Delivered second highest net
earnings of any first quarter on record, advanced strategic
initiatives and returned $1.1 billion to shareholders through
dividends and share repurchases. Full-year guidance reflects
expectation for fertilizer benchmark prices to stabilize near
mid-cycle values.
All amounts are in US dollars except as
otherwise noted
Nutrien Ltd. (TSX and NYSE: NTR) announced today its first
quarter 2023 results, with net earnings of $0.6 billion ($1.14
diluted net earnings per share). First quarter 2023 adjusted net
earnings per share1 was $1.11 and adjusted EBITDA1 was $1.4
billion.
“Nutrien delivered adjusted EBITDA of $1.4 billion in the first
quarter and continued to demonstrate the advantages of our
flexible, low-cost production assets and global distribution
network. We invested in initiatives to sustain and grow our asset
base and returned $1.1 billion to shareholders during the quarter,”
commented Ken Seitz, Nutrien’s President and CEO.
“Crop input demand has strengthened as the spring planting
season progresses in the northern hemisphere and higher cost
inventory is moving through the channel. We are encouraged by the
continued stabilization of fertilizer markets following a year of
unprecedented volatility and anticipate increased demand in the
second half of 2023 due to strong agriculture fundamentals,
improved grower affordability and lower inventory levels. With
fertilizer prices near mid-cycle levels, we expect to generate
strong operating cash flows in 2023 and to maintain a balanced and
disciplined approach to capital allocation,” added Mr. Seitz.
Highlights2:
- Nutrien Ag Solutions (“Retail”) adjusted EBITDA declined to
$(34) million in the first quarter of 2023 primarily due to lower
sales and gross margins for crop nutrients and crop protection
products compared to the record levels achieved in 2022. Crop
nutrient margins were below normalized levels in the first quarter
as prices declined and we worked through higher cost
inventory.
- Potash adjusted EBITDA declined to $676 million in the first
quarter of 2023 due to lower net realized selling prices and lower
sales volumes. North American sales volumes were impacted by
just-in-time buying. Lower offshore demand from customers in Asia
was largely offset by record first quarter Canpotex sales volumes
to Brazil.
- Nitrogen adjusted EBITDA declined to $676 million in the first
quarter of 2023 due to lower net realized selling prices for all
major nitrogen products. This was partially offset by lower natural
gas costs and increased operating rates at our North American
nitrogen plants.
- Nutrien repurchased 11.8 million shares year-to-date as of
March 31, 2023, under its normal course issuer bid programs, for
approximately $900 million. The Company’s total shares outstanding
declined to 496 million as at the end of the first quarter of 2023,
representing a 10 percent reduction compared to the same period in
2022.
- Nutrien full year 2023 adjusted EBITDA and adjusted net
earnings per share guidance1 was revised to $6.5 to $8.0 billion
and $5.50 to $7.50 per share, respectively.
1.
These (and any related guidance, if applicable) are non-IFRS
financial measures. See the “Non-IFRS Financial Measures” section
for further information.
2.
Our discussion of highlights set out on this page is a comparison
of the results for the three months ended March 31, 2023 to the
results for the three months ended March 31, 2022, unless otherwise
noted.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD&A”)
is the responsibility of management and is dated as of May 10,
2023. The Board of Directors (“Board”) of Nutrien carries out its
responsibility for review of this disclosure principally through
its Audit Committee, composed entirely of independent directors.
The Audit Committee reviews and, prior to its publication, approves
this disclosure pursuant to the authority delegated to it by the
Board. The term “Nutrien” refers to Nutrien Ltd. and the terms
“we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien
and, as applicable, Nutrien and its direct and indirect
subsidiaries on a consolidated basis. Additional information
relating to Nutrien (which, except as otherwise noted, is not
incorporated by reference herein), including our annual report
dated February 16, 2023 (“2022 Annual Report”), which includes our
annual audited consolidated financial statements and MD&A, and
our annual information form dated February 16, 2023, each for the
year ended December 31, 2022, can be found on SEDAR at
www.sedar.com and on EDGAR at www.sec.gov. No update is provided to
the disclosure in our 2022 annual MD&A except for material
information since the date of our annual MD&A. The Company is a
foreign private issuer under the rules and regulations of the US
Securities and Exchange Commission (the “SEC”).
This MD&A is based on and should be read in conjunction with
the Company’s unaudited interim condensed consolidated financial
statements as at and for the three months ended March 31, 2023
(“interim financial statements”) based on International Financial
Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board and prepared in accordance with
International Accounting Standard (“IAS”) 34 “Interim Financial
Reporting”, unless otherwise noted. This MD&A contains certain
non-IFRS financial measures and ratios and forward-looking
statements, which are described in the “Non-IFRS Financial
Measures” and the “Forward-Looking Statements” sections,
respectively.
Market Outlook and Guidance
Agriculture and Retail
- Geopolitical and weather-related challenges continue to impact
global agriculture commodity markets, including significant
production and export reductions from Ukraine and severe drought
conditions in Argentina. The global grain stocks-to-use ratio is
projected to end the current growing season at the lowest level in
over 25 years. Corn, soybeans and wheat prices have softened
recently due to seasonal pressure resulting from the expectation of
higher Brazilian and US crop production. However, new crop futures
are still approximately 15 percent above the 10-year average and
grower margins remain healthy, providing incentive to invest in
their crop and boost production.
- We expect an 8 million acre increase in US major crop planted
area in 2023, including an additional 3 million acres of corn,
which is supportive of crop input demand. Planting activity is
progressing well in North America and fertilizer application rates
have been in line with historical average levels and well above
rates in the spring of 2022. The combination of strong demand and
logistical challenges has tightened North American fertilizer
supply.
- South American crop production has been mixed as record
Brazilian soybean production and strong prospects for the safrinha
corn crop are balanced against the impacts of severe drought in
Argentina. We expect increased application rates for the 2023
summer crop planting season due to improved affordability ratios
compared to the previous year. Australian winter crop planting is
progressing well, with no major shifts in acreage expected from
record 2022 levels.
Crop Nutrient Markets
- Potash demand has strengthened in North America as the spring
application season has progressed, while engagement in offshore
markets has been more variable. We anticipate increased global
potash demand in the second half of 2023 as a result of lower
expected inventories and improved grower affordability compared to
2022.
- Potash shipments from Belarus are projected to be above our
previous expectation for 2023, partially offset by lower expected
exports from Russia. We now project Belarusian shipments will be
down 25 to 40 percent this year and Russian shipments down 25 to 35
percent compared to 2021. We have maintained our global potash
shipment forecast between 63 and 67 million tonnes in 2023.
- North American nitrogen supply has tightened during the spring
season due to strong demand and lower net imports. Global nitrogen
trade has been impacted by weaker industrial demand in Asia and
Europe, and lower Indian urea imports. We expect ammonia markets
will strengthen as demand increases and supply remains challenged
with approximately 40 percent of European capacity currently
curtailed and Russian ammonia exports are constrained.
- North American dry phosphate prices firmed during the spring
season driven by tight supplies and strong demand, while
international prices have remained relatively stable, supported by
demand in Brazil and India. Lower ammonia and sulfur prices have
been supportive of margins. We expect Chinese phosphate exports to
increase moderately year-over-year due to expected loosening of
government restrictions.
Financial Guidance
- Based on market factors detailed above, we are revising
full-year 2023 adjusted EBITDA guidance2 to $6.5 to $8.0 billion
and full year 2023 adjusted net earnings guidance2 to $5.50 to
$7.50 per share. We now project cash from operations of $5.0 to
$5.8 billion, which is expected to be relatively stable due to an
anticipated release in working capital.
- Retail adjusted EBITDA guidance was lowered primarily due to
the expectation of below normal crop nutrient gross margins in the
first half of 2023 as we work through higher cost inventory.
- Potash adjusted EBITDA guidance decreased due to lower
forecasted benchmark fertilizer prices and sales tonnes. Potash
sales tonnes guidance of 13.5 to 14.3 million tonnes assumes
increased demand year-over-year in our key markets of North America
and Brazil, partially offset by lower shipments to China due to
delayed contract negotiations with Canpotex.
- Nitrogen adjusted EBITDA guidance decreased due to lower
forecasted benchmark fertilizer prices, partially offset by the
expectation for lower North American natural gas prices.
All guidance numbers, including those noted above are outlined
in the table below. Refer to page 56 of Nutrien’s 2022 Annual
Report for related assumptions and sensitivities, except as set
forth below.
Guidance Ranges 1 as
of
May 10, 2023
Feb 15, 2023
(billions of US dollars, except as
otherwise noted)
Low
High
Low
High
Adjusted net earnings per share (in US
dollars) 2,3
5.50
7.50
8.45
10.65
Adjusted EBITDA 2
6.5
8.0
8.4
10.0
Retail adjusted EBITDA
1.60
1.75
1.85
2.05
Potash adjusted EBITDA
2.65
3.35
3.7
4.5
Nitrogen adjusted EBITDA
1.95
2.55
2.5
3.2
Phosphate adjusted EBITDA (in millions of
US dollars)
550
700
550
750
Potash sales tonnes (millions) 4
13.5
14.3
13.8
14.6
Nitrogen sales tonnes (millions) 4
10.8
11.4
10.8
11.4
Depreciation and amortization
2.1
2.2
2.1
2.2
Effective tax rate on adjusted earnings
(%)
23.5
24.0
23.5
24.5
1 See the "Forward-Looking Statements"
section.
2 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
3 Assumes 499 million shares outstanding
for May 10, 2023 adjusted net EPS guidance.
4 Manufactured product only. Nitrogen
sales tonnes includes ESN® products.
Consolidated Results
Three Months Ended March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
Sales
6,107
7,657
(20)
Freight, transportation and
distribution
199
203
(2)
Cost of goods sold
3,995
4,197
(5)
Gross margin
1,913
3,257
(41)
Expenses
974
1,258
(23)
Net earnings
576
1,385
(58)
Adjusted EBITDA 1
1,421
2,615
(46)
Diluted net earnings per share
1.14
2.49
(54)
Adjusted net earnings per share 1
1.11
2.70
(59)
Cash used in operating activities
(858)
(62)
n/m
Cash used in investing activities
(694)
(457)
52
Cash used for dividends and share
repurchases 2
(1,143)
(899)
27
1 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
2 This is a supplementary financial
measure. See the "Other Financial Measures" section.
Net earnings and adjusted EBITDA decreased in the first quarter
of 2023 compared to the same period in 2022, due to lower net
realized selling prices in all segments and lower sales volumes in
Retail, Potash and Phosphate. This was partially offset by
decreased cost of goods sold from lower natural gas costs and
increased operating rates at our North American nitrogen plants.
The increase in cash used in operating activities was primarily due
to lower earnings across all segments. The increase in cash used in
investing activities reflects higher capital expenditures to
sustain and grow our asset base and incremental cash used for
Retail business acquisitions. Cash used for dividends and share
repurchases increased in the first quarter of 2023 compared to the
same period in 2022 due to higher share repurchases under our
normal course issuer bid programs.
Segment Results
Our discussion of segment results set out on the following pages
is a comparison of the results for the three months ended March 31,
2023 to the results for the three months ended March 31, 2022,
unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended March
31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
1,335
1,587
(16)
141
292
(52)
11
18
Crop protection products
1,154
1,387
(17)
208
282
(26)
18
20
Seed
507
458
11
72
66
9
14
14
Merchandise
246
234
5
44
41
7
18
18
Nutrien Financial
57
49
16
57
49
16
100
100
Services and other
148
175
(15)
118
144
(18)
80
82
Nutrien Financial elimination 1
(25)
(29)
(14)
(25)
(29)
(14)
100
100
3,422
3,861
(11)
615
845
(27)
18
22
Cost of goods sold
2,807
3,016
(7)
Gross margin
615
845
(27)
Expenses ²
830
755
10
(Loss) earnings before finance costs and
taxes ("EBIT")
(215)
90
n/m
Depreciation and amortization
181
169
7
EBITDA
(34)
259
n/m
Adjustments 3
‐
(19)
(100)
Adjusted EBITDA
(34)
240
n/m
1 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
2 Includes selling expenses of $765
million (2022 – $722 million).
3 See Note 2 to the interim financial
statements.
- Retail adjusted EBITDA declined primarily due to lower
sales and gross margins for crop nutrients and crop protection
products compared to the record levels achieved in 2022. Expenses
increased primarily due to higher selling expenses resulting from
acquisitions completed in 2022 and general inflation. We achieved
growth in our high-value proprietary products portfolio in both
crop nutritionals and seed. We completed eight acquisitions and
focused on the integration of acquisitions completed in 2022.
- Crop nutrients sales decreased primarily due to lower
selling prices compared to the exceptionally strong comparable
period in 2022. Gross margin per tonne decreased in all regions due
to lower selling prices and higher cost inventory, partially offset
by growth in proprietary nutritional products. Sales volumes
decreased due to delayed grower purchases compared to the prior
year and import restrictions in Argentina.
- Crop protection products sales and gross margin
decreased, particularly in North America, attributable to a
historically strong comparable period in 2022. Lower prices for
certain herbicide products also led to reduced margins.
- Seed sales and gross margin increased due to strong corn
sales in the southern US and higher proprietary seed margins.
Australia experienced higher canola sales due to earlier supply
availability.
Potash
Three Months Ended March
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
343
833
(59)
854
1,218
(30)
401
684
(41)
Offshore
659
1,017
(35)
1,782
1,825
(2)
370
557
(34)
1,002
1,850
(46)
2,636
3,043
(13)
380
608
(38)
Cost of goods sold
305
305
‐
115
100
15
Gross margin – total
697
1,545
(55)
265
508
(48)
Expenses ¹
118
251
(53)
Depreciation and amortization
37
37
‐
EBIT
579
1,294
(55)
Gross margin excluding depreciation
Depreciation and amortization
97
112
(13)
and amortization – manufactured 2
302
545
(45)
EBITDA/ Adjusted EBITDA
676
1,406
(52)
Potash controllable cash cost of
product manufactured 2
62
50
24
1 Includes provincial mining taxes of $119
million (2022 – $249 million).
2 These are non-IFRS financial measures.
See the “Non-IFRS Financial Measures” section.
- Potash adjusted EBITDA declined due to lower net
realized selling prices and lower sales volumes. We adjusted
operating rates across our six-mine network in response to lower
near-term demand and brought forward maintenance activities,
preserving flexibility to increase production as demand
increases.
- Sales volumes decreased in North America primarily due
to just-in-time buying. Lower offshore demand from customers in
Asia was largely offset by record first quarter Canpotex sales
volumes to Brazil.
- Net realized selling price decreased due to a decline in
benchmark prices compared to the historically strong period in
2022.
- Cost of goods sold per tonne increased primarily due to
lower production volumes and a pull forward of maintenance
activities.
Canpotex Sales by Market
Three Months Ended March
31
(percentage of sales volumes, except as
otherwise noted)
2023
2022
Change
Other Asian markets 1
38
45
(7)
Latin America
35
32
3
Other markets
13
9
4
China
12
13
(1)
India
2
1
1
100
100
1 All Asian markets except China and
India.
Nitrogen
Three Months Ended March
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
385
560
(31)
534
595
(10)
721
940
(23)
Urea and ESN® 1
461
515
(10)
747
651
15
617
792
(22)
Solutions, nitrates and sulfates
333
439
(24)
1,076
1,079
‐
310
407
(24)
1,179
1,514
(22)
2,357
2,325
1
500
651
(23)
Cost of goods sold 1
648
672
(4)
275
290
(5)
Gross margin – manufactured
531
842
(37)
225
361
(38)
Gross margin – other 1,2
10
18
(44)
Depreciation and amortization 1
57
53
7
Gross margin – total
541
860
(37)
Gross margin excluding depreciation
(Income) expenses ³
(1)
(12)
(92)
and amortization – manufactured 4
282
414
(32)
EBIT
542
872
(38)
Ammonia controllable cash cost of
Depreciation and amortization
134
123
9
product manufactured 4
63
56
13
EBITDA/ Adjusted EBITDA
676
995
(32)
1 Certain immaterial 2022 figures have
been reclassified.
2 Includes other nitrogen and purchased
products and comprises net sales of $133 million (2022 – $227
million) less cost of goods sold of $123 million (2022 – $209
million).
3 Includes earnings from equity-accounted
investees of $30 million (2022 – $37 million).
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
- Nitrogen adjusted EBITDA declined due to lower net
realized selling prices for all major nitrogen products. During the
quarter our ammonia utilization rate increased to 95 percent1, due
in part to the continued focus on reliability initiatives and
investments in our assets. We progressed our inflight brownfield
expansions and advanced front-end engineering work on our proposed
Geismar clean ammonia plant.
- Sales volumes were slightly higher as we benefited from
increased production of urea and ESN® at our Canadian nitrogen
facilities, which offset lower ammonia production in Trinidad
caused by natural gas curtailments.
- Net realized selling price was lower for all major
nitrogen products due to weaker benchmark prices resulting from
lower energy prices in key nitrogen producing regions and a
temporary reduction in demand.
- Cost of goods sold per tonne decreased primarily due to
lower natural gas costs. Ammonia controllable cash cost of product
manufactured increased mainly due to higher inputs costs, including
materials and electricity.
Natural Gas Prices in Cost of Production
Three Months Ended March
31
(US dollars per MMBtu, except as otherwise
noted)
2023
2022
% Change
Overall gas cost excluding realized
derivative impact
4.85
6.86
(29)
Realized derivative impact
‐
(0.01)
(100)
Overall gas cost
4.85
6.85
(29)
Average NYMEX
3.42
4.95
(31)
Average AECO
3.21
3.61
(11)
- Natural gas prices in our cost of production
decreased in the first quarter as a result of lower North American
gas index prices and decreased gas costs in Trinidad, where our gas
prices are linked to ammonia benchmark prices.
1 Excludes Trinidad and Joffre.
Phosphate
Three Months Ended March
31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
264
393
(33)
388
460
(16)
682
854
(20)
Industrial and feed
182
170
7
160
191
(16)
1,136
891
27
446
563
(21)
548
651
(16)
814
865
(6)
Cost of goods sold
357
360
(1)
651
552
18
Gross margin - manufactured
89
203
(56)
163
313
(48)
Gross margin – other 1
(2)
4
n/m
Depreciation and amortization
122
63
94
Gross margin – total
87
207
(58)
Gross margin excluding depreciation
Expenses
17
9
89
and amortization – manufactured 2
285
376
(24)
EBIT
70
198
(65)
Depreciation and amortization
67
41
63
EBITDA/ Adjusted EBITDA
137
239
(43)
1 Includes other phosphate and purchased
products and comprises net sales of $68 million (2022 – $72
million) less cost of goods sold of $70 million (2022 – $68
million).
2 This is a non-IFRS financial measure.
See the "Non-IFRS Financial Measures" section.
- Phosphate adjusted EBITDA decreased due to lower sales
volumes and lower net realized prices for fertilizer products. We
completed several maintenance and reliability initiatives in the
first quarter and expect operating rates to increase in the second
half of 2023 following the completion of planned turnarounds in the
second quarter.
- Sales volumes decreased due to lower production volumes
and cautious buying activity.
- Net realized selling price decreased overall as lower
fertilizer net realized selling prices were partially offset by
higher industrial and feed net realized selling prices.
- Cost of goods sold per tonne increased due to higher
depreciation from impairment reversals in 2022, and lower
production, partially offset by lower ammonia and sulfur
costs.
Corporate and Others
Three Months Ended March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
Selling expenses
(2)
(2)
‐
General and administrative expenses
84
70
20
Share-based compensation expense
15
135
(89)
Other (income) expenses
(81)
53
n/m
EBIT
(16)
(256)
(94)
Depreciation and amortization
17
16
6
EBITDA
1
(240)
n/m
Adjustments 1
(14)
174
n/m
Adjusted EBITDA
(13)
(66)
(80)
1 See Note 2 to the interim financial
statements.
- Share-based compensation expense was lower due to a
decrease in the fair value of share-based awards.
- Other (income) expenses of $(81) million was mainly due
to an $80 million gain on amendments to our other post-retirement
benefit plans, which resulted from design plan changes. In
addition, we had net foreign exchange gains in 2023 compared to
losses in 2022 mainly due to hedging activities related to our
international operations, primarily for Brazil.
Eliminations
- Eliminations are not part of the Corporate and Others segment.
Eliminations of gross margin between operating segments were $(27)
million for the first quarter of 2023 compared to $(200) million in
the same period of 2022. We had significant eliminations in the
first quarter of 2022 due to higher-margin inventories held by our
Retail segment as global commodity benchmark prices increased.
Finance Costs, Income Taxes and Other Comprehensive
Income
Three Months Ended March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
Finance costs
170
109
56
Income tax expense
193
505
(62)
Other comprehensive income
2
176
(99)
- Finance costs were higher in the first quarter of 2023
compared to the same period in 2022 mainly due to higher interest
on short-term debt from increased commercial paper interest rates
and a higher average balance borrowed under our credit
facilities.
- Income tax expense was lower in the first quarter of
2023 as a result of lower earnings compared to the same period in
2022. The change in the actual effective tax rate on ordinary
earnings was a result of decreased earnings in higher tax
jurisdictions.
- Other comprehensive income was lower primarily driven by
changes in the currency translation of our foreign operations. In
the first quarter of 2023, we had lower gains on foreign currency
translation of our Retail foreign operations, as the Australian
currency depreciated and the Brazilian currency had lower
appreciation relative to the US dollar, compared to the same period
in 2022.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our
capital allocation strategy. We believe that our internally
generated cash flow, supplemented by available borrowings under new
or existing financing sources, if necessary, will be sufficient to
meet our anticipated capital expenditures, planned growth and
development activities, and other cash requirements for the
foreseeable future. Refer to the “Capital Structure and Management”
section for details on our existing long-term debt and credit
facilities.
Sources and Uses of Cash
Three Months Ended March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
Cash used in operating activities
(858)
(62)
n/m
Cash used in investing activities
(694)
(457)
52
Cash provided by financing activities
2,129
588
262
Effect of exchange rate changes on cash
and cash equivalents
(5)
9
n/m
Increase in cash and cash equivalents
572
78
633
Cash used in operating
activities
•
Higher cash used in operating activities in the first quarter of
2023 compared to the same period in 2022 was primarily due to lower
net earnings from lower net realized selling prices in all segments
and lower sales volumes in Retail, Potash and Phosphate.
Cash used in investing
activities
•
Higher cash used in investing activities in the first quarter of
2023 compared to the same period in 2022 mainly due to higher
spending to grow our Potash and Nitrogen operational capabilities
through our plan to ramp up production and the proposed Geismar
clean ammonia project, respectively, and higher spending on
strategic Retail business acquisitions. We also continued to
prioritize sustaining our assets to ensure we have safe and
reliable operations.
Cash provided by financing
activities
• •
Higher cash provided by financing activities in the first
quarter of 2023 compared to the same period in 2022 was due to the
issuance of an aggregate principal amount of $1.5 billion of notes
in the first quarter of 2023. Proceeds from short-term debt
increased from higher short-term borrowings in 2023 to temporarily
finance our working capital requirements and support repurchases of
common shares through our normal course issuer bid programs.
Financial Condition Review
The following balance sheet categories contain variances that
are considered material:
As at
(millions of US dollars, except as
otherwise noted)
March 31, 2023
December 31, 2022
$ Change
% Change
Assets
Cash and cash equivalents
1,473
901
572
63
Inventories
9,852
7,632
2,220
29
Prepaid expenses and other current
assets
937
1,615
(678)
(42)
Liabilities and Equity
Short-term debt
4,013
2,142
1,871
87
Payables and accrued charges
10,611
11,291
(680)
(6)
Long-term debt
9,510
8,040
1,470
18
Share capital
13,878
14,172
(294)
(2)
Retained earnings
11,660
11,928
(268)
(2)
- Explanations for changes in Cash and cash equivalents
are in the “Sources and Uses of Cash” section above.
- Inventories increased due to seasonal Retail inventory
build-up for the 2023 spring planting and application seasons in
North America.
- Prepaid expenses and other current assets decreased due
to Retail taking delivery of prepaid inventories in preparation for
the spring planting and application seasons in North America.
- Short-term debt increased due to additional commercial
paper issuances and borrowings under our credit facilities for our
seasonal working capital requirements and for share repurchases
under our normal course issuer bid programs.
- Payables and accrued charges decreased due to lower
income tax payable from payments made for the 2022 tax balance and
lower purchases driven by lower input costs. This was partially
offset by seasonally high customer prepayments in North
America.
- Long-term debt increased due to the issuance of an
aggregate principal amount of $1.5 billion of notes in the first
quarter of 2023.
- Share capital decreased primarily from shares
repurchased under our normal course issuer bid programs.
- Retained earnings decreased as share repurchases and
dividends declared in the quarter exceeded net earnings in the
first quarter of 2023.
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 three months
ended March 31, 2023.
As at March 31, 2023
(millions of US dollars, except as
Outstanding and
Committed
otherwise noted)
Rate of Interest (%)
Total Facility Limit
Short-Term Debt
Long-Term Debt
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit
facility
5.9
2,000
1,250
‐
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities
1,240
South America
1.3 - 77.5
484
157
Australia
4.5
147
‐
Other
0.8 - 4.0
52
3
Commercial paper
5.0 - 6.0
1,905
‐
Other short-term and long-term debt
n/a
175
7
Total
4,013
167
The amount available under the commercial paper program is
limited to the undrawn availability of backup funds under the
$4,500 million unsecured revolving term credit facility and excess
cash invested in highly liquid securities.
Our long-term debt consists primarily of notes and debentures.
See the “Capital Structure and Management” section of our 2022
Annual Report for information on balances, rates and maturities for
our notes and debentures. On March 27, 2023, we issued notes in the
aggregate principal amount of $1.5 billion. See Note 8 to the
interim financial statements.
Outstanding Share Data
As at May 9, 2023
Common shares
496,089,482
Options to purchase common shares
3,505,340
For more information on our capital structure and management,
see Note 24 to our 2022 annual consolidated financial
statements.
Quarterly Results
(millions of US dollars, except as
otherwise noted)
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Q3 2021
Q2 2021
Sales
6,107
7,533
8,188
14,506
7,657
7,267
6,024
9,763
Net earnings
576
1,118
1,583
3,601
1,385
1,207
726
1,113
Net earnings attributable to equity
holders of Nutrien
571
1,112
1,577
3,593
1,378
1,201
717
1,108
Net earnings per share attributable to
equity holders of Nutrien
Basic
1.14
2.15
2.95
6.53
2.49
2.11
1.26
1.94
Diluted
1.14
2.15
2.94
6.51
2.49
2.11
1.25
1.94
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 and third quarters of 2022, earnings were impacted
by $450 million and $330 million non-cash impairment reversals at
Aurora and White Springs, respectively, 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.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2022
Annual Report. We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the Audit
Committee of the Board. Our critical accounting estimates are
discussed on page 65 of our 2022 Annual Report. There were no
material changes in the three months ended March 31, 2023 to our
critical accounting estimates.
Controls and Procedures
Management is responsible for establishing and maintaining
adequate internal control over financial reporting, as defined in
Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of
1934, as amended, and National Instrument 52-109 Certification of
Disclosure in Issuers’ Annual and Interim Filings. Internal control
over financial reporting is designed to provide reasonable
assurance regarding the reliability of financial reporting and
preparation of financial statements for external purposes in
accordance with IFRS. Any system of internal control over financial
reporting, no matter how well designed, has inherent limitations.
Therefore, even those systems determined to be effective can
provide only reasonable assurance with respect to financial
statement preparation and presentation.
There has been no change in our internal control over financial
reporting during the three months ended March 31, 2023 that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this
document, including within the “Market Outlook and Guidance”
section, constitute “forward-looking information” or
“forward-looking statements” (collectively, “forward-looking
statements”) under applicable securities laws (such statements are
often accompanied by words such as “anticipate”, “forecast”,
“expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend”
or other similar words). All statements in this document, other
than those relating to historical information or current
conditions, are forward-looking statements, including, but not
limited to: Nutrien's business strategies, plans, prospects and
opportunities; Nutrien's revised 2023 full-year guidance, including
expectations regarding our adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment); our projections for
cash from operations; expectations regarding our growth and capital
allocation intentions and strategies; our advancement of strategic
growth initiatives; capital spending expectations for 2023;
expectations regarding performance of our operating segments in
2023; our operating segment market outlooks and our expectations
for market conditions and fundamentals in 2023 and beyond, and the
anticipated supply and demand for our products and services,
expected market and industry conditions with respect to crop
nutrient application rates, planted acres, grower crop investment,
crop mix, production volumes and expenses, shipments, consumption,
prices and the impact of seasonality, including drought conditions,
import and export volumes, economic sanctions, operating rates,
natural gas curtailments and the war between Ukraine and Russia;
Nutrien's ability to develop innovative and sustainable solutions;
the negotiation of sales contracts; timing and impacts of plant
turnarounds; acquisitions and divestitures and the anticipated
benefits thereof; and expectations in connection with our ability
to deliver long-term returns to shareholders. These forward-looking
statements are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control, which could
cause actual results to differ materially from such forward-looking
statements. As such, undue reliance should not be placed on these
forward-looking statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, having regard to our experience and our
perception of historical trends, this list is not exhaustive of the
factors that may affect any of the forward-looking statements and
the reader should not place undue reliance on these assumptions and
such forward-looking statements. Current conditions, economic and
otherwise, render assumptions, although reasonable when made,
subject to greater uncertainty. The additional key assumptions that
have been made include, among other things, assumptions with
respect to our ability to successfully complete, integrate and
realize the anticipated benefits of our already completed and
future acquisitions and divestitures, and that we will be able to
implement our standards, controls, procedures and policies in
respect of any acquired businesses and to realize the expected
synergies on the anticipated timeline or at all; that future
business, regulatory and industry conditions will be within the
parameters expected by us, including with respect to prices,
expenses, margins, demand, supply, product availability, shipments,
consumption, weather conditions, supplier agreements, availability
and cost of labor and interest, exchange and effective tax rates;
assumptions with respect to global economic conditions and the
accuracy of our market outlook expectations for 2023 and in the
future; our expectations for fertilizer prices to stabilize near
mid-cycle values in 2023; assumptions with respect to our intention
to complete share repurchases under our normal course issuer bid
programs, including the funding of such share repurchases, existing
and future market conditions, including with respect to the price
of our common shares, and compliance with respect to applicable
limitations under securities laws and regulations and stock
exchange policies; our expectations regarding any ongoing 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 war between
Ukraine and Russia on, among other things, global supply and
demand, including for crop nutrients, energy and commodity prices,
global interest rates, supply chains and the global macroeconomic
environment, including inflation; the adequacy of our cash
generated from operations and our ability to access our credit
facilities or capital markets for additional sources of financing;
our ability to identify suitable candidates for acquisitions and
divestitures and negotiate acceptable terms; our ability to
maintain investment grade ratings and achieve our performance
targets; our ability to successfully negotiate sales contracts; and
our ability to successfully implement new initiatives and
programs.
Events or circumstances that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to: general global economic, market
and business conditions; failure to complete announced and future
acquisitions or divestitures at all or on the expected terms and
within the expected timeline; seasonality; climate change and
weather conditions, including impacts from regional flooding and/or
drought conditions; crop planted acreage, yield and prices; the
supply and demand and price levels for our products; governmental
and regulatory requirements and actions by governmental
authorities, including changes in government policy (including
tariffs, trade restrictions and climate change initiatives),
government ownership requirements, changes in environmental, tax
and other laws or regulations and the interpretation thereof;
political risks, including civil unrest, actions by armed groups or
conflict and malicious acts including terrorism; the occurrence of
a major environmental or safety incident; innovation and
cybersecurity risks related to our systems, including our costs of
addressing or mitigating such risks; counterparty and sovereign
risk; delays in completion of turnarounds at our major facilities;
interruptions of or constraints in availability of key inputs,
including natural gas and sulfur; any significant impairment of the
carrying amount of certain assets; risks related to reputational
loss; certain complications that may arise in our mining processes;
the ability to attract, engage and retain skilled employees and
strikes or other forms of work stoppages; any ongoing impacts of
the COVID-19 pandemic and its resulting effects on economic
conditions and disruptions to global supply chains; the war between
Ukraine and Russia and its potential impact on, among other things,
global market conditions and supply and demand, including for crop
nutrients, energy and commodity prices, interest rates, supply
chains and the global economy generally; our ability to execute on
our strategies related to environmental, social and governance
matters, and achieve related expectations, targets and commitments;
the risk that rising interest rates and/or deteriorated business
operating results may result in the impairment of assets or
goodwill attributed to certain of our cash generating units; and
other risk factors detailed from time to time in Nutrien reports
filed with the Canadian securities regulators and the SEC in the
United States.
The purpose of our 2023 adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment) guidance ranges are
to assist readers in understanding our expected and targeted
financial results, and this information may not be appropriate for
other purposes.
The forward-looking statements in this document are made as of
the date hereof and Nutrien disclaims any intention or obligation
to update or revise any forward-looking statements in this document
as a result of new information or future events, except as may be
required under applicable Canadian securities legislation or
applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms
used in this document, as well as a list of abbreviated company
names and sources, see the “Terms & Definitions” section of our
2022 Annual Report. All references to per share amounts pertain to
diluted net earnings (loss) per share, “n/m” indicates information
that is not meaningful, and all financial amounts are stated in
millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and
services, helping to safely and sustainably feed a growing world.
We operate a world-class network of production, distribution and
retail facilities that positions us to efficiently serve the needs
of growers. We focus on creating long-term value for all
stakeholders by advancing our key environmental, social and
governance priorities.
More information about Nutrien can be found at
www.nutrien.com.
Selected financial data for download can be found in our data
tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, May 11, 2023
at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
- From Canada and the US 1-888-396-8049
- 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/2023-q1-earnings-conference-call
Appendix A - Selected Additional Financial Data
Selected Retail Measures
Three Months Ended March
31
2023
2022
Proprietary products gross margin
(millions of US dollars)
Crop nutrients
54
44
Crop protection products
74
111
Seed
30
26
Merchandise
3
3
All products
161
184
Proprietary products margin as a
percentage of product line margin (%)
Crop nutrients
38
15
Crop protection products
36
39
Seed
42
38
Merchandise
6
7
All products
26
22
Crop nutrients sales volumes (tonnes –
thousands)
North America
1,195
1,242
International
845
933
Total
2,040
2,175
Crop nutrients selling price per
tonne
North America
742
867
International
532
547
Total
655
729
Crop nutrients gross margin per
tonne
North America
94
185
International
35
67
Total
69
134
Financial performance measures
2023
2022
Retail adjusted EBITDA margin (%) 1, 2
10
11
Retail adjusted EBITDA per US selling
location (thousands of US dollars) 1, 2, 3
1,709
1,583
Retail adjusted average working capital to
sales (%) 1, 4
19
14
Retail adjusted average working capital to
sales excluding Nutrien Financial (%) 1, 4
3
‐
Nutrien Financial adjusted net interest
margin (%) 1, 4
6.6
6.9
Retail cash operating coverage ratio (%)
1, 4
59
57
1 Rolling four quarters ended March 31,
2023 and 2022.
2 These are supplementary financial
measures. See the “Other Financial Measures" section.
3 Excluding acquisitions.
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Nutrien Financial
As at March 31, 2023
As at
December
31, 2022
(millions of US dollars)
Current
<31 Days
Past Due
31–90 Days
Past Due
>90 Days
Past Due
Gross Receivables
Allowance 1
Net Receivables
Net Receivables
North America
1,220
86
139
75
1,520
(28)
1,492
2,007
International
677
40
55
26
798
(7)
791
662
Nutrien Financial receivables
1,897
126
194
101
2,318
(35)
2,283
2,669
1 Bad debt expense on the above
receivables for the three months ended March 31, 2023 was $1
million (2022 – $1 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended March
31
2023
2022
Sales volumes (tonnes –
thousands)
Fertilizer 1
1,248
1,153
Industrial and feed
1,109
1,172
Net sales (millions of US
dollars)
Fertilizer 1
681
826
Industrial and feed
498
688
Net selling price per tonne
Fertilizer 1
545
716
Industrial and feed
449
587
1 Certain immaterial 2022 figures have
been reclassified.
Production Measures
Three Months Ended March
31
2023
2022
Potash production (Product tonnes –
thousands)
3,088
3,703
Potash shutdown weeks 1
4
‐
Ammonia production – total 2
1,431
1,403
Ammonia production – adjusted 2, 3
1,037
958
Ammonia operating rate (%) 3
95
89
P2O5 production (P2O5 tonnes –
thousands)
341
378
P2O5 operating rate (%)
81
90
1 Represents weeks of full production
shutdown, including inventory adjustments and unplanned events,
excluding the impact of any periods of reduced operating rates,
planned routine annual maintenance shutdowns and announced
workforce reductions.
2 All figures are provided on a gross
production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B - Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial
measures to assess performance. Non-IFRS financial measures are
financial measures disclosed by the Company that (a) depict
historical or expected future financial performance, financial
position or cash flow of the Company, (b) with respect to their
composition, exclude amounts that are included in, or include
amounts that are excluded from, the composition of the most
directly comparable financial measure disclosed in the primary
financial statements of the Company, (c) are not disclosed in the
financial statements of the Company and (d) are not a ratio,
fraction, percentage or similar representation. Non-IFRS ratios are
financial measures disclosed by the Company that are in the form of
a ratio, fraction, percentage or similar representation that has a
non-IFRS financial measure as one or more of its components, and
that are not disclosed in the financial statements of the
Company.
These non-IFRS financial measures and non-IFRS ratios are not
standardized financial measures under IFRS and, therefore, are
unlikely to be comparable to similar financial measures presented
by other companies. Management believes these non-IFRS financial
measures and non-IFRS ratios provide transparent and useful
supplemental information to help investors evaluate our financial
performance, financial condition and liquidity using the same
measures as management. These non-IFRS financial measures and
non-IFRS ratios should not be considered as a substitute for, or
superior to, measures of financial performance prepared in
accordance with IFRS.
The following section outlines our non-IFRS financial measures
and non-IFRS ratios, their compositions, and why management uses
each measure. It also includes reconciliations to the most directly
comparable IFRS measures. Except as otherwise described herein, our
non-IFRS financial measures and non-IFRS ratios are calculated on a
consistent basis from period to period and are adjusted for
specific items in each period, as applicable. As additional
non-recurring or unusual items arise in the future, we generally
exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net
earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, depreciation and
amortization, share-based compensation and certain foreign exchange
gain/loss (net of related derivatives). We also adjust this measure
for the following other income and expenses that are excluded when
management evaluates the performance of our day-to-day operations:
integration and restructuring related costs, impairment or reversal
of impairment of assets, COVID-19 related expenses, and gain or
loss on disposal of certain businesses and investments.
Why we use the measure and why it is useful to investors:
It is not impacted by long-term investment and financing decisions,
but rather focuses on the performance of our day-to-day operations.
It provides a measure of our ability to service debt and to meet
other payment obligations, and as a component of employee
remuneration calculations.
Three Months Ended March
31
(millions of US dollars)
2023
2022
Net earnings
576
1,385
Finance costs
170
109
Income tax expense
193
505
Depreciation and amortization
496
461
EBITDA 1
1,435
2,460
Share-based compensation expense
15
135
Foreign exchange (gain) loss, net of
related derivatives
(34)
25
Integration and restructuring related
costs
5
9
COVID-19 related expenses 2
‐
5
Gain on disposal of investment
‐
(19)
Adjusted EBITDA
1,421
2,615
1 EBITDA is calculated as net earnings
before finance costs, income taxes, and depreciation and
amortization.
2 COVID-19 related expenses primarily
consist of increased cleaning and sanitization costs, the purchase
of personal protective equipment, discretionary supplemental
employee costs, and costs related to construction delays from
access limitations and other government restrictions.
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, and gain/loss on early extinguishment of debt or on
settlement of derivatives due to discontinuance of hedge
accounting. 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
March 31, 2023
Per
Increases
Diluted
(millions of US dollars, except as
otherwise noted)
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
571
1.14
Adjustments:
Share-based compensation expense
15
11
0.01
Foreign exchange gain, net of related
derivatives
(34)
(25)
(0.05)
Integration and restructuring related
costs
5
4
0.01
Adjusted net earnings
561
1.11
Three Months Ended
March 31, 2022
Per
Increases
Diluted
(millions of US dollars, except as
otherwise noted)
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
1,378
2.49
Adjustments:
Share-based compensation expense
135
101
0.18
Foreign exchange loss, net of related
derivatives
25
19
0.04
Integration and restructuring related
costs
9
7
0.01
COVID-19 related expenses
5
4
0.01
Gain on disposal of investment
(19)
(14)
(0.03)
Adjusted net earnings
1,495
2.70
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, and
gain/loss on early extinguishment of debt or on settlement of
derivatives due to discontinuance of hedge accounting.
Gross Margin Excluding Depreciation and Amortization Per
Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross
margin.
Definition: Gross margin per tonne less depreciation and
amortization per tonne for manufactured products. Reconciliations
are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations, which
excludes the effects of items that primarily reflect the impact of
long-term investment and financing decisions.
Potash Controllable Cash Cost of Product Manufactured
(“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of
goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and
amortization expense included in COPM, royalties, natural gas costs
and carbon taxes, change in inventory, and other adjustments,
divided by potash production tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Potash controllable cash COPM
excludes the effects of production from other periods and the
impacts of our long-term investment decisions. Potash controllable
cash COPM also excludes royalties and natural gas costs and carbon
taxes, which management does not consider controllable, as they are
primarily driven by regulatory and market conditions.
Three Months Ended March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
Total COGS – Potash
305
305
Change in inventory
40
77
Other adjustments 1
(8)
(15)
COPM
337
367
Depreciation and amortization in COPM
(100)
(119)
Royalties in COPM
(31)
(45)
Natural gas costs and carbon taxes in
COPM
(16)
(17)
Controllable cash COPM
190
186
Production tonnes (tonnes – thousands)
3,088
3,703
Potash controllable cash COPM per
tonne
62
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 March
31
(millions of US dollars, except as
otherwise noted)
2023
2022
Total Manufactured COGS – Nitrogen 1
648
672
Total Other COGS – Nitrogen 1
123
209
Total COGS – Nitrogen
771
881
Depreciation and amortization in COGS
(108)
(102)
Cash COGS for products other than
ammonia
(471)
(524)
Ammonia
Total cash COGS before other
adjustments
192
255
Other adjustments 2
(68)
(36)
Total cash COPM
124
219
Natural gas and steam costs in COPM
(85)
(181)
Controllable cash COPM
39
38
Production tonnes (net tonnes 3 –
thousands)
628
674
Ammonia controllable cash COPM per
tonne
63
56
1 Certain immaterial 2022 figures have
been reclassified.
2 Other adjustments include unallocated
production overhead that is recognized as part of cost of goods
sold but is not included in the measurement of inventory and
changes in inventory balances.
3 Ammonia tonnes available for sale, as
not upgraded to other nitrogen products.
Retail Adjusted Average Working Capital to Sales and Retail
Adjusted Average Working Capital to Sales Excluding Nutrien
Financial
Definition: Retail adjusted average working capital
divided by Retail adjusted sales for the last four rolling
quarters. We exclude in our calculations the sales and working
capital of certain acquisitions during the first year following the
acquisition. We also look at this metric excluding Nutrien
Financial revenue and working capital.
Why we use the measure and why it is useful to investors:
To evaluate operational efficiency. A lower or higher percentage
represents increased or decreased efficiency, respectively. The
metric excluding Nutrien Financial shows the impact that the
working capital of Nutrien Financial has on the ratio.
Rolling four quarters ended
March 31, 2023
(millions of US dollars, except as
otherwise noted)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Average/Total
Current assets
12,487
11,262
11,668
13,000
Current liabilities
(9,177)
(5,889)
(8,708)
(8,980)
Working capital
3,310
5,373
2,960
4,020
3,916
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
3,310
5,373
2,960
4,020
3,916
Nutrien Financial working capital
(4,404)
(3,898)
(2,669)
(2,283)
Adjusted working capital excluding Nutrien
Financial
(1,094)
1,475
291
1,737
602
Sales
9,422
3,980
4,087
3,422
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
9,422
3,980
4,087
3,422
20,911
Nutrien Financial revenue
(91)
(65)
(62)
(57)
Adjusted sales excluding Nutrien
Financial
9,331
3,915
4,025
3,365
20,636
Adjusted average working capital to
sales (%)
19
Adjusted average working capital to
sales excluding Nutrien Financial (%)
3
Rolling four quarters ended March
31, 2022
(millions of US dollars, except as
otherwise noted)
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Average/Total
Current assets
9,300
8,945
9,924
12,392
Current liabilities
(7,952)
(5,062)
(7,828)
(9,223)
Working capital
1,348
3,883
2,096
3,169
2,624
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
1,348
3,883
2,096
3,169
2,624
Nutrien Financial working capital
(3,072)
(2,820)
(2,150)
(2,274)
Adjusted working capital excluding Nutrien
Financial
(1,724)
1,063
(54)
895
45
Sales
7,537
3,347
3,878
3,861
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
7,537
3,347
3,878
3,861
18,623
Nutrien Financial revenue
(59)
(54)
(51)
(49)
Adjusted sales excluding Nutrien
Financial
7,478
3,293
3,827
3,812
18,410
Adjusted average working capital to sales
(%)
14
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 net
receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors:
Used by credit rating agencies and other users to evaluate the
financial performance of Nutrien Financial.
Rolling four quarters ended
March 31, 2023
(millions of US dollars, except as
otherwise noted)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Total/Average
Nutrien Financial revenue
91
65
62
57
Deemed interest expense 1
(12)
(12)
(11)
(20)
Net interest
79
53
51
37
220
Average Nutrien Financial net
receivables
4,404
3,898
2,669
2,283
3,314
Nutrien Financial adjusted net interest
margin (%)
6.6
Rolling four quarters ended March
31, 2022
(millions of US dollars, except as
otherwise noted)
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Total/Average
Nutrien Financial revenue
59
54
51
49
Deemed interest expense 1
(8)
(10)
(12)
(6)
Net interest
51
44
39
43
177
Average Nutrien Financial net
receivables
3,072
2,820
2,150
2,274
2,579
Nutrien Financial adjusted net interest
margin (%)
6.9
1 Average borrowing rate applied to the
notional debt required to fund the portfolio of receivables from
customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative,
and other expenses (income), excluding depreciation and
amortization expense, divided by Retail gross margin excluding
depreciation and amortization expense in cost of goods sold, for
the last four rolling quarters.
Why we use the measure and why it is useful to investors:
To understand the costs and underlying economics of our Retail
operations and to assess our Retail operating performance and
ability to generate free cash flow.
Rolling four quarters ended
March 31, 2023
(millions of US dollars, except as
otherwise noted)
Q2 2022
Q3 2022
Q4 2022
Q1 2023
Total
Selling expenses
1,013
821
836
765
3,435
General and administrative expenses
54
50
51
50
205
Other expenses
21
19
1
15
56
Operating expenses
1,088
890
888
830
3,696
Depreciation and amortization in operating
expenses
(171)
(204)
(198)
(179)
(752)
Operating expenses excluding depreciation
and amortization
917
686
690
651
2,944
Gross margin
2,340
917
1,077
615
4,949
Depreciation and amortization in cost of
goods sold
4
2
4
2
12
Gross margin excluding depreciation and
amortization
2,344
919
1,081
617
4,961
Cash operating coverage ratio (%)
59
Rolling four quarters ended March
31, 2022
(millions of US dollars, except as
otherwise noted)
Q2 2021
Q3 2021
Q4 2021
Q1 2022
Total
Selling expenses
863
746
848
722
3,179
General and administrative expenses
41
45
43
45
174
Other expenses (income)
34
17
20
(12)
59
Operating expenses
938
808
911
755
3,412
Depreciation and amortization in operating
expenses
(166)
(180)
(173)
(167)
(686)
Operating expenses excluding depreciation
and amortization
772
628
738
588
2,726
Gross margin
1,858
917
1,173
845
4,793
Depreciation and amortization in cost of
goods sold
3
2
5
2
12
Gross margin excluding depreciation and
amortization
1,861
919
1,178
847
4,805
Cash operating coverage ratio (%)
57
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures
disclosed by the Company that (a) are, or are intended to be,
disclosed on a periodic basis to depict the historical or expected
future financial performance, financial position or cash flow of
the Company, (b) are not disclosed in the financial statements of
the Company, (c) are not non-IFRS financial measures, and (d) are
not non-IFRS ratios.
The following section provides an explanation of the composition
of those supplementary financial measures if not previously
provided.
Retail adjusted EBITDA margin: Retail adjusted EBITDA
divided by Retail sales for the last four rolling quarters.
Retail adjusted EBITDA per US selling location:
Calculated as total Retail US adjusted EBITDA for the last four
rolling quarters, representing the organic EBITDA component, which
excludes acquisitions in those quarters, divided by the number of
US locations that have generated sales in the last four rolling
quarters, adjusted for acquired locations in those quarters.
Cash used for dividends and share repurchases (shareholder
returns): Calculated as dividends paid to Nutrien’s
shareholders plus repurchase of common shares as reflected in the
condensed consolidated statements of cash flows. This measure is
useful as it represents return of capital to shareholders.
Condensed Consolidated Financial Statements
Unaudited in millions of US dollars except as otherwise
noted
Condensed Consolidated Statements of Earnings
Three Months Ended
March 31
Note
2023
2022
SALES
2
6,107
7,657
Freight, transportation and
distribution
199
203
Cost of goods sold
3,995
4,197
GROSS MARGIN
1,913
3,257
Selling expenses
770
727
General and administrative expenses
145
126
Provincial mining taxes
119
249
Share-based compensation expense
15
135
Other (income) expenses
4
(75)
21
EARNINGS BEFORE FINANCE COSTS AND
INCOME TAXES
939
1,999
Finance costs
170
109
EARNINGS BEFORE INCOME TAXES
769
1,890
Income tax expense
5
193
505
NET EARNINGS
576
1,385
Attributable to
Equity holders of Nutrien
571
1,378
Non-controlling interest
5
7
NET EARNINGS
576
1,385
NET EARNINGS PER SHARE ATTRIBUTABLE TO
EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
1.14
2.49
Diluted
1.14
2.49
Weighted average shares outstanding for
basic EPS
501,175,000
552,636,000
Weighted average shares outstanding for
diluted EPS
502,220,000
554,647,000
Condensed Consolidated Statements of Comprehensive
Income
Three Months Ended
March 31
(Net of related income taxes)
2023
2022
NET EARNINGS
576
1,385
Other comprehensive income
Items that will not be reclassified to net
earnings:
Net actuarial (loss) gain on defined
benefit plans
(3)
1
Net fair value gain on investments
5
31
Items that have been or may be
subsequently reclassified to net earnings:
Gain on currency translation of foreign
operations
1
128
Other
(1)
16
OTHER COMPREHENSIVE INCOME
2
176
COMPREHENSIVE INCOME
578
1,561
Attributable to
Equity holders of Nutrien
573
1,554
Non-controlling interest
5
7
COMPREHENSIVE INCOME
578
1,561
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31
Note
2023
2022
Note 1
OPERATING ACTIVITIES
Net earnings
576
1,385
Adjustments for:
Depreciation and amortization
496
461
Share-based compensation expense
15
135
Gain on disposal of investment
‐
(19)
Provision for deferred income tax
21
45
Long-term income tax receivables
(72)
10
Net distributed (undistributed) earnings
of equity-accounted investees
163
(39)
Gain on amendments to other
post-retirement pension plans
(80)
‐
Other long-term assets, liabilities and
miscellaneous
7
30
Cash from operations before working
capital changes
1,126
2,008
Changes in non-cash operating working
capital:
Receivables
535
(909)
Inventories
(2,168)
(2,609)
Prepaid expenses and other current
assets
675
722
Payables and accrued charges
(1,026)
726
CASH USED IN OPERATING
ACTIVITIES
(858)
(62)
INVESTING ACTIVITIES
Capital expenditures 1
(450)
(351)
Business acquisitions, net of cash
acquired
(111)
(41)
Other
(33)
34
Net changes in non-cash working
capital
(100)
(99)
CASH USED IN INVESTING
ACTIVITIES
(694)
(457)
FINANCING ACTIVITIES
Transaction costs related to debt
(20)
‐
Proceeds from short-term debt, net
7
1,873
1,454
Proceeds from long-term debt
8
1,500
‐
Repayment of long-term debt
(17)
(2)
Repayment of principal portion of lease
liabilities
(87)
(79)
Dividends paid to Nutrien's
shareholders
9
(246)
(257)
Repurchase of common shares
9
(897)
(642)
Issuance of common shares
28
126
Other
(5)
(12)
CASH PROVIDED BY FINANCING
ACTIVITIES
2,129
588
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
(5)
9
INCREASE IN CASH AND CASH
EQUIVALENTS
572
78
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
901
499
CASH AND CASH EQUIVALENTS – END OF
PERIOD
1,473
577
Cash and cash equivalents is composed
of:
Cash
361
546
Short-term investments
1,112
31
1,473
577
SUPPLEMENTAL CASH FLOWS
INFORMATION
Interest paid
98
50
Income taxes paid
1,319
789
Total cash outflow for leases
119
107
1 Includes additions to property, plant
and equipment, and intangible assets for the three months ended
March 31, 2023 of $411 and $39 (2022 – $306 and $45),
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, 2021
557,492,516
15,457
149
(176)
30
(146)
8,192
23,652
47
23,699
Net earnings
‐
‐
‐
‐
‐
‐
1,378
1,378
7
1,385
Other comprehensive income
‐
‐
‐
128
48
176
‐
176
‐
176
Shares repurchased (Note 9)
(7,648,235)
(212)
‐
‐
‐
‐
(375)
(587)
‐
(587)
Dividends declared
‐
‐
‐
‐
‐
‐
(265)
(265)
‐
(265)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(11)
(11)
Effect of share-based compensation
including issuance of
common shares
2,275,861
153
(16)
‐
‐
‐
‐
137
‐
137
Transfer of net gain on cash flow
hedges
‐
‐
‐
‐
(3)
(3)
‐
(3)
‐
(3)
Transfer of net actuarial gain on defined
benefit plans
‐
‐
‐
‐
(1)
(1)
1
‐
‐
‐
BALANCE – MARCH 31, 2022
552,120,142
15,398
133
(48)
74
26
8,931
24,488
43
24,531
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374)
(17)
(391)
11,928
25,818
45
25,863
Net earnings
‐
‐
‐
‐
‐
‐
571
571
5
576
Other comprehensive income
‐
‐
‐
1
1
2
‐
2
‐
2
Shares repurchased (Note 9)
(11,751,290)
(328)
‐
‐
‐
‐
(571)
(899)
‐
(899)
Dividends declared
‐
‐
‐
‐
‐
‐
(265)
(265)
‐
(265)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(6)
(6)
Effect of share-based compensation
including issuance of
common shares
579,208
34
(3)
‐
‐
‐
‐
31
‐
31
Transfer of net loss on cash flow
hedges
‐
‐
‐
‐
5
5
‐
5
‐
5
Transfer of net actuarial loss on defined
benefit plans
‐
‐
‐
‐
3
3
(3)
‐
‐
‐
Other
‐
‐
‐
(2)
‐
(2)
‐
(2)
‐
(2)
BALANCE – MARCH 31, 2023
496,074,023
13,878
106
(375)
(8)
(383)
11,660
25,261
44
25,305
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Balance Sheets
March 31
December 31
As at
Note
2023
2022
2022
ASSETS
Current assets
Cash and cash equivalents
1,473
577
901
Receivables
6,009
6,437
6,194
Inventories
9,852
9,068
7,632
Prepaid expenses and other current
assets
937
943
1,615
18,271
17,025
16,342
Non-current assets
Property, plant and equipment
21,832
19,998
21,767
Goodwill
12,433
12,287
12,368
Intangible assets
2,292
2,334
2,297
Investments
686
757
843
Other assets
1,078
867
969
TOTAL ASSETS
56,592
53,268
54,586
LIABILITIES
Current liabilities
Short-term debt
7
4,013
3,033
2,142
Current portion of long-term debt
545
551
542
Current portion of lease liabilities
306
293
305
Payables and accrued charges
10,611
11,013
11,291
15,475
14,890
14,280
Non-current liabilities
Long-term debt
8
9,510
7,519
8,040
Lease liabilities
880
929
899
Deferred income tax liabilities
5
3,603
3,243
3,547
Pension and other post-retirement benefit
liabilities
242
425
319
Asset retirement obligations and accrued
environmental costs
1,389
1,523
1,403
Other non-current liabilities
188
208
235
TOTAL LIABILITIES
31,287
28,737
28,723
SHAREHOLDERS’ EQUITY
Share capital
9
13,878
15,398
14,172
Contributed surplus
106
133
109
Accumulated other comprehensive (loss)
income
(383)
26
(391)
Retained earnings
11,660
8,931
11,928
Equity holders of Nutrien
25,261
24,488
25,818
Non-controlling interest
44
43
45
TOTAL SHAREHOLDERS’ EQUITY
25,305
24,531
25,863
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
56,592
53,268
54,586
(See Notes to the Condensed Consolidated
Financial Statements)
Notes to the Condensed Consolidated Financial
Statements
As at and for the Three Months Ended March 31, 2023
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”,
“we”, “us”, “our” or “the Company”) is the world’s largest provider
of crop inputs and services. Nutrien plays a critical role in
helping growers around the globe increase food production in a
sustainable manner.
These unaudited interim condensed consolidated financial
statements (“interim financial statements”) are based on
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board and have been prepared
in accordance with IAS 34, “Interim Financial Reporting”. The
accounting policies and methods of computation used in preparing
these interim financial statements are materially consistent with
those used in the preparation of our 2022 annual consolidated
financial statements. These interim financial statements include
the accounts of Nutrien and its subsidiaries; however, they do not
include all disclosures normally provided in annual consolidated
financial statements and should be read in conjunction with our
2022 annual consolidated financial statements.
Certain immaterial 2022 figures have been reclassified in the
condensed consolidated statements of cash flows.
In management’s opinion, the interim financial statements
include all adjustments necessary to fairly present such
information in all material respects. Interim results are not
necessarily indicative of the results expected for any other
interim period or the fiscal year.
These interim financial statements were authorized by the Audit
Committee of the Board of Directors for issue on May 10, 2023.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag
Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail
segment distributes crop nutrients, crop protection products, seed
and merchandise, and it provides services directly to growers
through a network of farm centers in North America, South America
and Australia. The Potash, Nitrogen and Phosphate segments are
differentiated by the chemical nutrient contained in the products
that each produces.
Three Months Ended March 31,
2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,422
1,023
1,154
508
‐
‐
6,107
– intersegment
‐
54
264
64
‐
(382)
‐
Sales
– total
3,422
1,077
1,418
572
‐
(382)
6,107
Freight, transportation and
distribution
‐
75
106
58
‐
(40)
199
Net sales
3,422
1,002
1,312
514
‐
(342)
5,908
Cost of goods sold
2,807
305
771
427
‐
(315)
3,995
Gross margin
615
697
541
87
‐
(27)
1,913
Selling expenses
765
3
8
2
(2)
(6)
770
General and administrative expenses
50
3
5
3
84
‐
145
Provincial mining taxes
‐
119
‐
‐
‐
‐
119
Share-based compensation expense
‐
‐
‐
‐
15
‐
15
Other expenses (income)
15
(7)
(14)
12
(81)
‐
(75)
(Loss) earnings before finance costs and
income taxes
(215)
579
542
70
(16)
(21)
939
Depreciation and amortization
181
97
134
67
17
‐
496
EBITDA 1
(34)
676
676
137
1
(21)
1,435
Integration and restructuring related
costs
‐
‐
‐
‐
5
‐
5
Share-based compensation expense
‐
‐
‐
‐
15
‐
15
Foreign exchange gain, net of related
derivatives
‐
‐
‐
‐
(34)
‐
(34)
Adjusted EBITDA
(34)
676
676
137
(13)
(21)
1,421
Assets – at March 31, 2023
25,858
13,526
11,673
2,658
3,589
(712)
56,592
1 EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, and depreciation and
amortization.
Three Months Ended March 31,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,833
1,710
1,497
617
‐
‐
7,657
– intersegment
28
234
339
79
‐
(680)
‐
Sales
– total
3,861
1,944
1,836
696
‐
(680)
7,657
Freight, transportation and
distribution
‐
94
95
61
‐
(47)
203
Net sales
3,861
1,850
1,741
635
‐
(633)
7,454
Cost of goods sold
3,016
305
881
428
‐
(433)
4,197
Gross margin
845
1,545
860
207
‐
(200)
3,257
Selling expenses
722
3
8
2
(2)
(6)
727
General and administrative expenses
45
2
6
3
70
‐
126
Provincial mining taxes
‐
249
‐
‐
‐
‐
249
Share-based compensation expense
‐
‐
‐
‐
135
‐
135
Other (income) expenses
(12)
(3)
(26)
4
53
5
21
Earnings (loss) before finance costs and
income taxes
90
1,294
872
198
(256)
(199)
1,999
Depreciation and amortization
169
112
123
41
16
‐
461
EBITDA
259
1,406
995
239
(240)
(199)
2,460
Integration and restructuring related
costs
‐
‐
‐
‐
9
‐
9
Share-based compensation expense
‐
‐
‐
‐
135
‐
135
COVID-19 related expenses
‐
‐
‐
‐
5
‐
5
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
25
‐
25
Gain on disposal of investment
(19)
‐
‐
‐
‐
‐
(19)
Adjusted EBITDA
240
1,406
995
239
(66)
(199)
2,615
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876)
54,586
Three Months Ended
March 31
2023
2022
Retail sales by product line
Crop nutrients
1,335
1,587
Crop protection products
1,154
1,387
Seed
507
458
Merchandise
246
234
Nutrien Financial
57
49
Services and other
148
175
Nutrien Financial elimination 1
(25)
(29)
3,422
3,861
Potash sales by geography
Manufactured product
North America
417
927
Offshore 2
660
1,017
1,077
1,944
Nitrogen sales by product line
Manufactured product
Ammonia
416
591
Urea and ESN® 3
491
540
Solutions, nitrates and sulfates
371
474
Other nitrogen and purchased products
3
140
231
1,418
1,836
Phosphate sales by product line
Manufactured product
Fertilizer
302
432
Industrial and feed
195
184
Other phosphate and purchased products
75
80
572
696
1 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
2 Relates to Canpotex Limited ("Canpotex")
(Note 11) and includes provisional pricing adjustments for the
three months ended March 31, 2023 of $(147) (2022 – $62).
3 Certain immaterial 2022 figures have
been reclassified.
NOTE 3 SHARE-BASED COMPENSATION
The following table summarizes the awards granted under our
existing share-based compensation plans described in Note 5 of our
2022 annual consolidated financial statements:
Three Months Ended
March 31
2023
2022
Stock options:
Granted (number of units)
301,168
375,483
Weighted average grant date fair value (US
dollars)
25.67
20.49
Cash-settled share-based awards granted
(number of units) 1
1,003,010
970,461
1 For performance share units granted
subsequent to January 1, 2022, return on invested capital over a
three-year performance cycle is compared to Board-approved targets
as an additional performance condition.
NOTE 4 OTHER (INCOME) EXPENSES
Three Months Ended
March 31
2023
2022
Integration and restructuring related
costs
5
9
Foreign exchange (gain) loss, net of
related derivatives
(34)
25
Earnings of equity-accounted investees
(37)
(41)
Bad debt expense
9
‐
COVID-19 related expenses
‐
5
Gain on disposal of investment
‐
(19)
Project feasibility costs
13
12
Customer prepayment costs
14
13
Gain on amendments to other
post-retirement pension plans
(80)
‐
Other expenses
35
17
(75)
21
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
March 31
2023
2022
Income tax expense
193
505
Actual effective tax rate on earnings
(%)
23
26
Actual effective tax rate including
discrete items (%)
25
27
Discrete tax adjustments that impacted the
tax rate
18
8
The following table summarizes the income tax balances within
the condensed consolidated balance sheets:
Income Tax Assets and Liabilities
Balance Sheet Location
As at March 31, 2023
As at December 31, 2022
Income tax assets
Current
Receivables
455
144
Non-current
Other assets
127
54
Deferred income tax assets
Other assets
487
448
Total income tax assets
1,069
646
Income tax liabilities
Current
Payables and accrued charges
114
899
Non-current
Other non-current liabilities
48
46
Deferred income tax liabilities
Deferred income tax liabilities
3,603
3,547
Total income tax liabilities
3,765
4,492
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to
approximate amounts for which the instruments could be exchanged in
a current arm’s length transaction between knowledgeable, willing
parties. The valuation policies and procedures for financial
reporting purposes are determined by our finance department. There
have been no changes to our valuation methods presented in Note 10
of the 2022 annual consolidated financial statements and those
valuation methods have been applied in these interim financial
statements.
The following table presents our fair value hierarchy for
financial instruments carried at fair value on a recurring basis or
measured at amortized cost and require fair value disclosure. The
table does not include fair value information for financial
instruments that are measured using their carrying amount as a
reasonable approximation of fair value.
March 31, 2023
December 31, 2022
Carrying
Carrying
Financial assets (liabilities) measured
at
Amount
Level 1
Level 2
Level 3
Amount
Level 1
Level 2
Level 3
Fair value on a recurring basis
1
Derivative instrument assets
7
‐
7
‐
7
‐
7
‐
Other current financial assets -
marketable securities 2
155
29
126
‐
148
19
129
‐
Investments at FVTOCI 3
205
195
‐
10
200
190
‐
10
Derivative instrument liabilities
(26)
‐
(26)
‐
(35)
‐
(35)
‐
Amortized cost
Current portion of long-term debt
Notes and debentures
(500)
(498)
‐
‐
(500)
(493)
‐
‐
Fixed and floating rate debt
(45)
‐
(45)
‐
(42)
‐
(42)
‐
Long-term debt
Notes and debentures
(9,388)
(6,513)
(2,372)
‐
(7,910)
(3,581)
(3,656)
‐
Fixed and floating rate debt
(122)
‐
(122)
‐
(130)
‐
(130)
‐
1 During the periods ended March 31, 2023
and December 31, 2022, there were no transfers between levels for
financial instruments measured at fair value on a recurring
basis.
2 Marketable securities consist of equity
and fixed income securities.
3 Investments at fair value through other
comprehensive income ("FVTOCI") is primarily comprised of shares in
Sinofert Holdings Ltd.
NOTE 7 SHORT-TERM DEBT
Rate of
Interest (%)
Total Facility Limit as at March
31, 2023
As at
March 31, 2023
As at
December 31, 2022
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit
facility
5.9
2,000
1,250
500
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities 1
1,240
South America
1.3 - 77.5
484
453
Australia
4.5
147
190
Other
0.8
52
9
Commercial paper
5.0 - 6.0
1,905
783
Other short-term debt
n/a
175
207
4,013
2,142
1 Total facility limit amounts include
some facilities with maturities in excess of one year.
NOTE 8 LONG-TERM DEBT
Issuance in the first quarter
2023
Rate of interest (%)
Maturity
Amount
Notes issued 2023
4.900
March 27, 2028
750
Notes issued 2023
5.800
March 27, 2053
750
1,500
The notes issued in the three months ended March 31, 2023 are
unsecured, rank equally with our existing unsecured debt, and have
no sinking fund requirements prior to maturity. Each series is
redeemable and has various provisions for redemption prior to
maturity, at our option, at specified prices.
NOTE 9 SHARE CAPITAL
Share Repurchase Programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2021 Normal Course Issuer Bid
March 1, 2021
February 28, 2022
28,468,448
5
22,186,395
2022 Normal Course Issuer Bid
March 1, 2022
February 7, 2023
55,111,110
10
55,111,110
2023 Normal Course Issuer Bid 1
March 1, 2023
February 29, 2024
24,962,194
5
3,748,498
1 The 2023 normal course issuer bid will
expire earlier than the date above if we acquire the maximum number
of common shares allowable or otherwise decide not to make any
further repurchases.
Purchases under the normal course issuer bids were, or may be,
made through open market purchases at market prices as well as by
other means permitted by applicable securities laws, including
private agreements.
The following table summarizes our share repurchase activities
during the period:
Three Months Ended
March 31
2023
2022
Number of common shares repurchased for
cancellation
11,751,290
7,648,235
Average price per share (US dollars)
76.57
76.79
Total cost
899
587
Dividends Declared
We declared a dividend per share of $0.53 (2022 – $0.48) during
the three months ended March 31, 2023, payable on April 13, 2023 to
shareholders of record on March 31, 2023.
NOTE 10 SEASONALITY
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher in the spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. The results of this seasonality have a corresponding effect
on receivables from customers and rebates receivables, inventories,
prepaid expenses and other current assets, and trade payables. Our
short-term debt also fluctuates during the year to meet working
capital 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 11 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively
through Canpotex. Canpotex sells potash to buyers in export markets
pursuant to term and spot contracts at agreed upon prices. Our
total revenue is recognized at the amount received from Canpotex
representing proceeds from their sale of potash, less net costs of
Canpotex. Sales to Canpotex are shown in Note 2.
As at
March 31, 2023
December 31, 2022
Receivables from Canpotex
528
866
NOTE 12 BUSINESS COMBINATIONS
On October 1, 2022, we acquired Casa do Adubo S.A. (“Casa do
Adubo”). We have revised the total consideration paid for the
acquisition to $277, net of cash and cash equivalents acquired, and
amounts held in escrow, as a result of obtaining additional
information and finalizing the purchase price agreement during the
allowed measurement period, resulting in an increase to goodwill
and intangible assets. Preliminary goodwill recognized on the Casa
do Adubo acquisition was $177 as at March 31, 2023.
We have engaged independent valuation experts to assist in
determining the fair value of certain assets acquired and
liabilities assumed and related deferred income tax impacts. The
valuation technique and judgments applied are consistent with those
methods presented in Note 25 of the 2022 annual consolidated
financial statements. As at March 31, 2023, the total consideration
and purchase price allocation for Casa do Adubo is not final as we
are continuing to obtain and verify information required to
determine the fair value of certain assets acquired and liabilities
assumed and the amount of deferred income taxes arising on their
recognition. We will finalize the amounts recognized as we obtain
the information necessary to complete the analysis within one year
from the date of acquisition.
The following table allocates preliminary values to the acquired
assets and assumed liabilities based upon fair values at their
respective acquisition date:
March 31, 2023
Casa do Adubo
Preliminary at December 31,
2022
Adjustments
1
Revised Fair Value
Receivables
174
(1)
173
Inventories
107
‐
107
Prepaid expenses and other current
assets
3
‐
3
Property, plant and equipment
24
‐
24
Goodwill
145
32
177
Intangible assets
95
8
103
Other non-current assets
6
‐
6
Total assets
554
39
593
Short-term debt
14
‐
14
Payables and accrued charges
159
‐
159
Long-term debt, including current
portion
91
‐
91
Lease liabilities, including current
portion
10
‐
10
Other non-current liabilities
1
‐
1
Total liabilities
275
‐
275
Total consideration, net of cash and cash
equivalents acquired
279
39
318
Amounts held in escrow
(48)
7
(41)
Total consideration, net of cash and cash
equivalents acquired, and amounts held in escrow
231
46
277
1 We recorded adjustments to the
preliminary fair value to reflect facts and circumstances in
existence as of the date of acquisition. These adjustments
primarily relate to changes in the preliminary valuation
assumptions, including refinement of intangible assets. All
measurement period adjustments were offset against goodwill.
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