Delivered record potash sales volumes in the
third quarter and benefited from strong crop nutrient demand in
North America.
All amounts are in US dollars except as otherwise noted
Nutrien Ltd. (TSX and NYSE: NTR) announced today its third
quarter 2023 results, with net earnings of $82 million ($0.15
diluted net earnings per share). Third quarter 2023 adjusted net
earnings per share1 was $0.35 and adjusted EBITDA1 was $1.1
billion.
“Nutrien’s third-quarter results reflect the strength of
agriculture and crop nutrient market fundamentals in North America.
We delivered record potash sales volumes and are encouraged by the
increased level of demand and market stability in the second half
of 2023. We are optimistic on the outlook for our business and will
continue to position the company to efficiently serve the needs of
our customers,” commented Ken Seitz, Nutrien’s President and
CEO.
“Our focus is on initiatives that strengthen the advantages of
our integrated business, drive operational efficiencies and
increase free cash flow. We expect to deliver growth from highly
targeted investment projects and maintain a balanced and
disciplined approach to capital allocation, including the return of
meaningful capital to our shareholders,” added Mr. Seitz.
Highlights2:
- Generated net earnings of $1.1 billion ($2.18 diluted net
earnings per share) and adjusted EBITDA1 of $5.0 billion ($4.01
adjusted net earnings per share1) in the first nine months of 2023,
down from the record levels achieved over the comparable period in
2022. Adjusted EBITDA declined primarily due to lower net realized
fertilizer prices across all segments and lower Nutrien Ag
Solutions (“Retail”) earnings.
- Retail adjusted EBITDA declined to $197 million in the third
quarter primarily due to lower gross margin for crop protection
products, partially offset by higher gross margin for crop
nutrients and seed. Crop nutrients gross margin increased in the
quarter due to improved grower demand and higher per-tonne margins
for our commodity fertilizer and proprietary nutritional and
biostimulant product lines.
- Potash adjusted EBITDA declined to $611 million in the third
quarter due to lower net realized selling prices. We delivered
record potash sales volumes in the quarter supported by strong
demand in North America and increased Canpotex sales to Brazil,
which more than offset the impact of logistical challenges at
Canpotex’s West Coast port facilities and lower demand from
customers in India and Southeast Asia.
- Nitrogen adjusted EBITDA declined to $294 million in the third
quarter due to lower net realized selling prices and lower sales
volumes due to production outages, which more than offset lower
natural gas costs.
- Returned $1.8 billion to shareholders in the first nine months
of 2023 through dividends and share repurchases.
- Full year 2023 adjusted EBITDA guidance1 was narrowed to $5.8
to $6.4 billion and adjusted net earnings per share guidance was
revised to $4.15 to $5.00 per share.
1.
These (and any related guidance, if
applicable) are non-IFRS financial measures. See the “Non-IFRS
Financial Measures” section for further information.
2.
Our discussion of highlights set out on
this page is a comparison of the results for the three and nine
months ended September 30, 2023 to the results for the three and
nine months ended September 30, 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 November 1,
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.sedarplus.ca and on EDGAR at www.sec.gov. No update is provided
to the disclosure in our 2022 annual MD&A except for material
information since the date of our annual MD&A. The Company is a
foreign private issuer under the rules and regulations of the US
Securities and Exchange Commission (the “SEC”).
This MD&A is based on and should be read in conjunction with
the Company’s unaudited interim condensed consolidated financial
statements as at and for the three and nine months ended September
30, 2023 (“interim financial statements”) based on International
Financial Reporting Standards (“IFRS”) as issued by the
International Accounting Standards Board and prepared in accordance
with International Accounting Standard (“IAS”) 34 “Interim
Financial Reporting”, unless otherwise noted. This MD&A
contains certain non-IFRS financial measures and ratios and
forward-looking statements, which are described in the “Non-IFRS
Financial Measures” and the “Forward-Looking Statements” sections,
respectively.
Market Outlook and Guidance
Agriculture and Retail
- Weather and geopolitical issues continue to impact global grain
and oilseed production and trade flows, resulting in tight
inventories. New crop corn and soybean prices have recently
incurred some seasonal pressure but remain 10 to 15 percent above
the 10-year average.
- Harvest in the US has progressed at an above average pace and
fall fertilizer application rates have been strong in regions where
harvest has been completed. We project fertilizer demand will be up
5 to 10 percent in the fourth quarter of 2023 compared to the same
period in the prior year.
- Brazilian soybean acreage is expected to expand 3 to 4 percent
in 2023 and fertilizer demand has increased in the fourth quarter.
Growers in Brazil continue to purchase crop inputs on a
just-in-time basis, in particular crop protection products.
- Australian growing conditions have been variable and shifting
climate patterns could increase the risk of drier weather impacting
crop production and crop input demand.
Crop Nutrient Markets
- Global potash prices were relatively stable in the third
quarter of 2023 and demand was strong in North America, Brazil and
China. We have increased our projected global shipment range to 65
to 67 million tonnes due to the strength of demand in the second
half of 2023. We now anticipate exports from Belarus to be down
approximately 4 million tonnes and exports from Russia to be down
approximately 2 million tonnes, compared to 2021 levels.
- We expect robust agricultural fundamentals and the need to
replenish soil nutrient levels will support increased potash
consumption next year. We forecast global potash shipments in the
range of 67 to 71 million tonnes in 2024, supported by stronger
expected demand in Southeast Asia, Latin America, Europe and
India.
- Ammonia outages in Europe and production challenges in other
key regions have contributed to higher benchmark prices in the
second half of 2023. Urea markets are relatively balanced as
Chinese export restrictions and strong import demand in India
offset weaker seasonal demand in other regions.
- Tight phosphate fertilizer supply has supported global
benchmark prices, while recent increases in ammonia and sulfur
input costs could pressure phosphate margins.
Financial Guidance
- Based on market factors detailed above, we are narrowing
full-year 2023 adjusted EBITDA guidance2 to $5.8 to $6.4 billion.
Full-year 2023 adjusted net earnings guidance2 is revised to $4.15
to $5.00 per share primarily due to a higher projected effective
tax rate. Full-year 2023 cash provided by operations is now
projected at $4.0 to $4.5 billion and capital expenditures at
approximately $2.7 billion.
- Retail adjusted EBITDA guidance was revised to reflect pressure
on crop protection product margins in South America and lower
projected earnings in Australia, primarily related to weaker
livestock markets.
- Potash adjusted EBITDA guidance and potash sales volume
guidance were revised due to the strength of North American market
fundamentals.
- Nitrogen adjusted EBITDA guidance was narrowed as higher
benchmark prices offset lower projected sales volumes. Nutrien
lowered Nitrogen sales volume guidance due to unplanned plant
outages in the third quarter and the pull-forward of a planned
maintenance outage at our Borger site into the fourth quarter of
2023.
- Phosphate adjusted EBITDA guidance was lowered due to the
impacts of hurricane related outages in the third quarter and lower
projected feed and industrial sales volumes.
- Effective tax rate on adjusted earnings guidance was increased
primarily due to an unfavorable change to our geographic mix of
earnings. We expect our effective tax rate on adjusted earnings
will return to more historical levels in 2024.
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
November 1, 2023
August 2, 2023
(billions of US dollars, except as
otherwise noted)
Low
High
Low
High
Adjusted net earnings per share ("EPS")
(in US dollars) 2,3
4.15
5.00
3.85
5.60
Adjusted EBITDA 2
5.8
6.4
5.5
6.7
Retail adjusted EBITDA
1.45
1.50
1.45
1.60
Potash adjusted EBITDA
2.30
2.50
2.00
2.50
Nitrogen adjusted EBITDA
1.90
2.10
1.80
2.30
Phosphate adjusted EBITDA (in millions of
US dollars)
450
550
500
600
Potash sales tonnes (millions) 4
12.8
13.2
12.6
13.2
Nitrogen sales tonnes (millions) 4
10.5
10.7
10.8
11.2
Depreciation and amortization
2.1
2.2
2.1
2.2
Effective tax rate on adjusted earnings
(%)
27.0
27.5
25.5
26.0
1 See the "Forward-Looking
Statements" section.
2 These are non-IFRS financial
measures. See the "Non-IFRS Financial Measures" section.
3 Assumes 497 million shares
outstanding for November 1, 2023 adjusted net EPS guidance.
4 Manufactured product only.
Nitrogen sales tonnes includes ESN® products.
Consolidated Results
Three Months Ended September
30
Nine Months Ended September
30
(millions of US dollars, except as
otherwise noted)
2023
2022
% Change
2023
2022
% Change
Sales
5,631
8,188
(31
)
23,392
30,351
(23
)
Freight, transportation and
distribution
263
204
29
714
628
14
Cost of goods sold
3,741
4,722
(21
)
15,972
17,205
(7
)
Gross margin
1,627
3,262
(50
)
6,706
12,518
(46
)
Expenses
1,242
1,056
18
4,254
3,368
26
Net earnings
82
1,583
(95
)
1,106
6,569
(83
)
Adjusted EBITDA 1
1,084
2,467
(56
)
4,983
10,075
(51
)
Diluted net earnings per share
0.15
2.94
(95
)
2.18
11.96
(82
)
Adjusted net earnings per share 1
0.35
2.51
(86
)
4.01
11.10
(64
)
Cash (used in) provided by operating
activities
(469
)
878
n/m
916
3,374
(73
)
Cash used in investing activities
(673
)
(705
)
(5
)
(2,225
)
(1,679
)
33
Cash used for dividends and share
repurchases 2
(261
)
(1,959
)
(87
)
(1,817
)
(4,086
)
(56
)
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 third quarter
and first nine months of 2023 compared to the same periods in 2022,
mainly due to lower net realized selling prices across all segments
and lower Retail earnings. This was partially offset by decreased
cost of goods sold from lower natural gas and royalty costs, lower
provincial mining taxes, and higher sales volumes for Retail crop
nutrients. In the first nine months of 2023, we recorded non-cash
impairment of assets of $698 million primarily related to South
American Retail goodwill and Phosphate property, plant and
equipment, resulting in lower net earnings. In the third quarter
and first nine months of 2022, we recorded a non-cash impairment
reversal of $330 million and $780 million, respectively, related to
our Phosphate assets. The decrease in cash provided by operating
activities in the third quarter and first nine months of 2023
compared to the same periods in 2022 was primarily due to lower
earnings across all segments.
Segment Results
Our discussion of segment results set out on the following pages
is a comparison of the results for the three and nine months ended
September 30, 2023 to the results for the three and nine months
ended September 30, 2022, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended September
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
1,250
1,605
(22
)
262
214
22
21
13
Crop protection products
1,566
1,716
(9
)
339
436
(22
)
22
25
Seed
158
134
18
54
33
64
34
25
Merchandise
231
241
(4
)
40
41
(2
)
17
17
Nutrien Financial
73
65
12
73
65
12
100
100
Services and other
235
244
(4
)
150
153
(2
)
64
63
Nutrien Financial elimination 1
(23
)
(25
)
(8
)
(23
)
(25
)
(8
)
100
100
3,490
3,980
(12
)
895
917
(2
)
26
23
Cost of goods sold
2,595
3,063
(15
)
Gross margin
895
917
(2
)
Expenses 2
892
890
‐
Earnings before finance costs and taxes
("EBIT")
3
27
(89
)
Depreciation and amortization
189
206
(8
)
EBITDA
192
233
(18
)
Adjustments 3
5
2
150
Adjusted EBITDA
197
235
(16
)
1 Represents elimination for the interest
and service fees charged by Nutrien Financial to Retail
branches.
2 Includes selling expenses of $798
million (2022 – $821 million).
3 See Note 2 to the interim financial
statements.
Nine Months Ended September
30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
6,571
7,740
(15
)
1,032
1,417
(27
)
16
18
Crop protection products
5,790
6,086
(5
)
1,220
1,523
(20
)
21
25
Seed
2,093
1,861
12
391
382
2
19
21
Merchandise
750
755
(1
)
131
133
(2
)
17
18
Nutrien Financial
252
205
23
252
205
23
100
100
Services and other
691
729
(5
)
522
555
(6
)
76
76
Nutrien Financial elimination
(107
)
(113
)
(5
)
(107
)
(113
)
(5
)
100
100
16,040
17,263
(7
)
3,441
4,102
(16
)
21
24
Cost of goods sold
12,599
13,161
(4
)
Gross margin
3,441
4,102
(16
)
Expenses 1,2
3,242
2,733
19
EBIT
199
1,369
(85
)
Depreciation and amortization
558
550
1
EBITDA
757
1,919
(61
)
Adjustments 2
473
(17
)
n/m
Adjusted EBITDA
1,230
1,902
(35
)
1 Includes selling expenses of $2,534
million (2022 – $2,556 million).
2 Includes non-cash impairment of assets
of $465 million (2022 – nil). See Notes 2 and 3 to the interim
financial statements.
- Retail adjusted EBITDA decreased in the third quarter of
2023 primarily due to lower gross margin for crop protection
products, partially offset by higher gross margin for crop
nutrients and seed. For the first nine months of the year, adjusted
EBITDA decreased mainly due to lower gross margin for both crop
nutrients and crop protection products. Included with expenses for
the first nine months of 2023, we recognized a $465 million
non-cash impairment primarily to goodwill relating to our South
American Retail assets, mainly due to the impact of crop input
price volatility, more moderate long-term growth assumptions and
higher interest rates.
- Crop nutrients sales decreased in the third quarter and
first nine months of 2023 due to lower selling prices across all
regions compared to the strong comparable periods in 2022. Third
quarter gross margin increased due to improved grower demand and
higher per-tonne margins for both commodity fertilizer and our
proprietary nutritional and biostimulant product lines. Sales
volumes increased for both the third quarter and first nine months
of the year as growers returned to more normalized application
rates to replenish nutrients in the soil.
- Crop protection products sales were lower in the third
quarter and first nine months of 2023 primarily due to decreased
prices for certain commodity products compared to the historically
strong comparable periods in 2022. Gross margin was also impacted
by the selling through of higher cost inventory. Dry conditions in
the US Midwest impacted demand for certain crop protection products
during the third quarter and first nine months of the year.
- Seed sales and gross margin were higher in the third
quarter due to increased cotton sales in the Southern US and the
benefits of acquisitions in Brazil. Sales and gross margin for the
first nine months of 2023 improved primarily due to increased corn
sales in the US.
- Nutrien Financial sales increased in the third quarter
and first nine months of 2023 due to higher utilization of our
financing offerings in the US as well as the recent launch of NPay,
our digitally-enabled financing program in Australia.
Potash
Three Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
499
436
14
1,674
619
170
298
703
(58
)
Offshore
473
1,568
(70
)
2,221
2,548
(13
)
213
616
(65
)
972
2,004
(51
)
3,895
3,167
23
250
633
(61
)
Cost of goods sold
389
386
1
100
122
(18
)
Gross margin – total
583
1,618
(64
)
150
511
(71
)
Expenses 1
105
352
(70
)
Depreciation and amortization
34
35
(3
)
EBIT
478
1,266
(62
)
Gross margin excluding depreciation
Depreciation and amortization
133
112
19
and amortization – manufactured 2
184
546
(66
)
EBITDA / Adjusted EBITDA
611
1,378
(56
)
Potash controllable cash cost of
product manufactured 2
56
70
(20
)
1 Includes provincial mining taxes of $96
million (2022 – $348 million).
2 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Nine Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
1,311
1,949
(33
)
3,754
2,770
36
349
703
(50
)
Offshore
1,672
4,573
(63
)
6,159
7,149
(14
)
271
640
(58
)
2,983
6,522
(54
)
9,913
9,919
‐
301
658
(54
)
Cost of goods sold
1,047
1,090
(4
)
106
110
(4
)
Gross margin – total
1,936
5,432
(64
)
195
548
(64
)
Expenses 1
340
975
(65
)
Depreciation and amortization
35
36
(3
)
EBIT
1,596
4,457
(64
)
Gross margin excluding depreciation
Depreciation and amortization
345
354
(3
)
and amortization – manufactured
230
584
(61
)
EBITDA / Adjusted EBITDA
1,941
4,811
(60
)
Potash controllable cash cost of
product manufactured
59
56
5
1 Includes provincial mining taxes of $319
million (2022 – $959 million).
- Potash adjusted EBITDA declined in the third quarter and
first nine months of 2023 due to lower net realized selling prices
and offshore sales volumes, which more than offset higher North
American sales volumes.
- Sales volumes were the highest third quarter on record,
primarily driven by strong demand in North America and Brazil.
North American sales volumes were higher in the third quarter and
first nine months of 2023 due to lower channel inventory and
increased grower demand. Offshore sales volumes declined over the
same periods due to logistical challenges at Canpotex’s West Coast
port facilities and reduced shipments to customers in India and
Southeast Asia, partially offset by record Canpotex sales volumes
to Brazil.
- Net realized selling price decreased in the third
quarter and first nine months of 2023 compared to the historically
strong periods in 2022, due to a decline in benchmark prices and
higher logistics costs related to logistical challenges at
Canpotex’s West Coast port facilities.
- Cost of goods sold per tonne decreased in the third
quarter of 2023 primarily due to lower royalties and the timing of
turnaround activity. For the first nine months of the year, cost of
goods sold per tonne decreased mainly due to lower royalties.
Canpotex Sales by Market
(percentage of sales volumes, except
as
Three Months Ended September
30
Nine Months Ended September
30
otherwise noted)
2023
2022
Change
2023
2022
Change
Latin America
49
35
14
47
36
11
Other Asian markets 1
28
32
(4
)
28
34
(6
)
Other markets
10
10
‐
11
9
2
China
10
15
(5
)
9
14
(5
)
India
3
8
(5
)
5
7
(2
)
100
100
100
100
1 All Asian markets except China and
India.
Nitrogen
Three Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
156
649
(76
)
570
701
(19
)
272
927
(71
)
Urea and ESN® 1
272
431
(37
)
687
705
(3
)
396
613
(35
)
Solutions, nitrates and sulfates
231
465
(50
)
1,130
1,274
(11
)
205
365
(44
)
659
1,545
(57
)
2,387
2,680
(11
)
276
577
(52
)
Cost of goods sold 1
495
895
(45
)
208
335
(38
)
Gross margin – manufactured
164
650
(75
)
68
242
(72
)
Gross margin – other 1,2
(10
)
14
n/m
Depreciation and amortization 1
54
53
2
Gross margin – total
154
664
(77
)
Gross margin excluding depreciation
(Income) expenses 3
(10
)
(50
)
(80
)
and amortization – manufactured 4
122
295
(59
)
EBIT
164
714
(77
)
Ammonia controllable cash cost of
Depreciation and amortization
130
141
(8
)
product manufactured 4
61
62
(2
)
EBITDA / Adjusted EBITDA
294
855
(66
)
1 Certain immaterial 2022 figures have
been reclassified.
2 Includes other nitrogen and purchased
products and comprises net sales of $64 million (2022 – $226
million) less cost of goods sold of $74 million (2022 – $212
million).
3 Includes earnings from equity-accounted
investees of $30 million (2022 – $79 million).
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Nine Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
873
1,952
(55
)
1,785
1,939
(8
)
489
1,007
(51
)
Urea and ESN® 1
1,183
1,624
(27
)
2,386
2,250
6
496
722
(31
)
Solutions, nitrates and sulfates
897
1,440
(38
)
3,518
3,495
1
255
412
(38
)
2,953
5,016
(41
)
7,689
7,684
‐
384
653
(41
)
Cost of goods sold 1
1,840
2,478
(26
)
239
323
(26
)
Gross margin – manufactured
1,113
2,538
(56
)
145
330
(56
)
Gross margin – other 1,2
(19
)
44
n/m
Depreciation and amortization
55
52
6
Gross margin – total
1,094
2,582
(58
)
Gross margin excluding depreciation
(Income) expenses 3
(19
)
(105
)
(82
)
and amortization – manufactured
200
382
(48
)
EBIT
1,113
2,687
(59
)
Ammonia controllable cash cost of
Depreciation and amortization
426
403
6
product manufactured
60
59
2
EBITDA / Adjusted EBITDA
1,539
3,090
(50
)
1 Certain immaterial 2022 figures have
been reclassified.
2 Includes other nitrogen and purchased
products and comprises net sales of $298 million (2022 – $725
million) less cost of goods sold of $317 million (2022 – $681
million).
3 Includes earnings from equity-accounted
investees of $91 million (2022 – $192 million).
- Nitrogen adjusted EBITDA decreased in the third quarter
and first nine months of 2023 due to lower net realized selling
prices for all major nitrogen products, which more than offset
lower natural gas costs. During the third quarter, we completed two
smaller brownfield expansion projects at our Geismar facility and
installed our final nitrous oxide (N2O) abatement project, which we
expect to be a key contributor to reducing our greenhouse gas
emissions.
- Sales volumes were lower in the third quarter of 2023
primarily due to unplanned production outages at our plants in
Trinidad, Borger and Geismar. Sales volumes for the first nine
months of 2023 were flat as increased demand for nitrates and
sulfates and strong spring seasonal demand for urea and ESN® offset
lower ammonia sales volumes impacted by the production
outages.
- Net realized selling price in the third quarter and
first nine months of 2023 was lower for all major nitrogen products
primarily due to weaker benchmark prices resulting from lower
energy prices in key nitrogen producing regions.
- Cost of goods sold per tonne decreased in the third
quarter and first nine months of 2023 due to lower natural gas
costs. Ammonia controllable cash cost of product manufactured
increased for the first nine months mainly due to higher input
costs and lower production.
Natural Gas Prices in Cost of Production
Three Months Ended September
30
Nine Months Ended September
30
(US dollars per MMBtu, except as otherwise
noted)
2023
2022
% Change
2023
2022
% Change
Overall natural gas cost excluding
realized derivative impact
2.96
8.33
(64
)
3.56
7.92
(55
)
Realized derivative impact
(0.01
)
(0.09
)
(89
)
(0.01
)
(0.06
)
(83
)
Overall natural gas cost
2.95
8.24
(64
)
3.55
7.86
(55
)
Average NYMEX
2.55
8.20
(69
)
2.69
6.77
(60
)
Average AECO
1.78
4.46
(60
)
2.24
4.34
(48
)
- Natural gas prices in our cost of production decreased
in the third quarter and first nine months of 2023 as a result of
lower North American natural gas index prices and decreased natural
gas costs in Trinidad, where our natural gas prices are linked to
ammonia benchmark prices.
Phosphate
Three Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
245
375
(35
)
519
479
8
472
782
(40
)
Industrial and feed
137
192
(29
)
145
161
(10
)
946
1,198
(21
)
382
567
(33
)
664
640
4
575
886
(35
)
Cost of goods sold
351
445
(21
)
528
695
(24
)
Gross margin – manufactured
31
122
(75
)
47
191
(75
)
Gross margin – other 1
(4
)
(8
)
(50
)
Depreciation and amortization
113
75
51
Gross margin – total
27
114
(76
)
Gross margin excluding depreciation
Expenses (income) ²
12
(311
)
n/m
and amortization – manufactured 3
160
266
(40
)
EBIT
15
425
(96
)
Depreciation and amortization
75
48
56
EBITDA
90
473
(81
)
Adjustments 2
‐
(330
)
(100
)
Adjusted EBITDA
90
143
(37
)
1 Includes other phosphate and purchased
products and comprises net sales of $62 million (2022 – $84
million) less cost of goods sold of $66 million (2022 – $92
million).
2 2022 includes reversal of non-cash
impairment of assets of $(330) million. See Notes 2 and 3 to the
interim financial statements.
3 This is a non-IFRS financial measure.
See the "Non-IFRS Financial Measures" section.
Nine Months Ended September
30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
763
1,093
(30
)
1,333
1,305
2
572
837
(32
)
Industrial and feed
495
551
(10
)
465
542
(14
)
1,064
1,017
5
1,258
1,644
(23
)
1,798
1,847
(3
)
700
890
(21
)
Cost of goods sold
1,085
1,157
(6
)
604
626
(4
)
Gross margin – manufactured
173
487
(64
)
96
264
(64
)
Gross margin – other 1
(10
)
(10
)
‐
Depreciation and amortization
118
70
69
Gross margin – total
163
477
(66
)
Gross margin excluding depreciation
Expenses (income) ²
269
(739
)
n/m
and amortization – manufactured
214
334
(36
)
EBIT
(106
)
1,216
n/m
Depreciation and amortization
213
130
64
EBITDA
107
1,346
(92
)
Adjustments 2
233
(780
)
n/m
Adjusted EBITDA
340
566
(40
)
1 Includes other phosphate and purchased
products and comprises net sales of $202 million (2022 – $232
million) less cost of goods sold of $212 million (2022 – $242
million).
2 Includes non-cash impairment of assets
of $233 million (2022 - reversal of non-cash impairment of assets
of $(780) million). See Notes 2 and 3 to the interim financial
statements.
- Phosphate adjusted EBITDA decreased in the third quarter
and first nine months of 2023 primarily due to lower net realized
selling prices for fertilizer products, partially offset by lower
ammonia and sulfur input costs. Included with expenses for the
first nine months of 2023, we recognized a $233 million non-cash
impairment of our White Springs property, plant and equipment,
while we had non-cash impairment reversals of our Phosphate assets
of $780 million for the first nine months of 2022.
- Sales volumes increased in the third quarter of 2023 due
to higher phosphate fertilizer demand, which was partially offset
by hurricane-related downtime at our White Springs facility. Sales
volumes for the first nine months were lower than the previous year
primarily due to lower production impacting our industrial and feed
sales.
- Net realized selling price decreased in the third
quarter and first nine months of 2023 primarily due to lower
fertilizer net realized selling prices, while lower industrial and
feed net realized selling prices in the third quarter reflect the
typical lag relative to spot fertilizer prices.
- Cost of goods sold per tonne decreased in the third
quarter and first nine months due to lower ammonia and sulfur
costs, partially offset by higher depreciation from reversal of
impairments in 2022.
Corporate and Others
(millions of US dollars, except as
otherwise
Three Months Ended September
30
Nine Months Ended September
30
noted)
2023
2022
% Change
2023
2022
% Change
Selling expense recovery
(3
)
(2
)
50
(7
)
(6
)
17
General and administrative expenses
88
80
10
260
227
15
Share-based compensation expense
(recovery)
42
39
8
(7
)
122
n/m
Other expenses
117
59
98
187
160
17
EBIT
(244
)
(176
)
39
(433
)
(503
)
(14
)
Depreciation and amortization
25
19
32
62
55
13
EBITDA
(219
)
(157
)
39
(371
)
(448
)
(17
)
Adjustments 1
142
63
125
221
230
(4
)
Adjusted EBITDA
(77
)
(94
)
(18
)
(150
)
(218
)
(31
)
1 See Note 2 to the interim financial
statements.
- General and administrative expenses were higher in the
third quarter and first nine months of 2023 primarily due to higher
staffing costs and higher depreciation and amortization
expense.
- Share-based compensation was a recovery in the first
nine months of 2023 due to a decrease in the fair value of
share-based awards compared to an expense for the comparative
period in 2022 reflecting the increase in fair value. The fair
value takes into consideration several factors such as our share
price movement, our performance relative to our peer group and
return on our invested capital.
- Other expenses were higher in the third quarter and
first nine months of 2023 compared to the same periods in 2022 due
to higher foreign exchange losses primarily from our South American
Retail region. The first nine months of 2023 included a $92 million
loss on Blue Chip Swaps incurred through trade transactions to
remit cash from Argentina. The loss is a result of the significant
divergence between the Blue Chip Swap market exchange rate and the
official Argentinian Central Bank rate. This was partially offset
by an $80 million gain in the first nine months of 2023 from
amendments due to design plan changes to our other post-retirement
benefit plans.
Eliminations
- Eliminations are not part of the Corporate and Others segment.
The elimination of gross margin between operating segments of $32
million for the third quarter of 2023 was lower than the
elimination of $51 million in the same period of 2022 as crop input
volumes, selling prices and margins related to our intersegment
sales decreased. For the first nine months of 2023, there was a
recovery of $72 million compared to an elimination of $75 million
in the same period in 2022. This variance is due to the timing of
release of intersegment inventories held by our Retail
segment.
Finance Costs, Income Taxes and Other Comprehensive
Income
(millions of US dollars, except as
otherwise
Three Months Ended September
30
Nine Months Ended September
30
noted)
2023
2022
% Change
2023
2022
% Change
Finance costs
206
136
51
580
375
55
Income tax expense
97
487
(80
)
766
2,206
(65
)
Other comprehensive loss
(86
)
(230
)
(63
)
(16
)
(296
)
(95
)
- Finance costs were higher in the third quarter and first
nine months of 2023 compared to the same periods in 2022 primarily
due to higher interest on short-term debt from increased commercial
paper interest rates and higher average short-term and long-term
debt balances.
- Income tax expense was lower in the third quarter and
first nine months of 2023 as a result of lower earnings compared to
the same periods in 2022. The effective tax rates for the third
quarter and first nine months of 2023 were 54 percent and 41
percent compared to 24 percent and 25 percent for the comparative
periods in 2022. The increase in effective tax rates was a result
of the impacts of the non-cash impairments of assets, the loss on
Blue Chip Swaps and a change in recognition of deferred income
taxes in 2023.
- Other comprehensive loss was lower primarily driven by
changes in the currency translation of our foreign operations, our
investment in Sinofert Holdings Ltd. (“Sinofert”) and an actuarial
gain on our defined benefit plans in 2022 with no similar
transaction in 2023. In the third quarter and first nine months of
2023 compared to the same periods in 2022, we had lower foreign
currency translation losses on our Retail foreign operations mainly
due to improvements of Canadian and Australian currencies relative
to the US dollar. In the third quarter and first nine months of
2023, we had lower fair value losses on our investment in Sinofert
due to share price decreases, compared to the same periods 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
(millions of US dollars, except as
otherwise
Three Months Ended September
30
Nine Months Ended September
30
noted)
2023
2022
% Change
2023
2022
% Change
Cash (used in) provided by operating
activities
(469
)
878
n/m
916
3,374
(73
)
Cash used in investing activities
(673
)
(705
)
(5
)
(2,225
)
(1,679
)
33
Cash provided by (used in) financing
activities
976
(29
)
n/m
981
(1,319
)
n/m
Effect of exchange rate changes on cash
and cash equivalents
(17
)
(32
)
(47
)
(19
)
(52
)
(63
)
(Decrease) increase in cash and cash
equivalents
(183
)
112
n/m
(347
)
324
n/m
Cash (used in) provided by operating
activities
- Cash used in operating activities in the third quarter of 2023
compared to cash provided by operating activities in the same
period in 2022 and lower cash provided by operating activities in
the first nine months of 2023 compared to the same period in 2022
was primarily due to lower net realized selling prices across all
segments compared to historically strong benchmark prices in
2022.
Cash used in investing
activities
- Cash used in investing activities in the third quarter of 2023
was lower compared to the same period in 2022 as we reduced our
capital expenditures in the third quarter of 2023 in alignment with
the strategic actions announced earlier this year.
- Cash used in investing activities in the first nine months of
2023 was higher compared to the same period in 2022 due to higher
turnaround activities in the first half of 2023 and increased
investing capital expenditures as we complete our committed
projects.
Cash provided by (used in) financing
activities
- Cash provided by financing activities in the third quarter and
first nine months of 2023 compared to cash used in financing
activities in the same periods in 2022 was due to lower share
repurchases through our normal course issuer bid programs and the
issuance of $1,500 million of notes in the first quarter of 2023,
which were partially offset by lower proceeds from short-term debt
and the repayment of $500 million of notes at maturity in the
second quarter of 2023.
Financial Condition Review
The following balance sheet categories contain variances that
are considered material:
As at
(millions of US dollars, except as
otherwise noted)
September 30, 2023
December 31, 2022
$ Change
% Change
Assets
Cash and cash equivalents
554
901
(347
)
(39
)
Receivables
7,713
6,194
1,519
25
Inventories
5,169
7,632
(2,463
)
(32
)
Prepaid expenses and other current
assets
656
1,615
(959
)
(59
)
Property, plant and equipment
22,150
21,767
383
2
Goodwill
12,078
12,368
(290
)
(2
)
Liabilities and Equity
Short-term debt
4,354
2,142
2,212
103
Current portion of long-term debt
‐
542
(542
)
(100
)
Payables and accrued charges
6,653
11,291
(4,638
)
(41
)
Long-term debt
9,427
8,040
1,387
17
Share capital
13,837
14,172
(335
)
(2
)
Retained earnings
11,636
11,928
(292
)
(2
)
- Explanations for changes in Cash and cash equivalents
are in the “Sources and Uses of Cash” section.
- Receivables increased primarily due to the seasonality
of Retail sales resulting in higher receivables with customers and
vendor rebates. A strategic extension of credit terms to our Retail
customers also contributed to this increase. These were partially
offset by lower receivables in our Potash and Nitrogen segments as
selling prices decreased from the historically strong period in
2022.
- Inventories decreased due to Retail's seasonal sales and
lower-value inventories on hand as related benchmark prices
decreased. Generally, we build up our inventory levels in North
America near year-end in preparation for the next year’s upcoming
planting and application seasons.
- Prepaid expenses and other current assets decreased due
to the seasonal drawdown of prepaid inventories where Retail
typically prepays for products during the fourth quarter and takes
possession of inventory throughout the following year.
- Property, plant and equipment increased primarily as a
result of our capital expenditures related to our Potash and
Nitrogen capital projects and turnarounds to maintain safe and
reliable operations.
- Goodwill decreased due to the goodwill impairment
related to our Retail – South America group of cash generating
units (“CGUs”) in the second quarter of 2023, partially offset by
an increase in goodwill recognized from recent acquisitions.
- Short-term debt increased due to additional commercial
paper issuances for our seasonal working capital requirements.
- Current portion of long-term debt decreased due to the
repayment of $500 million of notes at maturity in the second
quarter of 2023.
- Payables and accrued charges decreased primarily due to
seasonality of our Retail segment. We generally receive higher
customer prepayments in North America near year-end and customers
draw down on the balance throughout the year. This also decreased
from income tax payments made in 2023 related to our 2022
historically strong earnings, lower provincial mining taxes from
lower potash prices and lower natural gas input costs.
- Long-term debt increased due to the issuance of $1,500
million of notes in the first quarter of 2023.
- Share capital decreased primarily as a result of shares
repurchased in the first nine months of 2023 under our normal
course issuer bid programs.
- Retained earnings decreased as declared dividends and
share repurchases exceeded net earnings in the first nine months 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 nine months ended
September 30, 2023.
As at September 30,
2023
(millions of US dollars, except as
Outstanding and
Committed
otherwise noted)
Rate of Interest (%)
Total Facility Limit
Short-Term Debt
Long-Term Debt
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit facility
1
n/a
1,500
‐
‐
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities
1,300
South America 2
2.3 – 13.2
460
151
Australia
5.0
123
‐
Other
4.0 – 4.7
47
3
Commercial paper
5.6 – 5.8
3,583
‐
Other short-term and other long-term debt
3
n/a
141
2
Total
4,354
156
1 During the three months ended
September 30, 2023, we extended the term of our unsecured revolving
term credit facility to September 10, 2024 and reduced the facility
limit from $2,000 million to $1,500 million.
2 Our credit facilities are
either denominated in local currency or US dollars. The range of
interest rates for South America excludes our Argentina facilities
denominated in local currency with interest rates ranging from 96.0
to 125.0 percent. The balance of these Argentina facilities as at
September 30, 2023 was $15 million.
3 Other long-term debt excludes
our notes and debentures.
The amount available under the commercial paper program is
limited to the undrawn availability of backup funds under the
$4,500 million unsecured revolving term credit facility and excess
cash invested in highly liquid securities.
Our long-term debt consists primarily of notes and debentures.
See the “Capital Structure and Management” section of our 2022
Annual Report for information on balances, rates and maturities for
our notes and debentures. During the first nine months of 2023, we
issued two series of notes of $750 million each with interest rates
of 4.900 and 5.800 percent, respectively, and repaid our $500
million 1.900 percent notes upon maturity on May 13, 2023. See Note
8 to the interim financial statements.
Outstanding Share Data
As at October 31, 2023
Common shares
494,547,340
Options to purchase common shares
3,278,255
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)
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Sales
5,631
11,654
6,107
7,533
8,188
14,506
7,657
7,267
Net earnings
82
448
576
1,118
1,583
3,601
1,385
1,207
Net earnings attributable to equity
holders of Nutrien
75
440
571
1,112
1,577
3,593
1,378
1,201
Net earnings per share attributable to
equity holders of Nutrien
Basic
0.15
0.89
1.14
2.15
2.95
6.53
2.49
2.11
Diluted
0.15
0.89
1.14
2.15
2.94
6.51
2.49
2.11
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher in the spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. The results of this seasonality have a corresponding effect
on receivables from customers and rebates receivables, inventories,
prepaid expenses and other current assets, and trade payables. Our
short-term debt also fluctuates during the year to meet working
capital requirements. Our cash collections generally occur after
the application season is complete, while customer prepayments made
to us are typically concentrated in December and January and
inventory prepayments paid to our suppliers are typically
concentrated in the period from November to January. Feed and
industrial sales are more evenly distributed throughout the
year.
Our earnings are significantly affected by fertilizer benchmark
prices, which have been volatile over the last two years and are
affected by demand-supply conditions, grower affordability and
weather.
In the second quarter of 2023, we recorded non-cash impairment
of assets totaling to $698 million. This is comprised of an
impairment of our Phosphate White Springs property, plant and
equipment of $233 million and an impairment of our South American
Retail assets of $465 million primarily related to goodwill. In the
second and third quarters of 2022, earnings were impacted by $450
million and $330 million non-cash impairment reversals at Aurora
and White Springs CGUs, respectively, of property, plant and
equipment in the Phosphate segment. The impairments and reversal of
impairments in our Phosphate segment reflect the volatility of
forecasted phosphate margins while the impairment related to the
Retail South America group of CGUs is due to the impact of crop
input price volatility, more moderate long-term growth assumptions
and higher interest rates. In the fourth quarter of 2021, earnings
were impacted by a $142 million loss resulting from the early
extinguishment of long-term debt.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2022
Annual Report. We have discussed the development, selection and
application of our key accounting policies, and the critical
accounting estimates and assumptions they involve, with the Audit
Committee of the Board. Our critical accounting estimates are
discussed on page 65 of our 2022 Annual Report. Other than the
critical accounting estimates discussed below, there were no other
material changes in the three or nine months ended September 30,
2023 to our critical accounting estimates.
Non-cash Impairment of Assets
Goodwill and Intangible Assets Impairment
Recent acquisitions in Brazil resulted in goodwill being
recognized for our Retail – South America group of CGUs. Goodwill
is more susceptible to impairment risk if business operating
results or economic conditions deteriorate, and we anticipate not
meeting our forecasts. During the three months ended June 30, 2023,
we revised our forecasted EBITDA for the Retail – South America
group of CGUs, which triggered an impairment analysis. Due to the
impact of crop input price volatility, more moderate long-term
growth assumptions and higher interest rates, we lowered our
product margin expectations and deferred certain of our planned
strategic investments. As a result, this reduced our forecasted
earnings and growth. As at June 30, 2023, the Retail – South
America group of CGUs recoverable amount was lower than its
carrying amount. As a result, we fully impaired goodwill of $422
million and recorded a $43 million impairment of intangible assets
for a total of $465 million for the Retail – South America group of
CGUs. Refer to Note 3 to the interim financial statements for
additional information.
The following table highlights sensitivities to the recoverable
amount, which could have resulted in additional impairment against
the carrying amount of intangible assets and property, plant and
equipment. The sensitivities have been calculated independently of
changes in other key variables. Dollar amounts are in millions,
except as otherwise noted.
Decrease to
Key Assumptions as at June 30,
2023
Change in Key
Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast period
($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
Long-Lived Asset Impairment and Reversals
Phosphate CGUs
Three Months Ended June 30,
2023
Impairment Trigger
Result
White Springs
Decrease in our forecasted
phosphate margins.
Impairment of $233 million
recorded to property, plant and equipment as the recoverable amount
was less than its carrying value.
Aurora
No impairment recorded.
The White Springs CGU has a short expected mine life and is
therefore more sensitive to changes in short- and medium-term
forecasted phosphate margins. Refer to Note 3 to the interim
financial statements for additional information.
The following table highlights sensitivities to the recoverable
amounts, which could result in additional impairment losses or
reversals of the previously recorded losses (relating to the White
Springs CGU). The sensitivities have been calculated independently
of changes in other key variables. Dollar amounts are in millions,
except as otherwise noted.
Change to Recoverable Amount
($)
Key Assumptions as at June 30,
2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period
($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
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 September 30, 2023 that has
materially affected, or is reasonably likely to materially affect,
our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this
document, including within the “Market Outlook and Guidance”
section, constitute “forward-looking information” or
“forward-looking statements” (collectively, “forward-looking
statements”) under applicable securities laws (such statements are
often accompanied by words such as “anticipate”, “forecast”,
“expect”, “believe”, “may”, “will”, “should”, “estimate”,
"project", “intend” or other similar words). All statements in this
document, other than those relating to historical information or
current conditions, are forward-looking statements, including, but
not limited to: Nutrien's business strategies, plans, prospects and
opportunities; Nutrien's revised 2023 full-year guidance, including
expectations regarding our adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment), Potash sales tonnes,
Nitrogen sales tonnes, depreciation and amortization and effective
tax rate on adjusted earnings; our expectations for annual potash
capability and ability to adjust operations according to market
demand; our projections for cash from operations; expectations
regarding our growth and capital allocation intentions and
strategies, including our forecasts relating to goodwill
impairment; our ability to reduce our greenhouse gas emissions, and
the initiatives in connection therewith, including the expected
impacts in connection with the installment of our final N2O
abatement project; expectations and forecasts relating to our
Aurora and White Springs CGUs and the reversals and impairments (as
applicable) associated therewith; our advancement of strategic
growth initiatives; capital spending expectations for 2023 and
beyond, including expectations for lower capital expenditures and
reduced expenses; expectations regarding Retail inventory levels in
North America; expectations regarding performance of our operating
segments in 2023; 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, industry and growing conditions with
respect to crop nutrient application rates, planted acres, grower
crop investment, crop mix, including the need to replenish soil
nutrient levels, production volumes and expenses, shipments,
consumption, prices, operating rates and the impact of seasonality,
import and export volumes, economic sanctions, operating rates,
inventories, crop development and natural gas curtailments; the
expected impact of completed brownfield expansions at our Geismar
facility; the negotiation of sales contracts; timing and impacts of
plant turnarounds; acquisitions and divestitures and the
anticipated benefits thereof; and expectations in connection with
our ability to deliver long-term returns to shareholders. These
forward-looking statements are subject to a number of assumptions,
risks and uncertainties, many of which are beyond our control,
which could cause actual results to differ materially from such
forward-looking statements. As such, undue reliance should not be
placed on these forward-looking statements.
All of the forward-looking statements are qualified by the
assumptions that are stated or inherent in such forward-looking
statements, including the assumptions referred to below and
elsewhere in this document. Although we believe that these
assumptions are reasonable, having regard to our experience and our
perception of historical trends, this list is not exhaustive of the
factors that may affect any of the forward-looking statements and
the reader should not place undue reliance on these assumptions and
such forward-looking statements. Current conditions, economic and
otherwise, render assumptions, although reasonable when made,
subject to greater uncertainty. The additional key assumptions that
have been made include, among other things, assumptions with
respect to our ability to successfully complete, integrate and
realize the anticipated benefits of our already completed and
future acquisitions and divestitures, and that we will be able to
implement our standards, controls, procedures and policies in
respect of any acquired businesses and to realize the expected
synergies on the anticipated timeline or at all; that future
business, regulatory and industry conditions will be within the
parameters expected by us, including with respect to prices,
expenses, margins, demand, supply, product availability, shipments,
consumption, weather conditions, supplier agreements, availability,
inventory levels, exports, crop development and cost of labor and
interest, exchange and effective tax rates; assumptions with
respect to global economic conditions and the accuracy of our
market outlook expectations for 2023 and in the future; assumptions
related to our Retail - South America group of CGUs goodwill and
intangible asset impairment; assumptions related to the calculation
of recoverable amount of our Aurora and White Springs CGUs,
including internal sales and input price forecasts, discount rate,
long-term growth rate and end of expected mine life; assumptions
with respect to the benefits of the brownfield expansions at our
Geismar facility; 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 the impacts, direct
and indirect, of certain geopolitical conflicts, including the war
between Ukraine and Russia and the conflict in Israel on, among
other things, global supply and demand, including for crop
nutrients, energy and commodity prices, global interest rates,
supply chains and the global macroeconomic environment, including
inflation; the adequacy of our cash generated from operations and
our ability to access our credit facilities or capital markets for
additional sources of financing; our ability to identify suitable
candidates for acquisitions and divestitures and negotiate
acceptable terms; our ability to maintain investment grade ratings
and achieve our performance targets; our ability to successfully
negotiate sales and other contracts; and our ability to
successfully implement new initiatives and programs, including with
respect to the recent launch of the digitally enabled financing
program in Australia.
Events or circumstances that could cause actual results to
differ materially from those in the forward-looking statements
include, but are not limited to: general global economic, market
and business conditions; failure to complete announced and future
acquisitions or divestitures at all or on the expected terms and
within the expected timeline; seasonality; climate change and
weather conditions, including impacts from regional flooding and/or
drought conditions; crop planted acreage, yield and prices; the
supply and demand and price levels for our products; governmental
and regulatory requirements and actions by governmental
authorities, including changes in government policy (including
tariffs, trade restrictions and climate change initiatives),
government ownership requirements, changes in environmental, tax
and other laws or regulations and the interpretation thereof;
political risks, including civil unrest, actions by armed groups or
conflict and malicious acts including terrorism; the occurrence of
a major environmental or safety incident; innovation and
cybersecurity risks related to our systems, including our costs of
addressing or mitigating such risks; counterparty and sovereign
risk; delays in completion of turnarounds at our major facilities;
interruptions of or constraints in availability of key inputs,
including natural gas and sulfur; any significant impairment of the
carrying amount of certain assets; the risk that rising interest
rates and/or deteriorated business operating results may result in
the further impairment of assets or goodwill attributed to certain
of our cash generating units; risks related to reputational loss;
certain complications that may arise in our mining processes; the
ability to attract, engage and retain skilled employees and strikes
or other forms of work stoppages; geopolitical conflicts, including
the war between Ukraine and Russia and the conflict in Israel, and
their potential impact on, among other things, global market
conditions and supply and demand, including for crop nutrients,
energy and commodity prices, interest rates, supply chains and the
global economy generally; our ability to execute on our strategies
related to environmental, social and governance matters, and
achieve related expectations, targets and commitments; and other
risk factors detailed from time to time in Nutrien reports filed
with the Canadian securities regulators and the SEC in the United
States.
The purpose of our 2023 adjusted net earnings per share and
adjusted EBITDA (consolidated and by segment), capital
expenditures, cash provided by operations, depreciation and
amortization and effective tax rate on adjusted earnings guidance
ranges are to assist readers in understanding our expected and
targeted financial results, and this information may not be
appropriate for other purposes.
The forward-looking statements in this document are made as of
the date hereof and Nutrien disclaims any intention or obligation
to update or revise any forward-looking statements in this document
as a result of new information or future events, except as may be
required under applicable Canadian securities legislation or
applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms
used in this document, as well as a list of abbreviated company
names and sources, see the “Terms & Definitions” section of our
2022 Annual Report. All references to per share amounts pertain to
diluted net earnings (loss) per share, “n/m” indicates information
that is not meaningful, and all financial amounts are stated in
millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and
services, helping to safely and sustainably feed a growing world.
We operate a world-class network of production, distribution and
retail facilities that positions us to efficiently serve the needs
of growers. We focus on creating long-term value for all
stakeholders by advancing our key environmental, social and
governance priorities.
More information about Nutrien can be found at
www.nutrien.com.
Selected financial data for download can be found in our data
tool at www.nutrien.com/investors/interactive-datatool Such data is
not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, November 2,
2023 at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
- From Canada and the US 1-888-886-7786
- International 1-416-764-8658
- No access code required. Please dial in 15 minutes prior to
ensure you are placed on the call in a timely manner.
Live Audio Webcast: Visit
https://www.nutrien.com/investors/events/2023-q3-earnings-conference-call
Appendix A – Selected Additional Financial Data
Selected Retail Measures
Three Months Ended September
30
Nine Months Ended September
30
2023
2022
2023
2022
Proprietary products gross margin
(millions of US dollars)
Crop nutrients
79
74
347
315
Crop protection products
107
189
434
617
Seed
28
21
171
173
Merchandise
2
1
8
7
All products
216
285
960
1,112
Proprietary products margin as a
percentage of product line margin (%)
Crop nutrients
31
35
34
22
Crop protection products
31
41
36
41
Seed
54
62
44
45
Merchandise
6
6
7
6
All products
24
30
28
27
Crop nutrients sales volumes (tonnes –
thousands)
North America
1,118
1,066
6,912
6,286
International
880
782
2,857
2,732
Total
1,998
1,848
9,769
9,018
Crop nutrients selling price per
tonne
North America
635
836
720
908
International
614
913
559
744
Total
625
869
673
858
Crop nutrients gross margin per
tonne
North America
165
155
130
191
International
88
64
47
80
Total
131
117
106
157
Financial performance measures
2023
2022
Retail adjusted EBITDA margin (%) 1, 2
8
11
Retail adjusted EBITDA per US selling
location (thousands of US dollars) 1, 2, 3
1,505
1,913
Retail adjusted average working capital to
sales (%) 1, 4
20
16
Retail adjusted average working capital to
sales excluding Nutrien Financial (%) 1, 4
2
1
Nutrien Financial adjusted net interest
margin (%) 1, 4
5.8
6.7
Retail cash operating coverage ratio (%)
1, 4
64
55
1 Rolling four quarters ended September
30, 2023 and 2022.
2 These are supplementary financial
measures. See the "Other Financial Measures" section.
3 Excluding acquisitions.
4 These are non-IFRS financial measures.
See the "Non-IFRS Financial Measures" section.
Nutrien Financial
As at September 30,
2023
As at
December
31, 2022
(millions of US dollars)
Current
<31 Days
Past Due
31–90 Days
Past Due
>90 Days
Past Due
Gross Receivables
Allowance 1
Net Receivables
Net Receivables
North America
3,418
93
91
104
3,706
(43)
3,663
2,007
International
570
59
24
49
702
(12)
690
662
Nutrien Financial receivables
3,988
152
115
153
4,408
(55)
4,353
2,669
1 Bad debt expense on the above
receivables for the nine months ended September 30, 2023 was $36
million (2022 – $10 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended September
30
Nine Months Ended September
30
2023
2022
2023
2022
Sales volumes (tonnes –
thousands)
Fertilizer 1
1,305
1,471
4,419
4,161
Industrial and feed
1,082
1,209
3,270
3,523
Net sales (millions of US
dollars)
Fertilizer 1
410
802
1,917
2,825
Industrial and feed
249
743
1,036
2,191
Net selling price per tonne
Fertilizer 1
314
547
434
679
Industrial and feed
230
614
317
622
1 Certain immaterial 2022 figures have
been reclassified.
Production Measures
Three Months Ended September
30
Nine Months Ended September
30
2023
2022
2023
2022
Potash production (Product tonnes –
thousands)
3,287
2,742
9,612
10,066
Potash shutdown weeks 1
‐
10
5
15
Ammonia production – total 2
1,315
1,483
3,995
4,359
Ammonia production – adjusted 2, 3
912
1,009
2,880
3,015
Ammonia operating rate (%) 3
82
91
88
92
P2O5 production (P2O5 tonnes –
thousands)
354
335
1,026
1,063
P2O5 operating rate (%)
83
78
81
84
1 Represents weeks of full production
shutdown, including inventory adjustments and unplanned events,
excluding the impact of any periods of reduced operating rates,
planned routine annual maintenance shutdowns and announced
workforce reductions.
2 All figures are provided on a gross
production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B – Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial
measures to assess performance. Non-IFRS financial measures are
financial measures disclosed by the Company that (a) depict
historical or expected future financial performance, financial
position or cash flow of the Company, (b) with respect to their
composition, exclude amounts that are included in, or include
amounts that are excluded from, the composition of the most
directly comparable financial measure disclosed in the primary
financial statements of the Company, (c) are not disclosed in the
financial statements of the Company and (d) are not a ratio,
fraction, percentage or similar representation. Non-IFRS ratios are
financial measures disclosed by the Company that are in the form of
a ratio, fraction, percentage or similar representation that has a
non-IFRS financial measure as one or more of its components, and
that are not disclosed in the financial statements of the
Company.
These non-IFRS financial measures and non-IFRS ratios are not
standardized financial measures under IFRS and, therefore, are
unlikely to be comparable to similar financial measures presented
by other companies. Management believes these non-IFRS financial
measures and non-IFRS ratios provide transparent and useful
supplemental information to help investors evaluate our financial
performance, financial condition and liquidity using the same
measures as management. These non-IFRS financial measures and
non-IFRS ratios should not be considered as a substitute for, or
superior to, measures of financial performance prepared in
accordance with IFRS.
The following section outlines our non-IFRS financial measures
and non-IFRS ratios, their compositions, and why management uses
each measure. It also includes reconciliations to the most directly
comparable IFRS measures. Except as otherwise described herein, our
non-IFRS financial measures and non-IFRS ratios are calculated on a
consistent basis from period to period and are adjusted for
specific items in each period, as applicable. As additional
non-recurring or unusual items arise in the future, we generally
exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net
earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, depreciation and
amortization, share-based compensation and certain foreign exchange
gain/loss (net of related derivatives). We also adjust this measure
for the following other income and expenses that are excluded when
management evaluates the performance of our day-to-day operations:
integration and restructuring related costs, impairment or reversal
of impairment of assets, COVID-19 related expenses, gain or loss on
disposal of certain businesses and investments, asset retirement
obligations (“ARO”) and accrued environmental costs (“ERL”) related
to our non-operating sites, and loss on remitting cash from certain
foreign jurisdictions (e.g. Blue Chip Swaps). In 2023, we amended
our calculation of adjusted EBITDA to adjust for the asset
retirement obligations and accrued environmental costs related to
our non-operating sites and the loss on remitting cash from certain
foreign jurisdictions. We do not consider these to be part of our
day-to-day operations. There were no similar income and expense in
the comparative periods.
Why we use the measure and why it is useful to investors:
It is not impacted by long-term investment and financing decisions,
but rather focuses on the performance of our day-to-day operations.
It provides a measure of our ability to service debt and to meet
other payment obligations, and as a component of employee
remuneration calculations.
Three Months Ended September
30
Nine Months Ended September
30
(millions of US dollars)
2023
2022
2023
2022
Net earnings
82
1,583
1,106
6,569
Finance costs
206
136
580
375
Income tax expense
97
487
766
2,206
Depreciation and amortization
552
526
1,604
1,492
EBITDA 1
937
2,732
4,056
10,642
Adjustments:
Integration and restructuring related
costs
14
15
29
35
Share-based compensation expense
(recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
‐
(330
)
698
(780
)
ARO/ERL expense for non-operating sites
²
4
‐
10
‐
Foreign exchange loss, net of related
derivatives
87
11
105
67
Loss on Blue Chip Swaps
‐
‐
92
‐
Gain on disposal of investment
‐
‐
‐
(19
)
COVID-19 related expenses ³
‐
‐
‐
8
Adjusted EBITDA
1,084
2,467
4,983
10,075
1 EBITDA is calculated as net earnings
before finance costs, income taxes, and depreciation and
amortization.
2 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
3 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, gain or loss on early extinguishment of debt or on
settlement of derivatives due to discontinuance of hedge
accounting, asset retirement obligations and accrued environmental
costs related to our non-operating sites, loss on remitting cash
from certain foreign jurisdictions (e.g. Blue Chip Swaps) and
change in recognition of tax losses and deductible temporary
differences related to impairments. In 2023, we amended our
calculation of adjusted net earnings and adjusted net earnings per
share to adjust for the asset retirement obligations and accrued
environmental costs related to our non-operating sites the loss on
remitting cash from certain foreign jurisdictions and the change in
recognition of Retail – South America tax losses and deductible
temporary differences. We do not consider these to be part of our
day-to-day operations. There were no similar income and expense in
the comparative periods. We generally apply the annual forecasted
effective tax rate to our adjustments during the year and, at
year-end, we apply the actual effective tax rate. If the effective
tax rate is significantly different from our forecasted effective
tax rate due to adjustments or discrete tax impacts, we apply a tax
rate that excludes those items. For material adjustments, we apply
a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations and is used
as a component of employee remuneration calculations.
Three Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
Per
Per
(millions of US dollars, except as
otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity
holders of Nutrien
75
0.15
1,086
2.18
Adjustments:
Share-based compensation expense
(recovery)
42
19
0.04
(7
)
(4
)
(0.01
)
Foreign exchange loss, net of related
derivatives
87
71
0.14
105
80
0.16
Integration and restructuring related
costs
14
6
0.02
29
17
0.03
Impairment of assets
‐
‐
‐
698
653
1.32
ARO/ERL expense for non-operating sites
1
4
2
‐
10
6
0.02
Loss on Blue Chip Swaps
‐
‐
‐
92
92
0.18
Change in recognition of deferred tax
assets
‐
‐
‐
66
66
0.13
Adjusted net earnings
173
0.35
1,996
4.01
1 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
Three Months Ended
September 30, 2022
Nine Months Ended
September 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
1,577
2.94
6,548
11.96
Adjustments:
Share-based compensation (recovery)
expense
39
30
0.06
122
91
0.17
Foreign exchange loss, net of related
derivatives
11
8
0.01
67
50
0.09
Integration and restructuring related
costs
15
11
0.02
35
26
0.05
Reversal of impairment of assets
(330
)
(265
)
(0.49
)
(780
)
(619
)
(1.13
)
COVID-19 related expenses
‐
‐
‐
8
6
0.01
Gain on disposal of investment
‐
‐
‐
(19
)
(14
)
(0.03
)
Gain on settlement of discontinued hedge
accounting derivative
(18
)
(14
)
(0.03
)
(18
)
(13
)
(0.02
)
Adjusted net earnings
1,347
2.51
6,075
11.10
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. They are provided to
assist readers in understanding our expected and targeted financial
results. We do not provide a reconciliation of such forward-looking
measures to the most directly comparable financial measures
calculated and presented in accordance with IFRS because a
meaningful or accurate calculation of reconciling items and the
information is not available without unreasonable effort due to
unknown variables, including the timing and amount of certain
reconciling items, and the uncertainty related to future results.
These unknown variables may include unpredictable transactions of
significant value that may be inherently difficult to determine
without unreasonable efforts. The probable significance of such
unavailable information, which could be material to future results,
cannot be addressed. Guidance for adjusted EBITDA and adjusted net
earnings per share excludes certain items such as, but not limited
to, the impacts of share-based compensation, certain foreign
exchange gain/loss (net of related derivatives), integration and
restructuring related costs, impairment or reversal of impairment
of assets, COVID-19 related expenses (including those recorded
under finance costs), gain or loss on disposal of certain
businesses and investments, gain or loss on early extinguishment of
debt or on settlement of derivatives due to discontinuance of hedge
accounting, asset retirement obligations and accrued environmental
costs related to our non-operating sites, loss on remitting cash
from certain foreign jurisdictions (e.g. Blue Chip Swaps) and the
change in recognition of Retail – South America tax losses and
deductible temporary differences.
Gross Margin Excluding Depreciation and Amortization Per
Tonne – Manufactured
Most directly comparable IFRS financial measure: Gross
margin.
Definition: Gross margin per tonne less depreciation and
amortization per tonne for manufactured products. Reconciliations
are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors:
Focuses on the performance of our day-to-day operations, which
excludes the effects of items that primarily reflect the impact of
long-term investment and financing decisions.
Potash Controllable Cash Cost of Product Manufactured
(“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of
goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and
amortization expense included in COPM, royalties, natural gas costs
and carbon taxes, change in inventory, and other adjustments,
divided by potash production tonnes.
Why we use the measure and why it is useful to investors:
To assess operational performance. Potash controllable cash COPM
excludes the effects of production from other periods and the
impacts of our long-term investment decisions, supporting a focus
on the performance of our day-to-day operations. Potash
controllable cash COPM also excludes royalties and natural gas
costs and carbon taxes, which management does not consider
controllable, as they are primarily driven by regulatory and market
conditions.
Three Months Ended September
30
Nine Months Ended September
30
(millions of US dollars, except as
otherwise noted)
2023
2022
2023
2022
Total COGS – Potash
389
386
1,047
1,090
Change in inventory
(73
)
(52
)
(47
)
20
Other adjustments 1
(2
)
(5
)
(19
)
(29
)
COPM
314
329
981
1,081
Depreciation and amortization in COPM
(102
)
(84
)
(303
)
(317
)
Royalties in COPM
(20
)
(42
)
(77
)
(150
)
Natural gas costs and carbon taxes in
COPM
(9
)
(9
)
(34
)
(45
)
Controllable cash COPM
183
194
567
569
Production tonnes (tonnes – thousands)
3,287
2,742
9,612
10,066
Potash controllable cash COPM per
tonne
56
70
59
56
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 September
30
Nine Months Ended September
30
(millions of US dollars, except as
otherwise noted)
2023
2022
2023
2022
Total Manufactured COGS – Nitrogen 1
495
895
1,840
2,478
Total Other COGS – Nitrogen 1
74
212
317
681
Total COGS – Nitrogen
569
1,107
2,157
3,159
Depreciation and amortization in COGS
(104
)
(117
)
(351
)
(334
)
Cash COGS for products other than
ammonia
(342
)
(640
)
(1,326
)
(1,912
)
Ammonia
Total cash COGS before other
adjustments
123
350
480
913
Other adjustments 2
(12
)
(31
)
(146
)
(145
)
Total cash COPM
111
319
334
768
Natural gas and steam costs in COPM
(73
)
(267
)
(231
)
(643
)
Controllable cash COPM
38
52
103
125
Production tonnes (net tonnes 3 –
thousands)
610
819
1,712
2,099
Ammonia controllable cash COPM per
tonne
61
62
60
59
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
September 30, 2023
(millions of US dollars, except as
otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Average/Total
Current assets
11,668
13,000
11,983
10,398
Current liabilities
(8,708
)
(8,980
)
(8,246
)
(5,228
)
Working capital
2,960
4,020
3,737
5,170
3,972
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
2,960
4,020
3,737
5,170
3,972
Nutrien Financial working capital
(2,669
)
(2,283
)
(4,716
)
(4,353
)
Adjusted working capital excluding Nutrien
Financial
291
1,737
(979
)
817
467
Sales
4,087
3,422
9,128
3,490
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
4,087
3,422
9,128
3,490
20,127
Nutrien Financial revenue
(62
)
(57
)
(122
)
(73
)
Adjusted sales excluding Nutrien
Financial
4,025
3,365
9,006
3,417
19,813
Adjusted average working capital to
sales (%)
20
Adjusted average working capital to
sales excluding Nutrien Financial (%)
2
Rolling four quarters ended
September 30, 2022
(millions of US dollars, except as
otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Average/Total
Current assets
9,924
12,392
12,487
11,262
Current liabilities
(7,828
)
(9,223
)
(9,177
)
(5,889
)
Working capital
2,096
3,169
3,310
5,373
3,487
Working capital from certain recent
acquisitions
‐
‐
‐
‐
Adjusted working capital
2,096
3,169
3,310
5,373
3,487
Nutrien Financial working capital
(2,150
)
(2,274
)
(4,404
)
(3,898
)
Adjusted working capital excluding Nutrien
Financial
(54
)
895
(1,094
)
1,475
306
Sales
3,878
3,861
9,422
3,980
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,878
3,861
9,422
3,980
21,141
Nutrien Financial revenue
(51
)
(49
)
(91
)
(65
)
Adjusted sales excluding Nutrien
Financial
3,827
3,812
9,331
3,915
20,885
Adjusted average working capital to sales
(%)
16
Adjusted average working capital to sales
excluding Nutrien Financial (%)
1
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed
interest expense divided by average Nutrien Financial net
receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors:
Used by credit rating agencies and other users to evaluate the
financial performance of Nutrien Financial.
Rolling four quarters ended
September 30, 2023
(millions of US dollars, except as
otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Total/Average
Nutrien Financial revenue
62
57
122
73
Deemed interest expense 1
(11
)
(20
)
(39
)
(41
)
Net interest
51
37
83
32
203
Average Nutrien Financial net
receivables
2,669
2,283
4,716
4,353
3,505
Nutrien Financial adjusted net interest
margin (%)
5.8
Rolling four quarters ended
September 30, 2022
(millions of US dollars, except as
otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Total/Average
Nutrien Financial revenue
51
49
91
65
Deemed interest expense 1
(12
)
(6
)
(12
)
(12
)
Net interest
39
43
79
53
214
Average Nutrien Financial net
receivables
2,150
2,274
4,404
3,898
3,182
Nutrien Financial adjusted net interest
margin (%)
6.7
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
September 30, 2023
(millions of US dollars, except as
otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Total
Selling expenses
836
765
971
798
3,370
General and administrative expenses
51
50
55
57
213
Other expenses
1
15
29
37
82
Operating expenses
888
830
1,055
892
3,665
Depreciation and amortization in operating
expenses
(198
)
(179
)
(185
)
(186
)
(748
)
Operating expenses excluding depreciation
and amortization
690
651
870
706
2,917
Gross margin
1,077
615
1,931
895
4,518
Depreciation and amortization in cost of
goods sold
4
2
3
3
12
Gross margin excluding depreciation and
amortization
1,081
617
1,934
898
4,530
Cash operating coverage ratio (%)
64
Rolling four quarters ended
September 30, 2022
(millions of US dollars, except as
otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Total
Selling expenses
848
722
1,013
821
3,404
General and administrative expenses
43
45
54
50
192
Other expenses (income)
20
(12
)
21
19
48
Operating expenses
911
755
1,088
890
3,644
Depreciation and amortization in operating
expenses
(173
)
(167
)
(171
)
(204
)
(715
)
Operating expenses excluding depreciation
and amortization
738
588
917
686
2,929
Gross margin
1,173
845
2,340
917
5,275
Depreciation and amortization in cost of
goods sold
5
2
4
2
13
Gross margin excluding depreciation and
amortization
1,178
847
2,344
919
5,288
Cash operating coverage ratio (%)
55
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
Nine Months Ended
September 30
September 30
Note
2023
2022
2023
2022
SALES
2
5,631
8,188
23,392
30,351
Freight, transportation and
distribution
263
204
714
628
Cost of goods sold
3,741
4,722
15,972
17,205
GROSS MARGIN
1,627
3,262
6,706
12,518
Selling expenses
799
826
2,548
2,570
General and administrative expenses
151
137
453
403
Provincial mining taxes
96
348
319
959
Share-based compensation expense
(recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
3
‐
(330
)
698
(780
)
Other expenses
4
154
36
243
94
EARNINGS BEFORE FINANCE COSTS AND
INCOME TAXES
385
2,206
2,452
9,150
Finance costs
206
136
580
375
EARNINGS BEFORE INCOME TAXES
179
2,070
1,872
8,775
Income tax expense
5
97
487
766
2,206
NET EARNINGS
82
1,583
1,106
6,569
Attributable to
Equity holders of Nutrien
75
1,577
1,086
6,548
Non-controlling interest
7
6
20
21
NET EARNINGS
82
1,583
1,106
6,569
NET EARNINGS PER SHARE ATTRIBUTABLE TO
EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
0.15
2.95
2.18
12.00
Diluted
0.15
2.94
2.18
11.96
Weighted average shares outstanding for
basic EPS
494,517,000
534,839,000
496,999,000
545,776,000
Weighted average shares outstanding for
diluted EPS
495,056,000
536,164,000
497,708,000
547,449,000
Condensed Consolidated Statements of Comprehensive (Loss)
Income
Three Months Ended
Nine Months Ended
September 30
September 30
(Net of related income taxes)
2023
2022
2023
2022
NET EARNINGS
82
1,583
1,106
6,569
Other comprehensive loss
Items that will not be reclassified to net
earnings:
Net actuarial gain (loss) on defined
benefit plans
‐
60
(3
)
61
Net fair value (loss) gain on
investments
(6
)
(54
)
5
(61
)
Items that have been or may be
subsequently reclassified to net earnings:
Loss on currency translation of foreign
operations
(64
)
(191
)
(14
)
(272
)
Other
(16
)
(45
)
(4
)
(24
)
OTHER COMPREHENSIVE LOSS
(86
)
(230
)
(16
)
(296
)
COMPREHENSIVE (LOSS) INCOME
(4
)
1,353
1,090
6,273
Attributable to
Equity holders of Nutrien
(11
)
1,348
1,070
6,254
Non-controlling interest
7
5
20
19
COMPREHENSIVE (LOSS) INCOME
(4
)
1,353
1,090
6,273
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Nine Months Ended
September 30
September 30
Note
2023
2022
2023
2022
Note 1
Note 1
OPERATING ACTIVITIES
Net earnings
82
1,583
1,106
6,569
Adjustments for:
Depreciation and amortization
552
526
1,604
1,492
Share-based compensation expense
(recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
3
‐
(330
)
698
(780
)
Provision for deferred income tax
55
160
176
152
Net (undistributed) distributed earnings
of equity-accounted investees
(28
)
(81
)
112
(139
)
Gain on amendments to other
post-retirement pension plans
‐
‐
(80
)
‐
Loss on Blue Chip Swaps
4
‐
‐
92
‐
Long-term income tax receivables and
payables
1
71
(89
)
201
Other long-term assets, liabilities and
miscellaneous
26
3
124
31
Cash from operations before working
capital changes
730
1,971
3,736
7,648
Changes in non-cash operating working
capital:
Receivables
627
1,240
(1,491
)
(3,602
)
Inventories
846
517
2,406
(344
)
Prepaid expenses and other current
assets
(52
)
(44
)
960
1,018
Payables and accrued charges
(2,620
)
(2,806
)
(4,695
)
(1,346
)
CASH (USED IN) PROVIDED BY OPERATING
ACTIVITIES
(469
)
878
916
3,374
INVESTING ACTIVITIES
Capital expenditures 1
(615
)
(636
)
(1,840
)
(1,464
)
Business acquisitions, net of cash
acquired
‐
(10
)
(116
)
(78
)
Proceeds from sales of Blue Chip Swaps,
net of purchases
‐
‐
(92
)
‐
Net changes in non-cash working
capital
36
31
(68
)
(77
)
Other
(94
)
(90
)
(109
)
(60
)
CASH USED IN INVESTING
ACTIVITIES
(673
)
(705
)
(2,225
)
(1,679
)
FINANCING ACTIVITIES
Proceeds from short-term debt, net
7
1,445
2,017
2,213
2,867
Proceeds from long-term debt
8
‐
‐
1,500
41
Repayment of long-term debt
8
(118
)
(22
)
(635
)
(50
)
Repayment of principal portion of lease
liabilities
(91
)
(83
)
(278
)
(256
)
Dividends paid to Nutrien's
shareholders
9
(261
)
(259
)
(770
)
(780
)
Repurchase of common shares
9
‐
(1,700
)
(1,047
)
(3,306
)
Issuance of common shares
1
4
32
168
Other
‐
14
(34
)
(3
)
CASH PROVIDED BY (USED IN) FINANCING
ACTIVITIES
976
(29
)
981
(1,319
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH
AND CASH EQUIVALENTS
(17
)
(32
)
(19
)
(52
)
(DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
(183
)
112
(347
)
324
CASH AND CASH EQUIVALENTS – BEGINNING
OF PERIOD
737
711
901
499
CASH AND CASH EQUIVALENTS – END OF
PERIOD
554
823
554
823
Cash and cash equivalents is composed
of:
Cash
508
428
508
428
Short-term investments
46
395
46
395
554
823
554
823
SUPPLEMENTAL CASH FLOWS
INFORMATION
Interest paid
137
80
462
280
Income taxes paid
133
318
1,722
1,503
Total cash outflow for leases
125
111
373
339
1 Includes additions to property, plant
and equipment, and intangible assets for the three months ended
September 30, 2023 of $567 and $48 (2022 – $584 and $52),
respectively, and for the nine months ended September 30, 2023 of
$1,699 and $141 (2022 – $1,317 and $147), 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
‐
‐
‐
‐
‐
‐
6,548
6,548
21
6,569
Other comprehensive loss
‐
‐
‐
(270
)
(24
)
(294
)
‐
(294
)
(2
)
(296
)
Shares repurchased (Note 9)
(38,387,969
)
(1,070
)
(23
)
‐
‐
‐
(2,241
)
(3,334
)
‐
(3,334
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(773
)
(773
)
‐
(773
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(18
)
(18
)
Effect of share-based compensation
including issuance of common shares
3,058,561
201
(19
)
‐
‐
‐
‐
182
‐
182
Transfer of net loss on cash flow
hedges
‐
‐
‐
‐
3
3
‐
3
‐
3
Transfer of net actuarial gain on defined
benefit plans
‐
‐
‐
‐
(61
)
(61
)
61
‐
‐
‐
BALANCE – SEPTEMBER 30, 2022
522,163,108
14,588
107
(446
)
(52
)
(498
)
11,787
25,984
48
26,032
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374
)
(17
)
(391
)
11,928
25,818
45
25,863
Net earnings
‐
‐
‐
‐
‐
‐
1,086
1,086
20
1,106
Other comprehensive loss
‐
‐
‐
(14
)
(2
)
(16
)
‐
(16
)
‐
(16
)
Shares repurchased (Note 9)
(13,378,189
)
(374
)
(26
)
‐
‐
‐
(600
)
(1,000
)
‐
(1,000
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(789
)
(789
)
‐
(789
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(14
)
(14
)
Effect of share-based compensation
including issuance of common shares
664,230
39
(1
)
‐
‐
‐
‐
38
‐
38
Transfer of net gain on sale of
investment
‐
‐
‐
‐
(14
)
(14
)
14
‐
‐
‐
Transfer of net loss on cash flow
hedges
‐
‐
‐
‐
8
8
‐
8
‐
8
Transfer of net actuarial loss on defined
benefit plans
‐
‐
‐
‐
3
3
(3
)
‐
‐
‐
BALANCE – SEPTEMBER 30, 2023
494,532,146
13,837
82
(388
)
(22
)
(410
)
11,636
25,145
51
25,196
(See Notes to the Condensed Consolidated
Financial Statements)
Condensed Consolidated Balance Sheets
September 30
December 31
As at
Note
2023
2022
2022
ASSETS
Current assets
Cash and cash equivalents
554
823
901
Receivables
7,713
8,591
6,194
Inventories
5,169
6,545
7,632
Prepaid expenses and other current
assets
656
737
1,615
14,092
16,696
16,342
Non-current assets
Property, plant and equipment
3
22,150
21,022
21,767
Goodwill
3
12,078
12,180
12,368
Intangible assets
3
2,219
2,217
2,297
Investments
731
772
843
Other assets
959
937
969
TOTAL ASSETS
52,229
53,824
54,586
LIABILITIES
Current liabilities
Short-term debt
7
4,354
4,454
2,142
Current portion of long-term debt
8
‐
1,016
542
Current portion of lease liabilities
305
303
305
Payables and accrued charges
6,653
8,760
11,291
11,312
14,533
14,280
Non-current liabilities
Long-term debt
8
9,427
7,020
8,040
Lease liabilities
901
884
899
Deferred income tax liabilities
5
3,631
3,489
3,547
Pension and other post-retirement benefit
liabilities
241
337
319
Asset retirement obligations and accrued
environmental costs
1,353
1,320
1,403
Other non-current liabilities
168
209
235
TOTAL LIABILITIES
27,033
27,792
28,723
SHAREHOLDERS’ EQUITY
Share capital
9
13,837
14,588
14,172
Contributed surplus
82
107
109
Accumulated other comprehensive loss
(410
)
(498
)
(391
)
Retained earnings
11,636
11,787
11,928
Equity holders of Nutrien
25,145
25,984
25,818
Non-controlling interest
51
48
45
TOTAL SHAREHOLDERS’ EQUITY
25,196
26,032
25,863
TOTAL LIABILITIES AND SHAREHOLDERS’
EQUITY
52,229
53,824
54,586
(See Notes to the Condensed Consolidated
Financial Statements)
Notes to the Condensed Consolidated Financial
Statements
As at and for the Three and Nine Months Ended September 30,
2023
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”,
“we”, “us”, “our” or “the Company”) is the world’s largest provider
of crop inputs and services. Nutrien plays a critical role in
helping growers around the globe increase food production in a
sustainable manner.
These unaudited interim condensed consolidated financial
statements (“interim financial statements”) are based on
International Financial Reporting Standards (“IFRS”) as issued by
the International Accounting Standards Board and have been prepared
in accordance with IAS 34, “Interim Financial Reporting”. The
accounting policies and methods of computation used in preparing
these interim financial statements are materially consistent with
those used in the preparation of our 2022 annual consolidated
financial statements. These interim financial statements include
the accounts of Nutrien and its subsidiaries; however, they do not
include all disclosures normally provided in annual consolidated
financial statements and should be read in conjunction with our
2022 annual consolidated financial statements.
Certain immaterial 2022 figures have been reclassified in the
condensed consolidated statements of cash flows.
In management’s opinion, the interim financial statements
include all adjustments necessary to fairly present such
information in all material respects. Interim results are not
necessarily indicative of the results expected for any other
interim period or the fiscal year.
These interim financial statements were authorized by the Audit
Committee of the Board of Directors for issue on November 1,
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 September
30, 2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,489
1,002
690
450
‐
‐
5,631
– intersegment
1
108
138
66
‐
(313
)
‐
Sales
– total
3,490
1,110
828
516
‐
(313
)
5,631
Freight, transportation and
distribution
‐
138
105
72
‐
(52
)
263
Net sales
3,490
972
723
444
‐
(261
)
5,368
Cost of goods sold
2,595
389
569
417
‐
(229
)
3,741
Gross margin
895
583
154
27
‐
(32
)
1,627
Selling expenses
798
3
8
1
(3
)
(8
)
799
General and administrative expenses
57
2
1
3
88
‐
151
Provincial mining taxes
‐
96
‐
‐
‐
‐
96
Share-based compensation expense
‐
‐
‐
‐
42
‐
42
Other expenses (income)
37
4
(19
)
8
117
7
154
Earnings (loss) before finance costs and
income taxes
3
478
164
15
(244
)
(31
)
385
Depreciation and amortization
189
133
130
75
25
‐
552
EBITDA 1
192
611
294
90
(219
)
(31
)
937
Integration and restructuring related
costs
5
‐
‐
‐
9
‐
14
Share-based compensation expense
‐
‐
‐
‐
42
‐
42
ARO/ERL expense for non-operating sites
2
‐
‐
‐
‐
4
‐
4
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
87
‐
87
Adjusted EBITDA
197
611
294
90
(77
)
(31
)
1,084
Assets – at September 30, 2023
22,811
13,613
11,476
2,410
2,405
(486
)
52,229
1 EBITDA is calculated as net earnings
(loss) before finance costs, income taxes, and depreciation and
amortization.
2 ARO/ERL refers to asset retirement
obligations and accrued environmental costs.
Three Months Ended September 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,967
1,968
1,666
587
‐
‐
8,188
– intersegment
13
84
236
126
‐
(459
)
‐
Sales
– total
3,980
2,052
1,902
713
‐
(459
)
8,188
Freight, transportation and
distribution
‐
48
131
62
‐
(37
)
204
Net sales
3,980
2,004
1,771
651
‐
(422
)
7,984
Cost of goods sold
3,063
386
1,107
537
‐
(371
)
4,722
Gross margin
917
1,618
664
114
‐
(51
)
3,262
Selling expenses
821
3
7
1
(2
)
(4
)
826
General and administrative expenses
50
2
2
3
80
‐
137
Provincial mining taxes
‐
348
‐
‐
‐
‐
348
Share-based compensation expense
‐
‐
‐
‐
39
‐
39
Reversal of impairment of assets
‐
‐
‐
(330
)
‐
‐
(330
)
Other expenses (income)
19
(1
)
(59
)
15
59
3
36
Earnings (loss) before finance costs and
income taxes
27
1,266
714
425
(176
)
(50
)
2,206
Depreciation and amortization
206
112
141
48
19
‐
526
EBITDA
233
1,378
855
473
(157
)
(50
)
2,732
Integration and restructuring related
costs
2
‐
‐
‐
13
‐
15
Share-based compensation expense
‐
‐
‐
‐
39
‐
39
Reversal of impairment of assets
‐
‐
‐
(330
)
‐
‐
(330
)
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
11
‐
11
Adjusted EBITDA
235
1,378
855
143
(94
)
(50
)
2,467
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Nine Months Ended September
30, 2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
16,038
3,001
2,909
1,444
‐
‐
23,392
– intersegment
2
302
708
204
‐
(1,216
)
‐
Sales
– total
16,040
3,303
3,617
1,648
‐
(1,216
)
23,392
Freight, transportation and
distribution
‐
320
366
188
‐
(160
)
714
Net sales
16,040
2,983
3,251
1,460
‐
(1,056
)
22,678
Cost of goods sold
12,599
1,047
2,157
1,297
‐
(1,128
)
15,972
Gross margin
3,441
1,936
1,094
163
‐
72
6,706
Selling expenses
2,534
9
23
5
(7
)
(16
)
2,548
General and administrative expenses
162
10
11
10
260
‐
453
Provincial mining taxes
‐
319
‐
‐
‐
‐
319
Share-based compensation recovery
‐
‐
‐
‐
(7
)
‐
(7
)
Impairment of assets
465
‐
‐
233
‐
‐
698
Other expenses (income)
81
2
(53
)
21
187
5
243
Earnings (loss) before finance costs and
income taxes
199
1,596
1,113
(106
)
(433
)
83
2,452
Depreciation and amortization
558
345
426
213
62
‐
1,604
EBITDA
757
1,941
1,539
107
(371
)
83
4,056
Integration and restructuring related
costs
8
‐
‐
‐
21
‐
29
Share-based compensation recovery
‐
‐
‐
‐
(7
)
‐
(7
)
Impairment of assets
465
‐
‐
233
‐
‐
698
ARO/ERL expense for non-operating
sites
‐
‐
‐
‐
10
‐
10
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
105
‐
105
Loss on Blue Chip Swaps
‐
‐
‐
‐
92
‐
92
Adjusted EBITDA
1,230
1,941
1,539
340
(150
)
83
4,983
Assets – at September 30, 2023
22,811
13,613
11,476
2,410
2,405
(486
)
52,229
Nine Months Ended September 30,
2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
17,177
6,345
5,078
1,751
‐
‐
30,351
– intersegment
86
396
1,021
303
‐
(1,806
)
‐
Sales
– total
17,263
6,741
6,099
2,054
‐
(1,806
)
30,351
Freight, transportation and
distribution
‐
219
358
178
‐
(127
)
628
Net sales
17,263
6,522
5,741
1,876
‐
(1,679
)
29,723
Cost of goods sold
13,161
1,090
3,159
1,399
‐
(1,604
)
17,205
Gross margin
4,102
5,432
2,582
477
‐
(75
)
12,518
Selling expenses
2,556
9
22
5
(6
)
(16
)
2,570
General and administrative expenses
149
6
12
9
227
‐
403
Provincial mining taxes
‐
959
‐
‐
‐
‐
959
Share-based compensation expense
‐
‐
‐
‐
122
‐
122
Reversal of impairment of assets
‐
‐
‐
(780
)
‐
‐
(780
)
Other expenses (income)
28
1
(139
)
27
160
17
94
Earnings (loss) before finance costs and
income taxes
1,369
4,457
2,687
1,216
(503
)
(76
)
9,150
Depreciation and amortization
550
354
403
130
55
‐
1,492
EBITDA
1,919
4,811
3,090
1,346
(448
)
(76
)
10,642
Integration and restructuring related
costs
2
‐
‐
‐
33
‐
35
Share-based compensation expense
‐
‐
‐
‐
122
‐
122
Reversal of impairment of assets
‐
‐
‐
(780
)
‐
‐
(780
)
COVID-19 related expenses
‐
‐
‐
‐
8
‐
8
Foreign exchange loss, net of related
derivatives
‐
‐
‐
‐
67
‐
67
Gain on disposal of investment
(19
)
‐
‐
‐
‐
‐
(19
)
Adjusted EBITDA
1,902
4,811
3,090
566
(218
)
(76
)
10,075
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Retail sales by product line
Crop nutrients
1,250
1,605
6,571
7,740
Crop protection products
1,566
1,716
5,790
6,086
Seed
158
134
2,093
1,861
Merchandise
231
241
750
755
Nutrien Financial
73
65
252
205
Services and other
235
244
691
729
Nutrien Financial elimination 1
(23
)
(25
)
(107
)
(113
)
3,490
3,980
16,040
17,263
Potash sales by geography
Manufactured product
North America
637
484
1,631
2,168
Offshore 2
473
1,568
1,672
4,573
1,110
2,052
3,303
6,741
Nitrogen sales by product line
Manufactured product
Ammonia
193
695
998
2,072
Urea and ESN® 3
297
464
1,278
1,723
Solutions, nitrates and sulfates
270
512
1,022
1,564
Other nitrogen and purchased products
3
68
231
319
740
828
1,902
3,617
6,099
Phosphate sales by product line
Manufactured product
Fertilizer
295
414
886
1,204
Industrial and feed
151
206
535
594
Other phosphate and purchased products
70
93
227
256
516
713
1,648
2,054
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 September 30, 2023 of $(34) (2022 – $(187)) and
the nine months ended September 30, 2023 of $(354) (2022 –
$66).
3 Certain immaterial 2022 figures have
been reclassified.
NOTE 3 (REVERSAL OF) IMPAIRMENT OF ASSETS
We recorded the following (reversal of) impairment of assets in
the condensed consolidated statements of earnings:
Three Months Ended
Nine Months Ended
September 30
September 30
Segment
Category
2023
2022
2023
2022
Retail
Goodwill
‐
‐
422
‐
Intangible assets
‐
‐
43
‐
Phosphate
Property, plant and equipment
‐
(330
)
233
(780
)
(Reversal of) impairment of
assets
‐
(330
)
698
(780
)
Goodwill and Intangible Assets
During the three months ended June 30, 2023, we revised our
forecasted EBITDA for the Retail – South America group of cash
generating units (“CGUs”), which triggered an impairment analysis.
Due to the impact of crop input price volatility, more moderate
long-term growth assumptions and higher interest rates, we lowered
our product margin expectations and deferred certain of our planned
strategic investments. As a result, this reduced our forecasted
earnings and growth.
Retail - South America group of
CGUs
June 30, 2023
Carrying amount
1,496
Recoverable amount
1,031
Impairment recognized relating to:
Goodwill
422
Intangible assets
43
After the recognition of the impairment, goodwill for the South
America group of CGUs is nil. We used the fair value less costs of
disposal (“FVLCD”) (a level 3 measurement), based on after-tax
discounted cash flows (“DCF”) (10-year projections plus a terminal
value) and incorporated assumptions an independent market
participant would apply. We adjusted discount rates for the country
risk premium in which we expect to generate cash flows. We used
comparative market multiples to ensure discounted cash flow results
are reasonable.
The key assumptions with the greatest influence on the
calculation of the recoverable amount are the discount rate,
terminal growth rate and forecasted EBITDA. The key forecast
assumptions were based on historical data and our estimates of
future results from internal sources considering industry and
market trends.
Key Assumptions Used in Impairment
Model
As at June 30, 2023
Terminal growth rate (%)
6.0
Forecasted EBITDA over forecast period
($)
4,300
Discount rate 1 (%)
16.6
1 Discount rate used in the previous
measurement was 16.0 percent, which was included as part of our
Retail - International group of CGUs.
The following table highlights sensitivities to the recoverable
amount, which could have resulted in additional impairment against
the carrying amount of intangible assets and property, plant and
equipment. The sensitivities have been calculated independently of
changes in other key variables.
Decrease to
Key Assumptions as at June 30,
2023
Change in Key
Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast period
($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
Property, Plant and Equipment – Phosphate CGUs
Three Months Ended June 30,
2023
Impairment Trigger
Result
White Springs
Decrease in our forecasted phosphate
margins.
Impairment recorded to property, plant and
equipment.
Aurora
No impairment recorded. Recoverable amount
of $2,000 was greater than the carrying amount of $1,660. The
recoverable amount was based on FVLCD using after-tax DCF (using a
five-year projection plus a terminal year to the end of expected
mine life).
White Springs CGU
June 30, 2023
Pre-tax impairment loss ($)
233
Pre-tax recoverable amount ($)
504
Valuation methodology
Value in use
Valuation technique
Pre-tax DCF to end of expected
mine life
Key assumptions
End of expected mine life (proven and
probable reserves) (year) 1
2032
Pre-tax discount rate 2 (%)
15.6
Post-tax discount rate 2 (%)
12.0
Forecasted EBITDA 3 ($)
720
1 The White Springs CGU has a short
expected mine life and is therefore more sensitive to changes in
short- and medium-term forecasted phosphate margins.
2 Discount rate used in the previous
measurement was 12.0 percent (pre-tax - 15.2 percent).
3 Forecasted EBITDA to 2028.
The recoverable amount of our Aurora and White Springs CGUs used
the following key assumptions: our forecasted EBITDA, discount
rate, long-term growth rate and end of expected mine life. We used
key assumptions that were based on historical data and estimates of
future results from internal sources, independent third-party price
benchmarks, and mineral reserve technical reports, as well as
industry and market trends.
Phosphate Sensitivities
The following table highlights sensitivities to the recoverable
amounts, which could result in additional impairment losses or
reversals of the recorded losses (relating to the White Springs
CGU). The sensitivities have been calculated independently of
changes in other key variables.
Change to Recoverable Amount
($)
Key Assumptions as at June 30,
2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period
($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
During the nine months ended September 30, 2022, as a result of
increased pricing forecast that reflected the macroeconomic
environment at the time, we recorded the following reversal of
impairment of assets:
Phosphate CGU
Aurora
White Springs
Date of impairment reversal
June 30, 2022
September 30, 2022
Pre-tax impairment reversal, net of
depreciation ($)
450
330
Recoverable amount ($)
2,900
770
Carrying amount before impairment reversal
($)
1,200
425
Valuation methodology
FVLCD
Value in use
Valuation technique
Five-year DCF plus terminal year
to end of mine life
Pre-tax DCF to end of expected
mine life
For additional information relating to the reversal of the
impairment, including the key assumptions used in the calculation,
see Note 13 of the 2022 annual consolidated financial
statements.
NOTE 4 OTHER EXPENSES (INCOME)
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Integration and restructuring related
costs
14
15
29
35
Foreign exchange loss, net of related
derivatives
87
11
105
67
Earnings of equity-accounted investees
(28
)
(82
)
(100
)
(200
)
Bad debt expense
12
4
51
18
COVID-19 related expenses
‐
‐
‐
8
Gain on disposal of investment
‐
‐
‐
(19
)
Project feasibility costs
19
28
53
57
Customer prepayment costs
10
13
36
35
Loss on Blue Chip Swaps
‐
‐
92
‐
Gain on amendments to other
post-retirement pension plans
‐
‐
(80
)
‐
Other expenses
40
47
57
93
154
36
243
94
The Central Bank of Argentina maintains certain currency
controls that limit our ability to remit cash from Argentina. Blue
Chip Swaps are trade transactions that effectively allow companies
to transfer US dollars out of Argentina. Through this mechanism, we
incurred a loss of $92 from the purchase of securities denominated
in Argentine peso and corresponding sale in US dollars during the
nine months ended September 30, 2023. The loss is a result of the
significant divergence between the Blue Chip Swap market exchange
rate and the official Argentinian Central Bank rate.
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate
was determined for each taxing jurisdiction and applied
individually to the interim period pre-tax earnings for each
jurisdiction.
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Income tax expense
97
487
766
2,206
Actual effective tax rate on earnings
(%)
41
24
33
25
Actual effective tax rate including
discrete items (%)
54
24
41
25
Discrete tax adjustments that impacted the
tax rate
23
(12
)
155
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 September 30,
2023
As at December 31, 2022
Income tax assets
Current
Receivables
317
144
Non-current
Other assets
125
54
Deferred income tax assets
Other assets
357
448
Total income tax assets
799
646
Income tax liabilities
Current
Payables and accrued charges
38
899
Non-current
Other non-current liabilities
28
46
Deferred income tax liabilities
Deferred income tax liabilities
3,631
3,547
Total income tax liabilities
3,697
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.
September 30, 2023
December 31, 2022
Carrying
Carrying
Financial assets (liabilities) measured
at
Amount
Level 1
Level 2
Level 3
Amount
Level 1
Level 2
Level 3
Fair value on a recurring basis
1
Derivative instrument assets
6
‐
6
‐
7
‐
7
‐
Other current financial assets –
marketable securities 2
187
32
155
‐
148
19
129
‐
Investments at FVTOCI 3
191
181
‐
10
200
190
‐
10
Derivative instrument liabilities
(37
)
‐
(37
)
‐
(35
)
‐
(35
)
‐
Amortized cost
Investments at amortized cost
(12
)
(12
)
‐
‐
‐
‐
‐
‐
Current portion of long-term debt
Notes and debentures
‐
‐
‐
‐
(500
)
(493
)
‐
‐
Fixed and floating rate debt
‐
‐
‐
‐
(42
)
‐
(42
)
‐
Long-term debt
Notes and debentures
(9,384
)
(4,366
)
(3,943
)
‐
(7,910
)
(3,581
)
(3,656
)
‐
Fixed and floating rate debt
(43
)
‐
(43
)
‐
(130
)
‐
(130
)
‐
1 During the periods ended September 30,
2023 and December 31, 2022, there were no transfers between levels
for financial instruments measured at fair value on a recurring
basis.
2 Marketable securities consist of equity
and fixed income securities.
3 Investments at fair value through other
comprehensive income ("FVTOCI") is primarily comprised of shares in
Sinofert Holdings Ltd.
NOTE 7 SHORT-TERM DEBT
Rate of
Interest (%)
Total Facility Limit as at
September 30, 2023
As at
September 30, 2023
As at
December 31, 2022
Credit facilities
Unsecured revolving term credit
facility
n/a
4,500
‐
‐
Unsecured revolving term credit facility
1
n/a
1,500
‐
500
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities 2
1,300
South America 3
5.1 – 13.2
460
453
Australia
5.0
123
190
Other
4.7
47
9
Commercial paper
5.6 – 5.8
3,583
783
Other short-term debt
n/a
141
207
4,354
2,142
1 During the three months ended September
30, 2023, we extended the term of our unsecured revolving term
credit facility to September 10, 2024 and reduced the facility
limit from $2,000 to $1,500.
2 Total facility limit amounts include
some facilities with maturities in excess of one year.
3 Our credit facilities are either
denominated in local currency or US dollars. The range of interest
rates for South America excludes our Argentina facilities
denominated in local currency with interest rates ranging from 96.0
to 125.0 percent. The balance of these Argentina facilities as at
September 30, 2023 was $15.
NOTE 8 LONG-TERM DEBT
Nine Months Ended
September 30
Rate of interest (%)
Maturity
Amount
Notes repaid 2023
1.900
May 13, 2023
500
Notes issued 2023
4.900
March 27, 2028
750
Notes issued 2023
5.800
March 27, 2053
750
1,500
The notes issued in the nine months ended September 30, 2023,
are unsecured, rank equally with our existing unsecured debt, and
have no sinking fund requirements prior to maturity. Each series is
redeemable and has various provisions for redemption prior to
maturity, at our option, at specified prices.
NOTE 9 SHARE CAPITAL
Share Repurchase Programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2021 Normal Course Issuer Bid
March 1, 2021
February 28, 2022
28,468,448
5
22,186,395
2022 Normal Course Issuer Bid
March 1, 2022
February 7, 2023
55,111,110
10
55,111,110
2023 Normal Course Issuer Bid 1
March 1, 2023
February 29, 2024
24,962,194
5
5,375,397
1 The 2023 normal course issuer bid will
expire earlier than the date above if we acquire the maximum number
of common shares allowable or otherwise decide not to make any
further repurchases.
Purchases under the normal course issuer bids were, or may be,
made through open market purchases at market prices as well as by
other means permitted by applicable securities laws, including
private agreements.
The following table summarizes our share repurchase activities
during the period:
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Number of common shares repurchased for
cancellation
‐
19,027,561
13,378,189
38,387,969
Average price per share (US dollars)
‐
89.25
74.73
86.85
Total cost
‐
1,698
1,000
3,334
Dividends Declared
We declared a dividend per share of $0.53 (2022 – $0.48) during
the three months ended September 30, 2023, payable on October 13,
2023 to shareholders of record on September 29, 2023.
NOTE 10 SEASONALITY
Seasonality in our business results from increased demand for
products during planting season. Crop input sales are generally
higher in the spring and fall application seasons. Crop input
inventories are normally accumulated leading up to each application
season. The results of this seasonality have a corresponding effect
on receivables from customers and rebates receivables, inventories,
prepaid expenses and other current assets, and trade payables. Our
short-term debt also fluctuates during the year to meet working
capital requirements. Our cash collections generally occur after
the application season is complete, while customer prepayments made
to us are typically concentrated in December and January and
inventory prepayments paid to our suppliers are typically
concentrated in the period from November to January. Feed and
industrial sales are more evenly distributed throughout the
year.
NOTE 11 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively
through Canpotex. Canpotex sells potash to buyers, including
Nutrien, in export markets pursuant to term and spot contracts at
agreed upon prices. Our total revenue is recognized at the amount
received from Canpotex representing proceeds from their sale of
potash, less net costs of Canpotex. Sales to Canpotex are shown in
Note 2. Purchases from Canpotex for the three months ended
September 30, 2023 were $26 (2022 – $230) and the nine months ended
September 30, 2023 were $60 (2022 – $391).
As at
September 30, 2023
December 31, 2022
Receivables from Canpotex
360
866
Payables to Canpotex
33
203
NOTE 12 BUSINESS COMBINATIONS
We acquired Casa do Adubo S.A. (“Casa do Adubo”) on October 1,
2022. We have completed our assessment of identifying and measuring
all the assets acquired and liabilities assumed as part of the Casa
do Adubo acquisition. This assessment included a thorough review of
all internal and external sources of information available on
circumstances that existed at the acquisition date, engagement of
independent valuation experts, and final agreement of the purchase
price. The fair values of the assets acquired and liabilities
assumed, the goodwill amount of $184 recorded, and valuation
technique and judgments applied are consistent with those disclosed
in Note 25 of the 2022 annual consolidated financial statements.
The goodwill recognized was fully impaired as part of the
impairment recorded to the Retail – South America group of CGUs
(Note 3).
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231027665379/en/
Investor Relations: Jeff Holzman Vice President, Investor
Relations (306) 933-8545 Investors@nutrien.com
Media Relations: Megan Fielding Vice President, Brand
& Culture Communications (403) 797-3015
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