Nutrien is accelerating growth initiatives and
announces intention to complete its existing 10 percent share
repurchase program in 2022
All amounts are in US dollars except as otherwise noted
Nutrien Ltd. (TSX and NYSE: NTR) announced today its second
quarter 2022 results, with net earnings of $3.6 billion ($6.51
diluted net earnings per share), which includes a non-cash
impairment reversal of $450 million relating to our Phosphate
operations. Second quarter 2022 adjusted net earnings per share1
were $5.85 and adjusted EBITDA1 was $5.0 billion.
“Nutrien delivered record earnings in the first half of 2022 due
to the strength of market fundamentals, strong operating
performance, the advantaged position of our global production
assets and the excellent results of Retail. We generated strong
results across our integrated business and demonstrated our
unmatched capability to efficiently supply our customers with the
products they need to help sustainably feed a growing world,”
commented Ken Seitz, Nutrien’s Interim President and CEO.
“We expect supply challenges across global energy, agriculture
and fertilizer markets to persist well beyond 2022. The strength of
our projected cash flow provides an opportunity to accelerate
high-return strategic growth initiatives and return significant
capital to shareholders. We intend on completing our 10 percent
share repurchase program in 2022, increasing the total amount of
capital returned to shareholders to approximately $6 billion during
the year,” added Mr. Seitz.
Highlights:
- Nutrien generated net earnings of $5.0 billion and adjusted
EBITDA1 of $7.6 billion in the first half of 2022 due to higher
realized prices and strong Retail performance, more than offsetting
a reduction in fertilizer sales volumes. As a result, cash provided
by operating activities increased to $2.5 billion in the first half
of 2022.
- Nutrien revised full-year 2022 adjusted EBITDA guidance1 and
adjusted net earnings per share guidance1 to $14.0 to $15.5 billion
and $15.80 to $17.80 per share, respectively. Adjusted net earnings
per share guidance includes our plans to allocate approximately $5
billion to share repurchases in 2022.
- Nutrien Ag Solutions (“Retail”) delivered record adjusted
EBITDA in the second quarter and the first half of 2022. First-half
adjusted EBITDA was up 38 percent year-over-year as a result of
strong sales and gross margin growth, due to supportive market
conditions in key regions where we operate. Retail cash operating
coverage ratio1 improved to 54 percent compared to 60 percent for
the same period in 2021 driven by higher margins.
- Potash adjusted EBITDA in the second quarter and the first half
of 2022 increased compared to the prior year due to higher net
realized selling prices and strong offshore sales volumes. North
American sales volumes were lower than the same period last year
due to a compressed application season.
- Nitrogen second quarter and first half adjusted EBITDA
increased compared to the prior year due to higher net realized
selling prices that more than offset higher natural gas costs and
lower sales volumes.
- In the second quarter of 2022, we recognized a non-cash
impairment reversal of $450 million associated with our Phosphate
operations due to a more favorable outlook for phosphate
margins.
- Nutrien repurchased approximately 22 million shares
year-to-date as of August 2, 2022, under our share repurchase
programs, for a total of approximately $1.8 billion.
- On May 18, 2022, Nutrien announced it is evaluating its
existing site at Geismar, Louisiana to build the world’s largest
clean ammonia facility. The project would leverage low-cost natural
gas, tidewater access to world markets, and high-quality carbon
capture and sequestration infrastructure to serve growing demand in
agricultural, industrial and emerging energy markets.
- On June 9, 2022, Nutrien announced its intention to increase
potash production capability to 18 million tonnes by 2025 in
response to the uncertainty of potash supply from Eastern Europe
being able to meet global demand.
- Nutrien announced agreements to acquire Brazilian ag retail
companies Casa do Adubo S.A. and Marca Agro Mercantil. These
acquisitions support Nutrien’s Retail growth strategy in Brazil and
upon completion of the acquisitions, we expect to surpass our
stated target of $100 million annual adjusted EBITDA in Brazil by
2023.
1 These (and any related guidance, if applicable) are non-IFRS
financial measures. See the “Non-IFRS Financial Measures” section
for further information.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD&A”)
is the responsibility of management and is dated as of August 3,
2022. The Board of Directors (“Board”) of Nutrien carries out its
responsibility for review of this disclosure principally through
its audit committee, comprised exclusively of independent
directors. The audit committee reviews and, prior to its
publication, approves this disclosure pursuant to the authority
delegated to it by the Board. The term “Nutrien” refers to Nutrien
Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company”
refer to Nutrien and, as applicable, Nutrien and its direct and
indirect subsidiaries on a consolidated basis. Additional
information relating to Nutrien (which, except as otherwise noted,
is not incorporated by reference herein), including our annual
report dated February 17, 2022 (“2021 Annual Report”), which
includes our annual audited consolidated financial statements and
MD&A, and our annual information form dated February 17, 2022
(“2021 Annual Information Form”), each for the year ended December
31, 2021, can be found on SEDAR at www.sedar.com and on EDGAR at
www.sec.gov. No update is provided to the disclosure in our 2021
annual MD&A except for material information since the date of
our annual MD&A. The Company is a foreign private issuer under
the rules and regulations of the US Securities and Exchange
Commission (the “SEC”).
This MD&A is based on and should be read in conjunction with
the Company’s unaudited interim condensed consolidated financial
statements as at and for the three and six months ended June 30,
2022 (“interim financial statements”) based on International
Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board and prepared in accordance
with International Accounting Standard 34 “Interim Financial
Reporting”, unless otherwise noted. This MD&A contains certain
non-IFRS financial measures and ratios and forward-looking
statements, which are described in the “Non-IFRS Financial
Measures” and the “Forward-Looking Statements” sections,
respectively.
Market Outlook and Guidance
Agriculture and Retail
- Global grain and oilseed stocks-to-use ratios remain well below
historical average levels, which we believe will continue to be
supportive for crop prices. Prices for key crops such as corn,
soybeans and wheat are up 25 to 35 percent compared to the 10-year
average, providing strong incentive for growers to increase
production.
- The US Department of Agriculture (USDA) projects that Ukrainian
wheat and corn production will be down by more than 40 percent and
combined Ukrainian exports of corn, wheat and barley will be down
by approximately 60 percent year-over-year in 2022/23. While
diplomatic efforts to restore exports from Ukrainian ports has
progressed, the overall reduction in Ukrainian production in 2022
is expected to continue to constrain supplies for the forthcoming
year.
- US crop conditions started the 2022 growing season favorably,
however, recent hot and dry weather has accelerated crop
development and could limit yield potential. In Western Canada,
growing conditions have improved from the severe 2021 drought. We
expect the combination of robust grower economics and favorable
growing conditions to support demand for crop nutritional products,
fungicides and insecticides in the third quarter of 2022.
- Prospective Brazilian grower margins remain historically high
and analysts expect a 2 to 4 percent increase in soybean planted
area in the 2022 planting season. While we expect this to support
overall crop input demand, fertilizer inventories have been slow to
move from port to inland positions and we expect import demand will
resurface as these inventories move inland for Brazil’s spring
planting season in the second half of 2022.
Crop Nutrient Markets
- Restricted supplies of potash from Russia and Belarus kept
potash prices at historically high levels through the first half of
2022. Potash shipments from Russia and Belarus were estimated to be
down approximately 25 and 50 percent respectively in the first half
of 2022, with the majority of Belarus exports occurring in the
first quarter. We have narrowed our global potash shipment forecast
to between 61 and 64 million tonnes in 2022 and continue to expect
demand to be constrained by restrictions on exports from Russia and
Belarus.
- A dramatic increase in European natural gas prices has once
again led to reduced nitrogen operating rates in the region.
Tightening European ammonia supplies and significantly reduced
Russian ammonia exports from the Black Sea are pressuring global
ammonia availability. We expect strong seasonal nitrogen demand in
the second half of 2022 following a period of delayed purchases due
to benchmark price volatility.
- The Chinese government continues to impose export restrictions
on urea and phosphate fertilizers that are expected to limit its
export volumes in the second half of 2022.
Financial Guidance
- Nutrien revised full-year 2022 adjusted EBITDA guidance1 and
full-year 2022 adjusted net earnings per share guidance1 primarily
due to lower expected Nitrogen earnings as a result of lower
nitrogen benchmark pricing and higher natural gas costs. Retail
adjusted EBITDA guidance was increased to reflect strong
performance in the second quarter. Adjusted net earnings per share
guidance includes our plans to allocate approximately $5 billion to
share repurchases in 2022.
- Nutrien lowered potash and nitrogen sales volume guidance to
reflect the impact of lower application in North America this
spring.
All guidance numbers, including those noted above are outlined
in the table below. Refer to page 53 of Nutrien’s 2021 Annual
Report for related assumptions and sensitivities.
Guidance Ranges1 as of
Aug 3, 2022
May 2, 2022
(billions of US dollars, except as
otherwise noted)
Low
High
Low
High
Adjusted net earnings per share 2
15.80
17.80
16.20
18.70
Adjusted EBITDA 2
14.0
15.5
14.5
16.5
Retail adjusted EBITDA
2.1
2.2
1.8
1.9
Potash adjusted EBITDA
7.6
8.2
7.5
8.3
Nitrogen adjusted EBITDA
4.0
4.7
5.0
5.8
Phosphate adjusted EBITDA (in US
millions)
750
850
800
900
Potash sales tonnes (millions) 3
14.3
14.9
14.5
15.1
Nitrogen sales tonnes (millions) 3
10.6
11.0
10.7
11.1
Depreciation and amortization
2.0
2.1
2.0
2.1
Effective tax rate on adjusted earnings
(%)
25.5
26.5
25.5
26.5
Sustaining capital expenditures 4
1.3
1.4
1.2
1.3
1 See the "Forward-Looking Statements"
section.
2 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
3 Manufactured product only. Nitrogen
sales tonnes excludes ESN® products.
4 This is a supplementary financial
measure. See the "Other Financial Measures" section.
Consolidated Results
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2022
2021
% Change
2022
2021
% Change
Sales
14,506
9,763
49
22,163
14,421
54
Freight, transportation and
distribution
221
222
‐
424
433
(2)
Cost of goods sold
8,286
6,659
24
12,483
9,950
25
Gross margin
5,999
2,882
108
9,256
4,038
129
Expenses
1,054
1,263
(17)
2,312
2,141
8
Net earnings
3,601
1,113
224
4,986
1,246
300
Adjusted EBITDA 1
4,993
2,215
125
7,608
3,021
152
Diluted net earnings per share
6.51
1.94
236
8.99
2.16
316
Adjusted net earnings per share 1
5.85
2.08
181
8.53
2.37
260
Cash provided by operating activities
2,558
1,966
30
2,496
1,814
38
Free cash flow 1
3,413
1,413
142
5,227
1,889
177
Free cash flow including changes in
non-cash operating working capital 1
2,302
1,662
39
2,046
1,346
52
1 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Net earnings and adjusted EBITDA more than doubled in the second
quarter and first half of 2022 compared to the same period in 2021.
This was due to higher net realized selling prices from global
supply uncertainties across our nutrient businesses and strong
Retail performance. In the second quarter of 2022, we recorded a
non-cash impairment reversal of $450 million related to our
Phosphate operations which impacted net earnings. Cash provided by
operating activities increased in the second quarter and first half
of 2022 compared to the same period in 2021 due primarily to higher
net earnings.
Segment Results
Our discussion of segment results set out on the following pages
is a comparison of the results for the three and six months ended
June 30, 2022 to the results for the three and six months ended
June 30, 2021, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended June
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
Sales
Crop nutrients
4,548
3,045
49
911
703
30
20
23
Crop protection products
2,983
2,666
12
805
587
37
27
22
Seed
1,269
1,216
4
283
237
19
22
19
Merchandise
280
268
4
51
45
13
18
17
Nutrien Financial
91
59
54
91
59
54
100
100
Services and other 1
310
320
(3)
258
264
(2)
83
83
Nutrien Financial elimination 1, 2
(59)
(37)
59
(59)
(37)
59
100
100
9,422
7,537
25
2,340
1,858
26
25
25
Cost of goods sold
7,082
5,679
25
Gross margin
2,340
1,858
26
Expenses 3
1,088
938
16
Earnings before finance costs and taxes
("EBIT")
1,252
920
36
Depreciation and amortization
175
169
4
EBITDA
1,427
1,089
31
Adjustments 4
‐
8
(100)
Adjusted EBITDA
1,427
1,097
30
1 Certain immaterial figures have been
reclassified for the three months ended June 30, 2021.
2 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
3 Includes selling expenses of $1,013
million (2021 – $863 million).
4 See Note 2 to the interim financial
statements.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
Sales
Crop nutrients
6,135
4,061
51
1,203
923
30
20
23
Crop protection products
4,370
3,751
17
1,087
763
42
25
20
Seed
1,727
1,679
3
349
306
14
20
18
Merchandise
514
498
3
92
83
11
18
17
Nutrien Financial
140
84
67
140
84
67
100
100
Services and other 1
485
485
‐
402
400
1
83
82
Nutrien Financial elimination 1
(88)
(49)
80
(88)
(49)
80
100
100
13,283
10,509
26
3,185
2,510
27
24
24
Cost of goods sold
10,098
7,999
26
Gross margin
3,185
2,510
27
Expenses 2
1,843
1,659
11
EBIT
1,342
851
58
Depreciation and amortization
344
346
(1)
EBITDA
1,686
1,197
41
Adjustments 3
(19)
9
n/m
Adjusted EBITDA
1,667
1,206
38
1 Certain immaterial figures have been
reclassified for the six months ended June 30, 2021.
2 Includes selling expenses of $1,735
million (2021 – $1,530 million).
3 See Note 2 to the interim financial
statements.
- Adjusted EBITDA increased in the second quarter and
first half of 2022 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 products sales. Retail cash
operating coverage ratio1 improved as at June 30, 2022 to 54
percent from 60 percent in the same period in 2021 due to
significantly higher gross margin.
- Crop nutrients sales and gross margin increased
significantly in the second quarter and first half of 2022 due to
higher selling prices. Gross margin per tonne increased in the
second quarter and first half of 2022 compared to the same periods
in the prior year due to strategic procurement and the timing of
inventory purchases. Sales volumes decreased due to a pull forward
of sales into the fourth quarter of 2021 and reduced application
resulting from a delayed planting season in North America.
- Crop protection products sales and gross margin
increased in the second quarter and first half of 2022 in all
regions we operate due to higher prices, along with increased sales
and gross margin in proprietary products. Gross margin percent
increased by 5 percentage points in the second quarter and first
half of 2022, supported by the reliability of our supply chain and
strategic procurement in a rising price environment.
- Seed sales and gross margin increased in the second
quarter and first half of 2022 due to higher pricing, an increase
in proprietary seed margins and strong demand in Australia.
- Merchandise sales increased in the second quarter and
first half of 2022 primarily driven by favorable market conditions
for Australia animal health products, with increased flock and herd
sizes along with higher fencing sales.
- Nutrien Financial sales increased in the second quarter
and first half 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 decreased in the second quarter
due to lower fertilizer application services, and held flat through
the first half of 2022, due to favorable weather conditions in
Australia in the first quarter.
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 June
30
(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
680
326
109
933
1,172
(20)
729
278
162
Offshore
1,988
491
305
2,776
2,449
13
716
200
258
2,668
817
227
3,709
3,621
2
719
226
218
Cost of goods sold
399
317
26
107
88
22
Gross margin – total
2,269
500
354
612
138
343
Expenses 1
372
123
202
Depreciation and amortization
35
32
9
EBIT
1,897
377
403
Gross margin excluding depreciation
Depreciation and amortization
130
116
12
and amortization – manufactured 3
647
170
281
EBITDA
2,027
493
311
Potash controllable cash cost of
Adjustments 2
‐
2
(100)
product manufactured 3
52
50
4
Adjusted EBITDA
2,027
495
309
1 Includes provincial mining taxes of $362
million (2021 – $107 million).
2 See Note 2 to the interim financial
statements.
3 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
North America
1,513
658
130
2,151
2,642
(19)
703
249
182
Offshore
3,005
770
290
4,601
4,136
11
653
186
251
4,518
1,428
216
6,752
6,778
‐
669
211
217
Cost of goods sold
704
608
16
104
90
16
Gross margin – total
3,814
820
365
565
121
367
Expenses 1
623
187
233
Depreciation and amortization
36
35
1
EBIT
3,191
633
404
Gross margin excluding depreciation
Depreciation and amortization
242
240
1
and amortization – manufactured
601
156
284
EBITDA
3,433
873
293
Potash controllable cash cost of
Adjustments 2
‐
2
(100)
product manufactured
51
50
2
Adjusted EBITDA
3,433
875
292
1 Includes provincial mining taxes of $611
million (2021 – $165 million).
2 See Note 2 to the interim financial
statements.
- Adjusted EBITDA increased in the second quarter and
first half 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.
- Sales volumes were the highest of any second quarter on
record due to strong demand in offshore markets. North American
sales volumes were impacted by delayed planting and a compressed
application window.
- Net realized selling price increased in the second
quarter and first half of 2022 due to the impact of supply
constraints, in particular related to uncertainty on future supply
from Russia and Belarus.
- Cost of goods sold per tonne increased in the second
quarter and first half of 2022 primarily due to higher royalties
resulting from increased net realized selling prices. Potash
controllable cash cost of product manufactured increased slightly
in the second quarter and first half of 2022 due to higher input
costs driven by inflation.
Canpotex Sales by Market
(percentage of sales volumes, except
as
Three Months Ended June
30
Six Months Ended June
30
otherwise noted)
2022
2021
Change
2022
2021
Change
Latin America
40
35
5
36
33
3
Other Asian markets 1
28
41
(13)
35
39
(4)
China
12
11
1
12
12
‐
Other markets
11
10
1
11
11
‐
India
9
3
6
6
5
1
100
100
100
100
1 All Asian markets except China and
India.
Nitrogen
Three Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Ammonia
743
346
115
643
836
(23)
1,157
416
178
Urea
601
346
74
810
819
(1)
742
421
76
Solutions, nitrates and sulfates
536
290
85
1,142
1,311
(13)
469
221
112
1,880
982
91
2,595
2,966
(13)
724
331
119
Cost of goods sold
839
597
41
323
201
61
Gross margin – manufactured
1,041
385
170
401
130
208
Gross margin – other 1
17
31
(45)
Depreciation and amortization
54
52
2
Gross margin – total
1,058
416
154
Gross margin excluding depreciation
(Income) expenses
(43)
17
n/m
and amortization – manufactured 3
455
182
149
EBIT
1,101
399
176
Ammonia controllable cash cost of
Depreciation and amortization
139
155
(10)
product manufactured 3
58
51
14
EBITDA
1,240
554
124
Adjustments 2
‐
1
(100)
Adjusted EBITDA
1,240
555
123
1 Includes other nitrogen (including ESN®)
and purchased products and comprises net sales of $349 million
(2021 – $197 million) less cost of goods sold of $332 million (2021
– $166 million).
2 See Note 2 to the interim financial
statements.
3 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Ammonia
1,303
506
158
1,238
1,408
(12)
1,052
360
192
Urea
1,064
595
79
1,401
1,576
(11)
760
377
102
Solutions, nitrates and sulfates
975
454
115
2,221
2,385
(7)
439
190
131
3,342
1,555
115
4,860
5,369
(9)
688
290
137
Cost of goods sold
1,479
1,037
43
305
194
57
Gross margin - manufactured
1,863
518
260
383
96
299
Gross margin – other 1
55
48
15
Depreciation and amortization
54
53
2
Gross margin – total
1,918
566
239
Gross margin excluding depreciation
Income
(55)
‐
‐
and amortization – manufactured
437
149
193
EBIT
1,973
566
249
Ammonia controllable cash cost of
Depreciation and amortization
262
284
(8)
product manufactured
57
51
12
EBITDA
2,235
850
163
Adjustments 2
‐
5
(100)
Adjusted EBITDA
2,235
855
161
1 Includes other nitrogen (including ESN®)
and purchased products and comprises net sales of $628 million
(2021 – $384 million) less cost of goods sold of $573 million (2021
– $336 million).
2 See Note 2 to the interim financial
statements.
- Adjusted EBITDA increased in the second quarter and
first half 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.
- Sales volumes decreased in the second quarter and first
half of 2022 due to unplanned plant outages that impacted ammonia
and urea production, along with a cool and wet spring in North
America that condensed the application window for direct
application of ammonia and delayed application of other nitrogen
products.
- Net realized selling price in the second quarter and
first half of 2022 were higher due to strong benchmark prices
resulting from the strength in global demand and tight supply,
along with higher energy prices in key nitrogen exporting
regions.
- Cost of goods sold per tonne in the second quarter and
first half of 2022 increased primarily due to higher natural gas
costs and higher raw material costs.
Natural Gas Prices in Cost of Production
Three Months Ended June
30
Six Months Ended June
30
(US dollars per MMBtu, except as otherwise
noted)
2022
2021
% Change
2022
2021
% Change
Overall gas cost excluding realized
derivative impact
8.54
3.86
121
7.72
3.51
120
Realized derivative impact
(0.06)
0.03
n/m
(0.04)
0.03
n/m
Overall gas cost
8.48
3.89
118
7.68
3.54
117
Average NYMEX
7.17
2.83
153
6.06
2.76
120
Average AECO
4.95
2.32
113
4.28
2.31
85
- Natural gas prices in our cost of production
increased in the second quarter and first half 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 June
30
(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
325
232
40
366
394
(7)
888
588
51
Industrial and feed
189
119
59
190
192
(1)
996
621
60
514
351
46
556
586
(5)
925
598
55
Cost of goods sold
352
271
30
634
463
37
Gross margin - manufactured
162
80
103
291
135
116
Gross margin – other 1
(6)
4
n/m
Depreciation and amortization
74
60
23
Gross margin – total
156
84
86
Gross margin excluding depreciation
(Income) expenses
(437)
7
n/m
and amortization – manufactured 3
365
195
87
EBIT
593
77
670
Depreciation and amortization
41
35
17
EBITDA
634
112
466
Adjustments 2
(450)
‐
n/m
Adjusted EBITDA
184
112
64
1 Includes other phosphate and purchased
products and comprises net sales of $76 million (2021 – $52
million) less cost of goods sold of $82 million (2021 – $48
million).
2 See Notes 2 and 3 to the interim
financial statements. Includes impairment reversal of assets of
$450 million (2021 – nil).
3 This is a non-IFRS financial measure.
See the "Non-IFRS Financial Measures" section.
Six Months Ended June
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2022
2021
% Change
2022
2021
% Change
2022
2021
% Change
Manufactured product
Net sales
Fertilizer
718
462
55
826
903
(9)
869
511
70
Industrial and feed
359
233
54
381
385
(1)
943
605
56
1,077
695
55
1,207
1,288
(6)
892
539
65
Cost of goods sold
712
553
29
589
429
37
Gross margin – manufactured
365
142
157
303
110
175
Gross margin – other 1
(2)
8
n/m
Depreciation and amortization
68
57
20
Gross margin – total
363
150
142
Gross margin excluding depreciation
(Income) expenses
(428)
14
n/m
and amortization – manufactured
371
167
123
EBIT
791
136
482
Depreciation and amortization
82
73
12
EBITDA
873
209
318
Adjustments 2
(450)
‐
n/m
Adjusted EBITDA
423
209
102
1 Includes other phosphate and purchased
products and comprises net sales of $148 million (2021 – $93
million) less cost of goods sold of $150 million (2021 – $85
million).
2 See Notes 2 and 3 to the interim
financial statements. Includes impairment reversal of assets of
$450 million (2021 – nil).
- Adjusted EBITDA increased in the second quarter and
first half of 2022 due to higher net realized selling prices, which
more than offset higher raw material costs and lower sales volumes.
As part of expenses, we recognized a $450 million non-cash
impairment of assets reversal, which is deducted from adjusted
EBITDA. This impairment reversal is due to a more favorable outlook
for phosphate margins.
- Sales volumes decreased particularly in fertilizer, as a
cool and wet spring in North America condensed the application
window.
- Net realized selling price increased in the second
quarter and first half of 2022 in connection with the increase in
global benchmark prices. Industrial and feed net realized selling
prices increased to a greater extent than fertilizer prices in the
second quarter of 2022, which reflects the typical lag in
industrial and feed price realizations relative to spot fertilizer
prices.
- Cost of goods sold per tonne increased primarily due to
significantly higher sulfur and ammonia input costs.
Corporate and Others
(millions of US dollars, except as
otherwise
Three Months Ended June
30
Six Months Ended June
30
noted)
2022
2021
% Change
2022
2021
% Change
Selling expenses
(2)
(9)
(78)
(4)
(15)
(73)
General and administrative expenses
77
66
17
147
124
19
Share-based compensation (recovery)
expense
(52)
38
n/m
83
61
36
Other expenses
48
83
(42)
101
111
(9)
EBIT
(71)
(178)
(60)
(327)
(281)
16
Depreciation and amortization
20
10
100
36
22
64
EBITDA
(51)
(168)
(70)
(291)
(259)
12
Adjustments 1
(7)
100
n/m
167
143
17
Adjusted EBITDA
(58)
(68)
(15)
(124)
(116)
7
1 See Note 2 to the interim financial
statements.
- Share-based compensation (recovery) expense – the
recovery in the second quarter of 2022 reflects a decrease in the
fair value of share-based compensation due to a decrease in our
share price, whereas an expense was recorded in the second quarter
of 2021 as our share price increased during the period.
- Other expenses were lower in the second quarter and
first half of 2022 compared to the same periods in 2021 due to the
absence of cloud computing related expenses from our change in
accounting policy, partially offset by higher foreign exchange
losses related to our international operations.
Eliminations
Eliminations of gross margin between operating segments was a
recovery of $176 million in the second quarter of 2022 compared to
a recovery of $24 million in the same period of 2021. We had a
significant recovery in the second quarter of 2022 due to the
release of higher-margin inventories held by our Retail segment at
the end of the previous quarter. Eliminations are not part of the
Corporate and Others segment.
Finance Costs, Income Taxes and Other Comprehensive (Loss)
Income
(millions of US dollars, except as
otherwise
Three Months Ended June
30
Six Months Ended June
30
noted)
2022
2021
% Change
2022
2021
% Change
Finance costs
130
125
4
239
245
(2)
Income tax expense
1,214
381
219
1,719
406
323
Other comprehensive (loss) income
(242)
61
n/m
(66)
85
n/m
- Income tax expense was higher as a result of
significantly higher earnings in the second quarter and first half
of 2022 compared to the same periods in 2021.
- Other comprehensive (loss) income is primarily driven by
changes in the currency translation of our foreign operations and
our investment in Sinofert Holdings Ltd. (“Sinofert”). In the
second quarter and first half 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 in the same periods
of 2021. In the second quarter of 2022, we also had a significant
loss on foreign currency translation of our Retail operations in
Australia, Brazil and Canada as these currencies depreciated
relative to the US dollar as at June 30, 2022 compared to March 31,
2022 levels. These losses offset the gains on translation for all
three currencies in the first quarter of 2022. Whereas, we had a
foreign currency translation gain in the second quarter of 2021 and
net loss in the second half of 2021.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our
capital allocation strategy. We believe that our internally
generated cash flow, supplemented by available borrowings under our
new or existing financing sources, if necessary, will be sufficient
to meet our anticipated capital expenditures, planned growth and
development activities, and other cash requirements for the
foreseeable future. Refer to the “Capital Structure and Management”
section for details on our existing long-term debt and credit
facilities.
Sources and Uses of Cash
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2022
2021
% Change
2022
2021
% Change
Cash provided by operating activities
2,558
1,966
30
2,496
1,814
38
Cash used in investing activities
(517)
(431)
20
(974)
(819)
19
Cash used in financing activities
(1,878)
(449)
318
(1,290)
(640)
102
Effect of exchange rate changes on cash
and cash equivalents
(29)
(4)
625
(20)
(15)
33
Increase in cash and cash equivalents
134
1,082
(88)
212
340
(38)
Cash provided by operating
activities
- Higher cash provided by operating activities in the second
quarter and first half of 2022 compared to the same periods in 2021
due to higher earnings driven by higher crop input prices from
tight global supply, offset with seasonal working capital
requirements.
Cash used in investing
activities
- Cash used in investing activities in the second quarter and
first half of 2022 was higher compared to the same periods in 2021
due to higher spending in Potash to increase our production
capabilities and in Nitrogen to advance our brownfield expansions,
and the timing of supplier payments.
Cash used in financing
activities
- Cash used in financing activities in the second quarter of 2022
was higher compared to the same period in 2021 due to increased
share repurchases and higher repayments of commercial paper.
- Cash used in financing activities in the first half of 2022 was
higher compared to the same period in 2021 due to increased share
repurchases, partially offset with increased commercial paper
drawdowns to temporarily finance working capital requirements.
Financial Condition Review
The following balance sheet categories contained variances that
were considered material:
As at
(millions of US dollars, except as
otherwise noted)
June 30, 2022
December 31, 2021
$ Change
% Change
Assets
Cash and cash equivalents
711
499
212
42
Receivables
10,171
5,366
4,805
90
Inventories
7,160
6,328
832
13
Prepaid expenses and other current
assets
615
1,653
(1,038)
(63)
Property, plant and equipment
20,492
20,016
476
2
Liabilities and Equity
Short-term debt
2,403
1,560
843
54
Current portion of long-term debt
1,028
545
483
89
Payables and accrued charges
11,682
10,052
1,630
16
Long-term debt
7,056
7,521
(465)
(6)
Share capital
15,115
15,457
(342)
(2)
Retained earnings
11,563
8,192
3,371
41
- Explanations for changes in Cash and cash equivalents
are in the “Sources and Uses of Cash” section.
- Receivables increased due to higher sales across all of
our segments as a result of higher crop nutrient net realized
selling prices consistent with higher benchmark pricing, as well as
higher Retail vendor rebates receivables.
- Inventories increased due to seasonal Retail inventory
build-up in North America and higher costs to produce or purchase
inventory due to inflation and tight global supply. The increase
was partly offset by a decrease in Retail seed inventory driven by
seasonality.
- Prepaid expenses and other current assets decreased due
to the drawdown of prepaid inventory (primarily seed and crop
protection products) during the North American planting and
application spring season.
- Property, plant and equipment increased due to an
impairment reversal related to our Aurora cash generating unit in
the Phosphate segment.
- Short-term debt increased due to additional commercial
paper issuances as part of our seasonal working capital
management.
- Payables and accrued charges increased due to a shift in
timing of supplier payments, higher input costs from inflation and
tight global supply and higher inventory purchases, which were
partly offset by lower customer prepayments in North America as
Retail customers took delivery of prepaid sales.
- Long-term debt decreased due to a reclassification to
the current portion of long-term debt of our $500 million notes
maturing May 2023.
- Share capital decreased from shares repurchased under
our normal course issuer bids partially offset by exercise of stock
options.
- Retained earnings increased as net earnings in the first
half of 2022 exceeded dividends declared and share
repurchases.
Capital Structure and Management
Principal Debt Instruments
As part of the normal course of business, we closely monitor our
liquidity position. We use a combination of cash generated from
operations and short-term and long-term debt to finance our
operations. We were in compliance with our debt covenants and did
not have any changes to our credit ratings in the six months ended
June 30, 2022.
As at June 30, 2022
Outstanding and
Committed
(millions of US dollars)
Rate of Interest (%)
Total Facility Limit
Short-Term Debt
Long-Term Debt
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities
770
South American
1.4 - 16.3
140
160
Other
1.6 - 4.0
17
3
Commercial paper
1.4 - 2.5
2,105
‐
Other short-term debt
n/a
141
‐
Total
2,403
163
We also have a commercial paper program, which is limited to the
availability of backup funds under the $4,500 million unsecured
revolving term credit facility and excess cash invested in highly
liquid securities.
Subsequent to June 30, 2022, and in addition to the $500 million
increase in our uncommitted revolving demand facility during the
second quarter of 2022, we entered into $2 billion in new
non-revolving term credit facilities, all with the same principal
covenants and events of default as our existing revolving term
credit facilities. These new facilities are temporary to help
manage normal seasonal working capital swings and are intended to
be closed before year-end. As of August 2, 2022, we had
approximately $3.0 billion drawn on our credit facilities and a
commercial paper balance of approximately $2.1 billion.
Our long-term debt consists primarily of notes. See the “Capital
Structure and Management” section of our 2021 Annual Report for
information on balances, rates and maturities for our notes.
Outstanding Share Data
As at August 2, 2022
Common shares
538,926,006
Options to purchase common shares
3,933,487
For more information on our capital structure and management,
see Note 24 to our 2021 annual financial statements.
On June 7, 2022, the Financial and Consumer Affairs Authority of
Saskatchewan and the Ontario Securities Commission granted Nutrien
exemptive relief to allow the purchase of up to 10 percent of its
“public float” of common shares through the facilities of the New
York Stock Exchange and other US-based trading systems as part of
Nutrien's current normal course issuer bid. Absent this exemptive
relief, Nutrien’s purchases under the normal course issuer bid on
markets other than the TSX would be limited to not more than 5
percent of its outstanding common shares over any twelve-month
period. The exemptive relief is effective until June 7, 2023 and is
conditional upon purchases being made in compliance with applicable
US rules and National Instrument 23-101- Trading Rules in Canada,
and at a price not higher than the market price at the time of
purchase. The aggregate number of common shares purchased by
Nutrien over any exchange or market may not exceed 10 percent of
the public float as specified in Nutrien's normal course issuer bid
application approved by the TSX and announced on February 25,
2022.
Quarterly Results
(millions of US dollars, except as
otherwise noted)
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Q1 2021
Q4 2020
Q3 2020
Sales 1
14,506
7,657
7,267
6,024
9,763
4,658
4,052
4,227
Net earnings (loss)
3,601
1,385
1,207
726
1,113
133
316
(587)
Net earnings (loss) attributable to equity
holders of Nutrien
3,593
1,378
1,201
717
1,108
127
316
(587)
Net earnings (loss) per share attributable
to equity holders of Nutrien
Basic
6.53
2.49
2.11
1.26
1.94
0.22
0.55
(1.03)
Diluted
6.51
2.49
2.11
1.25
1.94
0.22
0.55
(1.03)
1 Certain immaterial figures have been
reclassified in the third quarter of 2020.
Seasonality in our business results from increased demand for
products during the planting season. Crop input sales are generally
higher in the spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. Our cash collections generally occur after the application
season is complete, while customer prepayments made to us are
concentrated in December and January and inventory prepayments paid
to our suppliers are typically concentrated in the period from
November to January. Feed and industrial sales are more evenly
distributed throughout the year.
Our earnings are significantly affected by fertilizer benchmark
prices, which have been volatile over the last two years and are
affected by demand-supply conditions, grower affordability and
weather.
In the second quarter of 2022, earnings were impacted by a $450
million non-cash impairment reversal of property, plant and
equipment in the Phosphate segment related to higher forecasted
global prices and a more favorable outlook for phosphate margins.
In the fourth quarter of 2021, earnings were impacted by a $142
million loss resulting from the early extinguishment of long-term
debt. In the fourth quarter of 2020, earnings were impacted by a
$250 million net gain on disposal of our investment in Misr
Fertilizers Production Company S.A.E.. In the third quarter of
2020, earnings were impacted by an $823 million non-cash impairment
of assets primarily in the Phosphate segment as a result of lower
long-term forecasted global phosphate prices.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2021
Annual Report. We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the audit
committee of the Board. Our critical accounting estimates are
discussed on page 49 of our 2021 Annual Report. Other than the
critical accounting estimates discussed below, there were no
material changes in the three or six months ended June 30, 2022 to
our critical accounting estimates.
Impairment of Assets
Long-Lived Asset Impairment and Reversals
In the three months ended June 30, 2022, we revised our pricing
forecasts to reflect the current macroeconomic environment. This
resulted in a review of our previously impaired Phosphate
cash-generating units (“CGUs”). In 2020 we recorded an impairment
of assets relating to our property, plant and equipment of $545
million at our Aurora CGU, as a result of lower long-term
forecasted global phosphate prices. Due to increases in our
forecast during the three months ended June 30, 2022, the
recoverable amount of our Aurora CGU is above its carrying amount.
As a result, we recorded an impairment reversal of $450 million in
the statement of earnings relating to property, plant and
equipment. Refer to Note 3 to the interim financial statements.
The recoverable amount estimate is most sensitive to the
following key assumptions: our internal sales and input price
forecasts, which consider projections from independent third-party
data sources, discount rate, and expected mine life. We used key
assumptions that were based on historical data and estimates of
future results from internal sources, external price benchmarks,
and mineral reserve technical reports, as well as industry and
market trends. For our Aurora CGU, there were no reasonably
possible changes in key assumptions that would result in a
substantial change in the reversal amount.
In 2017 and 2020, we recorded an impairment of assets at our
White Springs CGU relating to property, plant and equipment of $250
million and $215 million respectively. The White Springs CGU has a
shorter expected mine life and is therefore more sensitive to
changes in short and medium-term pricing forecasts. We are
continuously monitoring our key assumptions for changes that could
have an impact on the recoverable amount including our internal
sales and input price forecasts. Changes in these key assumptions
could result in impairment reversals in future periods. The maximum
impairment reversal that could result at our White Springs CGU is
$340 million (full reversal, net of depreciation).
Goodwill Impairment
Operating segments have assets allocated to them that must be
assessed for impairment when events or circumstances indicate there
could be an impairment, or at least annually. Based on our
assumptions at the time of our impairment testing, the recoverable
amount of each of our CGUs or groups of CGUs was in excess of their
carrying amounts. Key assumptions in our testing models may change,
and changes that could reasonably be expected to occur may cause
impairment or impairment reversals. Such change in assumptions
could be driven by global supply and demand and other market
factors and changes in regulations and other future events outside
our control.
During the six months ended June 30, 2022, North American
central banks continued to increase their benchmark borrowing rates
and have forecasted additional near-term increases. Benchmark
borrowing rates are used as the risk-free rate which, is a
component of determining our discount rate for impairment testing.
As a result of these increases, we revised our discount rate to 8.0
percent (previous annual impairment analysis – 7.4 percent) and
this triggered an impairment test to be performed for our Retail –
North America group of CGUs.
The Retail – North America group of CGUs have $6.9 billion in
associated goodwill. Goodwill is more susceptible to impairment
risk if business operating results or economic conditions
deteriorate and we do not meet our forecasts. A reduction in the
terminal growth rate, an increase in the discount rate or a
decrease in forecasted EBITDA could cause impairment in the future.
As at June 30, 2022 the Retail – North America group of CGUs
recoverable amount exceeds its carrying amount by $0.8 billion,
which is 7 percent of the carrying amount. Refer to Note 3 to the
interim financial statements.
The following table indicates the percentages by which key
assumptions would need to change individually for the estimated
recoverable amount to be equal to the carrying amount:
Change Required for
Value Used in
Impairment
Carrying Amount to
Equal
Key Assumptions
Model
Recoverable Amount
Terminal growth rate (%)
2.5
percentage point decrease
0.6
Forecasted EBITDA over forecast
period (in billions of US dollars)
7.5
percent decrease
5.0
Discount rate (%)
8.0
percentage point increase
0.4
Risk Factors
Russia and Ukraine Conflict
The current conflict between Ukraine and Russia and the
international response has, and may continue to have, potential
wide-ranging consequences for global market volatility and economic
conditions, including energy and commodity prices. Certain
countries including Canada, the United States, Australia and
certain European countries have imposed strict financial and trade
sanctions against Russia, with Russia and Belarus imposing
retaliatory sanctions of their own, which have had, and may
continue to have, far-reaching effects on the global economy,
energy and commodity prices, food security and crop nutrient supply
and prices. The short-, medium- and long-term implications of the
conflict in Ukraine are difficult to predict with any degree of
certainty at this time. While Nutrien does not have operations in
Ukraine or Russia, there remains uncertainty relating to the
potential impact of the conflict and its effect on global food
security, growers and the market outlook for crop nutrient market
supply and demand fundamentals and nutrient prices, and it could
have a material and adverse effect on our business, financial
condition and results of operations. Depending on the extent,
duration, and severity of the conflict, it may have the effect of
heightening many of the other risks Nutrien is subject to and which
are described in our 2021 Annual Report and 2021 Annual Information
Form, including, without limitation, risks relating to market
fundamentals and conditions (such as sanctions and trade flows and
the impact thereof on crop nutrient supply and demand);
cybersecurity threats; energy and commodity prices; inflationary
pressures, interest rates and costs of capital; and supply chains
and cost-effective and timely transportation.
Controls and Procedures
Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended, and National Instrument 52-109 Certification of
Disclosure in Issuers’ Annual and Interim Filings. Internal control
over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in
accordance with IFRS. Any system of internal control over financial
reporting, no matter how well designed, has inherent limitations.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
There has been no change in our internal control over financial
reporting during the three months ended June 30, 2022 that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this
document, including within the "Financial 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 2022 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, including our evaluation of the Geismar, Louisiana
clean ammonia facility and the anticipated benefits thereof;
capital spending expectations for 2022; our intention to complete
our existing share repurchase program in 2022; expectations
regarding performance of our operating segments in 2022, including
our operating segment market outlooks and market conditions for
2022, 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, prices and the impact of import and export
volumes and economic sanctions; Nutrien's ability to develop
innovative and sustainable solutions; the negotiation of sales
contracts; and acquisitions and divestitures and the anticipated
benefits thereof. These forward-looking statements are subject to a
number of assumptions, risks and uncertainties, many of which are
beyond our control, which could cause actual results to differ
materially from such forward-looking statements. As such, undue
reliance should not be placed on these forward-looking
statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, 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; that future business, regulatory and industry conditions
will be within the parameters expected by us, including with
respect to prices, margins, demand, supply, product availability,
supplier agreements, availability and cost of labor and interest,
exchange and effective tax rates; assumptions with respect to
global economic conditions and the accuracy of our market outlook
expectations for 2022 and in the future; assumptions with respect
to our ability to repurchase shares under our share repurchase
program, including existing and future market conditions and
compliance with respect to applicable 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; interest rates, supply chains
and the global economy; the adequacy of our cash generated from
operations and our ability to access our credit facilities or
capital markets for additional sources of financing; our ability to
identify suitable candidates for acquisitions and divestitures and
negotiate acceptable terms; our ability to maintain investment
grade ratings and achieve our performance targets; our ability to
successfully negotiate sales 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; 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 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;
the risk that rising interest rates and/or deteriorated business
operating results may result in the impairment of 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, adjusted
EBITDA (consolidated and by segment) and sustaining capital
expenditures guidance ranges are to assist readers in understanding
our expected and targeted financial results, and this information
may not be appropriate for other purposes.
The forward-looking statements in this document are made as of
the date hereof and Nutrien disclaims any intention or obligation
to update or revise any forward-looking statements in this document
as a result of new information or future events, except as may be
required under applicable Canadian securities legislation or
applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms
used in this document, as well as a list of abbreviated company
names and sources, see the “Terms & Definitions” section of our
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, playing a critical role in helping growers increase food
production in a sustainable manner. We produce and distribute
approximately 27 million tonnes of potash, nitrogen and phosphate
products world-wide. With this capability and our leading
agriculture retail network, we are well positioned to supply the
needs of our customers. We operate with a long-term view and are
committed to working with our stakeholders as we address our
economic, environmental and social priorities. The scale and
diversity of our integrated portfolio provides a stable earnings
base, multiple avenues for growth and the opportunity to return
capital to shareholders.
Selected financial data for download can be found in our data
tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, August 4,
2022 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-q2-earnings-conference-call
Appendix A - Selected Additional Financial Data
Selected Retail Measures
Three Months Ended June
30
Six Months Ended June
30
2022
2021
2022
2021
Proprietary products margin as a
percentage of product line margin (%)
Crop nutrients
22
24
20
23
Crop protection products
39
43
39
42
Seed
46
46
44
43
All products
28
29
26
27
Crop nutrients sales volumes (tonnes –
thousands)
North America
3,978
5,020
5,220
6,617
International
1,017
1,132
1,950
1,935
Total
4,995
6,152
7,170
8,552
Crop nutrients selling price per
tonne
North America
940
506
923
494
International
795
445
676
408
Total
911
495
856
475
Crop nutrients gross margin per
tonne
North America
202
127
198
123
International
105
57
86
54
Total
182
114
168
108
Financial performance measures
2022
2021
Retail adjusted EBITDA margin (%) 1, 2
12
10
Retail adjusted EBITDA per US selling
location (thousands of US dollars) 1, 2, 3
1,897
1,267
Retail adjusted average working capital to
sales (%) 1, 4
15
12
Retail adjusted average working capital to
sales excluding Nutrien Financial (%) 1, 4
1
‐
Nutrien Financial adjusted net interest
margin (%) 1, 4
7.0
6.2
Retail cash operating coverage ratio (%)
1, 4
54
60
Retail normalized comparable store sales
(%) 4
(3)
1
1 Rolling four quarters ended June 30,
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 June 30, 2022
As at
Dec 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
3,342
201
70
67
3,680
(35)
3,645
1,488
International
642
53
13
53
761
(2)
759
662
Nutrien Financial receivables
3,984
254
83
120
4,441
(37)
4,404
2,150
1 Bad debt expense on the above
receivables for the six months ended June 30, 2022 was $8 million
(2021 – $5 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended June
30
Six Months Ended June
30
2022
2021
2022
2021
Sales volumes (tonnes –
thousands)
Fertilizer
1,453
1,825
2,546
3,130
Industrial and feed
1,142
1,141
2,314
2,239
Net sales (millions of US
dollars)
Fertilizer
1,120
638
1,894
970
Industrial and feed
760
344
1,448
585
Net selling price per tonne
Fertilizer
771
350
744
310
Industrial and feed
666
302
626
261
Production Measures
Three Months Ended June
30
Six Months Ended June
30
2022
2021
2022
2021
Potash production (Product tonnes –
thousands)
3,621
3,414
7,324
6,950
Potash shutdown weeks 1
5
4
5
4
Ammonia production – total 2
1,473
1,492
2,876
2,941
Ammonia production – adjusted 2, 3
1,048
954
2,006
2,007
Ammonia operating rate (%) 3
96
87
92
92
P2O5 production (P2O5 tonnes –
thousands)
350
347
728
725
P2O5 operating rate (%)
82
82
86
86
1 Represents weeks of full production
shutdown, including inventory adjustments and unplanned events,
excluding the impact of any periods of reduced operating rates,
planned routine annual maintenance shutdowns and announced
workforce reductions.
2 All figures are provided on a gross
production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B - Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial
measures to assess performance. Non-IFRS financial measures are
financial measures disclosed by 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 June
30
Six Months Ended June
30
(millions of US dollars)
2022
2021
2022
2021
Net earnings
3,601
1,113
4,986
1,246
Finance costs
130
125
239
245
Income tax expense
1,214
381
1,719
406
Depreciation and amortization
505
485
966
965
EBITDA 1
5,450
2,104
7,910
2,862
Share-based compensation (recovery)
expense
(52)
38
83
61
Foreign exchange loss (gain), net of
related derivatives
31
(2)
56
‐
Integration and restructuring related
costs
11
29
20
39
(Reversal) impairment of assets
(450)
1
(450)
5
COVID-19 related expenses 2
3
9
8
18
Gain on disposal of investment
‐
‐
(19)
‐
Cloud computing transition adjustment
3
‐
36
‐
36
Adjusted EBITDA
4,993
2,215
7,608
3,021
1 EBITDA is calculated as net earnings
(loss) 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. We generally apply the annual
forecasted effective tax rate to our adjustments during the year
and, at year-end, we apply the actual effective tax rate. If the
effective tax rate is significantly different from our forecasted
effective tax rate due to adjustments or discrete tax impacts, we
apply a tax rate that excludes those items. For material
adjustments, we apply a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations and is used
as a component of employee remuneration calculations.
Three Months Ended June
30, 2022
Six Months Ended June
30, 2022
Per
Per
(millions of US dollars, except as
otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
3,593
6.51
4,971
8.99
Adjustments:
Share-based compensation (recovery)
expense
(52)
(39)
(0.07)
83
62
0.11
Foreign exchange loss, net of related
derivatives
31
23
0.04
56
42
0.07
Integration and restructuring related
costs
11
8
0.01
20
15
0.02
Impairment reversal of assets
(450)
(354)
(0.64)
(450)
(354)
(0.64)
COVID-19 related expenses
3
2
‐
8
6
0.01
Gain on disposal of investment
‐
‐
‐
(19)
(14)
(0.03)
Adjusted net earnings
3,233
5.85
4,728
8.53
Three Months Ended June 30,
2021
Six Months Ended June 30,
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
1,108
1.94
1,235
2.16
Adjustments:
Share-based compensation expense
38
29
0.05
61
46
0.08
Foreign exchange gain, net of related
derivatives
(2)
(2)
‐
‐
‐
‐
Integration and restructuring related
costs
29
22
0.03
39
30
0.05
Impairment of assets
1
1
‐
5
4
0.01
COVID-19 related expenses
9
7
0.01
18
14
0.02
Cloud computing transition adjustment
36
27
0.05
36
27
0.05
Adjusted net earnings
1,192
2.08
1,356
2.37
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.
Free Cash Flow and Free Cash Flow Including Changes in
Non-Cash Operating Working Capital
Most directly comparable IFRS financial measure: Cash
provided by (used in) operating activities.
Definition: Free cash flow is calculated as cash provided
by (used in) operating activities less sustaining capital
expenditures and before changes in non-cash operating working
capital. Free cash flow including non-cash operating working
capital is calculated as cash provided by operating activities less
sustaining capital expenditures.
Why we use the measure and why it is useful to investors:
For evaluation of liquidity and financial strength. These are also
useful as indicators of our ability to service debt, meet other
payment obligations and make strategic investments. These do not
represent residual cash flow available for discretionary
expenditures.
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars)
2022
2021
2022
2021
Cash provided by operating activities
2,558
1,966
2,496
1,814
Sustaining capital expenditures
(256)
(304)
(450)
(468)
Free cash flow including changes in
non-cash operating working capital
2,302
1,662
2,046
1,346
Changes in non-cash operating working
capital
(1,111)
249
(3,181)
(543)
Free cash flow
3,413
1,413
5,227
1,889
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 June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2022
2021
2022
2021
Total COGS – Potash
399
317
704
608
Change in inventory
(5)
(11)
72
16
Other adjustments 1
(9)
(2)
(24)
(6)
COPM
385
304
752
618
Depreciation and amortization in COPM
(114)
(103)
(233)
(214)
Royalties in COPM
(63)
(19)
(108)
(36)
Natural gas costs and carbon taxes in
COPM
(19)
(11)
(36)
(23)
Controllable cash COPM
189
171
375
345
Production tonnes (tonnes – thousands)
3,621
3,414
7,324
6,950
Potash controllable cash COPM per
tonne
52
50
51
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.
Ammonia Controllable Cash COPM Per Tonne
Most directly comparable IFRS financial measure: Total
manufactured COGS for the Nitrogen segment.
Definition: Total Nitrogen COGS excluding depreciation
and amortization expense included in COGS, cash COGS for products
other than ammonia, other adjustments, and natural gas and steam
costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Ammonia controllable cash COPM
excludes the effects of production from other periods, the costs of
natural gas and steam, and long-term investment decisions,
supporting a focus on the performance of our day-to-day
operations.
Three Months Ended June
30
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2022
2021
2022
2021
Total Manufactured COGS – Nitrogen
839
597
1,479
1,037
Total Other COGS – Nitrogen
332
166
573
336
Total COGS – Nitrogen
1,171
763
2,052
1,373
Depreciation and amortization in COGS
(115)
(134)
(217)
(242)
Cash COGS for products other than
ammonia
(748)
(448)
(1,272)
(841)
Ammonia
Total cash COGS before other
adjustments
308
181
563
290
Other adjustments 1
(78)
(27)
(114)
(30)
Total cash COPM
230
154
449
260
Natural gas and steam costs
(195)
(118)
(376)
(192)
Controllable cash COPM
35
36
73
68
Production tonnes (net tonnes 2 –
thousands)
606
703
1,280
1,305
Ammonia controllable cash COPM per
tonne
58
51
57
51
1 Other adjustments include unallocated
production overhead that is recognized as part of cost of goods
sold but is not included in the measurement of inventory and
changes in inventory balances.
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
June 30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Average/Total
Current assets
8,945
9,924
12,392
12,487
Current liabilities
(5,062)
(7,828)
(9,223)
(9,177)
Working capital
3,883
2,096
3,169
3,310
3,115
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
3,883
2,096
3,169
3,310
3,115
Nutrien Financial working capital
(2,820)
(2,150)
(2,274)
(4,404)
Adjusted working capital excluding Nutrien
Financial
1,063
(54)
895
(1,094)
203
Sales
3,347
3,878
3,861
9,422
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,347
3,878
3,861
9,422
20,508
Nutrien Financial revenue
(54)
(51)
(49)
(91)
Adjusted sales excluding Nutrien
Financial
3,293
3,827
3,812
9,331
20,263
Adjusted average working capital to
sales (%)
15
Adjusted average working capital to
sales excluding Nutrien Financial (%)
1
Rolling four quarters ended June
30, 2021
(millions of US dollars, except as
otherwise noted)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Average/Total
Current assets
7,324
8,013
9,160
9,300
Current liabilities
(4,108)
(6,856)
(7,530)
(7,952)
Working capital
3,216
1,157
1,630
1,348
1,838
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
3,216
1,157
1,630
1,348
1,838
Nutrien Financial working capital
(1,711)
(1,392)
(1,221)
(3,072)
Adjusted working capital excluding Nutrien
Financial
1,505
(235)
409
(1,724)
(11)
Sales
2,742
2,618
2,972
7,537
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
2,742
2,618
2,972
7,537
15,869
Nutrien Financial revenue
(36)
(37)
(25)
(59)
Adjusted sales excluding Nutrien
Financial
2,706
2,581
2,947
7,478
15,712
Adjusted average working capital to sales
(%)
12
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
financial performance of Nutrien Financial.
Rolling four quarters ended
June 30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Total/Average
Nutrien Financial revenue
54
51
49
91
Deemed interest expense 1
(10)
(12)
(6)
(12)
Net interest
44
39
43
79
205
Average Nutrien Financial receivables
2,820
2,150
2,274
4,404
2,912
Nutrien Financial adjusted net interest
margin (%)
7.0
1 Average borrowing rate applied to the
notional debt required to fund the portfolio of receivables from
customers monitored and serviced by Nutrien Financial.
Rolling four quarters ended June
30, 2021
(millions of US dollars, except as
otherwise noted)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Total/Average
Nutrien Financial revenue
36
37
25
59
Deemed interest expense 1
(15)
(14)
(6)
(8)
Net interest
21
23
19
51
114
Average Nutrien Financial receivables
1,711
1,392
1,221
3,072
1,849
Nutrien Financial adjusted net interest
margin (%)
6.2
1 Average borrowing rate applied to the
notional debt required to fund the portfolio of receivables from
customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative,
and other expenses, excluding depreciation and amortization
expense, divided by Retail gross margin excluding depreciation and
amortization expense in cost of goods sold, for the last four
rolling quarters.
Why we use the measure and why it is useful to investors:
To understand the costs and underlying economics of our Retail
operations and to assess our Retail operating performance and
ability to generate free cash flow.
Rolling four quarters ended
June 30, 2022
(millions of US dollars, except as
otherwise noted)
Q3 2021
Q4 2021
Q1 2022
Q2 2022
Total
Selling expenses
746
848
722
1,013
3,329
General and administrative expenses
45
43
45
54
187
Other expenses (income)
17
20
(12)
21
46
Operating expenses
808
911
755
1,088
3,562
Depreciation and amortization in operating
expenses
(180)
(173)
(167)
(171)
(691)
Operating expenses excluding depreciation
and amortization
628
738
588
917
2,871
Gross margin
917
1,173
845
2,340
5,275
Depreciation and amortization in cost of
goods sold
2
5
2
4
13
Gross margin excluding depreciation and
amortization
919
1,178
847
2,344
5,288
Cash operating coverage ratio (%)
54
Rolling four quarters ended June
30, 2021
(millions of US dollars, except as
otherwise noted)
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Total
Selling expenses
669
727
667
863
2,926
General and administrative expenses
34
33
39
41
147
Other expenses (income)
(12)
8
15
34
45
Operating expenses
691
768
721
938
3,118
Depreciation and amortization in operating
expenses
(167)
(177)
(175)
(166)
(685)
Operating expenses excluding depreciation
and amortization
524
591
546
772
2,433
Gross margin
683
885
652
1,858
4,078
Depreciation and amortization in cost of
goods sold
3
3
2
3
11
Gross margin excluding depreciation and
amortization
686
888
654
1,861
4,089
Cash operating coverage ratio (%)
60
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail
sales from comparable base as a component of total Retail
sales.
Definition: Prior year comparable store sales adjusted
for published potash, nitrogen and phosphate benchmark prices and
foreign exchange rates used in the current year. We retain sales of
closed locations in the comparable base if the closed location is
in close proximity to an existing location, unless we plan to exit
the market area or are unable to economically or logistically serve
it. We do not adjust for temporary closures, expansions or
renovations of stores.
Why we use the measure and why it is useful to investors:
To evaluate sales growth by adjusting for fluctuations in commodity
prices and foreign exchange rates. Includes locations we have owned
for more than 12 months.
Six Months Ended June
30
(millions of US dollars, except as
otherwise noted)
2022
2021
Sales from comparable base
Prior period
10,509
9,425
Adjustments 1
(57)
‐
Revised prior period
10,452
9,425
Current period
13,230
10,405
Comparable store sales (%)
27
10
Prior period normalized for benchmark
prices and foreign exchange rates
13,706
10,351
Normalized comparable store sales (%)
(3)
1
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.
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.
Shareholder returns (cash used for dividends and share
repurchases): Calculated as dividends paid to Nutrien
shareholders plus repurchase of common shares. This measure is
useful as it represents return of capital to shareholders.
Condensed Consolidated Financial Statements
Unaudited in millions of US dollars except as otherwise
noted
Condensed Consolidated Statements of Earnings
Three Months Ended
Six Months Ended
June 30
June 30
Note
2022
2021
2022
2021
SALES
2
14,506
9,763
22,163
14,421
Freight, transportation and
distribution
221
222
424
433
Cost of goods sold
8,286
6,659
12,483
9,950
GROSS MARGIN
5,999
2,882
9,256
4,038
Selling expenses
1,017
865
1,744
1,538
General and administrative expenses
140
116
266
219
Provincial mining taxes
362
107
611
165
Share-based compensation (recovery)
expense
(52)
38
83
61
(Reversal) impairment of assets
3
(450)
1
(450)
5
Other expenses
4
37
136
58
153
EARNINGS BEFORE FINANCE COSTS AND
INCOME TAXES
4,945
1,619
6,944
1,897
Finance costs
130
125
239
245
EARNINGS BEFORE INCOME TAXES
4,815
1,494
6,705
1,652
Income tax expense
5
1,214
381
1,719
406
NET EARNINGS
3,601
1,113
4,986
1,246
Attributable to
Equity holders of Nutrien
3,593
1,108
4,971
1,235
Non-controlling interest
8
5
15
11
NET EARNINGS
3,601
1,113
4,986
1,246
NET EARNINGS PER SHARE ATTRIBUTABLE TO
EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
6.53
1.94
9.02
2.17
Diluted
6.51
1.94
8.99
2.16
Weighted average shares outstanding for
basic EPS
550,048,000
570,352,000
551,335,000
570,007,000
Weighted average shares outstanding for
diluted EPS
551,659,000
571,972,000
553,198,000
571,453,000
Condensed Consolidated Statements of Comprehensive
Income
Three Months Ended
Six Months Ended
June 30
June 30
(Net of related income taxes)
2022
2021
2022
2021
NET EARNINGS
3,601
1,113
4,986
1,246
Other comprehensive (loss) income
Items that will not be reclassified to net
earnings:
Net actuarial gain on defined benefit
plans
‐
‐
1
‐
Net fair value (loss) gain on
investments
(38)
22
(7)
70
Items that have been or may be
subsequently reclassified to net earnings:
(Loss) gain on currency translation of
foreign operations
(209)
25
(81)
(5)
Other
5
14
21
20
OTHER COMPREHENSIVE (LOSS)
INCOME
(242)
61
(66)
85
COMPREHENSIVE INCOME
3,359
1,174
4,920
1,331
Attributable to
Equity holders of Nutrien
3,352
1,170
4,906
1,321
Non-controlling interest
7
4
14
10
COMPREHENSIVE INCOME
3,359
1,174
4,920
1,331
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Six Months Ended
June 30
June 30
Note
2022
2021
2022
2021
Note 1
Note 1
OPERATING ACTIVITIES
Net earnings
3,601
1,113
4,986
1,246
Adjustments for:
Depreciation and amortization
505
485
966
965
Share-based compensation (recovery)
expense
(52)
38
83
61
(Reversal) impairment of assets
3
(450)
1
(450)
5
Recovery of deferred income tax
(53)
(20)
(8)
(10)
Gain on disposal of investment
‐
‐
(19)
‐
Cloud computing transition adjustment
4
‐
36
‐
36
Other long-term assets, liabilities and
miscellaneous
118
64
119
54
Cash from operations before working
capital changes
3,669
1,717
5,677
2,357
Changes in non-cash operating working
capital:
Receivables
(3,933)
(2,443)
(4,842)
(2,835)
Inventories
1,748
1,848
(861)
63
Prepaid expenses and other current
assets
340
310
1,062
998
Payables and accrued charges
734
534
1,460
1,231
CASH PROVIDED BY OPERATING
ACTIVITIES
2,558
1,966
2,496
1,814
INVESTING ACTIVITIES
Capital expenditures 1
(477)
(448)
(828)
(746)
Business acquisitions, net of cash
acquired
(27)
(19)
(68)
(40)
Other
(4)
(29)
30
(38)
Net changes in non-cash working
capital
(9)
65
(108)
5
CASH USED IN INVESTING
ACTIVITIES
(517)
(431)
(974)
(819)
FINANCING ACTIVITIES
Transaction costs related to debt
‐
(7)
‐
(7)
(Repayment of) proceeds from short-term
debt, net
(604)
(104)
850
(3)
Proceeds from long-term debt
41
8
41
8
Repayment of long-term debt
(26)
(5)
(28)
(5)
Repayment of principal portion of lease
liabilities
(94)
(86)
(173)
(164)
Dividends paid to Nutrien's
shareholders
7
(264)
(263)
(521)
(518)
Repurchase of common shares
7
(964)
(1)
(1,606)
(2)
Issuance of common shares
38
21
164
63
Other
(5)
(12)
(17)
(12)
CASH USED IN FINANCING
ACTIVITIES
(1,878)
(449)
(1,290)
(640)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
(29)
(4)
(20)
(15)
INCREASE IN CASH AND CASH
EQUIVALENTS
134
1,082
212
340
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
577
712
499
1,454
CASH AND CASH EQUIVALENTS – END OF
PERIOD
711
1,794
711
1,794
Cash and cash equivalents comprised
of:
Cash
628
1,580
628
1,580
Short-term investments
83
214
83
214
711
1,794
711
1,794
SUPPLEMENTAL CASH FLOWS
INFORMATION
Interest paid
150
162
200
238
Income taxes paid
396
105
1,185
144
Total cash outflow for leases
121
111
228
208
1 Includes additions to property, plant
and equipment and intangible assets for the three months ended June
30, 2022 of $427 and $50 (2021 – $443 and $5), respectively, and
for the six months ended June 30, 2022 of $733 and $95 (2021 – $708
and $38), 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
‐
‐
‐
‐
‐
‐
1,235
1,235
11
1,246
Other comprehensive (loss) income
‐
‐
‐
(4)
90
86
‐
86
(1)
85
Shares repurchased (Note 7)
(32,728)
(1)
(1)
‐
‐
‐
‐
(2)
‐
(2)
Dividends declared
‐
‐
‐
‐
‐
‐
(526)
(526)
‐
(526)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(12)
(12)
Effect of share-based compensation
including issuance of common shares
1,427,381
74
(3)
‐
‐
‐
‐
71
‐
71
Transfer of net gain on cash flow
hedges
‐
‐
‐
‐
(11)
(11)
‐
(11)
‐
(11)
BALANCE – JUNE 30, 2021
570,655,059
15,746
201
(66)
22
(44)
7,315
23,218
36
23,254
BALANCE – DECEMBER 31, 2021
557,492,516
15,457
149
(176)
30
(146)
8,192
23,652
47
23,699
Net earnings
‐
‐
‐
‐
‐
‐
4,971
4,971
15
4,986
Other comprehensive (loss) income
‐
‐
‐
(80)
15
(65)
‐
(65)
(1)
(66)
Shares repurchased (Note 7)
(19,360,408)
(539)
(22)
‐
‐
‐
(1,075)
(1,636)
‐
(1,636)
Dividends declared
‐
‐
‐
‐
‐
‐
(526)
(526)
‐
(526)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(17)
(17)
Effect of share-based compensation
including issuance of common shares
2,994,221
197
(22)
‐
‐
‐
‐
175
‐
175
Transfer of net gain on cash flow
hedges
‐
‐
‐
‐
(2)
(2)
‐
(2)
‐
(2)
Transfer of net actuarial gain on defined
benefit plans
‐
‐
‐
‐
(1)
(1)
1
‐
‐
‐
BALANCE – JUNE 30, 2022
541,126,329
15,115
105
(256)
42
(214)
11,563
26,569
44
26,613
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Balance Sheets
June 30
December 31
As at
Note
2022
2021
2021
ASSETS
Current assets
Cash and cash equivalents
711
1,794
499
Receivables
10,171
6,683
5,366
Inventories
7,160
4,876
6,328
Prepaid expenses and other current
assets
615
524
1,653
18,657
13,877
13,846
Non-current assets
Property, plant and equipment
20,492
19,592
20,016
Goodwill
12,213
12,211
12,220
Other intangible assets
2,283
2,393
2,340
Investments
731
619
703
Other assets
859
664
829
TOTAL ASSETS
55,235
49,356
49,954
LIABILITIES
Current liabilities
Short-term debt
2,403
210
1,560
Current portion of long-term debt
1,028
32
545
Current portion of lease liabilities
303
276
286
Payables and accrued charges
11,682
9,367
10,052
15,416
9,885
12,443
Non-current liabilities
Long-term debt
7,056
10,029
7,521
Lease liabilities
913
900
934
Deferred income tax liabilities
5
3,253
3,118
3,165
Pension and other post-retirement benefit
liabilities
422
458
419
Asset retirement obligations and accrued
environmental costs
1,376
1,559
1,566
Other non-current liabilities
186
153
207
TOTAL LIABILITIES
28,622
26,102
26,255
SHAREHOLDERS’ EQUITY
Share capital
7
15,115
15,746
15,457
Contributed surplus
105
201
149
Accumulated other comprehensive loss
(214)
(44)
(146)
Retained earnings
11,563
7,315
8,192
Equity holders of Nutrien
26,569
23,218
23,652
Non-controlling interest
44
36
47
TOTAL SHAREHOLDERS’ EQUITY
26,613
23,254
23,699
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
55,235
49,356
49,954
(See Notes to the Condensed Consolidated
Financial Statements)
Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Six Months Ended June 30,
2022
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, known as
“Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s
largest provider of crop inputs and services. Nutrien plays a
critical role in helping growers around the globe increase food
production in a sustainable manner.
These unaudited interim condensed consolidated financial
statements (“interim financial statements”) are based on
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board and have been prepared
in accordance with International Accounting Standard 34, “Interim
Financial Reporting”. The accounting policies and methods of
computation used in preparing these interim financial statements
are materially consistent with those used in the preparation of our
2021 annual consolidated financial statements. These interim
financial statements include the accounts of Nutrien and its
subsidiaries; however, they do not include all disclosures normally
provided in annual consolidated financial statements and should be
read in conjunction with our 2021 annual audited consolidated
financial statements.
Certain immaterial 2021 figures have been reclassified in the
condensed consolidated statements of cash flows and segment
note.
In management’s opinion, the interim financial statements
include all adjustments necessary to fairly present such
information in all material respects. Interim results are not
necessarily indicative of the results expected for any other
interim period or the fiscal year.
These interim financial statements were authorized by the audit
committee of the Board of Directors for issue on August 3,
2022.
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 produce.
Three Months Ended June 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
9,377
2,667
1,915
547
‐
‐
14,506
– intersegment
45
78
446
98
‐
(667)
‐
Sales
– total
9,422
2,745
2,361
645
‐
(667)
14,506
Freight, transportation and
distribution
‐
77
132
55
‐
(43)
221
Net sales
9,422
2,668
2,229
590
‐
(624)
14,285
Cost of goods sold
7,082
399
1,171
434
‐
(800)
8,286
Gross margin
2,340
2,269
1,058
156
‐
176
5,999
Selling expenses
1,013
3
7
2
(2)
(6)
1,017
General and administrative
expenses
54
2
4
3
77
‐
140
Provincial mining taxes
‐
362
‐
‐
‐
‐
362
Share-based compensation recovery
‐
‐
‐
‐
(52)
‐
(52)
Impairment reversal of assets
‐
‐
‐
(450)
‐
‐
(450)
Other expenses (income)
21
5
(54)
8
48
9
37
Earnings (loss) before finance costs
and income taxes
1,252
1,897
1,101
593
(71)
173
4,945
Depreciation and amortization
175
130
139
41
20
‐
505
EBITDA 1
1,427
2,027
1,240
634
(51)
173
5,450
Integration and restructuring related
costs
‐
‐
‐
‐
11
‐
11
Share-based compensation recovery
‐
‐
‐
‐
(52)
‐
(52)
Impairment reversal of assets
‐
‐
‐
(450)
‐
‐
(450)
COVID-19 related expenses
‐
‐
‐
‐
3
‐
3
Foreign exchange loss, net of
related derivatives
‐
‐
‐
‐
31
‐
31
Adjusted EBITDA
1,427
2,027
1,240
184
(58)
173
4,993
Assets – at June 30, 2022
24,825
14,777
11,726
2,396
2,562
(1,051)
55,235
1 EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, and depreciation and
amortization.
Three Months Ended June 30,
2021
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
7,522
844
1,008
389
‐
‐
9,763
– intersegment
15
61
307
60
‐
(443)
‐
Sales
– total
7,537
905
1,315
449
‐
(443)
9,763
Freight, transportation and
distribution
‐
88
136
46
‐
(48)
222
Net sales
7,537
817
1,179
403
‐
(395)
9,541
Cost of goods sold
5,679
317
763
319
‐
(419)
6,659
Gross margin
1,858
500
416
84
‐
24
2,882
Selling expenses
863
2
8
1
(9)
‐
865
General and administrative expenses
41
3
3
3
66
‐
116
Provincial mining taxes
‐
107
‐
‐
‐
‐
107
Share-based compensation expense
‐
‐
‐
‐
38
‐
38
Impairment of assets
‐
‐
1
‐
‐
‐
1
Other expenses
34
11
5
3
83
‐
136
Earnings (loss) before finance costs
and income taxes
920
377
399
77
(178)
24
1,619
Depreciation and amortization
169
116
155
35
10
‐
485
EBITDA
1,089
493
554
112
(168)
24
2,104
Integration and restructuring related
costs
7
‐
‐
‐
22
‐
29
Share-based compensation expense
‐
‐
‐
‐
38
‐
38
Impairment of assets
‐
‐
1
‐
‐
‐
1
COVID-19 related expenses
‐
‐
‐
‐
9
‐
9
Foreign exchange gain, net of related
derivatives
‐
‐
‐
‐
(2)
‐
(2)
Cloud computing transition
adjustment
1
2
‐
‐
33
‐
36
Adjusted EBITDA
1,097
495
555
112
(68)
24
2,215
Assets – at December 31, 2021
22,387
13,148
11,093
1,699
2,266
(639)
49,954
Six Months Ended June 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
13,210
4,377
3,412
1,164
‐
‐
22,163
– intersegment
73
312
785
177
‐
(1,347)
‐
Sales
– total
13,283
4,689
4,197
1,341
‐
(1,347)
22,163
Freight, transportation and
distribution
‐
171
227
116
‐
(90)
424
Net sales
13,283
4,518
3,970
1,225
‐
(1,257)
21,739
Cost of goods sold
10,098
704
2,052
862
‐
(1,233)
12,483
Gross margin
3,185
3,814
1,918
363
‐
(24)
9,256
Selling expenses
1,735
6
15
4
(4)
(12)
1,744
General and administrative expenses
99
4
10
6
147
‐
266
Provincial mining taxes
‐
611
‐
‐
‐
‐
611
Share-based compensation expense
‐
‐
‐
‐
83
‐
83
Impairment reversal of assets
‐
‐
‐
(450)
‐
‐
(450)
Other expenses (income)
9
2
(80)
12
101
14
58
Earnings (loss) before finance costs
and income taxes
1,342
3,191
1,973
791
(327)
(26)
6,944
Depreciation and amortization
344
242
262
82
36
‐
966
EBITDA
1,686
3,433
2,235
873
(291)
(26)
7,910
Integration and restructuring related
costs
‐
‐
‐
‐
20
‐
20
Share-based compensation expense
‐
‐
‐
‐
83
‐
83
Impairment reversal of assets
‐
‐
‐
(450)
‐
‐
(450)
COVID-19 related expenses
‐
‐
‐
‐
8
‐
8
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
56
‐
56
Gain on disposal of investment
(19)
‐
‐
‐
‐
‐
(19)
Adjusted EBITDA
1,667
3,433
2,235
423
(124)
(26)
7,608
Assets – at June 30, 2022
24,825
14,777
11,726
2,396
2,562
(1,051)
55,235
Six Months Ended June 30,
2021
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
10,482
1,475
1,703
761
‐
‐
14,421
– intersegment
27
151
467
132
‐
(777)
‐
Sales
– total
10,509
1,626
2,170
893
‐
(777)
14,421
Freight, transportation and
‐
198
231
105
‐
(101)
433
Net sales
10,509
1,428
1,939
788
‐
(676)
13,988
Cost of goods sold
7,999
608
1,373
638
‐
(668)
9,950
Gross margin
2,510
820
566
150
‐
(8)
4,038
Selling expenses
1,530
5
15
3
(15)
‐
1,538
General and administrative expenses
80
5
5
5
124
‐
219
Provincial mining taxes
‐
165
‐
‐
‐
‐
165
Share-based compensation expense
‐
‐
‐
‐
61
‐
61
Impairment of assets
‐
‐
5
‐
‐
‐
5
Other expenses (income)
49
12
(25)
6
111
‐
153
Earnings (loss) before finance costs
and income taxes
851
633
566
136
(281)
(8)
1,897
Depreciation and amortization
346
240
284
73
22
‐
965
EBITDA
1,197
873
850
209
(259)
(8)
2,862
Integration and restructuring related
costs
8
‐
‐
‐
31
‐
39
Share-based compensation expense
‐
‐
‐
‐
61
‐
61
Impairment of assets
‐
‐
5
‐
‐
‐
5
COVID-19 related expenses
‐
‐
‐
‐
18
‐
18
Cloud computing transition
adjustment
1
2
‐
‐
33
‐
36
Adjusted EBITDA
1,206
875
855
209
(116)
(8)
3,021
Assets – at December 31, 2021
22,387
13,148
11,093
1,699
2,266
(639)
49,954
Presented below is revenue from contracts with customers
disaggregated by product line or geographic location for each
reportable segment.
Three Months Ended
Six Months Ended
June 30
June 30
2022
2021
2022
2021
Retail sales by product line
Crop nutrients
4,548
3,045
6,135
4,061
Crop protection products
2,983
2,666
4,370
3,751
Seed
1,269
1,216
1,727
1,679
Merchandise
280
268
514
498
Nutrien Financial
91
59
140
84
Services and other 1
310
320
485
485
Nutrien Financial elimination 1,2
(59)
(37)
(88)
(49)
9,422
7,537
13,283
10,509
Potash sales by geography
Manufactured product
North America
757
414
1,684
856
Offshore 3
1,988
491
3,005
770
2,745
905
4,689
1,626
Nitrogen sales by product line
Manufactured product
Ammonia
786
405
1,377
593
Urea
637
372
1,121
646
Solutions, nitrates and sulfates
578
329
1,052
526
Other nitrogen and purchased products
360
209
647
405
2,361
1,315
4,197
2,170
Phosphate sales by product line
Manufactured product
Fertilizer
358
258
790
530
Industrial and feed
204
133
388
259
Other phosphate and purchased products
83
58
163
104
645
449
1,341
893
1 Certain immaterial 2021 figures have
been reclassified.
2 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
3 Relates to Canpotex Limited ("Canpotex")
(Note 9) and includes provisional pricing adjustments for the three
months ended June 30, 2022 of $191 (2021 – $45) and the six months
ended June 30, 2022 of $253 (2021 – $51).
NOTE 3 IMPAIRMENT OF ASSETS
Phosphate Impairment Reversal
In the three months ended June 30, 2022, we revised our pricing
forecasts to reflect the current macroeconomic environment. This
resulted in a review of our previously impaired Phosphate
cash-generating units (“CGUs”).
In 2020, we recorded an impairment of assets relating to
property, plant and equipment of $545 at our Aurora CGU as a result
of lower long-term forecasted global phosphate prices. Due to
increases in our forecast, the recoverable amount of our Aurora CGU
is above its carrying amount. As a result, during the three and six
months ended June 30, 2022, we recorded an impairment reversal of
$450 (full reversal, net of depreciation) in the statement of
earnings relating to property, plant and equipment.
Aurora CGU
Segment
Phosphate
Impairment reversal indicator
Higher forecasted global
prices
Valuation methodology
Fair value less costs of disposal
("FVLCD")
Fair value hierarchy
Level 3
Valuation technique
Five-year DCF1 plus terminal year
to end of mine life
Key assumptions
End of mine life (proven and probable
reserves) (year)
2050
Long-term growth rate (%)
2.0
Post-tax discount rate (%) 2
10.4
1 Discounted Cash Flow
2 Post-tax discount rate used in the
previous measurement was 10.5%
As at
Aurora CGU
June 30, 2022
Recoverable amount
2,900
Carrying amount
1,200
The recoverable amount estimate is most sensitive to the
following key assumptions: our internal sales and input price
forecasts, which consider projections from independent third-party
data sources, discount rate, and expected mine life. We used key
assumptions that were based on historical data and estimates of
future results from internal sources, external price benchmarks,
and mineral reserve technical reports, as well as industry and
market trends. For our Aurora CGU, there were no reasonably
possible changes in key assumptions that would result in a
substantial change in the reversal amount.
In 2017 and 2020, we recorded an impairment of assets at our
White Springs CGU relating to property, plant and equipment of $250
and $215 respectively. The White Springs CGU has a shorter expected
mine life and is therefore more sensitive to changes in short and
medium-term pricing forecasts. The impairment test performed on our
White Springs CGU at June 30, 2022 did not result in recognition of
an impairment reversal as the recoverable amount was not
substantially different than the carrying amount of the CGU. We are
continuously monitoring our key assumptions for changes that could
have an impact on the recoverable amount including our internal
sales and input price forecasts. Changes in these key assumptions
could result in impairment reversals in future periods. The maximum
impairment reversal that could result at our White Springs CGU is
$340 (full reversal, net of depreciation).
Goodwill Impairment Indicators
During the six months ended June 30, 2022, North American
central banks continued to increase their benchmark borrowing rates
and have forecasted additional near-term increases. Benchmark
borrowing rates are used as the risk-free rate which, is a
component of determining our discount rate for impairment testing.
As a result of these increases, we revised our discount rate to 8.0
percent (previous annual impairment analysis – 7.4 percent) and
this triggered an impairment test to be performed for our Retail –
North America group of CGUs. We used the FVLCD methodology based on
after-tax discounted cash flows (five-year projections and a
terminal year thereafter) and incorporated assumptions an
independent market participant would apply. FVLCD is a Level 3
measurement.
2021 Impairment
As at
Retail - North America group
of CGUs
Analysis
June 30, 2022
Carrying amount of goodwill
(billions)
6.9
6.9
Excess carrying amount over
recoverable amount (billions)
1.5
0.8
Excess carrying amount over
recoverable amount (percent)
12
7
Goodwill is more susceptible to impairment risk if business
operating results or economic conditions deteriorate and actual
results do not meet our forecasts. A reduction in the terminal
growth rate, an increase in the discount rate or a decrease in
forecasted EBITDA and cash flows could cause impairment in the
future.
The following table indicates the percentages by which key
assumptions would need to change individually for the estimated
recoverable amount to be equal to the carrying amount:
Change Required for
Value Used in
Impairment
Carrying Amount to
Equal
Key Assumptions
Model
Recoverable Amount
Terminal growth rate (%)
2.5
percentage point decrease
0.6
Forecasted EBITDA over forecast
period (in billions of US dollars)
7.5
percent decrease
5.0
Discount rate (%)
8.0
percentage point increase
0.4
NOTE 4 OTHER EXPENSES (INCOME)
Three Months Ended
Six Months Ended
June 30
June 30
2022
2021
2022
2021
Integration and restructuring related
costs
11
29
20
39
Foreign exchange loss, net of related
derivatives
31
1
56
3
Earnings of equity-accounted investees
(77)
(2)
(118)
(22)
Bad debt expense
14
13
14
15
COVID-19 related expenses
3
9
8
18
Gain on disposal of investment
‐
‐
(19)
‐
Cloud computing transition adjustment
‐
36
‐
36
Other expenses
55
50
97
64
37
136
58
153
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate
was determined for each taxing jurisdiction and applied
individually to the interim period pre-tax earnings for each
jurisdiction.
Three Months Ended
Six Months Ended
June 30
June 30
2022
2021
2022
2021
Income tax expense
1,214
381
1,719
406
Actual effective tax rate on earnings
(%)
25
26
26
25
Actual effective tax rate including
discrete items (%)
25
26
25
25
Discrete tax adjustments that impacted the
tax rate
12
(3)
20
(3)
Income tax balances within the condensed consolidated balance
sheets were comprised of the following:
Income Tax Assets and Liabilities
Balance Sheet Location
As at June 30, 2022
As at December 31, 2021
Income tax assets
Current
Receivables
252
223
Non-current
Other assets
132
166
Deferred income tax assets
Other assets
355
262
Total income tax assets
739
651
Income tax liabilities
Current
Payables and accrued charges
1,132
606
Non-current
Other non-current liabilities
52
44
Deferred income tax liabilities
Deferred income tax liabilities
3,253
3,165
Total income tax liabilities
4,437
3,815
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to
approximate amounts for which the instruments could be exchanged in
a current arm’s-length transaction between knowledgeable, willing
parties. The valuation policies and procedures for financial
reporting purposes are determined by our finance department. There
have been no changes to our valuation methods presented in Note 10
of the 2021 annual consolidated financial statements and those
valuation methods have been applied in these interim financial
statements.
The following table presents our fair value hierarchy for
financial instruments carried at fair value on a recurring basis or
measured at amortized cost:
June 30, 2022
December 31, 2021
Carrying
Carrying
Financial assets (liabilities) measured
at
Amount
Level 1
Level 2
Level 3
Amount
Level 1
Level 2
Level 3
Fair value on a recurring basis
1
Cash and cash equivalents
711
‐
711
‐
499
‐
499
‐
Derivative instrument assets
34
‐
34
‐
19
‐
19
‐
Other current financial assets -
marketable securities 2
133
18
115
‐
134
19
115
‐
Investments at FVTOCI 3
237
227
‐
10
244
234
‐
10
Derivative instrument liabilities
(24)
‐
(24)
‐
(20)
‐
(20)
‐
Amortized cost
Current portion of long-term debt
Notes and debentures
(999)
‐
(995)
‐
(500)
(506)
‐
‐
Fixed and floating rate debt
(29)
‐
(29)
‐
(45)
‐
(45)
‐
Long-term debt
Notes and debentures
(6,921)
(931)
(5,683)
‐
(7,424)
(4,021)
(4,709)
‐
Fixed and floating rate debt
(135)
‐
(135)
‐
(97)
‐
(97)
‐
1 During the periods ended June 30, 2022
and December 31, 2021, there were no transfers between levelling
for financial instruments measured at fair value on a recurring
basis.
2 Marketable securities consist of equity
and fixed income securities. We determine the fair value of equity
securities based on the bid price of identical instruments in
active markets. We value fixed income securities using quoted
prices of instruments with similar terms and credit risk.
3 Investments at fair value through other
comprehensive income ("FVTOCI") is primarily comprised of shares in
Sinofert Holdings Ltd.
NOTE 7 SHARE CAPITAL
Share Repurchase Programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2020 Normal Course Issuer Bid
February 27, 2020
February 26, 2021
28,572,458
5
710,100
2021 Normal Course Issuer Bid
March 1, 2021
February 28, 2022
28,468,448
5
22,186,395
2022 Normal Course Issuer Bid 1
March 1, 2022
February 28, 2023
55,111,110
10
13,156,167
1 The 2022 normal course issuer bid will
expire earlier than the date above if we acquire the maximum number
of common shares allowable or otherwise decide not to make any
further repurchases.
Purchases under the normal course issuer bids were, or may be,
made through open market purchases at market prices as well as by
other means permitted by applicable securities laws, including
private agreements.
The following table summarizes our share repurchase activities
during the period:
Three Months Ended
Six Months Ended
June 30
June 30
2022
2021
2022
2021
Number of common shares repurchased for
cancellation
11,712,173
17,750
19,360,408
32,728
Average price per share (US dollars)
89.51
52.88
84.48
52.90
Total cost
1,049
1
1,636
2
As of August 2, 2022, an additional 2,205,645 common shares were
repurchased for cancellation at a cost of $172 and an average price
per share of $78.21.
Dividends Declared
We declared a dividend per share of $0.48 (2021 – $0.46) during
the three months ended June 30, 2022, payable on July 15, 2022 to
shareholders of record on June 30, 2022.
NOTE 8 SEASONALITY
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher in spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. The results of this seasonality have a corresponding effect
on receivables from customers and rebates receivables, inventories,
prepaid expenses and other current assets and trade payables. Our
short-term debt also fluctuates during the year to meet working
capital needs. Our cash collections generally occur after the
application season is complete, while customer prepayments made to
us are typically concentrated in December and January and inventory
prepayments paid to our suppliers are typically concentrated in the
period from November to January. Feed and industrial sales are more
evenly distributed throughout the year.
NOTE 9 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively
through Canpotex. Canpotex sells potash to buyers in export markets
pursuant to term and spot contracts at agreed upon prices. Our
revenue is recognized at the amount received from Canpotex
representing proceeds from their sale of potash, less net costs of
Canpotex. Sales to Canpotex are shown in Note 2.
As at
June 30, 2022
December 31, 2021
Receivables from Canpotex
1,805
828
NOTE 10 SUBSEQUENT EVENTS
On July 20, 2022, Nutrien announced the planned acquisition of
Casa do Adubo S.A. The acquisition includes 39 retail locations and
10 distribution centers in Brazil. Closing of the transaction is
subject to approval from the Administrative Council for Economic
Defense (CADE) in Brazil and is expected to be completed in the
second half of 2022.
Subsequent to June 30, 2022, and in addition to the $500
increase in our uncommitted revolving demand facility during the
second quarter of 2022, we entered into $2 billion in new
non-revolving term credit facilities, all with the same principal
covenants and events of default as our existing revolving term
credit facilities. These new facilities are temporary to help
manage normal seasonal working capital swings and are intended to
be closed before year-end. As of August 2, 2022, we had
approximately $3.0 billion drawn on our credit facilities and a
commercial paper balance of approximately $2.1 billion.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220729005481/en/
Investor Relations: Jeff Holzman Vice President, Investor
Relations (306) 933-8545 Investors@nutrien.com
Media Relations: Megan Fielding Vice President, Brand
& Culture Communications (403) 797-3015
Contact us at: www.nutrien.com
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