UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

 

Form 6-K

 

 

Report of Foreign Private Issuer

Pursuant to Section 13a-16 or 15d-16 of the

Securities Exchange Act of 1934

For the month of: November, 2023

Commission File Number: 001-38336

 

 

NUTRIEN LTD.

(Name of registrant)

 

 

Suite 1700, 211 19th Street East

Saskatoon, Saskatchewan, Canada

S7K 5R6

(Address of principal executive office)

 

 

Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:

Form 20-F  ☐    Form 40-F  ☒

Exhibits 99.2 and 99.3 to this report on Form 6-K shall be incorporated by reference into the registrant’s Registration Statements on Form S-8 (File Nos. 333-222384, 333-222385 and 333-226295) and on Form F-10 (File No. 333-263275) under the Securities Act of 1933, as amended.

 

 

 

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

    NUTRIEN LTD.
Date: November 1, 2023     By:  

/s/ Robert A. Kirkpatrick

    Name:   Robert A. Kirkpatrick
    Title:   Senior Vice President, General Counsel Securities & Corporate Secretary

EXHIBIT INDEX

 

Exhibit   

Description of Exhibit

99.1    News Release dated November 1, 2023
99.2    Management’s Discussion and Analysis
99.3    Interim Financial Statements and Notes

Exhibit 99.1

 

LOGO    News Release

 

NYSE, TSX: NTR

 

November 1, 2023 – all amounts are in US dollars except as otherwise noted

Nutrien Reports Third Quarter 2023 Results

Delivered record potash sales volumes in the third quarter and benefited from

strong crop nutrient demand in North America.

SASKATOON, Saskatchewan - 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.

 

1

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.

 

2

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.

 

3

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.

   

 

4

    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.

 

5

 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.

 

6

Canpotex Sales by Market

 

 (percentage of sales volumes, except as
 otherwise noted)		   Three Months Ended September 30     Nine Months Ended September 30  
    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).

 

7

•  

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.

 

 

8

    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 noted)   Three Months Ended September 30     Nine Months Ended September 30  
    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.

 

 

9

•  

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 noted)   Three Months Ended September 30     Nine Months Ended September 30  
    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.

 

10

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 noted)    Three Months Ended September 30   Nine Months Ended September 30
        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.

 

11

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.

 

12

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 otherwise noted)               Outstanding and Committed  
    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.

 

13

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.

 

14

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.

 

 Key Assumptions as at June 30, 2023    Change in Key Assumption      Decrease to
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.

 

15

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.

 

16

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.

 

17

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.

For Further Information:

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

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

 

18

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.

 

 

19

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.

 

20

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.

 

21

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

  

 (millions of US dollars, except as otherwise noted)

     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
  Diluted
Share		  
 
 		     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
  Diluted
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

  

(millions of US dollars, except as otherwise noted)

     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
Diluted
Share		  
 
 		     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
Diluted
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  

 

22

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.

 

 

23

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  

 

24

    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.

 

 

25

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.

 

26

Unaudited   In millions of US dollars except as otherwise noted 

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Earnings

 

           Three Months Ended
September 30		     Nine Months Ended
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
September 30		     Nine Months Ended
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)

 

27

Unaudited   In millions of US dollars except as otherwise noted 

 

Condensed Consolidated Statements of Cash Flows

 

           Three Months Ended
September 30		     Nine Months Ended
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)

 

28

Unaudited   In millions of US dollars except as otherwise noted 

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

                      Accumulated Other Comprehensive
(Loss) Income (“AOCI”)		                          
     Number of
Common
Shares		     Share
Capital		     Contributed
Surplus		     Loss on
Currency
Translation of
Foreign
Operations		     Other     Total AOCI     Retained
Earnings		     Equity
Holders
of
Nutrien		     Non-
Controlling
Interest		     Total
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)

 

 

29

Unaudited   In millions of US dollars except as otherwise noted 

 

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)

 

30

Unaudited   In millions of US dollars except as otherwise noted 

 

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.

 

31

Unaudited   In millions of US dollars except as otherwise noted 

 

     Three Months Ended September 30, 2023  
      Retail      Potash     Nitrogen     Phosphate     Corporate
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  
      Retail      Potash     Nitrogen     Phosphate     Corporate
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  

 

32

Unaudited   In millions of US dollars except as otherwise noted 

 

     Nine Months Ended September 30, 2023  
      Retail     Potash      Nitrogen     Phosphate     Corporate
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  
      Retail     Potash      Nitrogen     Phosphate     Corporate
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  

 

33

Unaudited   In millions of US dollars except as otherwise noted 

 

         Three Months Ended
September 30		      Nine Months Ended
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
September 30		      Nine Months Ended
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 ) 

 

34

Unaudited   In millions of US dollars except as otherwise noted 

 

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.

 

Key Assumptions as at June 30, 2023    Change in Key Assumption      Decrease to
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).

 

35

Unaudited   In millions of US dollars except as otherwise noted 

 

 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.

 

36

Unaudited   In millions of US dollars except as otherwise noted 

 

NOTE 4 OTHER EXPENSES (INCOME)

 

     Three Months Ended
September 30		      Nine Months Ended
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
September 30		      Nine Months Ended
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

 

37

Unaudited   In millions of US dollars except as otherwise noted 

 

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  
 Financial assets (liabilities) measured at    Carrying
Amount		     Level 1     Level 2     Level 3             Carrying
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.

 

38

Unaudited   In millions of US dollars except as otherwise noted 

 

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

 

     Commencement
Date		     Expiry     Maximum
Shares for
Repurchase		     Maximum
Shares for
Repurchase (%)		     Number of
Shares
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
September 30		      Nine Months Ended
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.

 

39

Unaudited   In millions of US dollars except as otherwise noted 

 

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).

 

40

Exhibit 99.2

 

 

LOGO

NUTRIEN LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS

AS AT AND FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2023

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.

 

2

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.

 

3

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.

   

 

4

    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.

 

5

 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.

 

6

Canpotex Sales by Market

 

 (percentage of sales volumes, except as
 otherwise noted)		   Three Months Ended September 30     Nine Months Ended September 30  
    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).

 

7

•  

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.

 

 

8

    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 noted)   Three Months Ended September 30     Nine Months Ended September 30  
    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.

 

 

9

•  

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 noted)   Three Months Ended September 30     Nine Months Ended September 30  
    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.

 

10

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 noted)    Three Months Ended September 30   Nine Months Ended September 30
        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.

 

11

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.

 

12

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 otherwise noted)               Outstanding and Committed  
    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.

 

13

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.

 

14

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.

 

 Key Assumptions as at June 30, 2023    Change in Key Assumption      Decrease to
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.

 

15

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.

 

16

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.

 

17

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.

 

 

19

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.

 

20

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.

 

21

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

  

 (millions of US dollars, except as otherwise noted)

     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
  Diluted
Share		  
 
 		     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
  Diluted
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

  

(millions of US dollars, except as otherwise noted)

     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
Diluted
Share		  
 
 		     
 Increases
(Decreases)		  
 		     Post-Tax      

 Per
Diluted
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  

 

22

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.

 

 

23

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  

 

24

    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.

 

 

25

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.

 

26

Exhibit 99.3

 

 

LOGO

NUTRIEN LTD.

INTERIM FINANCIAL STATEMENTS AND NOTES

AS AT AND FOR THE THREE AND NINE MONTHS ENDED

SEPTEMBER 30, 2023

Unaudited   In millions of US dollars except as otherwise noted 

 

Condensed Consolidated Financial Statements

Condensed Consolidated Statements of Earnings

 

           Three Months Ended
September 30		     Nine Months Ended
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
September 30		     Nine Months Ended
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)

 

27

Unaudited   In millions of US dollars except as otherwise noted 

 

Condensed Consolidated Statements of Cash Flows

 

           Three Months Ended
September 30		     Nine Months Ended
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)

 

28

Unaudited   In millions of US dollars except as otherwise noted 

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

                      Accumulated Other Comprehensive
(Loss) Income (“AOCI”)		                          
     Number of
Common
Shares		     Share
Capital		     Contributed
Surplus		     Loss on
Currency
Translation of
Foreign
Operations		     Other     Total AOCI     Retained
Earnings		     Equity
Holders
of
Nutrien		     Non-
Controlling
Interest		     Total
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)

 

 

29

Unaudited   In millions of US dollars except as otherwise noted 

 

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)

 

30

Unaudited   In millions of US dollars except as otherwise noted 

 

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.

 

31

Unaudited   In millions of US dollars except as otherwise noted 

 

     Three Months Ended September 30, 2023  
      Retail      Potash     Nitrogen     Phosphate     Corporate
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  
      Retail      Potash     Nitrogen     Phosphate     Corporate
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  

 

32

Unaudited   In millions of US dollars except as otherwise noted 

 

     Nine Months Ended September 30, 2023  
      Retail     Potash      Nitrogen     Phosphate     Corporate
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  
      Retail     Potash      Nitrogen     Phosphate     Corporate
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  

 

33

Unaudited   In millions of US dollars except as otherwise noted 

 

         Three Months Ended
September 30		      Nine Months Ended
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
September 30		      Nine Months Ended
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 ) 

 

34

Unaudited   In millions of US dollars except as otherwise noted 

 

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.

 

Key Assumptions as at June 30, 2023    Change in Key Assumption      Decrease to
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).

 

35

Unaudited   In millions of US dollars except as otherwise noted 

 

 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.

 

36

Unaudited   In millions of US dollars except as otherwise noted 

 

NOTE 4 OTHER EXPENSES (INCOME)

 

     Three Months Ended
September 30		      Nine Months Ended
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
September 30		      Nine Months Ended
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

 

37

Unaudited   In millions of US dollars except as otherwise noted 

 

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  
 Financial assets (liabilities) measured at    Carrying
Amount		     Level 1     Level 2     Level 3             Carrying
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.

 

38

Unaudited   In millions of US dollars except as otherwise noted 

 

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

 

     Commencement
Date		     Expiry     Maximum
Shares for
Repurchase		     Maximum
Shares for
Repurchase (%)		     Number of
Shares
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
September 30		      Nine Months Ended
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.

 

39

Unaudited   In millions of US dollars except as otherwise noted 

 

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).

 

40

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