Nutrien reports third quarter 2024 results

All amounts are in US dollars, except as otherwise noted

Nutrien Ltd. (TSX and NYSE: NTR) announced its third quarter 2024 results, with net earnings of $25 million ($0.04 diluted net earnings per share). Third quarter 2024 adjusted EBITDA¹ was $1.0 billion and adjusted net earnings per share¹ was $0.39.

″Nutrien delivered higher Potash sales volumes and lower operating costs through the first nine months of 2024, utilizing the strengths of our six-mine network and global distribution capabilities to respond to increased customer demand. We are seeing strong crop nutrient demand in North America for the fall application season following a period of lower field activity in the third quarter,″ commented Ken Seitz, Nutrien’s President and CEO.

″We remain focused on strategic priorities that strengthen the advantages of our business across the ag value chain. This includes accelerating the timeline for achieving our annual consolidated cost savings target, further optimizing capital expenditures, delivering upstream fertilizer sales volume growth and advancing high-return downstream Retail growth opportunities. These initiatives provide a pathway for delivering structural improvements to our earnings and free cash flow through the cycle,″ added Mr. Seitz.

Highlights²:

• Generated net earnings of $582 million and adjusted EBITDA of $4.3 billion in the first nine months of 2024.

  
  

• Retail adjusted EBITDA increased to $1.4 billion in the first nine months of 2024 supported by higher product margins in North America. Lowered full-year 2024 Retail adjusted EBITDA guidance to $1.5 to $1.6 billion as favorable growing conditions in North America resulted in reduced pest pressure and lower field activity in the third quarter.

  
  

• Potash adjusted EBITDA decreased to $1.6 billion in the first nine months of 2024 due to lower net selling prices, partially offset by record sales volumes of 11.1 million tonnes. Raised full-year 2024 Potash sales volumes guidance to 13.5 to 13.9 million tonnes due to the continued strength of global demand.

  
  

• Nitrogen adjusted EBITDA decreased to $1.4 billion in the first nine months of 2024 as lower net selling prices more than offset lower natural gas costs and higher sales volumes. Total ammonia production increased in the first nine months of 2024, driven by improved natural gas utilization and reliability at our operations in Trinidad.

  
  

• Accelerated operational efficiency and cost savings initiatives and expect to achieve approximately $200 million of annual consolidated savings by 2025, ahead of our initial target of 2026.

  
  

• Maintained total capital expenditures guidance of $2.2 to $2.3 billion for 2024 and expect capital expenditures in a range of $2.0 to $2.1 billion in 2025 to sustain our assets and deliver on our growth initiatives.

  
  

• Repurchased 1.5 million shares for a total of approximately $75 million in the second half of 2024 as of November 5, 2024.

1. This is a non-GAAP financial measure. See the ″Non-GAAP Financial Measures″ section.

2. Our discussion of highlights set out on this page is a comparison of the results for the three and nine months ended September 30, 2024 to the results for the three and nine months ended September 30, 2023, unless otherwise noted.

Management’s Discussion and Analysis

The following management’s discussion and analysis (″MD&A″) is the responsibility of management and is dated as of November 6, 2024. The Board of Directors (″Board″) of Nutrien carries out its responsibility for review of this disclosure principally through its Audit Committee, composed entirely of independent directors. The Audit Committee reviews and, prior to its publication, approves this disclosure pursuant to the authority delegated to it by the Board. The term ″Nutrien″ refers to Nutrien Ltd. and the terms ″we″, ″us″, ″our″, ″Nutrien″ and ″the Company″ refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our annual report dated February 22, 2024 (″2023 Annual Report″), which includes our annual audited consolidated financial statements (″annual financial statements″) and MD&A, and our annual information form dated February 22, 2024, each for the year ended December 31, 2023, can be found on SEDAR+ at www.sedarplus.ca and on EDGAR at www.sec.gov. No update is provided to the disclosure in our 2023 annual MD&A except for material information since the date of our annual MD&A. The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the ″SEC″).

This MD&A is based on, and should be read in conjunction with, the Company’s unaudited interim condensed consolidated financial statements as at and for the three and nine months ended September 30, 2024 (″interim financial statements″) based on International Financial Reporting Standards (″IFRS″) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard (″IAS″) 34 ″Interim Financial Reporting″, unless otherwise noted. This MD&A contains certain non-GAAP financial measures and ratios and forward-looking statements, which are described in the ″Non-GAAP Financial Measures″ and the ″Forward-Looking Statements″ sections, respectively.

Market Outlook and Guidance

Agriculture and Retail Markets

• Favorable growing conditions in the US have supported expectations for record US corn and soybean yields and significant soil nutrient removal in 2024. Prospective crop margins have declined compared to the historically high levels in recent years, however we believe most growers in the US Midwest remain in a healthy financial position. Global grain stocks remain below historical average levels, supporting export demand for North American crops and firm prices for key agriculture commodities such as rice, sugar and palm oil.

  
  

• Fertilizer demand in North America for the fall application season has been supported by a relatively early harvest and the need to replenish soil nutrients, following a period of lower field activity in the third quarter.

  
  

• Soybean planting in Brazil was delayed by dryness; however, the pace of planting picked up in the second half of October and soybean crop area is expected to increase by one to three percent. Brazilian fertilizer demand is projected to be approximately 46 million tonnes in 2024, in line with historical record levels.

  
  

• Australian growing conditions for winter crops have been favorable with timely rains received in key areas, supporting crop production prospects and expected grower returns.

Crop Nutrient Markets

• We raised our 2024 global potash shipment forecast to 70 to 72 million tonnes primarily driven by stronger expected demand in Brazil and Southeast Asia. We believe the increase in global shipments in 2024 has been driven by an underlying increase in consumption in key markets.

  
  

• We forecast global potash shipments between 71 and 74 million tonnes in 2025 supported by the need to replenish soil nutrient levels and the relative affordability of potash. We anticipate limited new capacity in 2025 and the potential for incremental supply tightness with demand growth.

  
  

• Global ammonia prices have been supported by supply outages, project delays and higher European natural gas values. Chinese urea export restrictions, production challenges from major exporters and strong demand from India and Brazil have tightened the global urea market. US nitrogen inventory was estimated to be well below average levels at the end of the third quarter, which we expect will support demand in the fourth quarter of 2024 and early 2025.

  
  

• Global phosphate markets remain tight supported by Chinese export restrictions and production outages in the US. We anticipate some impact on global demand due to tight supply and weaker affordability relative to potash and nitrogen.

Financial and Operational Guidance

• Retail adjusted EBITDA guidance was lowered to $1.5 to $1.6 billion as favorable growing conditions in North America resulted in reduced pest pressure and lower field activity in the third quarter.

  
  

• Potash sales volume guidance was raised to 13.5 to 13.9 million tonnes due to the continued strength of global demand. The range reflects our scheduled maintenance downtime in the fourth quarter and the assumption of a relatively short duration labor disruption at the Port of Vancouver.

  
  

• Nitrogen sales volume guidance was lowered to 10.6 to 10.8 million tonnes due to extended turnarounds and unplanned outages in the third quarter, including the impact of weather-related events.

  
  

• Phosphate sales volume guidance was lowered to 2.4 to 2.5 million tonnes due to weather-related production impacts in the second half of 2024.

  
  

• Effective tax rate on adjusted net earnings guidance was lowered primarily due to a change in our expected geographic mix of earnings.

All guidance numbers, including those noted above, are outlined in the table below. Refer to page 65 of Nutrien’s 2023 Annual Report for related assumptions and sensitivities.

Consolidated Results

Net earnings and adjusted EBITDA decreased in the third quarter of 2024 compared to the same period in 2023, primarily due to lower Potash net selling prices and Retail earnings, partially offset by higher Nitrogen net selling prices and record Potash sales volumes. Net earnings were impacted over the same period due to higher expense for asset retirement obligations at non-operating sites. For the first nine months of the year, net earnings and adjusted EBITDA decreased due to lower fertilizer net selling prices, partially offset by increased Retail earnings, higher Potash sales volumes and lower natural gas costs. Net earnings were also impacted over the same period due to a loss on foreign currency derivatives.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and nine months ended September 30, 2024 to the results for the three and nine months ended September 30, 2023, unless otherwise noted.

Nutrien Ag Solutions (″Retail″)

• Retail adjusted EBITDA decreased in the third quarter of 2024 due primarily to lower crop nutrient sales volumes in North America and lower seed margins in Brazil. Adjusted EBITDA for the first nine months increased, supported by higher product margins in North America.

• Crop nutrients sales decreased in the third quarter and first nine months of 2024 due to lower sales volumes and selling prices. Gross margin decreased in the third quarter due to reduced field activity in North America that contributed to lower sales volumes and lower international per-tonne margins compared to the historically high levels in the same period last year that were supported by foreign exchange benefits in Argentina. For the first nine months, gross margin increased due to higher per-tonne margins, including growth in our proprietary crop nutritional and biostimulant product lines.

  
  

• Crop protection products sales were lower in the third quarter and first nine months of 2024 primarily due to lower selling prices and favorable growing conditions that resulted in reduced pest pressure and lower field activity. Gross margin for the third quarter and first nine months of 2024 were supported by the timing of supplier programs and the selling through of lower cost inventory compared to the same periods in 2023.

  
  

• Seed sales and gross margin decreased in the third quarter and first nine months of 2024 mainly due to the impact of dry weather and delayed planting on our proprietary seed business in Brazil.

  
  

• Nutrien Financial sales and gross margin increased in the third quarter and first nine months of 2024 due to higher financing rates offered.

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