6-K
Nutrien Ltd. (NTR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 6-K
Report ofForeign Issuer
Pursuant to Section 13a-16 or15d-16
of the Securities Exchange Act of 1934
For the month of: February, 2023
Commission File Number: 001-38336
NUTRIEN LTD.
(Name ofregistrant)
Suite 1700, 211 19th Street East
Saskatoon, Saskatchewan, Canada
S7K 5R6
(Address ofprincipal executive office)
Indicate by check mark whether the registrant files or will file annual reports under cover of Form 20-F or Form 40-F:
Form 20-F ☐ Form 40-F ☒
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| NUTRIEN LTD. | ||
|---|---|---|
| Date: February 15, 2023 | By: | /s/ Robert A. Kirkpatrick |
| Name: | Robert A. Kirkpatrick | |
| Title: | SVP & Corporate Secretary |
EXHIBIT INDEX
| Exhibit | Description of Exhibit |
|---|---|
| 99.1 | News Release dated February 15, 2023 |
EX-99.1
Exhibit 99.1
 |
News Release |
|---|---|
| NYSE, TSX: NTR |
February 15, 2023 – all amounts are in US dollars except as otherwise noted
Nutrien Reports Fourth Quarter and Full-Year 2022 Results
Delivered record net earnings, advanced strategic initiatives and returned $5.6 billion to shareholders in 2022. Expect strong market fundamentals in 2023 and announced a 10 percent increase in the quarterly dividend.
SASKATOON, Saskatchewan - Nutrien Ltd. (TSX and NYSE: NTR) announced today its fourth quarter 2022 results, with net earnings of $1.1 billion ($2.15 diluted net earnings per share). Fourth quarter 2022 adjusted net earnings per share^1^ was $2.02 and adjusted EBITDA^1^ was $2.1 billion.
“Geopolitical events caused an unprecedented level of supply disruption and market volatility across agriculture, energy and fertilizer markets in 2022. Nutrien delivered record net earnings and cash flow in this environment due to the advantages of our world-class production, distribution and retail network. We returned $5.6 billion to shareholders, invested in our global Retail network and advanced a number of long-term strategic initiatives that position our company for future growth and sustainability,” commented Ken Seitz, Nutrien’s President and CEO.
“The outlook for our business is strong as we expect global supply issues to persist and demand for crop inputs to increase in 2023. We remain disciplined in our capital allocation approach as we position the company to best serve the needs of our customers, while delivering meaningful returns for our shareholders,” added Mr. Seitz.
Highlights:
| • | Nutrien generated net earnings of $7.7 billion ($14.18 diluted net earnings per share) and adjusted EBITDA^1^ of $12.2 billion in 2022 supported by higher realized fertilizer prices and record Nutrien Ag Solutions (“Retail”) performance, more than offsetting a reduction in fertilizer sales<br>volumes. Cash provided by operating activities^^increased to $8.1 billion in 2022, more than doubling the prior year’s total. |
|---|---|
| • | Nutrien repurchased 53 million shares in 2022 and an additional 8 million shares in 2023, completing its normal<br>course issuer bid (“NCIB”) in early February 2023. Nutrien’s Board of Directors approved a 10 percent increase in the quarterly dividend to $0.53 per share and approved the purchase of up to 5 percent of Nutrien’s outstanding<br>common shares over a twelve-month period through a NCIB. The NCIB is subject to acceptance by the Toronto Stock Exchange. |
| --- | --- |
| • | Nutrien allocated $1.2 billion of growth capital^1^ (cash used in<br>investing activities of $2.9 billion) in 2022 to advance strategic initiatives across our Retail, Potash and Nitrogen businesses. This included expanding our Retail network by completing 21 acquisitions in Brazil, the US and Australia for a<br>total investment of approximately $400 million. |
| --- | --- |
| • | Retail delivered record adjusted EBITDA of $2.3 billion for the full year of 2022, due to supportive market<br>conditions in key regions where we operate. Retail cash operating coverage ratio^1^ as at December 31, 2022 improved to 55 percent compared to 58 percent for the same period in 2021<br>driven by higher margins. |
| --- | --- |
| • | Potash adjusted EBITDA of $5.8 billion for the full year of 2022 more than doubled compared to the prior year due to<br>higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes. |
| --- | --- |
| • | Nitrogen full year 2022 adjusted EBITDA of $3.9 billion increased 70 percent compared to the prior year due to<br>higher net realized selling prices that more than offset higher natural gas costs and lower sales volumes. |
| --- | --- |
| • | Nutrien issued full-year 2023 adjusted EBITDA and adjusted net earnings per share guidance^1^ of $8.4 to $10.0 billion and $8.45 to $10.65 per share, respectively. |
| --- | --- |
| 1. | These (and any related guidance, if applicable) are non-IFRS financial<br>measures. See the “Non-IFRS Financial Measures” section for further information. |
| --- | --- |
1
| • | Nutrien is adjusting the ramp up timing of its existing low-cost potash capacity to optimize capital expenditures in-line<br>with the pace of expected demand recovery in 2023 and beyond. We will maintain a flexible approach and now expect to reach 18 million tonnes of annual operational capability in 2026. Nutrien continues to believe long-term fundamentals support the<br>need for our low-cost, incremental potash capability and there is significant value in having flexibility to increase production when the market needs it. |
|---|
Market Outlook and Guidance
Agriculture and Retail
| • | Agricultural fundamentals remain strong and are supported by the lowest global grain stocks-to-use ratio in over 25 years. We expect Ukrainian crop production and exports will continue to be constrained by the impact of the war with Russia and believe it will take more than one growing<br>season to alleviate the supply risk from the market. Spot prices for corn, soybeans, and wheat are up 25 to 50 percent compared to the 10-year average, which supports grower returns and provides an<br>incentive to increase crop production in 2023. |
|---|---|
| • | We anticipate US major crop acreage will increase by approximately 4 percent in 2023, assuming a more normal<br>planting window compared to the spring of 2022. We expect corn plantings to increase to 91 to 93 million acres in 2023, which is supportive of crop input demand. |
| --- | --- |
| • | Brazilian grower economics for soybeans and corn are strong, which we expect will support another year of above-trend<br>acreage growth. Safrinha corn planting and crop input purchases have been delayed due to wet weather, but we expect strong demand as the planting season progresses. Australian growers have benefitted from multiple years of above-average yields and<br>historically high crop prices, positioning them very well financially entering 2023. We expect another year of strong crop production and input demand assuming favorable weather conditions. |
| --- | --- |
Crop Nutrient Markets
| • | We believe potash inventories have been drawn down in Brazil and the US following a historic decline in the pace of<br>potash shipments in the second half of 2022. We have seen improved potash demand in early 2023, however buyers continue to take a cautious approach to managing inventories that could lead to a more condensed shipment period as we approach the<br>primary application seasons. Our estimate for global potash shipments in 2023 is 63 to 67 million tonnes, which is still constrained compared to the historical trend demand estimated at around 70 million tonnes. |
|---|---|
| • | Belarus potash shipments in 2023 are projected to be down 40 to 60 percent and Russian shipments down 15 to<br>30 percent compared to 2021. We anticipate the reduction in supply will be most apparent in the first quarter of 2023 compared to the same period in 2022, as both Belarusian and Russian exports were heavily weighted to early 2022 before<br>sanctions and export restrictions were imposed. |
| --- | --- |
| • | Global nitrogen prices have declined since the beginning of 2023 due to lower European natural gas prices and buyer<br>deferrals. We expect European natural gas prices to be volatile throughout the year and around 30 percent of the region’s nitrogen capacity is currently offline. North American natural gas prices remain highly competitive compared to European<br>and Asian natural gas prices and we expect Henry Hub spot prices between $2.50 to $4.50 per MMBtu in 2023. |
| --- | --- |
| • | We anticipate nitrogen supply constraints will persist in 2023, including lower Russian ammonia exports, reduced European<br>operating rates and continued Chinese urea export restrictions. We expect a tight US supply and demand balance ahead of the 2023 spring season due to higher corn acreage and increased US nitrogen exports over the past six months.<br> |
| --- | --- |
| • | We expect Chinese phosphate export restrictions to be in place until at least April 2023, anticipate improved demand in<br>North America and Brazil, and the continuation of strong demand in India. Phosphate product margins are expected to be supported by lower raw material sulfur prices due to reduced operating rates and demand in China. |
| --- | --- |
2
Financial Guidance
Based on market factors detailed above, we are issuing full-year 2023 adjusted EBITDA guidance of $8.4 to $10.0 billion and full-year 2023 adjusted net earnings guidance of $8.45 to $10.65 per share.
| • | Retail adjusted EBITDA guidance assumes strong demand for crop inputs in each of the markets we serve. We expect gross<br>margins for crop nutrients and crop protection products will be lower compared to the record levels achieved in 2022. |
|---|---|
| • | Potash sales tonnes guidance of 13.8 to 14.6 million tonnes assumes increased demand in our key markets of North America<br>and Brazil and continued global supply constraints in 2023. We have maintained capability to increase sales volumes to our previous expectation of approximately 15 million tonnes if we see stronger demand in the market. |
| --- | --- |
| • | Nitrogen sales tonnes guidance of 10.8 to 11.4 million tonnes assumes higher operating rates at our North American plants<br>and a continuation of gas curtailments in Trinidad in 2023. Nitrogen sales tonnes guidance includes 300,000 to 350,000 tonnes of projected ESN® product sales that prior to 2023 were included in the other product category. |
| --- | --- |
All guidance numbers, including those noted above and related sensitives are outlined in the table below.
| (billions of US dollars, except as otherwise noted) | |||
| Adjusted net earnings per share in US dollars (“Adjusted EPS”)2,3 | 8.45 | 10.65 | |
| Adjusted EBITDA 2 | 8.4 | 10.0 | |
| Retail adjusted EBITDA | 1.85 | 2.05 | |
| Potash adjusted EBITDA | 3.7 | 4.5 | |
| Nitrogen adjusted EBITDA | 2.5 | 3.2 | |
| Phosphate adjusted EBITDA (in millions of US dollars) | 550 | 750 | |
| Potash sales tonnes (millions) 4 | 13.8 | 14.6 | |
| Nitrogen sales tonnes (millions) 4 | 10.8 | 11.4 | |
| Depreciation and amortization | 2.1 | 2.2 | |
| Effective tax rate on adjusted earnings (%) | 23.5 | 24.5 | |
| 2023 Annual Assumptions & Sensitivities<br>1 (millions of US dollars, except EPS amounts or as otherwise noted) | |||
| 1/MMBtu change in NYMEX 5 | 180 | 0.27 | |
| 25/tonne change in realized potash selling prices | 300 | 0.45 | |
| 25/tonne change in realized ammonia selling prices | 50 | 0.07 | |
| 25/tonne change in realized urea selling prices | 80 | 0.12 | |
| 2023 average Canadian to US dollar exchange rate | 1.33 | ||
| 2023 NYMEX natural gas (US dollars per MMBtu) | ~3.50 |
All values are in US Dollars.
1 See the “Forward-Looking Statements” section.
2 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.
3 Assumes 503 million shares outstanding for all EPS guidance and sensitivities.
4 Manufactured products only. Nitrogen sales tonnes guidance includes ESN^®^ products that prior to 2023 were included in the other category.
5 Nitrogen related impact.
3
Consolidated Results
| Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | 2022 | 2021 | % Change | **** | 2022 | 2021 | % Change | |
| Sales | **** | 7,533 | 7,267 | 4 | **** | 37,884 | 27,712 | 37 | |
| Freight, transportation and distribution | **** | 244 | 198 | 23 | **** | 872 | 851 | 2 | |
| Cost of goods sold | **** | 4,383 | 3,863 | 13 | **** | 21,588 | 17,452 | 24 | |
| Gross margin | **** | 2,906 | 3,206 | (9 | ) | **** | 15,424 | 9,409 | 64 |
| Expenses | **** | 1,247 | 1,379 | (10 | ) | **** | 4,615 | 4,628 | - |
| Net earnings | **** | 1,118 | 1,207 | (7 | ) | **** | 7,687 | 3,179 | 142 |
| Adjusted EBITDA ^1^ | **** | 2,095 | 2,463 | (15 | ) | **** | 12,170 | 7,126 | 71 |
| Diluted net earnings per share | **** | 2.15 | 2.11 | 2 | **** | 14.18 | 5.52 | 157 | |
| Adjusted net earnings per share ^1^ | **** | 2.02 | 2.47 | (18 | ) | **** | 13.19 | 6.23 | 112 |
| Cash provided by operating activities | **** | 4,736 | 3,637 | 30 | **** | 8,110 | 3,886 | 109 |
1 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.
Net earnings and adjusted EBITDA increased for the full year of 2022 compared to the same periods in 2021, due to higher net realized selling prices resulting primarily from global supply uncertainties across our nutrient businesses and strong Retail performance. Net earnings and adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period in 2021, due to lower sales volumes partially offset by higher net realized selling prices. In 2022, we recorded a non-cash impairment reversal of $780 million related to our Phosphate operations, which positively impacted net earnings. Cost of goods sold increased in the fourth quarter and full year of 2022 due to higher input costs, in particular higher cost of inventory, natural gas and sulfur. Cash provided by operating activities increased in the full year of 2022 compared to the same period in 2021 primarily due to higher net earnings and increased in the fourth quarter of 2022 compared to the same period in 2021 due to a higher release of working capital.
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three and twelve months ended December 31, 2022 to the results for the three and twelve months ended December 31, 2021, unless otherwise noted.
4
Nutrien Ag Solutions (“Retail”)
| (millions of US dollars, except | Gross Margin | Gross Margin (%) | |||||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | ||||||||||||||
| Sales | |||||||||||||||||||||
| Crop nutrients | 2,320 | **** | 2,035 | 14 | **** | 349 | **** | 428 | (18 | ) | **** | 15 | 21 | ||||||||
| Crop protection products | 981 | **** | 1,113 | (12 | ) | **** | 413 | **** | 414 | - | **** | 42 | 37 | ||||||||
| Seed | 251 | **** | 189 | 33 | **** | 46 | **** | 57 | (19 | ) | **** | 18 | 30 | ||||||||
| Merchandise | 264 | **** | 270 | (2 | ) | **** | 41 | **** | 45 | (9 | ) | **** | 16 | 17 | |||||||
| Nutrien Financial | 62 | **** | 51 | 22 | **** | 62 | **** | 51 | 22 | **** | 100 | 100 | |||||||||
| Services and other 1 | 237 | **** | 243 | (2 | ) | **** | 194 | **** | 201 | (3 | ) | **** | 82 | 83 | |||||||
| Nutrien Financial elimination 1, 2 | (28 | ) | (23 | ) | 22 | **** | (28 | ) | (23 | ) | 22 | **** | 100 | 100 | |||||||
| 4,087 | **** | 3,878 | 5 | **** | 1,077 | **** | 1,173 | (8 | ) | **** | 26 | 30 | |||||||||
| Cost of goods sold | 3,010 | **** | 2,705 | 11 | |||||||||||||||||
| Gross margin | 1,077 | **** | 1,173 | (8 | ) | ||||||||||||||||
| Expenses ³ | 888 | **** | 911 | (3 | ) | ||||||||||||||||
| Earnings before financecosts and taxes (“EBIT”) | 189 | **** | 262 | (28 | ) | ||||||||||||||||
| Depreciation and amortization | 202 | **** | 178 | 13 | |||||||||||||||||
| EBITDA | 391 | **** | 440 | (11 | ) | ||||||||||||||||
| Adjustments<br>4 | - | **** | 2 | (100 | ) | ||||||||||||||||
| Adjusted EBITDA | 391 | **** | 442 | (12 | ) | ||||||||||||||||
| 1 Certain immaterial figures have been reclassified for the three months ended December 31, 2021.<br> 2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.<br> 3 Includes selling expenses of 836 million (2021 – 848 million).<br> 4 See Note 2 to the unaudited condensed consolidated financial statements. | |||||||||||||||||||||
| (millions of US dollars, except | Gross Margin | Gross Margin (%) | |||||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | ||||||||||||||
| Sales | |||||||||||||||||||||
| Crop nutrients | 10,060 | **** | 7,290 | 38 | **** | 1,766 | **** | 1,597 | 11 | **** | 18 | 22 | |||||||||
| Crop protection products | 7,067 | **** | 6,333 | 12 | **** | 1,936 | **** | 1,551 | 25 | **** | 27 | 24 | |||||||||
| Seed | 2,112 | **** | 2,008 | 5 | **** | 428 | **** | 419 | 2 | **** | 20 | 21 | |||||||||
| Merchandise | 1,019 | **** | 1,033 | (1 | ) | **** | 174 | **** | 172 | 1 | **** | 17 | 17 | ||||||||
| Nutrien Financial | 267 | **** | 189 | 41 | **** | 267 | **** | 189 | 41 | **** | 100 | 100 | |||||||||
| Services and other 1 | 966 | **** | 980 | (1 | ) | **** | 749 | **** | 771 | (3 | ) | **** | 78 | 79 | |||||||
| Nutrien Financial elimination 1 | (141 | ) | (99 | ) | 42 | **** | (141 | ) | (99 | ) | 42 | **** | 100 | 100 | |||||||
| 21,350 | **** | 17,734 | 20 | **** | 5,179 | **** | 4,600 | 13 | **** | 24 | 26 | ||||||||||
| Cost of goods sold | 16,171 | **** | 13,134 | 23 | |||||||||||||||||
| Gross margin | 5,179 | **** | 4,600 | 13 | |||||||||||||||||
| Expenses ² | 3,621 | **** | 3,378 | 7 | |||||||||||||||||
| EBIT | 1,558 | **** | 1,222 | 27 | |||||||||||||||||
| Depreciation and amortization | 752 | **** | 706 | 7 | |||||||||||||||||
| EBITDA | 2,310 | **** | 1,928 | 20 | |||||||||||||||||
| Adjustments<br>3 | (17 | ) | 11 | n/m | |||||||||||||||||
| Adjusted EBITDA | 2,293 | **** | 1,939 | 18 |
All values are in US Dollars.
1 Certain immaterial figures have been reclassified for the twelve months ended December 31, 2021.
2 Includes selling expenses of $3,392 million (2021 – $3,124 million).
3 See Note 2 to the unaudited condensed consolidated financial statements.
| • | Adjusted EBITDA for the full year of 2022 increased due to higher sales and gross margins across nearly all<br>product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary product margins. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the prior<br>year’s record results as strong sales prices in most product categories were offset by lower volumes and higher cost inventory. Our Retail cash operating coverage ratio^1^ improved as at<br>December 31, 2022 to 55 percent from 58 percent in the same period in 2021 due to higher gross margin. |
|---|---|
| 1. | These (and any related guidance, if applicable) are non-IFRS financial<br>measures. See the “Non-IFRS Financial Measures” section for further information. |
| --- | --- |
5
| • | Crop nutrients sales increased in the fourth quarter and the full year of 2022 due to higher selling prices. Gross<br>margin increased for the full year of 2022 compared to the same period last year due to strategic procurement and the timing of inventory purchasing in the first half of 2022, with a decrease in the fourth quarter of 2022 due to higher cost<br>inventory. Sales volumes decreased for the full year 2022 due to reduced application resulting from a delayed planting season in North America and stronger fourth quarter engagement in 2021 in a rising price environment, slightly offset by increased<br>South American volumes attributed to recent acquisitions. |
|---|---|
| • | Crop protection products sales and gross margin increased for the full year of 2022, particularly in North<br>America, due to higher selling prices along with increased sales and gross margin in proprietary products. Gross margin was flat in the fourth quarter as higher sales pricing and a favorable sales mix in North America offset a decline in sales<br>volumes compared to a very strong period of demand in the fourth quarter of 2021. Gross margin as a percentage of sales increased for the full year of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price<br>environment. |
| --- | --- |
| • | Seed sales increased in the fourth quarter and the full year of 2022 due to higher pricing along with strong North<br>America corn sales, Latin America soybean sales and Australia canola sales. Gross margin increased for the full year of 2022 due to higher pricing with a decrease in the fourth quarter of 2022 attributed to the timing and mix of seed sales compared<br>to the same period in 2021. |
| --- | --- |
| • | Merchandise gross margin increased for the full year of 2022 due to strong margin performance in Australia animal<br>management, farm services and general merchandise, with a decrease in the fourth quarter of 2022 due to an unfavorable foreign exchange rate impact on Australian dollars. |
| --- | --- |
| • | Nutrien Financial sales increased in the fourth quarter and full year of 2022 due to higher utilization and<br>adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing. |
| --- | --- |
| • | Services and other sales and gross margin decreased in the fourth quarter and full year of 2022 mainly due to<br>lower livestock volumes in Australia, along with an unfavorable foreign exchange rate impact on Australian dollars. Fourth quarter 2022 sales benefited from improved selling rates on North American custom application services. |
| --- | --- |
Potash
| Three Months Ended December 31 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne | |||||||||||||||||
| as otherwise noted) | 2022 | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||
| Manufactured product | ||||||||||||||||||||
| Net sales | ||||||||||||||||||||
| North America | **** | 536 | 497 | 8 | 959 | 1,002 | (4 | ) | **** | 560 | 494 | 13 | ||||||||
| Offshore | **** | 841 | 923 | (9 | ) | 1,659 | 2,054 | (19 | ) | **** | 506 | 450 | 12 | |||||||
| **** | 1,377 | 1,420 | (3 | ) | 2,618 | 3,056 | (14 | ) | **** | 526 | 465 | 13 | ||||||||
| Cost of goods sold | **** | 310 | 305 | 2 | **** | 118 | 100 | 18 | ||||||||||||
| Gross margin – total | **** | 1,067 | 1,115 | (4 | ) | **** | 408 | 365 | 12 | |||||||||||
| Expenses ¹ | **** | 198 | 179 | 11 | Depreciation and amortization | **** | 34 | 38 | (11 | ) | ||||||||||
| EBIT | **** | 869 | 936 | (7 | ) | Gross margin excluding depreciation | ||||||||||||||
| Depreciation and amortization | **** | 89 | 117 | (24 | ) | and amortization – manufactured ^2^ | **** | 442 | 403 | 10 | ||||||||||
| EBITDA/ Adjusted EBITDA | **** | 958 | 1,053 | (9 | ) | Potash controllable cash cost of | ||||||||||||||
| product manufactured<br>^2^ | **** | 65 | 52 | 25 |
1 Includes provincial mining taxes of $190 million (2021 – $173 million).
2 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.
6
| Twelve Months Ended December 31 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne | |||||||||||||||||
| as otherwise noted) | 2022 | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||
| Manufactured product | ||||||||||||||||||||
| Net sales | ||||||||||||||||||||
| North America | **** | 2,485 | 1,638 | 52 | 3,729 | 5,159 | (28 | ) | **** | 667 | 317 | 110 | ||||||||
| Offshore | **** | 5,414 | 2,398 | 126 | 8,808 | 8,466 | 4 | **** | 615 | 283 | 117 | |||||||||
| **** | 7,899 | 4,036 | 96 | 12,537 | 13,625 | (8 | ) | **** | 630 | 296 | 113 | |||||||||
| Cost of goods sold | **** | 1,400 | 1,285 | 9 | **** | 112 | 94 | 19 | ||||||||||||
| Gross margin – total | **** | 6,499 | 2,751 | 136 | **** | 518 | 202 | 156 | ||||||||||||
| Expenses ¹ | **** | 1,173 | 512 | 129 | Depreciation and amortization | **** | 35 | 36 | (1 | ) | ||||||||||
| EBIT | **** | 5,326 | 2,239 | 138 | Gross margin excluding depreciation | |||||||||||||||
| Depreciation and amortization | **** | 443 | 488 | (9 | ) | and amortization – manufactured | **** | 553 | 238 | 133 | ||||||||||
| EBITDA | **** | 5,769 | 2,727 | 112 | Potash controllable cash cost of | |||||||||||||||
| Adjustments ^2^ | **** | - | 9 | (100 | ) | product manufactured | **** | 58 | 52 | 12 | ||||||||||
| Adjusted EBITDA | **** | 5,769 | 2,736 | 111 |
1 Includes provincial mining taxes of $1,149 million (2021 – $466 million).
2 See Note 2 to the unaudited condensed consolidated financial statements.
| • | Adjusted EBITDA increased in the full year of 2022 due to higher net realized selling prices and strong offshore<br>sales volumes, which more than offset lower North American sales volumes, higher royalties and provincial mining taxes. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period last year mainly due to lower volumes from<br>cautious purchasing in a declining price environment, partially offset by higher net realized selling prices. |
|---|---|
| • | Sales volumes decreased **** for the full year of 2022 due to a compressed North American spring application<br>season that resulted in high inventory carry-over and cautious purchasing in key markets during the second half of 2022. Offshore sales volumes were the highest of any full year period on record due to reduced supply from Eastern Europe.<br> |
| --- | --- |
| • | Net realized selling price increased in the fourth quarter and full year of 2022 due to the impact of reduced<br>supply from Eastern Europe. Net realized selling prices decreased from the third quarter of 2022 due to a decline in benchmark pricing. |
| --- | --- |
| • | Cost of goods sold per tonne in 2022 increased primarily due to higher royalties resulting from increased net<br>realized selling prices. **** Potash **** controllable cash cost of product manufactured increased due to lower production volumes and a pull forward of maintenance activities in the second half of 2022. |
| --- | --- |
Canpotex Sales by Market
| (percentage of sales volumes, except as | **** | Three Months Ended December 31 | **** | **** | Twelve Months Ended December 31 | **** | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| otherwise noted) | 2022 | 2021 | Change | 2022 | 2021 | Change | ||||||||
| Latin America | **** | 28 | 37 | (9 | ) | **** | 34 | 38 | (4 | ) | ||||
| Other Asian markets ^1^ | **** | 35 | 34 | 1 | **** | 34 | 35 | (1 | ) | |||||
| China | **** | 16 | 12 | 4 | **** | 14 | 11 | 3 | ||||||
| Other markets | **** | 10 | 11 | (1 | ) | **** | 10 | 10 | - | |||||
| India | **** | 11 | 6 | 5 | **** | 8 | 6 | 2 | ||||||
| **** | 100 | 100 | **** | 100 | 100 |
1 All Asian markets except China and India.
7
Nitrogen
| (millions of US dollars, except | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||
| Manufactured product | |||||||||||||||||||||
| Net sales | **** | **** | **** | ||||||||||||||||||
| Ammonia | 689 | **** | 519 | 33 | 776 | 790 | (2 | ) | **** | 887 | 656 | 35 | |||||||||
| Urea | 463 | **** | 552 | (16 | ) | 705 | 824 | (14 | ) | **** | 657 | 670 | (2 | ) | |||||||
| Solutions, nitrates and<br> sulfates | 389 | **** | 385 | 1 | 1,056 | 1,221 | (14 | ) | **** | 368 | 316 | 16 | |||||||||
| 1,541 | **** | 1,456 | 6 | 2,537 | 2,835 | (11 | ) | **** | 607 | 514 | 18 | ||||||||||
| Cost of goods sold | 846 | **** | 725 | 17 | **** | 333 | 256 | 30 | |||||||||||||
| Gross margin – manufactured | 695 | **** | 731 | (5 | ) | **** | 274 | 258 | 6 | ||||||||||||
| Gross margin – other 1 | 4 | **** | 23 | (83 | ) | Depreciation and amortization | **** | 61 | 52 | 17 | |||||||||||
| Gross margin – total | 699 | **** | 754 | (7 | ) | Gross margin excluding depreciation | |||||||||||||||
| Expenses (income) ² | 13 | **** | (2 | ) | n/m | and<br>amortization – manufactured ^4^ | **** | 335 | 310 | 8 | |||||||||||
| EBIT | 686 | **** | 756 | (9 | ) | Ammonia controllable cash cost of | |||||||||||||||
| Depreciation and amortization | 155 | **** | 148 | 5 | product manufactured ^4^ | **** | 57 | 45 | 27 | ||||||||||||
| EBITDA | 841 | **** | 904 | (7 | ) | ||||||||||||||||
| Adjustments 3 | - | **** | 17 | (100 | ) | ||||||||||||||||
| Adjusted EBITDA | 841 | **** | 921 | (9 | ) | ||||||||||||||||
| 1 Includes other nitrogen (including ESN®) and purchased<br>products and comprises net sales of 251 million (2021 – 193 million) less cost of goods sold of 247 million (2021 – 170 million).<br>2 Includes earnings from equity-accounted investees of 41 million (2021 – 41 million).<br>3 See Note 2 to the unaudited condensed consolidated financial statements.<br>4 These are non-IFRS financial measures. See the “Non-IFRS<br>Financial Measures” section. | |||||||||||||||||||||
| (millions of US dollars, except | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||
| Manufactured product | |||||||||||||||||||||
| Net sales | |||||||||||||||||||||
| Ammonia | 2,641 | **** | 1,393 | 90 | 2,715 | 2,919 | (7 | ) | **** | 973 | 477 | 104 | |||||||||
| Urea | 1,920 | **** | 1,463 | 31 | 2,757 | 3,059 | (10 | ) | **** | 696 | 478 | 46 | |||||||||
| Solutions, nitrates and<br> sulfates | 1,829 | **** | 1,128 | 62 | 4,551 | 4,747 | (4 | ) | **** | 402 | 238 | 69 | |||||||||
| 6,390 | **** | 3,984 | 60 | 10,023 | 10,725 | (7 | ) | **** | 638 | 371 | 72 | ||||||||||
| Cost of goods sold | 3,197 | **** | 2,353 | 36 | **** | 319 | 219 | 46 | |||||||||||||
| Gross margin – manufactured | 3,193 | **** | 1,631 | 96 | **** | 319 | 152 | 110 | |||||||||||||
| Gross margin – other 1 | 88 | **** | 95 | (7 | ) | Depreciation and amortization | **** | 56 | 52 | 7 | |||||||||||
| Gross margin – total | 3,281 | **** | 1,726 | 90 | Gross margin excluding depreciation | ||||||||||||||||
| (Income) expenses ² | (92 | ) | (3 | ) | n/m | and<br>amortization – manufactured | **** | 375 | 204 | 84 | |||||||||||
| EBIT | 3,373 | **** | 1,729 | 95 | Ammonia controllable cash cost of | ||||||||||||||||
| Depreciation and amortization | 558 | **** | 557 | - | product manufactured | **** | 59 | 50 | 18 | ||||||||||||
| EBITDA | 3,931 | **** | 2,286 | 72 | |||||||||||||||||
| Adjustments 3 | - | **** | 22 | (100 | ) | ||||||||||||||||
| Adjusted EBITDA | 3,931 | **** | 2,308 | 70 |
All values are in US Dollars.
1 Includes other nitrogen (including ESN^®^) and purchased products and comprises net sales of $1,143 million (2021 – $705 million) less cost of goods sold of $1,055 million (2021 – $610 million).
2 Includes earnings from equity-accounted investees of $233 million (2021 – $76 million).
3 See Note 2 to the unaudited condensed consolidated financial statements.
| • | Adjusted EBITDA increased in the full year of 2022 primarily due to higher net realized selling prices and higher<br>earnings from equity-accounted investees, which more than offset higher natural gas costs and lower sales volumes. Adjusted EBITDA in the fourth quarter of 2022 decreased as lower sales volumes more than offset an increase in net realized selling<br>prices. |
|---|---|
| • | Sales volumes decreased in the fourth quarter primarily due to Trinidad gas curtailments, unplanned plant outages<br>that included the impact of extreme cold weather in the quarter and cautious buying activity. Full-year sales volumes were also impacted by a compressed North American spring application season. |
| --- | --- |
| • | Net realized selling price was higher **** in the fourth quarter and full year of 2022 due to strong benchmark<br>prices, in particular for ammonia, resulting from tight global supply and higher energy prices in key nitrogen producing regions. |
| --- | --- |
8
| • | Cost of goods sold per tonne in the fourth quarter and full year of 2022 increased primarily due to higher natural<br>gas, raw material and other input costs. Ammonia **** controllable cash cost of product manufactured increased in the fourth quarter and full year of 2022 due to lower production volumes and higher input costs, mainly electricity costs.<br> |
|---|
Natural Gas Prices in Cost of Production
| Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (US dollars per MMBtu, except as otherwise noted) | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||
| Overall gas cost excluding realized derivative impact | **** | 7.49 | **** | 6.43 | 16 | **** | 7.82 | **** | 4.60 | 70 | |||||
| Realized derivative impact | **** | (0.05 | ) | (0.03 | ) | 67 | **** | (0.05 | ) | 0.01 | n/m | ||||
| Overall gas cost | **** | 7.44 | **** | 6.40 | 16 | **** | 7.77 | **** | 4.61 | 69 | |||||
| Average NYMEX | **** | 6.26 | **** | 5.83 | 7 | **** | 6.64 | **** | 3.84 | 73 | |||||
| Average AECO | **** | 4.11 | **** | 3.93 | 5 | **** | 4.28 | **** | 2.84 | 51 | |||||
| • | Natural gas prices in our cost of production increased in the fourth quarter and full year of 2022 as a<br>result of higher North American gas index prices and increased gas costs in Trinidad, where our gas prices are linked to ammonia benchmark prices. | ||||||||||||||
| --- | --- |
Phosphate
| (millions of US dollars, except | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | |||||||||||||
| Manufactured product | |||||||||||||||||||||
| Net sales | |||||||||||||||||||||
| Fertilizer | 274 | **** | 377 | (27 | ) | **** | 391 | 509 | (23 | ) | **** | 700 | 741 | (6 | ) | ||||||
| Industrial and feed | 155 | **** | 155 | - | **** | 140 | 202 | (31 | ) | **** | 1,107 | 766 | 45 | ||||||||
| 429 | **** | 532 | (19 | ) | **** | 531 | 711 | (25 | ) | **** | 807 | 749 | 8 | ||||||||
| Cost of goods sold | 405 | **** | 374 | 8 | **** | 762 | 526 | 45 | |||||||||||||
| Gross margin - manufactured | 24 | **** | 158 | (85 | ) | **** | 45 | 223 | (80 | ) | |||||||||||
| Gross margin – other 1 | (8 | ) | 5 | n/m | Depreciation and amortization | **** | 109 | 55 | 99 | ||||||||||||
| Gross margin – total | 16 | **** | 163 | (90 | ) | Gross margin excluding depreciation | |||||||||||||||
| Expenses | 46 | **** | 10 | 360 | and amortization –<br>manufactured^3^ | **** | 154 | 278 | (44 | ) | |||||||||||
| EBIT | (30 | ) | 153 | n/m | |||||||||||||||||
| Depreciation and amortization | 58 | **** | 39 | 49 | |||||||||||||||||
| EBITDA | 28 | **** | 192 | (85 | ) | ||||||||||||||||
| Adjustments 2 | - | **** | 4 | (100 | ) | ||||||||||||||||
| Adjusted EBITDA | 28 | **** | 196 | (86 | ) | ||||||||||||||||
| 1 Includes other phosphate and purchased products and comprises net sales of 72 million (2021 – 61<br>million) less cost of goods sold of 80 million (2021 – 56 million). 2 See Note 2 to the unaudited condensed consolidated financial<br>statements. 3 This is a non-IFRS financial measure. See the<br>“Non-IFRS Financial Measures” section. |
All values are in US Dollars.
9
| (millions of US dollars, except | Tonnes (thousands) | Average per Tonne^^ | ||||||||||||||||
| as otherwise noted) | 2021 | % Change | 2022 | 2021 | % Change | 2022 | 2021 | % Change | ||||||||||
| Manufactured product | ||||||||||||||||||
| Net sales | ||||||||||||||||||
| Fertilizer | 1,367 | **** | 1,108 | 23 | 1,696 | 1,840 | (8 | ) | **** | 806 | 602 | 34 | ||||||
| Industrial and feed | 706 | **** | 520 | 36 | 682 | 779 | (12 | ) | **** | 1,035 | 667 | 55 | ||||||
| 2,073 | **** | 1,628 | 27 | 2,378 | 2,619 | (9 | ) | **** | 872 | 622 | 40 | |||||||
| Cost of goods sold | 1,562 | **** | 1,227 | 27 | **** | 657 | 469 | 40 | ||||||||||
| Gross margin – manufactured | 511 | **** | 401 | 27 | **** | 215 | 153 | 41 | ||||||||||
| Gross margin – other 1 | (18 | ) | 20 | n/m | Depreciation and amortization | **** | 79 | 58 | 37 | |||||||||
| Gross margin – total | 493 | **** | 421 | 17 | Gross margin excluding depreciation | |||||||||||||
| (Income) expenses | (693 | ) | 36 | n/m | and amortization – manufactured | **** | 294 | 211 | 40 | |||||||||
| EBIT | 1,186 | **** | 385 | 208 | ||||||||||||||
| Depreciation and amortization | 188 | **** | 151 | 25 | ||||||||||||||
| EBITDA | 1,374 | **** | 536 | 156 | ||||||||||||||
| Adjustments<br>2 | (780 | ) | 4 | n/m | ||||||||||||||
| Adjusted EBITDA | 594 | **** | 540 | 10 | ||||||||||||||
| 1 Includes other phosphate and purchased products and comprises net sales of 304 million (2021 – 201<br>million) less cost of goods sold of 322 million (2021 – 181 million). | ||||||||||||||||||
| 2 See Note 2 to the unaudited condensed consolidated financial statements. Includes reversal of impairment of assets<br>of 780 million (2021 – nil). |
All values are in US Dollars.
| • | Adjusted EBITDA increased for the full year of 2022 mainly due to higher net realized selling prices, which more<br>than offset higher raw material costs and lower sales volumes. Adjusted EBITDA in the fourth quarter decreased due to lower sales volumes as a result of unplanned plant outages. Included with expenses for the full year of 2022, we recognized a<br>$780 million non-cash impairment of assets reversal due to a more favorable outlook for phosphate margins, which is deducted from adjusted EBITDA. |
|---|---|
| • | Sales volumes decreased in the fourth quarter and full year of 2022 due to lower production volumes and a<br>condensed North American spring application season. |
| --- | --- |
| • | Net realized selling price increased for the full year of 2022 aligned with the increase in global benchmark<br>prices. In the fourth quarter of 2022, higher industrial and feed net realized selling prices more than offset the decline in fertilizer net realized selling prices. |
| --- | --- |
| • | Cost of goods sold per tonne increased in the fourth quarter and full year of 2022 primarily due to significantly<br>higher sulfur and ammonia input costs, along with lower production volumes. |
| --- | --- |
Corporate and Others
| (millions of US dollars, except as otherwise | Three Months Ended December 31 | **** | Twelve Months Ended December 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| noted) | 2022 | **** | 2021 | % Change | 2022 | **** | 2021 | % Change | ||||
| Selling expenses | 5 | **** | 3 | 67 | (1 | ) | (21 | ) | (95 | ) | ||
| General and administrative expenses | 99 | **** | 93 | 6 | 326 | **** | 275 | 19 | ||||
| Share-based compensation (recovery) expense | (59 | ) | 73 | n/m | 63 | **** | 198 | (68 | ) | |||
| Other expenses | 67 | **** | 112 | (40 | ) | 227 | **** | 253 | (10 | ) | ||
| EBIT | (112 | ) | (281 | ) | (60 | ) | (615 | ) | (705 | ) | (13 | ) |
| Depreciation and amortization | 16 | **** | 15 | 7 | 71 | **** | 49 | 45 | ||||
| EBITDA | (96 | ) | (266 | ) | (64 | ) | (544 | ) | (656 | ) | (17 | ) |
| Adjustments<br>^1^ | (84 | ) | 116 | n/m | 146 | **** | 348 | (58 | ) | |||
| Adjusted EBITDA | (180 | ) | (150 | ) | 20 | (398 | ) | (308 | ) | 29 | ||
| 1 See Note 2 to the unaudited condensed consolidated financial statements. | ||||||||||||
| • | General and administrative expenses were higher in the full year of 2022 compared to the same period in 2021<br>mainly due to increased depreciation and amortization expense, higher donations and higher information technology-related expenses. | |||||||||||
| --- | --- | |||||||||||
| • | Share-based compensation (recovery) expense was a recovery in the fourth quarter of 2022 due to a decrease in<br>share price and an expense for the comparative period in 2021 due to an increase in share price. We had a lower expense for the full year of 2022 compared to 2021 mainly due to a lower value of share-based awards outstanding. | |||||||||||
| --- | --- |
10
| • | Other expenses were lower in the fourth quarter of 2022 compared to the same period in 2021 mainly due to net<br>foreign exchange gains in 2022 compared to net foreign exchange losses in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for our non-operating sites from the<br>changes in our cost and discount rate estimates. This was partially offset by an employee special recognition award expense in 2022. Other expenses were lower in the full year of 2022 compared to the same period in 2021 mainly due to lower COVID-19 related expenses, the absence of cloud computing related expenses from our change in accounting policy in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for<br>our non-operating sites from the changes in our cost and discount rate estimates. This was partially offset by higher information technology project feasibility costs and an employee special recognition award<br>expense in 2022. |
|---|
Eliminations
Eliminations are not part of the Corporate and Others segment. Eliminations of gross margin between operating segments were $(28) million for the full year of 2022 compared to $(89) million in the same period of 2021. We had significant eliminations in 2021 due to higher-margin inventories held by our Retail segment as global commodity benchmark prices increased. The magnitude of the rise in prices was lower in 2022.
Finance Costs, Income Taxes and Other Comprehensive Income (Loss)
| (millions of US dollars, except as otherwise | Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| noted) | **** | 2022 | 2021 | % Change | **** | 2022 | **** | 2021 | % Change | ||
| Finance costs | **** | 188 | 246 | (24 | ) | **** | 563 | **** | 613 | (8 | ) |
| Income tax expense | **** | 353 | 374 | (6 | ) | **** | 2,559 | **** | 989 | 159 | |
| Other comprehensive income (loss) | **** | 119 | 72 | 65 | **** | (177 | ) | 78 | n/m | ||
| • | Finance costs were lower in the fourth quarter and full year of 2022 compared to the same periods in 2021 mainly<br>due to the absence of a loss of $142 million on early extinguishment of a portion of our long-term debt in the comparative periods. In the full year of 2022 short-term interest was higher due to increased interest rates and a higher average<br>balance compared to 2021, which more than offset a decrease in long-term interest due to a lower average outstanding balance in 2022. | ||||||||||
| --- | --- | ||||||||||
| • | Income tax expense was higher in the full year of 2022 as a result of higher earnings in 2022 compared to the same<br>period in 2021. | ||||||||||
| --- | --- | ||||||||||
| • | Other comprehensive income (loss) is primarily driven by changes in our investment in Sinofert Holdings Ltd<br>(“Sinofert”), the currency translation of our foreign operations and net actuarial gains on defined benefit plans. In the fourth quarter of 2022, we had a fair value gain on our investment in Sinofert due to share price increases, compared<br>to a fair value loss due to share price decreases in 2021. In addition, we had higher gains on foreign currency translation of our Retail foreign operations, mainly in Australia and Brazil, compared to the same period in 2021, as these currencies<br>appreciated relative to the US dollar. These factors were partially offset by a lower net actuarial gain on our defined benefit pension plans in the fourth quarter of 2022 compared to the same period in 2021. For the full year of 2022, we had fair<br>value losses on our investment in Sinofert due to share price decreases, compared to fair value gains due to share price increases for the same period in 2021. In addition, we had higher losses on foreign currency translation of our Retail foreign<br>operations, mainly in Canada, compared to the same period in 2021, as this currency depreciated relative to the US dollar, partially offset by higher gains in Brazil, as this currency appreciated relative to the US dollar. | ||||||||||
| --- | --- |
11
Forward-Looking Statements
Certain statements and other information included in this document, including within the “Market Outlook and Guidance” section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “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 2023 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; our advancement of strategic growth initiatives; capital spending expectations for 2023; expectations regarding performance of our operating segments in 2023; our intention to increase potash production capability to 18 million tonnes by 2026; our operating segment market outlooks and our expectations for market conditions and fundamentals in 2023 and beyond, and the anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, grower crop investment, crop mix, production expenses, shipments, consumption, prices and the impact of seasonality, import and export volumes, economic sanctions and the conflict between Ukraine and Russia; Nutrien’s ability to develop innovative and sustainable solutions; the negotiation of sales contracts; acquisitions and divestitures and the anticipated benefits thereof; and expectations in connection with our ability to deliver long-term returns to shareholders. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies on the anticipated timeline or at all; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, expenses, margins, demand, supply, product availability, shipments, consumption, 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 2023 and in the future; assumptions with respect to our intention to complete share repurchases under our share repurchase program, including TSX approval and the funding of such share repurchases, existing and future market conditions, including with respect to the price of our common shares, and compliance with respect to applicable limitations under securities laws and regulations and stock exchange policies; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall global economy; our expectations regarding the impacts, direct and indirect, of the conflict between Ukraine and Russia on, among other things, global supply and demand, energy and commodity prices, global interest rates, supply chains and the global macroeconomic environment, including inflation; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our expectations regarding the impact of certain factors on the carrying amount of goodwill associated with our Retail – North America group of CGUs; 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.
12
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; seasonality; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; the COVID-19 pandemic, including variants of the COVID-19 virus and the efficiency and distribution of vaccines, and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, including government-imposed vaccine mandates, fiscal and monetary responses by governments and financial institutions to market conditions and disruptions to global supply chains; the conflict between Ukraine and Russia and its potential impact on, among other things, global market conditions and supply and demand, energy and commodity prices, interest rates, supply chains and the global economy generally; our ability to execute on our strategies related to environmental, social and governance matters, and achieve related expectations, targets and commitments; the risk that rising interest rates and/or deteriorated business operating results may result in the impairment of assets or goodwill attributed to certain of our cash generating units; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the SEC in the United States.
The purpose of our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment) guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
The forward-looking statements in this document are made as of the date hereof and Nutrien disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable Canadian securities legislation or applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms & Definitions” section of our 2021 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful, and all financial amounts are stated in millions of US dollars, unless otherwise noted.
13
About Nutrien
Nutrien is the world’s largest provider of crop inputs and services, helping to safely and sustainably feed a growing world. We operate a world-class network of production, distribution and retail facilities that positions us to efficiently serve the needs of growers. We focus on creating long-term value for all stakeholders by advancing our key environmental, social and governance priorities.
For Further Information:
Investor Relations:
Jeff Holzman
Vice President, Investor Relations
(306) 933-8545
Investors@nutrien.com
Media Relations:
Megan Fielding
Vice President, Brand & Culture Communications
(403) 797-3015
More information about Nutrien can be found at www.nutrien.com.
Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday,February 16, 2023 at 10:00 a.m. Eastern Time.
Telephone Conference dial-in numbers:
| • | From Canada and the US<br>1-888-886-7786 |
|---|---|
| • | International<br>1-416-764-8683 |
| --- | --- |
| • | No access code required. Please dial in 15 minutes prior to ensure you are placed on the call in a timely manner.<br> |
| --- | --- |
Live Audio Webcast: Visit https://www.nutrien.com/investors/events/2022-q4-earnings-conference-call
14
Appendix A - Selected Additional Financial Data
| Selected Retail Measures | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||||||
| Proprietary products gross margin (millions of US<br><br><br>dollars) | ||||||||||||||||
| Crop nutrients | **** | 55 | **** | 49 | **** | 370 | **** | 328 | ||||||||
| Crop protection products | **** | 58 | **** | 58 | **** | 675 | **** | 527 | ||||||||
| Seed | **** | (7 | ) | 22 | **** | 166 | **** | 183 | ||||||||
| Merchandise | **** | 5 | **** | 4 | **** | 12 | **** | 12 | ||||||||
| All products | **** | 111 | **** | 133 | **** | 1,223 | **** | 1,050 | ||||||||
| Proprietary products margin as a percentage of<br><br><br>product line margin (%) | ||||||||||||||||
| Crop nutrients | **** | 16 | **** | 12 | **** | 21 | **** | 21 | ||||||||
| Crop protection products | **** | 14 | **** | 14 | **** | 35 | **** | 34 | ||||||||
| Seed | **** | n/m | **** | 39 | **** | 39 | **** | 44 | ||||||||
| Merchandise | **** | 11 | **** | 9 | **** | 7 | **** | 7 | ||||||||
| All products | **** | 11 | **** | 11 | **** | 24 | **** | 23 | ||||||||
| Crop nutrients sales volumes (tonnes – thousands) | ||||||||||||||||
| North America | **** | 1,819 | **** | 2,119 | **** | 8,106 | **** | 9,848 | ||||||||
| International | **** | 675 | **** | 702 | **** | 3,407 | **** | 3,535 | ||||||||
| Total | **** | 2,494 | **** | 2,821 | **** | 11,513 | **** | 13,383 | ||||||||
| Crop nutrients selling price per tonne | ||||||||||||||||
| North America | **** | 942 | **** | 725 | **** | 916 | **** | 556 | ||||||||
| International | **** | 896 | **** | 708 | **** | 774 | **** | 512 | ||||||||
| Total | **** | 930 | **** | 721 | **** | 874 | **** | 545 | ||||||||
| Crop nutrients gross margin per tonne | ||||||||||||||||
| North America | **** | 151 | **** | 154 | **** | 182 | **** | 133 | ||||||||
| International | **** | 108 | **** | 144 | **** | 86 | **** | 82 | ||||||||
| Total | **** | 139 | **** | 152 | **** | 153 | **** | 119 | ||||||||
| Financial performance measures | 2022 | 2021 | ||||||||||||||
| Retail adjusted EBITDA margin (%) ^1, 2^ | **** | 11 | **** | 11 | ||||||||||||
| Retail adjusted EBITDA per US selling location (thousands of US dollars) ^1, 2, 3^ | **** | 1,923 | **** | 1,481 | ||||||||||||
| Retail adjusted average working capital to sales (%) ^1,4^ | **** | 17 | **** | 13 | ||||||||||||
| Retail adjusted average working capital to sales excluding Nutrien Financial (%) ^1, 4^ | **** | 2 | **** | - | ||||||||||||
| Nutrien Financial adjusted net interest margin (%) ^1,4^ | **** | 6.8 | **** | 6.6 | ||||||||||||
| Retail cash operating coverage ratio (%) ^1, 4^ | **** | 55 | **** | 58 | ||||||||||||
| Retail normalized comparable store sales (%) ^4^ | **** | (4 | ) | 7 | ||||||||||||
| 1 Rolling four quarters ended December 31, 2022 and 2021. | ||||||||||||||||
| 2 These are supplementary financial measures. See the “Other Financial Measures” section. | ||||||||||||||||
| 3 Excluding acquisitions. | ||||||||||||||||
| 4 These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section. | ||||||||||||||||
| Nutrien Financial | As at<br><br><br>December<br>31, 2021 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (millions of US dollars) | <31 Days<br><br><br>Past Due | 31–90<br><br><br>Days<br> <br>Past Due | >90 Days<br><br><br>Past Due | GrossReceivables | Allowance ^1^ | NetReceivables | Net<br>Receivables | |||||||||
| North America | 1,658 | 225 | 75 | 78 | 2,036 | (29 | ) | **** | 2,007 | 1,488 | ||||||
| International | 574 | 53 | 14 | 28 | 669 | (7 | ) | **** | 662 | 662 | ||||||
| Nutrien Financial receivables | 2,232 | 278 | 89 | 106 | 2,705 | (36 | ) | **** | 2,669 | 2,150 | ||||||
| 1 Bad debt expense on the above receivables for the twelve months ended December 31, 2022 was 10 million (2021 – 10 million) in the Retail<br>segment. |
All values are in US Dollars.
15
| Selected Nitrogen Measures | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||
|---|---|---|---|---|---|---|
| **** | 2022 | 2021 | **** | 2022 | 2021 | |
| Sales volumes (tonnes – thousands) | ||||||
| Fertilizer | **** | 1,408 | 1,578 | **** | 5,371 | 6,028 |
| Industrial and feed | **** | 1,129 | 1,257 | **** | 4,652 | 4,697 |
| Net sales (millions of US dollars) | ||||||
| Fertilizer | **** | 854 | 861 | **** | 3,512 | 2,364 |
| Industrial and feed | **** | 687 | 595 | **** | 2,878 | 1,620 |
| Net selling price per tonne | ||||||
| Fertilizer | **** | 607 | 545 | **** | 654 | 392 |
| Industrial and feed | **** | 608 | 473 | **** | 619 | 345 |
| Production Measures | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||
| **** | 2022 | 2021 | **** | 2022 | 2021 | |
| Potash production (Product tonnes – thousands) | **** | 2,941 | 3,641 | **** | 13,007 | 13,790 |
| Potash shutdown weeks ^1^ | **** | 3 | - | **** | 18 | 14 |
| Ammonia production – total ^2^ | **** | 1,400 | 1,641 | **** | 5,759 | 5,996 |
| Ammonia production – adjusted ^2, 3^ | **** | 920 | 1,069 | **** | 3,935 | 3,932 |
| Ammonia operating rate (%) ^3^ | **** | 83 | 97 | **** | 90 | 90 |
| P2O5 production (P2O5 tonnes – thousands) | **** | 288 | 409 | **** | 1,351 | 1,518 |
| P2O5 operating rate (%) | **** | 67 | 95 | **** | 79 | 89 |
| 1 Represents weeks of full production shutdown, including inventory adjustments and unplanned events,<br>excluding the impact of any periods of reduced operating rates, planned routine annual maintenance shutdowns and announced workforce reductions. | ||||||
| 2 All figures are provided on a gross production basis in thousands of product tonnes. | ||||||
| 3 Excludes Trinidad and Joffre. |
16
Appendix B - Non-IFRS Financial Measures
We use both IFRS measures and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by a company that (a) depict historical or expected future financial performance, financial position or cash flow of a company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the company, (c) are not disclosed in the financial statements of the company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by a company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the company.
These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It also includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As additional non-recurring or unusual items arise in the future, we generally exclude these items in our calculations.
Adjusted EBITDA (Consolidated)
Most directly comparableIFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, share-based compensation and certain foreign exchange gain/loss (net of related derivatives). We also adjust this measure for the following other income and expenses that are excluded when management evaluates the performance of our day-to-day operations: integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses, gain or loss on disposal of certain businesses and investments, and IFRS adoption transition adjustments.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations, and as a component of employee remuneration calculations.
| Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars) | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | |
| Net earnings | **** | 1,118 | **** | 1,207 | **** | 7,687 | **** | 3,179 | |
| Finance costs | **** | 188 | **** | 246 | **** | 563 | **** | 613 | |
| Income tax expense | **** | 353 | **** | 374 | **** | 2,559 | **** | 989 | |
| Depreciation and amortization | **** | 520 | **** | 497 | **** | 2,012 | **** | 1,951 | |
| EBITDA ^1^ | **** | 2,179 | **** | 2,324 | **** | 12,821 | **** | 6,732 | |
| Share-based compensation (recovery) expense | **** | (59 | ) | 73 | **** | 63 | **** | 198 | |
| Foreign exchange (gain) loss, net of related derivatives | **** | (36 | ) | 38 | **** | 31 | **** | 39 | |
| Integration and restructuring related costs | **** | 11 | **** | (4 | ) | **** | 46 | **** | 43 |
| Impairment (reversal) of assets | **** | - | **** | 21 | **** | (780 | ) | 33 | |
| COVID-19 related expenses ^2^ | **** | - | **** | 11 | **** | 8 | **** | 45 | |
| Gain on disposal of investment | **** | - | **** | - | **** | (19 | ) | - | |
| Cloud computing transition adjustment ^3^ | **** | - | **** | - | **** | - | **** | 36 | |
| Adjusted EBITDA | **** | 2,095 | **** | 2,463 | **** | 12,170 | **** | 7,126 |
1 EBITDA is calculated as net earnings before finance costs, income taxes, and depreciation and amortization.
2 COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs, and costs related to construction delays from access limitations and other government restrictions.
3 Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in April 2021.
17
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.
Definition: Adjusted net earnings and related per share information are calculated as net earnings (loss) before share-based compensation and certain foreign exchange gain/loss (net of related derivatives), net of tax. We also adjust this measure for the following other income and expenses (net of tax) that are excluded when management evaluates the performance of our day-to-day operations: certain integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting. In 2022, we amended our calculation of adjusted net earnings to adjust for a gain on settlement of a derivative due to discontinued hedge accounting. There was no similar gain or loss in the comparative period. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations and is used as a component of employee remuneration calculations.
| Three Months Ended<br><br><br>December 31, 2022 | Twelve Months Ended<br><br><br>December 31, 2022 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise<br>noted) | **** | Increases(Decreases) | **** | Post-Tax | **** | PerDilutedShare | **** | **** | Increases(Decreases) | **** | Post-Tax | **** | PerDilutedShare | **** |
| Net earnings attributable to equity holders of<br><br><br>Nutrien | 1,112 | 2.15 | 7,660 | 14.18 | ||||||||||
| Adjustments: | ||||||||||||||
| Share-based compensation (recovery) expense | (59 | ) | (45 | ) | (0.09 | ) | 63 | 47 | 0.10 | |||||
| Foreign exchange (gain) loss, net of related<br>derivatives | (36 | ) | (27 | ) | (0.05 | ) | 31 | 23 | 0.05 | |||||
| Integration and restructuring related costs | 11 | 8 | 0.01 | 46 | 35 | 0.06 | ||||||||
| Reversal of impairment of assets | - | - | - | (780 | ) | (619 | ) | (1.15 | ) | |||||
| COVID-19 related expenses | - | - | - | 8 | 6 | 0.01 | ||||||||
| Gain on disposal of investment | - | - | - | (19 | ) | (14 | ) | (0.03 | ) | |||||
| Gain on settlement of discontinued hedge<br>accounting derivative | - | - | - | (18 | ) | (14 | ) | (0.03 | ) | |||||
| Adjusted net earnings | 1,048 | **** | 2.02 | **** | 7,124 | **** | 13.19 | **** | ||||||
| Three Months Ended<br><br><br>December 31, 2021 | Twelve Months Ended<br><br><br>December 31, 2021 | |||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||
| (millions of US dollars, except as otherwise<br>noted) | Increases<br>(Decreases) | Post-Tax | Per<br>Diluted<br>Share | Increases<br>(Decreases) | Post-Tax | Per<br>Diluted<br>Share | ||||||||
| Net earnings attributable to equity holders of<br><br><br>Nutrien | 1,201 | 2.11 | 3,153 | 5.52 | ||||||||||
| Adjustments: | ||||||||||||||
| Share-based compensation expense | 73 | 56 | 0.10 | 198 | 151 | 0.27 | ||||||||
| Foreign exchange loss, net of related<br>derivatives | 38 | 29 | 0.05 | 39 | 30 | 0.05 | ||||||||
| Integration and restructuring related (recovery)<br>costs | (4 | ) | (3 | ) | (0.01 | ) | 43 | 33 | 0.06 | |||||
| Impairment of assets | 21 | 16 | 0.03 | 33 | 25 | 0.04 | ||||||||
| COVID-19 related expenses | 11 | 8 | 0.01 | 45 | 34 | 0.06 | ||||||||
| Cloud computing transition adjustment | - | - | - | 36 | 27 | 0.05 | ||||||||
| Loss on early extinguishment of debt | 142 | 104 | 0.18 | 142 | 104 | 0.18 | ||||||||
| Adjusted net earnings | 1,411 | 2.47 | 3,557 | 6.23 |
18
Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per Share Guidance
Adjusted EBITDA and adjusted net earnings per share guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS because a meaningful or accurate calculation of reconciling items and the information is not available without unreasonable effort due to unknown variables, including the timing and amount of certain reconciling items, and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. The probable significance of such unavailable information, which could be material to future results, cannot be addressed. Guidance for adjusted EBITDA and adjusted net earnings per share excludes certain items such as, but not limited to, the impacts of share-based compensation, certain foreign exchange gain/loss (net of related derivatives), integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting.
Growth Capital
Most directly comparable IFRS financial measure: Cash used in investing activities.
Definition: Cash used in investing activities related to growth initiatives consisting of investing capital expenditures, which are a component of capital expenditures, plus business acquisitions, net of cash acquired per the unaudited condensed consolidated statements of cash flows.
Why weuse the measure and why it is useful to investors: To demonstrate how we allocate our capital to our various priorities including growth and expansion projects and acquisitions.
| (millions of US dollars) | 2022 | **** | 2021 | |
|---|---|---|---|---|
| Cash used in investing activities | (2,901 | ) | (1,807 | ) |
| Sustaining capital expenditures | 1,449 | **** | 1,247 | |
| Mine development and pre-stripping capital<br>expenditures | 234 | **** | 156 | |
| Borrowing costs on property, plant and equipment | (37 | ) | (29 | ) |
| Other ^1^ | 12 | **** | (64 | ) |
| Net changes in non-cash<br>working capital ^1^ | 44 | **** | (101 | ) |
| Growth capital | (1,199 | ) | (598 | ) |
1 Included in investing activities as per the unaudited condensed consolidated statement of cash flows.
Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin per tonne less depreciation and amortization per tonne for manufactured products. Reconciliations are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
19
Potash Controllable Cash Cost of Product Manufactured (“COPM”) Per Tonne
Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.
Definition: Total Potash COGS excluding depreciation and amortization expense included in COPM, royalties, natural gas costs and carbon taxes, change in inventory, and other adjustments, divided by potash production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. In 2022, we replaced Potash cash COPM with this new financial measure. Potash controllable cash COPM excludes the effects of production from other periods and the impacts of our long-term investment decisions. Potash controllable cash COPM also excludes royalties and natural gas costs and carbon taxes, which management does not consider controllable, as they are primarily driven by regulatory and market conditions.
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | ||
| Total COGS – Potash | **** | 310 | **** | 305 | **** | 1,400 | **** | 1,285 | ||
| Change in inventory | **** | 38 | **** | 64 | **** | 58 | **** | 22 | ||
| Other adjustments<br>^1^ | **** | (12 | ) | 1 | **** | (41 | ) | (6 | ) | |
| COPM | **** | 336 | **** | 370 | **** | 1,417 | **** | 1,301 | ||
| Depreciation and amortization in COPM | **** | (89 | ) | (115 | ) | **** | (406 | ) | (430 | ) |
| Royalties in COPM | **** | (40 | ) | (47 | ) | **** | (190 | ) | (107 | ) |
| Natural gas costs and carbon taxes in COPM | **** | (17 | ) | (17 | ) | **** | (62 | ) | (51 | ) |
| Controllable cash COPM | **** | 190 | **** | 191 | **** | 759 | **** | 713 | ||
| Production tonnes (tonnes – thousands) | **** | 2,941 | **** | 3,641 | **** | 13,007 | **** | 13,790 | ||
| Potash controllable cash COPM per tonne | **** | 65 | **** | 52 | **** | 58 | **** | 52 | ||
| 1 Other adjustments include unallocated production overhead that is recognized as part of cost of<br>goods sold but is not included in the measurement of inventory and changes in inventory balances. |
Ammonia Controllable Cash COPM Per Tonne
Most directly comparable IFRS financial measure: Total manufactured COGS for the Nitrogen segment.
Definition: Total Nitrogen COGS excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful toinvestors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | ||
| Total Manufactured COGS – Nitrogen | **** | 846 | **** | 725 | **** | 3,197 | **** | 2,353 | ||
| Total Other COGS – Nitrogen | **** | 247 | **** | 170 | **** | 1,055 | **** | 610 | ||
| Total COGS – Nitrogen | **** | 1,093 | **** | 895 | **** | 4,252 | **** | 2,963 | ||
| Depreciation and amortization in COGS | **** | (131 | ) | (126 | ) | **** | (465 | ) | (473 | ) |
| Cash COGS for products other than ammonia | **** | (648 | ) | (519 | ) | **** | (2,560 | ) | (1,740 | ) |
| Ammonia | ||||||||||
| Total cash COGS before other adjustments | **** | 314 | **** | 250 | **** | 1,227 | **** | 750 | ||
| Other adjustments<br>^1^ | **** | (65 | ) | (30 | ) | **** | (210 | ) | (96 | ) |
| Total cash COPM | **** | 249 | **** | 220 | **** | 1,017 | **** | 654 | ||
| Natural gas and steam costs in COPM | **** | (212 | ) | (186 | ) | **** | (855 | ) | (515 | ) |
| Controllable cash COPM | **** | 37 | **** | 34 | **** | 162 | **** | 139 | ||
| Production tonnes (net tonnes ^2^ – thousands) | **** | 655 | **** | 758 | **** | 2,754 | **** | 2,769 | ||
| Ammonia controllable cash COPM per tonne | **** | 57 | **** | 45 | **** | 59 | **** | 50 | ||
| 1 Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is<br>not included in the measurement of inventory and changes in inventory balances. | ||||||||||
| 2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products. |
20
Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working
Capital to Sales Excluding Nutrien Financial
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the sales and working capital of certain acquisitions during the first year following the acquisition. We also look at this metric excluding Nutrien Financial revenue and working capital.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.
| Rolling four quarters ended December 31, 2022 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | Q1 2022 | **** | Q2 2022 | **** | Q3 2022 | **** | Q4 2022 | **** | Average/Total | **** |
| Current assets | 12,392 | 12,487 | 11,262 | 11,668 | |||||||
| Current liabilities | (9,223 | ) | (9,177 | ) | (5,889 | ) | (8,708 | ) | |||
| Working capital | 3,169 | 3,310 | 5,373 | 2,960 | 3,703 | **** | |||||
| Working capital from certain recent acquisitions | - | - | - | - | |||||||
| Adjusted working capital | 3,169 | 3,310 | 5,373 | 2,960 | 3,703 | **** | |||||
| Nutrien Financial working capital | (2,274 | ) | (4,404 | ) | (3,898 | ) | (2,669 | ) | |||
| Adjusted working capital excluding Nutrien Financial | 895 | (1,094 | ) | 1,475 | 291 | 392 | **** | ||||
| Sales | 3,861 | 9,422 | 3,980 | 4,087 | |||||||
| Sales from certain recent acquisitions | - | - | - | - | |||||||
| Adjusted sales | 3,861 | 9,422 | 3,980 | 4,087 | 21,350 | **** | |||||
| Nutrien Financial revenue | (49 | ) | (91 | ) | (65 | ) | (62 | ) | |||
| Adjusted sales excluding Nutrien Financial | 3,812 | 9,331 | 3,915 | 4,025 | 21,083 | **** | |||||
| Adjusted average working capital to sales (%) | 17 | **** | |||||||||
| Adjusted average working capital to sales excluding Nutrien Financial (%) | **** | 2 | **** | ||||||||
| Rolling four quarters ended December 31, 2021 | |||||||||||
| (millions of US dollars, except as otherwise noted) | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Average/Total | ||||||
| Current assets | 9,160 | 9,300 | 8,945 | 9,924 | |||||||
| Current liabilities | (7,530 | ) | (7,952 | ) | (5,062 | ) | (7,828 | ) | |||
| Working capital | 1,630 | 1,348 | 3,883 | 2,096 | 2,239 | ||||||
| Working capital from certain recent acquisitions | - | - | - | - | |||||||
| Adjusted working capital | 1,630 | 1,348 | 3,883 | 2,096 | 2,239 | ||||||
| Nutrien Financial working capital | (1,221 | ) | (3,072 | ) | (2,820 | ) | (2,150 | ) | |||
| Adjusted working capital excluding Nutrien Financial | 409 | (1,724 | ) | 1,063 | (54 | ) | (77 | ) | |||
| Sales | 2,972 | 7,537 | 3,347 | 3,878 | |||||||
| Sales from certain recent acquisitions | - | - | - | - | |||||||
| Adjusted sales | 2,972 | 7,537 | 3,347 | 3,878 | 17,734 | ||||||
| Nutrien Financial revenue | (25 | ) | (59 | ) | (54 | ) | (51 | ) | |||
| Adjusted sales excluding Nutrien Financial | 2,947 | 7,478 | 3,293 | 3,827 | 17,545 | ||||||
| Adjusted average working capital to sales (%) | 13 | ||||||||||
| Adjusted average working capital to sales excluding Nutrien Financial (%) | - |
21
Nutrien Financial Adjusted Net Interest Margin
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate the financial performance of Nutrien Financial.
| Rolling four quarters ended December 31, 2022 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | Q1 2022 | **** | **** | Q2 2022 | **** | **** | Q3 2022 | **** | **** | Q4 2022 | **** | **** | Total/Average |
| Nutrien Financial revenue | 49 | 91 | 65 | 62 | ||||||||||
| Deemed interest expense ^1^ | (6 | ) | (12 | ) | (12 | ) | (11 | ) | ||||||
| Net interest | 43 | 79 | 53 | 51 | **** | 226 | ||||||||
| Average Nutrien Financial receivables | 2,274 | 4,404 | 3,898 | 2,669 | **** | 3,311 | ||||||||
| Nutrien Financial adjusted net interest margin (%) | **** | 6.8 | ||||||||||||
| Rolling four quarters ended December 31, 2021 | ||||||||||||||
| (millions of US dollars, except as otherwise noted) | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Total/Average | |||||||||
| Nutrien Financial revenue | 25 | 59 | 54 | 51 | ||||||||||
| Deemed interest expense ^1^ | (6 | ) | (8 | ) | (10 | ) | (12 | ) | ||||||
| Net interest | 19 | 51 | 44 | 39 | 153 | |||||||||
| Average Nutrien Financial receivables | 1,221 | 3,072 | 2,820 | 2,150 | 2,316 | |||||||||
| Nutrien Financial adjusted net interest margin (%) | 6.6 | |||||||||||||
| 1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial. |
22
Retail Cash Operating Coverage Ratio
Definition: Retail selling, general and administrative, and other expenses (income), excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.
Why we use themeasure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.
| Rolling four quarters ended December 31, 2022 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | Q1 2022 | Q2 2022 | Q3 2022 | Q4 2022 | Total | ||||||||||
| Selling expenses | 722 | 1,013 | 821 | 836 | **** | 3,392 | **** | ||||||||
| General and administrative expenses | 45 | 54 | 50 | 51 | **** | 200 | **** | ||||||||
| Other (income) expenses | (12 | ) | 21 | 19 | 1 | **** | 29 | **** | |||||||
| Operating expenses | 755 | 1,088 | 890 | 888 | **** | 3,621 | **** | ||||||||
| Depreciation and amortization in operating expenses | (167 | ) | (171 | ) | (204 | ) | (198 | ) | **** | (740 | ) | ||||
| Operating expenses excluding depreciation and<br>amortization | 588 | 917 | 686 | 690 | **** | 2,881 | **** | ||||||||
| Gross margin | 845 | 2,340 | 917 | 1,077 | **** | 5,179 | **** | ||||||||
| Depreciation and amortization in cost of goods sold | 2 | 4 | 2 | 4 | **** | 12 | **** | ||||||||
| Gross margin excluding depreciation and amortization | 847 | 2,344 | 919 | 1,081 | **** | 5,191 | **** | ||||||||
| Cash operating coverage ratio (%) | **** | 55 | **** | ||||||||||||
| Rolling four quarters ended December 31, 2021 | |||||||||||||||
| (millions of US dollars, except as otherwise noted) | Q1 2021 | Q2 2021 | Q3 2021 | Q4 2021 | Total | ||||||||||
| Selling expenses | 667 | 863 | 746 | 848 | 3,124 | ||||||||||
| General and administrative expenses | 39 | 41 | 45 | 43 | 168 | ||||||||||
| Other expenses | 15 | 34 | 17 | 20 | 86 | ||||||||||
| Operating expenses | 721 | 938 | 808 | 911 | 3,378 | ||||||||||
| Depreciation and amortization in operating expenses | (175 | ) | (166 | ) | (180 | ) | (173 | ) | (694 | ) | |||||
| Operating expenses excluding depreciation and<br>amortization | 546 | 772 | 628 | 738 | 2,684 | ||||||||||
| Gross margin | 652 | 1,858 | 917 | 1,173 | 4,600 | ||||||||||
| Depreciation and amortization in cost of goods sold | 2 | 3 | 2 | 5 | 12 | ||||||||||
| Gross margin excluding depreciation and amortization | 654 | 1,861 | 919 | 1,178 | 4,612 | ||||||||||
| Cash operating coverage ratio (%) | 58 |
23
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 average selling price (which generally moves with published potash, nitrogen and phosphate benchmark prices), acquisitions of new stores and foreign exchange rates used in the current year.
Why we use the measure and why it isuseful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.
| Twelve Months Ended December 31 | |||||
|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | **** | 2022 | **** | 2021 | |
| Sales from comparable base | |||||
| Prior period | **** | 17,734 | **** | 14,785 | |
| Adjustments<br>^1^ | **** | (64 | ) | (476 | ) |
| Revised prior period | **** | 17,670 | **** | 14,309 | |
| Current period | **** | 21,092 | **** | 17,511 | |
| Comparable store sales (%) | **** | 19 | **** | 22 | |
| Prior period normalized for average selling prices and foreign<br>exchange rates | **** | 21,867 | **** | 16,350 | |
| Normalized comparable store sales (%) | **** | (4 | ) | 7 | |
| 1 Adjustments relate to prior period sales related to closed locations or businesses that no longer exist in the<br>current period in order to provide a comparable base in our calculation. |
Appendix C – Other Financial Measures
Supplementary Financial Measures
Supplementary financial measures are financial measures disclosed by a company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of a company, (b) are not disclosed in the financial statements of the company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios.
The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.
Retail adjusted EBITDA margin: Retail adjusted EBITDA divided by Retail sales for the last four rolling quarters.
Sustaining capital expenditures: Represents capital expenditures that are required to sustain operations at existing levels and include major repairs and maintenance, and plant turnarounds.
Investing capital expenditures: Represents capital expenditures related to significant expansions of current operations or to create cost savings (synergies). Investing capital expenditures excludes capital outlays for business acquisitions and equity-accounted investees.
Retail adjusted EBITDA per US selling location: Calculated as total Retail US adjusted EBITDA for the last four rolling quarters, representing the organic EBITDA component, which excludes acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations in those quarters.
24
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Financial Statements
Condensed ConsolidatedStatements of Earnings
| Three Months Ended December 31 | Twelve Months EndedDecember 31 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Note | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | |||
| SALES | 2 | **** | 7,533 | **** | 7,267 | **** | 37,884 | **** | 27,712 | ||
| Freight, transportation and distribution | **** | 244 | **** | 198 | **** | 872 | **** | 851 | |||
| Cost of goods sold | **** | 4,383 | **** | 3,863 | **** | 21,588 | **** | 17,452 | |||
| GROSS MARGIN | **** | 2,906 | **** | 3,206 | **** | 15,424 | **** | 9,409 | |||
| Selling expenses | **** | 844 | **** | 855 | **** | 3,414 | **** | 3,142 | |||
| General and administrative expenses | **** | 162 | **** | 148 | **** | 565 | **** | 477 | |||
| Provincial mining taxes | **** | 190 | **** | 173 | **** | 1,149 | **** | 466 | |||
| Share-based compensation (recovery) expense | **** | (59 | ) | 73 | **** | 63 | **** | 198 | |||
| Impairment (reversal) of assets | **** | - | **** | 21 | **** | (780 | ) | 33 | |||
| Other expenses | 4 | **** | 110 | **** | 109 | **** | 204 | **** | 312 | ||
| EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES | **** | 1,659 | **** | 1,827 | **** | 10,809 | **** | 4,781 | |||
| Finance costs | **** | 188 | **** | 246 | **** | 563 | **** | 613 | |||
| EARNINGS BEFORE INCOME TAXES | **** | 1,471 | **** | 1,581 | **** | 10,246 | **** | 4,168 | |||
| Income tax expense | **** | 353 | **** | 374 | **** | 2,559 | **** | 989 | |||
| NET EARNINGS | **** | 1,118 | **** | 1,207 | **** | 7,687 | **** | 3,179 | |||
| Attributable to | |||||||||||
| Equity holders of Nutrien | **** | 1,112 | **** | 1,201 | **** | 7,660 | **** | 3,153 | |||
| Non-controlling<br>interest | **** | 6 | **** | 6 | **** | 27 | **** | 26 | |||
| NET EARNINGS | **** | 1,118 | **** | 1,207 | **** | 7,687 | **** | 3,179 | |||
| NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITYHOLDERS OF NUTRIEN (“EPS”) | **** | ||||||||||
| Basic | **** | 2.15 | **** | 2.11 | **** | 14.22 | **** | 5.53 | |||
| Diluted | **** | 2.15 | **** | 2.11 | **** | 14.18 | **** | 5.52 | |||
| Weighted average shares outstanding for basic EPS | **** | 516,810,000 | **** | 568,027,000 | **** | 538,475,000 | **** | 569,664,000 | |||
| Weighted average shares outstanding for diluted EPS | **** | 517,964,000 | **** | 569,653,000 | **** | 540,010,000 | **** | 571,289,000 | |||
| Condensed Consolidated Statements of ComprehensiveIncome | **** | ||||||||||
| Three Months EndedDecember 31 | Twelve Months EndedDecember 31 | ||||||||||
| (Net of related income taxes) | **** | 2022 | **** | 2021 | **** | 2022 | **** | 2021 | |||
| NET EARNINGS | **** | 1,118 | **** | 1,207 | **** | 7,687 | **** | 3,179 | |||
| Other comprehensive income (loss) | |||||||||||
| Items that will not be reclassified to net earnings: | |||||||||||
| Net actuarial gain on defined benefit plans | **** | 22 | **** | 95 | **** | 83 | **** | 95 | |||
| Net fair value gain (loss) on investments | **** | 17 | **** | (35 | ) | **** | (44 | ) | 81 | ||
| Items that have been or may be subsequently reclassified to net earnings: | |||||||||||
| Gain (loss) on currency translation of foreign operations | **** | 73 | **** | 14 | **** | (199 | ) | (115 | ) | ||
| Other | **** | 7 | **** | (2 | ) | **** | (17 | ) | 17 | ||
| OTHER COMPREHENSIVE INCOME (LOSS) | **** | 119 | **** | 72 | **** | (177 | ) | 78 | |||
| COMPREHENSIVE INCOME | **** | 1,237 | **** | 1,279 | **** | 7,510 | **** | 3,257 | |||
| Attributable to | |||||||||||
| Equity holders of Nutrien | **** | 1,230 | **** | 1,273 | **** | 7,484 | **** | 3,232 | |||
| Non-controlling<br>interest | **** | 7 | **** | 6 | **** | 26 | **** | 25 | |||
| COMPREHENSIVE INCOME | **** | 1,237 | **** | 1,279 | **** | 7,510 | **** | 3,257 | |||
| (See Notes to the Condensed Consolidated Financial Statements) |
25
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Statements of Cash Flows
| Three Months EndedDecember 31 | **** | Twelve Months EndedDecember 31 | **** | |||||
|---|---|---|---|---|---|---|---|---|
| 2022 | **** | 2021 | 2022 | **** | 2021 | |||
| Note 1 | Note 1 | |||||||
| OPERATING ACTIVITIES | ||||||||
| Net earnings | 1,118 | **** | 1,207 | 7,687 | **** | 3,179 | ||
| Adjustments for: | ||||||||
| Depreciation and amortization | 520 | **** | 497 | 2,012 | **** | 1,951 | ||
| Share-based compensation (recovery) expense | (59 | ) | 73 | 63 | **** | 198 | ||
| Impairment (reversal) of assets | - | **** | 21 | (780 | ) | 33 | ||
| Gain on disposal of investment | - | **** | - | (19 | ) | - | ||
| Loss on early extinguishment of debt | - | **** | 142 | - | **** | 142 | ||
| Cloud computing transition adjustment | - | **** | - | - | **** | 36 | ||
| Provision for (recovery of) deferred income tax | 30 | **** | 66 | 182 | **** | (31 | ) | |
| Long-term income tax receivables | 72 | **** | - | 273 | **** | - | ||
| Net undistributed earnings of equity-accounted investees | (42 | ) | (43 | ) | (181 | ) | (44 | ) |
| Other long-term assets, liabilities and miscellaneous | (29 | ) | 40 | 21 | **** | 83 | ||
| Cash from operations before working capital changes | 1,610 | **** | 2,003 | 9,258 | **** | 5,547 | ||
| Changes in non-cash operating working capital: | ||||||||
| Receivables | 2,683 | **** | 1,432 | (919 | ) | (1,669 | ) | |
| Inventories | (937 | ) | (1,652 | ) | (1,281 | ) | (1,459 | ) |
| Prepaid expenses and other current assets | (904 | ) | (1,092 | ) | 114 | **** | (227 | ) |
| Payables and accrued charges | 2,284 | **** | 2,946 | 938 | **** | 1,694 | ||
| CASH PROVIDED BY OPERATING ACTIVITIES | 4,736 | **** | 3,637 | 8,110 | **** | 3,886 | ||
| INVESTING ACTIVITIES | ||||||||
| Capital expenditures 1 | (974 | ) | (646 | ) | (2,438 | ) | (1,884 | ) |
| Business acquisitions, net of cash acquired | (329 | ) | (18 | ) | (407 | ) | (88 | ) |
| Other | 48 | **** | 121 | (12 | ) | 64 | ||
| Net changes in non-cash working capital | 33 | **** | 78 | (44 | ) | 101 | ||
| CASH USED IN INVESTING ACTIVITIES | (1,222 | ) | (465 | ) | (2,901 | ) | (1,807 | ) |
| FINANCING ACTIVITIES | ||||||||
| Transaction costs related to debt | (6 | ) | - | (9 | ) | (7 | ) | |
| (Repayment of) proceeds from short-term debt, net | (2,338 | ) | 307 | 529 | **** | 1,344 | ||
| Proceeds from long-term debt | 1,004 | **** | (3 | ) | 1,045 | **** | 86 | |
| Repayment of long-term debt | (511 | ) | (2,207 | ) | (561 | ) | (2,212 | ) |
| Repayment of principal portion of lease liabilities | (85 | ) | (78 | ) | (341 | ) | (320 | ) |
| Dividends paid to Nutrien’s shareholders | (251 | ) | (266 | ) | (1,031 | ) | (1,045 | ) |
| Repurchase of common shares | (1,214 | ) | (885 | ) | (4,520 | ) | (1,035 | ) |
| Issuance of common shares | - | **** | 12 | 168 | **** | 200 | ||
| Other | (11 | ) | - | (11 | ) | (14 | ) | |
| CASH USED IN FINANCING ACTIVITIES | (3,412 | ) | (3,120 | ) | (4,731 | ) | (3,003 | ) |
| EFFECT OF EXCHANGE RATE CHANGES ON CASH ANDCASH<br>EQUIVALENTS | (24 | ) | 4 | (76 | ) | (31 | ) | |
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | 78 | **** | 56 | 402 | **** | (955 | ) | |
| CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 823 | **** | 443 | 499 | **** | 1,454 | ||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | 901 | **** | 499 | 901 | **** | 499 | ||
| Cash and cash equivalents is composed of: | ||||||||
| Cash | 775 | **** | 428 | 775 | **** | 428 | ||
| Short-term investments | 126 | **** | 71 | 126 | **** | 71 | ||
| 901 | **** | 499 | 901 | **** | 499 | |||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||
| Interest paid | 202 | **** | 172 | 482 | **** | 491 | ||
| Income taxes paid | 379 | **** | 79 | 1,882 | **** | 435 | ||
| Total cash outflow for leases | 120 | **** | 94 | 459 | **** | 393 | ||
| 1 Includes additions to property, plant and equipment, and intangible assets for the three months ended<br>December 31, 2022 of 910 and 64 (2021 – 606 and 40), respectively, and for the twelve months ended December 31, 2022 of 2,227 and 211 (2021 – 1,777 and 107), respectively. | ||||||||
| (See Notes to the Condensed Consolidated Financial Statements) |
All values are in US Dollars.
26
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Statements of Changes in Shareholders’ Equity
| Accumulated Other Comprehensive<br>(Loss) Income (“AOCI”) | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br>Common<br>Shares | Share<br>Capital | Contributed<br>Surplus | Loss on<br>Currency<br>Translation<br>of Foreign<br>Operations | Other | Total<br>AOCI | Retained<br>Earnings | Equity<br>Holders<br>of<br>Nutrien | Non-<br>Controlling<br>Interest | Total<br>Equity | |||||||||||||||||||||
| BALANCE – DECEMBER 31, 2020 | 569,260,406 | 15,673 | 205 | (62 | ) | (57 | ) | (119 | ) | 6,606 | 22,365 | 38 | 22,403 | |||||||||||||||||
| Net earnings | - | - | - | - | - | - | 3,153 | 3,153 | 26 | 3,179 | ||||||||||||||||||||
| Other comprehensive (loss) income | - | - | - | (114 | ) | 193 | 79 | - | 79 | (1 | ) | 78 | ||||||||||||||||||
| Shares repurchased (Note 6) | (15,982,154 | ) | (442 | ) | (47 | ) | - | - | - | (616 | ) | (1,105 | ) | - | (1,105 | ) | ||||||||||||||
| Dividends declared | - | - | - | - | - | - | (1,046 | ) | (1,046 | ) | - | (1,046 | ) | |||||||||||||||||
| Non-controlling interest transactions | - | - | - | - | - | - | - | - | (16 | ) | (16 | ) | ||||||||||||||||||
| Effect of share-based compensation including issuance of common shares | 4,424,437 | 226 | (9 | ) | - | - | - | - | 217 | - | 217 | |||||||||||||||||||
| Transfer of net gain on cash flow hedges | - | - | - | - | (11 | ) | (11 | ) | - | (11 | ) | - | (11 | ) | ||||||||||||||||
| Transfer of net actuarial gain on defined benefit plans | - | - | - | - | (95 | ) | (95 | ) | 95 | - | - | - | ||||||||||||||||||
| Share cancellation | (210,173 | ) | - | - | - | - | - | - | - | - | - | |||||||||||||||||||
| BALANCE – DECEMBER 31, 2021 | **** | 557,492,516 | **** | **** | 15,457 | **** | **** | 149 | **** | **** | (176 | ) | **** | 30 | **** | **** | (146 | ) | **** | 8,192 | **** | **** | 23,652 | **** | **** | 47 | **** | **** | 23,699 | **** |
| Net earnings | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 7,660 | **** | **** | 7,660 | **** | **** | 27 | **** | **** | 7,687 | **** |
| Other comprehensive (loss) income | **** | - | **** | **** | - | **** | **** | - | **** | **** | (198 | ) | **** | 22 | **** | **** | (176 | ) | **** | - | **** | **** | (176 | ) | **** | (1 | ) | **** | (177 | ) |
| Shares repurchased (Note 6) | **** | (53,312,559 | ) | **** | (1,487 | ) | **** | (22 | ) | **** | - | **** | **** | - | **** | **** | - | **** | **** | (2,987 | ) | **** | (4,496 | ) | **** | - | **** | **** | (4,496 | ) |
| Dividends declared | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (1,019 | ) | **** | (1,019 | ) | **** | - | **** | **** | (1,019 | ) |
| Non-controlling interest transactions | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (1 | ) | **** | (1 | ) | **** | (28 | ) | **** | (29 | ) |
| Effect of share-based compensation including issuance of common shares | **** | 3,066,148 | **** | **** | 202 | **** | **** | (18 | ) | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 184 | **** | **** | - | **** | **** | 184 | **** |
| Transfer of net loss on cash flow hedges | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 14 | **** | **** | 14 | **** | **** | - | **** | **** | 14 | **** | **** | - | **** | **** | 14 | **** |
| Transfer of net actuarial gain on defined benefit<br>plans | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (83 | ) | **** | (83 | ) | **** | 83 | **** | **** | - | **** | **** | - | **** | **** | - | **** |
| BALANCE – DECEMBER 31, 2022 | **** | 507,246,105 | **** | **** | 14,172 | **** | **** | 109 | **** | **** | (374 | ) | **** | (17 | ) | **** | (391 | ) | **** | 11,928 | **** | **** | 25,818 | **** | **** | 45 | **** | **** | 25,863 | **** |
(See Notes to the Condensed Consolidated Financial Statements)
27
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Balance Sheets
| December 31 | December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| As at | Note | 2022 | 2021 | |||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | **** | 901 | **** | 499 | ||||
| Receivables | **** | 6,194 | **** | 5,366 | ||||
| Inventories | **** | 7,632 | **** | 6,328 | ||||
| Prepaid expenses and other current assets | **** | 1,615 | **** | 1,653 | ||||
| **** | 16,342 | **** | 13,846 | |||||
| Non-current assets | ||||||||
| Property, plant and equipment | **** | 21,767 | **** | 20,016 | ||||
| Goodwill | **** | 12,368 | **** | 12,220 | ||||
| Intangible assets | **** | 2,297 | **** | 2,340 | ||||
| Investments | **** | 843 | **** | 703 | ||||
| Other assets | **** | 969 | **** | 829 | ||||
| TOTAL ASSETS | **** | 54,586 | **** | 49,954 | ||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Short-term debt | **** | 2,142 | **** | 1,560 | ||||
| Current portion of long-term debt | **** | 542 | **** | 545 | ||||
| Current portion of lease liabilities | **** | 305 | **** | 286 | ||||
| Payables and accrued charges | **** | 11,291 | **** | 10,052 | ||||
| **** | 14,280 | **** | 12,443 | |||||
| Non-current liabilities | ||||||||
| Long-term debt | 5 | **** | 8,040 | **** | 7,521 | |||
| Lease liabilities | **** | 899 | **** | 934 | ||||
| Deferred income tax liabilities | **** | 3,547 | **** | 3,165 | ||||
| Pension and other post-retirement benefit liabilities | **** | 319 | **** | 419 | ||||
| Asset retirement obligations and accrued environmental costs | **** | 1,403 | **** | 1,566 | ||||
| Other non-current<br>liabilities | **** | 235 | **** | 207 | ||||
| TOTAL LIABILITIES | **** | 28,723 | **** | 26,255 | ||||
| SHAREHOLDERS’ EQUITY | ||||||||
| Share capital | 6 | **** | 14,172 | **** | 15,457 | |||
| Contributed surplus | **** | 109 | **** | 149 | ||||
| Accumulated other comprehensive loss | **** | (391 | ) | (146 | ) | |||
| Retained earnings | **** | 11,928 | **** | 8,192 | ||||
| Equity holders of Nutrien | **** | 25,818 | **** | 23,652 | ||||
| Non-controlling<br>interest | **** | 45 | **** | 47 | ||||
| TOTAL SHAREHOLDERS’ EQUITY | **** | 25,863 | **** | 23,699 | ||||
| TOTAL LIABILITIES AND SHAREHOLDERS’EQUITY | **** | 54,586 | **** | 49,954 | ||||
| (See | Notes to the Condensed Consolidated Financial Statements) | |||||||
| --- | --- |
28
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Notes to the Condensed Consolidated Financial Statements
As at and for theThree and Twelve Months Ended December 31, 2022
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.
Our accounting policies are in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. The accounting policies and methods of computation used in preparing these unaudited condensed consolidated financial statements are materially consistent with those used in the preparation of our 2021 annual consolidated financial statements. These unaudited condensed consolidated financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2021 annual consolidated financial statements. Our 2022 annual consolidated financial statements, which are expected to be issued in February 2023, will include additional information under IFRS.
Certain immaterial 2021 figures have been reclassified in the condensed consolidated statements of cash flows.
In management’s opinion, the unaudited condensed consolidated financial statements include all adjustments necessary to fairly present such information in all material respects.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces.
29
| Unaudited | In millions of US dollars except as otherwise noted | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, 2022 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Retail | Potash | Nitrogen | Phosphate | Corporateand Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | **** | 4,089 | **** | **** | 1,255 | **** | 1,677 | **** | **** | 512 | **** | **** | - | **** | **** | - | **** | **** | 7,533 | **** |
| – intersegment | **** | (2 | ) | **** | 203 | **** | 272 | **** | **** | 54 | **** | **** | - | **** | **** | (527) | **** | **** | - | **** |
| Sales – total | **** | 4,087 | **** | **** | 1,458 | **** | 1,949 | **** | **** | 566 | **** | **** | - | **** | **** | (527 | ) | **** | 7,533 | **** |
| Freight, transportation and distribution | **** | - | **** | **** | 81 | **** | 157 | **** | **** | 65 | **** | **** | - | **** | **** | (59 | ) | **** | 244 | **** |
| Net sales | **** | 4,087 | **** | **** | 1,377 | **** | 1,792 | **** | **** | 501 | **** | **** | - | **** | **** | (468 | ) | **** | 7,289 | **** |
| Cost of goods sold | **** | 3,010 | **** | **** | 310 | **** | 1,093 | **** | **** | 485 | **** | **** | - | **** | **** | (515 | ) | **** | 4,383 | **** |
| Gross margin | **** | 1,077 | **** | **** | 1,067 | **** | 699 | **** | **** | 16 | **** | **** | - | **** | **** | 47 | **** | **** | 2,906 | **** |
| Selling expenses | **** | 836 | **** | **** | 1 | **** | 6 | **** | **** | 2 | **** | **** | 5 | **** | **** | (6 | ) | **** | 844 | **** |
| General and administrative expenses | **** | 51 | **** | **** | 3 | **** | 5 | **** | **** | 4 | **** | **** | 99 | **** | **** | - | **** | **** | 162 | **** |
| Provincial mining taxes | **** | - | **** | **** | 190 | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 190 | **** |
| Share-based compensation recovery | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | (59 | ) | **** | - | **** | **** | (59 | ) |
| Other expenses (income) | **** | 1 | **** | **** | 4 | **** | 2 | **** | **** | 40 | **** | **** | 67 | **** | **** | (4 | ) | **** | 110 | **** |
| Earnings (loss) before finance costs and<br> income taxes | **** | 189 | **** | **** | 869 | **** | 686 | **** | **** | (30 | ) | **** | (112 | ) | **** | 57 | **** | **** | 1,659 | **** |
| Depreciation and amortization | **** | 202 | **** | **** | 89 | **** | 155 | **** | **** | 58 | **** | **** | 16 | **** | **** | - | **** | **** | 520 | **** |
| EBITDA ^1^ | **** | 391 | **** | **** | 958 | **** | 841 | **** | **** | 28 | **** | **** | (96 | ) | **** | 57 | **** | **** | 2,179 | **** |
| Integration and restructuring related costs | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | 11 | **** | **** | - | **** | **** | 11 | **** |
| Share-based compensation recovery | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | (59 | ) | **** | - | **** | **** | (59 | ) |
| Foreign exchange gain, net of<br>related<br> derivatives | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | (36 | ) | **** | - | **** | **** | (36 | ) |
| Adjusted EBITDA | **** | 391 | **** | **** | 958 | **** | 841 | **** | **** | 28 | **** | **** | (180 | ) | **** | 57 | **** | **** | 2,095 | **** |
| Assets – at December 31, 2022 | **** | 24,451 | **** | **** | 13,921 | **** | 11,807 | **** | **** | 2,661 | **** | **** | 2,622 | **** | **** | (876 | ) | **** | 54,586 | **** |
| 1 EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and<br>amortization. | ||||||||||||||||||||
| Three Months Ended December 31, 2021 | ||||||||||||||||||||
| Retail | Potash | Nitrogen | Phosphate | Corporate<br>and Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | 3,847 | 1,358 | 1,476 | 586 | - | - | 7,267 | |||||||||||||
| – intersegment | 31 | 128 | 292 | 65 | - | (516 | ) | - | ||||||||||||
| Sales – total | 3,878 | 1,486 | 1,768 | 651 | - | (516 | ) | 7,267 | ||||||||||||
| Freight, transportation and distribution | - | 66 | 119 | 58 | - | (45 | ) | 198 | ||||||||||||
| Net sales | 3,878 | 1,420 | 1,649 | 593 | - | (471 | ) | 7,069 | ||||||||||||
| Cost of goods sold | 2,705 | 305 | 895 | 430 | - | (472 | ) | 3,863 | ||||||||||||
| Gross margin | 1,173 | 1,115 | 754 | 163 | - | 1 | 3,206 | |||||||||||||
| Selling expenses | 848 | 1 | 2 | 1 | 3 | - | 855 | |||||||||||||
| General and administrative expenses | 43 | 2 | 7 | 3 | 93 | - | 148 | |||||||||||||
| Provincial mining taxes | - | 173 | - | - | - | - | 173 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 73 | - | 73 | |||||||||||||
| Impairment of assets | - | - | 17 | 4 | - | - | 21 | |||||||||||||
| Other expenses (income) | 20 | 3 | (28 | ) | 2 | 112 | - | 109 | ||||||||||||
| Earnings (loss) before finance costs and<br> income taxes | 262 | 936 | 756 | 153 | (281 | ) | 1 | 1,827 | ||||||||||||
| Depreciation and amortization | 178 | 117 | 148 | 39 | 15 | - | 497 | |||||||||||||
| EBITDA | 440 | 1,053 | 904 | 192 | (266 | ) | 1 | 2,324 | ||||||||||||
| Integration and restructuring related costs<br> (recovery) | 2 | - | - | - | (6 | ) | - | (4 | ) | |||||||||||
| Share-based compensation expense | - | - | - | - | 73 | - | 73 | |||||||||||||
| Impairment of assets | - | - | 17 | 4 | - | - | 21 | |||||||||||||
| COVID-19 coronavirus pandemic<br> (“COVID-19”) related expenses | - | - | - | - | 11 | - | 11 | |||||||||||||
| Foreign exchange loss, net of<br>related<br> derivatives | - | - | - | - | 38 | - | 38 | |||||||||||||
| Adjusted EBITDA | 442 | 1,053 | 921 | 196 | (150 | ) | 1 | 2,463 | ||||||||||||
| Assets – at December 31, 2021 | 22,387 | 13,148 | 11,093 | 1,699 | 2,266 | (639 | ) | 49,954 |
30
| Unaudited | In millions of US dollars except as otherwise noted | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Twelve Months Ended December 31, 2022 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Retail | Potash | Nitrogen | Phosphate | Corporateand Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | **** | 21,266 | **** | **** | 7,600 | **** | 6,755 | **** | **** | 2,263 | **** | **** | - | **** | **** | - | **** | **** | 37,884 | **** |
| – intersegment | **** | 84 | **** | **** | 599 | **** | 1,293 | **** | **** | 357 | **** | **** | - | **** | **** | (2,333 | ) | **** | - | **** |
| Sales – total | **** | 21,350 | **** | **** | 8,199 | **** | 8,048 | **** | **** | 2,620 | **** | **** | - | **** | **** | (2,333 | ) | **** | 37,884 | **** |
| Freight, transportation and distribution | **** | - | **** | **** | 300 | **** | 515 | **** | **** | 243 | **** | **** | - | **** | **** | (186 | ) | **** | 872 | **** |
| Net sales | **** | 21,350 | **** | **** | 7,899 | **** | 7,533 | **** | **** | 2,377 | **** | **** | - | **** | **** | (2,147 | ) | **** | 37,012 | **** |
| Cost of goods sold | **** | 16,171 | **** | **** | 1,400 | **** | 4,252 | **** | **** | 1,884 | **** | **** | - | **** | **** | (2,119 | ) | **** | 21,588 | **** |
| Gross margin | **** | 5,179 | **** | **** | 6,499 | **** | 3,281 | **** | **** | 493 | **** | **** | - | **** | **** | (28 | ) | **** | 15,424 | **** |
| Selling expenses | **** | 3,392 | **** | **** | 10 | **** | 28 | **** | **** | 7 | **** | **** | (1 | ) | **** | (22 | ) | **** | 3,414 | **** |
| General and administrative expenses | **** | 200 | **** | **** | 9 | **** | 17 | **** | **** | 13 | **** | **** | 326 | **** | **** | - | **** | **** | 565 | **** |
| Provincial mining taxes | **** | - | **** | **** | 1,149 | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 1,149 | **** |
| Share-based compensation expense | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | 63 | **** | **** | - | **** | **** | 63 | **** |
| Reversal of impairment of assets | **** | - | **** | **** | - | **** | - | **** | **** | (780 | ) | **** | - | **** | **** | - | **** | **** | (780 | ) |
| Other expenses (income) | **** | 29 | **** | **** | 5 | **** | (137 | ) | **** | 67 | **** | **** | 227 | **** | **** | 13 | **** | **** | 204 | **** |
| Earnings (loss) before finance costs and income taxes | **** | 1,558 | **** | **** | 5,326 | **** | 3,373 | **** | **** | 1,186 | **** | **** | (615 | ) | **** | (19 | ) | **** | 10,809 | **** |
| Depreciation and amortization | **** | 752 | **** | **** | 443 | **** | 558 | **** | **** | 188 | **** | **** | 71 | **** | **** | - | **** | **** | 2,012 | **** |
| EBITDA | **** | 2,310 | **** | **** | 5,769 | **** | 3,931 | **** | **** | 1,374 | **** | **** | (544 | ) | **** | (19 | ) | **** | 12,821 | **** |
| Integration and restructuring related costs | **** | 2 | **** | **** | - | **** | - | **** | **** | - | **** | **** | 44 | **** | **** | - | **** | **** | 46 | **** |
| Share-based compensation expense | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | 63 | **** | **** | - | **** | **** | 63 | **** |
| Reversal of impairment of assets | **** | - | **** | **** | - | **** | - | **** | **** | (780 | ) | **** | - | **** | **** | - | **** | **** | (780 | ) |
| COVID-19 related expenses | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | 8 | **** | **** | - | **** | **** | 8 | **** |
| Foreign exchange loss, net of related derivatives | **** | - | **** | **** | - | **** | - | **** | **** | - | **** | **** | 31 | **** | **** | - | **** | **** | 31 | **** |
| Gain on disposal of investment | **** | (19 | ) | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (19 | ) |
| Adjusted EBITDA | **** | 2,293 | **** | **** | 5,769 | **** | 3,931 | **** | **** | 594 | **** | **** | (398 | ) | **** | (19 | ) | **** | 12,170 | **** |
| Assets – at December 31, 2022 | **** | 24,451 | **** | **** | 13,921 | **** | 11,807 | **** | **** | 2,661 | **** | **** | 2,622 | **** | **** | (876 | ) | **** | 54,586 | **** |
| Twelve Months Ended December 31, 2021 | ||||||||||||||||||||
| Retail | Potash | Nitrogen | Phosphate | Corporate<br>and Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | 17,665 | 4,021 | 4,216 | 1,810 | - | - | 27,712 | |||||||||||||
| – intersegment | 69 | 386 | 921 | 236 | - | (1,612 | ) | - | ||||||||||||
| Sales – total | 17,734 | 4,407 | 5,137 | 2,046 | - | (1,612 | ) | 27,712 | ||||||||||||
| Freight, transportation and distribution | - | 371 | 448 | 217 | - | (185 | ) | 851 | ||||||||||||
| Net sales | 17,734 | 4,036 | 4,689 | 1,829 | - | (1,427 | ) | 26,861 | ||||||||||||
| Cost of goods sold | 13,134 | 1,285 | 2,963 | 1,408 | - | (1,338 | ) | 17,452 | ||||||||||||
| Gross margin | 4,600 | 2,751 | 1,726 | 421 | - | (89 | ) | 9,409 | ||||||||||||
| Selling expenses | 3,124 | 9 | 24 | 6 | (21 | ) | - | 3,142 | ||||||||||||
| General and administrative expenses | 168 | 8 | 15 | 11 | 275 | - | 477 | |||||||||||||
| Provincial mining taxes | - | 466 | - | - | - | - | 466 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 198 | - | 198 | |||||||||||||
| Impairment of assets | - | 7 | 22 | 4 | - | - | 33 | |||||||||||||
| Other expenses (income) | 86 | 22 | (64 | ) | 15 | 253 | - | 312 | ||||||||||||
| Earnings (loss) before finance costs and income taxes | 1,222 | 2,239 | 1,729 | 385 | (705 | ) | (89 | ) | 4,781 | |||||||||||
| Depreciation and amortization | 706 | 488 | 557 | 151 | 49 | - | 1,951 | |||||||||||||
| EBITDA | 1,928 | 2,727 | 2,286 | 536 | (656 | ) | (89 | ) | 6,732 | |||||||||||
| Integration and restructuring related costs | 10 | - | - | - | 33 | - | 43 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 198 | - | 198 | |||||||||||||
| Impairment of assets | - | 7 | 22 | 4 | - | - | 33 | |||||||||||||
| COVID-19 related expenses | - | - | - | - | 45 | - | 45 | |||||||||||||
| Foreign exchange loss, net of related derivatives | - | - | - | - | 39 | - | 39 | |||||||||||||
| Cloud computing transition adjustment | 1 | 2 | - | - | 33 | - | 36 | |||||||||||||
| Adjusted EBITDA | 1,939 | 2,736 | 2,308 | 540 | (308 | ) | (89 | ) | 7,126 | |||||||||||
| Assets – at December 31, 2021 | 22,387 | 13,148 | 11,093 | 1,699 | 2,266 | (639 | ) | 49,954 |
31
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
NOTE 3 GOODWILL
Goodwill Impairment Testing
| Goodwill by cash-generating unit or group of cash-generating units | 2022 | 2021 | ||
|---|---|---|---|---|
| Retail – North America | **** | 6,898 | 6,898 | |
| Retail – International | **** | 927 | 779 | |
| Potash | **** | 154 | 154 | |
| Nitrogen | **** | 4,389 | 4,389 | |
| **** | 12,368 | 12,220 |
We performed our annual impairment test on goodwill and did not identify any impairment.
In 2022, North American central banks increased their benchmark borrowing rates, which are a component of our discount rate for impairment testing. As a result of these increases, we revised our discount rates throughout 2022, which triggered impairment testing for our Retail – North America group of Cash Generating Units (“CGUs”) as at June 30, 2022 and September 30, 2022. No impairment was recognized during these interim testing periods. There was no trigger for an impairment test to be performed in the three months ended December 31, 2022.
Goodwill is more susceptible to impairment risk if there is an increase in the discount rate, or a deterioration in business operating results or economic conditions and actual results do not meet our forecasts. As at September 30, 2022, the Retail – North America group of CGUs carrying amount approximated its recoverable amount. A 25 basis point increase in the discount rate would have resulted in an impairment of the carrying amount of goodwill of approximately $500. A decrease in forecasted EBITDA and cash flows or a reduction in the terminal growth rate could result in impairment in the future.
| Retail – North America – Key Assumptions | As atSeptember 30, 2022 | As at<br>June 30, 2022 | ||
|---|---|---|---|---|
| Terminal growth rate (%) | **** | 2.5 | 2.5 | |
| Forecasted EBITDA over forecast period (billions) | **** | 7.6 | 7.5 | |
| Discount rate (%) | **** | 8.5 | 8.0 |
In testing for impairment of goodwill, we calculate the recoverable amount for a CGU or groups of CGUs containing goodwill. We used the fair value less cost of disposal (“FVLCD”) methodology based on after-tax discounted cash flows (five-year projections plus a terminal value) and incorporated assumptions an independent market participant would apply, including considerations related to climate-change initiatives. We adjusted discount rates for each CGU or group of CGUs for the risk associated with achieving our forecasts and for the country risk premium in which we expect to generate cash flows. FVLCD is a Level 3 measurement. We use our market capitalization and comparative market multiples to ensure discounted cash flow results are reasonable.
The key assumptions with the greatest influence on the calculation of the recoverable amounts are the discount rates, terminal growth rates and cash flow forecasts. The key forecast assumptions were based on historical data and our estimates of future results from internal sources considering industry and market trends.
The remaining CGUs were tested as part of our annual impairment test and the following table indicates the key assumptions used:
| Terminal Growth Rate (%) | Discount Rate (%) | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| **** | 2022 | 2021 | **** | 2022 | 2021 | |||||||||
| Retail – International ^1^ | **** | 2.0 | – | 6.0 | 2.0 | – | 6.2 | **** | 8.9 | – | 16.0 | 8.0 | – | 15.5 |
| Potash | 2.5 | 2.5 | 8.3 | 7.7 | ||||||||||
| Nitrogen | 2.0 | 2.0 | 9.3 | 7.8 |
1 The discount rates reflect the country risk premium and size for our international groups of CGUs.
32
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
NOTE 4 OTHER EXPENSES (INCOME)
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||||||
| Integration and restructuring related costs (recovery) | **** | 11 | **** | (4 | ) | **** | 46 | **** | 43 | |||
| Foreign exchange (gain) loss, net of related derivatives | **** | (36 | ) | 38 | **** | 31 | **** | 42 | ||||
| Earnings of equity-accounted investees | **** | (47 | ) | (46 | ) | **** | (247 | ) | (89 | ) | ||
| Bad debt (recovery) expense | **** | (6 | ) | 4 | **** | 12 | **** | 26 | ||||
| COVID-19 related expenses | **** | - | **** | 11 | **** | 8 | **** | 45 | ||||
| Gain on disposal of investment | **** | - | **** | - | **** | (19 | ) | - | ||||
| Project feasibility costs | **** | 22 | **** | 20 | **** | 79 | **** | 50 | ||||
| Customer prepayment costs | **** | 7 | **** | 8 | **** | 42 | **** | 45 | ||||
| Legal expenses | **** | 8 | **** | 4 | **** | 21 | **** | 6 | ||||
| Consulting expenses | **** | 15 | **** | 2 | **** | 29 | **** | 4 | ||||
| Employee special recognition award | **** | 61 | **** | - | **** | 61 | **** | - | ||||
| Cloud computing transition adjustment | **** | - | **** | - | **** | - | **** | 36 | ||||
| Other expenses | **** | 75 | **** | 72 | **** | 141 | **** | 104 | ||||
| **** | 110 | **** | 109 | **** | 204 | **** | 312 |
NOTE 5 LONG-TERM DEBT
In March 2022, we filed a base shelf prospectus in Canada and the US qualifying the issuance of up to $5,000 of common shares, debt and other securities during a period of 25 months from March 11, 2022. Issuance of securities requires us to file a prospectus supplement and is subject to availability of funding in capital markets. On November 7, 2022, we issued $1,000 of notes, as described below, pursuant to the base shelf prospectus and a prospectus supplement.
| Repayments and issuances in the fourth quarter | Rate of interest (%) | Maturity | Amount | |||
|---|---|---|---|---|---|---|
| Notes repaid 2022 | 3.150 | October 1, 2022 | 500 | |||
| Notes issued | ||||||
| Notes issued 2022 | 5.900 | November 7, 2024 | **** | 500 | ||
| Notes issued 2022 | 5.950 | November 7, 2025 | **** | 500 | ||
| **** | 1,000 |
The notes issued in the fourth quarter of 2022 are unsecured, rank equally with our existing unsecured notes and debentures, and have no sinking fund requirements prior to maturity. Each series of notes is redeemable and provides for redemption prior to maturity, at our option, at specified prices.
33
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
NOTE 6 SHARE CAPITAL
Share Repurchase Programs
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||
|---|---|---|---|---|---|---|---|---|
| 2022 | 2021 | 2022 | 2021 | |||||
| Number of common shares repurchased for cancellation | **** | 14,924,590 | 13,522,057 | **** | 53,312,559 | 15,982,154 | ||
| Average price per share (US dollars) | **** | 77.91 | 70.64 | **** | 84.34 | 69.17 | ||
| Total cost | **** | 1,162 | 955 | **** | 4,496 | 1,105 |
The original expiry date for the 2022 normal course issuer bid was February 28, 2023, but we acquired the maximum number of common shares allowable on February 7, 2023. As of February 7, 2023, an additional 8,002,792 common shares were repurchased for cancellation at a cost of $625 and an average price per share of $78.07.
On February 15, 2023, our Board of Directors approved a share repurchase program for up to five percent of our outstanding common shares. The 2023 normal course issuer bid, which is subject to the acceptance by the Toronto Stock Exchange, will expire after a one-year period, if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.
Dividends Declared
On February 15, 2023, our Board of Directors declared a quarterly dividend of $0.53 per share payable on April 13, 2023, to shareholders of record on March 31, 2023. The total estimated dividend to be paid is $265.
NOTE 7 BUSINESS COMBINATIONS
| Casa do Adubo S.A. (“Casa do Adubo”) | Other Acquisitions | |
|---|---|---|
| Acquisition date | October 1, 2022 | Various |
| Purchase price, net of cash and cash equivalents acquired, and amounts held in escrow | $231 (preliminary) | $176 (preliminary) (2021 – $88) |
| On the acquisition date, we acquired 100% of the issued and outstanding Casa do Adubo stock. | ||
| Goodwill and expected benefits of acquisitions | $145 (preliminary) | $55 (preliminary) (2021 – $77) |
| The expected benefits of the acquisitions resulting in goodwill include:<br><br><br>• synergies from expected reduction in operating costs<br><br><br>• wider distribution channel for selling products of<br>acquired businesses<br> <br>• a larger assembled workforce<br><br><br>• potential increase in customer base<br><br><br>• enhanced ability to innovate | ||
| Description | An agriculture retailer in Brazil with 39 retail locations and 10 distribution centers. This acquisition is aligned with our disciplined approach to capital allocation and sustainability<br>commitments, as we continue to expand our presence in Brazil. | 2022 – 43 Retail locations related to various agricultural services and 1 wholesale warehouse location (2021 – 36 Retail locations) |
We have engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed and related deferred income tax impacts. As at December 31, 2022, the total consideration and purchase price allocation for Casa do Adubo and certain other acquisitions are not final as we are continuing to obtain and verify information required to determine the fair value of certain assets acquired and liabilities assumed and the amount of deferred income taxes arising on their recognition, as part of the due diligence process. We expect to finalize the amounts recognized as we obtain the information necessary to complete the analysis within one year from the date of acquisition.
34
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective acquisition date. The information below represents preliminary fair values.
For certain other acquisitions, we finalized the purchase price with no material change to the fair values disclosed in prior periods. The valuation technique and judgments applied are consistent with those methods presented in Note 30 of the 2021 annual consolidated financial statements.
| December 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|
| Other<br><br><br>Acquisitions(Preliminary) | Other<br><br><br>Acquisitions | ||||||
| Receivables | 174 | ^1^ | **** | 11 | **** | 43 | |
| Inventories | 107 | **** | **** | 92 | **** | 24 | |
| Prepaid expenses and other current assets | 3 | **** | **** | 13 | **** | - | |
| Property, plant and equipment | 24 | **** | **** | 116 | **** | 10 | |
| Goodwill | 145 | ^2^ | **** | 55 | **** | 77 | |
| Intangible assets | 95 | **** | **** | 9 | **** | 16 | |
| Investments | - | **** | **** | 2 | **** | - | |
| Other non-current<br>assets | 6 | **** | **** | 4 | **** | 4 | |
| Total assets | 554 | **** | **** | 302 | **** | 174 | |
| Short-term debt | 14 | ^3^ | **** | 11 | **** | 11 | |
| Payables and accrued charges | 159 | **** | **** | 74 | **** | 50 | |
| Long-term debt, including current portion | 91 | **** | **** | 14 | **** | 7 | |
| Lease liabilities, including current portion | 10 | **** | **** | 3 | **** | 1 | |
| Other non-current<br>liabilities | 1 | **** | **** | 14 | **** | 17 | |
| Total liabilities | 275 | **** | **** | 116 | **** | 86 | |
| Total consideration | 279 | **** | **** | 186 | **** | 88 | |
| Amounts held in escrow | (48 | ) | **** | (10 | ) | - | |
| Total consideration, net of cash and cash equivalents acquired,<br>andamounts held in escrow | 231 | **** | **** | 176 | **** | 88 | |
| 1 Includes receivables from customers with gross contractual amounts of 169, of which 3 is considered to be<br>uncollectible. | |||||||
| 2 Goodwill was calculated as the excess of the fair value of consideration transferred over the recognized amount of<br>net identifiable assets acquired. The portion of goodwill deductible for income tax purposes will be determined when the purchase allocation is finalized. | |||||||
| 3 Outstanding amount on the Casa do Adubo credit facilities assumed as part of the acquisition. |
All values are in US Dollars.
Financial information related to the Casa do Adubo acquisition is as follows:
| 2022 Proforma (estimated as if acquisitions occurred at the beginning of the year) | ||
|---|---|---|
| Sales | **** | 440 |
| Earnings before finance costs and income taxes^1^ | **** | 42 |
| 1 Net earnings is not available. | ||
| From date of acquisition | Three and Twelve Months EndedDecember 31, 2022 | |
| Sales | **** | 130 |
| Earnings before finance costs and income taxes | **** | 7 |
35