(30)
153
n/m
Depreciation and amortization
58
39
49
EBITDA
28
192
(85)
Adjustments 2
‐
4
(100)
Adjusted EBITDA
28
196
(86)
1. Includes other phosphate and purchased products and comprises net sales of $72 million (2021 – $61 million) less cost of goods sold of $80 million (2021 – $56 million).
2. See Note 2 to the unaudited condensed consolidated financial statements.
3. This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section.
Twelve Months Ended December 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Fertilizer
1,367
1,108
23
1,696
1,840
(8)
806
602
34
Industrial and feed
706
520
36
682
779
(12)
1,035
667
55
2,073
1,628
27
2,378
2,619
(9)
872
622
40
Cost of goods sold
1,562
1,227
27
657
469
40
Gross margin – manufactured
511
401
27
215
153
41
Gross margin – other 1
(18)
20
n/m
Depreciation and amortization
79
58
37
Gross margin – total
493
421
17
Gross margin excluding depreciation
(Income) expenses
(693)
36
n/m
and amortization – manufactured
294
211
40
EBIT
1,186
385
208
Depreciation and amortization
188
151
25
EBITDA
1,374
536
156
Adjustments 2
(780)
4
n/m
Adjusted EBITDA
594
540
10
1. Includes other phosphate and purchased products and comprises net sales of $304 million (2021 – $201 million) less cost of goods sold of $322 million (2021 – $181 million).
2. See Note 2 to the unaudited condensed consolidated financial statements. Includes reversal of impairment of assets of $780 million (2021 – nil).
Adjusted EBITDA increased for the full year of 2022 mainly due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes. Adjusted EBITDA in the fourth quarter decreased due to lower sales volumes as a result of unplanned plant outages. Included with expenses for the full year of 2022, we recognized a $780 million non-cash impairment of assets reversal due to a more favorable outlook for phosphate margins, which is deducted from adjusted EBITDA. Sales volumes decreased in the fourth quarter and full year of 2022 due to lower production volumes and a condensed North American spring application season. Net realized selling price increased for the full year of 2022 aligned with the increase in global benchmark prices. In the fourth quarter of 2022, higher industrial and feed net realized selling prices more than offset the decline in fertilizer net realized selling prices. Cost of goods sold per tonne increased in the fourth quarter and full year of 2022 primarily due to significantly higher sulfur and ammonia input costs, along with lower production volumes.Corporate and Others
(millions of US dollars, except as otherwise
Three Months Ended December 31
Twelve Months Ended December 31
noted)
2022
2021
% Change
2022
2021
% Change
Selling expenses
5
3
67
(1)
(21)
(95)
General and administrative expenses
99
93
6
326
275
19
Share-based compensation (recovery) expense
(59)
73
n/m
63
198
(68)
Other expenses
67
112
(40)
227
253
(10)
EBIT
(112)
(281)
(60)
(615)
(705)
(13)
Depreciation and amortization
16
15
7
71
49
45
EBITDA
(96)
(266)
(64)
(544)
(656)
(17)
Adjustments 1
(84)
116
n/m
146
348
(58)
Adjusted EBITDA
(180)
(150)
20
(398)
(308)
29
1. See Note 2 to the unaudited condensed consolidated financial statements.
General and administrative expenses were higher in the full year of 2022 compared to the same period in 2021 mainly due to increased depreciation and amortization expense, higher donations and higher information technology-related expenses. Share-based compensation (recovery) expense was a recovery in the fourth quarter of 2022 due to a decrease in share price and an expense for the comparative period in 2021 due to an increase in share price. We had a lower expense for the full year of 2022 compared to 2021 mainly due to a lower value of share-based awards outstanding. Other expenses were lower in the fourth quarter of 2022 compared to the same period in 2021 mainly due to net foreign exchange gains in 2022 compared to net foreign exchange losses in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for our non-operating sites from the changes in our cost and discount rate estimates. This was partially offset by an employee special recognition award expense in 2022. Other expenses were lower in the full year of 2022 compared to the same period in 2021 mainly due to lower COVID-19 related expenses, the absence of cloud computing related expenses from our change in accounting policy in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for our non-operating sites from the changes in our cost and discount rate estimates. This was partially offset by higher information technology project feasibility costs and an employee special recognition award expense in 2022.Eliminations
Eliminations are not part of the Corporate and Others segment. Eliminations of gross margin between operating segments were $(28) million for the full year of 2022 compared to $(89) million in the same period of 2021. We had significant eliminations in 2021 due to higher-margin inventories held by our Retail segment as global commodity benchmark prices increased. The magnitude of the rise in prices was lower in 2022.
Finance Costs, Income Taxes and Other Comprehensive Income (Loss)
(millions of US dollars, except as otherwise
Three Months Ended December 31
Twelve Months Ended December 31
noted)
2022
2021
% Change
2022
2021
% Change
Finance costs
188
246
(24)
563
613
(8)
Income tax expense
353
374
(6)
2,559
989
159
Other comprehensive income (loss)
119
72
65
(177)
78
n/m
Finance costs were lower in the fourth quarter and full year of 2022 compared to the same periods in 2021 mainly due to the absence of a loss of $142 million on early extinguishment of a portion of our long-term debt in the comparative periods. In the full year of 2022 short-term interest was higher due to increased interest rates and a higher average balance compared to 2021, which more than offset a decrease in long-term interest due to a lower average outstanding balance in 2022. Income tax expense was higher in the full year of 2022 as a result of higher earnings in 2022 compared to the same period in 2021. Other comprehensive income (loss) is primarily driven by changes in our investment in Sinofert Holdings Ltd (“Sinofert”), the currency translation of our foreign operations and net actuarial gains on defined benefit plans. In the fourth quarter of 2022, we had a fair value gain on our investment in Sinofert due to share price increases, compared to a fair value loss due to share price decreases in 2021. In addition, we had higher gains on foreign currency translation of our Retail foreign operations, mainly in Australia and Brazil, compared to the same period in 2021, as these currencies appreciated relative to the US dollar. These factors were partially offset by a lower net actuarial gain on our defined benefit pension plans in the fourth quarter of 2022 compared to the same period in 2021. For the full year of 2022, we had fair value losses on our investment in Sinofert due to share price decreases, compared to fair value gains due to share price increases for the same period in 2021. In addition, we had higher losses on foreign currency translation of our Retail foreign operations, mainly in Canada, compared to the same period in 2021, as this currency depreciated relative to the US dollar, partially offset by higher gains in Brazil, as this currency appreciated relative to the US dollar.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 2023 full-year guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment); expectations regarding our growth and capital allocation intentions and strategies; our advancement of strategic growth initiatives; capital spending expectations for 2023; expectations regarding performance of our operating segments in 2023; our intention to increase potash production capability to 18 million tonnes by 2026; 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 expenses, shipments, consumption, prices and the impact of seasonality, import and export volumes, economic sanctions and the conflict between Ukraine and Russia; Nutrien's ability to develop innovative and sustainable solutions; 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 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, supplier agreements, availability 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; assumptions with respect to our intention to complete share repurchases under our share repurchase program, including TSX approval and 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; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall global economy; our expectations regarding the impacts, direct and indirect, of the conflict between Ukraine and Russia on, among other things, global supply and demand, 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 expectations regarding the impact of certain factors on the carrying amount of goodwill associated with our Retail – North America group of CGUs; 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 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; 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 COVID-19 pandemic, including variants of the COVID-19 virus and the efficiency and distribution of vaccines, and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, including government-imposed vaccine mandates, fiscal and monetary responses by governments and financial institutions to market conditions and disruptions to global supply chains; the conflict between Ukraine and Russia and its potential impact on, among other things, global market conditions and supply and demand, 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; the risk that rising interest rates and/or deteriorated business operating results may result in the impairment of assets or goodwill attributed to certain of our cash generating units; 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 adjusted net earnings per share and adjusted EBITDA (consolidated and by segment) 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 2021 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, February 16, 2023 at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
From Canada and the US 1-888-886-7786 International 1-416-764-8683 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/2022-q4-earnings-conference-call
Appendix A - Selected Additional Financial Data
Selected Retail Measures
Three Months Ended December 31
Twelve Months Ended December 31
2022
2021
2022
2021
Proprietary products gross margin (millions of US dollars)
Crop nutrients
55
49
370
328
Crop protection products
58
58
675
527
Seed
(7)
22
166
183
Merchandise
5
4
12
12
All products
111
133
1,223
1,050
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients
16
12
21
21
Crop protection products
14
14
35
34
Seed
n/m
39
39
44
Merchandise
11
9
7
7
All products
11
11
24
23
Crop nutrients sales volumes (tonnes – thousands)
North America
1,819
2,119
8,106
9,848
International
675
702
3,407
3,535
Total
2,494
2,821
11,513
13,383
Crop nutrients selling price per tonne
North America
942
725
916
556
International
896
708
774
512
Total
930
721
874
545
Crop nutrients gross margin per tonne
North America
151
154
182
133
International
108
144
86
82
Total
139
152
153
119
Financial performance measures
2022
2021
Retail adjusted EBITDA margin (%) 1, 2
11
11
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3
1,923
1,481
Retail adjusted average working capital to sales (%) 1, 4
17
13
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4
2
‐
Nutrien Financial adjusted net interest margin (%) 1, 4
6.8
6.6
Retail cash operating coverage ratio (%) 1, 4
55
58
Retail normalized comparable store sales (%) 4
(4)
7
1. Rolling four quarters ended December 31, 2022 and 2021.
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 December 31, 2022
As at
December
31, 2021
(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
1,658
225
75
78
2,036
(29)
2,007
1,488
International
574
53
14
28
669
(7)
662
662
Nutrien Financial receivables
2,232
278
89
106
2,705
(36)
2,669
2,150
1. Bad debt expense on the above receivables for the twelve months ended December 31, 2022 was $10 million (2021 – $10 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended December 31
Twelve Months Ended December 31
2022
2021
2022
2021
Sales volumes (tonnes – thousands)
Fertilizer
1,408
1,578
5,371
6,028
Industrial and feed
1,129
1,257
4,652
4,697
Net sales (millions of US dollars)
Fertilizer
854
861
3,512
2,364
Industrial and feed
687
595
2,878
1,620
Net selling price per tonne
Fertilizer
607
545
654
392
Industrial and feed
608
473
619
345
Production Measures
Three Months Ended December 31
Twelve Months Ended December 31
2022
2021
2022
2021
Potash production (Product tonnes – thousands)
2,941
3,641
13,007
13,790
Potash shutdown weeks 1
3
‐
18
14
Ammonia production – total 2
1,400
1,641
5,759
5,996
Ammonia production – adjusted 2, 3
920
1,069
3,935
3,932
Ammonia operating rate (%) 3
83
97
90
90
P2O5 production (P2O5 tonnes – thousands)
288
409
1,351
1,518
P2O5 operating rate (%)
67
95
79
89
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 a company that (a) depict historical or expected future financial performance, financial position or cash flow of a 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 a 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, and IFRS adoption transition adjustments.
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 December 31
Twelve Months Ended December 31
(millions of US dollars)
2022
2021
2022
2021
Net earnings
1,118
1,207
7,687
3,179
Finance costs
188
246
563
613
Income tax expense
353
374
2,559
989
Depreciation and amortization
520
497
2,012
1,951
EBITDA 1
2,179
2,324
12,821
6,732
Share-based compensation (recovery) expense
(59)
73
63
198
Foreign exchange (gain) loss, net of related derivatives
(36)
38
31
39
Integration and restructuring related costs
11
(4)
46
43
Impairment (reversal) of assets
‐
21
(780)
33
COVID-19 related expenses 2
‐
11
8
45
Gain on disposal of investment
‐
‐
(19)
‐
Cloud computing transition adjustment 3
‐
‐
‐
36
Adjusted EBITDA
2,095
2,463
12,170
7,126
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. Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in April 2021.
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, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting. In 2022, we amended our calculation of adjusted net earnings to adjust for a gain on settlement of a derivative due to discontinued hedge accounting. There was no similar gain or loss in the comparative period. 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
December 31, 2022
Twelve Months Ended
December 31, 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
1,112
2.15
7,660
14.18
Adjustments:
Share-based compensation (recovery) expense
(59)
(45)
(0.09)
63
47
0.10
Foreign exchange (gain) loss, net of related derivatives
(36)
(27)
(0.05)
31
23
0.05
Integration and restructuring related costs
11
8
0.01
46
35
0.06
Reversal of impairment of assets
‐
‐
‐
(780)
(619)
(1.15)
COVID-19 related expenses
‐
‐
‐
8
6
0.01
Gain on disposal of investment
‐
‐
‐
(19)
(14)
(0.03)
Gain on settlement of discontinued hedge accounting derivative
‐
‐
‐
(18)
(14)
(0.03)
Adjusted net earnings
1,048
2.02
7,124
13.19
Three Months Ended
December 31, 2021
Twelve Months Ended
December 31, 2021
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
1,201
2.11
3,153
5.52
Adjustments:
Share-based compensation expense
73
56
0.10
198
151
0.27
Foreign exchange loss, net of related derivatives
38
29
0.05
39
30
0.05
Integration and restructuring related (recovery) costs
(4)
(3)
(0.01)
43
33
0.06
Impairment of assets
21
16
0.03
33
25
0.04
COVID-19 related expenses
11
8
0.01
45
34
0.06
Cloud computing transition adjustment
‐
‐
‐
36
27
0.05
Loss on early extinguishment of debt
142
104
0.18
142
104
0.18
Adjusted net earnings
1,411
2.47
3,557
6.23
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, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting.
Growth Capital
Most directly comparable IFRS financial measure: Cash used in investing activities.
Definition: Cash used in investing activities related to growth initiatives consisting of investing capital expenditures, which are a component of capital expenditures, plus business acquisitions, net of cash acquired per the unaudited condensed consolidated statements of cash flows.
Why we use the measure and why it is useful to investors: To demonstrate how we allocate our capital to our various priorities including growth and expansion projects and acquisitions.
(millions of US dollars)
2022
2021
Cash used in investing activities
(2,901)
(1,807)
Sustaining capital expenditures
1,449
1,247
Mine development and pre-stripping capital expenditures
234
156
Borrowing costs on property, plant and equipment
(37)
(29)
Other 1
12
(64)
Net changes in non-cash working capital 1
44
(101)
Growth capital
(1,199)
(598)
1. Included in investing activities as per the unaudited condensed consolidated statement of cash flows.
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. In 2022, we replaced Potash cash COPM with this new financial measure. 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 December 31
Twelve Months Ended December 31
(millions of US dollars, except as otherwise noted)
2022
2021
2022
2021
Total COGS – Potash
310
305
1,400
1,285
Change in inventory
38
64
58
22
Other adjustments 1
(12)
1
(41)
(6)
COPM
336
370
1,417
1,301
Depreciation and amortization in COPM
(89)
(115)
(406)
(430)
Royalties in COPM
(40)
(47)
(190)
(107)
Natural gas costs and carbon taxes in COPM
(17)
(17)
(62)
(51)
Controllable cash COPM
190
191
759
713
Production tonnes (tonnes – thousands)
2,941
3,641
13,007
13,790
Potash controllable cash COPM per tonne
65
52
58
52
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 December 31
Twelve Months Ended December 31
(millions of US dollars, except as otherwise noted)
2022
2021
2022
2021
Total Manufactured COGS – Nitrogen
846
725
3,197
2,353
Total Other COGS – Nitrogen
247
170
1,055
610
Total COGS – Nitrogen
1,093
895
4,252
2,963
Depreciation and amortization in COGS
(131)
(126)
(465)
(473)
Cash COGS for products other than ammonia
(648)
(519)
(2,560)
(1,740)
Ammonia
Total cash COGS before other adjustments
314
250
1,227
750
Other adjustments 1
(65)
(30)
(210)
(96)
Total cash COPM
249
220
1,017
654
Natural gas and steam costs in COPM
(212)
(186)
(855)
(515)
Controllable cash COPM
37
34
162
139
Production tonnes (net tonnes 2 – thousands)
655
758
2,754
2,769
Ammonia controllable cash COPM per tonne
57
45
59
50
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.
2. 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 December 31, 2022
(millions of US dollars, except as otherwise noted)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Average/Total
Current assets
12,392
12,487
11,262
11,668
Current liabilities
(9,223)
(9,177)
(5,889)
(8,708)
Working capital
3,169
3,310
5,373
2,960
3,703
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
3,169
3,310
5,373
2,960
3,703
Nutrien Financial working capital
(2,274)
(4,404)
(3,898)
(2,669)
Adjusted working capital excluding Nutrien Financial
895
(1,094)
1,475
291
392
Sales
3,861
9,422
3,980
4,087
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,861
9,422
3,980
4,087
21,350
Nutrien Financial revenue
(49)
(91)
(65)
(62)
Adjusted sales excluding Nutrien Financial
3,812
9,331
3,915
4,025
21,083
Adjusted average working capital to sales (%)
17
Adjusted average working capital to sales excluding Nutrien Financial (%)
2
Rolling four quarters ended December 31, 2021
(millions of US dollars, except as otherwise noted)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Average/Total
Current assets
9,160
9,300
8,945
9,924
Current liabilities
(7,530)
(7,952)
(5,062)
(7,828)
Working capital
1,630
1,348
3,883
2,096
2,239
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
1,630
1,348
3,883
2,096
2,239
Nutrien Financial working capital
(1,221)
(3,072)
(2,820)
(2,150)
Adjusted working capital excluding Nutrien Financial
409
(1,724)
1,063
(54)
(77)
Sales
2,972
7,537
3,347
3,878
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
2,972
7,537
3,347
3,878
17,734
Nutrien Financial revenue
(25)
(59)
(54)
(51)
Adjusted sales excluding Nutrien Financial
2,947
7,478
3,293
3,827
17,545
Adjusted average working capital to sales (%)
13
Adjusted average working capital to sales excluding Nutrien Financial (%)
‐
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial 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 December 31, 2022
(millions of US dollars, except as otherwise noted)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Total/Average
Nutrien Financial revenue
49
91
65
62
Deemed interest expense 1
(6)
(12)
(12)
(11)
Net interest
43
79
53
51
226
Average Nutrien Financial receivables
2,274
4,404
3,898
2,669
3,311
Nutrien Financial adjusted net interest margin (%)
6.8
Rolling four quarters ended December 31, 2021
(millions of US dollars, except as otherwise noted)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Total/Average
Nutrien Financial revenue
25
59
54
51
Deemed interest expense 1
(6)
(8)
(10)
(12)
Net interest
19
51
44
39
153
Average Nutrien Financial receivables
1,221
3,072
2,820
2,150
2,316
Nutrien Financial adjusted net interest margin (%)
6.6
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 December 31, 2022
(millions of US dollars, except as otherwise noted)
Q1 2022
Q2 2022
Q3 2022
Q4 2022
Total
Selling expenses
722
1,013
821
836
3,392
General and administrative expenses
45
54
50
51
200
Other (income) expenses
(12)
21
19
1
29
Operating expenses
755
1,088
890
888
3,621
Depreciation and amortization in operating expenses
(167)
(171)
(204)
(198)
(740)
Operating expenses excluding depreciation and amortization
588
917
686
690
2,881
Gross margin
845
2,340
917
1,077
5,179
Depreciation and amortization in cost of goods sold
2
4
2
4
12
Gross margin excluding depreciation and amortization
847
2,344
919
1,081
5,191
Cash operating coverage ratio (%)
55
Rolling four quarters ended December 31, 2021
(millions of US dollars, except as otherwise noted)
Q1 2021
Q2 2021
Q3 2021
Q4 2021
Total
Selling expenses
667
863
746
848
3,124
General and administrative expenses
39
41
45
43
168
Other expenses
15
34
17
20
86
Operating expenses
721
938
808
911
3,378
Depreciation and amortization in operating expenses
(175)
(166)
(180)
(173)
(694)
Operating expenses excluding depreciation and amortization
546
772
628
738
2,684
Gross margin
652
1,858
917
1,173
4,600
Depreciation and amortization in cost of goods sold
2
3
2
5
12
Gross margin excluding depreciation and amortization
654
1,861
919
1,178
4,612
Cash operating coverage ratio (%)
58
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.
Definition: Prior year comparable store sales adjusted for average selling price (which generally moves with published potash, nitrogen and phosphate benchmark prices), acquisitions of new stores and foreign exchange rates used in the current year.
Why we use the measure and why it is useful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.
Twelve Months Ended December 31
(millions of US dollars, except as otherwise noted)
2022
2021
Sales from comparable base
Prior period
17,734
14,785
Adjustments 1
(64)
(476)
Revised prior period
17,670
14,309
Current period
21,092
17,511
Comparable store sales (%)
19
22
Prior period normalized for average selling prices and foreign exchange rates
21,867
16,350
Normalized comparable store sales (%)
(4)
7
1. Adjustments relate to prior period sales related to closed locations or businesses that no longer exist in the current period in order to provide a comparable base in our calculation.
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures disclosed by a 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 a 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.
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.
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.
Condensed Consolidated Financial Statements
Unaudited - In millions of US dollars except as otherwise noted
Condensed Consolidated Statements of Earnings
Three Months Ended
Twelve Months Ended
December 31
December 31
Note
2022
2021
2022
2021
SALES
2
7,533
7,267
37,884
27,712
Freight, transportation and distribution
244
198
872
851
Cost of goods sold
4,383
3,863
21,588
17,452
GROSS MARGIN
2,906
3,206
15,424
9,409
Selling expenses
844
855
3,414
3,142
General and administrative expenses
162
148
565
477
Provincial mining taxes
190
173
1,149
466
Share-based compensation (recovery) expense
(59)
73
63
198
Impairment (reversal) of assets
‐
21
(780)
33
Other expenses
4
110
109
204
312
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
1,659
1,827
10,809
4,781
Finance costs
188
246
563
613
EARNINGS BEFORE INCOME TAXES
1,471
1,581
10,246
4,168
Income tax expense
353
374
2,559
989
NET EARNINGS
1,118
1,207
7,687
3,179
Attributable to
Equity holders of Nutrien
1,112
1,201
7,660
3,153
Non-controlling interest
6
6
27
26
NET EARNINGS
1,118
1,207
7,687
3,179
NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
2.15
2.11
14.22
5.53
Diluted
2.15
2.11
14.18
5.52
Weighted average shares outstanding for basic EPS
516,810,000
568,027,000
538,475,000
569,664,000
Weighted average shares outstanding for diluted EPS
517,964,000
569,653,000
540,010,000
571,289,000
Condensed Consolidated Statements of Comprehensive Income
Three Months Ended
Twelve Months Ended
December 31
December 31
(Net of related income taxes)
2022
2021
2022
2021
NET EARNINGS
1,118
1,207
7,687
3,179
Other comprehensive income (loss)
Items that will not be reclassified to net earnings:
Net actuarial gain on defined benefit plans
22
95
83
95
Net fair value gain (loss) on investments
17
(35)
(44)
81
Items that have been or may be subsequently reclassified to net earnings:
Gain (loss) on currency translation of foreign operations
73
14
(199)
(115)
Other
7
(2)
(17)
17
OTHER COMPREHENSIVE INCOME (LOSS)
119
72
(177)
78
COMPREHENSIVE INCOME
1,237
1,279
7,510
3,257
Attributable to
Equity holders of Nutrien
1,230
1,273
7,484
3,232
Non-controlling interest
7
6
26
25
COMPREHENSIVE INCOME
1,237
1,279
7,510
3,257
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Twelve Months Ended
December 31
December 31
Note
2022
2021
2022
2021
Note 1
Note 1
OPERATING ACTIVITIES
Net earnings
1,118
1,207
7,687
3,179
Adjustments for:
Depreciation and amortization
520
497
2,012
1,951
Share-based compensation (recovery) expense
(59)
73
63
198
Impairment (reversal) of assets
‐
21
(780)
33
Gain on disposal of investment
‐
‐
(19)
‐
Loss on early extinguishment of debt
‐
142
‐
142
Cloud computing transition adjustment
‐
‐
‐
36
Provision for (recovery of) deferred income tax
30
66
182
(31)
Long-term income tax receivables
72
‐
273
‐
Net undistributed earnings of equity-accounted investees
(42)
(43)
(181)
(44)
Other long-term assets, liabilities and miscellaneous
(29)
40
21
83
Cash from operations before working capital changes
1,610
2,003
9,258
5,547
Changes in non-cash operating working capital:
Receivables
2,683
1,432
(919)
(1,669)
Inventories
(937)
(1,652)
(1,281)
(1,459)
Prepaid expenses and other current assets
(904)
(1,092)
114
(227)
Payables and accrued charges
2,284
2,946
938
1,694
CASH PROVIDED BY OPERATING ACTIVITIES
4,736
3,637
8,110
3,886
INVESTING ACTIVITIES
Capital expenditures 1
(974)
(646)
(2,438)
(1,884)
Business acquisitions, net of cash acquired
(329)
(18)
(407)
(88)
Other
48
121
(12)
64
Net changes in non-cash working capital
33
78
(44)
101
CASH USED IN INVESTING ACTIVITIES
(1,222)
(465)
(2,901)
(1,807)
FINANCING ACTIVITIES
Transaction costs related to debt
(6)
‐
(9)
(7)
(Repayment of) proceeds from short-term debt, net
(2,338)
307
529
1,344
Proceeds from long-term debt
5
1,004
(3)
1,045
86
Repayment of long-term debt
5
(511)
(2,207)
(561)
(2,212)
Repayment of principal portion of lease liabilities
(85)
(78)
(341)
(320)
Dividends paid to Nutrien's shareholders
(251)
(266)
(1,031)
(1,045)
Repurchase of common shares
6
(1,214)
(885)
(4,520)
(1,035)
Issuance of common shares
‐
12
168
200
Other
(11)
‐
(11)
(14)
CASH USED IN FINANCING ACTIVITIES
(3,412)
(3,120)
(4,731)
(3,003)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(24)
4
(76)
(31)
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS
78
56
402
(955)
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
823
443
499
1,454
CASH AND CASH EQUIVALENTS – END OF PERIOD
901
499
901
499
Cash and cash equivalents is composed of:
Cash
775
428
775
428
Short-term investments
126
71
126
71
901
499
901
499
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid
202
172
482
491
Income taxes paid
379
79
1,882
435
Total cash outflow for leases
120
94
459
393
1. Includes additions to property, plant and equipment, and intangible assets for the three months ended December 31, 2022 of $910 and $64 (2021 – $606 and $40), respectively, and for the twelve months ended December 31, 2022 of $2,227 and $211 (2021 – $1,777 and $107), respectively.
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Changes in Shareholders’ Equity
Accumulated Other Comprehensive
(Loss) Income ("AOCI")
Loss 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, 2020
569,260,406
15,673
205
(62)
(57)
(119)
6,606
22,365
38
22,403
Net earnings
‐
‐
‐
‐
‐
‐
3,153
3,153
26
3,179
Other comprehensive (loss) income
‐
‐
‐
(114)
193
79
‐
79
(1)
78
Shares repurchased (Note 6)
(15,982,154)
(442)
(47)
‐
‐
‐
(616)
(1,105)
‐
(1,105)
Dividends declared
‐
‐
‐
‐
‐
‐
(1,046)
(1,046)
‐
(1,046)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(16)
(16)
Effect of share-based compensation including issuance of common shares
4,424,437
226
(9)
‐
‐
‐
‐
217
‐
217
Transfer of net gain on cash flow hedges
‐
‐
‐
‐
(11)
(11)
‐
(11)
‐
(11)
Transfer of net actuarial gain on defined benefit plans
‐
‐
‐
‐
(95)
(95)
95
‐
‐
‐
Share cancellation
(210,173)
‐
‐
‐
‐
‐
‐
‐
‐
‐
BALANCE – DECEMBER 31, 2021
557,492,516
15,457
149
(176)
30
(146)
8,192
23,652
47
23,699
Net earnings
‐
‐
‐
‐
‐
‐
7,660
7,660
27
7,687
Other comprehensive (loss) income
‐
‐
‐
(198)
22
(176)
‐
(176)
(1)
(177)
Shares repurchased (Note 6)
(53,312,559)
(1,487)
(22)
‐
‐
‐
(2,987)
(4,496)
‐
(4,496)
Dividends declared
‐
‐
‐
‐
‐
‐
(1,019)
(1,019)
‐
(1,019)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
(1)
(1)
(28)
(29)
Effect of share-based compensation including issuance of common shares
3,066,148
202
(18)
‐
‐
‐
‐
184
‐
184
Transfer of net loss on cash flow hedges
‐
‐
‐
‐
14
14
‐
14
‐
14
Transfer of net actuarial gain on defined benefit plans
‐
‐
‐
‐
(83)
(83)
83
‐
‐
‐
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374)
(17)
(391)
11,928
25,818
45
25,863
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Balance Sheets
December 31
December 31
As at
Note
2022
2021
ASSETS
Current assets
Cash and cash equivalents
901
499
Receivables
6,194
5,366
Inventories
7,632
6,328
Prepaid expenses and other current assets
1,615
1,653
16,342
13,846
Non-current assets
Property, plant and equipment
21,767
20,016
Goodwill
12,368
12,220
Intangible assets
2,297
2,340
Investments
843
703
Other assets
969
829
TOTAL ASSETS
54,586
49,954
LIABILITIES
Current liabilities
Short-term debt
2,142
1,560
Current portion of long-term debt
542
545
Current portion of lease liabilities
305
286
Payables and accrued charges
11,291
10,052
14,280
12,443
Non-current liabilities
Long-term debt
5
8,040
7,521
Lease liabilities
899
934
Deferred income tax liabilities
3,547
3,165
Pension and other post-retirement benefit liabilities
319
419
Asset retirement obligations and accrued environmental costs
1,403
1,566
Other non-current liabilities
235
207
TOTAL LIABILITIES
28,723
26,255
SHAREHOLDERS’ EQUITY
Share capital
6
14,172
15,457
Contributed surplus
109
149
Accumulated other comprehensive loss
(391)
(146)
Retained earnings
11,928
8,192
Equity holders of Nutrien
25,818
23,652
Non-controlling interest
45
47
TOTAL SHAREHOLDERS’ EQUITY
25,863
23,699
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
54,586
49,954
(See Notes to the Condensed Consolidated Financial Statements)
Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Twelve Months Ended December 31, 2022
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.
Our accounting policies are in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The accounting policies and methods of computation used in preparing these unaudited condensed consolidated financial statements are materially consistent with those used in the preparation of our 2021 annual consolidated financial statements. These unaudited condensed consolidated financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2021 annual consolidated financial statements. Our 2022 annual consolidated financial statements, which are expected to be issued in February 2023, will include additional information under IFRS.
Certain immaterial 2021 figures have been reclassified in the condensed consolidated statements of cash flows.
In management’s opinion, the unaudited condensed consolidated financial statements include all adjustments necessary to fairly present such information in all material respects.
NOTE 2 SEGMENT INFORMATION
The Company 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 December 31, 2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
4,089
1,255
1,677
512
‐
‐
7,533
– intersegment
(2)
203
272
54
‐
(527)
‐
Sales
– total
4,087
1,458
1,949
566
‐
(527)
7,533
Freight, transportation and distribution
‐
81
157
65
‐
(59)
244
Net sales
4,087
1,377
1,792
501
‐
(468)
7,289
Cost of goods sold
3,010
310
1,093
485
‐
(515)
4,383
Gross margin
1,077
1,067
699
16
‐
47
2,906
Selling expenses
836
1
6
2
5
(6)
844
General and administrative expenses
51
3
5
4
99
‐
162
Provincial mining taxes
‐
190
‐
‐
‐
‐
190
Share-based compensation recovery
‐
‐
‐
‐
(59)
‐
(59)
Other expenses (income)
1
4
2
40
67
(4)
110
Earnings (loss) before
finance costs and income taxes
189
869
686
(30)
(112)
57
1,659
Depreciation and amortization
202
89
155
58
16
‐
520
EBITDA 1
391
958
841
28
(96)
57
2,179
Integration and
restructuring related costs
‐
‐
‐
‐
11
‐
11
Share-based compensation recovery
‐
‐
‐
‐
(59)
‐
(59)
Foreign exchange gain,
net of related derivatives
‐
‐
‐
‐
(36)
‐
(36)
Adjusted EBITDA
391
958
841
28
(180)
57
2,095
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876)
54,586
1. EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.
Three Months Ended December 31, 2021
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,847
1,358
1,476
586
‐
‐
7,267
– intersegment
31
128
292
65
‐
(516)
‐
Sales
– total
3,878
1,486
1,768
651
‐
(516)
7,267
Freight, transportation and distribution
‐
66
119
58
‐
(45)
198
Net sales
3,878
1,420
1,649
593
‐
(471)
7,069
Cost of goods sold
2,705
305
895
430
‐
(472)
3,863
Gross margin
1,173
1,115
754
163
‐
1
3,206
Selling expenses
848
1
2
1
3
‐
855
General and administrative expenses
43
2
7
3
93
‐
148
Provincial mining taxes
‐
173
‐
‐
‐
‐
173
Share-based compensation expense
‐
‐
‐
‐
73
‐
73
Impairment of assets
‐
‐
17
4
‐
‐
21
Other expenses (income)
20
3
(28)
2
112
‐
109
Earnings (loss) before
finance costs and income taxes
262
936
756
153
(281)
1
1,827
Depreciation and amortization
178
117
148
39
15
‐
497
EBITDA
440
1,053
904
192
(266)
1
2,324
Integration and restructuring
related costs (recovery)
2
‐
‐
‐
(6)
‐
(4)
Share-based compensation expense
‐
‐
‐
‐
73
‐
73
Impairment of assets
‐
‐
17
4
‐
‐
21
COVID-19 coronavirus pandemic
("COVID-19") related expenses
‐
‐
‐
‐
11
‐
11
Foreign exchange loss,
net of related derivatives
‐
‐
‐
‐
38
‐
38
Adjusted EBITDA
442
1,053
921
196
(150)
1
2,463
Assets – at December 31, 2021
22,387
13,148
11,093
1,699
2,266
(639)
49,954
Twelve Months Ended December 31, 2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
21,266
7,600
6,755
2,263
‐
‐
37,884
– intersegment
84
599
1,293
357
‐
(2,333)
‐
Sales
– total
21,350
8,199
8,048
2,620
‐
(2,333)
37,884
Freight, transportation and distribution
‐
300
515
243
‐
(186)
872
Net sales
21,350
7,899
7,533
2,377
‐
(2,147)
37,012
Cost of goods sold
16,171
1,400
4,252
1,884
‐
(2,119)
21,588
Gross margin
5,179
6,499
3,281
493
‐
(28)
15,424
Selling expenses
3,392
10
28
7
(1)
(22)
3,414
General and administrative expenses
200
9
17
13
326
‐
565
Provincial mining taxes
‐
1,149
‐
‐
‐
‐
1,149
Share-based compensation expense
‐
‐
‐
‐
63
‐
63
Reversal of impairment of assets
‐
‐
‐
(780)
‐
‐
(780)
Other expenses (income)
29
5
(137)
67
227
13
204
Earnings (loss) before
finance costs and income taxes
1,558
5,326
3,373
1,186
(615)
(19)
10,809
Depreciation and amortization
752
443
558
188
71
‐
2,012
EBITDA
2,310
5,769
3,931
1,374
(544)
(19)
12,821
Integration and restructuring
related costs
2
‐
‐
‐
44
‐
46
Share-based compensation expense
‐
‐
‐
‐
63
‐
63
Reversal of impairment of assets
‐
‐
‐
(780)
‐
‐
(780)
COVID-19 related expenses
‐
‐
‐
‐
8
‐
8
Foreign exchange loss,
net of related derivatives
‐
‐
‐
‐
31
‐
31
Gain on disposal of investment
(19)
‐
‐
‐
‐
‐
(19)
Adjusted EBITDA
2,293
5,769
3,931
594
(398)
(19)
12,170
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876)
54,586
Twelve Months Ended December 31, 2021
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
17,665
4,021
4,216
1,810
‐
‐
27,712
– intersegment
69
386
921
236
‐
(1,612)
‐
Sales
– total
17,734
4,407
5,137
2,046
‐
(1,612)
27,712
Freight, transportation and distribution
‐
371
448
217
‐
(185)
851
Net sales
17,734
4,036
4,689
1,829
‐
(1,427)
26,861
Cost of goods sold
13,134
1,285
2,963
1,408
‐
(1,338)
17,452
Gross margin
4,600
2,751
1,726
421
‐
(89)
9,409
Selling expenses
3,124
9
24
6
(21)
‐
3,142
General and administrative expenses
168
8
15
11
275
‐
477
Provincial mining taxes
‐
466
‐
‐
‐
‐
466
Share-based compensation expense
‐
‐
‐
‐
198
‐
198
Impairment of assets
‐
7
22
4
‐
‐
33
Other expenses (income)
86
22
(64)
15
253
‐
312
Earnings (loss) before
finance costs and income taxes
1,222
2,239
1,729
385
(705)
(89)
4,781
Depreciation and amortization
706
488
557
151
49
‐
1,951
EBITDA
1,928
2,727
2,286
536
(656)
(89)
6,732
Integration and
restructuring related costs
10
‐
‐
‐
33
‐
43
Share-based compensation expense
‐
‐
‐
‐
198
‐
198
Impairment of assets
‐
7
22
4
‐
‐
33
COVID-19 related expenses
‐
‐
‐
‐
45
‐
45
Foreign exchange loss,
net of related derivatives
‐
‐
‐
‐
39
‐
39
Cloud computing transition adjustment
1
2
‐
‐
33
‐
36
Adjusted EBITDA
1,939
2,736
2,308
540
(308)
(89)
7,126
Assets – at December 31, 2021
22,387
13,148
11,093
1,699
2,266
(639)
49,954
NOTE 3 GOODWILL
Goodwill Impairment Testing
Goodwill by cash-generating unit or group of cash-generating units
2022
2021
Retail – North America
6,898
6,898
Retail – International
927
779
Potash
154
154
Nitrogen
4,389
4,389
12,368
12,220
We performed our annual impairment test on goodwill and did not identify any impairment.
In 2022, North American central banks increased their benchmark borrowing rates, which are a component of our discount rate for impairment testing. As a result of these increases, we revised our discount rates throughout 2022, which triggered impairment testing for our Retail – North America group of Cash Generating Units (“CGUs”) as at June 30, 2022 and September 30, 2022. No impairment was recognized during these interim testing periods. There was no trigger for an impairment test to be performed in the three months ended December 31, 2022.
Goodwill is more susceptible to impairment risk if there is an increase in the discount rate, or a deterioration in business operating results or economic conditions and actual results do not meet our forecasts. As at September 30, 2022, the Retail – North America group of CGUs carrying amount approximated its recoverable amount. A 25 basis point increase in the discount rate would have resulted in an impairment of the carrying amount of goodwill of approximately $500. A decrease in forecasted EBITDA and cash flows or a reduction in the terminal growth rate could result in impairment in the future.
As at
As at
Retail – North America – Key Assumptions
September 30, 2022
June 30, 2022
Terminal growth rate (%)
2.5
2.5
Forecasted EBITDA over forecast period (billions)
7.6
7.5
Discount rate (%)
8.5
8.0
In testing for impairment of goodwill, we calculate the recoverable amount for a CGU or groups of CGUs containing goodwill. We used the fair value less cost of disposal (“FVLCD”) methodology based on after-tax discounted cash flows (five-year projections plus a terminal value) and incorporated assumptions an independent market participant would apply, including considerations related to climate-change initiatives. We adjusted discount rates for each CGU or group of CGUs for the risk associated with achieving our forecasts and for the country risk premium in which we expect to generate cash flows. FVLCD is a Level 3 measurement. We use our market capitalization and comparative market multiples to ensure discounted cash flow results are reasonable.
The key assumptions with the greatest influence on the calculation of the recoverable amounts are the discount rates, terminal growth rates and cash flow forecasts. The key forecast assumptions were based on historical data and our estimates of future results from internal sources considering industry and market trends.
The remaining CGUs were tested as part of our annual impairment test and the following table indicates the key assumptions used:
Terminal Growth Rate (%)
Discount Rate (%)
2022
2021
2022
2021
Retail – International 1
2.0
–
6.0
2.0
–
6.2
8.9
–
16.0
8.0
–
15.5
Potash
2.5
2.5
8.3
7.7
Nitrogen
2.0
2.0
9.3
7.8
1. The discount rates reflect the country risk premium and size for our international groups of CGUs.
NOTE 4 OTHER EXPENSES (INCOME)
Three Months Ended
Twelve Months Ended
December 31
December 31
2022
2021
2022
2021
Integration and restructuring related costs (recovery)
11
(4)
46
43
Foreign exchange (gain) loss, net of related derivatives
(36)
38
31
42
Earnings of equity-accounted investees
(47)
(46)
(247)
(89)
Bad debt (recovery) expense
(6)
4
12
26
COVID-19 related expenses
‐
11
8
45
Gain on disposal of investment
‐
‐
(19)
‐
Project feasibility costs
22
20
79
50
Customer prepayment costs
7
8
42
45
Legal expenses
8
4
21
6
Consulting expenses
15
2
29
4
Employee special recognition award
61
‐
61
‐
Cloud computing transition adjustment
‐
‐
‐
36
Other expenses
75
72
141
104
110
109
204
312
NOTE 5 LONG-TERM DEBT
In March 2022, we filed a base shelf prospectus in Canada and the US qualifying the issuance of up to $5,000 of common shares, debt and other securities during a period of 25 months from March 11, 2022. Issuance of securities requires us to file a prospectus supplement and is subject to availability of funding in capital markets. On November 7, 2022, we issued $1,000 of notes, as described below, pursuant to the base shelf prospectus and a prospectus supplement.
Repayments and issuances in the fourth quarter
Rate of interest (%)
Maturity
Amount
Notes repaid 2022
3.150
October 1, 2022
500
Notes issued
Notes issued 2022
5.900
November 7, 2024
500
Notes issued 2022
5.950
November 7, 2025
500
1,000
The notes issued in the fourth quarter of 2022 are unsecured, rank equally with our existing unsecured notes and debentures, and have no sinking fund requirements prior to maturity. Each series of notes is redeemable and provides for redemption prior to maturity, at our option, at specified prices.
NOTE 6 SHARE CAPITAL
Share Repurchase Programs
Three Months Ended
Twelve Months Ended
December 31
December 31
2022
2021
2022
2021
Number of common shares repurchased for cancellation
14,924,590
13,522,057
53,312,559
15,982,154
Average price per share (US dollars)
77.91
70.64
84.34
69.17
Total cost
1,162
955
4,496
1,105
The original expiry date for the 2022 normal course issuer bid was February 28, 2023, but we acquired the maximum number of common shares allowable on February 7, 2023. As of February 7, 2023, an additional 8,002,792 common shares were repurchased for cancellation at a cost of $625 and an average price per share of $78.07.
On February 15, 2023, our Board of Directors approved a share repurchase program for up to five percent of our outstanding common shares. The 2023 normal course issuer bid, which is subject to the acceptance by the Toronto Stock Exchange, will expire after a one-year period, if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.
Dividends Declared
On February 15, 2023, our Board of Directors declared a quarterly dividend of $0.53 per share payable on April 13, 2023, to shareholders of record on March 31, 2023. The total estimated dividend to be paid is $265.
NOTE 7 BUSINESS COMBINATIONS
Casa do Adubo S.A. (“Casa do Adubo”)
Other Acquisitions
Acquisition date
October 1, 2022
Various
Purchase price, net of cash and cash equivalents acquired, and amounts held in escrow
$231 (preliminary)
On the acquisition date, we acquired 100% of the issued and outstanding Casa do Adubo stock.
$176 (preliminary) (2021 – $88)
Goodwill and expected benefits of acquisitions
$145 (preliminary)
$55 (preliminary) (2021 – $77)
The expected benefits of the acquisitions resulting in goodwill include:
synergies from expected reduction in operating costs wider distribution channel for selling products of acquired businesses a larger assembled workforce potential increase in customer base enhanced ability to innovateDescription
An agriculture retailer in Brazil with 39 retail locations and 10 distribution centers. This acquisition is aligned with our disciplined approach to capital allocation and sustainability commitments, as we continue to expand our presence in Brazil.
2022 – 43 Retail locations related to various agricultural services and 1 wholesale warehouse location (2021 – 36 Retail locations)
We have engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed and related deferred income tax impacts. As at December 31, 2022, the total consideration and purchase price allocation for Casa do Adubo and certain other acquisitions are not final as we are continuing to obtain and verify information required to determine the fair value of certain assets acquired and liabilities assumed and the amount of deferred income taxes arising on their recognition, as part of the due diligence process. We expect to finalize the amounts recognized as we obtain the information necessary to complete the analysis within one year from the date of acquisition.
We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective acquisition date. The information below represents preliminary fair values.
For certain other acquisitions, we finalized the purchase price with no material change to the fair values disclosed in prior periods. The valuation technique and judgments applied are consistent with those methods presented in Note 30 of the 2021 annual consolidated financial statements.
December 31, 2022
December 31, 2021
Casa do Adubo
(Preliminary)
Other
Acquisitions
(Preliminary)
Other
Acquisitions
Receivables
174
1
11
43
Inventories
107
92
24
Prepaid expenses and other current assets
3
13
‐
Property, plant and equipment
24
116
10
Goodwill
145
2
55
77
Intangible assets
95
9
16
Investments
‐
2
‐
Other non-current assets
6
4
4
Total assets
554
302
174
Short-term debt
14
3
11
11
Payables and accrued charges
159
74
50
Long-term debt, including current portion
91
14
7
Lease liabilities, including current portion
10
3
1
Other non-current liabilities
1
14
17
Total liabilities
275
116
86
Total consideration
279
186
88
Amounts held in escrow
(48)
(10)
‐
Total consideration, net of cash and cash equivalents acquired, and amounts held in escrow
231
176
88
1. Includes receivables from customers with gross contractual amounts of $169, of which $3 is considered to be uncollectible.
2. Goodwill was calculated as the excess of the fair value of consideration transferred over the recognized amount of net identifiable assets acquired. The portion of goodwill deductible for income tax purposes will be determined when the purchase allocation is finalized.
3. Outstanding amount on the Casa do Adubo credit facilities assumed as part of the acquisition.
Financial information related to the Casa do Adubo acquisition is as follows:
2022 Proforma (estimated as if acquisitions occurred at the beginning of the year)
Sales
440
Earnings before finance costs and income taxes1
42
1. Net earnings is not available.
Three and Twelve Months Ended
From date of acquisition
December 31, 2022
Sales
130
Earnings before finance costs and income taxes
7
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