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Nutrien Reports Record Earnings and an Excellent Outlook

SASKATOON, Saskatchewan--(BUSINESS WIRE)-- Nutrien Ltd. (TSX and NYSE: NTR) announced today its second quarter 2021 results, with net earnings of $1.1 billion($1.94 diluted earnings per share). Second-quarter adjusted net earnings1 were $2.08 per share and adjusted EBITDA1 was $2.2 billion.

“We delivered record earnings across our global business for the second quarter and first half of 2021 and expect the remainder of the year to contribute to a full year record. We showcased Nutrien’s unique competitive advantages, strong operating performance and the significant leverage to higher fertilizer prices as we focus on our purpose to help growers meet the ever-growing demand for increased food production in a sustainable manner,” commented Mayo Schmidt, Nutrien’s President and CEO. 

“The outlook for global crop and fertilizer markets continues to be very strong and we are positioned to benefit from our structural advantages and as a global leader in agriculture. We increased our full year 2021 adjusted EBITDA guidance1 by over $1.5 billion, supported in part by our quick actions to produce an additional one million tonnes of potash, illustrating the power of the Potash team’s unparalleled flexible, reliable, and low-cost six-mine network,” added Mr. Schmidt.

Highlights:

  • Nutrien generated record adjusted EBITDA of $3.0 billion and free cash flow1 of $1.9 billion in the first half of 2021. This represents an increase of 36 percent and 40 percent, respectively, compared to the first half of 2020 and 17 percent and 12 percent, respectively higher than the previous record for the company in the first half of 2019.
  • Nutrien raised full-year 2021 adjusted EBITDA and adjusted net earnings per share1 guidance to $6.0 to $6.4 billion and $4.60 to $5.10 per share, respectively. This reflects higher expected results across our business, as well as, the benefits of increasing our 2021 potash sales guidance by one million tonnes to address global demand in support of our grower customers around the world. By the fourth quarter of 2021, we expect to surge potash production to an annualized run-rate of approximately 17 million tonnes, due to our flexible mine network and the responsiveness of our dedicated employees.
  • Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the second quarter and first half of 2021. First-half adjusted EBITDA increased 24 percent compared to the same period in 2020 as a result of double-digit growth in revenue and gross margin, higher gross margin percentage and adjusted EBITDA margins surpassing 11 percent. The increase was primarily due to organic growth supported by strong demand for grains and oilseeds, continued growth in our proprietary product sales, optimization and efficiency initiatives, as well as, the ongoing commitment of our approximately 3,600 crop advisors to serve our grower customers.
  • Sales through our digitally-enabled retail platform were approximately $1.6 billion in the first half of 2021, nearly double the sales compared to the same period in 2020 and exceeding the full year 2020 results of $1.2 billion in just six months. In the first half of 2021, we processed nearly half-a-million individual grower payments through the digital platform.
  • Potash adjusted EBITDA was 48 percent higher in the second quarter and 41 percent higher in the first half of 2021 compared to the same periods in 2020 due to higher net realized selling prices and sales volumes. We achieved record production and sales volumes of nearly 7 million tonnes in the first six months of 2021.
  • Nitrogen adjusted EBITDA was 45 percent higher in the second quarter and 38 percent higher in the first half of 2021 compared to the same periods in 2020 due to higher net realized selling prices. Phosphate adjusted EBITDA increased 45 percent in the second quarter and 70 percent in the first half of 2021 compared to the same periods in 2020 due to higher net realized selling prices.
  • Subsequent to the second quarter of 2021, Nutrien announced an agreement to purchase Terra Nova, a retail businesses in Brazil with EBITDA margins and acquisition multiples in line with similar transaction metrics for ag retail businesses acquired by Nutrien in the US. We also entered a collaboration agreement with EXMAR NV to jointly develop and build a low-carbon, ammonia-fueled vessel to further reduce maritime transportation emissions.

___________________
1 This financial measure including related guidance, if applicable, is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section for further information.

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of August 9, 2021. The Board of Directors (“Board”) of Nutrien carries out its responsibility for review of this disclosure principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews and, prior to its publication approves this disclosure pursuant to the authority delegated to it by the Board. The term “Nutrien” refers to Nutrien Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our 2020 Annual Report dated February 18, 2021, which includes our annual audited consolidated financial statements and MD&A, and our Annual Information Form, each for the year ended December 31, 2020, can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. No update is provided to the disclosure in our 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 (“SEC”).

This MD&A is based on the Company’s unaudited interim condensed consolidated financial statements as at and for the three and six months ended June 30, 2021 (“interim financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting” unless otherwise noted. This MD&A contains certain non-IFRS financial measures and forward-looking statements which are described in the “Non-IFRS Financial Measures” and the “Forward-Looking Statements” sections, respectively.

Market Outlook

Agriculture and Retail

  • Crop prices continue to be supported by strong global demand and less than expected supply, resulting in historically low global inventory and strong grower margins. We expect these market fundamentals to continue beyond this season and be supportive of crop prices and grower margins into 2022.
  • Growing conditions across North America vary with favorable crop conditions in the US South and East regions, and drought conditions in the Western US, US Northern Plains and Canadian Prairies. We expect this variability could impact regional crop protection and plant health product demand in the second half of 2021 as growers experiencing favorable conditions look to boost and protect yields, particularly given additional pest pressure in parts of the US this summer, while growers impacted by drought may reduce some applications. However, with the strong outlook for crop prices and assuming a normal window for fall application, we expect US fertilizer demand and post-harvest crop protection applications to be strong.
  • Brazil’s safrinha corn crop production estimates are significantly below initial market expectations due to both drought and frost. However, Brazilian crop prices remain at near-record highs and growers are expected to increase soybean and safrinha corn area when the next growing seasons begin. In Australia, precipitation has supported favorable soil moisture levels, leading to the largest seeded area for winter crops in the country’s history.

Crop Nutrient Markets

  • Global potash shipments are projected to reach a record 69 to 71 million tonnes in 2021 while inventory in key regions are expected to be historically low going into 2022. This is supported by strong potash consumption backed by favorable agricultural fundamentals, with further upside limited by global supply issues and most producers operating at peak rates.
  • We believe Latin America could reach new records for both potash consumption and imports in 2021, as applications for the last crop were strong and growers are proactively securing volumes for the upcoming season. In North America, increased crop area and normal application rates have supported historically high demand which we expect will continue in the fall.
  • Global nitrogen demand growth is expected to be approximately 3 percent in 2021 driven by strong agricultural fundamentals and a rebound in industrial demand. In addition, global supply is tight because of production outages and project delays, which together with higher global energy costs, have supported nitrogen prices.
  • Strong global urea prices and robust global import demand led Chinese urea exports to increase by over 40 percent during the first half of 2021 compared to depressed 2020 levels. However, as a result of high Chinese domestic prices and very strong demand, the Chinese government urged producers to prioritize the domestic market, which may limit China’s exports through the second half of 2021. Meanwhile, strong Indian urea demand, lower domestic production and tight inventories have resulted in regular tenders.
  • Global phosphate demand remains robust in most key markets, which in combination with higher raw material costs and limited growth in export supply has continued to support phosphate prices. While inventories in India are tight, poor import economics create uncertainty for import demand in the second half of 2021.

Financial Outlook and Guidance

Based on market factors detailed above, we are raising full-year 2021 adjusted EBITDA guidance to $6.0 to $6.4 billion from $4.4 to $4.9 billion and full-year 2021 adjusted net earnings guidance to $4.60 to $5.10 per share from $2.55 to $3.25 per share.

All guidance numbers, including those noted above are outlined in the tables below. Refer to page 57 of Nutrien’s 2020 Annual Report for related assumptions and sensitivities.

2021 Guidance Ranges 1

 

Low

 

 

 

High

 

Adjusted net earnings per share 2

$

4.60

 

 

$

5.10

 

Adjusted EBITDA (billions) 2

$

6.0

 

 

$

6.4

 

Retail Adjusted EBITDA (billions)

$

1.6

 

 

$

1.7

 

Potash Adjusted EBITDA (billions)

$

2.4

 

 

$

2.6

 

Nitrogen Adjusted EBITDA (billions)

$

1.85

 

 

$

2.05

 

Phosphate Adjusted EBITDA (millions)

$

400

 

 

$

500

 

Potash sales tonnes (millions) 3

 

13.5

 

 

 

13.9

 

Nitrogen sales tonnes (millions) 3

 

10.8

 

 

 

11.2

 

Depreciation and amortization (billions)

$

1.9

 

 

$

2.0

 

Effective tax rate on adjusted earnings

 

24

%

 

 

26

%

Sustaining capital expenditures (billions) 2

$

1.15

 

 

$

1.25

 

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.

 

Consolidated Results

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Sales 1

9,763

 

8,431

 

16

 

14,421

 

12,629

 

14

Freight, transportation and distribution

222

 

237

 

(6)

 

433

 

449

 

(4)

Cost of goods sold

6,659

 

6,024

 

11

 

9,950

 

9,125

 

9

Gross margin 1

2,882

 

2,170

 

33

 

4,038

 

3,055

 

32

Expenses 1

1,263

 

1,031

 

23

 

2,141

 

1,834

 

17

Net earnings

1,113

 

765

 

45

 

1,246

 

730

 

71

Adjusted EBITDA 2

2,215

 

1,721

 

29

 

3,021

 

2,229

 

36

Cash provided by operating activities

1,966

 

1,756

 

12

 

1,814

 

1,230

 

47

Free cash flow ("FCF") 2

1,413

 

1,173

 

20

 

1,889

 

1,354

 

40

FCF including changes in non-cash operating working capital 2

1,662

 

1,611

 

3

 

1,346

 

922

 

46

1 Certain immaterial figures have been reclassified for the three and six months ended June 30, 2020.

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

Net earnings and adjusted EBITDA increased significantly in the second quarter and first half of 2021 compared to the same periods in 2020 due to higher net realized selling prices, higher potash sales volumes and earnings growth in Nutrien Ag Solutions (“Retail”). Cash flow from operating activities increased in the second quarter and first half of 2021 compared to the same periods last year, which helped generate $1.9 billion in free cash flow in the first half of 2021, an increase of more than $0.5 billion compared to the amount generated in the same period in 2020. The COVID-19 pandemic had a limited impact on our results during the second quarter and first half of 2021.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and six months ended June 30, 2021 to the results for the three and six months ended June 30, 2020, unless otherwise noted.

Nutrien Ag Solutions (“Retail”)

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients

3,045

 

2,527

 

20

 

703

 

559

 

26

 

23

 

22

Crop protection products

2,666

 

2,436

 

9

 

587

 

547

 

7

 

22

 

22

Seed

1,216

 

1,141

 

7

 

237

 

219

 

8

 

19

 

19

Merchandise

268

 

253

 

6

 

45

 

45

 

-

 

17

 

18

Nutrien Financial 1

59

 

40

 

48

 

59

 

40

 

48

 

100

 

100

Services and other 1

335

 

400

 

(16)

 

279

 

250

 

12

 

83

 

63

Nutrien Financial elimination 2

(52)

 

(33)

 

58

 

(52)

 

(33)

 

58

 

100

 

100

 

7,537

 

6,764

 

11

 

1,858

 

1,627

 

14

 

25

 

24

Cost of goods sold

5,679

 

5,137

 

11

 

 

 

 

 

 

 

 

 

 

Gross margin

1,858

 

1,627

 

14

 

 

 

 

 

 

 

 

 

 

Expenses 1,3

938

 

826

 

14

 

 

 

 

 

 

 

 

 

 

Earnings before finance costs and taxes ("EBIT")

920

 

801

 

15

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

169

 

163

 

4

 

 

 

 

 

 

 

 

 

 

EBITDA

1,089

 

964

 

13

 

 

 

 

 

 

 

 

 

 

Adjustments 4

8

 

-

 

n/m

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

1,097

 

964

 

14

 

 

 

 

 

 

 

 

 

 

1 Certain immaterial figures have been reclassified for the three months ended June 30, 2020.

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

3 Includes selling expenses of $863 million (2020 – $764 million).

4 See Note 2 to the interim financial statements.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Gross Margin

 

Gross Margin (%)

as otherwise noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

 

2021

 

2020

Sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Crop nutrients

4,061

 

3,312

 

23

 

923

 

715

 

29

 

23

 

22

Crop protection products

3,751

 

3,446

 

9

 

763

 

704

 

8

 

20

 

20

Seed

1,679

 

1,535

 

9

 

306

 

278

 

10

 

18

 

18

Merchandise

498

 

469

 

6

 

83

 

79

 

5

 

17

 

17

Nutrien Financial 1

84

 

56

 

50

 

84

 

56

 

50

 

100

 

100

Services and other 1

508

 

655

 

(22)

 

423

 

384

 

10

 

83

 

59

Nutrien Financial elimination

(72)

 

(48)

 

50

 

(72)

 

(48)

 

50

 

100

 

100

 

10,509

 

9,425

 

12

 

2,510

 

2,168

 

16

 

24

 

23

Cost of goods sold

7,999

 

7,257

 

10

 

 

 

 

 

 

 

 

 

 

Gross margin

2,510

 

2,168

 

16

 

 

 

 

 

 

 

 

 

 

Expenses 1,2

1,659

 

1,515

 

10

 

 

 

 

 

 

 

 

 

 

EBIT

851

 

653

 

30

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

346

 

318

 

9

 

 

 

 

 

 

 

 

 

 

EBITDA

1,197

 

971

 

23

 

 

 

 

 

 

 

 

 

 

Adjustments 3

9

 

-

 

n/m

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

1,206

 

971

 

24

 

 

 

 

 

 

 

 

 

 

1 Certain immaterial figures have been reclassified for the six months ended June 30, 2020.

2 Includes selling expenses of $1,530 million (2020 – $1,399 million).

3 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2021 due to higher sales, gross margin and gross margin percentages. This was supported by expanded planted acreage and strong agricultural market fundamentals in all regions in which we operate, as well as, supply chain improvements and strategic procurement. Our Retail cash operating coverage ratio1 for the first half of 2021 declined to 60 percent.
  • Crop nutrients sales increased significantly in the second quarter and first half of 2021 supported by higher prices and record North American and International first half sales volumes. Gross margin benefited from stronger margin per tonne due in part to strategic procurement in a rising price environment.
  • Crop protection products sales increased in the second quarter and first half of 2021 due to market growth and favorable application conditions throughout most of the US. Gross margin percentages were stable as strategic procurement and strong proprietary product results more than offset higher costs for certain products caused by global supply chain issues.
  • Seed sales increased in the second quarter and first half of 2021, supported by higher seeded acreage in key regions where we operate and strong agriculture fundamentals. Gross margin percentage was stable in the second quarter and first half of 2021.
  • Merchandise sales increased in the second quarter and first half of 2021 primarily driven by growth in the Australian market due to higher animal health and management sales related to strong livestock prices. Gross margin was similar in both periods despite the shift in product mix.
  • Nutrien Financial sales increased in the second quarter and first half of 2021 due to higher utilization and adoption of our programs.
  • Services and other sales decreased due to the divestiture of an Australian livestock export business in the fourth quarter of 2020, which more than offset higher US custom application sales. Despite the change in revenue mix, the impact to gross margin percentage was favorable for both the second quarter and first half of 2021.

___________________
1 This financial measure is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section for further information.

Potash

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

326

 

232

 

41

 

1,172

 

1,201

 

(2)

 

278

 

194

 

43

Offshore

491

 

356

 

38

 

2,449

 

2,414

 

1

 

200

 

147

 

36

 

817

 

588

 

39

 

3,621

 

3,615

 

-

 

226

 

163

 

39

Cost of goods sold

317

 

310

 

2

 

 

 

 

 

 

 

88

 

86

 

2

Gross margin - total

500

 

278

 

80

 

 

 

 

 

 

 

138

 

77

 

79

Expenses 1

123

 

52

 

137

 

Depreciation and amortization

 

32

 

30

 

7

EBIT

377

 

226

 

67

 

Gross margin excluding depreciation

 

 

 

 

 

Depreciation and amortization

116

 

109

 

6

 

and amortization - manufactured 2

170

 

107

 

59

EBITDA

493

 

335

 

47

 

Potash cash cost of product

 

 

 

 

 

 

Adjustments 3

2

 

-

 

n/m

 

manufactured 2

 

59

 

52

 

13

Adjusted EBITDA

495

 

335

 

48

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes provincial mining taxes of $107 million (2020 – $46 million).

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

3 See Note 2 to the interim financial statements.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

North America

658

 

457

 

44

 

2,642

 

2,348

 

13

 

249

 

195

 

28

Offshore

770

 

648

 

19

 

4,136

 

4,144

 

-

 

186

 

156

 

19

 

1,428

 

1,105

 

29

 

6,778

 

6,492

 

4

 

211

 

170

 

24

Cost of goods sold

608

 

575

 

6

 

 

 

 

 

 

 

90

 

88

 

2

Gross margin - total

820

 

530

 

55

 

 

 

 

 

 

 

121

 

82

 

48

Expenses 1

187

 

115

 

63

 

Depreciation and amortization

 

35

 

32

 

9

EBIT

633

 

415

 

53

 

Gross margin excluding depreciation

 

 

 

 

 

Depreciation and amortization

240

 

205

 

17

 

and amortization - manufactured

156

 

114

 

37

EBITDA

873

 

620

 

41

 

Potash cash cost of product

 

 

 

 

 

 

Adjustments 2

2

 

-

 

n/m

 

manufactured

 

58

 

56

 

4

Adjusted EBITDA

875

 

620

 

41

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes provincial mining taxes of $165 million (2020 – $103 million).

2 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2021 due to higher net realized selling prices and record sales volumes.
  • Sales volumes were the highest of any second quarter or first half on record. Demand was strong in both North America and Offshore markets, supported by high crop prices and good affordability, allowing us to leverage our structurally advantaged, flexible, low-cost network of six mines and integrated transportation and logistics system.
  • Net realized selling price increased in the second quarter and first half of 2021 due to strong global demand and very tight supply.
  • Cost of goods sold per tonne in the second quarter and first half of 2021 was slightly higher compared to the same periods in 2020, primarily due to the stronger Canadian dollar and mine production mix. These factors also led to a higher potash cash cost of product manufactured per tonne in the second quarter and first half of 2021.

Canpotex Sales by Market

(percentage of sales volumes, except as

Three Months Ended June 30

 

Six Months Ended June 30

otherwise noted)

2021

2020

Change

 

2021

2020

Change

Other Asian markets 1

41

26

15

 

39

28

11

Latin America

35

36

(1)

 

33

31

2

China

11

19

(8)

 

12

22

(10)

Other markets

10

7

3

 

11

7

4

India

3

12

(9)

 

5

12

(7)

 

100

100

 

 

100

100

 

1 All Asian markets except China and India.

 

 

 

 

 

 

 

Nitrogen

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

346

 

229

 

51

 

836

 

935

 

(11)

 

416

 

244

 

70

Urea

346

 

273

 

27

 

819

 

1,000

 

(18)

 

421

 

273

 

54

Solutions, nitrates and sulfates

290

 

194

 

49

 

1,311

 

1,255

 

4

 

221

 

154

 

44

 

982

 

696

 

41

 

2,966

 

3,190

 

(7)

 

331

 

218

 

52

Cost of goods sold

597

 

508

 

18

 

 

 

 

 

 

 

201

 

159

 

26

Gross margin - manufactured

385

 

188

 

105

 

 

 

 

 

 

 

130

 

59

 

120

Gross margin - other 1

31

 

20

 

55

 

Depreciation and amortization

 

52

 

54

 

(4)

Gross margin - total

416

 

208

 

100

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses (income)

17

 

(3)

 

n/m

 

and amortization - manufactured

182

 

113

 

61

EBIT

399

 

211

 

89

 

Ammonia controllable cash cost of

 

 

 

 

 

 

Depreciation and amortization

155

 

172

 

(10)

 

product manufactured 2

 

51

 

40

 

28

EBITDA

554

 

383

 

45

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 3

1

 

-

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

555

 

383

 

45

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $197 million (2020 – $157 million) less cost of goods sold of $166 million (2020 – $137 million).

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

3 See Note 2 to the interim financial statements.

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ammonia

506

 

359

 

41

 

1,408

 

1,502

 

(6)

 

360

 

239

 

51

Urea

595

 

510

 

17

 

1,576

 

1,856

 

(15)

 

377

 

275

 

37

Solutions, nitrates and sulfates

454

 

357

 

27

 

2,385

 

2,360

 

1

 

190

 

151

 

26

 

1,555

 

1,226

 

27

 

5,369

 

5,718

 

(6)

 

290

 

214

 

36

Cost of goods sold

1,037

 

952

 

9

 

 

 

 

 

 

 

194

 

166

 

17

Gross margin - manufactured

518

 

274

 

89

 

 

 

 

 

 

 

96

 

48

 

100

Gross margin - other 1

48

 

31

 

55

 

Depreciation and amortization

 

53

 

56

 

(5)

Gross margin - total

566

 

305

 

86

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses

-

 

8

 

(100)

 

and amortization - manufactured

149

 

104

 

43

EBIT

566

 

297

 

91

 

Ammonia controllable cash cost of

 

 

 

 

 

 

Depreciation and amortization

284

 

322

 

(12)

 

product manufactured

 

51

 

43

 

19

EBITDA

850

 

619

 

37

 

 

 

 

 

 

 

 

 

 

 

 

Adjustments 2

5

 

-

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

855

 

619

 

38

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $384 million (2020 – $305 million) less cost of goods sold of $336 million (2020 – $274 million).

2 See Note 2 to the interim financial statements.

  • Adjusted EBITDA increased in the second quarter and first half of 2021 due to higher net realized selling prices which more than offset higher natural gas costs, lower equity earnings and lower sales volumes.
  • Sales volumes were lower in the second quarter and first half of 2021 due to higher turnaround activities, temporary production outages and lower inventories at the beginning of 2021. Our ammonia operating rate was 87 percent and 92 percent respectively in the second quarter and first half of 2021.
  • Net realized selling price of nitrogen in the second quarter and first half of 2021 was higher due to higher benchmark prices resulting from the strength in global agriculture markets and a recovery in industrial nitrogen demand.
  • Cost of goods sold per tonne increased during the second quarter and first half of 2021 due to higher natural gas costs, a stronger Canadian dollar and lower nitrogen production. The stronger Canadian dollar combined with lower production volumes led to a higher ammonia controllable cash cost of product manufactured per tonne in the second quarter and first half of 2021.

Natural Gas Prices in Cost of Production

 

Three Months Ended June 30

 

Six Months Ended June 30

(US dollars per MMBtu, except as otherwise noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Overall gas cost excluding realized derivative impact

3.86

 

2.09

 

85

 

3.51

 

2.16

 

63

Realized derivative impact

0.03

 

0.06

 

(50)

 

0.03

 

0.06

 

(50)

Overall gas cost

3.89

 

2.15

 

81

 

3.54

 

2.22

 

59

 

 

 

 

 

 

 

 

 

 

 

 

Average NYMEX

2.83

 

1.72

 

65

 

2.76

 

1.83

 

51

Average AECO

2.32

 

1.37

 

69

 

2.31

 

1.50

 

54

  • Natural gas prices in our cost of production increased in the second quarter and first half of 2021 as a result of higher North American gas index prices and increased gas costs in Trinidad, which are linked to ammonia benchmark prices.

Phosphate

 

Three Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

232

 

146

 

59

 

394

 

472

 

(17)

 

588

 

309

 

90

Industrial and feed

119

 

104

 

14

 

192

 

194

 

(1)

 

621

 

538

 

15

 

351

 

250

 

40

 

586

 

666

 

(12)

 

598

 

375

 

59

Cost of goods sold

271

 

224

 

21

 

 

 

 

 

 

 

463

 

335

 

38

Gross margin - manufactured

80

 

26

 

208

 

 

 

 

 

 

 

135

 

40

 

238

Gross margin - other 1

4

 

2

 

100

 

Depreciation and amortization

 

60

 

84

 

(29)

Gross margin - total

84

 

28

 

200

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses

7

 

7

 

-

 

and amortization - manufactured

195

 

124

 

57

EBIT

77

 

21

 

267

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

35

 

56

 

(38)

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA / Adjusted EBITDA

112

 

77

 

45

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other phosphate and purchased products and is comprised of net sales of $52 million (2020 - $27 million) less cost of goods sold of $48 million (2020 - $25 million).

 

Six Months Ended June 30

(millions of US dollars, except

Dollars

 

Tonnes (thousands)

 

Average per Tonne

as otherwise noted)

2021

 

2020

% Change

 

2021

 

2020

% Change

 

2021

 

2020

% Change

Manufactured product

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fertilizer

462

 

319

 

45

 

903

 

1,040

 

(13)

 

511

 

307

 

66

Industrial and feed

233

 

210

 

11

 

385

 

385

 

-

 

605

 

546

 

11

 

695

 

529

 

31

 

1,288

 

1,425

 

(10)

 

539

 

372

 

45

Cost of goods sold

553

 

511

 

8

 

 

 

 

 

 

 

429

 

359

 

19

Gross margin - manufactured

142

 

18

 

689

 

 

 

 

 

 

 

110

 

13

 

746

Gross margin - other 1

8

 

3

 

167

 

Depreciation and amortization

 

57

 

84

 

(32)

Gross margin - total

150

 

21

 

614

 

Gross margin excluding depreciation

 

 

 

 

 

Expenses

14

 

17

 

(18)

 

and amortization - manufactured

167

 

97

 

72

EBIT

136

 

4

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

73

 

119

 

(39)

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA / Adjusted EBITDA

209

 

123

 

70

 

 

 

 

 

 

 

 

 

 

 

 

1 Includes other phosphate and purchased products and is comprised of net sales of $93 million (2020 - $61 million) less cost of goods sold of $85 million (2020 - $58 million).

  • Adjusted EBITDA increased in the second quarter and first half of 2021 due to higher net realized selling prices which more than offset higher raw material costs and lower sales volumes.
  • Sales volumes were lower in the second quarter and first half of 2021 due to the timing of turnaround activity this year and higher inventory tonnes in 2020 which supported higher sales in the second quarter and first half of 2020.
  • Net realized selling price of phosphate fertilizer increased in the second quarter and first half of 2021 as a result of the increase in benchmark fertilizer prices resulting from the strength in global agriculture markets and higher global raw material costs. Industrial and feed prices also increased, but to a lesser extent than fertilizer, due to a lag in price realizations relative to spot prices.
  • Cost of goods sold per tonne increased due to significantly higher raw material input costs and a $46 million favorable change in estimate related to an asset retirement obligation recorded in the second quarter of 2020. This was partially offset by lower depreciation and amortization following the non-cash impairment of assets in the third quarter of 2020.

Corporate and Others

(millions of US dollars, except as otherwise

Three Months Ended June 30

 

Six Months Ended June 30

noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Sales 1

-

 

20

 

(100)

 

-

 

47

 

(100)

Cost of goods sold

-

 

18

 

(100)

 

-

 

43

 

(100)

Gross margin

-

 

2

 

(100)

 

-

 

4

 

(100)

Selling expenses

(9)

 

(8)

 

13

 

(15)

 

(13)

 

15

General and administrative expenses

66

 

65

 

2

 

124

 

125

 

(1)

Share-based compensation expense (recovery)

38

 

12

 

217

 

61

 

(20)

 

n/m

Other expenses

83

 

80

 

4

 

111

 

87

 

28

EBIT

(178)

 

(147)

 

21

 

(281)

 

(175)

 

61

Depreciation and amortization

10

 

17

 

(41)

 

22

 

26

 

(15)

EBITDA

(168)

 

(130)

 

29

 

(259)

 

(149)

 

74

Adjustments 2

100

 

65

 

54

 

143

 

18

 

694

Adjusted EBITDA

(68)

 

(65)

 

5

 

(116)

 

(131)

 

(11)

1 Primarily relates to our non-core Canadian business that was sold in 2020.

2 See Note 2 to the interim financial statements.

  • Share-based compensation expense (recovery) – In the second quarter of 2021, the expense was higher as a result of the increase in our share price. We also had a higher number of share-based awards that vested in 2021.

    We had an expense in the first half of 2021 due to an increase in our share price, while a recovery was recorded in the first half of 2020 as our share price decreased as a result of market volatility caused by the COVID-19 pandemic.
  • Other expenses were higher in the second quarter and first half of 2021 compared to the same periods in 2020 as we recognized additional cloud computing related expenses from our change in accounting policy (refer to Note 3). This was partially offset by lower foreign exchange losses as Canadian and Australian dollars improved relative to the US dollar in the second quarter of 2021.

Finance Costs, Income Tax Expense and
Other Comprehensive Income (Loss)

(millions of US dollars, except as otherwise

Three Months Ended June 30

 

Six Months Ended June 30

noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Finance costs

125

 

139

 

(10)

 

245

 

272

 

(10)

Income tax expense

381

 

235

 

62

 

406

 

219

 

85

Other comprehensive income (loss)

61

 

201

 

(70)

 

85

 

(157)

 

n/m

  • Finance costs in the second quarter and first half of 2021 were lower due to lower interest rates and a lower short-term debt balance, more than offsetting a higher long-term debt balance resulting from the $1.5 billion in notes issued in the second quarter of 2020.
  • Income tax expense in the second quarter and first half of 2021 was higher as a result of higher earnings before income taxes compared to the same periods in 2020.
  • Other comprehensive income (loss) is primarily driven by changes in the currency translation of our foreign operations and our investment in Sinofert Holdings Ltd. (“Sinofert”). In 2020, the COVID-19 pandemic resulted in increased market volatility that affected share prices and foreign exchange rates. This resulted in fair value losses on our investment in Sinofert as well as a significant translation gain in the second quarter of 2020 and a significant translation loss in the first quarter of 2020. In the first half of 2021, Sinofert share price increased while the Canadian and Australian dollars relative to the US dollar were less volatile.

Liquidity and Capital Resources

Sources and Uses of Liquidity

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

Sources and Uses of Cash

(millions of US dollars, except as otherwise

Three Months Ended June 30

 

Six Months Ended June 30

noted)

2021

 

2020

 

% Change

 

2021

 

2020

 

% Change

Cash provided by operating activities

1,966

 

1,756

 

12

 

1,814

 

1,230

 

47

Cash used in investing activities

(431)

 

(408)

 

6

 

(819)

 

(853)

 

(4)

Cash (used in) provided by financing activities

(449)

 

(3,139)

 

(86)

 

(640)

 

380

 

n/m

Effect of exchange rate changes on cash and cash equivalents

(4)

 

24

 

n/m

 

(15)

 

(13)

 

15

Increase (decrease) in cash and cash equivalents

1,082

 

(1,767)

 

n/m

 

340

 

744

 

(54)

Cash provided by
operating activities

  • Higher cash provided by operating activities in the second quarter and first half of 2021 compared to the same periods in 2020 was primarily due to strong global crop and fertilizer markets, which resulted in higher earnings, combined with improvements to working capital management, the most significant of which was an increase in payables and accrued charges related to a shift in timing of supplier payments.

Cash used in
investing activities

  • Higher cash used in investing activities in the second quarter was primarily due to higher additions to our property, plant and equipment from higher turnaround activities compared to the same period in 2020.
  • Lower cash used in investing activities for the first half of 2021 was primarily due to lower acquisitions compared to the same period in 2020.

Cash (used in)
provided by
financing activities

  • Lower cash used in financing activities for the second quarter of 2021 compared to the second quarter of 2020 was due to minimal debt repayments in 2021. In 2020, as we managed our liquidity needs during the initial period of the COVID-19 pandemic, we repaid $4.3 billion of short-term debt and issued $1.5 billion of notes.
  • Cash used in financing activities for the first half of 2021 compared to cash provided by financing activities in the first half of 2020 was primarily due to the issuance of $1.5 billion of notes and a note repayment of $500 million in the first half of 2020. We did not issue or repay notes in the first half of 2021.

Financial Condition Review

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

 

As at

 

 

 

 

(millions of US dollars, except as otherwise noted)

June 30, 2021

 

December 31, 2020

 

$ Change

 

% Change

Assets

 

 

 

 

 

 

 

Cash and cash equivalents

1,794

 

1,454

 

340

 

23

Receivables

6,683

 

3,626

 

3,057

 

84

Prepaid expenses and other current assets

524

 

1,460

 

(936)

 

(64)

Other assets

664

 

914

 

(250)

 

(27)

Liabilities and Equity

 

 

 

 

 

 

 

Payables and accrued charges

9,367

 

8,058

 

1,309

 

16

Retained earnings

7,315

 

6,606

 

709

 

11

  • Explanations for changes in Cash and cash equivalents are in the “Sources and Uses of Cash” section.
  • Receivables increased due to higher sales across all of our segments. This was a result of increased crop nutrient net realized selling prices and demand for crop inputs, as well as higher Retail vendor rebates receivables. Certain income tax receivables previously classified as non-current are currently realizable within one year.
  • Prepaid expenses and other current assets decreased due to Retail taking delivery of prepaid inventory (primarily seed and crop protection) during the spring planting and application seasons.
  • Other assets decreased due to a reclassification of certain income tax receivables as current receivables, which will be realized within one year.
  • Payables and accrued charges increased due to a shift in timing of supplier payments and higher inventory purchases to meet strong seasonal demand, which were partially offset by lower customer prepayments in North America as Retail customers took delivery of prepaid sales.
  • Retained earnings increased as net earnings in the first half of 2021 exceeded dividends declared.

Capital Structure and Management

Principal Debt Instruments

As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the six months ended June 30, 2021.

 

As at June 30, 2021

 

 

 

Outstanding and Committed

(millions of US dollars)

Rate of Interest (%)

Total Facility Limit

Short-term debt

Long-term debt

Credit facilities

 

 

 

 

Unsecured revolving term credit facility

n/a

4,500

-

-

Uncommitted revolving demand facility

n/a

500

-

-

Other credit facilities 1

0.9 - 7.5

630

115

73

Other

n/a

 

95

-

Total

 

 

210

73

1 Other credit facilities are unsecured and consist of South American facilities with debt of $167 million and interest rates ranging from 1.5 percent to 7.5 percent and other facilities with debt of $21 million and interest rates ranging from 0.9 percent to 4.1 percent.

We also have a commercial paper program, which is limited to the availability of backup funds under the $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities. There is no outstanding balance as of June 30, 2021.

We extended the maturity date of the unsecured revolving term credit facility from 2023 to 2026 in the three months ended June 30, 2021. There was no change to the total facility limit or the significant agreement terms from those we disclosed in our 2020 Annual Report.

Our long-term debt consists primarily of notes. See the “Capital Structure and Management” section of our 2020 Annual Report for information on balances, rates and maturities for our notes.

Outstanding Share Data

 

As at August 6, 2021

Common shares

570,688,867

Options to purchase common shares

9,877,776

For more information on our capital structure and management, see Note 24 to our 2020 financial statements.

Quarterly Results

(millions of US dollars, except as otherwise noted)

Q2 2021

Q1 2021

Q4 2020

Q3 2020

Q2 2020

Q1 2020

Q4 2019

Q3 2019

Sales 1

9,763

 

4,658

 

4,052

 

4,227

 

8,431

 

4,198

 

3,462

 

4,185

Net earnings (loss) attributable to equity holders of Nutrien

1,108

 

127

 

316

 

(587)

 

765

 

(35)

 

(48)

 

141

Adjusted EBITDA

2,215

 

806

 

768

 

670

 

1,721

 

508

 

664

 

787

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic

1.94

 

0.22

 

0.55

 

(1.03)

 

1.34

 

(0.06)

 

(0.08)

 

0.25

Diluted

1.94

 

0.22

 

0.55

 

(1.03)

 

1.34

 

(0.06)

 

(0.08)

 

0.24

1 Certain immaterial figures have been reclassified in the first three quarters of 2020.

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

In the third quarter of 2020, earnings were impacted by an $824 million non-cash impairment of assets primarily in the Phosphate segment as a result of lower forecasted global phosphate prices. In the fourth quarter of 2020, earnings were impacted by a $250 million net gain on disposal of our investment in Misr Fertilizers Production Company S.A.E. (“MOPCO”).

Critical Accounting Estimates

Our significant accounting policies are disclosed in our 2020 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board. Our critical accounting estimates are discussed on page 53 of our 2020 Annual Report. There were no significant changes in the six months ended June 30, 2021 to our critical accounting estimates.

Controls and Procedures

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

There has been no change in our internal control over financial reporting during the three months ended June 30, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Forward-Looking Statements

Certain statements and other information included in this document, including within the "Financial Outlook and Guidance" section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's business strategies, plans, prospects and opportunities; Nutrien's full-year guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment); expectations regarding our growth and capital allocation intentions and strategies; capital spending expectations for 2021; expectations regarding performance of our operating segments in 2021, including our operating segment market outlooks and market conditions for 2021, and the anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of import and export volumes; Nutrien's ability to develop innovative and sustainable solutions; the negotiation of sales contracts; and acquisitions and divestitures. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.

All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2021 and in the future; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall economy; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; our ability to maintain investment grade ratings and achieve our performance targets; our ability to successfully negotiate sales contracts; and our ability to successfully implement new initiatives and programs.

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

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

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

Terms and Definitions

For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms and Definitions” section of our 2020 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful and all financial amounts are stated in millions of US dollars, unless otherwise noted.

About Nutrien

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

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

Such data is not incorporated by reference herein.

Nutrien will host a Conference Call on Tuesday, August 10, 2021 at 10:00 am Eastern Time.

Appendix A - Selected Additional Financial Data

Selected Retail measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2021

 

2020

 

2021

 

2020

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

 

 

 

 

 

 

 

Crop nutrients

24

 

24

 

23

 

26

Crop protection products

43

 

42

 

42

 

42

Seed

46

 

47

 

43

 

44

All products

29

 

29

 

27

 

28

Crop nutrients sales volumes (tonnes - thousands)

 

 

 

 

 

 

 

North America

5,020

 

5,098

 

6,617

 

6,524

International

1,132

 

1,024

 

1,935

 

1,623

Total

6,152

 

6,122

 

8,552

 

8,147

Crop nutrients selling price per tonne

 

 

 

 

 

 

 

North America

506

 

427

 

494

 

425

International

445

 

340

 

408

 

332

Total

495

 

413

 

475

 

406

Crop nutrients gross margin per tonne

 

 

 

 

 

 

 

North America

127

 

101

 

123

 

100

International

57

 

42

 

54

 

40

Total

114

 

91

 

108

 

88

 

 

 

 

 

 

 

 

Financial performance measures

 

 

 

 

 

 

2021

Retail adjusted EBITDA to sales (“Retail adjusted EBITDA margin”) (%) 1

 

 

 

10

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

 

 

 

12

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

 

 

 

-

Retail cash operating coverage ratio (%) 1, 2

 

 

 

60

Retail normalized comparable store sales (%) 2

 

 

 

1

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

 

 

 

1,267

Nutrien Financial net interest margin (%) 1, 2

 

 

 

6.2

1 Rolling four quarters ended June 30, 2021.

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

Nutrien Financial

As at June 30, 2021

(millions of US dollars)

Current

<31 days
past due

31-90 days
past due

>90 days
past due

Gross
Receivables

Allowance 1

Total

North America

2,530

152

56

48

2,786

(31)

2,755

International

230

12

14

63

319

(2)

317

Nutrien Financial receivables

2,760

164

70

111

3,105

(33)

3,072

1 Bad debt expense on the above receivables for the three months ended June 30, 2021 was $11 million (2020 - $12 million) in the Retail segment.

Selected Nitrogen measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2021

 

2020

 

2021

 

2020

Sales volumes (tonnes - thousands)

 

 

 

 

 

 

 

Fertilizer

1,825

 

2,173

 

3,130

 

3,584

Industrial and feed

1,141

 

1,017

 

2,239

 

2,134

Net sales (millions of US dollars)

 

 

 

 

 

 

 

Fertilizer

638

 

510

 

970

 

828

Industrial and feed

344

 

186

 

585

 

398

Net selling price per tonne

 

 

 

 

 

 

 

Fertilizer

350

 

235

 

310

 

231

Industrial and feed

302

 

182

 

261

 

186

Production measures

Three Months Ended June 30

 

Six Months Ended June 30

 

2021

 

2020

 

2021

 

2020

Potash production (Product tonnes - thousands)

3,414

 

3,346

 

6,950

 

6,381

Potash shutdown weeks 1

4

 

22

 

4

 

34

Ammonia production - total 2

1,492

 

1,619

 

2,941

 

3,066

Ammonia production - adjusted 2, 3

954

 

1,067

 

2,007

 

2,058

Ammonia operating rate (%) 3

87

 

97

 

92

 

94

P2O5 production (P2O5 tonnes - thousands)

347

 

357

 

725

 

729

P2O5 operating rate (%)

82

 

84

 

86

 

86

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 in thousands of product tonnes.

3 Excludes Trinidad and Joffre.

 

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 historical or future financial performance, financial position or cash flow that are not specified, defined or determined under IFRS, and are not presented in our interim financial statements. Non-IFRS measures either exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure specified, defined or determined under 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. Except as otherwise described herein, our non-IFRS financial measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As non-recurring or unusual items arise, we generally exclude these items in our calculation of the applicable non-IFRS financial measure.

Adjusted EBITDA (Consolidated)

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

Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, certain integration and restructuring related costs, share-based compensation, impairment of assets, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses, cloud computing transition adjustment, loss on disposal of business, and net gain on disposal of investment in MOPCO. COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs and costs related to construction delays from access limitations and other government restrictions. Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in April 2021. In 2021, we amended our calculation of adjusted EBITDA to adjust for the impact of restructuring and related costs and cloud computing transition adjustment. There were no similar expenses in the comparative period.

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

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars)

2021

 

2020

 

2021

 

2020

Net earnings

1,113

 

765

 

1,246

 

730

Finance costs

125

 

139

 

245

 

272

Income tax expense

381

 

235

 

406

 

219

Depreciation and amortization

485

 

517

 

965

 

990

EBITDA

2,104

 

1,656

 

2,862

 

2,211

Integration and restructuring related costs

29

 

18

 

39

 

28

Share-based compensation expense (recovery)

38

 

12

 

61

 

(20)

Impairment of assets

1

 

-

 

5

 

-

COVID-19 related expenses

9

 

17

 

18

 

19

Foreign exchange (gain) loss, net of related derivatives

(2)

 

18

 

-

 

(9)

Cloud computing transition adjustment

36

 

-

 

36

 

-

Adjusted EBITDA

2,215

 

1,721

 

3,021

 

2,229

Adjusted EBITDA (Consolidated), Adjusted Net Earnings Per Share and Sustaining Capital Expenditures Guidance

Adjusted EBITDA, adjusted net earnings per share and sustaining capital expenditures guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS 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 for adjusted EBITDA and adjusted net earnings per share excludes the impacts of integration and restructuring related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses, and cloud computing transition adjustment. Guidance for sustaining capital expenditures includes expected expenditures required to sustain operations at existing levels and includes major repairs and maintenance and plant turnarounds.

Adjusted Net Earnings and Adjusted Net Earnings Per Share

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

Definition: Net earnings (loss) before certain integration and restructuring related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses (including those recorded under finance costs for managing our liquidity position in response to the COVID-19 pandemic in 2020), cloud computing transition adjustment, loss on disposal of business, net gain on disposal of investment in MOPCO and impairment of assets, net of tax. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment. In 2021, we amended our calculation of adjusted net earnings to adjust for the impact of restructuring and related costs and cloud computing transition adjustment. There were no similar expenses in the comparative period.

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
June 30, 2021

 

Six Months Ended
June 30, 2021

 

 

 

 

 

Per

 

 

 

 

 

Per

(millions of US dollars, except as otherwise

Increases

 

 

 

Diluted

 

Increases

 

 

 

Diluted

noted)

(Decreases)

 

Post-Tax

 

Share

 

(Decreases)

 

Post-Tax

 

Share

Net earnings attributable to equity holders of Nutrien

 

 

1,108

 

1.94

 

 

 

1,235

 

2.16

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Integration and restructuring related costs

29

 

22

 

0.03

 

39

 

30

 

0.05

Share-based compensation expense

38

 

29

 

0.05

 

61

 

46

 

0.08

Impairment of assets

1

 

1

 

-

 

5

 

4

 

0.01

COVID-19 related expenses

9

 

7

 

0.01

 

18

 

14

 

0.02

Foreign exchange gain, net of related derivatives

(2)

 

(2)

 

-

 

-

 

-

 

-

Cloud computing transition adjustment

36

 

27

 

0.05

 

36

 

27

 

0.05

Adjusted net earnings

 

 

1,192

 

2.08

 

 

 

1,356

 

2.37

Free Cash Flow and Free Cash Flow Including Changes in Non-Cash Operating 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. We also calculate a similar measure that includes changes in non-cash operating working capital.

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

 

Three Months Ended June 30

 

Six Months Ended June 30

(millions of US dollars)

2021

 

2020

 

2021

 

2020

Cash from operations before working capital changes

1,717

 

1,318

 

2,357

 

1,662

Sustaining capital expenditures

(304)

 

(145)

 

(468)

 

(308)

Free cash flow

1,413

 

1,173

 

1,889

 

1,354

Changes in non-cash operating working capital

249

 

438

 

(543)

 

(432)

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

1,662

 

1,611

 

1,346

 

922

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 June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2021

 

2020

 

2021

 

2020

Total COGS - Potash

317

 

310

 

608

 

575

Change in inventory

(11)

 

(40)

 

16

 

(32)

Other adjustments

(2)

 

(3)

 

(6)

 

(5)

COPM

304

 

267

 

618

 

538

Depreciation and amortization included in COPM

(103)

 

(92)

 

(214)

 

(181)

Cash COPM

201

 

175

 

404

 

357

Production tonnes (tonnes - thousands)

3,414

 

3,346

 

6,950

 

6,381

Potash cash COPM per tonne

59

 

52

 

58

 

56

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 June 30

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2021

 

2020

 

2021

 

2020

Total COGS - Nitrogen

763

 

645

 

1,373

 

1,226

Depreciation and amortization in COGS

(134)

 

(152)

 

(242)

 

(282)

Cash COGS for products other than ammonia

(448)

 

(369)

 

(841)

 

(730)

Ammonia

 

 

 

 

 

 

 

Total cash COGS before other adjustments

181

 

124

 

290

 

214

Other adjustments 1

(27)

 

(46)

 

(30)

 

(35)

Total cash COPM

154

 

78

 

260

 

179

Natural gas and steam costs

(118)

 

(53)

 

(192)

 

(119)

Controllable cash COPM

36

 

25

 

68

 

60

Production tonnes (net tonnes 2 - thousands)

703

 

644

 

1,305

 

1,388

Ammonia controllable cash COPM per tonne

51

 

40

 

51

 

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.

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

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

Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the working capital and sales of certain acquisitions (such as Ruralco) during the first year following the acquisition. We amended our calculation to adjust for the sales of certain recently acquired businesses. We also look at this metric excluding the sales and working capital of Nutrien Financial.

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

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Average/Total

Working capital

3,216

 

1,157

 

1,630

 

1,348

 

 

Working capital from certain recent acquisitions

-

 

-

 

-

 

-

 

 

Adjusted working capital

3,216

 

1,157

 

1,630

 

1,348

 

1,838

Nutrien Financial working capital

(1,711)

 

(1,392)

 

(1,221)

 

(3,072)

 

 

Adjusted working capital excluding Nutrien Financial

1,505

 

(235)

 

409

 

(1,724)

 

(11)

 

 

 

 

 

 

 

 

 

 

Sales 1

2,742

 

2,618

 

2,972

 

7,537

 

 

Sales from certain recent acquisitions

-

 

-

 

-

 

-

 

 

Adjusted sales

2,742

 

2,618

 

2,972

 

7,537

 

15,869

Nutrien Financial revenue 1

(36)

 

(37)

 

(25)

 

(59)

 

 

Adjusted sales excluding Nutrien Financial

2,706

 

2,581

 

2,947

 

7,478

 

15,712

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

 

 

 

 

 

 

 

 

 

 

Adjusted average working capital to sales (%)

 

 

 

 

 

 

 

 

12

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

 

 

 

-

Nutrien Financial Net Interest Margin

Most directly comparable IFRS financial measure: Nutrien Financial gross margin divided by average Nutrien Financial receivables.

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

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

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Total/Average

Nutrien Financial revenue

36

 

37

 

25

 

59

 

 

Deemed interest expense 1

(15)

 

(14)

 

(6)

 

(8)

 

 

Net interest

21

 

23

 

19

 

51

 

114

 

 

 

 

 

 

 

 

 

 

Average Nutrien Financial receivables

1,711

 

1,392

 

1,221

 

3,072

 

1,849

Nutrien Financial net interest margin (%)

 

 

 

 

 

 

 

 

6.2

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

Retail Cash Operating Coverage Ratio

Most directly comparable IFRS financial measure: Retail operating expenses 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 June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Total

Operating expenses 1, 2

691

 

768

 

721

 

938

 

3,118

Depreciation and amortization in operating expenses

(167)

 

(177)

 

(175)

 

(166)

 

(685)

Operating expenses excluding depreciation and amortization

524

 

591

 

546

 

772

 

2,433

 

 

 

 

 

 

 

 

 

 

Gross margin 2

683

 

885

 

652

 

1,858

 

4,078

Depreciation and amortization in cost of goods sold

3

 

3

 

2

 

3

 

11

Gross margin excluding depreciation and amortization

686

 

888

 

654

 

1,861

 

4,089

Cash operating coverage ratio (%)

 

 

 

 

 

 

 

 

60

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

2 Certain immaterial figures have been reclassified for the third quarter of 2020.

Retail Adjusted EBITDA per US Selling Location

Most directly comparable IFRS financial measure: Retail US adjusted EBITDA.

Definition: Total Retail US adjusted 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. This measure includes locations we have owned for more than 12 months.

 

Rolling four quarters ended June 30, 2021

(millions of US dollars, except as otherwise noted)

Q3 2020

 

Q4 2020

 

Q1 2021

 

Q2 2021

 

Total

Adjusted US EBITDA

86

 

177

 

29

 

847

 

1,139

Adjustments for acquisitions

 

 

 

 

 

 

 

 

(5)

Adjusted US EBITDA adjusted for acquisitions

 

 

 

 

 

 

 

 

1,134

Number of US selling locations adjusted for acquisitions

 

 

 

 

 

 

 

 

895

Adjusted EBITDA per US selling location (thousands of US dollars)

 

 

 

 

 

 

 

1,267

Retail Normalized Comparable Store Sales

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

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

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

 

Six Months Ended June 30

(millions of US dollars, except as otherwise noted)

2021

 

2020

Sales from comparable base

 

 

 

Current period

10,405

 

8,602

Prior period 1

9,425

 

8,551

Comparable store sales (%)

10

 

1

Prior period normalized for benchmark prices and foreign exchange rates 1

10,351

 

8,104

Normalized comparable store sales (%)

1

 

6

1 Certain immaterial figures have been reclassified in 2020.

Condensed Consolidated Financial Statements

Unaudited in millions of US dollars except as otherwise noted

Condensed Consolidated Statements of Earnings

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

Note

2021

 

2020

 

2021

 

2020

 

 

 

 

Note 1

 

 

 

Note 1

SALES

2

9,763

 

8,431

 

14,421

 

12,629

Freight, transportation and distribution

 

222

 

237

 

433

 

449

Cost of goods sold

 

6,659

 

6,024

 

9,950

 

9,125

GROSS MARGIN

 

2,882

 

2,170

 

4,038

 

3,055

Selling expenses

 

865

 

763

 

1,538

 

1,405

General and administrative expenses

 

116

 

101

 

219

 

205

Provincial mining taxes

 

107

 

48

 

165

 

105

Share-based compensation expense (recovery)

 

38

 

12

 

61

 

(20)

Other expenses

3

137

 

107

 

158

 

139

EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES

1,619

 

1,139

 

1,897

 

1,221

Finance costs

 

125

 

139

 

245

 

272

EARNINGS BEFORE INCOME TAXES

 

1,494

 

1,000

 

1,652

 

949

Income tax expense

4

381

 

235

 

406

 

219

NET EARNINGS

 

1,113

 

765

 

1,246

 

730

Attributable to

 

 

 

 

 

 

 

 

Equity holders of Nutrien

 

1,108

 

765

 

1,235

 

730

Non-controlling interest

 

5

 

-

 

11

 

-

NET EARNINGS

 

1,113

 

765

 

1,246

 

730

 

 

 

 

 

 

 

 

 

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

Basic

 

1.94

 

1.34

 

2.17

 

1.28

Diluted

 

1.94

 

1.34

 

2.16

 

1.28

Weighted average shares outstanding for basic EPS

 

570,352,000

 

569,146,000

 

570,007,000

 

570,157,000

Weighted average shares outstanding for diluted EPS

 

571,972,000

 

569,146,000

 

571,453,000

 

570,157,000

 

 

 

 

 

 

 

 

 

Condensed Consolidated Statements of Comprehensive Income

 

Three Months Ended

 

Six Months Ended

 

June 30

 

June 30

(Net of related income taxes)

2021

 

2020

 

2021

 

2020

NET EARNINGS

1,113

 

765

 

1,246

 

730

Other comprehensive income (loss)

 

 

 

 

 

 

 

Items that will not be reclassified to net earnings:

 

 

 

 

 

 

 

Net actuarial gain on defined benefit plans

-

 

-

 

-

 

3

Net fair value gain (loss) on investments

22

 

(2)

 

70

 

(21)

Items that have been or may be subsequently reclassified to

 

 

 

 

 

 

 

net earnings:

Gain (loss) on currency translation of foreign operations

25

 

194

 

(5)

 

(121)

Other

14

 

9

 

20

 

(18)

OTHER COMPREHENSIVE INCOME (LOSS)

61

 

201

 

85

 

(157)

COMPREHENSIVE INCOME

1,174

 

966

 

1,331

 

573

Attributable to

 

 

 

 

 

 

 

Equity holders of Nutrien

1,170

 

966

 

1,321

 

573

Non-controlling interest

4

 

-

 

10

 

-

COMPREHENSIVE INCOME

1,174

 

966

 

1,331

 

573

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Cash Flows

 

 

Three Months Ended

 

Six Months Ended

 

 

June 30

 

June 30

 

Note

2021

 

2020

 

2021

 

2020

 

 

 

 

 

 

 

 

 

OPERATING ACTIVITIES

 

 

 

 

 

 

 

 

Net earnings

 

1,113

 

765

 

1,246

 

730

Adjustments for:

 

 

 

 

 

 

 

 

Depreciation and amortization

 

485

 

517

 

965

 

990

Share-based compensation expense (recovery)

 

38

 

12

 

61

 

(20)

Impairment of assets

 

1

 

-

 

5

 

-

(Recovery of) provision for deferred income tax

 

(20)

 

84

 

(10)

 

62

Cloud computing transition adjustment

3

36

 

-

 

36

 

-

Other long-term assets, liabilities and miscellaneous

 

64

 

(60)

 

54

 

(100)

Cash from operations before working capital changes

 

1,717

 

1,318

 

2,357

 

1,662

Changes in non-cash operating working capital:

 

 

 

 

 

 

 

 

Receivables

 

(2,443)

 

(1,824)

 

(2,835)

 

(2,147)

Inventories

 

1,848

 

2,174

 

63

 

746

Prepaid expenses and other current assets

 

310

 

247

 

998

 

1,013

Payables and accrued charges

 

534

 

(159)

 

1,231

 

(44)

CASH PROVIDED BY OPERATING ACTIVITIES

 

1,966

 

1,756

 

1,814

 

1,230

INVESTING ACTIVITIES

 

 

 

 

 

 

 

 

Additions to property, plant and equipment

 

(378)

 

(298)

 

(703)

 

(661)

Additions to intangible assets

 

(5)

 

(36)

 

(38)

 

(68)

Business acquisitions, net of cash acquired

 

(19)

 

(116)

 

(40)

 

(173)

Other

 

(29)

 

42

 

(38)

 

49

CASH USED IN INVESTING ACTIVITIES

 

(431)

 

(408)

 

(819)

 

(853)

FINANCING ACTIVITIES

 

 

 

 

 

 

 

 

Transaction costs related to debt

 

(7)

 

(15)

 

(7)

 

(15)

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

 

(104)

 

(4,290)

 

(3)

 

204

Proceeds from long-term debt

 

8

 

1,500

 

8

 

1,506

Repayment of long-term debt

 

(5)

 

(6)

 

(5)

 

(507)

Repayment of principal portion of lease liabilities

 

(86)

 

(70)

 

(164)

 

(134)

Dividends paid to Nutrien's shareholders

6

(263)

 

(258)

 

(518)

 

(514)

Repurchase of common shares

6

(1)

 

-

 

(2)

 

(160)

Issuance of common shares

 

21

 

-

 

63

 

-

Other

 

(12)

 

-

 

(12)

 

-

CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES

 

(449)

 

(3,139)

 

(640)

 

380

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

 

(4)

 

24

 

(15)

 

(13)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

 

1,082

 

(1,767)

 

340

 

744

CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD

 

712

 

3,182

 

1,454

 

671

CASH AND CASH EQUIVALENTS – END OF PERIOD

 

1,794

 

1,415

 

1,794

 

1,415

Cash and cash equivalents comprised of:

 

 

 

 

 

 

 

 

Cash

 

1,580

 

1,106

 

1,580

 

1,106

Short-term investments

 

214

 

309

 

214

 

309

 

 

1,794

 

1,415

 

1,794

 

1,415

SUPPLEMENTAL CASH FLOWS INFORMATION

 

 

 

 

 

 

 

 

Interest paid

 

86

 

153

 

162

 

249

Income taxes paid

 

105

 

30

 

144

 

65

Total cash outflow for leases

 

111

 

96

 

208

 

188

 

 

 

 

 

 

 

 

 

(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

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

 

 

Net Fair Value

 

Gain on

 

Currency

 

 

 

 

 

 

 

Holders

 

Non-

 

 

 

Number of

 

 

 

 

 

(Loss) Gain

 

Defined

 

Translation

 

 

 

 

 

 

 

of

 

Controlling

 

 

 

Common

 

Share

Contributed

 

on

 

Benefit

 

of Foreign

 

 

 

Total

 

Retained

 

Nutrien

 

Interest

 

Total

 

Shares

 

Capital

 

Surplus

 

Investments

 

Plans 1

 

Operations

 

Other

 

AOCI

 

Earnings

 

(Note 1)

 

(Note 1)

 

Equity

BALANCE – DECEMBER 31, 2019

572,942,809

 

15,771

 

248

 

(29)

 

-

 

(204)

 

(18)

 

(251)

 

7,101

 

22,869

 

38

 

22,907

Net earnings

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

730

 

730

 

-

 

730

Other comprehensive (loss) income

-

 

-

 

-

 

(21)

 

3

 

(121)

 

(18)

 

(157)

 

-

 

(157)

 

-

 

(157)

Shares repurchased (Note 6)

(3,832,580)

 

(105)

 

(55)

 

-

 

-

 

-

 

-

 

-

 

-

 

(160)

 

-

 

(160)

Dividends declared

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(514)

 

(514)

 

-

 

(514)

Effect of share-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compensation including

issuance of common shares

35,706

1

7

-

-

-

-

-

-

8

-

8

Transfer of net loss on

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

cash flow hedges

-

-

-

-

-

-

11

11

-

11

-

11

Transfer of net actuarial gain

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

on defined benefit plans

-

-

-

-

(3)

-

-

(3)

3

-

-

-

BALANCE – JUNE 30, 2020

569,145,935

 

15,667

 

200

 

(50)

 

-

 

(325)

 

(25)

 

(400)

 

7,320

 

22,787

 

38

 

22,825

BALANCE – DECEMBER 31, 2020

569,260,406

 

15,673

 

205

 

(36)

 

-

 

(62)

 

(21)

 

(119)

 

6,606

 

22,365

 

38

 

22,403

Net earnings

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

1,235

 

1,235

 

11

 

1,246

Other comprehensive income (loss)

-

 

-

 

-

 

70

 

-

 

(4)

 

20

 

86

 

-

 

86

 

(1)

 

85

Shares repurchased (Note 6)

(32,728)

 

(1)

 

(1)

 

-

 

-

 

-

 

-

 

-

 

-

 

(2)

 

-

 

(2)

Dividends declared

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(526)

 

(526)

 

-

 

(526)

Non-controlling interest transactions

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

-

 

(12)

 

(12)

Effect of share-based

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

compensation including

issuance of common shares

-

74

(3)

-

-

-

-

-

-

71

-

71

Transfer of net gain on cash flow hedges

-

 

-

 

-

 

-

 

-

 

-

 

(11)

 

(11)

 

-

 

(11)

 

-

 

(11)

BALANCE – JUNE 30, 2021

569,227,678

 

15,746

 

201

 

34

 

-

 

(66)

 

(12)

 

(44)

 

7,315

 

23,218

 

36

 

23,254

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Balance Sheets

 

 

June 30

 

December 31

As at

Note

2021

 

2020

 

2020

 

 

 

 

Note 1

 

Note 1

ASSETS

 

 

 

 

 

 

Current assets

 

 

 

 

 

 

Cash and cash equivalents

 

1,794

 

1,415

 

1,454

Receivables

 

6,683

 

5,736

 

3,626

Inventories

 

4,876

 

4,199

 

4,930

Prepaid expenses and other current assets

 

524

 

420

 

1,460

 

 

13,877

 

11,770

 

11,470

Non-current assets

 

 

 

 

 

 

Property, plant and equipment

 

19,592

 

20,178

 

19,660

Goodwill

 

12,211

 

12,096

 

12,198

Other intangible assets

 

2,393

 

2,376

 

2,388

Investments

 

619

 

803

 

562

Other assets

 

664

 

578

 

914

TOTAL ASSETS

 

49,356

 

47,801

 

47,192

LIABILITIES

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

Short-term debt

 

210

 

1,247

 

159

Current portion of long-term debt

 

32

 

-

 

14

Current portion of lease liabilities

 

276

 

228

 

249

Payables and accrued charges

 

9,367

 

7,306

 

8,058

 

 

9,885

 

8,781

 

8,480

Non-current liabilities

 

 

 

 

 

 

Long-term debt

 

10,029

 

10,032

 

10,047

Lease liabilities

 

900

 

841

 

891

Deferred income tax liabilities

4

3,118

 

3,212

 

3,149

Pension and other post-retirement benefit liabilities

 

458

 

435

 

454

Asset retirement obligations and accrued environmental costs

 

1,559

 

1,575

 

1,597

Other non-current liabilities

 

153

 

100

 

171

TOTAL LIABILITIES

 

26,102

 

24,976

 

24,789

SHAREHOLDERS’ EQUITY

 

 

 

 

 

 

Share capital

6

15,746

 

15,667

 

15,673

Contributed surplus

 

201

 

200

 

205

Accumulated other comprehensive loss

 

(44)

 

(400)

 

(119)

Retained earnings

 

7,315

 

7,320

 

6,606

Equity holders of Nutrien

 

23,218

 

22,787

 

22,365

Non-controlling interest

 

36

 

38

 

38

TOTAL SHAREHOLDERS’ EQUITY

 

23,254

 

22,825

 

22,403

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

 

49,356

 

47,801

 

47,192

 

 

 

 

 

 

 

(See Notes to the Condensed Consolidated Financial Statements) 

Notes to the Condensed Consolidated Financial Statements

As at and for the Three and Six Months Ended June 30, 2021

NOTE 1 BASIS OF PRESENTATION

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

These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are consistent with those used in the preparation of our 2020 annual consolidated financial statements except as disclosed in Note 3. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2020 annual consolidated financial statements.

Certain immaterial 2020 figures have been reclassified in the condensed consolidated statements of earnings, condensed consolidated statements of changes in shareholders’ equity, condensed consolidated balance sheets and segment information.

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

We prepare our interim financial statements in accordance with IFRS, which requires us to make judgments, assumptions and estimates in applying accounting policies. We have assessed our accounting estimates and other matters that require the use of forecasted financial information for the impacts arising from the novel coronavirus (“COVID-19”) pandemic. The future assessment of these estimates, including expectations about the severity, duration and scope of the pandemic, could differ materially in future reporting periods. As a result of the COVID-19 pandemic, we incurred directly attributable and incremental COVID-19 related expenses in other expenses (Note 3).

These interim financial statements were authorized by the audit committee of the Board of Directors for issue on August 9, 2021.

NOTE 2 SEGMENT INFORMATION

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

 

 

Three Months Ended June 30, 2021

 

 

 

 

 

 

 

 

 

 

Corporate

 

 

 

 

 

 

Retail

 

Potash

 

Nitrogen

 

Phosphate

 

and Others

 

Eliminations

 

Consolidated

Sales

– third party

7,522

 

844

 

1,008

 

389

 

-

 

-

 

9,763

 

– intersegment

15

 

61

 

307

 

60

 

-

 

(443)

 

-

Sales

– total

7,537

 

905

 

1,315

 

449

 

-

 

(443)

 

9,763

Freight, transportation and distribution

-

 

88

 

136

 

46

 

-

 

(48)

 

222

Net sales

7,537

 

817

 

1,179

 

403

 

-

 

(395)

 

9,541

Cost of goods sold

5,679

 

317

 

763

 

319

 

-

 

(419)

 

6,659

Gross margin

1,858

 

500

 

416

 

84

 

-

 

24

 

2,882

Selling expenses

863

 

2

 

8

 

1

 

(9)

 

-

 

865

General and administrative expenses

41

 

3

 

3

 

3

 

66

 

-

 

116

Provincial mining taxes

-

 

107

 

-

 

-

 

-

 

-

 

107

Share-based compensation expense

-

 

-

 

-

 

-

 

38

 

-

 

38

Other expenses

34

 

11

 

6

 

3

 

83

 

-

 

137

Earnings (loss) before finance costs and

 

 

 

 

 

 

 

 

 

 

 

 

 

income taxes

920

377

399

77

(178)

24

1,619

Depreciation and amortization

169

 

116

 

155

 

35

 

10

 

-

 

485

EBITDA

1,089

 

493

 

554

 

112

 

(168)

 

24

 

2,104

Integration and restructuring related costs

7

 

-

 

-

 

-

 

22

 

-

 

29

Share-based compensation expense

-

 

-

 

-

 

-

 

38

 

-

 

38

Impairment of assets

-

 

-

 

1