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Nutrien Delivers Record First Half Earnings and Expects Strong Second Half

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Nutrien Ltd. reported strong Q2 2022 results, posting net earnings of $3.6 billion ($6.51 per share) boosted by a $450 million non-cash impairment reversal. Adjusted net earnings per share reached $5.85, with adjusted EBITDA at $5.0 billion. The company anticipates ongoing supply challenges across the agriculture sector and plans to complete its 10% share repurchase program, returning approximately $6 billion to shareholders in 2022. Nutrien's adjusted EBITDA guidance for the year is now set between $14.0 billion and $15.5 billion.

Positive
  • Net earnings of $5.0 billion and adjusted EBITDA of $7.6 billion in H1 2022.
  • Record adjusted EBITDA growth of 38% year-over-year in Nutrien Ag Solutions (Retail).
  • Plans to allocate approximately $5 billion to share repurchases in 2022.
Negative
  • Lower North American sales volumes due to a compressed application season.

Nutrien is accelerating growth initiatives and announces intention to complete its existing 10 percent share repurchase program in 2022

All amounts are in US dollars except as otherwise noted

SASKATOON, Saskatchewan--(BUSINESS WIRE)-- Nutrien Ltd. (TSX and NYSE: NTR) announced today its second quarter 2022 results, with net earnings of $3.6 billion ($6.51 diluted net earnings per share), which includes a non-cash impairment reversal of $450 million relating to our Phosphate operations. Second quarter 2022 adjusted net earnings per share1 were $5.85 and adjusted EBITDA1 was $5.0 billion.

“Nutrien delivered record earnings in the first half of 2022 due to the strength of market fundamentals, strong operating performance, the advantaged position of our global production assets and the excellent results of Retail. We generated strong results across our integrated business and demonstrated our unmatched capability to efficiently supply our customers with the products they need to help sustainably feed a growing world,” commented Ken Seitz, Nutrien’s Interim President and CEO.

“We expect supply challenges across global energy, agriculture and fertilizer markets to persist well beyond 2022. The strength of our projected cash flow provides an opportunity to accelerate high-return strategic growth initiatives and return significant capital to shareholders. We intend on completing our 10 percent share repurchase program in 2022, increasing the total amount of capital returned to shareholders to approximately $6 billion during the year,” added Mr. Seitz.

Highlights:

  • Nutrien generated net earnings of $5.0 billion and adjusted EBITDA1 of $7.6 billion in the first half of 2022 due to higher realized prices and strong Retail performance, more than offsetting a reduction in fertilizer sales volumes. As a result, cash provided by operating activities increased to $2.5 billion in the first half of 2022.
  • Nutrien revised full-year 2022 adjusted EBITDA guidance1 and adjusted net earnings per share guidance1 to $14.0 to $15.5 billion and $15.80 to $17.80 per share, respectively. Adjusted net earnings per share guidance includes our plans to allocate approximately $5 billion to share repurchases in 2022.
  • Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the second quarter and the first half of 2022. First-half adjusted EBITDA was up 38 percent year-over-year as a result of strong sales and gross margin growth, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio1 improved to 54 percent compared to 60 percent for the same period in 2021 driven by higher margins.
  • Potash adjusted EBITDA in the second quarter and the first half of 2022 increased compared to the prior year due to higher net realized selling prices and strong offshore sales volumes. North American sales volumes were lower than the same period last year due to a compressed application season.
  • Nitrogen second quarter and first half adjusted EBITDA increased compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower sales volumes.
  • In the second quarter of 2022, we recognized a non-cash impairment reversal of $450 million associated with our Phosphate operations due to a more favorable outlook for phosphate margins.
  • Nutrien repurchased approximately 22 million shares year-to-date as of August 2, 2022, under our share repurchase programs, for a total of approximately $1.8 billion.
  • On May 18, 2022, Nutrien announced it is evaluating its existing site at Geismar, Louisiana to build the world’s largest clean ammonia facility. The project would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure to serve growing demand in agricultural, industrial and emerging energy markets.
  • On June 9, 2022, Nutrien announced its intention to increase potash production capability to 18 million tonnes by 2025 in response to the uncertainty of potash supply from Eastern Europe being able to meet global demand.
  • Nutrien announced agreements to acquire Brazilian ag retail companies Casa do Adubo S.A. and Marca Agro Mercantil. These acquisitions support Nutrien’s Retail growth strategy in Brazil and upon completion of the acquisitions, we expect to surpass our stated target of $100 million annual adjusted EBITDA in Brazil by 2023.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of August 3, 2022. The Board of Directors (“Board”) of Nutrien carries out its responsibility for review of this disclosure principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews and, prior to its publication, approves this disclosure pursuant to the authority delegated to it by the Board. The term “Nutrien” refers to Nutrien Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our annual report dated February 17, 2022 (“2021 Annual Report”), which includes our annual audited consolidated financial statements and MD&A, and our annual information form dated February 17, 2022 (“2021 Annual Information Form”), each for the year ended December 31, 2021, can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. No update is provided to the disclosure in our 2021 annual MD&A except for material information since the date of our annual MD&A. The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).

This MD&A is based on and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements as at and for the three and six months ended June 30, 2022 (“interim financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless otherwise noted. This MD&A contains certain non-IFRS financial measures and ratios and forward-looking statements, which are described in the “Non-IFRS Financial Measures” and the “Forward-Looking Statements” sections, respectively.

Market Outlook and Guidance

Agriculture and Retail

  • Global grain and oilseed stocks-to-use ratios remain well below historical average levels, which we believe will continue to be supportive for crop prices. Prices for key crops such as corn, soybeans and wheat are up 25 to 35 percent compared to the 10-year average, providing strong incentive for growers to increase production.
  • The US Department of Agriculture (USDA) projects that Ukrainian wheat and corn production will be down by more than 40 percent and combined Ukrainian exports of corn, wheat and barley will be down by approximately 60 percent year-over-year in 2022/23. While diplomatic efforts to restore exports from Ukrainian ports has progressed, the overall reduction in Ukrainian production in 2022 is expected to continue to constrain supplies for the forthcoming year.
  • US crop conditions started the 2022 growing season favorably, however, recent hot and dry weather has accelerated crop development and could limit yield potential. In Western Canada, growing conditions have improved from the severe 2021 drought. We expect the combination of robust grower economics and favorable growing conditions to support demand for crop nutritional products, fungicides and insecticides in the third quarter of 2022.
  • Prospective Brazilian grower margins remain historically high and analysts expect a 2 to 4 percent increase in soybean planted area in the 2022 planting season. While we expect this to support overall crop input demand, fertilizer inventories have been slow to move from port to inland positions and we expect import demand will resurface as these inventories move inland for Brazil’s spring planting season in the second half of 2022.

Crop Nutrient Markets

  • Restricted supplies of potash from Russia and Belarus kept potash prices at historically high levels through the first half of 2022. Potash shipments from Russia and Belarus were estimated to be down approximately 25 and 50 percent respectively in the first half of 2022, with the majority of Belarus exports occurring in the first quarter. We have narrowed our global potash shipment forecast to between 61 and 64 million tonnes in 2022 and continue to expect demand to be constrained by restrictions on exports from Russia and Belarus.
  • A dramatic increase in European natural gas prices has once again led to reduced nitrogen operating rates in the region. Tightening European ammonia supplies and significantly reduced Russian ammonia exports from the Black Sea are pressuring global ammonia availability. We expect strong seasonal nitrogen demand in the second half of 2022 following a period of delayed purchases due to benchmark price volatility.
  • The Chinese government continues to impose export restrictions on urea and phosphate fertilizers that are expected to limit its export volumes in the second half of 2022.

Financial Guidance

  • Nutrien revised full-year 2022 adjusted EBITDA guidance1 and full-year 2022 adjusted net earnings per share guidance1 primarily due to lower expected Nitrogen earnings as a result of lower nitrogen benchmark pricing and higher natural gas costs. Retail adjusted EBITDA guidance was increased to reflect strong performance in the second quarter. Adjusted net earnings per share guidance includes our plans to allocate approximately $5 billion to share repurchases in 2022.
  • Nutrien lowered potash and nitrogen sales volume guidance to reflect the impact of lower application in North America this spring.

All guidance numbers, including those noted above are outlined in the table below. Refer to page 53 of Nutrien’s 2021 Annual Report for related assumptions and sensitivities.

 

Guidance Ranges1 as of

 

Aug 3, 2022

May 2, 2022

(billions of US dollars, except as otherwise noted)

Low

 

High

 

Low

 

High

Adjusted net earnings per share 2

15.80

 

17.80

 

16.20

 

18.70

Adjusted EBITDA 2

14.0

 

15.5

 

14.5

 

16.5

Retail adjusted EBITDA

2.1

 

2.2

 

1.8

 

1.9

Potash adjusted EBITDA

7.6

 

8.2

 

7.5

 

8.3

Nitrogen adjusted EBITDA

4.0

 

4.7

 

5.0

 

5.8

Phosphate adjusted EBITDA (in US millions)

750

 

850

 

800

 

900

Potash sales tonnes (millions) 3

14.3

 

14.9

 

14.5

 

15.1

Nitrogen sales tonnes (millions) 3

10.6

 

11.0

 

10.7

 

11.1

Depreciation and amortization

2.0

 

2.1

 

2.0

 

2.1

Effective tax rate on adjusted earnings (%)

25.5

 

26.5

 

25.5

 

26.5

Sustaining capital expenditures 4

1.3

 

1.4

 

1.2

 

1.3

1 See the "Forward-Looking Statements" section.

2 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

3 Manufactured product only. Nitrogen sales tonnes excludes ESN® products.

4 This is a supplementary financial measure. See the "Other Financial Measures" section.

Consolidated Results

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Sales

14,506

 

9,763

 

49

 

22,163

 

14,421

 

54

Freight, transportation and distribution

221

 

222

 

 

424

 

433

 

(2)

Cost of goods sold

8,286

 

6,659

 

24

 

12,483

 

9,950

 

25

Gross margin

5,999

 

2,882

 

108

 

9,256

 

4,038

 

129

Expenses

1,054

 

1,263

 

(17)

 

2,312

 

2,141

 

8

Net earnings

3,601

 

1,113

 

224

 

4,986

 

1,246

 

300

Adjusted EBITDA 1

4,993

 

2,215

 

125

 

7,608

 

3,021

 

152

Diluted net earnings per share

6.51

 

1.94

 

236

 

8.99

 

2.16

 

316

Adjusted net earnings per share 1

5.85

 

2.08

 

181

 

8.53

 

2.37

 

260

Cash provided by operating activities

2,558

 

1,966

 

30

 

2,496

 

1,814

 

38

Free cash flow 1

3,413

 

1,413

 

142

 

5,227

 

1,889

 

177

Free cash flow including changes in non-cash operating working capital 1

2,302

 

1,662

 

39

 

2,046

 

1,346

 

52

1 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

Net earnings and adjusted EBITDA more than doubled in the second quarter and first half of 2022 compared to the same period in 2021. This was due to higher net realized selling prices from global supply uncertainties across our nutrient businesses and strong Retail performance. In the second quarter of 2022, we recorded a non-cash impairment reversal of $450 million related to our Phosphate operations which impacted net earnings. Cash provided by operating activities increased in the second quarter and first half of 2022 compared to the same period in 2021 due primarily to higher net earnings.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and six months ended June 30, 2022 to the results for the three and six months ended June 30, 2021, unless otherwise noted.

Nutrien Ag Solutions (“Retail”)

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

 

2022

 

2021

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients

4,548

 

3,045

 

49

 

911

 

703

 

30

 

20

 

23

Crop protection products

2,983

 

2,666

 

12

 

805

 

587

 

37

 

27

 

22

Seed

1,269

 

1,216

 

4

 

283

 

237

 

19

 

22

 

19

Merchandise

280

 

268

 

4

 

51

 

45

 

13

 

18

 

17

Nutrien Financial

91

 

59

 

54

 

91

 

59

 

54

 

100

 

100

Services and other 1

310

 

320

 

(3)

 

258

 

264

 

(2)

 

83

 

83

Nutrien Financial elimination 1, 2

(59)

 

(37)

 

59

 

(59)

 

(37)

 

59

 

100

 

100

 

9,422

 

7,537

 

25

 

2,340

 

1,858

 

26

 

25

 

25

Cost of goods sold

7,082

 

5,679

 

25

 

 

 

 

 

 

 

 

 

 

Gross margin

2,340

 

1,858

 

26

 

 

 

 

 

 

 

 

 

 

Expenses 3

1,088

 

938

 

16

 

 

 

 

 

 

 

 

 

 

Earnings before finance costs and taxes ("EBIT")

1,252

 

920

 

36

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

175

 

169

 

4

 

 

 

 

 

 

 

 

 

 

EBITDA

1,427

 

1,089

 

31

 

 

 

 

 

 

 

 

 

 

Adjustments 4

 

8

 

(100)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

1,427

 

1,097

 

30

 

 

 

 

 

 

 

 

 

 

1 Certain immaterial figures have been reclassified for the three months ended June 30, 2021.

2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.

3 Includes selling expenses of $1,013 million (2021 – $863 million).

4 See Note 2 to the interim financial statements.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

 

2022

 

2021

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients

6,135

 

4,061

 

51

 

1,203

 

923

 

30

 

20

 

23

Crop protection products

4,370

 

3,751

 

17

 

1,087

 

763

 

42

 

25

 

20

Seed

1,727

 

1,679

 

3

 

349

 

306

 

14

 

20

 

18

Merchandise

514

 

498

 

3

 

92

 

83

 

11

 

18

 

17

Nutrien Financial

140

 

84

 

67

 

140

 

84

 

67

 

100

 

100

Services and other 1

485

 

485

 

 

402

 

400

 

1

 

83

 

82

Nutrien Financial elimination 1

(88)

 

(49)

 

80

 

(88)

 

(49)

 

80

 

100

 

100

 

13,283

 

10,509

 

26

 

3,185

 

2,510

 

27

 

24

 

24

Cost of goods sold

10,098

 

7,999

 

26

 

 

 

 

 

 

 

 

 

 

Gross margin

3,185

 

2,510

 

27

 

 

 

 

 

 

 

 

 

 

Expenses 2

1,843

 

1,659

 

11

 

 

 

 

 

 

 

 

 

 

EBIT

1,342

 

851

 

58

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

344

 

346

 

(1)

 

 

 

 

 

 

 

 

 

 

EBITDA

1,686

 

1,197

 

41

 

 

 

 

 

 

 

 

 

 

Adjustments 3

(19)

 

9

 

n/m

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

1,667

 

1,206

 

38

 

 

 

 

 

 

 

 

 

 

1 Certain immaterial figures have been reclassified for the six months ended June 30, 2021.

2 Includes selling expenses of $1,735 million (2021 – $1,530 million).

3 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher sales and gross margins across nearly all product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary products sales. Retail cash operating coverage ratio1 improved as at June 30, 2022 to 54 percent from 60 percent in the same period in 2021 due to significantly higher gross margin.
  • Crop nutrients sales and gross margin increased significantly in the second quarter and first half of 2022 due to higher selling prices. Gross margin per tonne increased in the second quarter and first half of 2022 compared to the same periods in the prior year due to strategic procurement and the timing of inventory purchases. Sales volumes decreased due to a pull forward of sales into the fourth quarter of 2021 and reduced application resulting from a delayed planting season in North America.
  • Crop protection products sales and gross margin increased in the second quarter and first half of 2022 in all regions we operate due to higher prices, along with increased sales and gross margin in proprietary products. Gross margin percent increased by 5 percentage points in the second quarter and first half of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment.
  • Seed sales and gross margin increased in the second quarter and first half of 2022 due to higher pricing, an increase in proprietary seed margins and strong demand in Australia.
  • Merchandise sales increased in the second quarter and first half of 2022 primarily driven by favorable market conditions for Australia animal health products, with increased flock and herd sizes along with higher fencing sales.
  • Nutrien Financial sales increased in the second quarter and first half of 2022 due to higher utilization and adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing.
  • Services and other sales decreased in the second quarter due to lower fertilizer application services, and held flat through the first half of 2022, due to favorable weather conditions in Australia in the first quarter.
1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

Potash

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

680

 

326

 

109

 

933

 

1,172

 

(20)

 

729

 

278

 

162

Offshore

1,988

 

491

 

305

 

2,776

 

2,449

 

13

 

716

 

200

 

258

 

2,668

 

817

 

227

 

3,709

 

3,621

 

2

 

719

 

226

 

218

Cost of goods sold

399

 

317

 

26

 

 

 

 

 

 

 

107

 

88

 

22

Gross margin – total

2,269

 

500

 

354

 

 

 

 

 

 

 

612

 

138

 

343

Expenses 1

372

 

123

 

202

 

Depreciation and amortization

 

35

 

32

 

9

EBIT

1,897

 

377

 

403

 

Gross margin excluding depreciation

 

 

 

 

 

Depreciation and amortization

130

 

116

 

12

 

and amortization – manufactured 3

647

 

170

 

281

EBITDA

2,027

 

493

 

311

 

Potash controllable cash cost of

 

 

 

 

 

 

Adjustments 2

 

2

 

(100)

 

product manufactured 3

 

52

 

50

 

4

Adjusted EBITDA

2,027

 

495

 

309

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes provincial mining taxes of $362 million (2021 – $107 million).

2 See Note 2 to the interim financial statements.

3 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

1,513

 

658

 

130

 

2,151

 

2,642

 

(19)

 

703

 

249

 

182

Offshore

3,005

 

770

 

290

 

4,601

 

4,136

 

11

 

653

 

186

 

251

 

4,518

 

1,428

 

216

 

6,752

 

6,778

 

 

669

 

211

 

217

Cost of goods sold

704

 

608

 

16

 

 

 

 

 

 

 

104

 

90

 

16

Gross margin – total

3,814

 

820

 

365

 

 

 

 

 

 

 

565

 

121

 

367

Expenses 1

623

 

187

 

233

 

Depreciation and amortization

 

36

 

35

 

1

EBIT

3,191

 

633

 

404

 

Gross margin excluding depreciation

 

 

 

 

 

Depreciation and amortization

242

 

240

 

1

 

and amortization – manufactured

601

 

156

 

284

EBITDA

3,433

 

873

 

293

 

Potash controllable cash cost of

 

 

 

 

 

 

Adjustments 2

 

2

 

(100)

 

product manufactured

 

51

 

50

 

2

Adjusted EBITDA

3,433

 

875

 

292

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes provincial mining taxes of $611 million (2021 – $165 million).

2 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher net realized selling prices and strong offshore sales volumes, which more than offset lower North American sales volumes, higher royalties and provincial mining taxes.
  • Sales volumes were the highest of any second quarter on record due to strong demand in offshore markets. North American sales volumes were impacted by delayed planting and a compressed application window.
  • Net realized selling price increased in the second quarter and first half of 2022 due to the impact of supply constraints, in particular related to uncertainty on future supply from Russia and Belarus.
  • Cost of goods sold per tonne increased in the second quarter and first half of 2022 primarily due to higher royalties resulting from increased net realized selling prices. Potash controllable cash cost of product manufactured increased slightly in the second quarter and first half of 2022 due to higher input costs driven by inflation.

Canpotex Sales by Market

(percentage of sales volumes, except as

Three Months Ended June 30

 

Six Months Ended June 30

otherwise noted)

2022

2021

Change

 

2022

2021

Change

Latin America

40

35

5

 

36

33

3

Other Asian markets 1

28

41

(13)

 

35

39

(4)

China

12

11

1

 

12

12

Other markets

11

10

1

 

11

11

India

9

3

6

 

6

5

1

 

100

100

 

 

100

100

 

1 All Asian markets except China and India.

Nitrogen

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

743

 

346

 

115

 

643

 

836

 

(23)

 

1,157

 

416

 

178

Urea

601

 

346

 

74

 

810

 

819

 

(1)

 

742

 

421

 

76

Solutions, nitrates and sulfates

536

 

290

 

85

 

1,142

 

1,311

 

(13)

 

469

 

221

 

112

 

1,880

 

982

 

91

 

2,595

 

2,966

 

(13)

 

724

 

331

 

119

Cost of goods sold

839

 

597

 

41

 

 

 

 

 

 

 

323

 

201

 

61

Gross margin – manufactured

1,041

 

385

 

170

 

 

 

 

 

 

 

401

 

130

 

208

Gross margin – other 1

17

 

31

 

(45)

 

Depreciation and amortization

54

 

52

 

2

Gross margin – total

1,058

 

416

 

154

 

Gross margin excluding depreciation

 

 

 

 

 

(Income) expenses

(43)

 

17

 

n/m

 

and amortization – manufactured 3

455

 

182

 

149

EBIT

1,101

 

399

 

176

 

Ammonia controllable cash cost of

 

 

 

 

 

Depreciation and amortization

139

 

155

 

(10)

 

product manufactured 3

58

 

51

 

14

EBITDA

1,240

 

554

 

124

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 2

 

1

 

(100)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

1,240

 

555

 

123

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $349 million (2021 – $197 million) less cost of goods sold of $332 million (2021 – $166 million).

2 See Note 2 to the interim financial statements.

3 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

1,303

 

506

 

158

 

1,238

 

1,408

 

(12)

 

1,052

 

360

 

192

Urea

1,064

 

595

 

79

 

1,401

 

1,576

 

(11)

 

760

 

377

 

102

Solutions, nitrates and sulfates

975

 

454

 

115

 

2,221

 

2,385

 

(7)

 

439

 

190

 

131

 

3,342

 

1,555

 

115

 

4,860

 

5,369

 

(9)

 

688

 

290

 

137

Cost of goods sold

1,479

 

1,037

 

43

 

 

 

 

 

 

 

305

 

194

 

57

Gross margin - manufactured

1,863

 

518

 

260

 

 

 

 

 

 

 

383

 

96

 

299

Gross margin – other 1

55

 

48

 

15

 

Depreciation and amortization

54

 

53

 

2

Gross margin – total

1,918

 

566

 

239

 

Gross margin excluding depreciation

 

 

 

 

 

Income

(55)

 

 

 

and amortization – manufactured

437

 

149

 

193

EBIT

1,973

 

566

 

249

 

Ammonia controllable cash cost of

 

 

 

 

 

Depreciation and amortization

262

 

284

 

(8)

 

product manufactured

57

 

51

 

12

EBITDA

2,235

 

850

 

163

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 2

 

5

 

(100)

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

2,235

 

855

 

161

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $628 million (2021 – $384 million) less cost of goods sold of $573 million (2021 – $336 million).

2 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2022 primarily due to higher net realized selling prices and higher earnings from equity-accounted investees, which more than offset higher natural gas costs and lower sales volumes.
  • Sales volumes decreased in the second quarter and first half of 2022 due to unplanned plant outages that impacted ammonia and urea production, along with a cool and wet spring in North America that condensed the application window for direct application of ammonia and delayed application of other nitrogen products.
  • Net realized selling price in the second quarter and first half of 2022 were higher due to strong benchmark prices resulting from the strength in global demand and tight supply, along with higher energy prices in key nitrogen exporting regions.
  • Cost of goods sold per tonne in the second quarter and first half of 2022 increased primarily due to higher natural gas costs and higher raw material costs.

Natural Gas Prices in Cost of Production

 

Three Months Ended June 30

 

Six Months Ended June 30

(US dollars per MMBtu, except as otherwise noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Overall gas cost excluding realized derivative impact

8.54

 

3.86

 

121

 

7.72

 

3.51

 

120

Realized derivative impact

(0.06)

 

0.03

 

n/m

 

(0.04)

 

0.03

 

n/m

Overall gas cost

8.48

 

3.89

 

118

 

7.68

 

3.54

 

117

 

 

 

 

 

 

 

 

 

 

 

 

Average NYMEX

7.17

 

2.83

 

153

 

6.06

 

2.76

 

120

Average AECO

4.95

 

2.32

 

113

 

4.28

 

2.31

 

85

  • Natural gas prices in our cost of production increased in the second quarter and first half of 2022 as a result of higher North American gas index prices and increased gas costs in Trinidad, where our gas prices are linked to ammonia benchmark prices.

Phosphate

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

325

 

232

 

40

 

366

 

394

 

(7)

 

888

 

588

 

51

Industrial and feed

189

 

119

 

59

 

190

 

192

 

(1)

 

996

 

621

 

60

 

514

 

351

 

46

 

556

 

586

 

(5)

 

925

 

598

 

55

Cost of goods sold

352

 

271

 

30

 

 

 

 

 

 

 

634

 

463

 

37

Gross margin - manufactured

162

 

80

 

103

 

 

 

 

 

 

 

291

 

135

 

116

Gross margin – other 1

(6)

 

4

 

n/m

 

Depreciation and amortization

74

 

60

 

23

Gross margin – total

156

 

84

 

86

 

Gross margin excluding depreciation

 

 

 

 

 

(Income) expenses

(437)

 

7

 

n/m

 

and amortization – manufactured 3

365

 

195

 

87

EBIT

593

 

77

 

670

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

41

 

35

 

17

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

634

 

112

 

466

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 2

(450)

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

184

 

112

 

64

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other phosphate and purchased products and comprises net sales of $76 million (2021 – $52 million) less cost of goods sold of $82 million (2021 – $48 million).

2 See Notes 2 and 3 to the interim financial statements. Includes impairment reversal of assets of $450 million (2021 – nil).

3 This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2022

 

2021

% Change

 

2022

 

2021

% Change

 

2022

 

2021

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

718

 

462

 

55

 

826

 

903

 

(9)

 

869

 

511

 

70

Industrial and feed

359

 

233

 

54

 

381

 

385

 

(1)

 

943

 

605

 

56

 

1,077

 

695

 

55

 

1,207

 

1,288

 

(6)

 

892

 

539

 

65

Cost of goods sold

712

 

553

 

29

 

 

 

 

 

 

 

589

 

429

 

37

Gross margin – manufactured

365

 

142

 

157

 

 

 

 

 

 

 

303

 

110

 

175

Gross margin – other 1

(2)

 

8

 

n/m

 

Depreciation and amortization

 

68

 

57

 

20

Gross margin – total

363

 

150

 

142

 

Gross margin excluding depreciation

 

 

 

 

 

(Income) expenses

(428)

 

14

 

n/m

 

and amortization – manufactured

371

 

167

 

123

EBIT

791

 

136

 

482

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

82

 

73

 

12

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

873

 

209

 

318

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 2

(450)

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

423

 

209

 

102

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other phosphate and purchased products and comprises net sales of $148 million (2021 – $93 million) less cost of goods sold of $150 million (2021 – $85 million).

2 See Notes 2 and 3 to the interim financial statements. Includes impairment reversal of assets of $450 million (2021 – nil).

  • Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes. As part of expenses, we recognized a $450 million non-cash impairment of assets reversal, which is deducted from adjusted EBITDA. This impairment reversal is due to a more favorable outlook for phosphate margins.
  • Sales volumes decreased particularly in fertilizer, as a cool and wet spring in North America condensed the application window.
  • Net realized selling price increased in the second quarter and first half of 2022 in connection with the increase in global benchmark prices. Industrial and feed net realized selling prices increased to a greater extent than fertilizer prices in the second quarter of 2022, which reflects the typical lag in industrial and feed price realizations relative to spot fertilizer prices.
  • Cost of goods sold per tonne increased primarily due to significantly higher sulfur and ammonia input costs.

Corporate and Others

(millions of US dollars, except as otherwise

Three Months Ended June 30

 

Six Months Ended June 30

noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Selling expenses

(2)

 

(9)

 

(78)

 

(4)

 

(15)

 

(73)

General and administrative expenses

77

 

66

 

17

 

147

 

124

 

19

Share-based compensation (recovery) expense

(52)

 

38

 

n/m

 

83

 

61

 

36

Other expenses

48

 

83

 

(42)

 

101

 

111

 

(9)

EBIT

(71)

 

(178)

 

(60)

 

(327)

 

(281)

 

16

Depreciation and amortization

20

 

10

 

100

 

36

 

22

 

64

EBITDA

(51)

 

(168)

 

(70)

 

(291)

 

(259)

 

12

Adjustments 1

(7)

 

100

 

n/m

 

167

 

143

 

17

Adjusted EBITDA

(58)

 

(68)

 

(15)

 

(124)

 

(116)

 

7

1 See Note 2 to the interim financial statements.

  • Share-based compensation (recovery) expense – the recovery in the second quarter of 2022 reflects a decrease in the fair value of share-based compensation due to a decrease in our share price, whereas an expense was recorded in the second quarter of 2021 as our share price increased during the period.
  • Other expenses were lower in the second quarter and first half of 2022 compared to the same periods in 2021 due to the absence of cloud computing related expenses from our change in accounting policy, partially offset by higher foreign exchange losses related to our international operations.

Eliminations

Eliminations of gross margin between operating segments was a recovery of $176 million in the second quarter of 2022 compared to a recovery of $24 million in the same period of 2021. We had a significant recovery in the second quarter of 2022 due to the release of higher-margin inventories held by our Retail segment at the end of the previous quarter. Eliminations are not part of the Corporate and Others segment.

Finance Costs, Income Taxes and Other Comprehensive (Loss) Income

(millions of US dollars, except as otherwise

Three Months Ended June 30

 

Six Months Ended June 30

noted)

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Finance costs

130

 

125

 

4

 

239

 

245

 

(2)

Income tax expense

1,214

 

381

 

219

 

1,719

 

406

 

323

Other comprehensive (loss) income

(242)

 

61

 

n/m

 

(66)

 

85

 

n/m

  • Income tax expense was higher as a result of significantly higher earnings in the second quarter and first half of 2022 compared to the same periods in 2021.
  • Other comprehensive (loss) income is primarily driven by changes in the currency translation of our foreign operations and our investment in Sinofert Holdings Ltd. (“Sinofert”). In the second quarter and first half of 2022, we had fair value losses on our investment in Sinofert due to share price decreases compared to fair value gains due to share price increases in the same periods of 2021. In the second quarter of 2022, we also had a significant loss on foreign currency translation of our Retail operations in Australia, Brazil and Canada as these currencies depreciated relative to the US dollar as at June 30, 2022 compared to March 31, 2022 levels. These losses offset the gains on translation for all three currencies in the first quarter of 2022. Whereas, we had a foreign currency translation gain in the second quarter of 2021 and net loss in the second half of 2021.

Liquidity and Capital Resources

Sources and Uses of Liquidity

We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under our new or existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures, planned growth and development activities, and other cash requirements for the foreseeable future. Refer to the “Capital Structure and Management” section for details on our existing long-term debt and credit facilities.

Sources and Uses of Cash

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted) 

2022

 

2021

 

% Change

 

2022

 

2021

 

% Change

Cash provided by operating activities

2,558

 

1,966

 

30

 

2,496

 

1,814

 

38

Cash used in investing activities

(517)

 

(431)

 

20

 

(974)

 

(819)

 

19

Cash used in financing activities

(1,878)

 

(449)

 

318

 

(1,290)

 

(640)

 

102

Effect of exchange rate changes on cash and cash equivalents

(29)

 

(4)

 

625

 

(20)

 

(15)

 

33

Increase in cash and cash equivalents

134

 

1,082

 

(88)

 

212

 

340

 

(38)

Cash provided by operating activities

  • Higher cash provided by operating activities in the second quarter and first half of 2022 compared to the same periods in 2021 due to higher earnings driven by higher crop input prices from tight global supply, offset with seasonal working capital requirements.

Cash used in investing activities

  • Cash used in investing activities in the second quarter and first half of 2022 was higher compared to the same periods in 2021 due to higher spending in Potash to increase our production capabilities and in Nitrogen to advance our brownfield expansions, and the timing of supplier payments.

Cash used in financing activities

  • Cash used in financing activities in the second quarter of 2022 was higher compared to the same period in 2021 due to increased share repurchases and higher repayments of commercial paper.
  • Cash used in financing activities in the first half of 2022 was higher compared to the same period in 2021 due to increased share repurchases, partially offset with increased commercial paper drawdowns to temporarily finance working capital requirements.

Financial Condition Review

The following balance sheet categories contained variances that were considered material:

 

As at

 

 

 

 

(millions of US dollars, except as otherwise noted)

June 30, 2022

 

December 31, 2021

 

$ Change

 

% Change

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

711

 

499

 

212

 

42

Receivables

10,171

 

5,366

 

4,805

 

90

Inventories

7,160

 

6,328

 

832

 

13

Prepaid expenses and other current assets

615

 

1,653

 

(1,038)

 

(63)

Property, plant and equipment

20,492

 

20,016

 

476

 

2

Liabilities and Equity

 

 

 

 

 

 

 

Short-term debt

2,403

 

1,560

 

843

 

54

Current portion of long-term debt

1,028

 

545

 

483

 

89

Payables and accrued charges

11,682

 

10,052

 

1,630

 

16

Long-term debt

7,056

 

7,521

 

(465)

 

(6)

Share capital

15,115

 

15,457

 

(342)

 

(2)

Retained earnings

11,563

 

8,192

 

3,371

 

41

  • Explanations for changes in Cash and cash equivalents are in the “Sources and Uses of Cash” section.
  • Receivables increased due to higher sales across all of our segments as a result of higher crop nutrient net realized selling prices consistent with higher benchmark pricing, as well as higher Retail vendor rebates receivables.
  • Inventories increased due to seasonal Retail inventory build-up in North America and higher costs to produce or purchase inventory due to inflation and tight global supply. The increase was partly offset by a decrease in Retail seed inventory driven by seasonality.
  • Prepaid expenses and other current assets decreased due to the drawdown of prepaid inventory (primarily seed and crop protection products) during the North American planting and application spring season.
  • Property, plant and equipment increased due to an impairment reversal related to our Aurora cash generating unit in the Phosphate segment.
  • Short-term debt increased due to additional commercial paper issuances as part of our seasonal working capital management.
  • Payables and accrued charges increased due to a shift in timing of supplier payments, higher input costs from inflation and tight global supply and higher inventory purchases, which were partly offset by lower customer prepayments in North America as Retail customers took delivery of prepaid sales.
  • Long-term debt decreased due to a reclassification to the current portion of long-term debt of our $500 million notes maturing May 2023.
  • Share capital decreased from shares repurchased under our normal course issuer bids partially offset by exercise of stock options.
  • Retained earnings increased as net earnings in the first half of 2022 exceeded dividends declared and share repurchases.

Capital Structure and Management

Principal Debt Instruments

As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the six months ended June 30, 2022.

 

As at June 30, 2022

 

 

 

Outstanding and Committed

(millions of US dollars)

Rate of Interest (%)

Total Facility Limit

Short-Term Debt

Long-Term Debt

Credit facilities

 

 

 

 

Unsecured revolving term credit facility

n/a

4,500

Uncommitted revolving demand facility

n/a

1,000

Other credit facilities

 

770

 

 

South American

1.4 - 16.3

 

140

160

Other

1.6 - 4.0

 

17

3

Commercial paper

1.4 - 2.5

 

2,105

Other short-term debt

n/a

 

141

Total

 

 

2,403

163

We also have a commercial paper program, which is limited to the availability of backup funds under the $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities.

Subsequent to June 30, 2022, and in addition to the $500 million increase in our uncommitted revolving demand facility during the second quarter of 2022, we entered into $2 billion in new non-revolving term credit facilities, all with the same principal covenants and events of default as our existing revolving term credit facilities. These new facilities are temporary to help manage normal seasonal working capital swings and are intended to be closed before year-end. As of August 2, 2022, we had approximately $3.0 billion drawn on our credit facilities and a commercial paper balance of approximately $2.1 billion.

Our long-term debt consists primarily of notes. See the “Capital Structure and Management” section of our 2021 Annual Report for information on balances, rates and maturities for our notes.

Outstanding Share Data

 

As at August 2, 2022

Common shares

538,926,006

Options to purchase common shares

3,933,487

For more information on our capital structure and management, see Note 24 to our 2021 annual financial statements.

On June 7, 2022, the Financial and Consumer Affairs Authority of Saskatchewan and the Ontario Securities Commission granted Nutrien exemptive relief to allow the purchase of up to 10 percent of its “public float” of common shares through the facilities of the New York Stock Exchange and other US-based trading systems as part of Nutrien's current normal course issuer bid. Absent this exemptive relief, Nutrien’s purchases under the normal course issuer bid on markets other than the TSX would be limited to not more than 5 percent of its outstanding common shares over any twelve-month period. The exemptive relief is effective until June 7, 2023 and is conditional upon purchases being made in compliance with applicable US rules and National Instrument 23-101- Trading Rules in Canada, and at a price not higher than the market price at the time of purchase. The aggregate number of common shares purchased by Nutrien over any exchange or market may not exceed 10 percent of the public float as specified in Nutrien's normal course issuer bid application approved by the TSX and announced on February 25, 2022.

Quarterly Results

(millions of US dollars, except as otherwise noted)

Q2 2022

Q1 2022

Q4 2021

Q3 2021

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Sales 1

14,506

7,657

7,267

6,024

9,763

4,658

4,052

4,227

Net earnings (loss)

3,601

1,385

1,207

726

1,113

133

316

(587)

Net earnings (loss) attributable to equity holders of Nutrien

3,593

1,378

1,201

717

1,108

127

316

(587)

Net earnings (loss) per share attributable to equity holders of Nutrien

 

 

 

 

 

 

 

 

Basic

6.53

2.49

2.11

1.26

1.94

0.22

0.55

(1.03)

Diluted

6.51

2.49

2.11

1.25

1.94

0.22

0.55

(1.03)

1 Certain immaterial figures have been reclassified in the third quarter of 2020.

Seasonality in our business results from increased demand for products during the planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

Our earnings are significantly affected by fertilizer benchmark prices, which have been volatile over the last two years and are affected by demand-supply conditions, grower affordability and weather.

In the second quarter of 2022, earnings were impacted by a $450 million non-cash impairment reversal of property, plant and equipment in the Phosphate segment related to higher forecasted global prices and a more favorable outlook for phosphate margins. In the fourth quarter of 2021, earnings were impacted by a $142 million loss resulting from the early extinguishment of long-term debt. In the fourth quarter of 2020, earnings were impacted by a $250 million net gain on disposal of our investment in Misr Fertilizers Production Company S.A.E.. In the third quarter of 2020, earnings were impacted by an $823 million non-cash impairment of assets primarily in the Phosphate segment as a result of lower long-term forecasted global phosphate prices.

Critical Accounting Estimates

Our significant accounting policies are disclosed in our 2021 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board. Our critical accounting estimates are discussed on page 49 of our 2021 Annual Report. Other than the critical accounting estimates discussed below, there were no material changes in the three or six months ended June 30, 2022 to our critical accounting estimates.

Impairment of Assets

Long-Lived Asset Impairment and Reversals

In the three months ended June 30, 2022, we revised our pricing forecasts to reflect the current macroeconomic environment. This resulted in a review of our previously impaired Phosphate cash-generating units (“CGUs”). In 2020 we recorded an impairment of assets relating to our property, plant and equipment of $545 million at our Aurora CGU, as a result of lower long-term forecasted global phosphate prices. Due to increases in our forecast during the three months ended June 30, 2022, the recoverable amount of our Aurora CGU is above its carrying amount. As a result, we recorded an impairment reversal of $450 million in the statement of earnings relating to property, plant and equipment. Refer to Note 3 to the interim financial statements.

The recoverable amount estimate is most sensitive to the following key assumptions: our internal sales and input price forecasts, which consider projections from independent third-party data sources, discount rate, and expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, external price benchmarks, and mineral reserve technical reports, as well as industry and market trends. For our Aurora CGU, there were no reasonably possible changes in key assumptions that would result in a substantial change in the reversal amount.

In 2017 and 2020, we recorded an impairment of assets at our White Springs CGU relating to property, plant and equipment of $250 million and $215 million respectively. The White Springs CGU has a shorter expected mine life and is therefore more sensitive to changes in short and medium-term pricing forecasts. We are continuously monitoring our key assumptions for changes that could have an impact on the recoverable amount including our internal sales and input price forecasts. Changes in these key assumptions could result in impairment reversals in future periods. The maximum impairment reversal that could result at our White Springs CGU is $340 million (full reversal, net of depreciation).

Goodwill Impairment

Operating segments have assets allocated to them that must be assessed for impairment when events or circumstances indicate there could be an impairment, or at least annually. Based on our assumptions at the time of our impairment testing, the recoverable amount of each of our CGUs or groups of CGUs was in excess of their carrying amounts. Key assumptions in our testing models may change, and changes that could reasonably be expected to occur may cause impairment or impairment reversals. Such change in assumptions could be driven by global supply and demand and other market factors and changes in regulations and other future events outside our control.

During the six months ended June 30, 2022, North American central banks continued to increase their benchmark borrowing rates and have forecasted additional near-term increases. Benchmark borrowing rates are used as the risk-free rate which, is a component of determining our discount rate for impairment testing. As a result of these increases, we revised our discount rate to 8.0 percent (previous annual impairment analysis – 7.4 percent) and this triggered an impairment test to be performed for our Retail – North America group of CGUs.

The Retail – North America group of CGUs have $6.9 billion in associated goodwill. Goodwill is more susceptible to impairment risk if business operating results or economic conditions deteriorate and we do not meet our forecasts. A reduction in the terminal growth rate, an increase in the discount rate or a decrease in forecasted EBITDA could cause impairment in the future. As at June 30, 2022 the Retail – North America group of CGUs recoverable amount exceeds its carrying amount by $0.8 billion, which is 7 percent of the carrying amount. Refer to Note 3 to the interim financial statements.

The following table indicates the percentages by which key assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:

 

 

 

Change Required for

 

Value Used in Impairment

 

Carrying Amount to Equal

Key Assumptions

Model

 

Recoverable Amount

Terminal growth rate (%)

2.5

 

percentage point decrease

0.6

Forecasted EBITDA over forecast period (in billions of US dollars)

7.5

 

percent decrease

5.0

Discount rate (%)

8.0

 

percentage point increase

0.4

Risk Factors

Russia and Ukraine Conflict

The current conflict between Ukraine and Russia and the international response has, and may continue to have, potential wide-ranging consequences for global market volatility and economic conditions, including energy and commodity prices. Certain countries including Canada, the United States, Australia and certain European countries have imposed strict financial and trade sanctions against Russia, with Russia and Belarus imposing retaliatory sanctions of their own, which have had, and may continue to have, far-reaching effects on the global economy, energy and commodity prices, food security and crop nutrient supply and prices. The short-, medium- and long-term implications of the conflict in Ukraine are difficult to predict with any degree of certainty at this time. While Nutrien does not have operations in Ukraine or Russia, there remains uncertainty relating to the potential impact of the conflict and its effect on global food security, growers and the market outlook for crop nutrient market supply and demand fundamentals and nutrient prices, and it could have a material and adverse effect on our business, financial condition and results of operations. Depending on the extent, duration, and severity of the conflict, it may have the effect of heightening many of the other risks Nutrien is subject to and which are described in our 2021 Annual Report and 2021 Annual Information Form, including, without limitation, risks relating to market fundamentals and conditions (such as sanctions and trade flows and the impact thereof on crop nutrient supply and demand); cybersecurity threats; energy and commodity prices; inflationary pressures, interest rates and costs of capital; and supply chains and cost-effective and timely transportation.

Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

There has been no change in our internal control over financial reporting during the three months ended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Forward-Looking Statements

Certain statements and other information included in this document, including within the "Financial Outlook and Guidance" section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's business strategies, plans, prospects and opportunities; Nutrien's 2022 full-year guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment); expectations regarding our growth and capital allocation intentions and strategies, including our evaluation of the Geismar, Louisiana clean ammonia facility and the anticipated benefits thereof; capital spending expectations for 2022; our intention to complete our existing share repurchase program in 2022; expectations regarding performance of our operating segments in 2022, including our operating segment market outlooks and market conditions for 2022, and the anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, grower crop investment, crop mix, prices and the impact of import and export volumes and economic sanctions; Nutrien's ability to develop innovative and sustainable solutions; the negotiation of sales contracts; and acquisitions and divestitures and the anticipated benefits thereof. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.

All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2022 and in the future; assumptions with respect to our ability to repurchase shares under our share repurchase program, including existing and future market conditions and compliance with respect to applicable securities laws and regulations and stock exchange policies; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall global economy; our expectations regarding the impacts, direct and indirect, of the conflict between Ukraine and Russia on, among other things, global supply and demand, energy and commodity prices; interest rates, supply chains and the global economy; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; our ability to maintain investment grade ratings and achieve our performance targets; our ability to successfully negotiate sales contracts; and our ability to successfully implement new initiatives and programs.

Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; the COVID-19 pandemic, including variants of the COVID-19 virus and the efficiency and distribution of vaccines, and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, including government-imposed vaccine mandates, fiscal and monetary responses by governments and financial institutions and disruptions to global supply chains; the conflict between Ukraine and Russia and its potential impact on, among other things, global market conditions and supply and demand, energy and commodity prices; interest rates, supply chains and the global economy generally; our ability to execute on our strategies related to environmental, social, and governance matters, and achieve related expectations; the risk that rising interest rates and/or deteriorated business operating results may result in the impairment of goodwill attributed to certain of our cash generating units; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the SEC in the United States.

The purpose of our adjusted net earnings per share, adjusted EBITDA (consolidated and by segment) and sustaining capital expenditures guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

The forward-looking statements in this document are made as of the date hereof and Nutrien disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable Canadian securities legislation or applicable US federal securities laws.

Terms and Definitions

For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms & Definitions” section of our 2021 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful, and all financial amounts are stated in millions of US dollars, unless otherwise noted.

About Nutrien

Nutrien is the world's largest provider of crop inputs and services, playing a critical role in helping growers increase food production in a sustainable manner. We produce and distribute approximately 27 million tonnes of potash, nitrogen and phosphate products world-wide. With this capability and our leading agriculture retail network, we are well positioned to supply the needs of our customers. We operate with a long-term view and are committed to working with our stakeholders as we address our economic, environmental and social priorities. The scale and diversity of our integrated portfolio provides a stable earnings base, multiple avenues for growth and the opportunity to return capital to shareholders.

Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool

Such data is not incorporated by reference herein.

Nutrien will host a Conference Call on Thursday, August 4, 2022 at 10:00 a.m. Eastern Time.

Telephone Conference dial-in numbers:

  • From Canada and the US 1-888-886-7786
  • International 1-416-764-8683
  • No access code required. Please dial in 15 minutes prior to ensure you are placed on the call in a timely manner.

Live Audio Webcast: Visit https://www.nutrien.com/investors/events/2022-q2-earnings-conference-call

Appendix A - Selected Additional Financial Data

Selected Retail Measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2022

 

2021

 

2022

 

2021

Proprietary products margin as a percentage of product line margin (%)

 

 

 

 

 

 

 

Crop nutrients

22

 

24

 

20

 

23

Crop protection products

39

 

43

 

39

 

42

Seed

46

 

46

 

44

 

43

All products

28

 

29

 

26

 

27

Crop nutrients sales volumes (tonnes – thousands)

 

 

 

 

 

 

 

North America

3,978

 

5,020

 

5,220

 

6,617

International

1,017

 

1,132

 

1,950

 

1,935

Total

4,995

 

6,152

 

7,170

 

8,552

Crop nutrients selling price per tonne

 

 

 

 

 

 

 

North America

940

 

506

 

923

 

494

International

795

 

445

 

676

 

408

Total

911

 

495

 

856

 

475

Crop nutrients gross margin per tonne

 

 

 

 

 

 

 

North America

202

 

127

 

198

 

123

International

105

 

57

 

86

 

54

Total

182

 

114

 

168

 

108

 

 

 

 

 

 

 

 

Financial performance measures

 

 

 

 

2022

 

2021

Retail adjusted EBITDA margin (%) 1, 2

 

12

 

10

Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3

 

1,897

 

1,267

Retail adjusted average working capital to sales (%) 1, 4

 

 

 

15

 

12

Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4

 

1

 

Nutrien Financial adjusted net interest margin (%) 1, 4

 

 

 

 

7.0

 

6.2

Retail cash operating coverage ratio (%) 1, 4

 

 

 

 

54

 

60

Retail normalized comparable store sales (%) 4

 

 

 

 

(3)

 

1

1 Rolling four quarters ended June 30, 2022 and 2021.

2 These are supplementary financial measures. See the “Other Financial Measures" section.

3 Excluding acquisitions.

4 These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

Nutrien Financial

As at June 30, 2022

As at

Dec 31, 2021

(millions of US dollars)

Current

<31 days
past due

31–90 days
past due

>90 days
past due

Gross
Receivables

Allowance 1

Net Receivables

Net Receivables

North America

3,342

201

70

67

3,680

(35)

3,645

1,488

International

642

53

13

53

761

(2)

759

662

Nutrien Financial receivables

3,984

254

83

120

4,441

(37)

4,404

2,150

1 Bad debt expense on the above receivables for the six months ended June 30, 2022 was $8 million (2021 – $5 million) in the Retail segment.

Selected Nitrogen Measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2022

 

2021

 

2022

 

2021

Sales volumes (tonnes – thousands)

 

 

 

 

 

 

 

Fertilizer

1,453

 

1,825

 

2,546

 

3,130

Industrial and feed

1,142

 

1,141

 

2,314

 

2,239

Net sales (millions of US dollars)

 

 

 

 

 

 

 

Fertilizer

1,120

 

638

 

1,894

 

970

Industrial and feed

760

 

344

 

1,448

 

585

Net selling price per tonne

 

 

 

 

 

 

 

Fertilizer

771

 

350

 

744

 

310

Industrial and feed

666

 

302

 

626

 

261

Production Measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2022

 

2021

 

2022

 

2021

Potash production (Product tonnes – thousands)

3,621

 

3,414

 

7,324

 

6,950

Potash shutdown weeks 1

5

 

4

 

5

 

4

Ammonia production – total 2

1,473

 

1,492

 

2,876

 

2,941

Ammonia production – adjusted 2, 3

1,048

 

954

 

2,006

 

2,007

Ammonia operating rate (%) 3

96

 

87

 

92

 

92

P2O5 production (P2O5 tonnes – thousands)

350

 

347

 

728

 

725

P2O5 operating rate (%)

82

 

82

 

86

 

86

1 Represents weeks of full production shutdown, including inventory adjustments and unplanned events, excluding the impact of any periods of reduced operating rates, planned routine annual maintenance shutdowns and announced workforce reductions.

2 All figures are provided on a gross production basis in thousands of product tonnes.

3 Excludes Trinidad and Joffre.

Appendix B - Non-IFRS Financial Measures

We use both IFRS measures and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by a company that (a) depict historical or expected future financial performance, financial position or cash flow of a company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the company, (c) are not disclosed in the financial statements of the company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by a company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the company.

These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.

The following section outlines our non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It also includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As additional non-recurring or unusual items arise in the future, we generally exclude these items in our calculations.

Adjusted EBITDA (Consolidated)

Most directly comparable IFRS financial measure: Net earnings (loss).

Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, share-based compensation and certain foreign exchange gain/loss (net of related derivatives). We also adjust this measure for the following other income and expenses that are excluded when management evaluates the performance of our day-to-day operations: integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses, gain or loss on disposal of certain businesses and investments, and IFRS adoption transition adjustments.

Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations, and as a component of employee remuneration calculations.

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars)

2022

 

2021

 

2022

 

2021

Net earnings

3,601

 

1,113

 

4,986

 

1,246

Finance costs

130

 

125

 

239

 

245

Income tax expense

1,214

 

381

 

1,719

 

406

Depreciation and amortization

505

 

485

 

966

 

965

EBITDA 1

5,450

 

2,104

 

7,910

 

2,862

Share-based compensation (recovery) expense

(52)

 

38

 

83

 

61

Foreign exchange loss (gain), net of related derivatives

31

 

(2)

 

56

 

Integration and restructuring related costs

11

 

29

 

20

 

39

(Reversal) impairment of assets

(450)

 

1

 

(450)

 

5

COVID-19 related expenses 2

3

 

9

 

8

 

18

Gain on disposal of investment

 

 

(19)

 

Cloud computing transition adjustment 3

 

36

 

 

36

Adjusted EBITDA

4,993

 

2,215

 

7,608

 

3,021

1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.

2 COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs, and costs related to construction delays from access limitations and other government restrictions.

3 Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in April 2021.

Adjusted Net Earnings and Adjusted Net Earnings Per Share

Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.

Definition: Adjusted net earnings and related per share information are calculated as net earnings (loss) before share-based compensation and certain foreign exchange gain/loss (net of related derivatives), net of tax. We also adjust this measure for the following other income and expenses (net of tax) that are excluded when management evaluates the performance of our day-to-day operations: certain integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments and gain/loss on early extinguishment of debt. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment.

Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations and is used as a component of employee remuneration calculations.

 

Three Months Ended
June 30, 2022

 

Six Months Ended
June 30, 2022

 

 

 

 

 

Per

 

 

 

 

 

Per

(millions of US dollars, except as otherwise

Increases

 

 

 

Diluted

 

Increases

 

 

 

Diluted

noted)

(Decreases)

 

Post-Tax

 

Share

 

(Decreases)

 

Post-Tax

 

Share

Net earnings attributable to equity holders of Nutrien

 

 

3,593

 

6.51

 

 

 

4,971

 

8.99

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation (recovery) expense

(52)

 

(39)

 

(0.07)

 

83

 

62

 

0.11

Foreign exchange loss, net of related derivatives

31

 

23

 

0.04

 

56

 

42

 

0.07

Integration and restructuring related costs

11

 

8

 

0.01

 

20

 

15

 

0.02

Impairment reversal of assets

(450)

 

(354)

 

(0.64)

 

(450)

 

(354)

 

(0.64)

COVID-19 related expenses

3

 

2

 

 

8

 

6

 

0.01

Gain on disposal of investment

 

 

 

(19)

 

(14)

 

(0.03)

Adjusted net earnings

 

 

3,233

 

5.85

 

 

 

4,728

 

8.53

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended
June 30, 2021

 

Six Months Ended
June 30, 2021

 

 

 

 

 

Per

 

 

 

 

 

Per

(millions of US dollars, except as otherwise

Increases

 

 

 

Diluted

 

Increases

 

 

 

Diluted

noted)

(Decreases)

 

Post-Tax

 

Share

 

(Decreases)

 

Post-Tax

 

Share

Net earnings attributable to equity holders of Nutrien

 

 

1,108

 

1.94

 

 

 

1,235

 

2.16

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Share-based compensation expense

38

 

29

 

0.05

 

61

 

46

 

0.08

Foreign exchange gain, net of related derivatives

(2)

 

(2)

 

 

 

 

Integration and restructuring related costs

29

 

22

 

0.03

 

39

 

30

 

0.05

Impairment of assets

1

 

1

 

 

5

 

4

 

0.01

COVID-19 related expenses

9

 

7

 

0.01

 

18

 

14

 

0.02

Cloud computing transition adjustment

36

 

27

 

0.05

 

36

 

27

 

0.05

Adjusted net earnings

 

 

1,192

 

2.08

 

 

 

1,356

 

2.37

Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per Share Guidance

Adjusted EBITDA and adjusted net earnings per share guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS because a meaningful or accurate calculation of reconciling items and the information is not available without unreasonable effort due to unknown variables, including the timing and amount of certain reconciling items, and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. The probable significance of such unavailable information, which could be material to future results, cannot be addressed. Guidance for adjusted EBITDA and adjusted net earnings per share excludes certain items such as, but not limited to, the impacts of share-based compensation, certain foreign exchange gain/loss (net of related derivatives), integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt.

Free Cash Flow and Free Cash Flow Including Changes in Non-Cash Operating Working Capital

Most directly comparable IFRS financial measure: Cash provided by (used in) operating activities.

Definition: Free cash flow is calculated as cash provided by (used in) operating activities less sustaining capital expenditures and before changes in non-cash operating working capital. Free cash flow including non-cash operating working capital is calculated as cash provided by operating activities less sustaining capital expenditures.

Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength. These are also useful as indicators of our ability to service debt, meet other payment obligations and make strategic investments. These do not represent residual cash flow available for discretionary expenditures.

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars)

2022

 

2021

 

2022

 

2021

Cash provided by operating activities

2,558

 

1,966

 

2,496

 

1,814

Sustaining capital expenditures

(256)

 

(304)

 

(450)

 

(468)

Free cash flow including changes in non-cash operating working capital

2,302

 

1,662

 

2,046

 

1,346

Changes in non-cash operating working capital

(1,111)

 

249

 

(3,181)

 

(543)

Free cash flow

3,413

 

1,413

 

5,227

 

1,889

Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured

Most directly comparable IFRS financial measure: Gross margin.

Definition: Gross margin per tonne less depreciation and amortization per tonne for manufactured products. Reconciliations are provided in the “Segment Results” section.

Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.

Potash Controllable Cash Cost of Product Manufactured (“COPM”) Per Tonne

Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.

Definition: Total Potash COGS excluding depreciation and amortization expense included in COPM, royalties, natural gas costs and carbon taxes, change in inventory, and other adjustments, divided by potash production tonnes.

Why we use the measure and why it is useful to investors: To assess operational performance. In 2022, we replaced Potash cash COPM with this new financial measure. Potash controllable cash COPM excludes the effects of production from other periods and the impacts of our long-term investment decisions. Potash controllable cash COPM also excludes royalties and natural gas costs and carbon taxes, which management does not consider controllable, as they are primarily driven by regulatory and market conditions.

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2022

 

2021

 

2022

 

2021

Total COGS – Potash

399

 

317

 

704

 

608

Change in inventory

(5)

 

(11)

 

72

 

16

Other adjustments 1

(9)

 

(2)

 

(24)

 

(6)

COPM

385

 

304

 

752

 

618

Depreciation and amortization in COPM

(114)

 

(103)

 

(233)

 

(214)

Royalties in COPM

(63)

 

(19)

 

(108)

 

(36)

Natural gas costs and carbon taxes in COPM

(19)

 

(11)

 

(36)

 

(23)

Controllable cash COPM

189

 

171

 

375

 

345

Production tonnes (tonnes – thousands)

3,621

 

3,414

 

7,324

 

6,950

Potash controllable cash COPM per tonne

52

 

50

 

51

 

50

1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.

Ammonia Controllable Cash COPM Per Tonne

Most directly comparable IFRS financial measure: Total manufactured COGS for the Nitrogen segment.

Definition: Total Nitrogen COGS excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.

Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2022

 

2021

 

2022

 

2021

Total Manufactured COGS – Nitrogen

839

 

597

 

1,479

 

1,037

Total Other COGS – Nitrogen

332

 

166

 

573

 

336

Total COGS – Nitrogen

1,171

 

763

 

2,052

 

1,373

Depreciation and amortization in COGS

(115)

 

(134)

 

(217)

 

(242)

Cash COGS for products other than ammonia

(748)

 

(448)

 

(1,272)

 

(841)

Ammonia

 

 

 

 

 

 

 

Total cash COGS before other adjustments

308

 

181

 

563

 

290

Other adjustments 1

(78)

 

(27)

 

(114)

 

(30)

Total cash COPM

230

 

154

 

449

 

260

Natural gas and steam costs

(195)

 

(118)

 

(376)

 

(192)

Controllable cash COPM

35

 

36

 

73

 

68

Production tonnes (net tonnes 2 – thousands)

606

 

703

 

1,280

 

1,305

Ammonia controllable cash COPM per tonne

58

 

51

 

57

 

51

1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.

2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.

Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working Capital to Sales Excluding Nutrien Financial

Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the sales and working capital of certain acquisitions during the first year following the acquisition. We also look at this metric excluding Nutrien Financial revenue and working capital.

Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.

 

Rolling four quarters ended June 30, 2022

(millions of US dollars, except as otherwise noted)

Q3 2021

 

Q4 2021

 

Q1 2022

 

Q2 2022

 

Average/Total

Current assets

8,945

 

9,924

 

12,392

 

12,487

 

 

Current liabilities

(5,062)

 

(7,828)

 

(9,223)

 

(9,177)

 

 

Working capital

3,883

 

2,096

 

3,169

 

3,310

 

3,115

Working capital from certain recent acquisitions

 

 

 

 

 

Adjusted working capital

3,883

 

2,096

 

3,169

 

3,310

 

3,115

Nutrien Financial working capital

(2,820)

 

(2,150)

 

(2,274)

 

(4,404)

 

 

Adjusted working capital excluding Nutrien Financial

1,063

 

(54)

 

895

 

(1,094)

 

203

 

 

 

 

 

 

 

 

 

 

Sales

3,347

 

3,878

 

3,861

 

9,422

 

 

Sales from certain recent acquisitions

 

 

 

 

 

Adjusted sales

3,347

 

3,878

 

3,861

 

9,422

 

20,508

Nutrien Financial revenue

(54)

 

(51)

 

(49)

 

(91)

 

 

Adjusted sales excluding Nutrien Financial

3,293

 

3,827

 

3,812

 

9,331

 

20,263

 

 

 

 

 

 

 

 

 

 

Adjusted average working capital to sales (%)

 

15

Adjusted average working capital to sales excluding Nutrien Financial (%)

 

1

 

 

 

 

 

 

 

 

 

 

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Average/Total

Current assets

7,324

 

8,013

 

9,160

 

9,300

 

 

Current liabilities

(4,108)

 

(6,856)

 

(7,530)

 

(7,952)

 

 

Working capital

3,216

 

1,157

 

1,630

 

1,348

 

1,838

Working capital from certain recent acquisitions

 

 

 

 

 

Adjusted working capital

3,216

 

1,157

 

1,630

 

1,348

 

1,838

Nutrien Financial working capital

(1,711)

 

(1,392)

 

(1,221)

 

(3,072)

 

 

Adjusted working capital excluding Nutrien Financial

1,505

 

(235)

 

409

 

(1,724)

 

(11)

 

 

 

 

 

 

 

 

 

 

Sales

2,742

 

2,618

 

2,972

 

7,537

 

 

Sales from certain recent acquisitions

 

 

 

 

 

Adjusted sales

2,742

 

2,618

 

2,972

 

7,537

 

15,869

Nutrien Financial revenue

(36)

 

(37)

 

(25)

 

(59)

 

 

Adjusted sales excluding Nutrien Financial

2,706

 

2,581

 

2,947

 

7,478

 

15,712

 

 

 

 

 

 

 

 

 

 

Adjusted average working capital to sales (%)

 

12

Adjusted average working capital to sales excluding Nutrien Financial (%)

 

Nutrien Financial Adjusted Net Interest Margin

Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.

Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate financial performance of Nutrien Financial.

 

Rolling four quarters ended June 30, 2022

(millions of US dollars, except as otherwise noted)

Q3 2021

 

Q4 2021

 

Q1 2022

 

Q2 2022

 

Total/Average

Nutrien Financial revenue

54

 

51

 

49

 

91

 

 

Deemed interest expense 1

(10)

 

(12)

 

(6)

 

(12)

 

 

Net interest

44

 

39

 

43

 

79

 

205

 

 

 

 

 

 

 

 

 

 

Average Nutrien Financial receivables

2,820

 

2,150

 

2,274

 

4,404

 

2,912

Nutrien Financial adjusted net interest margin (%)

 

 

 

 

 

 

 

 

7.0

1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.

 

 

 

 

 

 

 

 

 

 

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Total/Average

Nutrien Financial revenue

36

 

37

 

25

 

59

 

 

Deemed interest expense 1

(15)

 

(14)

 

(6)

 

(8)

 

 

Net interest

21

 

23

 

19

 

51

 

114

 

 

 

 

 

 

 

 

 

 

Average Nutrien Financial receivables

1,711

 

1,392

 

1,221

 

3,072

 

1,849

Nutrien Financial adjusted net interest margin (%)

 

 

 

 

 

 

 

 

6.2

1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.

Retail Cash Operating Coverage Ratio

Definition: Retail selling, general and administrative, and other expenses, excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.

Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.

 

Rolling four quarters ended June 30, 2022

(millions of US dollars, except as otherwise noted)

Q3 2021

 

Q4 2021

 

Q1 2022

 

Q2 2022

 

Total

Selling expenses

746

 

848

 

722

 

1,013

 

3,329

General and administrative expenses

45

 

43

 

45

 

54

 

187

Other expenses (income)

17

 

20

 

(12)

 

21

 

46

Operating expenses

808

 

911

 

755

 

1,088

 

3,562

Depreciation and amortization in operating expenses

(180)

 

(173)

 

(167)

 

(171)

 

(691)

Operating expenses excluding depreciation and amortization

628

 

738

 

588

 

917

 

2,871

 

 

 

 

 

 

 

 

 

 

Gross margin

917

 

1,173

 

845

 

2,340

 

5,275

Depreciation and amortization in cost of goods sold

2

 

5

 

2

 

4

 

13

Gross margin excluding depreciation and amortization

919

 

1,178

 

847

 

2,344

 

5,288

Cash operating coverage ratio (%)

 

 

 

 

 

 

 

 

54

 

 

 

 

 

 

 

 

 

 

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Total

Selling expenses

669

 

727

 

667

 

863

 

2,926

General and administrative expenses

34

 

33

 

39

 

41

 

147

Other expenses (income)

(12)

 

8

 

15

 

34

 

45

Operating expenses

691

 

768

 

721

 

938

 

3,118

Depreciation and amortization in operating expenses

(167)

 

(177)

 

(175)

 

(166)

 

(685)

Operating expenses excluding depreciation and amortization

524

 

591

 

546

 

772

 

2,433

 

 

 

 

 

 

 

 

 

 

Gross margin

683

 

885

 

652

 

1,858

 

4,078

Depreciation and amortization in cost of goods sold

3

 

3

 

2

 

3

 

11

Gross margin excluding depreciation and amortization

686

 

888

 

654

 

1,861

 

4,089

Cash operating coverage ratio (%)

 

 

 

 

 

 

 

 

60

Retail Normalized Comparable Store Sales

Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.

Definition: Prior year comparable store sales adjusted for published potash, nitrogen and phosphate benchmark prices and foreign exchange rates used in the current year. We retain sales of closed locations in the comparable base if the closed location is in close proximity to an existing location, unless we plan to exit the market area or are unable to economically or logistically serve it. We do not adjust for temporary closures, expansions or renovations of stores.

Why we use the measure and why it is useful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2022

 

2021

Sales from comparable base

 

 

 

Prior period

10,509

 

9,425

Adjustments 1

(57)

 

Revised prior period

10,452

 

9,425

Current period

13,230

 

10,405

Comparable store sales (%)

27

 

10

Prior period normalized for benchmark prices and foreign exchange rates

13,706

 

10,351

Normalized comparable store sales (%)

(3)

 

1

1 Adjustments relate to prior period sales related to closed locations or businesses that no longer exist in the current period in order to provide a comparable base in our calculation.

Appendix C – Other Financial Measures

Supplementary Financial Measures

Supplementary financial measures are financial measures disclosed by a company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of a company, (b) are not disclosed in the financial statements of the company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios.

The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.

Retail adjusted EBITDA margin: Retail adjusted EBITDA divided by Retail sales for the last four rolling quarters.

Sustaining capital expenditures: Represents capital expenditures that are required to sustain operations at existing levels and include major repairs and maintenance, and plant turnarounds.

Retail adjusted EBITDA per US selling location: Calculated as total Retail US adjusted EBITDA for the last four rolling quarters, representing the organic EBITDA component, which excludes acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations in those quarters.

Shareholder returns (cash used for dividends and share repurchases): Calculated as dividends paid to Nutrien shareholders plus repurchase of common shares. This measure is useful as it represents return of capital to shareholders.

Condensed Consolidated Financial Statements

Unaudited in millions of US dollars except as otherwise noted

Condensed Consolidated Statements of Earnings

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

Note

2022

 

2021

 

2022

 

2021

SALES

2

14,506

 

9,763

 

22,163

 

14,421

Freight, transportation and distribution

 

221

 

222

 

424

 

433

Cost of goods sold

 

8,286

 

6,659

 

12,483

 

9,950

GROSS MARGIN

 

5,999

 

2,882

 

9,256

 

4,038

Selling expenses

 

1,017

 

865

 

1,744

 

1,538

General and administrative expenses

 

140

 

116

 

266

 

219

Provincial mining taxes

 

362

 

107

 

611

 

165

Share-based compensation (recovery) expense

 

(52)

 

38

 

83

 

61

(Reversal) impairment of assets

3

(450)

 

1

 

(450)

 

5

Other expenses

4

37

 

136

 

58

 

153

EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES

4,945

 

1,619

 

6,944

 

1,897

Finance costs

 

130

 

125

 

239

 

245

EARNINGS BEFORE INCOME TAXES

 

4,815

 

1,494

 

6,705

 

1,652

Income tax expense

5

1,214

 

381

 

1,719

 

406

NET EARNINGS

 

3,601

 

1,113

 

4,986

 

1,246

Attributable to

 

 

 

 

 

 

 

 

Equity holders of Nutrien

 

3,593

 

1,108

 

4,971

 

1,235

Non-controlling interest

 

8

 

5

 

15

 

11

NET EARNINGS

 

3,601

 

1,113

 

4,986

 

1,246

 

 

 

 

 

 

 

 

 

NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")

Basic

 

6.53

 

1.94

 

9.02

 

2.17

Diluted

 

6.51

 

1.94

 

8.99

 

2.16

Weighted average shares outstanding for basic EPS

 

550,048,000

 

570,352,000

 

551,335,000

 

570,007,000

Weighted average shares outstanding for diluted EPS

 

551,659,000

 

571,972,000

 

553,198,000

 

571,453,000

Condensed Consolidated Statements of Comprehensive Income

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

(Net of related income taxes)

2022

 

2021

 

2022

 

2021

NET EARNINGS

3,601

 

1,113

 

4,986

 

1,246

Other comprehensive (loss) income

 

 

 

 

 

 

 

Items that will not be reclassified to net earnings:

 

 

 

 

 

 

 

Net actuarial gain on defined benefit plans

 

 

1

 

Net fair value (loss) gain on investments

(38)

 

22

 

(7)

 

70

Items that have been or may be subsequently reclassified to net earnings:

 

 

 

 

 

 

 

(Loss) gain on currency translation of foreign operations

(209)

 

25

 

(81)

 

(5)

Other

5

 

14

 

21

 

20

OTHER COMPREHENSIVE (LOSS) INCOME

(242)

 

61

 

(66)

 

85

COMPREHENSIVE INCOME

3,359

 

1,174

 

4,920

 

1,331

Attributable to

 

 

 

 

 

 

 

Equity holders of Nutrien

3,352

 

1,170

 

4,906

 

1,321

Non-controlling interest

7

 

4

 

14

 

10

COMPREHENSIVE INCOME

3,359

 

1,174

 

4,920

 

1,331

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Cash Flows

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

Note

2022

 

2021

 

2022

 

2021

 

 

 

 

Note 1

 

 

 

Note 1

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

3,601

 

1,113

 

4,986

 

1,246

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

505

 

485

 

966

 

965

Share-based compensation (recovery) expense

 

(52)

 

38

 

83

 

61

(Reversal) impairment of assets

3

(450)

 

1

 

(450)

 

5

Recovery of deferred income tax

 

(53)

 

(20)

 

(8)

 

(10)

Gain on disposal of investment

 

 

 

(19)

 

Cloud computing transition adjustment

4

 

36

 

 

36

Other long-term assets, liabilities and miscellaneous

 

118

 

64

 

119

 

54

Cash from operations before working capital changes

 

3,669

 

1,717

 

5,677

 

2,357

Changes in non-cash operating working capital:

 

 

 

 

 

 

 

 

Receivables

 

(3,933)

 

(2,443)

 

(4,842)

 

(2,835)

Inventories

 

1,748

 

1,848

 

(861)

 

63

Prepaid expenses and other current assets

 

340

 

310

 

1,062

 

998

Payables and accrued charges

 

734

 

534

 

1,460

 

1,231

CASH PROVIDED BY OPERATING ACTIVITIES

 

2,558

 

1,966

 

2,496

 

1,814

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Capital expenditures 1

 

(477)

 

(448)

 

(828)

 

(746)

Business acquisitions, net of cash acquired

 

(27)

 

(19)

 

(68)

 

(40)

Other

 

(4)

 

(29)

 

30

 

(38)

Net changes in non-cash working capital

 

(9)

 

65

 

(108)

 

5

CASH USED IN INVESTING ACTIVITIES

 

(517)

 

(431)

 

(974)

 

(819)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Transaction costs related to debt

 

 

(7)

 

 

(7)

(Repayment of) proceeds from short-term debt, net

 

(604)

 

(104)

 

850

 

(3)

Proceeds from long-term debt

 

41

 

8

 

41

 

8

Repayment of long-term debt

 

(26)

 

(5)

 

(28)

 

(5)

Repayment of principal portion of lease liabilities

 

(94)

 

(86)

 

(173)

 

(164)

Dividends paid to Nutrien's shareholders

7

(264)

 

(263)

 

(521)

 

(518)

Repurchase of common shares

7

(964)

 

(1)

 

(1,606)

 

(2)

Issuance of common shares

 

38

 

21

 

164

 

63

Other

 

(5)

 

(12)

 

(17)

 

(12)

CASH USED IN FINANCING ACTIVITIES

 

(1,878)

 

(449)

 

(1,290)

 

(640)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(29)

 

(4)

 

(20)

 

(15)

INCREASE IN CASH AND CASH EQUIVALENTS

 

134

 

1,082

 

212

 

340

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

 

577

 

712

 

499

 

1,454

CASH AND CASH EQUIVALENTS – END OF PERIOD

 

711

 

1,794

 

711

 

1,794

Cash and cash equivalents comprised of:

 

 

 

 

 

 

 

 

Cash

 

628

 

1,580

 

628

 

1,580

Short-term investments

 

83

 

214

 

83

 

214

 

 

711

 

1,794

 

711

 

1,794

SUPPLEMENTAL CASH FLOWS INFORMATION

 

 

 

 

 

 

 

 

Interest paid

 

150

 

162

 

200

 

238

Income taxes paid

 

396

 

105

 

1,185

 

144

Total cash outflow for leases

 

121

 

111

 

228

 

208

1 Includes additions to property, plant and equipment and intangible assets for the three months ended June 30, 2022 of $427 and $50 (2021 – $443 and $5), respectively, and for the six months ended June 30, 2022 of $733 and $95 (2021 – $708 and $38), respectively.

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

 

 

 

 

 

 

Accumulated Other Comprehensive

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income ("AOCI")

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Currency

 

 

 

 

 

 

 

Equity

 

 

 

 

 

Number of

 

 

 

 

 

Translation

 

 

 

 

 

 

 

Holders

 

Non-

 

 

 

Common

 

Share

 

Contributed

 

of Foreign

 

 

 

Total

 

Retained

 

of

 

Controlling

 

Total

 

Shares

 

Capital

 

Surplus

 

Operations

 

Other

 

AOCI

 

Earnings

 

Nutrien

 

Interest

 

Equity

BALANCE – DECEMBER 31, 2020

569,260,406

 

15,673

 

205

 

(62)

 

(57)

 

(119)

 

6,606

 

22,365

 

38

 

22,403

Net earnings

 

 

 

 

 

 

1,235

 

1,235

 

11

 

1,246

Other comprehensive (loss) income

 

 

 

(4)

 

90

 

86

 

 

86

 

(1)

 

85

Shares repurchased (Note 7)

(32,728)

 

(1)

 

(1)

 

 

 

 

 

(2)

 

 

(2)

Dividends declared

 

 

 

 

 

 

(526)

 

(526)

 

 

(526)

Non-controlling interest transactions

 

 

 

 

 

 

 

 

(12)

 

(12)

Effect of share-based compensation including issuance of common shares

1,427,381

 

74

 

(3)

 

 

 

 

 

71

 

 

71

Transfer of net gain on cash flow hedges

 

 

 

 

(11)

 

(11)

 

 

(11)

 

 

(11)

BALANCE – JUNE 30, 2021

570,655,059

 

15,746

 

201

 

(66)

 

22

 

(44)

 

7,315

 

23,218

 

36

 

23,254

BALANCE – DECEMBER 31, 2021

557,492,516

 

15,457

 

149

 

(176)

 

30

 

(146)

 

8,192

 

23,652

 

47

 

23,699

Net earnings

 

 

 

 

 

 

4,971

 

4,971

 

15

 

4,986

Other comprehensive (loss) income

 

 

 

(80)

 

15

 

(65)

 

 

(65)

 

(1)

 

(66)

Shares repurchased (Note 7)

(19,360,408)

 

(539)

 

(22)

 

 

 

 

(1,075)

 

(1,636)

 

 

(1,636)

Dividends declared

 

 

 

 

 

 

(526)

 

(526)

 

 

(526)

Non-controlling interest transactions

 

 

 

 

 

 

 

 

(17)

 

(17)

Effect of share-based compensation including issuance of common shares

2,994,221

 

197

 

(22)

 

 

 

 

 

175

 

 

175

Transfer of net gain on cash flow hedges

 

 

 

 

(2)

 

(2)

 

 

(2)

 

 

(2)

Transfer of net actuarial gain on defined benefit plans

 

 

 

 

(1)

 

(1)

 

1

 

 

 

BALANCE – JUNE 30, 2022

541,126,329

 

15,115

 

105

 

(256)

 

42

 

(214)

 

11,563

 

26,569

 

44

 

26,613

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Balance Sheets

 

 

June 30

 

December 31

As at

Note

2022

 

2021

 

2021

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

711

 

1,794

 

499

Receivables

 

10,171

 

6,683

 

5,366

Inventories

 

7,160

 

4,876

 

6,328

Prepaid expenses and other current assets

 

615

 

524

 

1,653

 

 

18,657

 

13,877

 

13,846

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

20,492

 

19,592

 

20,016

Goodwill

 

12,213

 

12,211

 

12,220

Other intangible assets

 

2,283

 

2,393

 

2,340

Investments

 

731

 

619

 

703

Other assets

 

859

 

664

 

829

TOTAL ASSETS

 

55,235

 

49,356

 

49,954

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term debt

 

2,403

 

210

 

1,560

Current portion of long-term debt

 

1,028

 

32

 

545

Current portion of lease liabilities

 

303

 

276

 

286

Payables and accrued charges

 

11,682

 

9,367

 

10,052

 

 

15,416

 

9,885

 

12,443

Non-current liabilities

 

 

 

 

 

 

Long-term debt

 

7,056

 

10,029

 

7,521

Lease liabilities

 

913

 

900

 

934

Deferred income tax liabilities

5

3,253

 

3,118

 

3,165

Pension and other post-retirement benefit liabilities

 

422

 

458

 

419

Asset retirement obligations and accrued environmental costs

 

1,376

 

1,559

 

1,566

Other non-current liabilities

 

186

 

153

 

207

TOTAL LIABILITIES

 

28,622

 

26,102

 

26,255

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Share capital

7

15,115

 

15,746

 

15,457

Contributed surplus

 

105

 

201

 

149

Accumulated other comprehensive loss

 

(214)

 

(44)

 

(146)

Retained earnings

 

11,563

 

7,315

 

8,192

Equity holders of Nutrien

 

26,569

 

23,218

 

23,652

Non-controlling interest

 

44

 

36

 

47

TOTAL SHAREHOLDERS’ EQUITY

 

26,613

 

23,254

 

23,699

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

55,235

 

49,356

 

49,954

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Notes to the Condensed Consolidated Financial Statements
As at and for the Three and Six Months Ended June 30, 2022

NOTE 1 BASIS OF PRESENTATION

Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.

These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are materially consistent with those used in the preparation of our 2021 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2021 annual audited consolidated financial statements.

Certain immaterial 2021 figures have been reclassified in the condensed consolidated statements of cash flows and segment note.

In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year.

These interim financial statements were authorized by the audit committee of the Board of Directors for issue on August 3, 2022.

NOTE 2 SEGMENT INFORMATION

The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produce.

 

 

Three Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

9,377

 

2,667

 

1,915

 

547

 

 

 

14,506

 

– intersegment

45

 

78

 

446

 

98

 

 

(667)

 

Sales

– total

9,422

 

2,745

 

2,361

 

645

 

 

(667)

 

14,506

Freight, transportation and

distribution

 

77

 

132

 

55

 

 

(43)

 

221

Net sales

9,422

 

2,668

 

2,229

 

590

 

 

(624)

 

14,285

Cost of goods sold

7,082

 

399

 

1,171

 

434

 

 

(800)

 

8,286

Gross margin

2,340

 

2,269

 

1,058

 

156

 

 

176

 

5,999

Selling expenses

1,013

 

3

 

7

 

2

 

(2)

 

(6)

 

1,017

General and administrative

expenses

54

 

2

 

4

 

3

 

77

 

 

140

Provincial mining taxes

 

362

 

 

 

 

 

362

Share-based compensation recovery

 

 

 

 

(52)

 

 

(52)

Impairment reversal of assets

 

 

 

(450)

 

 

 

(450)

Other expenses (income)

21

 

5

 

(54)

 

8

 

48

 

9

 

37

Earnings (loss) before finance costs

and income taxes

1,252

 

1,897

 

1,101

 

593

 

(71)

 

173

 

4,945

Depreciation and amortization

175

 

130

 

139

 

41

 

20

 

 

505

EBITDA 1

1,427

 

2,027

 

1,240

 

634

 

(51)

 

173

 

5,450

Integration and restructuring related

costs

 

 

 

 

11

 

 

11

Share-based compensation recovery

 

 

 

 

(52)

 

 

(52)

Impairment reversal of assets

 

 

 

(450)

 

 

 

(450)

COVID-19 related expenses

 

 

 

 

3

 

 

3

Foreign exchange loss, net of

related derivatives

 

 

 

 

31

 

 

31

Adjusted EBITDA

1,427

 

2,027

 

1,240

 

184

 

(58)

 

173

 

4,993

Assets – at June 30, 2022

24,825

 

14,777

 

11,726

 

2,396

 

2,562

 

(1,051)

 

55,235

1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.

 

 

Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

7,522

 

844

 

1,008

 

389

 

 

 

9,763

 

– intersegment

15

 

61

 

307

 

60

 

 

(443)

 

Sales

– total

7,537

 

905

 

1,315

 

449

 

 

(443)

 

9,763

Freight, transportation and

distribution

 

88

 

136

 

46

 

 

(48)

 

222

Net sales

7,537

 

817

 

1,179

 

403

 

 

(395)

 

9,541

Cost of goods sold

5,679

 

317

 

763

 

319

 

 

(419)

 

6,659

Gross margin

1,858

 

500

 

416

 

84

 

 

24

 

2,882

Selling expenses

863

 

2

 

8

 

1

 

(9)

 

 

865

General and administrative expenses

41

 

3

 

3

 

3

 

66

 

 

116

Provincial mining taxes

 

107

 

 

 

 

 

107

Share-based compensation expense

 

 

 

 

38

 

 

38

Impairment of assets

 

 

1

 

 

 

 

1

Other expenses

34

 

11

 

5

 

3

 

83

 

 

136

Earnings (loss) before finance costs

and income taxes

920

 

377

 

399

 

77

 

(178)

 

24

 

1,619

Depreciation and amortization

169

 

116

 

155

 

35

 

10

 

 

485

EBITDA

1,089

 

493

 

554

 

112

 

(168)

 

24

 

2,104

Integration and restructuring related

costs

7

 

 

 

 

22

 

 

29

Share-based compensation expense

 

 

 

 

38

 

 

38

Impairment of assets

 

 

1

 

 

 

 

1

COVID-19 related expenses

 

 

 

 

9

 

 

9

Foreign exchange gain, net of related

derivatives

 

 

 

 

(2)

 

 

(2)

Cloud computing transition

adjustment

1

 

2

 

 

 

33

 

 

36

Adjusted EBITDA

1,097

 

495

 

555

 

112

 

(68)

 

24

 

2,215

Assets – at December 31, 2021

22,387

 

13,148

 

11,093

 

1,699

 

2,266

 

(639)

 

49,954

 

 

Six Months Ended June 30, 2022

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

13,210

 

4,377

 

3,412

 

1,164

 

 

 

22,163

 

– intersegment

73

 

312

 

785

 

177

 

 

(1,347)

 

Sales

– total

13,283

 

4,689

 

4,197

 

1,341

 

 

(1,347)

 

22,163

Freight, transportation and

distribution

 

171

 

227

 

116

 

 

(90)

 

424

Net sales

13,283

 

4,518

 

3,970

 

1,225

 

 

(1,257)

 

21,739

Cost of goods sold

10,098

 

704

 

2,052

 

862

 

 

(1,233)

 

12,483

Gross margin

3,185

 

3,814

 

1,918

 

363

 

 

(24)

 

9,256

Selling expenses

1,735

 

6

 

15

 

4

 

(4)

 

(12)

 

1,744

General and administrative expenses

99

 

4

 

10

 

6

 

147

 

 

266

Provincial mining taxes

 

611

 

 

 

 

 

611

Share-based compensation expense

 

 

 

 

83

 

 

83

Impairment reversal of assets

 

 

 

(450)

 

 

 

(450)

Other expenses (income)

9

 

2

 

(80)

 

12

 

101

 

14

 

58

Earnings (loss) before finance costs

and income taxes

1,342

 

3,191

 

1,973

 

791

 

(327)

 

(26)

 

6,944

Depreciation and amortization

344

 

242

 

262

 

82

 

36

 

 

966

EBITDA

1,686

 

3,433

 

2,235

 

873

 

(291)

 

(26)

 

7,910

Integration and restructuring related

costs

 

 

 

 

20

 

 

20

Share-based compensation expense

 

 

 

 

83

 

 

83

Impairment reversal of assets

 

 

 

(450)

 

 

 

(450)

COVID-19 related expenses

 

 

 

 

8

 

 

8

Foreign exchange loss, net of related

derivatives

 

 

 

 

56

 

 

56

Gain on disposal of investment

(19)

 

 

 

 

 

 

(19)

Adjusted EBITDA

1,667

 

3,433

 

2,235

 

423

 

(124)

 

(26)

 

7,608

Assets – at June 30, 2022

24,825

 

14,777

 

11,726

 

2,396

 

2,562

 

(1,051)

 

55,235

 

 

Six Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

10,482

 

1,475

 

1,703

 

761

 

 

 

14,421

 

– intersegment

27

 

151

 

467

 

132

 

 

(777)

 

Sales

– total

10,509

 

1,626

 

2,170

 

893

 

 

(777)

 

14,421

Freight, transportation and

 

 

198

 

231

 

105

 

 

(101)

 

433

Net sales

10,509

 

1,428

 

1,939

 

788

 

 

(676)

 

13,988

Cost of goods sold

7,999

 

608

 

1,373

 

638

 

 

(668)

 

9,950

Gross margin

2,510

 

820

 

566

 

150

 

 

(8)

 

4,038

Selling expenses

1,530

 

5

 

15

 

3

 

(15)

 

 

1,538

General and administrative expenses

80

 

5

 

5

 

5

 

124

 

 

219

Provincial mining taxes

 

165

 

 

 

 

 

165

Share-based compensation expense

 

 

 

 

61

 

 

61

Impairment of assets

 

 

5

 

 

 

 

5

Other expenses (income)

49

 

12

 

(25)

 

6

 

111

 

 

153

Earnings (loss) before finance costs

and income taxes

851

 

633

 

566

 

136

 

(281)

 

(8)

 

1,897

Depreciation and amortization

346

 

240

 

284

 

73

 

22

 

 

965

EBITDA

1,197

 

873

 

850

 

209

 

(259)

 

(8)

 

2,862

Integration and restructuring related

costs

8

 

 

 

 

31

 

 

39

Share-based compensation expense

 

 

 

 

61

 

 

61

Impairment of assets

 

 

5

 

 

 

 

5

COVID-19 related expenses

 

 

 

 

18

 

 

18

Cloud computing transition

adjustment

1

 

2

 

 

 

33

 

 

36

Adjusted EBITDA

1,206

 

875

 

855

 

209

 

(116)

 

(8)

 

3,021

Assets – at December 31, 2021

22,387

 

13,148

 

11,093

 

1,699

 

2,266

 

(639)

 

49,954

Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment.

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

 

2022

 

2021

 

2022

 

2021

Retail sales by product line

 

 

 

 

 

 

 

Crop nutrients

4,548

 

3,045

 

6,135

 

4,061

Crop protection products

2,983

 

2,666

 

4,370

 

3,751

Seed

1,269

 

1,216

 

1,727

 

1,679

Merchandise

280

 

268

 

514

 

498

Nutrien Financial

91

 

59

 

140

 

84

Services and other 1

310

 

320

 

485

 

485

Nutrien Financial elimination 1,2

(59)

 

(37)

 

(88)

 

(49)

 

9,422

 

7,537

 

13,283

 

10,509

Potash sales by geography

 

 

 

 

 

 

 

Manufactured product

 

 

 

 

 

 

 

North America

757

 

414

 

1,684

 

856

Offshore 3

1,988

 

491

 

3,005

 

770

 

2,745

 

905

 

4,689

 

1,626

Nitrogen sales by product line

 

 

 

 

 

 

 

Manufactured product

 

 

 

 

 

 

 

Ammonia

786

 

405

 

1,377

 

593

Urea

637

 

372

 

1,121

 

646

Solutions, nitrates and sulfates

578

 

329

 

1,052

 

526

Other nitrogen and purchased products

360

 

209

 

647

 

405

 

2,361

 

1,315

 

4,197

 

2,170

Phosphate sales by product line

 

 

 

 

 

 

 

Manufactured product

 

 

 

 

 

 

 

Fertilizer

358

 

258

 

790

 

530

Industrial and feed

204

 

133

 

388

 

259

Other phosphate and purchased products

83

 

58

 

163

 

104

 

645

 

449

 

1,341

 

893

1 Certain immaterial 2021 figures have been reclassified.

2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.

3 Relates to Canpotex Limited ("Canpotex") (Note 9) and includes provisional pricing adjustments for the three months ended June 30, 2022 of $191 (2021 – $45) and the six months ended June 30, 2022 of $253 (2021 – $51).

NOTE 3 IMPAIRMENT OF ASSETS

Phosphate Impairment Reversal

In the three months ended June 30, 2022, we revised our pricing forecasts to reflect the current macroeconomic environment. This resulted in a review of our previously impaired Phosphate cash-generating units (“CGUs”).

In 2020, we recorded an impairment of assets relating to property, plant and equipment of $545 at our Aurora CGU as a result of lower long-term forecasted global phosphate prices. Due to increases in our forecast, the recoverable amount of our Aurora CGU is above its carrying amount. As a result, during the three and six months ended June 30, 2022, we recorded an impairment reversal of $450 (full reversal, net of depreciation) in the statement of earnings relating to property, plant and equipment.

Aurora CGU

 

 

Segment

 

Phosphate

Impairment reversal indicator

 

Higher forecasted global prices

Valuation methodology

 

Fair value less costs of disposal ("FVLCD")

Fair value hierarchy

 

Level 3

Valuation technique

 

Five-year DCF1 plus terminal year to end of mine life

Key assumptions

 

 

End of mine life (proven and probable reserves) (year)

 

2050

Long-term growth rate (%)

 

2.0

Post-tax discount rate (%) 2

 

10.4

1 Discounted Cash Flow

 

 

2 Post-tax discount rate used in the previous measurement was 10.5%

 

 

 

 

As at

Aurora CGU

 

June 30, 2022

Recoverable amount

 

2,900

Carrying amount

 

1,200

The recoverable amount estimate is most sensitive to the following key assumptions: our internal sales and input price forecasts, which consider projections from independent third-party data sources, discount rate, and expected mine life. We used key assumptions that were based on historical data and estimates of future results from internal sources, external price benchmarks, and mineral reserve technical reports, as well as industry and market trends. For our Aurora CGU, there were no reasonably possible changes in key assumptions that would result in a substantial change in the reversal amount.

In 2017 and 2020, we recorded an impairment of assets at our White Springs CGU relating to property, plant and equipment of $250 and $215 respectively. The White Springs CGU has a shorter expected mine life and is therefore more sensitive to changes in short and medium-term pricing forecasts. The impairment test performed on our White Springs CGU at June 30, 2022 did not result in recognition of an impairment reversal as the recoverable amount was not substantially different than the carrying amount of the CGU. We are continuously monitoring our key assumptions for changes that could have an impact on the recoverable amount including our internal sales and input price forecasts. Changes in these key assumptions could result in impairment reversals in future periods. The maximum impairment reversal that could result at our White Springs CGU is $340 (full reversal, net of depreciation).

Goodwill Impairment Indicators

During the six months ended June 30, 2022, North American central banks continued to increase their benchmark borrowing rates and have forecasted additional near-term increases. Benchmark borrowing rates are used as the risk-free rate which, is a component of determining our discount rate for impairment testing. As a result of these increases, we revised our discount rate to 8.0 percent (previous annual impairment analysis – 7.4 percent) and this triggered an impairment test to be performed for our Retail – North America group of CGUs. We used the FVLCD methodology based on after-tax discounted cash flows (five-year projections and a terminal year thereafter) and incorporated assumptions an independent market participant would apply. FVLCD is a Level 3 measurement.

 

 

2021 Impairment

 

As at

Retail - North America group of CGUs

 

Analysis

 

June 30, 2022

Carrying amount of goodwill (billions)

 

6.9

 

6.9

Excess carrying amount over recoverable amount (billions)

 

1.5

 

0.8

Excess carrying amount over recoverable amount (percent)

 

12

 

7

Goodwill is more susceptible to impairment risk if business operating results or economic conditions deteriorate and actual results do not meet our forecasts. A reduction in the terminal growth rate, an increase in the discount rate or a decrease in forecasted EBITDA and cash flows could cause impairment in the future.

The following table indicates the percentages by which key assumptions would need to change individually for the estimated recoverable amount to be equal to the carrying amount:

 

 

 

Change Required for

 

Value Used in Impairment

 

Carrying Amount to Equal

Key Assumptions

Model

 

Recoverable Amount

Terminal growth rate (%)

2.5

 

percentage point decrease

0.6

Forecasted EBITDA over forecast period (in billions of US dollars)

7.5

 

percent decrease

5.0

Discount rate (%)

8.0

 

percentage point increase

0.4

NOTE 4 OTHER EXPENSES (INCOME)

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

 

2022

 

2021

 

2022

 

2021

Integration and restructuring related costs

11

 

29

 

20

 

39

Foreign exchange loss, net of related derivatives

31

 

1

 

56

 

3

Earnings of equity-accounted investees

(77)

 

(2)

 

(118)

 

(22)

Bad debt expense

14

 

13

 

14

 

15

COVID-19 related expenses

3

 

9

 

8

 

18

Gain on disposal of investment

 

 

(19)

 

Cloud computing transition adjustment

 

36

 

 

36

Other expenses

55

 

50

 

97

 

64

37

 

136

 

58

 

153

NOTE 5 INCOME TAXES

A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

 

2022

 

2021

 

2022

 

2021

Income tax expense

1,214

 

381

 

1,719

 

406

Actual effective tax rate on earnings (%)

25

 

26

 

26

 

25

Actual effective tax rate including discrete items (%)

25

 

26

 

25

 

25

Discrete tax adjustments that impacted the tax rate

12

 

(3)

 

20

 

(3)

Income tax balances within the condensed consolidated balance sheets were comprised of the following:

Income Tax Assets and Liabilities

Balance Sheet Location

As at June 30, 2022

As at December 31, 2021

Income tax assets

 

 

 

Current

Receivables

252

223

Non-current

Other assets

132

166

Deferred income tax assets

Other assets

355

262

Total income tax assets

 

739

651

Income tax liabilities

 

 

 

Current

Payables and accrued charges

1,132

606

Non-current

Other non-current liabilities

52

44

Deferred income tax liabilities

Deferred income tax liabilities

3,253

3,165

Total income tax liabilities

 

4,437

3,815

NOTE 6 FINANCIAL INSTRUMENTS

Fair Value

Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 10 of the 2021 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.

The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:

 

June 30, 2022

 

December 31, 2021

 

Carrying

 

 

 

 

 

 

 

Carrying

 

 

 

 

 

 

Financial assets (liabilities) measured at

Amount

 

Level 1

 

Level 2

 

Level 3

 

Amount

 

Level 1

 

Level 2

 

Level 3

Fair value on a recurring basis 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

711

 

 

711

 

 

499

 

 

499

 

Derivative instrument assets

34

 

 

34

 

 

19

 

 

19

 

Other current financial assets - marketable securities 2

133

 

18

 

115

 

 

134

 

19

 

115

 

Investments at FVTOCI 3

237

 

227

 

 

10

 

244

 

234

 

 

10

Derivative instrument liabilities

(24)

 

 

(24)

 

 

(20)

 

 

(20)

 

Amortized cost

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current portion of long-term debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes and debentures

(999)

 

 

(995)

 

 

(500)

 

(506)

 

 

Fixed and floating rate debt

(29)

 

 

(29)

 

 

(45)

 

 

(45)

 

Long-term debt

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes and debentures

(6,921)

 

(931)

 

(5,683)

 

 

(7,424)

 

(4,021)

 

(4,709)

 

Fixed and floating rate debt

(135)

 

 

(135)

 

 

(97)

 

 

(97)

 

1 During the periods ended June 30, 2022 and December 31, 2021, there were no transfers between levelling for financial instruments measured at fair value on a recurring basis.

2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk.

3 Investments at fair value through other comprehensive income ("FVTOCI") is primarily comprised of shares in Sinofert Holdings Ltd.

NOTE 7 SHARE CAPITAL

Share Repurchase Programs

 

 

 

 

 

Maximum

 

Maximum

 

Number of

 

Commencement

 

 

 

Shares for

 

Shares for

 

Shares

 

Date

 

Expiry

 

Repurchase

 

Repurchase (%)

 

Repurchased

2020 Normal Course Issuer Bid

February 27, 2020

 

February 26, 2021

 

28,572,458

 

5

 

710,100

2021 Normal Course Issuer Bid

March 1, 2021

 

February 28, 2022

 

28,468,448

 

5

 

22,186,395

2022 Normal Course Issuer Bid 1

March 1, 2022

 

February 28, 2023

 

55,111,110

 

10

 

13,156,167

1 The 2022 normal course issuer bid will expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.

Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities laws, including private agreements.

The following table summarizes our share repurchase activities during the period:

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

 

2022

 

2021

 

2022

 

2021

Number of common shares repurchased for cancellation

11,712,173

 

17,750

 

19,360,408

 

32,728

Average price per share (US dollars)

89.51

 

52.88

 

84.48

 

52.90

Total cost

1,049

 

1

 

1,636

 

2

As of August 2, 2022, an additional 2,205,645 common shares were repurchased for cancellation at a cost of $172 and an average price per share of $78.21.

Dividends Declared

We declared a dividend per share of $0.48 (2021 – $0.46) during the three months ended June 30, 2022, payable on July 15, 2022 to shareholders of record on June 30, 2022.

NOTE 8 SEASONALITY

Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

NOTE 9 RELATED PARTY TRANSACTIONS

We sell potash outside Canada and the United States exclusively through Canpotex. Canpotex sells potash to buyers in export markets pursuant to term and spot contracts at agreed upon prices. Our revenue is recognized at the amount received from Canpotex representing proceeds from their sale of potash, less net costs of Canpotex. Sales to Canpotex are shown in Note 2.

As at

June 30, 2022

 

December 31, 2021

Receivables from Canpotex

1,805

 

828

NOTE 10 SUBSEQUENT EVENTS

On July 20, 2022, Nutrien announced the planned acquisition of Casa do Adubo S.A. The acquisition includes 39 retail locations and 10 distribution centers in Brazil. Closing of the transaction is subject to approval from the Administrative Council for Economic Defense (CADE) in Brazil and is expected to be completed in the second half of 2022.

Subsequent to June 30, 2022, and in addition to the $500 increase in our uncommitted revolving demand facility during the second quarter of 2022, we entered into $2 billion in new non-revolving term credit facilities, all with the same principal covenants and events of default as our existing revolving term credit facilities. These new facilities are temporary to help manage normal seasonal working capital swings and are intended to be closed before year-end. As of August 2, 2022, we had approximately $3.0 billion drawn on our credit facilities and a commercial paper balance of approximately $2.1 billion.

Investor Relations:

Jeff Holzman

Vice President, Investor Relations

(306) 933-8545

Investors@nutrien.com

Media Relations:

Megan Fielding

Vice President, Brand & Culture Communications

(403) 797-3015

Contact us at: www.nutrien.com

Source: Nutrien Ltd.

FAQ

What were Nutrien's Q2 2022 net earnings and EPS?

Nutrien reported net earnings of $3.6 billion and diluted EPS of $6.51 in Q2 2022.

What is Nutrien's adjusted EBITDA guidance for 2022?

Nutrien's adjusted EBITDA guidance for 2022 is between $14.0 billion and $15.5 billion.

How much capital is Nutrien returning to shareholders in 2022?

Nutrien intends to return approximately $6 billion to shareholders through share repurchases in 2022.

What factors contributed to Nutrien's strong performance in H1 2022?

The strong performance was attributed to higher realized prices, strong Retail performance, and favorable market conditions.

Why did Nutrien experience lower North American sales volumes?

Sales volumes were lower due to a compressed application season.

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