Nutrien Reports Third Quarter 2023 Results
Nutrien Ltd. (TSX and NYSE: NTR) announced today its third quarter 2023 results, with net earnings of $82 million ($0.15 diluted net earnings per share). Third quarter 2023 adjusted net earnings per share1 was $0.35 and adjusted EBITDA1 was $1.1 billion.
“Nutrien’s third-quarter results reflect the strength of agriculture and crop nutrient market fundamentals in North America. We delivered record potash sales volumes and are encouraged by the increased level of demand and market stability in the second half of 2023. We are optimistic on the outlook for our business and will continue to position the company to efficiently serve the needs of our customers,” commented Ken Seitz, Nutrien’s President and CEO.
“Our focus is on initiatives that strengthen the advantages of our integrated business, drive operational efficiencies and increase free cash flow. We expect to deliver growth from highly targeted investment projects and maintain a balanced and disciplined approach to capital allocation, including the return of meaningful capital to our shareholders,” added Mr. Seitz.
Highlights2:
Generated net earnings of $1.1 billion ($2.18 diluted net earnings per share) and adjusted EBITDA1 of $5.0 billion ($4.01 adjusted net earnings per share1) in the first nine months of 2023, down from the record levels achieved over the comparable period in 2022. Adjusted EBITDA declined primarily due to lower net realized fertilizer prices across all segments and lower Nutrien Ag Solutions (“Retail”) earnings. Retail adjusted EBITDA declined to $197 million in the third quarter primarily due to lower gross margin for crop protection products, partially offset by higher gross margin for crop nutrients and seed. Crop nutrients gross margin increased in the quarter due to improved grower demand and higher per-tonne margins for our commodity fertilizer and proprietary nutritional and biostimulant product lines. Potash adjusted EBITDA declined to $611 million in the third quarter due to lower net realized selling prices. We delivered record potash sales volumes in the quarter supported by strong demand in North America and increased Canpotex sales to Brazil, which more than offset the impact of logistical challenges at Canpotex’s West Coast port facilities and lower demand from customers in India and Southeast Asia. Nitrogen adjusted EBITDA declined to $294 million in the third quarter due to lower net realized selling prices and lower sales volumes due to production outages, which more than offset lower natural gas costs. Returned $1.8 billion to shareholders in the first nine months of 2023 through dividends and share repurchases. Full year 2023 adjusted EBITDA guidance1 was narrowed to $5.8 to $6.4 billion and adjusted net earnings per share guidance was revised to $4.15 to $5.00 per share. 1.These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.
2.Our discussion of highlights set out on this page is a comparison of the results for the three and nine months ended September 30, 2023 to the results for the three and nine months ended September 30, 2022, unless otherwise noted.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD”) 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, 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 except for material information since the date of our annual MD The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).
This MD 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 contains certain non-IFRS financial measures and ratios and forward-looking statements, which are described in the “Non-IFRS Financial Measures” and the “Forward-Looking Statements” sections, respectively.
Market Outlook and Guidance
Agriculture and Retail
Weather and geopolitical issues continue to impact global grain and oilseed production and trade flows, resulting in tight inventories. New crop corn and soybean prices have recently incurred some seasonal pressure but remain 10 to 15 percent above the 10-year average. Harvest in the US has progressed at an above average pace and fall fertilizer application rates have been strong in regions where harvest has been completed. We project fertilizer demand will be up 5 to 10 percent in the fourth quarter of 2023 compared to the same period in the prior year. Brazilian soybean acreage is expected to expand 3 to 4 percent in 2023 and fertilizer demand has increased in the fourth quarter. Growers in Brazil continue to purchase crop inputs on a just-in-time basis, in particular crop protection products. Australian growing conditions have been variable and shifting climate patterns could increase the risk of drier weather impacting crop production and crop input demand.Crop Nutrient Markets
Global potash prices were relatively stable in the third quarter of 2023 and demand was strong in North America, Brazil and China. We have increased our projected global shipment range to 65 to 67 million tonnes due to the strength of demand in the second half of 2023. We now anticipate exports from Belarus to be down approximately 4 million tonnes and exports from Russia to be down approximately 2 million tonnes, compared to 2021 levels. We expect robust agricultural fundamentals and the need to replenish soil nutrient levels will support increased potash consumption next year. We forecast global potash shipments in the range of 67 to 71 million tonnes in 2024, supported by stronger expected demand in Southeast Asia, Latin America, Europe and India. Ammonia outages in Europe and production challenges in other key regions have contributed to higher benchmark prices in the second half of 2023. Urea markets are relatively balanced as Chinese export restrictions and strong import demand in India offset weaker seasonal demand in other regions. Tight phosphate fertilizer supply has supported global benchmark prices, while recent increases in ammonia and sulfur input costs could pressure phosphate margins.Financial Guidance
Based on market factors detailed above, we are narrowing full-year 2023 adjusted EBITDA guidance2 to $5.8 to $6.4 billion. Full-year 2023 adjusted net earnings guidance2 is revised to $4.15 to $5.00 per share primarily due to a higher projected effective tax rate. Full-year 2023 cash provided by operations is now projected at $4.0 to $4.5 billion and capital expenditures at approximately $2.7 billion. Retail adjusted EBITDA guidance was revised to reflect pressure on crop protection product margins in South America and lower projected earnings in Australia, primarily related to weaker livestock markets. Potash adjusted EBITDA guidance and potash sales volume guidance were revised due to the strength of North American market fundamentals. Nitrogen adjusted EBITDA guidance was narrowed as higher benchmark prices offset lower projected sales volumes. Nutrien lowered Nitrogen sales volume guidance due to unplanned plant outages in the third quarter and the pull-forward of a planned maintenance outage at our Borger site into the fourth quarter of 2023. Phosphate adjusted EBITDA guidance was lowered due to the impacts of hurricane related outages in the third quarter and lower projected feed and industrial sales volumes. Effective tax rate on adjusted earnings guidance was increased primarily due to an unfavorable change to our geographic mix of earnings. We expect our effective tax rate on adjusted earnings will return to more historical levels in 2024.All guidance numbers, including those noted above are outlined in the table below. Refer to page 56 of Nutrien’s 2022 Annual Report for related assumptions and sensitivities, except as set forth below.
Guidance Ranges 1 as of
November 1, 2023
August 2, 2023
(billions of US dollars, except as otherwise noted)
Low
High
Low
High
Adjusted net earnings per share ("EPS") (in US dollars) 2,3
4.15
5.00
3.85
5.60
Adjusted EBITDA 2
5.8
6.4
5.5
6.7
Retail adjusted EBITDA
1.45
1.50
1.45
1.60
Potash adjusted EBITDA
2.30
2.50
2.00
2.50
Nitrogen adjusted EBITDA
1.90
2.10
1.80
2.30
Phosphate adjusted EBITDA (in millions of US dollars)
450
550
500
600
Potash sales tonnes (millions) 4
12.8
13.2
12.6
13.2
Nitrogen sales tonnes (millions) 4
10.5
10.7
10.8
11.2
Depreciation and amortization
2.1
2.2
2.1
2.2
Effective tax rate on adjusted earnings (%)
27.0
27.5
25.5
26.0
1 See the "Forward-Looking Statements" section.
2 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
3 Assumes 497 million shares outstanding for November 1, 2023 adjusted net EPS guidance.
4 Manufactured product only. Nitrogen sales tonnes includes ESN® products.
Consolidated Results
Three Months Ended September 30
Nine Months Ended September 30
(millions of US dollars, except as otherwise noted)
2023
2022
% Change
2023
2022
% Change
Sales
5,631
8,188
(31
)
23,392
30,351
(23
)
Freight, transportation and distribution
263
204
29
714
628
14
Cost of goods sold
3,741
4,722
(21
)
15,972
17,205
(7
)
Gross margin
1,627
3,262
(50
)
6,706
12,518
(46
)
Expenses
1,242
1,056
18
4,254
3,368
26
Net earnings
82
1,583
(95
)
1,106
6,569
(83
)
Adjusted EBITDA 1
1,084
2,467
(56
)
4,983
10,075
(51
)
Diluted net earnings per share
0.15
2.94
(95
)
2.18
11.96
(82
)
Adjusted net earnings per share 1
0.35
2.51
(86
)
4.01
11.10
(64
)
Cash (used in) provided by operating activities
(469
)
878
n/m
916
3,374
(73
)
Cash used in investing activities
(673
)
(705
)
(5
)
(2,225
)
(1,679
)
33
Cash used for dividends and share repurchases 2
(261
)
(1,959
)
(87
)
(1,817
)
(4,086
)
(56
)
1 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
2 This is a supplementary financial measure. See the "Other Financial Measures" section.
Net earnings and adjusted EBITDA decreased in the third quarter and first nine months of 2023 compared to the same periods in 2022, mainly due to lower net realized selling prices across all segments and lower Retail earnings. This was partially offset by decreased cost of goods sold from lower natural gas and royalty costs, lower provincial mining taxes, and higher sales volumes for Retail crop nutrients. In the first nine months of 2023, we recorded non-cash impairment of assets of $698 million primarily related to South American Retail goodwill and Phosphate property, plant and equipment, resulting in lower net earnings. In the third quarter and first nine months of 2022, we recorded a non-cash impairment reversal of $330 million and $780 million, respectively, related to our Phosphate assets. The decrease in cash provided by operating activities in the third quarter and first nine months of 2023 compared to the same periods in 2022 was primarily due to lower earnings across all segments.
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three and nine months ended September 30, 2023 to the results for the three and nine months ended September 30, 2022, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended September 30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
1,250
1,605
(22
)
262
214
22
21
13
Crop protection products
1,566
1,716
(9
)
339
436
(22
)
22
25
Seed
158
134
18
54
33
64
34
25
Merchandise
231
241
(4
)
40
41
(2
)
17
17
Nutrien Financial
73
65
12
73
65
12
100
100
Services and other
235
244
(4
)
150
153
(2
)
64
63
Nutrien Financial elimination 1
(23
)
(25
)
(8
)
(23
)
(25
)
(8
)
100
100
3,490
3,980
(12
)
895
917
(2
)
26
23
Cost of goods sold
2,595
3,063
(15
)
Gross margin
895
917
(2
)
Expenses 2
892
890
‐
Earnings before finance costs and taxes ("EBIT")
3
27
(89
)
Depreciation and amortization
189
206
(8
)
EBITDA
192
233
(18
)
Adjustments 3
5
2
150
Adjusted EBITDA
197
235
(16
)
1 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
2 Includes selling expenses of $798 million (2022 – $821 million).
3 See Note 2 to the interim financial statements.
Nine Months Ended September 30
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
Sales
Crop nutrients
6,571
7,740
(15
)
1,032
1,417
(27
)
16
18
Crop protection products
5,790
6,086
(5
)
1,220
1,523
(20
)
21
25
Seed
2,093
1,861
12
391
382
2
19
21
Merchandise
750
755
(1
)
131
133
(2
)
17
18
Nutrien Financial
252
205
23
252
205
23
100
100
Services and other
691
729
(5
)
522
555
(6
)
76
76
Nutrien Financial elimination
(107
)
(113
)
(5
)
(107
)
(113
)
(5
)
100
100
16,040
17,263
(7
)
3,441
4,102
(16
)
21
24
Cost of goods sold
12,599
13,161
(4
)
Gross margin
3,441
4,102
(16
)
Expenses 1,2
3,242
2,733
19
EBIT
199
1,369
(85
)
Depreciation and amortization
558
550
1
EBITDA
757
1,919
(61
)
Adjustments 2
473
(17
)
n/m
Adjusted EBITDA
1,230
1,902
(35
)
1 Includes selling expenses of $2,534 million (2022 – $2,556 million).
2 Includes non-cash impairment of assets of $465 million (2022 – nil). See Notes 2 and 3 to the interim financial statements.
Retail adjusted EBITDA decreased in the third quarter of 2023 primarily due to lower gross margin for crop protection products, partially offset by higher gross margin for crop nutrients and seed. For the first nine months of the year, adjusted EBITDA decreased mainly due to lower gross margin for both crop nutrients and crop protection products. Included with expenses for the first nine months of 2023, we recognized a $465 million non-cash impairment primarily to goodwill relating to our South American Retail assets, mainly due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates. Crop nutrients sales decreased in the third quarter and first nine months of 2023 due to lower selling prices across all regions compared to the strong comparable periods in 2022. Third quarter gross margin increased due to improved grower demand and higher per-tonne margins for both commodity fertilizer and our proprietary nutritional and biostimulant product lines. Sales volumes increased for both the third quarter and first nine months of the year as growers returned to more normalized application rates to replenish nutrients in the soil. Crop protection products sales were lower in the third quarter and first nine months of 2023 primarily due to decreased prices for certain commodity products compared to the historically strong comparable periods in 2022. Gross margin was also impacted by the selling through of higher cost inventory. Dry conditions in the US Midwest impacted demand for certain crop protection products during the third quarter and first nine months of the year. Seed sales and gross margin were higher in the third quarter due to increased cotton sales in the Southern US and the benefits of acquisitions in Brazil. Sales and gross margin for the first nine months of 2023 improved primarily due to increased corn sales in the US. Nutrien Financial sales increased in the third quarter and first nine months of 2023 due to higher utilization of our financing offerings in the US as well as the recent launch of NPay, our digitally-enabled financing program in Australia.Potash
Three Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
499
436
14
1,674
619
170
298
703
(58
)
Offshore
473
1,568
(70
)
2,221
2,548
(13
)
213
616
(65
)
972
2,004
(51
)
3,895
3,167
23
250
633
(61
)
Cost of goods sold
389
386
1
100
122
(18
)
Gross margin – total
583
1,618
(64
)
150
511
(71
)
Expenses 1
105
352
(70
)
Depreciation and amortization
34
35
(3
)
EBIT
478
1,266
(62
)
Gross margin excluding depreciation
Depreciation and amortization
133
112
19
and amortization – manufactured 2
184
546
(66
)
EBITDA / Adjusted EBITDA
611
1,378
(56
)
Potash controllable cash cost of
product manufactured 2
56
70
(20
)
1 Includes provincial mining taxes of $96 million (2022 – $348 million).
2 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Nine Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
North America
1,311
1,949
(33
)
3,754
2,770
36
349
703
(50
)
Offshore
1,672
4,573
(63
)
6,159
7,149
(14
)
271
640
(58
)
2,983
6,522
(54
)
9,913
9,919
‐
301
658
(54
)
Cost of goods sold
1,047
1,090
(4
)
106
110
(4
)
Gross margin – total
1,936
5,432
(64
)
195
548
(64
)
Expenses 1
340
975
(65
)
Depreciation and amortization
35
36
(3
)
EBIT
1,596
4,457
(64
)
Gross margin excluding depreciation
Depreciation and amortization
345
354
(3
)
and amortization – manufactured
230
584
(61
)
EBITDA / Adjusted EBITDA
1,941
4,811
(60
)
Potash controllable cash cost of
product manufactured
59
56
5
1 Includes provincial mining taxes of $319 million (2022 – $959 million).
Potash adjusted EBITDA declined in the third quarter and first nine months of 2023 due to lower net realized selling prices and offshore sales volumes, which more than offset higher North American sales volumes. Sales volumes were the highest third quarter on record, primarily driven by strong demand in North America and Brazil. North American sales volumes were higher in the third quarter and first nine months of 2023 due to lower channel inventory and increased grower demand. Offshore sales volumes declined over the same periods due to logistical challenges at Canpotex’s West Coast port facilities and reduced shipments to customers in India and Southeast Asia, partially offset by record Canpotex sales volumes to Brazil. Net realized selling price decreased in the third quarter and first nine months of 2023 compared to the historically strong periods in 2022, due to a decline in benchmark prices and higher logistics costs related to logistical challenges at Canpotex’s West Coast port facilities. Cost of goods sold per tonne decreased in the third quarter of 2023 primarily due to lower royalties and the timing of turnaround activity. For the first nine months of the year, cost of goods sold per tonne decreased mainly due to lower royalties.Canpotex Sales by Market
(percentage of sales volumes, except as
Three Months Ended September 30
Nine Months Ended September 30
otherwise noted)
2023
2022
Change
2023
2022
Change
Latin America
49
35
14
47
36
11
Other Asian markets 1
28
32
(4
)
28
34
(6
)
Other markets
10
10
‐
11
9
2
China
10
15
(5
)
9
14
(5
)
India
3
8
(5
)
5
7
(2
)
100
100
100
100
1 All Asian markets except China and India.
Nitrogen
Three Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
156
649
(76
)
570
701
(19
)
272
927
(71
)
Urea and ESN® 1
272
431
(37
)
687
705
(3
)
396
613
(35
)
Solutions, nitrates and sulfates
231
465
(50
)
1,130
1,274
(11
)
205
365
(44
)
659
1,545
(57
)
2,387
2,680
(11
)
276
577
(52
)
Cost of goods sold 1
495
895
(45
)
208
335
(38
)
Gross margin – manufactured
164
650
(75
)
68
242
(72
)
Gross margin – other 1,2
(10
)
14
n/m
Depreciation and amortization 1
54
53
2
Gross margin – total
154
664
(77
)
Gross margin excluding depreciation
(Income) expenses 3
(10
)
(50
)
(80
)
and amortization – manufactured 4
122
295
(59
)
EBIT
164
714
(77
)
Ammonia controllable cash cost of
Depreciation and amortization
130
141
(8
)
product manufactured 4
61
62
(2
)
EBITDA / Adjusted EBITDA
294
855
(66
)
1 Certain immaterial 2022 figures have been reclassified.
2 Includes other nitrogen and purchased products and comprises net sales of $64 million (2022 – $226 million) less cost of goods sold of $74 million (2022 – $212 million).
3 Includes earnings from equity-accounted investees of $30 million (2022 – $79 million).
4 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Nine Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Ammonia
873
1,952
(55
)
1,785
1,939
(8
)
489
1,007
(51
)
Urea and ESN® 1
1,183
1,624
(27
)
2,386
2,250
6
496
722
(31
)
Solutions, nitrates and sulfates
897
1,440
(38
)
3,518
3,495
1
255
412
(38
)
2,953
5,016
(41
)
7,689
7,684
‐
384
653
(41
)
Cost of goods sold 1
1,840
2,478
(26
)
239
323
(26
)
Gross margin – manufactured
1,113
2,538
(56
)
145
330
(56
)
Gross margin – other 1,2
(19
)
44
n/m
Depreciation and amortization
55
52
6
Gross margin – total
1,094
2,582
(58
)
Gross margin excluding depreciation
(Income) expenses 3
(19
)
(105
)
(82
)
and amortization – manufactured
200
382
(48
)
EBIT
1,113
2,687
(59
)
Ammonia controllable cash cost of
Depreciation and amortization
426
403
6
product manufactured
60
59
2
EBITDA / Adjusted EBITDA
1,539
3,090
(50
)
1 Certain immaterial 2022 figures have been reclassified.
2 Includes other nitrogen and purchased products and comprises net sales of $298 million (2022 – $725 million) less cost of goods sold of $317 million (2022 – $681 million).
3 Includes earnings from equity-accounted investees of $91 million (2022 – $192 million).
Nitrogen adjusted EBITDA decreased in the third quarter and first nine months of 2023 due to lower net realized selling prices for all major nitrogen products, which more than offset lower natural gas costs. During the third quarter, we completed two smaller brownfield expansion projects at our Geismar facility and installed our final nitrous oxide (N2O) abatement project, which we expect to be a key contributor to reducing our greenhouse gas emissions. Sales volumes were lower in the third quarter of 2023 primarily due to unplanned production outages at our plants in Trinidad, Borger and Geismar. Sales volumes for the first nine months of 2023 were flat as increased demand for nitrates and sulfates and strong spring seasonal demand for urea and ESN® offset lower ammonia sales volumes impacted by the production outages. Net realized selling price in the third quarter and first nine months of 2023 was lower for all major nitrogen products primarily due to weaker benchmark prices resulting from lower energy prices in key nitrogen producing regions. Cost of goods sold per tonne decreased in the third quarter and first nine months of 2023 due to lower natural gas costs. Ammonia controllable cash cost of product manufactured increased for the first nine months mainly due to higher input costs and lower production.Natural Gas Prices in Cost of Production
Three Months Ended September 30
Nine Months Ended September 30
(US dollars per MMBtu, except as otherwise noted)
2023
2022
% Change
2023
2022
% Change
Overall natural gas cost excluding realized derivative impact
2.96
8.33
(64
)
3.56
7.92
(55
)
Realized derivative impact
(0.01
)
(0.09
)
(89
)
(0.01
)
(0.06
)
(83
)
Overall natural gas cost
2.95
8.24
(64
)
3.55
7.86
(55
)
Average NYMEX
2.55
8.20
(69
)
2.69
6.77
(60
)
Average AECO
1.78
4.46
(60
)
2.24
4.34
(48
)
Natural gas prices in our cost of production decreased in the third quarter and first nine months of 2023 as a result of lower North American natural gas index prices and decreased natural gas costs in Trinidad, where our natural gas prices are linked to ammonia benchmark prices.Phosphate
Three Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
245
375
(35
)
519
479
8
472
782
(40
)
Industrial and feed
137
192
(29
)
145
161
(10
)
946
1,198
(21
)
382
567
(33
)
664
640
4
575
886
(35
)
Cost of goods sold
351
445
(21
)
528
695
(24
)
Gross margin – manufactured
31
122
(75
)
47
191
(75
)
Gross margin – other 1
(4
)
(8
)
(50
)
Depreciation and amortization
113
75
51
Gross margin – total
27
114
(76
)
Gross margin excluding depreciation
Expenses (income) ²
12
(311
)
n/m
and amortization – manufactured 3
160
266
(40
)
EBIT
15
425
(96
)
Depreciation and amortization
75
48
56
EBITDA
90
473
(81
)
Adjustments 2
‐
(330
)
(100
)
Adjusted EBITDA
90
143
(37
)
1 Includes other phosphate and purchased products and comprises net sales of $62 million (2022 – $84 million) less cost of goods sold of $66 million (2022 – $92 million).
2 2022 includes reversal of non-cash impairment of assets of $(330) million. See Notes 2 and 3 to the interim financial statements.
3 This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section.
Nine Months Ended September 30
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2023
2022
% Change
2023
2022
% Change
2023
2022
% Change
Manufactured product
Net sales
Fertilizer
763
1,093
(30
)
1,333
1,305
2
572
837
(32
)
Industrial and feed
495
551
(10
)
465
542
(14
)
1,064
1,017
5
1,258
1,644
(23
)
1,798
1,847
(3
)
700
890
(21
)
Cost of goods sold
1,085
1,157
(6
)
604
626
(4
)
Gross margin – manufactured
173
487
(64
)
96
264
(64
)
Gross margin – other 1
(10
)
(10
)
‐
Depreciation and amortization
118
70
69
Gross margin – total
163
477
(66
)
Gross margin excluding depreciation
Expenses (income) ²
269
(739
)
n/m
and amortization – manufactured
214
334
(36
)
EBIT
(106
)
1,216
n/m
Depreciation and amortization
213
130
64
EBITDA
107
1,346
(92
)
Adjustments 2
233
(780
)
n/m
Adjusted EBITDA
340
566
(40
)
1 Includes other phosphate and purchased products and comprises net sales of $202 million (2022 – $232 million) less cost of goods sold of $212 million (2022 – $242 million).
2 Includes non-cash impairment of assets of $233 million (2022 - reversal of non-cash impairment of assets of $(780) million). See Notes 2 and 3 to the interim financial statements.
Phosphate adjusted EBITDA decreased in the third quarter and first nine months of 2023 primarily due to lower net realized selling prices for fertilizer products, partially offset by lower ammonia and sulfur input costs. Included with expenses for the first nine months of 2023, we recognized a $233 million non-cash impairment of our White Springs property, plant and equipment, while we had non-cash impairment reversals of our Phosphate assets of $780 million for the first nine months of 2022. Sales volumes increased in the third quarter of 2023 due to higher phosphate fertilizer demand, which was partially offset by hurricane-related downtime at our White Springs facility. Sales volumes for the first nine months were lower than the previous year primarily due to lower production impacting our industrial and feed sales. Net realized selling price decreased in the third quarter and first nine months of 2023 primarily due to lower fertilizer net realized selling prices, while lower industrial and feed net realized selling prices in the third quarter reflect the typical lag relative to spot fertilizer prices. Cost of goods sold per tonne decreased in the third quarter and first nine months due to lower ammonia and sulfur costs, partially offset by higher depreciation from reversal of impairments in 2022.Corporate and Others
(millions of US dollars, except as otherwise
Three Months Ended September 30
Nine Months Ended September 30
noted)
2023
2022
% Change
2023
2022
% Change
Selling expense recovery
(3
)
(2
)
50
(7
)
(6
)
17
General and administrative expenses
88
80
10
260
227
15
Share-based compensation expense (recovery)
42
39
8
(7
)
122
n/m
Other expenses
117
59
98
187
160
17
EBIT
(244
)
(176
)
39
(433
)
(503
)
(14
)
Depreciation and amortization
25
19
32
62
55
13
EBITDA
(219
)
(157
)
39
(371
)
(448
)
(17
)
Adjustments 1
142
63
125
221
230
(4
)
Adjusted EBITDA
(77
)
(94
)
(18
)
(150
)
(218
)
(31
)
1 See Note 2 to the interim financial statements.
General and administrative expenses were higher in the third quarter and first nine months of 2023 primarily due to higher staffing costs and higher depreciation and amortization expense. Share-based compensation was a recovery in the first nine months of 2023 due to a decrease in the fair value of share-based awards compared to an expense for the comparative period in 2022 reflecting the increase in fair value. The fair value takes into consideration several factors such as our share price movement, our performance relative to our peer group and return on our invested capital. Other expenses were higher in the third quarter and first nine months of 2023 compared to the same periods in 2022 due to higher foreign exchange losses primarily from our South American Retail region. The first nine months of 2023 included a $92 million loss on Blue Chip Swaps incurred through trade transactions to remit cash from Argentina. The loss is a result of the significant divergence between the Blue Chip Swap market exchange rate and the official Argentinian Central Bank rate. This was partially offset by an $80 million gain in the first nine months of 2023 from amendments due to design plan changes to our other post-retirement benefit plans.Eliminations
Eliminations are not part of the Corporate and Others segment. The elimination of gross margin between operating segments of $32 million for the third quarter of 2023 was lower than the elimination of $51 million in the same period of 2022 as crop input volumes, selling prices and margins related to our intersegment sales decreased. For the first nine months of 2023, there was a recovery of $72 million compared to an elimination of $75 million in the same period in 2022. This variance is due to the timing of release of intersegment inventories held by our Retail segment.Finance Costs, Income Taxes and Other Comprehensive Income
(millions of US dollars, except as otherwise
Three Months Ended September 30
Nine Months Ended September 30
noted)
2023
2022
% Change
2023
2022
% Change
Finance costs
206
136
51
580
375
55
Income tax expense
97
487
(80
)
766
2,206
(65
)
Other comprehensive loss
(86
)
(230
)
(63
)
(16
)
(296
)
(95
)
Finance costs were higher in the third quarter and first nine months of 2023 compared to the same periods in 2022 primarily due to higher interest on short-term debt from increased commercial paper interest rates and higher average short-term and long-term debt balances. Income tax expense was lower in the third quarter and first nine months of 2023 as a result of lower earnings compared to the same periods in 2022. The effective tax rates for the third quarter and first nine months of 2023 were 54 percent and 41 percent compared to 24 percent and 25 percent for the comparative periods in 2022. The increase in effective tax rates was a result of the impacts of the non-cash impairments of assets, the loss on Blue Chip Swaps and a change in recognition of deferred income taxes in 2023. Other comprehensive loss was lower primarily driven by changes in the currency translation of our foreign operations, our investment in Sinofert Holdings Ltd. (“Sinofert”) and an actuarial gain on our defined benefit plans in 2022 with no similar transaction in 2023. In the third quarter and first nine months of 2023 compared to the same periods in 2022, we had lower foreign currency translation losses on our Retail foreign operations mainly due to improvements of Canadian and Australian currencies relative to the US dollar. In the third quarter and first nine months of 2023, we had lower fair value losses on our investment in Sinofert due to share price decreases, compared to the same periods in 2022.Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under new or existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures, planned growth and development activities, and other cash requirements for the foreseeable future. Refer to the “capital Structure and Management” section for details on our existing long-term debt and credit facilities.
Sources and Uses of Cash
(millions of US dollars, except as otherwise
Three Months Ended September 30
Nine Months Ended September 30
noted)
2023
2022
% Change
2023
2022
% Change
Cash (used in) provided by operating activities
(469
)
878
n/m
916
3,374
(73
)
Cash used in investing activities
(673
)
(705
)
(5
)
(2,225
)
(1,679
)
33
Cash provided by (used in) financing activities
976
(29
)
n/m
981
(1,319
)
n/m
Effect of exchange rate changes on cash and cash equivalents
(17
)
(32
)
(47
)
(19
)
(52
)
(63
)
(Decrease) increase in cash and cash equivalents
(183
)
112
n/m
(347
)
324
n/m
Cash (used in) provided by operating activities
Cash used in operating activities in the third quarter of 2023 compared to cash provided by operating activities in the same period in 2022 and lower cash provided by operating activities in the first nine months of 2023 compared to the same period in 2022 was primarily due to lower net realized selling prices across all segments compared to historically strong benchmark prices in 2022.Cash used in investing activities
Cash used in investing activities in the third quarter of 2023 was lower compared to the same period in 2022 as we reduced our capital expenditures in the third quarter of 2023 in alignment with the strategic actions announced earlier this year. Cash used in investing activities in the first nine months of 2023 was higher compared to the same period in 2022 due to higher turnaround activities in the first half of 2023 and increased investing capital expenditures as we complete our committed projects.Cash provided by (used in) financing activities
Cash provided by financing activities in the third quarter and first nine months of 2023 compared to cash used in financing activities in the same periods in 2022 was due to lower share repurchases through our normal course issuer bid programs and the issuance of $1,500 million of notes in the first quarter of 2023, which were partially offset by lower proceeds from short-term debt and the repayment of $500 million of notes at maturity in the second quarter of 2023.Financial Condition Review
The following balance sheet categories contain variances that are considered material:
As at
(millions of US dollars, except as otherwise noted)
September 30, 2023
December 31, 2022
$ Change
% Change
Assets
Cash and cash equivalents
554
901
(347
)
(39
)
Receivables
7,713
6,194
1,519
25
Inventories
5,169
7,632
(2,463
)
(32
)
Prepaid expenses and other current assets
656
1,615
(959
)
(59
)
Property, plant and equipment
22,150
21,767
383
2
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. decreased due to the goodwill impairment related to our Retail – South America group of cash generating units (“CGUs”) in the second quarter of 2023, partially offset by an increase in goodwill recognized from recent acquisitions. Short-term debt increased due to additional commercial paper issuances for our seasonal working capital requirements. Current portion of long-term debt decreased due to the repayment of $500 million of notes at maturity in the second quarter of 2023. Payables and accrued charges decreased primarily due to seasonality of our Retail segment. We generally receive higher customer prepayments in North America near year-end and customers draw down on the balance throughout the year. This also decreased from income tax payments made in 2023 related to our 2022 historically strong earnings, lower provincial mining taxes from lower potash prices and lower natural gas input costs. Long-term debt increased due to the issuance of $1,500 million of notes in the first quarter of 2023. Share capital decreased primarily as a result of shares repurchased in the first nine months of 2023 under our normal course issuer bid programs. Retained earnings decreased as declared dividends and share repurchases exceeded net earnings in the first nine months of 2023.Capital Structure and Management
Principal Debt Instruments
As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the nine months ended September 30, 2023.
As at September 30, 2023
(millions of US dollars, except as
Outstanding and Committed
otherwise noted)
Rate of Interest (%)
Total Facility Limit
Short-Term Debt
Long-Term Debt
Credit facilities
Unsecured revolving term credit facility
n/a
4,500
‐
‐
Unsecured revolving term credit facility 1
n/a
1,500
‐
‐
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities
1,300
South America 2
2.3 – 13.2
460
151
Australia
5.0
123
‐
Other
4.0 – 4.7
47
3
Commercial paper
5.6 – 5.8
3,583
‐
Other short-term and other long-term debt 3
n/a
141
2
Total
4,354
156
1 During the three months ended September 30, 2023, we extended the term of our unsecured revolving term credit facility to September 10, 2024 and reduced the facility limit from $2,000 million to $1,500 million.
2 Our credit facilities are either denominated in local currency or US dollars. The range of interest rates for South America excludes our Argentina facilities denominated in local currency with interest rates ranging from 96.0 to 125.0 percent. The balance of these Argentina facilities as at September 30, 2023 was $15 million.
3 Other long-term debt excludes our notes and debentures.
The amount available under the commercial paper program is limited to the undrawn availability of backup funds under the $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities.
Our long-term debt consists primarily of notes and debentures. See the “Capital Structure and Management” section of our 2022 Annual Report for information on balances, rates and maturities for our notes and debentures. During the first nine months of 2023, we issued two series of notes of $750 million each with interest rates of 4.900 and 5.800 percent, respectively, and repaid our $500 million 1.900 percent notes upon maturity on May 13, 2023. See Note 8 to the interim financial statements.
Outstanding Share Data
As at October 31, 2023
Common shares
494,547,340
Options to purchase common shares
3,278,255
For more information on our capital structure and management, see Note 24 to our 2022 annual consolidated financial statements.
Quarterly Results
(millions of US dollars, except as otherwise noted)
Q3 2023
Q2 2023
Q1 2023
Q4 2022
Q3 2022
Q2 2022
Q1 2022
Q4 2021
Sales
5,631
11,654
6,107
7,533
8,188
14,506
7,657
7,267
Net earnings
82
448
576
1,118
1,583
3,601
1,385
1,207
Net earnings attributable to equity holders of Nutrien
75
440
571
1,112
1,577
3,593
1,378
1,201
Net earnings per share attributable to equity holders of Nutrien
Basic
0.15
0.89
1.14
2.15
2.95
6.53
2.49
2.11
Diluted
0.15
0.89
1.14
2.15
2.94
6.51
2.49
2.11
Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets, and trade payables. Our short-term debt also fluctuates during the year to meet working capital requirements. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
Our earnings are significantly affected by fertilizer benchmark prices, which have been volatile over the last two years and are affected by demand-supply conditions, grower affordability and weather.
In the second quarter of 2023, we recorded non-cash impairment of assets totaling to $698 million. This is comprised of an impairment of our Phosphate White Springs property, plant and equipment of $233 million and an impairment of our South American Retail assets of $465 million primarily related to goodwill. In the second and third quarters of 2022, earnings were impacted by $450 million and $330 million non-cash impairment reversals at Aurora and White Springs CGUs, respectively, of property, plant and equipment in the Phosphate segment. The impairments and reversal of impairments in our Phosphate segment reflect the volatility of forecasted phosphate margins while the impairment related to the Retail South America group of CGUs is due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates. In the fourth quarter of 2021, earnings were impacted by a $142 million loss resulting from the early extinguishment of long-term debt.
Critical Accounting Estimates
Our significant accounting policies are disclosed in our 2022 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the Audit Committee of the Board. Our critical accounting estimates are discussed on page 65 of our 2022 Annual Report. Other than the critical accounting estimates discussed below, there were no other material changes in the three or nine months ended September 30, 2023 to our critical accounting estimates.
Non-cash Impairment of Assets
Goodwill and Intangible Assets Impairment
Recent acquisitions in Brazil resulted in goodwill being recognized for our Retail – South America group of CGUs. goodwill is more susceptible to impairment risk if business operating results or economic conditions deteriorate, and we anticipate not meeting our forecasts. During the three months ended June 30, 2023, we revised our forecasted EBITDA for the Retail – South America group of CGUs, which triggered an impairment analysis. Due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates, we lowered our product margin expectations and deferred certain of our planned strategic investments. As a result, this reduced our forecasted earnings and growth. As at June 30, 2023, the Retail – South America group of CGUs recoverable amount was lower than its carrying amount. As a result, we fully impaired goodwill of $422 million and recorded a $43 million impairment of intangible assets for a total of $465 million for the Retail – South America group of CGUs. Refer to Note 3 to the interim financial statements for additional information.
The following table highlights sensitivities to the recoverable amount, which could have resulted in additional impairment against the carrying amount of intangible assets and property, plant and equipment. The sensitivities have been calculated independently of changes in other key variables. Dollar amounts are in millions, except as otherwise noted.
Decrease to
Key Assumptions as at June 30, 2023
Change in Key Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast period ($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
Long-Lived Asset Impairment and Reversals
Phosphate CGUs
Three Months Ended June 30, 2023
Impairment Trigger
Result
White Springs
Decrease in our forecasted phosphate margins.
Impairment of $233 million recorded to property, plant and equipment as the recoverable amount was less than its carrying value.
Aurora
No impairment recorded.
The White Springs CGU has a short expected mine life and is therefore more sensitive to changes in short- and medium-term forecasted phosphate margins. Refer to Note 3 to the interim financial statements for additional information.
The following table highlights sensitivities to the recoverable amounts, which could result in additional impairment losses or reversals of the previously recorded losses (relating to the White Springs CGU). The sensitivities have been calculated independently of changes in other key variables. Dollar amounts are in millions, except as otherwise noted.
Change to Recoverable Amount ($)
Key Assumptions as at June 30, 2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period ($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
There has been no change in our internal control over financial reporting during the three months ended September 30, 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this document, including within the “Market Outlook and Guidance” section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, "project", “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's business strategies, plans, prospects and opportunities; Nutrien's revised 2023 full-year guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment), Potash sales tonnes, Nitrogen sales tonnes, depreciation and amortization and effective tax rate on adjusted earnings; our expectations for annual potash capability and ability to adjust operations according to market demand; our projections for cash from operations; expectations regarding our growth and capital allocation intentions and strategies, including our forecasts relating to goodwill impairment; our ability to reduce our greenhouse gas emissions, and the initiatives in connection therewith, including the expected impacts in connection with the installment of our final N2O abatement project; expectations and forecasts relating to our Aurora and White Springs CGUs and the reversals and impairments (as applicable) associated therewith; our advancement of strategic growth initiatives; capital spending expectations for 2023 and beyond, including expectations for lower capital expenditures and reduced expenses; expectations regarding Retail inventory levels in North America; expectations regarding performance of our operating segments in 2023; our operating segment market outlooks and our expectations for market conditions and fundamentals in 2023 and beyond, and the anticipated supply and demand for our products and services, expected market, industry and growing conditions with respect to crop nutrient application rates, planted acres, grower crop investment, crop mix, including the need to replenish soil nutrient levels, production volumes and expenses, shipments, consumption, prices, operating rates and the impact of seasonality, import and export volumes, economic sanctions, operating rates, inventories, crop development and natural gas curtailments; the expected impact of completed brownfield expansions at our Geismar facility; the negotiation of sales contracts; timing and impacts of plant turnarounds; acquisitions and divestitures and the anticipated benefits thereof; and expectations in connection with our ability to deliver long-term returns to shareholders. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies on the anticipated timeline or at all; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, expenses, margins, demand, supply, product availability, shipments, consumption, weather conditions, supplier agreements, availability, inventory levels, exports, crop development and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2023 and in the future; assumptions related to our Retail - South America group of CGUs goodwill and intangible asset impairment; assumptions related to the calculation of recoverable amount of our Aurora and White Springs CGUs, including internal sales and input price forecasts, discount rate, long-term growth rate and end of expected mine life; assumptions with respect to the benefits of the brownfield expansions at our Geismar facility; assumptions with respect to our intention to complete share repurchases under our normal course issuer bid programs, including the funding of such share repurchases, existing and future market conditions, including with respect to the price of our common shares, and compliance with respect to applicable limitations under securities laws and regulations and stock exchange policies; our expectations regarding the impacts, direct and indirect, of certain geopolitical conflicts, including the war between Ukraine and Russia and the conflict in Israel on, among other things, global supply and demand, including for crop nutrients, energy and commodity prices, global interest rates, supply chains and the global macroeconomic environment, including inflation; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; our ability to maintain investment grade ratings and achieve our performance targets; our ability to successfully negotiate sales and other contracts; and our ability to successfully implement new initiatives and programs, including with respect to the recent launch of the digitally enabled financing program in Australia.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; seasonality; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; the risk that rising interest rates and/or deteriorated business operating results may result in the further impairment of assets or goodwill attributed to certain of our cash generating units; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; geopolitical conflicts, including the war between Ukraine and Russia and the conflict in Israel, and their potential impact on, among other things, global market conditions and supply and demand, including for crop nutrients, energy and commodity prices, interest rates, supply chains and the global economy generally; our ability to execute on our strategies related to environmental, social and governance matters, and achieve related expectations, targets and commitments; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the SEC in the United States.
The purpose of our 2023 adjusted net earnings per share and adjusted EBITDA (consolidated and by segment), capital expenditures, cash provided by operations, depreciation and amortization and effective tax rate on adjusted earnings guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
The forward-looking statements in this document are made as of the date hereof and Nutrien disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable Canadian securities legislation or applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms Definitions” section of our 2022 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful, and all financial amounts are stated in millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and services, helping to safely and sustainably feed a growing world. We operate a world-class network of production, distribution and retail facilities that positions us to efficiently serve the needs of growers. We focus on creating long-term value for all stakeholders by advancing our key environmental, social and governance priorities.
More information about Nutrien can be found at www.nutrien.com.
Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, November 2, 2023 at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
From Canada and the US 1-888-886-7786 International 1-416-764-8658 No access code required. Please dial in 15 minutes prior to ensure you are placed on the call in a timely manner.Live Audio Webcast: Visit https://www.nutrien.com/investors/events/2023-q3-earnings-conference-call
Appendix A – Selected Additional Financial Data
Selected Retail Measures
Three Months Ended September 30
Nine Months Ended September 30
2023
2022
2023
2022
Proprietary products gross margin (millions of US dollars)
Crop nutrients
79
74
347
315
Crop protection products
107
189
434
617
Seed
28
21
171
173
Merchandise
2
1
8
7
All products
216
285
960
1,112
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients
31
35
34
22
Crop protection products
31
41
36
41
Seed
54
62
44
45
Merchandise
6
6
7
6
All products
24
30
28
27
Crop nutrients sales volumes (tonnes – thousands)
North America
1,118
1,066
6,912
6,286
International
880
782
2,857
2,732
Total
1,998
1,848
9,769
9,018
Crop nutrients selling price per tonne
North America
635
836
720
908
International
614
913
559
744
Total
625
869
673
858
Crop nutrients gross margin per tonne
North America
165
155
130
191
International
88
64
47
80
Total
131
117
106
157
Financial performance measures
2023
2022
Retail adjusted EBITDA margin (%) 1, 2
8
11
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3
1,505
1,913
Retail adjusted average working capital to sales (%) 1, 4
20
16
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4
2
1
Nutrien Financial adjusted net interest margin (%) 1, 4
5.8
6.7
Retail cash operating coverage ratio (%) 1, 4
64
55
1 Rolling four quarters ended September 30, 2023 and 2022.
2 These are supplementary financial measures. See the "Other Financial Measures" section.
3 Excluding acquisitions.
4 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.
Nutrien Financial
As at September 30, 2023
As at
December
31, 2022
(millions of US dollars)
Current
31 Days
Past Due
31–90 Days
Past Due
>90 Days
Past Due
Gross Receivables
Allowance 1
Net Receivables
Net Receivables
North America
3,418
93
91
104
3,706
(43)
3,663
2,007
International
570
59
24
49
702
(12)
690
662
Nutrien Financial receivables
3,988
152
115
153
4,408
(55)
4,353
2,669
1 Bad debt expense on the above receivables for the nine months ended September 30, 2023 was $36 million (2022 – $10 million) in the Retail segment.
Selected Nitrogen Measures
Three Months Ended September 30
Nine Months Ended September 30
2023
2022
2023
2022
Sales volumes (tonnes – thousands)
Fertilizer 1
1,305
1,471
4,419
4,161
Industrial and feed
1,082
1,209
3,270
3,523
Net sales (millions of US dollars)
Fertilizer 1
410
802
1,917
2,825
Industrial and feed
249
743
1,036
2,191
Net selling price per tonne
Fertilizer 1
314
547
434
679
Industrial and feed
230
614
317
622
1 Certain immaterial 2022 figures have been reclassified.
Production Measures
Three Months Ended September 30
Nine Months Ended September 30
2023
2022
2023
2022
Potash production (Product tonnes – thousands)
3,287
2,742
9,612
10,066
Potash shutdown weeks 1
‐
10
5
15
Ammonia production – total 2
1,315
1,483
3,995
4,359
Ammonia production – adjusted 2, 3
912
1,009
2,880
3,015
Ammonia operating rate (%) 3
82
91
88
92
P2O5 production (P2O5 tonnes – thousands)
354
335
1,026
1,063
P2O5 operating rate (%)
83
78
81
84
1 Represents weeks of full production shutdown, including inventory adjustments and unplanned events, excluding the impact of any periods of reduced operating rates, planned routine annual maintenance shutdowns and announced workforce reductions.
2 All figures are provided on a gross production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B – Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by the Company that (a) depict historical or expected future financial performance, financial position or cash flow of the Company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the Company, (c) are not disclosed in the financial statements of the Company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by the Company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the Company.
These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It also includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As additional non-recurring or unusual items arise in the future, we generally exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, share-based compensation and certain foreign exchange gain/loss (net of related derivatives). We also adjust this measure for the following other income and expenses that are excluded when management evaluates the performance of our day-to-day operations: integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses, gain or loss on disposal of certain businesses and investments, asset retirement obligations (“ARO”) and accrued environmental costs (“ERL”) related to our non-operating sites, and loss on remitting cash from certain foreign jurisdictions (e.g. Blue Chip Swaps). In 2023, we amended our calculation of adjusted EBITDA to adjust for the asset retirement obligations and accrued environmental costs related to our non-operating sites and the loss on remitting cash from certain foreign jurisdictions. We do not consider these to be part of our day-to-day operations. There were no similar income and expense in the comparative periods.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations, and as a component of employee remuneration calculations.
Three Months Ended September 30
Nine Months Ended September 30
(millions of US dollars)
2023
2022
2023
2022
Net earnings
82
1,583
1,106
6,569
Finance costs
206
136
580
375
Income tax expense
97
487
766
2,206
Depreciation and amortization
552
526
1,604
1,492
EBITDA 1
937
2,732
4,056
10,642
Adjustments:
Integration and restructuring related costs
14
15
29
35
Share-based compensation expense (recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
‐
(330
)
698
(780
)
ARO/ERL expense for non-operating sites ²
4
‐
10
‐
Foreign exchange loss, net of related derivatives
87
11
105
67
Loss on Blue Chip Swaps
‐
‐
92
‐
Gain on disposal of investment
‐
‐
‐
(19
)
COVID-19 related expenses ³
‐
‐
‐
8
Adjusted EBITDA
1,084
2,467
4,983
10,075
1 EBITDA is calculated as net earnings before finance costs, income taxes, and depreciation and amortization.
2 ARO/ERL refers to asset retirement obligations and accrued environmental costs.
3 COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs, and costs related to construction delays from access limitations and other government restrictions.
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.
Definition: Adjusted net earnings and related per share information are calculated as net earnings (loss) before share-based compensation and certain foreign exchange gain/loss (net of related derivatives), net of tax. We also adjust this measure for the following other income and expenses (net of tax) that are excluded when management evaluates the performance of our day-to-day operations: certain integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, gain or loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting, asset retirement obligations and accrued environmental costs related to our non-operating sites, loss on remitting cash from certain foreign jurisdictions (e.g. Blue Chip Swaps) and change in recognition of tax losses and deductible temporary differences related to impairments. In 2023, we amended our calculation of adjusted net earnings and adjusted net earnings per share to adjust for the asset retirement obligations and accrued environmental costs related to our non-operating sites the loss on remitting cash from certain foreign jurisdictions and the change in recognition of Retail – South America tax losses and deductible temporary differences. We do not consider these to be part of our day-to-day operations. There were no similar income and expense in the comparative periods. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations and is used as a component of employee remuneration calculations.
Three Months Ended
September 30, 2023
Nine Months Ended
September 30, 2023
Per
Per
(millions of US dollars, except as otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity holders of Nutrien
75
0.15
1,086
2.18
Adjustments:
Share-based compensation expense (recovery)
42
19
0.04
(7
)
(4
)
(0.01
)
Foreign exchange loss, net of related derivatives
87
71
0.14
105
80
0.16
Integration and restructuring related costs
14
6
0.02
29
17
0.03
Impairment of assets
‐
‐
‐
698
653
1.32
ARO/ERL expense for non-operating sites 1
4
2
‐
10
6
0.02
Loss on Blue Chip Swaps
‐
‐
‐
92
92
0.18
Change in recognition of deferred tax assets
‐
‐
‐
66
66
0.13
Adjusted net earnings
173
0.35
1,996
4.01
1 ARO/ERL refers to asset retirement obligations and accrued environmental costs.
Three Months Ended
September 30, 2022
Nine Months Ended
September 30, 2022
Per
Per
(millions of US dollars, except as otherwise
Increases
Diluted
Increases
Diluted
noted)
(Decreases)
Post-Tax
Share
(Decreases)
Post-Tax
Share
Net earnings attributable to equity holders of Nutrien
1,577
2.94
6,548
11.96
Adjustments:
Share-based compensation (recovery) expense
39
30
0.06
122
91
0.17
Foreign exchange loss, net of related derivatives
11
8
0.01
67
50
0.09
Integration and restructuring related costs
15
11
0.02
35
26
0.05
Reversal of impairment of assets
(330
)
(265
)
(0.49
)
(780
)
(619
)
(1.13
)
COVID-19 related expenses
‐
‐
‐
8
6
0.01
Gain on disposal of investment
‐
‐
‐
(19
)
(14
)
(0.03
)
Gain on settlement of discontinued hedge accounting derivative
(18
)
(14
)
(0.03
)
(18
)
(13
)
(0.02
)
Adjusted net earnings
1,347
2.51
6,075
11.10
Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per Share Guidance
Adjusted EBITDA and adjusted net earnings per share guidance are forward-looking non-IFRS financial measures. They are provided to assist readers in understanding our expected and targeted financial results. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS because a meaningful or accurate calculation of reconciling items and the information is not available without unreasonable effort due to unknown variables, including the timing and amount of certain reconciling items, and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. The probable significance of such unavailable information, which could be material to future results, cannot be addressed. Guidance for adjusted EBITDA and adjusted net earnings per share excludes certain items such as, but not limited to, the impacts of share-based compensation, certain foreign exchange gain/loss (net of related derivatives), integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, gain or loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting, asset retirement obligations and accrued environmental costs related to our non-operating sites, loss on remitting cash from certain foreign jurisdictions (e.g. Blue Chip Swaps) and the change in recognition of Retail – South America tax losses and deductible temporary differences.
Gross Margin Excluding Depreciation and Amortization Per Tonne – Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin per tonne less depreciation and amortization per tonne for manufactured products. Reconciliations are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
Potash Controllable Cash Cost of Product Manufactured (“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and amortization expense included in COPM, royalties, natural gas costs and carbon taxes, change in inventory, and other adjustments, divided by potash production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. Potash controllable cash COPM excludes the effects of production from other periods and the impacts of our long-term investment decisions, supporting a focus on the performance of our day-to-day operations. Potash controllable cash COPM also excludes royalties and natural gas costs and carbon taxes, which management does not consider controllable, as they are primarily driven by regulatory and market conditions.
Three Months Ended September 30
Nine Months Ended September 30
(millions of US dollars, except as otherwise noted)
2023
2022
2023
2022
Total COGS – Potash
389
386
1,047
1,090
Change in inventory
(73
)
(52
)
(47
)
20
Other adjustments 1
(2
)
(5
)
(19
)
(29
)
COPM
314
329
981
1,081
Depreciation and amortization in COPM
(102
)
(84
)
(303
)
(317
)
Royalties in COPM
(20
)
(42
)
(77
)
(150
)
Natural gas costs and carbon taxes in COPM
(9
)
(9
)
(34
)
(45
)
Controllable cash COPM
183
194
567
569
Production tonnes (tonnes – thousands)
3,287
2,742
9,612
10,066
Potash controllable cash COPM per tonne
56
70
59
56
1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.
Ammonia Controllable Cash COPM Per Tonne
Most directly comparable IFRS financial measure: Total manufactured COGS for the Nitrogen segment.
Definition: Total Nitrogen COGS excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
Three Months Ended September 30
Nine Months Ended September 30
(millions of US dollars, except as otherwise noted)
2023
2022
2023
2022
Total Manufactured COGS – Nitrogen 1
495
895
1,840
2,478
Total Other COGS – Nitrogen 1
74
212
317
681
Total COGS – Nitrogen
569
1,107
2,157
3,159
Depreciation and amortization in COGS
(104
)
(117
)
(351
)
(334
)
Cash COGS for products other than ammonia
(342
)
(640
)
(1,326
)
(1,912
)
Ammonia
Total cash COGS before other adjustments
123
350
480
913
Other adjustments 2
(12
)
(31
)
(146
)
(145
)
Total cash COPM
111
319
334
768
Natural gas and steam costs in COPM
(73
)
(267
)
(231
)
(643
)
Controllable cash COPM
38
52
103
125
Production tonnes (net tonnes 3 – thousands)
610
819
1,712
2,099
Ammonia controllable cash COPM per tonne
61
62
60
59
1 Certain immaterial 2022 figures have been reclassified.
2 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.
3 Ammonia tonnes available for sale, as not upgraded to other nitrogen products.
Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working
Capital to Sales Excluding Nutrien Financial
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the sales and working capital of certain acquisitions during the first year following the acquisition. We also look at this metric excluding Nutrien Financial revenue and working capital.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.
Rolling four quarters ended September 30, 2023
(millions of US dollars, except as otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Average/Total
Current assets
11,668
13,000
11,983
10,398
Current liabilities
(8,708
)
(8,980
)
(8,246
)
(5,228
)
Working capital
2,960
4,020
3,737
5,170
3,972
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
2,960
4,020
3,737
5,170
3,972
Nutrien Financial working capital
(2,669
)
(2,283
)
(4,716
)
(4,353
)
Adjusted working capital excluding Nutrien Financial
291
1,737
(979
)
817
467
Sales
4,087
3,422
9,128
3,490
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
4,087
3,422
9,128
3,490
20,127
Nutrien Financial revenue
(62
)
(57
)
(122
)
(73
)
Adjusted sales excluding Nutrien Financial
4,025
3,365
9,006
3,417
19,813
Adjusted average working capital to sales (%)
20
Adjusted average working capital to sales excluding Nutrien Financial (%)
2
Rolling four quarters ended September 30, 2022
(millions of US dollars, except as otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Average/Total
Current assets
9,924
12,392
12,487
11,262
Current liabilities
(7,828
)
(9,223
)
(9,177
)
(5,889
)
Working capital
2,096
3,169
3,310
5,373
3,487
Working capital from certain recent acquisitions
‐
‐
‐
‐
Adjusted working capital
2,096
3,169
3,310
5,373
3,487
Nutrien Financial working capital
(2,150
)
(2,274
)
(4,404
)
(3,898
)
Adjusted working capital excluding Nutrien Financial
(54
)
895
(1,094
)
1,475
306
Sales
3,878
3,861
9,422
3,980
Sales from certain recent acquisitions
‐
‐
‐
‐
Adjusted sales
3,878
3,861
9,422
3,980
21,141
Nutrien Financial revenue
(51
)
(49
)
(91
)
(65
)
Adjusted sales excluding Nutrien Financial
3,827
3,812
9,331
3,915
20,885
Adjusted average working capital to sales (%)
16
Adjusted average working capital to sales excluding Nutrien Financial (%)
1
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial net receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate the financial performance of Nutrien Financial.
Rolling four quarters ended September 30, 2023
(millions of US dollars, except as otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Total/Average
Nutrien Financial revenue
62
57
122
73
Deemed interest expense 1
(11
)
(20
)
(39
)
(41
)
Net interest
51
37
83
32
203
Average Nutrien Financial net receivables
2,669
2,283
4,716
4,353
3,505
Nutrien Financial adjusted net interest margin (%)
5.8
Rolling four quarters ended September 30, 2022
(millions of US dollars, except as otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Total/Average
Nutrien Financial revenue
51
49
91
65
Deemed interest expense 1
(12
)
(6
)
(12
)
(12
)
Net interest
39
43
79
53
214
Average Nutrien Financial net receivables
2,150
2,274
4,404
3,898
3,182
Nutrien Financial adjusted net interest margin (%)
6.7
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative, and other expenses (income), excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.
Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.
Rolling four quarters ended September 30, 2023
(millions of US dollars, except as otherwise noted)
Q4 2022
Q1 2023
Q2 2023
Q3 2023
Total
Selling expenses
836
765
971
798
3,370
General and administrative expenses
51
50
55
57
213
Other expenses
1
15
29
37
82
Operating expenses
888
830
1,055
892
3,665
Depreciation and amortization in operating expenses
(198
)
(179
)
(185
)
(186
)
(748
)
Operating expenses excluding depreciation and amortization
690
651
870
706
2,917
Gross margin
1,077
615
1,931
895
4,518
Depreciation and amortization in cost of goods sold
4
2
3
3
12
Gross margin excluding depreciation and amortization
1,081
617
1,934
898
4,530
Cash operating coverage ratio (%)
64
Rolling four quarters ended September 30, 2022
(millions of US dollars, except as otherwise noted)
Q4 2021
Q1 2022
Q2 2022
Q3 2022
Total
Selling expenses
848
722
1,013
821
3,404
General and administrative expenses
43
45
54
50
192
Other expenses (income)
20
(12
)
21
19
48
Operating expenses
911
755
1,088
890
3,644
Depreciation and amortization in operating expenses
(173
)
(167
)
(171
)
(204
)
(715
)
Operating expenses excluding depreciation and amortization
738
588
917
686
2,929
Gross margin
1,173
845
2,340
917
5,275
Depreciation and amortization in cost of goods sold
5
2
4
2
13
Gross margin excluding depreciation and amortization
1,178
847
2,344
919
5,288
Cash operating coverage ratio (%)
55
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures disclosed by the Company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of the Company, (b) are not disclosed in the financial statements of the Company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios.
The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.
Retail adjusted EBITDA margin: Retail adjusted EBITDA divided by Retail sales for the last four rolling quarters.
Retail adjusted EBITDA per US selling location: Calculated as total Retail US adjusted EBITDA for the last four rolling quarters, representing the organic EBITDA component, which excludes acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations in those quarters.
Cash used for dividends and share repurchases (shareholder returns): Calculated as dividends paid to Nutrien’s shareholders plus repurchase of common shares as reflected in the condensed consolidated statements of cash flows. This measure is useful as it represents return of capital to shareholders.
Condensed Consolidated Financial Statements
Unaudited in millions of US dollars except as otherwise noted
Condensed Consolidated Statements of Earnings
Three Months Ended
Nine Months Ended
September 30
September 30
Note
2023
2022
2023
2022
SALES
2
5,631
8,188
23,392
30,351
Freight, transportation and distribution
263
204
714
628
Cost of goods sold
3,741
4,722
15,972
17,205
GROSS MARGIN
1,627
3,262
6,706
12,518
Selling expenses
799
826
2,548
2,570
General and administrative expenses
151
137
453
403
Provincial mining taxes
96
348
319
959
Share-based compensation expense (recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
3
‐
(330
)
698
(780
)
Other expenses
4
154
36
243
94
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
385
2,206
2,452
9,150
Finance costs
206
136
580
375
EARNINGS BEFORE INCOME TAXES
179
2,070
1,872
8,775
Income tax expense
5
97
487
766
2,206
NET EARNINGS
82
1,583
1,106
6,569
Attributable to
Equity holders of Nutrien
75
1,577
1,086
6,548
Non-controlling interest
7
6
20
21
NET EARNINGS
82
1,583
1,106
6,569
NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
0.15
2.95
2.18
12.00
Diluted
0.15
2.94
2.18
11.96
Weighted average shares outstanding for basic EPS
494,517,000
534,839,000
496,999,000
545,776,000
Weighted average shares outstanding for diluted EPS
495,056,000
536,164,000
497,708,000
547,449,000
Condensed Consolidated Statements of Comprehensive (Loss) Income
Three Months Ended
Nine Months Ended
September 30
September 30
(Net of related income taxes)
2023
2022
2023
2022
NET EARNINGS
82
1,583
1,106
6,569
Other comprehensive loss
Items that will not be reclassified to net earnings:
Net actuarial gain (loss) on defined benefit plans
‐
60
(3
)
61
Net fair value (loss) gain on investments
(6
)
(54
)
5
(61
)
Items that have been or may be subsequently reclassified to net earnings:
Loss on currency translation of foreign operations
(64
)
(191
)
(14
)
(272
)
Other
(16
)
(45
)
(4
)
(24
)
OTHER COMPREHENSIVE LOSS
(86
)
(230
)
(16
)
(296
)
COMPREHENSIVE (LOSS) INCOME
(4
)
1,353
1,090
6,273
Attributable to
Equity holders of Nutrien
(11
)
1,348
1,070
6,254
Non-controlling interest
7
5
20
19
COMPREHENSIVE (LOSS) INCOME
(4
)
1,353
1,090
6,273
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
Nine Months Ended
September 30
September 30
Note
2023
2022
2023
2022
Note 1
Note 1
OPERATING ACTIVITIES
Net earnings
82
1,583
1,106
6,569
Adjustments for:
Depreciation and amortization
552
526
1,604
1,492
Share-based compensation expense (recovery)
42
39
(7
)
122
(Reversal of) impairment of assets
3
‐
(330
)
698
(780
)
Provision for deferred income tax
55
160
176
152
Net (undistributed) distributed earnings of equity-accounted investees
(28
)
(81
)
112
(139
)
Gain on amendments to other post-retirement pension plans
‐
‐
(80
)
‐
Loss on Blue Chip Swaps
4
‐
‐
92
‐
Long-term income tax receivables and payables
1
71
(89
)
201
Other long-term assets, liabilities and miscellaneous
26
3
124
31
Cash from operations before working capital changes
730
1,971
3,736
7,648
Changes in non-cash operating working capital:
Receivables
627
1,240
(1,491
)
(3,602
)
Inventories
846
517
2,406
(344
)
Prepaid expenses and other current assets
(52
)
(44
)
960
1,018
Payables and accrued charges
(2,620
)
(2,806
)
(4,695
)
(1,346
)
CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES
(469
)
878
916
3,374
INVESTING ACTIVITIES
Capital expenditures 1
(615
)
(636
)
(1,840
)
(1,464
)
Business acquisitions, net of cash acquired
‐
(10
)
(116
)
(78
)
Proceeds from sales of Blue Chip Swaps, net of purchases
‐
‐
(92
)
‐
Net changes in non-cash working capital
36
31
(68
)
(77
)
Other
(94
)
(90
)
(109
)
(60
)
CASH USED IN INVESTING ACTIVITIES
(673
)
(705
)
(2,225
)
(1,679
)
FINANCING ACTIVITIES
Proceeds from short-term debt, net
7
1,445
2,017
2,213
2,867
Proceeds from long-term debt
8
‐
‐
1,500
41
Repayment of long-term debt
8
(118
)
(22
)
(635
)
(50
)
Repayment of principal portion of lease liabilities
(91
)
(83
)
(278
)
(256
)
Dividends paid to Nutrien's shareholders
9
(261
)
(259
)
(770
)
(780
)
Repurchase of common shares
9
‐
(1,700
)
(1,047
)
(3,306
)
Issuance of common shares
1
4
32
168
Other
‐
14
(34
)
(3
)
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES
976
(29
)
981
(1,319
)
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS
(17
)
(32
)
(19
)
(52
)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(183
)
112
(347
)
324
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
737
711
901
499
CASH AND CASH EQUIVALENTS – END OF PERIOD
554
823
554
823
Cash and cash equivalents is composed of:
Cash
508
428
508
428
Short-term investments
46
395
46
395
554
823
554
823
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid
137
80
462
280
Income taxes paid
133
318
1,722
1,503
Total cash outflow for leases
125
111
373
339
1 Includes additions to property, plant and equipment, and intangible assets for the three months ended September 30, 2023 of $567 and $48 (2022 – $584 and $52), respectively, and for the nine months ended September 30, 2023 of $1,699 and $141 (2022 – $1,317 and $147), respectively.
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Changes in Shareholders’ Equity
Accumulated Other Comprehensive
(Loss) Income ("AOCI")
Loss on
Currency
Number of
Translation
Holders
Non-
Common
Share
Contributed
of Foreign
Total
Retained
of
Controlling
Total
Shares
Surplus
Operations
Other
AOCI
Earnings
Nutrien
Interest
BALANCE – DECEMBER 31, 2021
557,492,516
15,457
149
(176
)
30
(146
)
8,192
23,652
47
23,699
Net earnings
‐
‐
‐
‐
‐
‐
6,548
6,548
21
6,569
Other comprehensive loss
‐
‐
‐
(270
)
(24
)
(294
)
‐
(294
)
(2
)
(296
)
Shares repurchased (Note 9)
(38,387,969
)
(1,070
)
(23
)
‐
‐
‐
(2,241
)
(3,334
)
‐
(3,334
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(773
)
(773
)
‐
(773
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(18
)
(18
)
Effect of share-based compensation
including issuance of common shares
3,058,561
201
(19
)
‐
‐
‐
‐
182
‐
182
Transfer of net loss on cash flow hedges
‐
‐
‐
‐
3
3
‐
3
‐
3
Transfer of net actuarial gain on defined benefit plans
‐
‐
‐
‐
(61
)
(61
)
61
‐
‐
‐
BALANCE – SEPTEMBER 30, 2022
522,163,108
14,588
107
(446
)
(52
)
(498
)
11,787
25,984
48
26,032
BALANCE – DECEMBER 31, 2022
507,246,105
14,172
109
(374
)
(17
)
(391
)
11,928
25,818
45
25,863
Net earnings
‐
‐
‐
‐
‐
‐
1,086
1,086
20
1,106
Other comprehensive loss
‐
‐
‐
(14
)
(2
)
(16
)
‐
(16
)
‐
(16
)
Shares repurchased (Note 9)
(13,378,189
)
(374
)
(26
)
‐
‐
‐
(600
)
(1,000
)
‐
(1,000
)
Dividends declared (Note 9)
‐
‐
‐
‐
‐
‐
(789
)
(789
)
‐
(789
)
Non-controlling interest transactions
‐
‐
‐
‐
‐
‐
‐
‐
(14
)
(14
)
Effect of share-based compensation
including issuance of common shares
664,230
39
(1
)
‐
‐
‐
‐
38
‐
38
Transfer of net gain on sale of investment
‐
‐
‐
‐
(14
)
(14
)
14
‐
‐
‐
Transfer of net loss on cash flow hedges
‐
‐
‐
‐
8
8
‐
8
‐
8
Transfer of net actuarial loss on defined benefit plans
‐
‐
‐
‐
3
3
(3
)
‐
‐
‐
BALANCE – SEPTEMBER 30, 2023
494,532,146
13,837
82
(388
)
(22
)
(410
)
11,636
25,145
51
25,196
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Balance Sheets
September 30
December 31
As at
Note
2023
2022
2022
ASSETS
Current assets
Cash and cash equivalents
554
823
901
Receivables
7,713
8,591
6,194
Inventories
5,169
6,545
7,632
Prepaid expenses and other current assets
656
737
1,615
14,092
16,696
16,342
Non-current assets
Property, plant and equipment
3
22,150
21,022
21,767
3
12,078
12,180
12,368
Intangible assets
3
2,219
2,217
2,297
Investments
731
772
843
Other assets
959
937
969
TOTAL ASSETS
52,229
53,824
54,586
LIABILITIES
Current liabilities
Short-term debt
7
4,354
4,454
2,142
Current portion of long-term debt
8
‐
1,016
542
Current portion of lease liabilities
305
303
305
Payables and accrued charges
6,653
8,760
11,291
11,312
14,533
14,280
Non-current liabilities
Long-term debt
8
9,427
7,020
8,040
Lease liabilities
901
884
899
Deferred income tax liabilities
5
3,631
3,489
3,547
Pension and other post-retirement benefit liabilities
241
337
319
Asset retirement obligations and accrued environmental costs
1,353
1,320
1,403
Other non-current liabilities
168
209
235
TOTAL LIABILITIES
27,033
27,792
28,723
SHAREHOLDERS’ EQUITY
Share capital
9
13,837
14,588
14,172
Contributed surplus
82
107
109
Accumulated other comprehensive loss
(410
)
(498
)
(391
)
Retained earnings
11,636
11,787
11,928
Equity holders of Nutrien
25,145
25,984
25,818
Non-controlling interest
51
48
45
TOTAL SHAREHOLDERS’ EQUITY
25,196
26,032
25,863
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
52,229
53,824
54,586
(See Notes to the Condensed Consolidated Financial Statements)
Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Nine Months Ended September 30, 2023
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.
These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and have been prepared in accordance with IAS 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are materially consistent with those used in the preparation of our 2022 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2022 annual consolidated financial statements.
Certain immaterial 2022 figures have been reclassified in the condensed consolidated statements of cash flows.
In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year.
These interim financial statements were authorized by the Audit Committee of the Board of Directors for issue on November 1, 2023.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces.
Three Months Ended September 30, 2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,489
1,002
690
450
‐
‐
5,631
– intersegment
1
108
138
66
‐
(313
)
‐
Sales
– total
3,490
1,110
828
516
‐
(313
)
5,631
Freight, transportation and distribution
‐
138
105
72
‐
(52
)
263
Net sales
3,490
972
723
444
‐
(261
)
5,368
Cost of goods sold
2,595
389
569
417
‐
(229
)
3,741
Gross margin
895
583
154
27
‐
(32
)
1,627
Selling expenses
798
3
8
1
(3
)
(8
)
799
General and administrative expenses
57
2
1
3
88
‐
151
Provincial mining taxes
‐
96
‐
‐
‐
‐
96
Share-based compensation expense
‐
‐
‐
‐
42
‐
42
Other expenses (income)
37
4
(19
)
8
117
7
154
Earnings (loss) before finance costs and income taxes
3
478
164
15
(244
)
(31
)
385
Depreciation and amortization
189
133
130
75
25
‐
552
EBITDA 1
192
611
294
90
(219
)
(31
)
937
Integration and restructuring related costs
5
‐
‐
‐
9
‐
14
Share-based compensation expense
‐
‐
‐
‐
42
‐
42
ARO/ERL expense for non-operating sites 2
‐
‐
‐
‐
4
‐
4
Foreign exchange loss, net of related derivatives
‐
‐
‐
‐
87
‐
87
Adjusted EBITDA
197
611
294
90
(77
)
(31
)
1,084
Assets – at September 30, 2023
22,811
13,613
11,476
2,410
2,405
(486
)
52,229
1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.
2 ARO/ERL refers to asset retirement obligations and accrued environmental costs.
Three Months Ended September 30, 2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
3,967
1,968
1,666
587
‐
‐
8,188
– intersegment
13
84
236
126
‐
(459
)
‐
Sales
– total
3,980
2,052
1,902
713
‐
(459
)
8,188
Freight, transportation and distribution
‐
48
131
62
‐
(37
)
204
Net sales
3,980
2,004
1,771
651
‐
(422
)
7,984
Cost of goods sold
3,063
386
1,107
537
‐
(371
)
4,722
Gross margin
917
1,618
664
114
‐
(51
)
3,262
Selling expenses
821
3
7
1
(2
)
(4
)
826
General and administrative expenses
50
2
2
3
80
‐
137
Provincial mining taxes
‐
348
‐
‐
‐
‐
348
Share-based compensation expense
‐
‐
‐
‐
39
‐
39
Reversal of impairment of assets
‐
‐
‐
(330
)
‐
‐
(330
)
Other expenses (income)
19
(1
)
(59
)
15
59
3
36
Earnings (loss) before finance costs and income taxes
27
1,266
714
425
(176
)
(50
)
2,206
Depreciation and amortization
206
112
141
48
19
‐
526
EBITDA
233
1,378
855
473
(157
)
(50
)
2,732
Integration and restructuring related costs
2
‐
‐
‐
13
‐
15
Share-based compensation expense
‐
‐
‐
‐
39
‐
39
Reversal of impairment of assets
‐
‐
‐
(330
)
‐
‐
(330
)
Foreign exchange loss, net of related derivatives
‐
‐
‐
‐
11
‐
11
Adjusted EBITDA
235
1,378
855
143
(94
)
(50
)
2,467
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Nine Months Ended September 30, 2023
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
16,038
3,001
2,909
1,444
‐
‐
23,392
– intersegment
2
302
708
204
‐
(1,216
)
‐
Sales
– total
16,040
3,303
3,617
1,648
‐
(1,216
)
23,392
Freight, transportation and distribution
‐
320
366
188
‐
(160
)
714
Net sales
16,040
2,983
3,251
1,460
‐
(1,056
)
22,678
Cost of goods sold
12,599
1,047
2,157
1,297
‐
(1,128
)
15,972
Gross margin
3,441
1,936
1,094
163
‐
72
6,706
Selling expenses
2,534
9
23
5
(7
)
(16
)
2,548
General and administrative expenses
162
10
11
10
260
‐
453
Provincial mining taxes
‐
319
‐
‐
‐
‐
319
Share-based compensation recovery
‐
‐
‐
‐
(7
)
‐
(7
)
Impairment of assets
465
‐
‐
233
‐
‐
698
Other expenses (income)
81
2
(53
)
21
187
5
243
Earnings (loss) before finance costs and income taxes
199
1,596
1,113
(106
)
(433
)
83
2,452
Depreciation and amortization
558
345
426
213
62
‐
1,604
EBITDA
757
1,941
1,539
107
(371
)
83
4,056
Integration and restructuring related costs
8
‐
‐
‐
21
‐
29
Share-based compensation recovery
‐
‐
‐
‐
(7
)
‐
(7
)
Impairment of assets
465
‐
‐
233
‐
‐
698
ARO/ERL expense for non-operating sites
‐
‐
‐
‐
10
‐
10
Foreign exchange loss, net of related derivatives
‐
‐
‐
‐
105
‐
105
Loss on Blue Chip Swaps
‐
‐
‐
‐
92
‐
92
Adjusted EBITDA
1,230
1,941
1,539
340
(150
)
83
4,983
Assets – at September 30, 2023
22,811
13,613
11,476
2,410
2,405
(486
)
52,229
Nine Months Ended September 30, 2022
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
17,177
6,345
5,078
1,751
‐
‐
30,351
– intersegment
86
396
1,021
303
‐
(1,806
)
‐
Sales
– total
17,263
6,741
6,099
2,054
‐
(1,806
)
30,351
Freight, transportation and distribution
‐
219
358
178
‐
(127
)
628
Net sales
17,263
6,522
5,741
1,876
‐
(1,679
)
29,723
Cost of goods sold
13,161
1,090
3,159
1,399
‐
(1,604
)
17,205
Gross margin
4,102
5,432
2,582
477
‐
(75
)
12,518
Selling expenses
2,556
9
22
5
(6
)
(16
)
2,570
General and administrative expenses
149
6
12
9
227
‐
403
Provincial mining taxes
‐
959
‐
‐
‐
‐
959
Share-based compensation expense
‐
‐
‐
‐
122
‐
122
Reversal of impairment of assets
‐
‐
‐
(780
)
‐
‐
(780
)
Other expenses (income)
28
1
(139
)
27
160
17
94
Earnings (loss) before finance costs and income taxes
1,369
4,457
2,687
1,216
(503
)
(76
)
9,150
Depreciation and amortization
550
354
403
130
55
‐
1,492
EBITDA
1,919
4,811
3,090
1,346
(448
)
(76
)
10,642
Integration and restructuring related costs
2
‐
‐
‐
33
‐
35
Share-based compensation expense
‐
‐
‐
‐
122
‐
122
Reversal of impairment of assets
‐
‐
‐
(780
)
‐
‐
(780
)
COVID-19 related expenses
‐
‐
‐
‐
8
‐
8
Foreign exchange loss, net of related derivatives
‐
‐
‐
‐
67
‐
67
Gain on disposal of investment
(19
)
‐
‐
‐
‐
‐
(19
)
Adjusted EBITDA
1,902
4,811
3,090
566
(218
)
(76
)
10,075
Assets – at December 31, 2022
24,451
13,921
11,807
2,661
2,622
(876
)
54,586
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Retail sales by product line
Crop nutrients
1,250
1,605
6,571
7,740
Crop protection products
1,566
1,716
5,790
6,086
Seed
158
134
2,093
1,861
Merchandise
231
241
750
755
Nutrien Financial
73
65
252
205
Services and other
235
244
691
729
Nutrien Financial elimination 1
(23
)
(25
)
(107
)
(113
)
3,490
3,980
16,040
17,263
Potash sales by geography
Manufactured product
North America
637
484
1,631
2,168
Offshore 2
473
1,568
1,672
4,573
1,110
2,052
3,303
6,741
Nitrogen sales by product line
Manufactured product
Ammonia
193
695
998
2,072
Urea and ESN® 3
297
464
1,278
1,723
Solutions, nitrates and sulfates
270
512
1,022
1,564
Other nitrogen and purchased products 3
68
231
319
740
828
1,902
3,617
6,099
Phosphate sales by product line
Manufactured product
Fertilizer
295
414
886
1,204
Industrial and feed
151
206
535
594
Other phosphate and purchased products
70
93
227
256
516
713
1,648
2,054
1 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
2 Relates to Canpotex Limited ("Canpotex") (Note 11) and includes provisional pricing adjustments for the three months ended September 30, 2023 of $(34) (2022 – $(187)) and the nine months ended September 30, 2023 of $(354) (2022 – $66).
3 Certain immaterial 2022 figures have been reclassified.
NOTE 3 (REVERSAL OF) IMPAIRMENT OF ASSETS
We recorded the following (reversal of) impairment of assets in the condensed consolidated statements of earnings:
Three Months Ended
Nine Months Ended
September 30
September 30
Segment
Category
2023
2022
2023
2022
Retail
‐
‐
422
‐
Intangible assets
‐
‐
43
‐
Phosphate
Property, plant and equipment
‐
(330
)
233
(780
)
(Reversal of) impairment of assets
‐
(330
)
698
(780
)
Goodwill and Intangible Assets
During the three months ended June 30, 2023, we revised our forecasted EBITDA for the Retail – South America group of cash generating units (“CGUs”), which triggered an impairment analysis. Due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates, we lowered our product margin expectations and deferred certain of our planned strategic investments. As a result, this reduced our forecasted earnings and growth.
Retail - South America group of CGUs
June 30, 2023
Carrying amount
1,496
Recoverable amount
1,031
Impairment recognized relating to:
422
Intangible assets
43
After the recognition of the impairment, goodwill for the South America group of CGUs is nil. We used the fair value less costs of disposal (“FVLCD”) (a level 3 measurement), based on after-tax discounted cash flows (“DCF”) (10-year projections plus a terminal value) and incorporated assumptions an independent market participant would apply. We adjusted discount rates for the country risk premium in which we expect to generate cash flows. We used comparative market multiples to ensure discounted cash flow results are reasonable.
The key assumptions with the greatest influence on the calculation of the recoverable amount are the discount rate, terminal growth rate and forecasted EBITDA. The key forecast assumptions were based on historical data and our estimates of future results from internal sources considering industry and market trends.
Key Assumptions Used in Impairment Model
As at June 30, 2023
Terminal growth rate (%)
6.0
Forecasted EBITDA over forecast period ($)
4,300
Discount rate 1 (%)
16.6
1 Discount rate used in the previous measurement was 16.0 percent, which was included as part of our Retail - International group of CGUs.
The following table highlights sensitivities to the recoverable amount, which could have resulted in additional impairment against the carrying amount of intangible assets and property, plant and equipment. The sensitivities have been calculated independently of changes in other key variables.
Decrease to
Key Assumptions as at June 30, 2023
Change in Key Assumption
Recoverable Amount ($)
Terminal growth rate (%)
-
1.0 percent
50
Forecasted EBITDA over forecast period ($)
-
5.0 percent
100
Discount rate (%)
+
1.0 percent
120
Property, Plant and Equipment – Phosphate CGUs
Three Months Ended June 30, 2023
Impairment Trigger
Result
White Springs
Decrease in our forecasted phosphate margins.
Impairment recorded to property, plant and equipment.
Aurora
No impairment recorded. Recoverable amount of $2,000 was greater than the carrying amount of $1,660. The recoverable amount was based on FVLCD using after-tax DCF (using a five-year projection plus a terminal year to the end of expected mine life).
White Springs CGU
June 30, 2023
Pre-tax impairment loss ($)
233
Pre-tax recoverable amount ($)
504
Valuation methodology
Value in use
Valuation technique
Pre-tax DCF to end of expected mine life
Key assumptions
End of expected mine life (proven and probable reserves) (year) 1
2032
Pre-tax discount rate 2 (%)
15.6
Post-tax discount rate 2 (%)
12.0
Forecasted EBITDA 3 ($)
720
1 The White Springs CGU has a short expected mine life and is therefore more sensitive to changes in short- and medium-term forecasted phosphate margins.
2 Discount rate used in the previous measurement was 12.0 percent (pre-tax - 15.2 percent).
3 Forecasted EBITDA to 2028.
The recoverable amount of our Aurora and White Springs CGUs used the following key assumptions: our forecasted EBITDA, discount rate, long-term growth rate and end of expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, independent third-party price benchmarks, and mineral reserve technical reports, as well as industry and market trends.
Phosphate Sensitivities
The following table highlights sensitivities to the recoverable amounts, which could result in additional impairment losses or reversals of the recorded losses (relating to the White Springs CGU). The sensitivities have been calculated independently of changes in other key variables.
Change to Recoverable Amount ($)
Key Assumptions as at June 30, 2023
Change in Assumption
White Springs
Aurora
Forecasted EBITDA over forecast period ($)
+ / -
5.0 percent
+ / -
40
+ / -
220
Pre-tax discount rate (%)
+ / -
1.0 percent
- / +
20
n/a
n/a
Post-tax discount rate (%)
+ / -
1.0 percent
n/a
n/a
- / +
190
Long-term growth rate (%)
+ / -
1.0 percent
n/a
n/a
+ / -
110
During the nine months ended September 30, 2022, as a result of increased pricing forecast that reflected the macroeconomic environment at the time, we recorded the following reversal of impairment of assets:
Phosphate CGU
Aurora
White Springs
Date of impairment reversal
June 30, 2022
September 30, 2022
Pre-tax impairment reversal, net of depreciation ($)
450
330
Recoverable amount ($)
2,900
770
Carrying amount before impairment reversal ($)
1,200
425
Valuation methodology
FVLCD
Value in use
Valuation technique
Five-year DCF plus terminal year to end of mine life
Pre-tax DCF to end of expected mine life
For additional information relating to the reversal of the impairment, including the key assumptions used in the calculation, see Note 13 of the 2022 annual consolidated financial statements.
NOTE 4 OTHER EXPENSES (INCOME)
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Integration and restructuring related costs
14
15
29
35
Foreign exchange loss, net of related derivatives
87
11
105
67
Earnings of equity-accounted investees
(28
)
(82
)
(100
)
(200
)
Bad debt expense
12
4
51
18
COVID-19 related expenses
‐
‐
‐
8
Gain on disposal of investment
‐
‐
‐
(19
)
Project feasibility costs
19
28
53
57
Customer prepayment costs
10
13
36
35
Loss on Blue Chip Swaps
‐
‐
92
‐
Gain on amendments to other post-retirement pension plans
‐
‐
(80
)
‐
Other expenses
40
47
57
93
154
36
243
94
The Central Bank of Argentina maintains certain currency controls that limit our ability to remit cash from Argentina. Blue Chip Swaps are trade transactions that effectively allow companies to transfer US dollars out of Argentina. Through this mechanism, we incurred a loss of $92 from the purchase of securities denominated in Argentine peso and corresponding sale in US dollars during the nine months ended September 30, 2023. The loss is a result of the significant divergence between the Blue Chip Swap market exchange rate and the official Argentinian Central Bank rate.
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Income tax expense
97
487
766
2,206
Actual effective tax rate on earnings (%)
41
24
33
25
Actual effective tax rate including discrete items (%)
54
24
41
25
Discrete tax adjustments that impacted the tax rate
23
(12
)
155
8
The following table summarizes the income tax balances within the condensed consolidated balance sheets:
Income Tax Assets and Liabilities
Balance Sheet Location
As at September 30, 2023
As at December 31, 2022
Income tax assets
Current
Receivables
317
144
Non-current
Other assets
125
54
Deferred income tax assets
Other assets
357
448
Total income tax assets
799
646
Income tax liabilities
Current
Payables and accrued charges
38
899
Non-current
Other non-current liabilities
28
46
Deferred income tax liabilities
Deferred income tax liabilities
3,631
3,547
Total income tax liabilities
3,697
4,492
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 10 of the 2022 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.
The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost and require fair value disclosure. The table does not include fair value information for financial instruments that are measured using their carrying amount as a reasonable approximation of fair value.
September 30, 2023
December 31, 2022
Carrying
Carrying
Financial assets (liabilities) measured at
Amount
Level 1
Level 2
Level 3
Amount
Level 1
Level 2
Level 3
Fair value on a recurring basis 1
Derivative instrument assets
6
‐
6
‐
7
‐
7
‐
Other current financial assets – marketable securities 2
187
32
155
‐
148
19
129
‐
Investments at FVTOCI 3
191
181
‐
10
200
190
‐
10
Derivative instrument liabilities
(37
)
‐
(37
)
‐
(35
)
‐
(35
)
‐
Amortized cost
Investments at amortized cost
(12
)
(12
)
‐
‐
‐
‐
‐
‐
Current portion of long-term debt
Notes and debentures
‐
‐
‐
‐
(500
)
(493
)
‐
‐
Fixed and floating rate debt
‐
‐
‐
‐
(42
)
‐
(42
)
‐
Long-term debt
Notes and debentures
(9,384
)
(4,366
)
(3,943
)
‐
(7,910
)
(3,581
)
(3,656
)
‐
Fixed and floating rate debt
(43
)
‐
(43
)
‐
(130
)
‐
(130
)
‐
1 During the periods ended September 30, 2023 and December 31, 2022, there were no transfers between levels for financial instruments measured at fair value on a recurring basis.
2 Marketable securities consist of equity and fixed income securities.
3 Investments at fair value through other comprehensive income ("FVTOCI") is primarily comprised of shares in Sinofert Holdings Ltd.
NOTE 7 SHORT-TERM DEBT
Rate of
Interest (%)
Total Facility Limit as at September 30, 2023
As at
September 30, 2023
As at
December 31, 2022
Credit facilities
Unsecured revolving term credit facility
n/a
4,500
‐
‐
Unsecured revolving term credit facility 1
n/a
1,500
‐
500
Uncommitted revolving demand facility
n/a
1,000
‐
‐
Other credit facilities 2
1,300
South America 3
5.1 – 13.2
460
453
Australia
5.0
123
190
Other
4.7
47
9
Commercial paper
5.6 – 5.8
3,583
783
Other short-term debt
n/a
141
207
4,354
2,142
1 During the three months ended September 30, 2023, we extended the term of our unsecured revolving term credit facility to September 10, 2024 and reduced the facility limit from $2,000 to $1,500.
2 Total facility limit amounts include some facilities with maturities in excess of one year.
3 Our credit facilities are either denominated in local currency or US dollars. The range of interest rates for South America excludes our Argentina facilities denominated in local currency with interest rates ranging from 96.0 to 125.0 percent. The balance of these Argentina facilities as at September 30, 2023 was $15.
NOTE 8 LONG-TERM DEBT
Nine Months Ended
September 30
Rate of interest (%)
Maturity
Amount
Notes repaid 2023
1.900
May 13, 2023
500
Notes issued 2023
4.900
March 27, 2028
750
Notes issued 2023
5.800
March 27, 2053
750
1,500
The notes issued in the nine months ended September 30, 2023, are unsecured, rank equally with our existing unsecured debt, and have no sinking fund requirements prior to maturity. Each series is redeemable and has various provisions for redemption prior to maturity, at our option, at specified prices.
NOTE 9 SHARE CAPITAL
Share Repurchase Programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2021 Normal Course Issuer Bid
March 1, 2021
February 28, 2022
28,468,448
5
22,186,395
2022 Normal Course Issuer Bid
March 1, 2022
February 7, 2023
55,111,110
10
55,111,110
2023 Normal Course Issuer Bid 1
March 1, 2023
February 29, 2024
24,962,194
5
5,375,397
1 The 2023 normal course issuer bid will expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.
Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities laws, including private agreements.
The following table summarizes our share repurchase activities during the period:
Three Months Ended
Nine Months Ended
September 30
September 30
2023
2022
2023
2022
Number of common shares repurchased for cancellation
‐
19,027,561
13,378,189
38,387,969
Average price per share (US dollars)
‐
89.25
74.73
86.85
Total cost
‐
1,698
1,000
3,334
Dividends Declared
We declared a dividend per share of $0.53 (2022 – $0.48) during the three months ended September 30, 2023, payable on October 13, 2023 to shareholders of record on September 29, 2023.
NOTE 10 SEASONALITY
Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets, and trade payables. Our short-term debt also fluctuates during the year to meet working capital requirements. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
NOTE 11 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively through Canpotex. Canpotex sells potash to buyers, including Nutrien, in export markets pursuant to term and spot contracts at agreed upon prices. Our total revenue is recognized at the amount received from Canpotex representing proceeds from their sale of potash, less net costs of Canpotex. Sales to Canpotex are shown in Note 2. Purchases from Canpotex for the three months ended September 30, 2023 were $26 (2022 – $230) and the nine months ended September 30, 2023 were $60 (2022 – $391).
As at
September 30, 2023
December 31, 2022
Receivables from Canpotex
360
866
Payables to Canpotex
33
203
NOTE 12 BUSINESS COMBINATIONS
We acquired Casa do Adubo S.A. (“Casa do Adubo”) on October 1, 2022. We have completed our assessment of identifying and measuring all the assets acquired and liabilities assumed as part of the Casa do Adubo acquisition. This assessment included a thorough review of all internal and external sources of information available on circumstances that existed at the acquisition date, engagement of independent valuation experts, and final agreement of the purchase price. The fair values of the assets acquired and liabilities assumed, the goodwill amount of $184 recorded, and valuation technique and judgments applied are consistent with those disclosed in Note 25 of the 2022 annual consolidated financial statements. The goodwill recognized was fully impaired as part of the impairment recorded to the Retail – South America group of CGUs (Note 3).
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