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Nutrien Delivers Stable Earnings in a Challenging Year

all amounts are in US dollars except as otherwise noted

SASKATOON, Saskatchewan--(BUSINESS WIRE)-- Nutrien Ltd. (Nutrien) (NYSE, TSX: NTR) announced today its 2019 fourth-quarter and full year 2019 results, with a net loss from continuing operations of $48 million($0.08 diluted loss per share) in the fourth quarter of 2019. Fourth-quarter adjusted net earnings was $0.09 per shareand adjusted EBITDA was $664 million. Adjusted net earnings (total and per share amounts) and adjusted EBITDA, together with the related annual guidance, Potash adjusted EBITDA, free cash flow and free cash flow including changes in non-cash working capital are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

“Nutrien’s earnings held up well in 2019 and we generated strong free cash flow in a very tough agriculture market. We executed on our strategic plan, growing our Retail business with several strategic acquisitions and made great strides with the roll-out and adoption of our leading Retail digital platform and financial tools. Agriculture fundamentals are strengthening and grower sentiment is positive. We expect higher planting and favorable farm economics to support strong North American crop input demand in 2020,” commented Chuck Magro, Nutrien’s President and CEO.

“Our business is designed to provide stability in times of market weakness, with significant leverage through a recovery in fertilizer markets. We remain focused on optimizing our network, allocating capital to grow our Retail business and leading our industry in returning capital to shareholders,” added Mr. Magro.

Highlights:

  • Nutrien generated $2.2 billion in free cash flow in 2019, up 9 percent over last year, and $2.6 billion in free cash flow including changes in non-cash working capital in 2019, which is over three times higher than in 2018.
  • Nutrien recorded a number of charges totaling $128 million this quarter related to mergers, acquisitions and impairments, the largest associated with the rebranding of the Australian retail business after the Ruralco acquisition.
  • Retail performed well as EBITDA increased 8 percent in the fourth quarter and 2 percent in the full year 2019, compared to the same periods in 2018. Nutrien’s sales, service and supply chain strength helped to grow market share and we expect strong EBITDA growth in 2020 due to contributions from acquisitions, improved market conditions and organic growth.
  • Potash EBITDA was down 62 percent in the fourth quarter of 2019 compared to the same period in 2018 due to lower sales volumes and lower net realized selling prices caused by a temporary reduction in global demand, the impact of production downtime and the Canadian National Railway labor strike. 2019 potash adjusted EBITDA was similar to 2018 as higher average net realized selling prices were mostly offset by lower sales volumes.
  • Nitrogen EBITDA in the fourth quarter of 2019 was 19 percent lower than the same period last year due primarily to lower ammonia sales volumes and a lower nitrogen net realized selling price. Nitrogen EBITDA in 2019 increased 2 percent compared to 2018 as lower natural gas costs in North America more than offset higher natural gas costs in Trinidad, and higher earnings from equity-accounted investees and the impact of IFRS 16 more than offset lower ammonia sales volumes and lower nitrogen net realized selling prices.
  • In the fourth quarter of 2019, Nutrien increased the maximum number of common shares that may be acquired under its current normal course issuer bid (NCIB) to approximately 7 percent of the outstanding common shares. Nutrien repurchased an aggregate of 36 million common shares in 2019 and 72 million common shares over the past 24 months.
  • Nutrien full-year 2020 adjusted net earnings per share and adjusted EBITDA guidance is $1.90 to $2.60 per share and $3.8 to $4.3 billion, respectively.

Market Outlook

Agriculture and Retail

  • Recent US/China trade progress has underpinned positive sentiment among US growers as agricultural exports to China are expected to improve significantly both in the short and medium term.
  • The US Department of Agriculture (USDA) projects 2019/2020 global grain inventories outside of China to be at six-year lows. US crop input demand in 2020 is expected to be supported by an additional 14 million acres, or about a 6 percent increase, in planted acreage.
  • We expect demand for potash in Southeast Asia will be supported by the significant improvement in palm oil prices since mid-2019.
  • Despite improved agricultural fundamentals in most key markets, we continue to monitor the possible impacts of the Coronavirus, drought conditions in Australia and the African Swine Fever.

Crop Nutrient Markets

  • Global potash prices declined in 2019 as customers in key offshore markets drew from inventories built by strong first-half 2019 shipments, while demand declined in North America due to adverse weather and in Southeast Asia due to weak palm oil prices. Global potash producers announced the equivalent of over 3 million tonnes of estimated production curtailments to rebalance supply. We estimate global potash deliveries were approximately 64.5 million tonnes in 2019, down significantly from the 66.7 million tonnes in 2018.

We believe potash production curtailments lowered inventory at the producer level, while continued grower consumption lowered distributor inventory in key markets outside of China. We expect global potash demand to rebound in 2020, driven by increased planting acreage in North America, a rebound in applications in Indonesia and Malaysia, lower beginning inventories and strong affordability. We estimate global potash deliveries in 2020 will be between 66 to 68 million tonnes in 2020, similar to the record global delivery levels of 2018.

  • Global nitrogen prices declined in 2019, due to reduced demand in North America driven by challenging weather conditions and lower feedstock prices in some key producing regions. We expect nitrogen fundamentals to improve in 2020, supported by higher North American planting, stable demand in other key regions and limited new global capacity.
  • Dry phosphate fertilizer prices have recently improved after reaching historically low levels in 2019, but they continue to be impacted by increased supply from Morocco and Saudi Arabia. Some global phosphate producers have announced curtailments to rebalance supply and the Coronavirus could reduce Chinese export availability in the first quarter of 2020, however, we expect low raw material costs will be a headwind to a significant market recovery.

Financial Outlook and Guidance

Based on market factors detailed above, we are issuing 2020 adjusted net earnings guidance of $1.90 to $2.60 per share and adjusted EBITDA guidance of $3.8 to $4.3 billion.

All guidance numbers, including those noted above and related sensitivities are outlined in the tables below.

2020 Guidance Ranges 1

Low

 

High

 

Adjusted net earnings per share 2

$

1.90

 

$

2.60

 

Adjusted EBITDA (billions) 2

$

3.8

 

$

4.3

 

Retail EBITDA (billions)

$

1.4

 

$

1.5

 

Potash EBITDA (billions)

$

1.3

 

$

1.5

 

Nitrogen EBITDA (billions)

$

1.2

 

$

1.4

 

Phosphate EBITDA (millions)

$

180

 

$

250

 

Potash sales tonnes (millions) 3

 

12.3

 

 

12.7

 

Nitrogen sales tonnes (millions) 3

 

11.0

 

 

11.6

 

Depreciation and amortization (billions)

$

1.8

 

$

1.9

 

Effective tax rate on continuing operations

 

23

%

 

25

%

Sustaining capital expenditures (billions)

$

1.0

 

$

1.1

 

 

Impact to

 

 

Adjusted

 

 

Adjusted

 

2020 Annual Assumptions & Sensitivities 1

 

EBITDA

 

 

EPS4

 

$1/MMBtu change in NYMEX5

$

165

 

$

0.21

 

$20/tonne change in realized Potash selling prices

$

205

 

$

0.25

 

$20/tonne change in realized Ammonia selling prices

$

40

 

$

0.05

 

$20/tonne change in realized Urea selling prices

$

65

 

$

0.09

 

 

 

 

 

 

 

 

2020 FX Rate CAD to USD

 

 

1.30

 

 

 

2020 NYMEX natural gas ($US/MMBtu)

 

 

$2.25

 

 

 

1 See the “Forward-Looking Statements” section.
2 See the “Non-IFRS Financial Measures” section.
3 Manufactured products only. Nitrogen excludes ESN® and Rainbow products.
4 Assumes 574 million shares outstanding.
5 Nitrogen related impact.

Consolidated Results

 

Three Months Ended December 31

 

Twelve Months Ended December 31

(millions of US dollars)

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

Sales

3,442

 

3,762

 

(9)

 

20,023

 

19,636

 

2

Freight, transportation and distribution

172

 

189

 

(9)

 

768

 

864

 

(11)

Cost of goods sold

2,256

 

2,314

 

(3)

 

13,814

 

13,380

 

3

Gross margin

1,014

 

1,259

 

(19)

 

5,441

 

5,392

 

1

Expenses

951

 

713

 

33

 

3,579

 

4,978

 

(28)

Net (loss) earnings from continuing operations

(48)

 

296

 

n/m

 

992

 

(31)

 

n/m

Net earnings from discontinued operations

-

 

2,906

 

(100)

 

-

 

3,604

 

(100)

Net (loss) earnings

(48)

 

3,202

 

n/m

 

992

 

3,573

 

(72)

EBITDA 1

499

 

944

 

(47)

 

3,661

 

2,006

 

83

Adjusted EBITDA 1

664

 

924

 

(28)

 

4,025

 

3,934

 

2

Free cash flow ("FCF") 1

138

 

403

 

(66)

 

2,157

 

1,975

 

9

FCF including changes in non-cash working capital 1

2,068

 

1,647

 

26

 

2,647

 

837

 

216

1 See the "Non-IFRS Financial Measures" section.

Our fourth-quarter net loss from continuing operations was caused by the impact of a temporary slow down in global fertilizer demand that more than offset a strong performance by Retail. 2019 net earnings from continuing operations increased compared to 2018 due to solid operational results, the continued benefit of Merger related synergies and operational improvements and a non-cash impairment of our New Brunswick potash facility in 2018.

Our net earnings from discontinued operations in 2018 was related to the required divestiture of certain equity investments in connection with the Merger.

Segment Results

In the first quarter of 2019, our Executive Leadership Team reassessed our product groupings and decided to evaluate the performance of ammonium sulfate as part of the Nitrogen segment, rather than the Phosphate and Sulfate segment as previously reported in 2018. Effective January 1, 2019, we have four reportable operating segments: Retail, Potash, Nitrogen and Phosphate. Comparative amounts presented on a segmented basis have been restated accordingly. We also renamed our “Others” segment to “Corporate and Others”.

Detailed descriptions of our operating segments can be found in our 2018 Annual Report dated February 20, 2019 in the “Operating Segment Performance & Outlook” section.

Our discussion of segment results set out on the following pages is a comparison of the results for the three and twelve months ended December 31, 2019 to the results for the three and twelve months ended December 31, 2018, respectively and unless otherwise noted. See Appendix A for a summary of our results for the twelve months ended December 31, 2019 by operating segment.

Retail

 

Three Months Ended December 31

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

2019

 

2018

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients 1

907

 

917

 

(1)

 

186

 

184

 

1

 

21

 

20

Crop protection products

635

 

644

 

(1)

 

281

 

270

 

4

 

44

 

42

Seed

99

 

103

 

(4)

 

60

 

56

 

7

 

61

 

54

Merchandise 2

211

 

142

 

49

 

44

 

27

 

63

 

21

 

19

Services and other

319

 

211

 

51

 

165

 

125

 

32

 

52

 

59

 

2,171

 

2,017

 

8

 

736

 

662

 

11

 

34

 

33

Cost of goods sold 2

1,435

 

1,355

 

6

 

 

 

 

 

 

 

 

 

 

Gross margin

736

 

662

 

11

 

 

 

 

 

 

 

 

 

 

Expenses 3

667

 

580

 

15

 

 

 

 

 

 

 

 

 

 

Earnings before finance costs and taxes ("EBIT")

69

 

82

 

(16)

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

162

 

132

 

23

 

 

 

 

 

 

 

 

 

 

EBITDA

231

 

214

 

8

 

 

 

 

 

 

 

 

 

 

1 Includes intersegment sales. See Note 2 to the unaudited condensed consolidated financial statements as at and for the three and twelve months ended December 31, 2019 (''condensed consolidated financial statements'').
2 Certain immaterial figures have been reclassified or grouped together for the three months ended December 31, 2018.
3 Includes selling expenses of $668 million (2018 – $571 million).

  • EBITDA was higher in the fourth quarter and full year of 2019 as sales, service and supply chain strength helped to grow our market share and margins. EBITDA in both periods also benefited from strong US and Australia results and the impact from adoption of IFRS 16, which more than offset weather-related challenges in Canada. Gross margin and gross margin percentage increased in the fourth quarter and full year 2019 as a result of optimization initiatives and strategic purchasing. Selling expenses as a proportion of sales in the full year 2019 were similar to the same period in 2018.
  • Crop nutrients sales decreased in the fourth quarter of 2019 as higher sales volumes were offset by lower selling prices. Crop nutrients sales in 2019 increased due to higher sales volumes and higher selling prices. Gross margin percentage increased in the periods due to strategic purchasing and an increased mix of higher margin specialty and proprietary products sales.
  • Crop protection products sales in the fourth quarter decreased compared to the fourth quarter of 2018 due primarily to lower Canadian fall applications caused by early winter conditions. Crop protection products sales in 2019 increased as US farmers made more in-season applications due to the excessive moisture experienced in the fall of 2018. Gross margin percentage increased in the fourth quarter and was flat in 2019 due to favorable product mix changes and strategic purchasing that offset the impact of higher competition from a condensed season and higher costs for product sourced from China.
  • Seed sales in the fourth quarter were down slightly compared to the same period in 2018 caused mostly by drought conditions in Australia. Sales in 2019 increased compared to 2018 due to the mix of higher value corn and cotton seed sales, which more than offset the impact of lower planted acreage in the US. Gross margin percentage increased in the fourth quarter due to a favorable sales mix, while gross margin percentage in 2019 was comparable with 2018.
  • Merchandise sales and gross margin increased in the fourth quarter and full year of 2019 due to our recent acquisition of Ruralco.
  • Services and other sales were higher in the fourth quarter and full year of 2019 due to sales from recent acquisitions, including Ruralco, and increased US applications and services resulting from a condensed growing season. Gross margin percentage decreased in the quarter and full year of 2019 due to product mix changes resulting primarily from the acquisition of Ruralco.

Potash

 

Three Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018

% Change

 

2019

 

2018

% Change

 

2019

 

2018

% Change

Manufactured product 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

146

 

177

 

(18)

 

651

 

731

 

(11)

 

226

 

242

 

(7)

Offshore

204

 

459

 

(56)

 

1,234

 

2,126

 

(42)

 

164

 

216

 

(24)

 

350

 

636

 

(45)

 

1,885

 

2,857

 

(34)

 

186

 

223

 

(17)

Cost of goods sold

211

 

271

 

(22)

 

 

 

 

 

 

 

112

 

95

 

18

Gross margin - manufactured

139

 

365

 

(62)

 

 

 

 

 

 

 

74

 

128

 

(42)

Gross margin - other 2

-

 

1

 

(100)

 

Depreciation and amortization

 

35

 

32

 

9

Gross margin - total

139

 

366

 

(62)

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses 3

56

 

64

 

(13)

 

and amortization - manufactured 4

109

 

160

 

(32)

EBIT

83

 

302

 

(73)

 

Potash cash cost of product

 

 

 

 

 

 

Depreciation and amortization

66

 

92

 

(28)

 

manufactured 4

 

82

 

67

 

22

EBITDA

149

 

394

 

(62)

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
2 Includes other potash and purchased products and is comprised of net sales of $Nil (2018 – $1 million) less cost of goods sold of $Nil (2018 – $Nil).
3 Includes provincial mining and other taxes of $50 million (2018 – $56 million).
4 See the "Non-IFRS Financial Measures" section.

  • EBITDA decreased in the fourth quarter due to lower sales volumes, lower net realized selling prices and the temporary impacts associated with production downtime and the Canadian National Railway labor strike. EBITDA in 2019 was higher as a result of a non-cash impairment of our New Brunswick potash facility in 2018. Adjusted EBITDA in 2019 was similar to 2018 as lower sales volumes and higher provincial mining taxes and other taxes were mostly offset by higher net realized selling prices.
  • Sales volumes in North America were down in the fourth quarter and in the full year of 2019 due to challenging US weather conditions that negatively impacted both spring and fall applications. Offshore sales volumes in 2019 were the second highest on record, down only from 2018, due to strong demand in the first half of the year. Offshore sales volumes in the fourth quarter of 2019 decreased from the same period last year as customers in key markets delayed purchases and/or drew upon existing inventory.
  • Net realized selling price decreased in the fourth quarter of 2019 reflecting lower benchmark prices caused by a temporary slowdown in global demand. Higher freight rates further decreased North America net realized selling prices while adjustments to Nutrien’s provisional selling price to Canpotex lowered Offshore net realized selling prices in the quarter. Net realized selling prices were higher in 2019 compared to 2018 due to stronger prices through the first nine months of the year.
  • Cost of goods sold per tonne increased in the fourth quarter and full year of 2019 compared to the same periods in 2018 due to the impact of lower production volumes related to temporary production downtime. Potash cash cost of product manufactured per tonne increased in the fourth quarter and full year of 2019 due primarily to the impact of lower production volumes compared to the same periods in 2018.

Canpotex Sales by Market

(percentage of sales volumes, except as

Three Months Ended December 31

 

Twelve Months Ended December 31

otherwise noted)

2019

2018

% Change

 

2019

2018

% Change

Latin America

31

33

(6)

 

31

33

(6)

Other Asian markets 1

27

28

(4)

 

27

31

(13)

China

17

17

-

 

22

18

22

India

7

14

(50)

 

10

10

-

Other markets

18

8

125

 

10

8

25

 

100

100

 

 

100

100

 

1 All Asian markets except China and India.

Nitrogen

 

Three Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

Manufactured product 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

141

 

235

 

(40)

 

571

 

808

 

(29)

 

245

 

290

 

(16)

Urea

193

 

231

 

(16)

 

695

 

687

 

1

 

278

 

337

 

(18)

Solutions, nitrates and sulfates

166

 

180

 

(8)

 

1,096

 

1,016

 

8

 

152

 

177

 

(14)

 

500

 

646

 

(23)

 

2,362

 

2,511

 

(6)

 

212

 

257

 

(18)

Cost of goods sold

404

 

439

 

(8)

 

 

 

 

 

 

 

171

 

175

 

(2)

Gross margin - manufactured

96

 

207

 

(54)

 

 

 

 

 

 

 

41

 

82

 

(50)

Gross margin - other 3

11

 

17

 

(35)

 

Depreciation and amortization

 

60

 

43

 

40

Gross margin - total

107

 

224

 

(52)

 

Gross margin excluding depreciation

 

 

 

 

 

(Income) Expenses

(11)

 

11

 

n/m

 

and amortization - manufactured 4

101

 

125

 

(19)

EBIT

118

 

213

 

(45)

 

Ammonia controllable cash cost of

 

 

 

 

 

 

Depreciation and amortization

141

 

108

 

31

 

product manufactured 4

 

48

 

44

 

9

EBITDA

259

 

321

 

(19)

 

 

 

 

 

 

 

 

 

 

 

 

1 Restated for the reclassification of sulfate from the Phosphate segment. See Note 2 to the condensed consolidated financial statements.

2 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.

3 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $103 million (2018 – $99 million) less cost of goods sold of $92 million (2018 – $82 million).

4 See the "Non-IFRS Financial Measures" section.

  • EBITDA decreased in the fourth quarter of 2019 as lower ammonia sales volumes and lower nitrogen net realized selling prices more than offset the impact of lower natural gas costs. EBITDA for 2019 increased compared to 2018 as lower natural gas costs, higher earnings from equity-accounted investees and the impact of adopting IFRS 16 more than offset lower sales volumes and net realized selling prices.
  • Sales volumes in the fourth quarter and full year of 2019 were down compared to the same period in 2018 as lower ammonia sales volumes in some of our highest netback regions were only partially offset by higher urea and solutions, nitrates and sulfates sales volumes. Ammonia sales volumes were impacted by compressed spring and fall application seasons in North America and turnaround activity at our Trinidad facility.
  • Net realized selling price of nitrogen was lower in the fourth quarter and full year of 2019 as benefits from our distribution network and product positioning were more than offset by lower global benchmark prices.
  • Cost of goods sold per tonne of nitrogen decreased in the fourth quarter of 2019 due primarily to lower natural gas costs. Cost of goods sold in 2019 was slightly higher compared to 2018 as lower natural gas costs in North America were offset by higher natural gas costs in Trinidad and a lower proportion of sales from lower cost facilities. Ammonia controllable cash cost of product manufactured per tonne increased in the fourth quarter and full year 2019 due to lower production volumes available for sale resulting from turnaround activity at our Trinidad facility.

Natural Gas Prices

 

Three Months Ended December 31

 

Twelve Months Ended December 31

(US dollars per MMBtu, except as otherwise noted)

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

Overall gas cost excluding realized derivative impact

2.46

 

2.87

 

(14)

 

2.47

 

2.54

 

(3)

Realized derivative impact

0.06

 

0.14

 

(57)

 

0.11

 

0.29

 

(62)

Overall gas cost

2.52

 

3.01

 

(16)

 

2.58

 

2.83

 

(9)

 

 

 

 

 

 

 

 

 

 

 

 

Average NYMEX

2.50

 

3.64

 

(31)

 

2.63

 

3.09

 

(15)

Average AECO

1.76

 

1.45

 

21

 

1.22

 

1.19

 

3

  • Gas costs decreased in the fourth quarter and full year 2019 compared to the same periods last year due primarily to lower gas costs in the US and a lower realized derivative impact.

Phosphate

 

Three Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

Manufactured product 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

155

 

255

 

(39)

 

466

 

601

 

(22)

 

334

 

423

 

(21)

Industrial and feed

105

 

106

 

(1)

 

181

 

207

 

(13)

 

581

 

513

 

13

 

260

 

361

 

(28)

 

647

 

808

 

(20)

 

403

 

446

 

(10)

Cost of goods sold

255

 

346

 

(26)

 

 

 

 

 

 

 

395

 

428

 

(8)

Gross margin - manufactured

5

 

15

 

(67)

 

 

 

 

 

 

 

8

 

18

 

(56)

Gross margin - other 3

1

 

(2)

 

n/m

 

Depreciation and amortization

 

88

 

66

 

33

Gross margin - total

6

 

13

 

(54)

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses

9

 

13

 

(31)

 

and amortization - manufactured 4

96

 

84

 

14

EBIT

(3)

 

-

 

-

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

57

 

53

 

8

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

54

 

53

 

2

 

 

 

 

 

 

 

 

 

 

 

 

1 Restated for the reclassification of sulfate to the Nitrogen segment. See Note 2 to the condensed consolidated financial statements.
2 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
3 Includes other phosphate and purchased products and is comprised of net sales of $27 million (2018 - $45 million) less cost of goods sold of $26 million (2018 - $47 million).
4 See the "Non-IFRS Financial Measures" section.

  • EBITDA increased in the fourth quarter of 2019 due to lower phosphate rock and other raw material costs that were partially offset by lower sales volumes and lower net realized selling prices. EBITDA decreased in 2019 relative to 2018 due primarily to lower net realized selling prices and lower sales volumes.
  • Sales volumes decreased in the fourth quarter and the full year of 2019 due primarily to reduced fertilizer application in North America caused by adverse weather in both the spring and fall application seasons. Industrial and feed sales volumes in the same periods decreased due to the timing of sales.
  • Net realized selling price decreased in the fourth quarter and full year of 2019 compared to the same periods in 2018 as higher prices for industrial products were more than offset by lower dry phosphate fertilizer prices.
  • Cost of goods sold per tonne decreased in the fourth quarter compared to the same period in 2018 due to benefits from the conversion of our Redwater facility to ammonium sulfate and lower raw material costs. Cost of goods sold per tonne increased in the full year of 2019 due to higher non-cash asset retirement adjustments, and lower sales volumes that more than offset lower raw material costs.

Forward-Looking Statements

Certain statements and other information included and incorporated by reference in this document 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 2020 annual guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (both consolidated and by segment); capital spending expectations for 2020; expectations regarding performance of our operating segments in 2020; our operating segment market outlooks and market conditions for 2020, and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes; and acquisitions and divestitures, and the expected synergies associated with various acquisitions, including timing 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, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. 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 that we will be able to implement our standards, controls, procedures and policies at any acquired businesses 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; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2020 and in the future; 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; and the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects’ approach.

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; regional natural gas supply restrictions; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions; any significant impairment of the carrying value 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; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States.

The purpose of our expected adjusted net earnings per share, adjusted EBITDA and EBITDA by segment guidance ranges, as well as our adjusted net earnings per share and adjusted EBITDA price and volume and input cost sensitivities ranges, are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

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 References

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”, “Abbreviated Company Names and Sources” and “Terms and Measures” sections of our 2018 Annual Report dated February 20, 2019. 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 data 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 around the globe increase food production in a sustainable manner. We produce and distribute 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.

Contact us at: www.nutrien.com.

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

Such data is not incorporated by reference herein.

Nutrien will host a Conference Call on Wednesday, February 19, 2020 at 10:00 am Eastern Time.

  • Telephone Conference dial-in numbers:
    • From Canada and the US 1-877-702-9274
    • International 1-647-689-5529
    • 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 www.nutrien.com/investors/events

Appendix A - Selected Additional Financial Data

Twelve Months Ended December 31, 2019 Operating Segment Results

Retail

 

Twelve Months Ended December 31

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2019

 

2018

 

% Change

 

2019

 

2018

 

% Change

 

2019

 

2018

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients 1

4,989

 

4,577

 

9

 

1,032

 

923

 

12

 

21

 

20

Crop protection products

4,983

 

4,862

 

2

 

1,173

 

1,155

 

2

 

24

 

24

Seed

1,712

 

1,687

 

1

 

336

 

333

 

1

 

20

 

20

Merchandise 2

598

 

584

 

2

 

109

 

103

 

6

 

18

 

18

Services and other

939

 

810

 

16

 

590

 

521

 

13

 

63

 

64

 

13,221

 

12,520

 

6

 

3,240

 

3,035

 

7

 

25

 

24

Cost of goods sold 2

9,981

 

9,485

 

5

 

 

 

 

 

 

 

 

 

 

Gross margin

3,240

 

3,035

 

7

 

 

 

 

 

 

 

 

 

 

Expenses 3

2,604

 

2,328

 

12

 

 

 

 

 

 

 

 

 

 

EBIT

636

 

707

 

(10)

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

595

 

499

 

19

 

 

 

 

 

 

 

 

 

 

EBITDA

1,231

 

1,206

 

2

 

 

 

 

 

 

 

 

 

 

1 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
2 Certain immaterial figures have been reclassified or grouped together for the twelve months ended December 31, 2018.
3 Includes selling expenses of $2,484 million (2018 – $2,303 million).

Potash

 

Twelve Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018

% Change

 

2019

 

2018

% Change

 

2019

 

2018

% Change

Manufactured product 1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

978

 

1,007

 

(3)

 

4,040

 

4,693

 

(14)

 

242

 

214

 

13

Offshore

1,625

 

1,657

 

(2)

 

7,481

 

8,326

 

(10)

 

217

 

199

 

9

 

2,603

 

2,664

 

(2)

 

11,521

 

13,019

 

(12)

 

226

 

205

 

10

Cost of goods sold

1,103

 

1,182

 

(7)

 

 

 

 

 

 

 

96

 

91

 

5

Gross margin - manufactured

1,500

 

1,482

 

1

 

 

 

 

 

 

 

130

 

114

 

14

Gross margin - other 2

1

 

2

 

(50)

 

Depreciation and amortization

 

34

 

31

 

10

Gross margin - total

1,501

 

1,484

 

1

 

 

 

 

 

 

 

Impairment of assets

-

 

1,809

 

(100)

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses 3

298

 

282

 

6

 

and amortization - manufactured 4

164

 

145

 

13

EBIT

1,203

 

(607)

 

n/m

 

Potash cash cost of product

 

 

 

 

 

 

Depreciation and amortization

390

 

404

 

(3)

 

manufactured 4

 

63

 

60

 

5

EBITDA

1,593

 

(203)

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA 4

1,593

 

1,606

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
2 Includes other potash and purchased products and is comprised of net sales of $1 million (2018 – $3 million) less cost of goods sold of $Nil (2018 – $1 million).
3 Includes provincial mining and other taxes of $287 million (2018 – $244 million).
4 See the "Non-IFRS Financial Measures" section.

Nitrogen

 

Twelve Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

Manufactured product 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

743

 

903

 

(18)

 

2,971

 

3,330

 

(11)

 

250

 

271

 

(8)

Urea

932

 

895

 

4

 

3,037

 

3,003

 

1

 

307

 

298

 

3

Solutions, nitrates and

sulfates

706

 

729

 

(3)

 

4,262

 

4,265

 

-

 

166

 

171

 

(3)

 

2,381

 

2,527

 

(6)

 

10,270

 

10,598

 

(3)

 

232

 

238

 

(3)

Cost of goods sold

1,749

 

1,777

 

(2)

 

 

 

 

 

 

 

170

 

168

 

1

Gross margin - manufactured

632

 

750

 

(16)

 

 

 

 

 

 

 

62

 

70

 

(11)

Gross margin - other 3

68

 

70

 

(3)

 

Depreciation and amortization

 

52

 

42

 

24

Gross margin - total

700

 

820

 

(15)

 

Gross margin excluding depreciation

 

 

 

 

 

(Income) Expenses

(4)

 

47

 

n/m

 

and amortization - manufactured 4

114

 

112

 

2

EBIT

704

 

773

 

(9)

 

Ammonia controllable cash cost of

 

 

 

 

 

 

Depreciation and amortization

535

 

442

 

21

 

product manufactured 4

 

45

 

43

 

5

EBITDA

1,239

 

1,215

 

2

 

 

 

 

 

 

 

 

 

 

 

 

1 Restated for the reclassification of sulfate from the Phosphate segment. See the ''Segment Results'' section and Note 2 to the condensed consolidated financial statements.
2 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
3 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $467 million (2018 – $438 million) less cost of goods sold of $399 million (2018 – $368 million).
4 See the "Non-IFRS Financial Measures" section.

Phosphate

 

Twelve Months Ended December 31

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

 

2019

 

2018 ¹

% Change

Manufactured product 2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

790

 

995

 

(21)

 

2,130

 

2,425

 

(12)

 

371

 

410

 

(10)

Industrial and feed

426

 

424

 

-

 

759

 

847

 

(10)

 

561

 

500

 

12

 

1,216

 

1,419

 

(14)

 

2,889

 

3,272

 

(12)

 

421

 

434

 

(3)

Cost of goods sold

1,218

 

1,329

 

(8)

 

 

 

 

 

 

 

422

 

406

 

4

Gross margin - manufactured

(2)

 

90

 

n/m

 

 

 

 

 

 

 

(1)

 

28

 

n/m

Gross margin - other 3

(3)

 

(2)

 

50

 

Depreciation and amortization

 

82

 

59

 

39

Gross margin - total

(5)

 

88

 

n/m

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses

38

 

26

 

46

 

and amortization - manufactured 4

81

 

87

 

(7)

EBIT

(43)

 

62

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

237

 

193

 

23

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

194

 

255

 

(24)

 

 

 

 

 

 

 

 

 

 

 

 

1 Restated for the reclassification of sulfate to the Nitrogen segment. See the ''Segment Results'' section and Note 2 to the condensed consolidated financial statements.
2 Includes intersegment sales. See Note 2 to the condensed consolidated financial statements.
3 Includes other phosphate and purchased products and is comprised of net sales of $152 million (2018 - $142 million) less cost of goods sold of $155 million (2018 - $144 million).
4 See the "Non-IFRS Financial Measures" section.

Selected Retail measures

Three Months Ended December 31

 

Twelve Months Ended December 31

 

2019

 

2018

 

2019

 

2018

Proprietary products margin as a percentage of

product line margin (%)

 

 

 

 

 

 

 

Crop nutrients

15

 

11

 

23

 

21

Crop protection products

8

 

8

 

34

 

37

Seed

11

 

16

 

38

 

38

All Products

8

 

8

 

24

 

25

Crop nutrients sales volumes (tonnes -

thousands)

 

 

 

 

 

 

 

North America

1,558

 

1,543

 

8,812

 

8,547

International

559

 

447

 

2,236

 

2,142

Total

2,117

 

1,990

 

11,048

 

10,689

Crop nutrients selling price per tonne

 

 

 

 

 

 

 

North America

436

 

456

 

465

 

437

International

408

 

479

 

398

 

395

Total

428

 

461

 

452

 

428

Crop nutrients gross margin per tonne

 

 

 

 

 

 

 

North America

95

 

96

 

102

 

94

International

68

 

80

 

60

 

57

Total

88

 

92

 

93

 

86

 

 

 

 

 

 

 

 

Financial performance measures

 

 

 

 

2019 Target

 

2019 Actuals

Retail EBITDA to sales (%) 1, 2

 

 

 

10

 

9

Retail adjusted average working capital to sales (%) 1, 2

 

 

 

20

 

23

Retail cash operating coverage ratio (%) 1, 2

 

 

 

60

 

62

Retail normalized comparable store sales (%) 2

 

 

 

 

 

(1)

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

 

 

 

 

 

967

1 Rolling four quarters ended December 31, 2019.
2 See the "Non-IFRS Financial Measures" section.

Selected Nitrogen measures

Three Months Ended December 31

 

Twelve Months Ended December 31

 

2019

 

2018

 

2019

 

2018

Sales volumes (tonnes - thousands)

 

 

 

 

 

 

 

Fertilizer

1,350

 

1,331

 

5,554

 

5,680

Industrial and feed

1,012

 

1,180

 

4,716

 

4,918

Net sales (millions of US dollars)

 

 

 

 

 

 

 

Fertilizer

311

 

359

 

1,466

 

1,444

Industrial and feed

189

 

287

 

915

 

1,083

Net selling price per tonne

 

 

 

 

 

 

 

Fertilizer

230

 

269

 

264

 

254

Industrial and feed

187

 

243

 

194

 

220

Production measures

Three Months Ended December 31

 

Twelve Months Ended December 31

 

2019

 

2018

 

2019

 

2018

Potash production (Product tonnes - thousands)

1,939

 

3,039

 

11,700

 

12,842

Potash shutdown weeks 1

28

 

7

 

55

 

39

Nitrogen production (Ammonia tonnes - thousands) 2

1,401

 

1,547

 

6,164

 

6,372

Ammonia operating rate (%) 3

94

 

87

 

91

 

92

Phosphate production (P2O5 tonnes - thousands) 4

390

 

412

 

1,514

 

1,551

Phosphate P2O5 operating rate (%)4

91

 

96

 

89

 

91

1 Represents weeks of full production shutdown, excluding the impact of any periods of reduced operating rates and planned routine annual maintenance shutdowns and announced workforce reductions.
2 All figures are provided on a gross production basis.
3 Excludes Trinidad and Joffre.
4 Excludes Redwater. Comparative figures were restated to exclude Redwater.

Appendix B - Non-IFRS Financial Measures

We use both IFRS and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are numerical measures of a company’s performance, that either exclude or include amounts that are not normally excluded or included in the most directly comparable measures calculated and presented in accordance with IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts.

Management believes the non-IFRS financial measures 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 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, their definitions and why management uses each measure. It includes reconciliations to the most directly comparable IFRS measures.

EBITDA, Adjusted EBITDA and Potash Adjusted EBITDA

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

Definition: EBITDA is calculated as net earnings (loss) from continuing operations before finance costs, income taxes and depreciation and amortization. Adjusted EBITDA is calculated as net earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization, Merger and related costs, acquisition and integration related costs, share-based compensation, defined benefit plans curtailment gain, impairment of assets, and foreign exchange gain/loss, net of related derivatives. In the fourth quarter of 2019, we amended our calculations of adjusted EBITDA and restated the comparative periods to exclude the impact of foreign exchange gain/loss, net of related derivatives, as foreign exchange changes are not indicative of our operating performance. We have also amended our calculations of adjusted EBITDA to adjust for acquisition and integration related costs for certain acquisitions such as Ruralco. There were no similar acquisitions in the comparative periods.

Why we use the measure and why it is useful to investors: These are meaningful measures because they are not impacted by long-term investment and financing decisions, but rather focus on the performance of our day-to-day operations. These provide a measure of our ability to service debt and to meet other payment obligations.

 

Three Months Ended December 31

 

Twelve Months Ended December 31

(millions of US dollars)

2019

 

2018

 

2019

 

2018

Net (loss) earnings from continuing operations

(48)

 

296

 

992

 

(31)

Finance costs

141

 

144

 

554

 

538

Income tax (recovery) expense

(30)

 

106

 

316

 

(93)

Depreciation and amortization

436

 

398

 

1,799

 

1,592

EBITDA

499

 

944

 

3,661

 

2,006

Merger and related costs

25

 

27

 

82

 

170

Acquisition and integration related costs

16

 

-

 

16

 

-

Share-based compensation

9

 

(33)

 

104

 

116

Defined benefit plans curtailment gain

-

 

(6)

 

-

 

(157)

Impairment of assets

87

 

-

 

120

 

1,809

Foreign exchange loss (gain), net of

related derivatives

28

 

(8)

 

42

 

(10)

Adjusted EBITDA

664

 

924

 

4,025

 

3,934

 

Three Months Ended December 31

 

Twelve Months Ended December 31

(millions of US dollars)

2019

 

2018

 

2019

 

2018

Potash EBITDA

149

 

394

 

1,593

 

(203)

Impairment of assets

-

 

-

 

-

 

1,809

Potash adjusted EBITDA

149

 

394

 

1,593

 

1,606

Adjusted EBITDA, Adjusted Net Earnings and Adjusted Net Earnings Per Share Guidance

This guidance is provided on a non-IFRS basis. 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 due to unknown variables 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. Guidance excludes the impacts of acquisition and integration related costs, share-based compensation and foreign exchange gain/loss, net of related derivatives.

Adjusted Net Earnings and Adjusted Net Earnings Per Share

Most directly comparable IFRS financial measure: Net earnings from continuing operations and net earnings per share.

Definition: Net earnings from continuing operations before Merger and related costs, acquisition and integration related costs, share-based compensation, impairment of assets and foreign exchange gain/loss (net of related derivatives), net of tax. In the fourth quarter of 2019, we amended our calculations of adjusted net earnings to exclude the impact of foreign exchange gain/loss, net of derivatives, as foreign exchange changes are not indicative of our operating performance. We have also amended our calculations of adjusted net earnings to adjust for acquisition and integration related costs for certain acquisitions such as Ruralco.

Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations excluding the effects of non-operating items.

 

Three Months Ended

December 31, 2019

 

Twelve Months Ended

December 31, 2019

 

 

 

 

 

Per

 

 

 

 

 

Per

(millions of US dollars, except as otherwise

Increases

 

 

 

Diluted

 

Increases

 

 

 

Diluted

noted)

(Decreases)

 

Post-Tax

 

Share

 

(Decreases)

 

Post-Tax

 

Share

Net (loss) earnings from continuing operations

 

 

(48)

 

(0.08)

 

 

 

992

 

1.70

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Merger and related costs

25

 

15

 

0.02

 

82

 

62

 

0.10

Acquisition and integration related costs

16

 

11

 

0.02

 

16

 

12

 

0.02

Share-based compensation

9

 

6

 

0.01

 

104

 

79

 

0.14

Impairment of assets

87

 

53

 

0.09

 

120

 

91

 

0.16

Foreign exchange loss, net of

related derivatives

28

 

17

 

0.03

 

42

 

32

 

0.05

Adjusted net earnings

 

 

54

 

0.09

 

 

 

1,268

 

2.17

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

Most directly comparable IFRS financial measure: Cash from operations before working capital changes.

Definition: Cash from operations before working capital changes less sustaining capital expenditures and cash provided by operating activities from discontinued operations. We also calculate this measure including changes in non-cash working capital.

Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength, and as a component of employee remuneration calculations. These are also useful as an indicator 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 December 31

 

Twelve Months Ended December 31

(millions of US dollars)

2019

 

2018

 

2019

 

2018

Cash from operations before working capital changes

489

 

724

 

3,175

 

3,190

Cash used in (provided by) operating activities from

discontinued operations

-

 

26

 

-

 

(130)

Sustaining capital expenditures

(351)

 

(347)

 

(1,018)

 

(1,085)

Free cash flow

138

 

403

 

2,157

 

1,975

 

 

 

 

 

 

 

 

Changes in non-cash working capital

1,930

 

1,244

 

490

 

(1,138)

Free cash flow including changes in non-cash

working capital

2,068

 

1,647

 

2,647

 

837

Potash Cash Cost of Product Manufactured (“COPM”)

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

Definition: Potash COGS for the period excluding depreciation and amortization expense and inventory and other adjustments divided by the production tonnes for the period.

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

 

Three Months Ended December 31

 

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2019

 

2018

 

2019

 

2018

Total COGS - Potash

211

 

271

 

1,103

 

1,183

Change in inventory

11

 

33

 

10

 

(5)

Other adjustments

-

 

(4)

 

(16)

 

(14)

COPM

222

 

300

 

1,097

 

1,164

Depreciation and amortization included in COPM

(63)

 

(98)

 

(355)

 

(391)

Cash COPM

159

 

202

 

742

 

773

Production tonnes (tonnes - thousands)

1,939

 

3,039

 

11,700

 

12,842

Potash cash COPM per tonne

82

 

67

 

63

 

60

Ammonia Controllable Cash COPM

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

Definition: The total of COGS for the Nitrogen segment 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 December 31

 

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2019

 

2018

 

2019

 

2018

Total COGS - Nitrogen

496

 

521

 

2,148

 

2,145

Depreciation and amortization in COGS

(122)

 

(108)

 

(462)

 

(442)

Cash COGS for products other than ammonia

(274)

 

(286)

 

(1,226)

 

(1,212)

Ammonia

 

 

 

 

 

 

 

Total cash COGS before other adjustments

100

 

127

 

460

 

491

Other adjustments 1

(22)

 

-

 

(57)

 

(28)

Total cash COPM

78

 

127

 

403

 

463

Natural gas and steam costs

(52)

 

(90)

 

(273)

 

(321)

Controllable cash COPM

26

 

37

 

130

 

142

Production tonnes (net tonnes 2 - thousands)

544

 

843

 

2,887

 

3,320

Ammonia controllable cash COPM per tonne

48

 

44

 

45

 

43

1 Includes changes in inventory balances and other adjustments.

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

Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured

Most directly comparable IFRS financial measure: Gross margin.

Definition: Gross margin from manufactured products per tonne less depreciation and amortization per tonne. Reconciliations are provided in the “Segment Results” section and “Appendix A – Selected Additional Financial Data”.

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.

Retail EBITDA to Sales

Most directly comparable IFRS financial measure: Retail EBITDA divided by Retail sales.

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

Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A higher or lower percentage represents increased or decreased efficiency, respectively.

 

Rolling four quarters ended December 31, 2019

(millions of US dollars, except as otherwise noted)

Q1 2019

 

Q2 2019

 

Q3 2019

 

Q4 2019

 

Total

EBITDA

(26)

 

836

 

190

 

231

 

1,231

Sales

2,039

 

6,512

 

2,499

 

2,171

 

13,221

EBITDA to Sales (%)

 

 

 

 

 

 

 

 

9

Retail Adjusted Average Working Capital to Sales

Most directly comparable IFRS financial measure: (Current assets minus current liabilities for Retail) divided by Retail sales.

Definition: Retail average working capital divided by Retail sales for the last four rolling quarters excluding working capital acquired in the quarter certain recent acquisitions, such as Ruralco, were completed.

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.

 

Rolling four quarters ended December 31, 2019

(millions of US dollars, except as otherwise noted)

Q1 2019

 

Q2 2019

 

Q3 2019

 

Q4 2019

 

Average/Total

Working capital

3,190

 

3,741

 

3,699

 

1,759

 

 

Working capital from certain recent acquisitions

-

 

-

 

(75)

 

(138)

 

 

Adjusted working capital

3,190

 

3,741

 

3,624

 

1,621

 

3,044

Sales

2,039

 

6,512

 

2,499

 

2,171

 

13,221

Adjusted average working capital to sales (%)

 

 

 

 

 

 

 

 

23

Retail Cash Operating Coverage Ratio

Most directly comparable IFRS financial measure: Retail operating expenses 1 as a percentage of Retail gross margin.

Definition: Retail operating 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 December 31, 2019

(millions of US dollars, except as otherwise noted)

Q1 2019

 

Q2 2019

 

Q3 2019

 

Q4 2019

 

Total

Gross margin

409

 

1,440

 

655

 

736

 

3,240

Depreciation and amortization in cost of goods sold

2

 

1

 

2

 

2

 

7

Gross margin excluding depreciation and amortization

411

 

1,441

 

657

 

738

 

3,247

 

 

 

 

 

 

 

 

 

 

Operating expenses

571

 

749

 

617

 

667

 

2,604

Depreciation and amortization in operating expenses

(132)

 

(143)

 

(150)

 

(160)

 

(585)

Operating expenses excluding depreciation and amortization

439

 

606

 

467

 

507

 

2,019

 

 

 

 

 

 

 

 

 

 

Cash operating coverage ratio (%)

 

 

 

 

 

 

 

 

62

1 Includes Retail expenses below gross margin including selling expenses, general and administrative expenses and other (income) expenses.

Retail EBITDA per US Selling Location

Most directly comparable IFRS financial measure: Retail US EBITDA.

Definition: Total Retail US EBITDA for the last four rolling quarters adjusted for 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.

Why we use the measure and why it is useful to investors: To assess our US Retail operating performance. Includes locations we have owned for more than 12 months.

 

Rolling four quarters ended December 31, 2019

(millions of US dollars, except as otherwise noted)

Q1 2019

 

Q2 2019

 

Q3 2019

 

Q4 2019

 

Total

US EBITDA

(58)

 

672

 

142

 

143

 

899

Adjustments for acquisitions

 

 

 

 

 

 

 

 

(27)

US EBITDA adjusted for acquisitions

 

 

 

 

 

 

 

 

872

Number of US selling locations adjusted for acquisitions

 

 

 

 

 

 

 

 

902

EBITDA per US selling location (thousands of US dollars)

 

 

 

 

 

 

 

967

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.

 

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2019

 

2018

Sales from comparable base

 

 

 

Current period

12,568

 

12,253

Prior period

12,520

1

12,103

Comparable store sales (%)

0

 

1

Prior period normalized for benchmark prices and foreign exchange rates

12,636

1

12,363

Normalized comparable store sales (%)

(1)

 

(1)

1 Certain immaterial figures have been reclassified for 2018.

Condensed Consolidated Financial Statements

Unaudited in millions of dollars except as otherwise noted

Condensed Consolidated Statements of (Loss) Earnings

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31

 

December 31

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

Note 1

 

 

 

Note 1

SALES

Note 2

3,442

 

3,762

 

20,023

 

19,636

Freight, transportation and distribution

 

172

 

189

 

768

 

864

Cost of goods sold

 

2,256

 

2,314

 

13,814

 

13,380

GROSS MARGIN

 

1,014

 

1,259

 

5,441

 

5,392

Selling expenses

 

670

 

579

 

2,505

 

2,337

General and administrative expenses

 

117

 

111

 

404

 

423

Provincial mining and other taxes

 

39

 

58

 

292

 

250

Share-based compensation expense (recovery)

 

9

 

(33)

 

104

 

116

Impairment of assets

 

87

 

-

 

120

 

1,809

Other expenses (income)

 

29

 

(2)

 

154

 

43

EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES

63

 

546

 

1,862

 

414

Finance costs

 

141

 

144

 

554

 

538

(LOSS) EARNINGS BEFORE INCOME TAXES

 

(78)

 

402

 

1,308

 

(124)

Income tax (recovery) expense

 

(30)

 

106

 

316

 

(93)

NET (LOSS) EARNINGS FROM CONTINUING OPERATIONS

 

(48)

 

296

 

992

 

(31)

Net earnings from discontinued operations

 

-

 

2,906

 

-

 

3,604

NET (LOSS) EARNINGS

 

(48)

 

3,202

 

992

 

3,573

NET (LOSS) EARNINGS PER SHARE FROM CONTINUING OPERATIONS

 

 

 

 

 

 

 

Basic

 

(0.08)

 

0.48

 

1.70

 

(0.05)

Diluted

 

(0.08)

 

0.48

 

1.70

 

(0.05)

NET EARNINGS PER SHARE FROM DISCONTINUED OPERATIONS

 

 

 

 

 

 

 

Basic

 

-

 

4.75

 

-

 

5.77

Diluted

 

-

 

4.74

 

-

 

5.77

NET (LOSS) EARNINGS PER SHARE ("EPS")

 

 

 

 

 

 

 

 

Basic

 

(0.08)

 

5.23

 

1.70

 

5.72

Diluted

 

(0.08)

 

5.22

 

1.70

 

5.72

Weighted average shares outstanding for basic EPS

 

572,916,000

 

612,151,000

 

582,269,000

 

624,900,000

Weighted average shares outstanding for diluted EPS

 

572,916,000

 

612,947,000

 

583,102,000

 

624,900,000

Condensed Consolidated Statements of Comprehensive Income

 

Three Months Ended

 

Twelve Months Ended

 

December 31

 

December 31

(Net of related income taxes)

2019

 

2018

 

2019

 

2018

NET (LOSS) EARNINGS

(48)

 

3,202

 

992

 

3,573

Other comprehensive income (loss)

 

 

 

 

 

 

 

Items that will not be reclassified to net (loss) earnings:

 

 

 

 

 

 

 

Net actuarial gain (loss) on defined benefit plans

7

 

(2)

 

7

 

54

Net fair value gain (loss) on investments

1

 

(20)

 

(25)

 

(99)

Items that have been or may be subsequently reclassified to

net (loss) earnings:

 

 

 

 

 

 

 

Gain (loss) on currency translation of foreign operations

83

 

(103)

 

47

 

(249)

Other

2

 

(3)

 

7

 

(8)

OTHER COMPREHENSIVE INCOME (LOSS)

93

 

(128)

 

36

 

(302)

COMPREHENSIVE INCOME

45

 

3,074

 

1,028

 

3,271

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Cash Flows

 

 

Three Months Ended

 

Twelve Months Ended

 

 

December 31

 

December 31

 

 

2019

 

2018

 

2019

 

2018

 

 

 

 

Note 1

 

 

 

Note 1

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net (loss) earnings

 

(48)

 

3,202

 

992

 

3,573

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

436

 

398

 

1,799

 

1,592

Share-based compensation

 

9

 

(33)

 

104

 

116

Impairment of assets

 

87

 

-

 

120

 

1,809

(Recovery of) provision for deferred income tax

 

(1)

 

(232)

 

177

 

(290)

Gain on sale of investments in Sociedad Quimica y Minera de

Chile S.A. ("SQM") and Arab Potash Company

 

-

 

(3,558)

 

-

 

(4,399)

Income tax related to the sale of the investment in SQM

 

-

 

977

 

-

 

977

Other long-term liabilities and miscellaneous

 

6

 

(30)

 

(17)

 

(188)

Cash from operations before working capital changes

 

489

 

724

 

3,175

 

3,190

Changes in non-cash operating working capital:

 

 

 

 

 

 

 

 

Receivables

 

1,363

 

1,351

 

(64)

 

(153)

Inventories

 

(1,049)

 

(1,011)

 

190

 

(887)

Prepaid expenses and other current assets

 

(1,039)

 

(176)

 

(238)

 

561

Payables and accrued charges

 

2,655

 

1,080

 

602

 

(659)

CASH PROVIDED BY OPERATING ACTIVITIES

 

2,419

 

1,968

 

3,665

 

2,052

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(551)

 

(492)

 

(1,728)

 

(1,405)

Additions to intangible assets

 

(45)

 

(51)

 

(163)

 

(102)

Business acquisitions, net of cash acquired

 

(74)

 

(48)

 

(911)

 

(433)

Proceeds from disposal of discontinued operations, net of tax

 

-

 

3,561

 

55

 

5,394

Purchase of investments

 

(34)

 

(12)

 

(198)

 

(135)

Cash acquired in Merger

 

-

 

-

 

-

 

466

Other

 

39

 

26

 

147

 

102

CASH (USED IN) PROVIDED BY INVESTING ACTIVITIES

 

(665)

 

2,984

 

(2,798)

 

3,887

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Transaction costs on long-term debt

 

-

 

-

 

(29)

 

(21)

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

 

(1,318)

 

(4,141)

 

216

 

(927)

Proceeds from long-term debt

 

-

 

-

 

1,510

 

-

Repayment of long-term debt

 

-

 

(4)

 

(1,010)

 

(12)

Repayment of principal portion of lease liabilities

 

(68)

 

-

 

(234)

 

-

Dividends paid

 

(258)

 

(244)

 

(1,022)

 

(952)

Repurchase of common shares

 

-

 

(137)

 

(1,930)

 

(1,800)

Issuance of common shares

 

2

 

-

 

20

 

7

CASH USED IN FINANCING ACTIVITIES

 

(1,642)

 

(4,526)

 

(2,479)

 

(3,705)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND

CASH EQUIVALENTS

 

(9)

 

(14)

 

(31)

 

(36)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

103

 

412

 

(1,643)

 

2,198

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

 

568

 

1,902

 

2,314

 

116

CASH AND CASH EQUIVALENTS – END OF PERIOD

 

671

 

2,314

 

671

 

2,314

Cash and cash equivalents comprised of:

 

 

 

 

 

 

 

 

Cash

 

532

 

1,506

 

532

 

1,506

Short-term investments

 

139

 

808

 

139

 

808

 

 

671

 

2,314

 

671

 

2,314

SUPPLEMENTAL CASH FLOWS INFORMATION

 

 

 

 

 

 

 

 

Interest paid

 

152

 

141

 

505

 

507

Income taxes paid

 

28

 

1,032

 

29

 

1,155

Total cash outflow for leases

 

92

 

-

 

345

 

-

 

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Changes in Shareholders’ Equity

 

 

 

 

 

Accumulated Other Comprehensive (Loss) Income ("AOCI")

 

 

 

 

 

 

 

 

 

 

 

Net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Actuarial

 

Loss on

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Fair

 

Gain on

 

Currency

 

 

 

 

 

 

 

 

 

 

 

 

 

Value

 

Defined

 

Translation

 

 

 

 

 

 

 

 

 

Share

 

Contributed

 

Gain (Loss) on

 

Benefit

 

of Foreign

 

 

 

Total

 

Retained

 

Total

 

Capital

 

Surplus

 

Investments

 

Plans 1

 

Operations

 

Other

 

AOCI

 

Earnings

 

Equity 2

BALANCE – DECEMBER 31, 2017

1,806

 

230

 

73

 

-

 

(2)

 

(46)

 

25

 

6,242

 

8,303

Merger impact

15,898

 

7

 

-

 

-

 

-

 

-

 

-

 

(1)

 

15,904

Net earnings

-

 

-

 

-

 

-

 

-

 

-

 

-

 

3,573

 

3,573

Other comprehensive (loss) income

-

 

-

 

(99)

 

54

 

(249)

 

(8)

 

(302)

 

-

 

(302)

Shares repurchased

(998)

 

(23)

 

-

 

-

 

-

 

-

 

-

 

(831)

 

(1,852)

Dividends declared

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(1,273)

 

(1,273)

Effect of share-based compensation including issuance of

common shares

34

 

17

 

-

 

-

 

-

 

-

 

-

 

-

 

51

Transfer of net loss on sale of investment

-

 

-

 

19

 

-

 

-

 

-

 

19

 

(19)

 

-

Transfer of net loss on cash flow hedges

-

 

-

 

-

 

-

 

-

 

21

 

21

 

-

 

21

Transfer of net actuarial gain on defined benefit plans

-

 

-

 

-

 

(54)

 

-

 

-

 

(54)

 

54

 

-

BALANCE – DECEMBER 31, 2018

16,740

 

231

 

(7)

 

-

 

(251)

 

(33)

 

(291)

 

7,745

 

24,425

Net earnings

-

 

-

 

-

 

-

 

-

 

-

 

-

 

992

 

992

Other comprehensive (loss) income

-

 

-

 

(25)

 

7

 

47

 

7

 

36

 

-

 

36

Shares repurchased

(992)

 

-

 

-

 

-

 

-

 

-

 

-

 

(886)

 

(1,878)

Dividends declared

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(754)

 

(754)

Effect of share-based compensation including issuance of

common shares

23

 

17

 

-

 

-

 

-

 

-

 

-

 

-

 

40

Transfer of net loss on investment

-

 

-

 

3

 

-

 

-

 

-

 

3

 

(3)

 

-

Transfer of net loss on cash flow hedges

-

 

-

 

-

 

-

 

-

 

8

 

8

 

-

 

8

Transfer of net actuarial gain on defined benefit plans

-

 

-

 

-

 

(7)

 

-

 

-

 

(7)

 

7

 

-

BALANCE – DECEMBER 31, 2019

15,771

 

248

 

(29)

 

-

 

(204)

 

(18)

 

(251)

 

7,101

 

22,869

1 Any amounts incurred during a period were closed out to retained earnings at each period-end. Therefore, no balance exists at the beginning or end of period.

2 All equity transactions were attributable to common shareholders.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Balance Sheets

As at

 

December 31, 2019

 

December 31, 2018

ASSETS

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

671

 

2,314

Receivables

 

3,542

 

3,342

Inventories

 

4,975

 

4,917

Prepaid expenses and other current assets

 

1,477

 

1,089

 

 

10,665

 

11,662

Non-current assets

 

 

 

 

Property, plant and equipment

Note 1

20,335

 

18,796

Goodwill

 

11,986

 

11,431

Other intangible assets

 

2,428

 

2,210

Investments

 

821

 

878

Other assets

 

564

 

525

TOTAL ASSETS

 

46,799

 

45,502

LIABILITIES

 

 

 

 

Current liabilities

 

 

 

 

Short-term debt

 

976

 

629

Current portion of long-term debt

 

502

 

995

Current portion of lease liabilities

Note 1

214

 

8

Payables and accrued charges

 

7,437

 

6,703

 

 

9,129

 

8,335

Non-current liabilities

 

 

 

 

Long-term debt

 

8,553

 

7,579

Lease liabilities

Note 1

859

 

12

Deferred income tax liabilities

 

3,145

 

2,907

Pension and other post-retirement benefit liabilities

 

433

 

395

Asset retirement obligations and accrued environmental costs

 

1,650

 

1,673

Other non-current liabilities

 

161

 

176

TOTAL LIABILITIES

 

23,930

 

21,077

SHAREHOLDERS’ EQUITY

 

 

 

 

Share capital

 

15,771

 

16,740

Contributed surplus

 

248

 

231

Accumulated other comprehensive loss

 

(251)

 

(291)

Retained earnings

 

7,101

 

7,745

TOTAL SHAREHOLDERS’ EQUITY

 

22,869

 

24,425

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

46,799

 

45,502

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Notes to the Condensed Consolidated Financial Statements

As at and for the Three and Twelve Months Ended December 31, 2019

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. Disclosures related to the merger of Potash Corporation of Saskatchewan Inc. and Agrium Inc. (the “Merger”) can be found in Note 3 of our 2018 annual consolidated financial statements.

Our accounting policies are in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board (“IFRS”). The accounting policies and methods of computation used in preparing these unaudited condensed consolidated financial statements are consistent with those used in the preparation of our 2018 annual consolidated financial statements, with the exception of IFRS 16, “Leases” (“IFRS 16”), which was adopted effective January 1, 2019, and resulted in an increase to property, plant and equipment and recognition of lease liabilities of approximately $1 billion at January 1, 2019. Other impacts from adoption of IFRS 16 are disclosed in Note 13 of our first quarter 2019 unaudited condensed consolidated financial statements.

These unaudited condensed consolidated 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 2018 annual consolidated financial statements. Our 2019 annual consolidated financial statements which are expected to be issued in February 2020 will include additional information under IFRS.

Certain immaterial 2018 figures have been reclassified or grouped together in the condensed consolidated statements of earnings, condensed consolidated statements of cash flows, and in the segment information.

In management’s opinion, the unaudited condensed consolidated financial statements include all adjustments necessary to fairly present such information in all material respects.

NOTE 2 SEGMENT INFORMATION

The Company’s four reportable operating segments are: Retail, Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and provides services directly to growers through a network of farm centers in North and South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces. In the first quarter of 2019, our Chief Operating Decision Maker reassessed product groupings and decided to evaluate the performance of ammonium sulfate as part of the Nitrogen segment, rather than the Phosphate and Sulfate segment, as previously reported in our 2018 annual consolidated financial statements. Comparative amounts for the Nitrogen and Phosphate segments were restated, including EBITDA, which is calculated as net earnings (loss) from continuing operations before finance costs, income taxes and depreciation and amortization. For the three months ended December 31, 2018, Nitrogen reflected increases of $30, $8 and $12 in sales, gross margin and EBITDA, respectively, and for the twelve months ended December 31, 2018, Nitrogen reflected increases of $121, $40 and $53 in sales, gross margin and EBITDA, respectively, as well as $377 in assets as at December 31, 2018, with corresponding decreases in Phosphate. In addition, the “Others” segment was renamed to “Corporate and Others”.

 

 

Three Months Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

2,161

 

374

 

575

 

298

 

34

 

-

 

3,442

 

– intersegment

10

 

29

 

125

 

43

 

-

 

(207)

 

-

Sales

– total

2,171

 

403

 

700

 

341

 

34

 

(207)

 

3,442

Freight, transportation and distribution

-

 

53

 

97

 

54

 

-

 

(32)

 

172

Net sales

2,171

 

350

 

603

 

287

 

34

 

(175)

 

3,270

Cost of goods sold

1,435

 

211

 

496

 

281

 

34

 

(201)

 

2,256

Gross margin

736

 

139

 

107

 

6

 

-

 

26

 

1,014

Selling expenses

668

 

2

 

4

 

-

 

(4)

 

-

 

670

General and administrative expenses

30

 

6

 

4

 

4

 

73

 

-

 

117

Provincial mining and other taxes

-

 

50

 

-

 

-

 

(11)

 

-

 

39

Share-based compensation expense

-

 

-

 

-

 

-

 

9

 

-

 

9

Impairment of assets

-

 

-

 

-

 

-

 

87

 

-

 

87

Other (income) expenses

(31)

 

(2)

 

(19)

 

5

 

76

 

-

 

29

Earnings (loss) before finance costs and

income taxes

69

 

83

 

118

 

(3)

 

(230)

 

26

 

63

Depreciation and amortization

162

 

66

 

141

 

57

 

10

 

-

 

436

EBITDA

231

 

149

 

259

 

54

 

(220)

 

26

 

499

Assets – at December 31, 2019

19,990

 

11,696

 

10,991

 

2,198

 

2,129

 

(205)

 

46,799

 

 

Three Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen 1

 

Phosphate 1

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

2,003

 

648

 

675

 

399

 

37

 

-

 

3,762

 

– intersegment

14

 

40

 

164

 

65

 

-

 

(283)

 

-

Sales

– total

2,017

 

688

 

839

 

464

 

37

 

(283)

 

3,762

Freight, transportation and distribution

-

 

51

 

94

 

58

 

-

 

(14)

 

189

Net sales

2,017

 

637

 

745

 

406

 

37

 

(269)

 

3,573

Cost of goods sold

1,355

 

271

 

521

 

393

 

37

 

(263)

 

2,314

Gross margin

662

 

366

 

224

 

13

 

-

 

(6)

 

1,259

Selling expenses

571

 

5

 

8

 

2

 

(7)

 

-

 

579

General and administrative expenses

27

 

2

 

3

 

3

 

76

 

-

 

111

Provincial mining and other taxes

-

 

56

 

1

 

-

 

1

 

-

 

58

Share-based compensation recovery

-

 

-

 

-

 

-

 

(33)

 

-

 

(33)

Other (income) expenses

(18)

 

1

 

(1)

 

8

 

8

 

-

 

(2)

Earnings (loss) before finance costs and

income taxes

82

 

302

 

213

 

-

 

(45)

 

(6)

 

546

Depreciation and amortization

132

 

92

 

108

 

53

 

13

 

-

 

398

EBITDA

214

 

394

 

321

 

53

 

(32)

 

(6)

 

944

Assets – at December 31, 2018

17,964

 

11,710

 

10,386

 

2,406

 

3,678

 

(642)

 

45,502

1 Comparative figures have been restated to reflect the change in the sulfate product grouping from Phosphate and Sulfate to Nitrogen.

 

 

Twelve Months Ended December 31, 2019

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

13,183

 

2,702

 

2,608

 

1,397

 

133

 

-

 

20,023

 

– intersegment

38

 

207

 

612

 

203

 

-

 

(1,060)

 

-

Sales

– total

13,221

 

2,909

 

3,220

 

1,600

 

133

 

(1,060)

 

20,023

Freight, transportation and distribution

-

 

305

 

372

 

232

 

-

 

(141)

 

768

Net sales

13,221

 

2,604

 

2,848

 

1,368

 

133

 

(919)

 

19,255

Cost of goods sold

9,981

 

1,103

 

2,148

 

1,373

 

133

 

(924)

 

13,814

Gross margin

3,240

 

1,501

 

700

 

(5)

 

-

 

5

 

5,441

Selling expenses

2,484

 

9

 

25

 

5

 

(18)

 

-

 

2,505

General and administrative expenses

112

 

6

 

15

 

7

 

264

 

-

 

404

Provincial mining and other taxes

-

 

287

 

2

 

1

 

2

 

-

 

292

Share-based compensation expense

-

 

-

 

-

 

-

 

104

 

-

 

104

Impairment of assets

-

 

-

 

-

 

-

 

120

 

-

 

120

Other expenses (income)

8

 

(4)

 

(46)

 

25

 

171

 

-

 

154

Earnings (loss) before finance costs and

income taxes

636

 

1,203

 

704

 

(43)

 

(643)

 

5

 

1,862

Depreciation and amortization

595

 

390

 

535

 

237

 

42

 

-

 

1,799

EBITDA

1,231

 

1,593

 

1,239

 

194

 

(601)

 

5

 

3,661

Assets – at December 31, 2019

19,990

 

11,696

 

10,991

 

2,198

 

2,129

 

(205)

 

46,799

 

 

Twelve Months Ended December 31, 2018

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen 1

 

Phosphate 1

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

12,470

 

2,796

 

2,712

 

1,508

 

150

 

-

 

19,636

 

– intersegment

50

 

220

 

626

 

268

 

-

 

(1,164)

 

-

Sales

– total

12,520

 

3,016

 

3,338

 

1,776

 

150

 

(1,164)

 

19,636

Freight, transportation and distribution

-

 

349

 

373

 

215

 

-

 

(73)

 

864

Net sales

12,520

 

2,667

 

2,965

 

1,561

 

150

 

(1,091)

 

18,772

Cost of goods sold

9,485

 

1,183

 

2,145

 

1,473

 

150

 

(1,056)

 

13,380

Gross margin

3,035

 

1,484

 

820

 

88

 

-

 

(35)

 

5,392

Selling expenses

2,303

 

14

 

32

 

10

 

(22)

 

-

 

2,337

General and administrative expenses

100

 

10

 

20

 

9

 

284

 

-

 

423

Provincial mining and other taxes

-

 

244

 

3

 

1

 

2

 

-

 

250

Share-based compensation expense

-

 

-

 

-

 

-

 

116

 

-

 

116

Impairment of assets

-

 

1,809

 

-

 

-

 

-

 

-

 

1,809

Other (income) expenses

(75)

 

14

 

(8)

 

6

 

106

 

-

 

43

Earnings (loss) before finance costs and

income taxes

707

 

(607)

 

773

 

62

 

(486)

 

(35)

 

414

Depreciation and amortization

499

 

404

 

442

 

193

 

54

 

-

 

1,592

EBITDA

1,206

 

(203)

 

1,215

 

255

 

(432)

 

(35)

 

2,006

Assets – at December 31, 2018

17,964

 

11,710

 

10,386

 

2,406

 

3,678

 

(642)

 

45,502

1 Comparative figures have been restated to reflect the change in the sulfate product grouping from Phosphate and Sulfate to Nitrogen.

 

Investor and Media Relations:
Richard Downey
Vice President, Investor & Corporate Relations
(403) 225-7357
[email protected]

Investor Relations
Tim Mizuno
Senior Manager, Investor Relations
(306) 933-8548

Source: Nutrien Ltd.