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, 2021
Commission File Number: 001-38336
NUTRIEN LTD.
(Name ofregistrant)
Suite 500, 122 – 1st Avenue South
Saskatoon, Saskatchewan
S7K 7G3 Canada
(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 17, 2021 | 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 17, 2021 |
EX-99.1
Exhibit 99.1
 |
News Release |
|---|---|
| NYSE, TSX: NTR |
February 17, 2021 – all amounts are in US dollars except as otherwise noted
Strong Execution and Improved Market Conditions
Set up 2021 and Beyond
Nutrien Ltd. (TSX and NYSE: NTR) announced today its fourth quarter and full year 2020 results, with fourth-quarter net earnings of $316 million^^($0.55 diluted earnings per share). Fourth-quarter adjusted net earnings^1^ were $0.24 per share and adjusted EBITDA^1^ was $768 million.
“Nutrien reported excellent results across our entire business. Our Retail Ag Solutions business delivered a record fourth quarter and we also reported higher potash and nitrogen sales volumes and lower production costs. Agriculture fundamentals began to improve in late 2020 and we are starting to see the benefit to our business from this cyclical recovery,” commented Chuck Magro, Nutrien’s President and CEO.
“We are committed to shareholder returns and again raised our dividend and announced another share buyback program, which emphasizes the strength of Nutrien, notwithstanding a global pandemic. We continually look for ways to improve our business portfolio, including the MOPCO divestment for over half-a-billion dollars, with the intention to reallocate the capital to higher return opportunities to drive shareholder value,” added Mr. Magro.
Highlights:
| • | Nutrien announced a dividend increase and new share buyback program. The Board of Directors approved an increase in the<br>quarterly dividend to $0.46 per share, our third dividend increase in three years with an annualized payout at $1.84 per share. Nutrien’s Board of Directors also approved the purchase of up to five percent of Nutrien’s outstanding common<br>shares over a one-year period through a normal course issuer bid (NCIB). The NCIB is subject to acceptance by the Toronto Stock Exchange. |
|---|---|
| • | Nutrien generated $1.8 billion in free cash flow^1^ in 2020, and<br>$2.4 billion including the improvement to our non-cash operating working capital^1^. |
| --- | --- |
| • | Retail Ag Solutions delivered a 29 percent increase in adjusted EBITDA in the fourth quarter of 2020 compared to the<br>same period in 2019, due to exceptional organic growth and strong fall fertilizer applications in North America. Retail generated 16 percent higher adjusted EBITDA in 2020 compared to 2019 due to double digit organic growth and contributions<br>from acquisitions. 2020 Retail adjusted EBITDA to sales was 9.7 percent on a consolidated basis and 10.6 percent in the US, higher by 0.4 and 0.9 percentage points, respectively, compared to 2019. |
| --- | --- |
Retail Ag Solutions further improved results through supply chain and efficiency efforts including improving the cash operating coverage ratio and lowering Retail adjusted average working capital^1^ by nearly $900 million compared to 2019. Adjusted EBITDA per US selling location^1^ reached $1.08 million and digital platform sales exceeded $1.2 billion in 2020, more than double our goal of $500 million and over four times 2019 levels.
| • | Potash adjusted EBITDA in the fourth quarter increased 48 percent compared to the same period in 2019, due to much<br>stronger domestic and offshore sales volumes. 2020 Potash adjusted EBITDA was 25 percent lower than in 2019 due to lower net realized selling prices. Potash sales volumes in 2020 were the second highest on record and Nutrien is fully committed<br>on domestic and offshore sales volumes into April of 2021, despite not shipping volumes to China and India until new sales contracts are negotiated. Potash cash cost of product manufactured^1^ was<br>$59 per tonne in 2020, down $4 per tonne from 2019. |
|---|---|
| • | Nitrogen adjusted EBITDA increased 3 percent in the fourth quarter of 2020 compared to the fourth quarter of 2019<br>primarily due to higher sales volumes. Nitrogen adjusted EBITDA decreased 13 percent in 2020 as higher sales volumes and lower cost of goods sold per tonne were more than offset by lower net realized selling prices. Sales volumes increased by<br>nearly 700,000 tonnes in 2020 driven by higher production resulting from debottlenecking projects and strong operating rates. |
| --- | --- |
1 This financial measure including related guidance, if applicable, is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section for further information.
1
| • | Nutrien closed the sale of its stake in Misr Fertilizers Production Company S.A.E. (“MOPCO”) which includes<br>settlement of related arbitration claims. Total net proceeds received from the transaction in 2020 were $540 million. The investment had contributed approximately $15 million to $20 million to Nutrien’s adjusted EBITDA annually,<br>and carried a book value of approximately $300 million. The cash received is expected to be redeployed to generate higher returns for shareholders. |
|---|---|
| • | Nutrien announced the launch of the agricultural industry’s most comprehensive carbon program, providing end-to-end support for growers to drive improved sustainability, boost yields and provide the opportunity to monetize improved carbon performance at the farm level through<br>carbon credits. |
| --- | --- |
| • | Nutrien’s 2021 adjusted net earnings per share^1^ and adjusted<br>EBITDA^1^ guidance is $2.05 to $2.75 per share and $4.0 billion to $4.5 billion, respectively. |
| --- | --- |
Market Outlook
Agriculture and Retail
| • | Key crop prices continue to be supported by very tight global supply and demand fundamentals, which have increased farm<br>level profitability and boosted grower sentiment. Global crop demand is strong and is aided by record Chinese grain and oilseed imports. |
|---|---|
| • | US major crop planted acreage is expected to increase by approximately 10 million acres in 2021. This increase is<br>expected to lead to much higher crop input demand, particularly for crop nutrients, as prospective fertilizer costs as a proportion of crop revenue are at decade-low levels. |
| --- | --- |
| • | Record Brazilian crop margins led to higher soybean planting in 2020 and is expected to result in higher year-over-year<br>planted area for Safrinha corn in 2021. We expect this will support strong Brazilian crop input demand in 2021. |
| --- | --- |
Crop Nutrient Markets
| • | Global potash demand surpassed expectations in late 2020 and we now estimate world potash shipments reached record levels<br>at approximately 68 million tonnes. Potash prices also improved considerably in late 2020, with US Midwest prices up nearly $100 per tonne at the end of 2020 compared to mid-year levels. This demand<br>momentum continues in 2021 supported by favorable crop economics, high potash affordability and limited inventory build in major markets. As a result, we forecast 2021 global potash shipments will be 68 to 70 million tonnes.<br> |
|---|---|
| • | India and China settled a 2021 potash agreement with one supplier, the only major potash supply agreements to date.<br>Canpotex and other major suppliers individually commented that the agreement did not reflect strengthening market conditions. |
| --- | --- |
| • | North American fall potash applications were very strong in 2020 and channel inventories are low. Spring potash demand<br>continues to be strong and Nutrien has been fully committed on domestic sales into the second quarter of 2021 since early December 2020. Globally, potash inventory levels continue to decrease while crop prices and grower profitability have<br>increased. As a result, Canpotex is fully committed into the second quarter of 2021 and has not placed or allocated any volumes to China nor India since the previous supply contracts expired. |
| --- | --- |
| • | A rally in global energy prices in early 2021 steepened the nitrogen cost curve, which in addition to strong agricultural<br>and recovering industrial demand, led to higher nitrogen prices. Global ammonia prices are further supported by tightening supply, while urea prices are higher due to solid demand in nearly all key markets. We expect that Chinese urea exports in<br>2021 will decline to 3 to 5 million tonnes from 5.5 million tonnes in 2020 due to strong domestic demand and higher coal feedstock prices. |
| --- | --- |
| • | Global phosphate prices have continued to trend higher in early 2021, driven by tight supply and higher input costs.<br> |
| --- | --- |
1 This financial measure including related guidance, if applicable, is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section for further information.
2
Financial Outlook and Guidance
Based on market factors detailed above, we are issuing 2021 adjusted net earnings guidance of $2.05 to $2.75 per share and 2021 adjusted EBITDA guidance of $4.0 to $4.5 billion.
All guidance numbers, including those noted above and related sensitivities are outlined in the tables below.
| 2021 Guidance Ranges ^1^ | Low | High | ||||
|---|---|---|---|---|---|---|
| Adjusted net earnings per share ^2^ | $ | 2.05 | $ | 2.75 | ||
| Adjusted EBITDA (billions) ^2^ | $ | 4.0 | $ | 4.5 | ||
| Retail Adjusted EBITDA (billions) | $ | 1.5 | $ | 1.6 | ||
| Potash Adjusted EBITDA (billions) | $ | 1.4 | $ | 1.6 | ||
| Nitrogen Adjusted EBITDA (billions) | $ | 1.1 | $ | 1.3 | ||
| Phosphate Adjusted EBITDA (millions) | $ | 250 | $ | 350 | ||
| Potash sales tonnes (millions)^3^ | 12.5 | 13.0 | ||||
| Nitrogen sales tonnes (millions) ^3^ | 10.9 | 11.4 | ||||
| Depreciation and amortization (billions) | $ | 1.9 | $ | 2.0 | ||
| Effective tax rate on adjusted earnings | 22 | % | 24 | % | ||
| Sustaining capital expenditures (billions) ^2^ | $ | 1.1 | $ | 1.2 | ||
| --- | --- | --- | ||||
| 2021 Annual Assumptions & Sensitivities 1 | ||||||
| 1/MMBtu change in NYMEX 5 | 155 | 0.21 | ||||
| 25/tonne change in realized potash selling prices | 260 | 0.35 | ||||
| 25/tonne change in realized ammonia selling prices | 47 | 0.06 | ||||
| 25/tonne change in realized urea selling prices | 82 | 0.11 | ||||
| 2021 FX Rate CAD to | 1.29 | |||||
| 2021 NYMEX natural gas (US/MMBtu) | 2.80 |
All values are in US Dollars.
1 See the “Forward-Looking Statements” section.
2 See the “Non-IFRS Financial Measures” section.
3 Manufactured products only. Nitrogen excludes ESN® and Rainbow products.
4 Assumes 570 million shares outstanding.
5 Nitrogen related impact.
Consolidated Results
| Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||
| Sales ^1^ | **** | 4,052 | 3,462 | 17 | **** | 20,908 | 20,084 | 4 | |||||||
| Freight, transportation and distribution | **** | 202 | 172 | 17 | **** | 855 | 768 | 11 | |||||||
| Cost of goods sold | **** | 2,685 | 2,256 | 19 | **** | 14,814 | 13,814 | 7 | |||||||
| Gross margin ^1^ | **** | 1,165 | 1,034 | 13 | **** | 5,239 | 5,502 | (5 | ) | ||||||
| Expenses ^1^ | **** | 762 | 971 | (22 | ) | **** | 4,337 | 3,640 | 19 | ||||||
| Net earnings (loss) | **** | 316 | (48 | ) | n/m | **** | 459 | 992 | (54 | ) | |||||
| Adjusted EBITDA ^2^ | **** | 768 | 664 | 16 | **** | 3,667 | 4,025 | (9 | ) | ||||||
| Free cash flow (“FCF”) ^2^ | **** | 196 | 138 | 42 | **** | 1,830 | 2,157 | (15 | ) | ||||||
| FCF including changes in<br>non-cash operating working capital ^2^ | **** | 2,370 | 2,068 | 15 | **** | 2,404 | 2,647 | (9 | ) |
1 Certain immaterial figures have been reclassified for the three months and year ended December 31, 2019.
2 See the “Non-IFRS Financial Measures” section.
Net earnings increased in the fourth quarter of 2020 compared to the same period in 2019 due to improved operating results, the gain associated with the MOPCO transaction and the impact of impairments in the fourth quarter of 2019. Net earnings in 2020 were lower than 2019 due to lower realized crop nutrient prices and the non-cash impairment of assets largely related to our Phosphate operations in the third quarter of 2020. Adjusted EBITDA increased in the fourth quarter of 2020 compared to the same period in 2019 due to strong Retail earnings growth and higher potash sales volumes. Adjusted EBITDA decreased in the full year 2020 compared to 2019 primarily due to lower crop nutrient prices that more than offset strong Retail organic growth, earnings contributions from acquisitions and greater operational efficiencies. The COVID-19 pandemic had limited impact on our results during the periods.
3
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, 2020 to the results for the three and twelve months ended December 31, 2019, respectively, unless otherwise noted. In the third quarter of 2020, we revised the measure with which we evaluate our segments from EBITDA to adjusted EBITDA. Adjusted EBITDA provides a better indication of the segments performance as it excludes the impact of impairments and other costs that are centrally managed by our corporate function. We have presented adjusted EBITDA for the comparative periods.
Retail
| (millions of US dollars, except | Gross Margin | Gross Margin (%) | |||||||||||||||||
| as otherwise noted) | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | ||||||||||||
| Sales | |||||||||||||||||||
| Crop nutrients | 1,108 | **** | 907 | 22 | **** | 236 | **** | 186 | 27 | **** | 21 | 21 | |||||||
| Crop protection products | 828 | **** | 635 | 30 | **** | 343 | **** | 281 | 22 | **** | 41 | 44 | |||||||
| Seed | 152 | **** | 99 | 54 | **** | 58 | **** | 60 | (3 | ) | **** | 38 | 61 | ||||||
| Merchandise | 240 | **** | 211 | 14 | **** | 41 | **** | 44 | (7 | ) | **** | 17 | 21 | ||||||
| Nutrien Financial | 37 | **** | - | n/m | **** | 37 | **** | - | n/m | **** | 100 | n/m | |||||||
| Services and other 1 | 290 | **** | 339 | (14 | ) | **** | 207 | **** | 185 | 12 | **** | 71 | 55 | ||||||
| Nutrien Financial elimination 2 | (37 | ) | - | n/m | **** | (37 | ) | - | n/m | **** | 100 | n/m | |||||||
| 2,618 | **** | 2,191 | 19 | **** | 885 | **** | 756 | 17 | **** | 34 | 35 | ||||||||
| Cost of goods sold | 1,733 | **** | 1,435 | 21 | |||||||||||||||
| Gross margin | 885 | **** | 756 | 17 | |||||||||||||||
| Expenses<br>1, 3 | 768 | **** | 687 | 12 | |||||||||||||||
| Earnings before financecosts and taxes (“EBIT”) | 117 | **** | 69 | 70 | |||||||||||||||
| Depreciation and amortization | 180 | **** | 162 | 11 | |||||||||||||||
| EBITDA / Adjusted EBITDA | 297 | **** | 231 | 29 | |||||||||||||||
| 1 Certain immaterial figures have been reclassified for the three months ended December 31, 2019.<br> 2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.<br> 3 Includes selling expenses of 727 million (2019 – 668 million). | |||||||||||||||||||
| (millions of US dollars, except | Gross Margin | Gross Margin (%) | |||||||||||||||||
| as otherwise noted) | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | ||||||||||||
| Sales | |||||||||||||||||||
| Crop nutrients | 5,200 | **** | 4,989 | 4 | **** | 1,130 | **** | 1,032 | 9 | **** | 22 | 21 | |||||||
| Crop protection products | 5,602 | **** | 4,983 | 12 | **** | 1,303 | **** | 1,173 | 11 | **** | 23 | 24 | |||||||
| Seed | 1,790 | **** | 1,712 | 5 | **** | 363 | **** | 336 | 8 | **** | 20 | 20 | |||||||
| Merchandise | 943 | **** | 598 | 58 | **** | 157 | **** | 109 | 44 | **** | 17 | 18 | |||||||
| Nutrien Financial | 129 | **** | - | n/m | **** | 129 | **** | - | n/m | **** | 100 | n/m | |||||||
| Services and other 1 | 1,241 | **** | 1,000 | 24 | **** | 774 | **** | 651 | 19 | **** | 62 | 65 | |||||||
| Nutrien Financial elimination 2 | (120 | ) | - | n/m | **** | (120 | ) | - | n/m | **** | 100 | n/m | |||||||
| 14,785 | **** | 13,282 | 11 | **** | 3,736 | **** | 3,301 | 13 | **** | 25 | 25 | ||||||||
| Cost of goods sold | 11,049 | **** | 9,981 | 11 | |||||||||||||||
| Gross margin | 3,736 | **** | 3,301 | 13 | |||||||||||||||
| Expenses<br>1, 3 | 2,974 | **** | 2,665 | 12 | |||||||||||||||
| EBIT | 762 | **** | 636 | 20 | |||||||||||||||
| Depreciation and amortization | 668 | **** | 595 | 12 | |||||||||||||||
| EBITDA / Adjusted EBITDA | 1,430 | **** | 1,231 | 16 |
All values are in US Dollars.
1 Certain immaterial figures have been reclassified for the year ended December 31, 2019.
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
3 Includes selling expenses of $2,795 million (2019 – $2,484 million).
4
| • | Adjusted EBITDA increased in the fourth quarter of 2020 compared to the same period in 2019 due to stronger sales<br>and firm margins, with much higher gross margin for crop nutrients, crop protection products and services and other. Adjusted EBITDA in 2020 increased by nearly $200 million compared to 2019 from a combination of organic and acquisition-related<br>growth. |
|---|
Selling expenses as a percent of sales decreased in the fourth quarter and were stable in 2020 compared to the same periods in 2019 due to ongoing efficiency initiatives and despite higher depreciation and amortization.
| • | Crop nutrients sales were higher in the fourth quarter and full year of 2020 relative to the same periods in 2019<br>due to 27 percent and 15 percent higher sales volumes respectively, that more than offset the impact of lower selling prices per tonne. Fourth quarter sales increased due to strong fall applications in the US and our expansion in South<br>America. Gross margin percentage was stable in the fourth quarter of 2020 but increased for the full year of 2020 due to a larger proportion of higher-margin proprietary product sales in the year. |
|---|---|
| • | Crop protection products sales in the fourth quarter and full year 2020 were higher compared to the same periods<br>in 2019 due to strong market share growth in all key regions. Gross margin percentage decreased in the fourth quarter due to regional mix, which was partially offset by stronger US proprietary product results. US gross margin percentage increased<br>nearly 3 percentage points in the fourth quarter of 2020 relative to the same period in 2019. Gross margin percentage was similar year-over-year, decreasing only 0.3 percentage points compared to 2019. US gross margin percentage was 25 percent,<br>higher by one percentage point over 2019. |
| --- | --- |
| • | Seed sales in the fourth quarter and full year 2020 increased relative to the same periods last year due to<br>contributions from the Tec Agro Group and Agrosema Comercial Agricola Ltda. acquisitions in Brazil and higher sales in Australia. Gross margin percentage decreased in the fourth quarter of 2020 compared to the same period in 2019 due to regional mix<br>and the timing of US supplier and customer programs. Gross margin percentage in the full year 2020 was consistent with the prior year, as a one percentage point gain in the US was offset by the lower rates in Australia caused by seed mix changes.<br> |
| --- | --- |
| • | Merchandise sales increased in the fourth quarter and full year of 2020 due to strong demand growth, primarily in<br>Australia and the US. Gross margin percentage decreased in both periods relative to 2019 due to a higher mix of lower-margin product sales in Australia. |
| --- | --- |
| • | Nutrien Financial is reported for the **** first full year of operations for the Nutrien Financial business.<br>Revenue is primarily earned through interest and service fees that are charged to our Retail branches or directly to customers. |
| --- | --- |
| • | Services and other sales were lower in the fourth quarter of 2020 compared to the same quarter in 2019 due to the<br>timing of livestock related sales in Australia, which more than offset significantly higher application services in North and South America. Gross margin and gross margin percentage in the fourth quarter of 2020 were up significantly year-over-year<br>primarily due to strong demand for US application services. Sales and gross margin were significantly higher in 2020 than in 2019 due to strong growth in demand for services in Australia and North America. |
| --- | --- |
Potash
| Three Months Ended December 31 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne | ||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||||
| Manufactured product | |||||||||||||||||||
| Net sales | |||||||||||||||||||
| North America | **** | 199 | 146 | 36 | 1,041 | 651 | 60 | **** | 192 | 226 | (15 | ) | |||||||
| Offshore | **** | 251 | 204 | 23 | 1,613 | 1,234 | 31 | **** | 156 | 164 | (5 | ) | |||||||
| **** | 450 | 350 | 29 | 2,654 | 1,885 | 41 | **** | 170 | 186 | (9 | ) | ||||||||
| Cost of goods sold | **** | 305 | 211 | 45 | **** | 116 | 112 | 4 | |||||||||||
| Gross margin - manufactured | **** | 145 | 139 | 4 | **** | 54 | 74 | (27 | ) | ||||||||||
| Gross margin - other<br>^1^ | **** | - | - | - | Depreciation and amortization | **** | 46 | 35 | 31 | ||||||||||
| Gross margin - total | **** | 145 | 139 | 4 | Gross margin excluding depreciation | ||||||||||||||
| Expenses<br>^2^ | **** | 49 | 56 | (13 | ) | and amortization - manufactured ^3^ | **** | 100 | 109 | (8 | ) | ||||||||
| EBIT | **** | 96 | 83 | 16 | Potash cash cost of product | ||||||||||||||
| Depreciation and amortization | **** | 123 | 66 | 86 | manufactured<br>^3^ | **** | 71 | 82 | (13 | ) | |||||||||
| EBITDA | **** | 219 | 149 | 47 | |||||||||||||||
| Impairment of assets | **** | 1 | - | n/m | |||||||||||||||
| Adjusted EBITDA | **** | 220 | 149 | 48 |
1 Includes other potash and purchased products and is comprised of net sales of $Nil (2019 – $Nil) less cost of goods sold of $Nil (2019 – $Nil).
2 Includes provincial mining and other taxes of $40 million (2019 – $50 million).
3 See the “Non-IFRS Financial Measures” section.
5
| Twelve Months Ended December 31 | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne | |||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||
| Manufactured product | ||||||||||||||||||||
| Net sales | ||||||||||||||||||||
| North America | **** | 908 | 978 | (7 | ) | **** | 4,815 | 4,040 | 19 | **** | 189 | 242 | (22 | ) | ||||||
| Offshore | **** | 1,238 | 1,625 | (24 | ) | **** | 8,009 | 7,481 | 7 | **** | 155 | 217 | (29 | ) | ||||||
| **** | 2,146 | 2,603 | (18 | ) | **** | 12,824 | 11,521 | 11 | **** | 167 | 226 | (26 | ) | |||||||
| Cost of goods sold | **** | 1,183 | 1,103 | 7 | **** | 92 | 96 | (4 | ) | |||||||||||
| Gross margin - manufactured | **** | 963 | 1,500 | (36 | ) | **** | 75 | 130 | (42 | ) | ||||||||||
| Gross margin - other<br>^1^ | **** | - | 1 | (100 | ) | Depreciation and amortization | **** | 35 | 34 | 3 | ||||||||||
| Gross margin - total | **** | 963 | 1,501 | (36 | ) | Gross margin excluding depreciation | ||||||||||||||
| Expenses<br>^2^ | **** | 248 | 298 | (17 | ) | and amortization - manufactured | **** | 110 | 164 | (33 | ) | |||||||||
| EBIT | **** | 715 | 1,203 | (41 | ) | Potash cash cost of product | ||||||||||||||
| Depreciation and amortization | **** | 452 | 390 | 16 | manufactured | **** | 59 | 63 | (6 | ) | ||||||||||
| EBITDA | **** | 1,167 | 1,593 | (27 | ) | |||||||||||||||
| Impairment of assets | **** | 23 | - | n/m | ||||||||||||||||
| Adjusted EBITDA | **** | 1,190 | 1,593 | (25 | ) |
1 Includes other potash and purchased products and is comprised of net sales of $Nil (2019 – $1 million) less cost of goods sold of $Nil (2019 – $Nil).
2 Includes provincial mining and other taxes of $201 million (2019 – $287 million).
| • | Adjusted EBITDA increased in the fourth quarter of 2020 compared to the same quarter in 2019, due to higher<br>domestic and offshore sales volumes and lower cost of goods sold per tonne, excluding the impact of depreciation and amortization. Adjusted EBITDA in 2020 decreased compared to 2019 as lower net realized selling prices more than offset positive<br>impacts of significantly higher sales volumes and lower production costs and operating costs. |
|---|---|
| • | Sales volumes in the fourth quarter and full year of 2020 increased relative to the same periods in 2019 due to<br>strong domestic and offshore demand supported by improved global crop prices, increased planted acreage in the US and strong fall application in North America in anticipation of higher planting in 2021. |
| --- | --- |
| • | Net realized selling price decreased in the fourth quarter and full year of 2020 due to lower year-over-year<br>global benchmark prices. |
| --- | --- |
| • | Cost of goods sold per tonne increased in the fourth quarter of 2020 due to higher depreciation and amortization<br>related to production mix and the timing of maintenance projects relative to the fourth quarter of 2019. Excluding the impact of depreciation and amortization, cost of goods sold per tonne was lower both in the fourth quarter and full year of 2020<br>due to production efficiencies and higher production levels. These factors also lowered the potash cash cost of product manufactured in both periods. |
| --- | --- |
Canpotex Sales by Market
| (percentage of sales volumes, except as<br><br><br>otherwise noted) | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | Change | 2020 | 2019 | Change | |||||||||
| Latin America | **** | 31 | 31 | - | **** | 32 | 31 | 1 | ||||||
| Other Asian markets ^1^ | **** | 24 | 27 | (3 | ) | **** | 25 | 27 | (2 | ) | ||||
| China | **** | 21 | 17 | 4 | **** | 22 | 22 | - | ||||||
| India | **** | 17 | 7 | 10 | **** | 14 | 10 | 4 | ||||||
| Other markets | **** | 7 | 18 | (11 | ) | **** | 7 | 10 | (3 | ) | ||||
| **** | 100 | 100 | **** | 100 | 100 |
1 All Asian markets except China and India.
6
Nitrogen
| Three Months Ended December 31 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Manufactured product | ||||||||||||||||||||||
| Net sales | ||||||||||||||||||||||
| Ammonia | **** | 157 | **** | 141 | 11 | 730 | 571 | 28 | **** | 216 | 245 | (12 | ) | |||||||||
| Urea | **** | 230 | **** | 193 | 19 | 853 | 695 | 23 | **** | 270 | 278 | (3 | ) | |||||||||
| Solutions, nitrates and sulfates | **** | 168 | **** | 166 | 1 | 1,262 | 1,096 | 15 | **** | 133 | 152 | (13 | ) | |||||||||
| **** | 555 | **** | 500 | 11 | 2,845 | 2,362 | 20 | **** | 195 | 212 | (8 | ) | ||||||||||
| Cost of goods sold | **** | 460 | **** | 404 | 14 | **** | 162 | 171 | (5 | ) | ||||||||||||
| Gross margin - manufactured | **** | 95 | **** | 96 | (1 | ) | **** | 33 | 41 | (20 | ) | |||||||||||
| Gross margin - other ^1^ | **** | 17 | **** | 11 | 55 | Depreciation and amortization | **** | 51 | 60 | (15 | ) | |||||||||||
| Gross margin - total | **** | 112 | **** | 107 | 5 | Gross margin excluding depreciation | ||||||||||||||||
| Income<br>^2^ | **** | (254 | ) | (11 | ) | n/m | and amortization - manufactured | **** | 84 | 101 | (17 | ) | ||||||||||
| EBIT | **** | 366 | **** | 118 | 210 | Ammonia controllable cash cost of | ||||||||||||||||
| Depreciation and amortization | **** | 146 | **** | 141 | 4 | product manufactured ^3^ | **** | 40 | 48 | (17 | ) | |||||||||||
| EBITDA | **** | 512 | **** | 259 | 98 | |||||||||||||||||
| Adjustments ^2^ | **** | (246 | ) | - | n/m | |||||||||||||||||
| Adjusted EBITDA | **** | 266 | **** | 259 | 3 | |||||||||||||||||
| 1 | Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of<br>$114 million (2019 – $103 million) less cost of goods sold of $97 million (2019 – $92 million). | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 2 | The adjustments consist primarily of the net gain on disposal of investment in MOPCO which was recorded in other income.<br>See Note 2 and Note 3 to the unaudited condensed consolidated financial statements as at and for the three and twelve months ended December 31, 2020. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 3 | See the “Non-IFRS Financial Measures” section. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| Twelve Months Ended December 31 | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Manufactured product | ||||||||||||||||||||||
| Net sales | ||||||||||||||||||||||
| Ammonia | **** | 621 | **** | 743 | (16 | ) | 2,778 | 2,971 | (6 | ) | **** | 224 | 250 | (10 | ) | |||||||
| Urea | **** | 933 | **** | 932 | - | 3,475 | 3,037 | 14 | **** | 268 | 307 | (13 | ) | |||||||||
| Solutions, nitrates and sulfates | **** | 668 | **** | 706 | (5 | ) | 4,713 | 4,262 | 11 | **** | 142 | 166 | (14 | ) | ||||||||
| **** | 2,222 | **** | 2,381 | (7 | ) | 10,966 | 10,270 | 7 | **** | 203 | 232 | (13 | ) | |||||||||
| Cost of goods sold | **** | 1,804 | **** | 1,749 | 3 | **** | 165 | 170 | (3 | ) | ||||||||||||
| Gross margin - manufactured | **** | 418 | **** | 632 | (34 | ) | **** | 38 | 62 | (39 | ) | |||||||||||
| Gross margin - other ^1^ | **** | 57 | **** | 68 | (16 | ) | Depreciation and amortization | **** | 55 | 52 | 6 | |||||||||||
| Gross margin - total | **** | 475 | **** | 700 | (32 | ) | Gross margin excluding depreciation | |||||||||||||||
| Income<br>^2^ | **** | (225 | ) | (4 | ) | n/m | and amortization - manufactured | **** | 93 | 114 | (18 | ) | ||||||||||
| EBIT | **** | 700 | **** | 704 | (1 | ) | Ammonia controllable cash cost of | |||||||||||||||
| Depreciation and amortization | **** | 599 | **** | 535 | 12 | product manufactured | **** | 43 | 45 | (4 | ) | |||||||||||
| EBITDA | **** | 1,299 | **** | 1,239 | 5 | |||||||||||||||||
| Adjustments ^2^ | **** | (219 | ) | - | n/m | |||||||||||||||||
| Adjusted EBITDA | **** | 1,080 | **** | 1,239 | (13 | ) | ||||||||||||||||
| 1 | Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of<br>$518 million (2019 – $467 million) less cost of goods sold of $461 million (2019 – $399 million). | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 2 | The adjustments consist primarily of the net gain on disposal of investment in MOPCO which was recorded in other income.<br>See Note 2 and Note 3 to the unaudited condensed consolidated financial statements as at and for the three and twelve months ended December 31, 2020. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| • | Adjusted EBITDA increased in the fourth quarter of 2020 compared to the same period in 2019 due to significantly<br>higher sales volumes that more than offset lower net realized selling prices. Adjusted EBITDA in the full year 2020 decreased relative to 2019 as lower net realized selling prices were only partially offset by higher sales volumes and lower cost of<br>goods sold per tonne. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| • | Sales volumes increased in the fourth quarter and full year of 2020 compared to the same periods in 2019 due to<br>strong fertilizer sales in North America that more than offset lower global industrial demand. Total nitrogen sales in 2020 were the highest on record as a result of recent expansion projects and strong overall operating rates at our North American<br>facilities. | |||||||||||||||||||||
| --- | --- |
7
| • | Net realized selling price of nitrogen was lower in the fourth quarter and full year 2020 than the same periods in<br>2019 due to lower global and North American benchmark prices. Fourth quarter 2020 sales commitments were mostly made in the previous quarter, prior to more recent increases in benchmark prices. |
|---|---|
| • | Cost of goods sold per tonne decreased in the fourth quarter of 2020 as higher production volumes and lower<br>depreciation and amortization per tonne more than offset the impact of higher natural gas costs. Cost of goods sold per tonne in 2020 decreased compared to 2019 due to lower natural gas costs and lower fixed costs, more than offsetting an increase<br>in depreciation and amortization. Ammonia controllable cash cost of product manufactured per tonne declined in the fourth quarter due to increased production volumes, as the comparable period was impacted by turnaround activity at our Trinidad<br>facility. |
| --- | --- |
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) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | ||||||||
| Overall gas cost excluding realized derivative impact | **** | 2.71 | 2.46 | 10 | **** | 2.31 | 2.47 | (6 | ) | |||||
| Realized derivative impact | **** | 0.03 | 0.06 | (50 | ) | **** | 0.05 | 0.11 | (55 | ) | ||||
| Overall gas cost | **** | 2.74 | 2.52 | 9 | **** | 2.36 | 2.58 | (9 | ) | |||||
| Average NYMEX | **** | 2.66 | 2.50 | 6 | **** | 2.08 | 2.63 | (21 | ) | |||||
| Average AECO | **** | 2.10 | 1.76 | 19 | **** | 1.68 | 1.22 | 38 | ||||||
| • | Gas prices in our cost of production increased in the fourth quarter of 2020 relative to the same period<br>last year, tracking benchmark prices. Lower US gas prices and a lower realized derivative impact in 2020 more than offset higher Canadian gas prices compared to the same period in 2019. | |||||||||||||
| --- | --- |
Phosphate
| Three Months Ended December 31 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||
| Manufactured product | ||||||||||||||||||||||
| Net sales | ||||||||||||||||||||||
| Fertilizer | **** | 180 | **** | 155 | 16 | **** | 466 | 466 | - | **** | 387 | 334 | 16 | |||||||||
| Industrial and feed | **** | 100 | **** | 105 | (5 | ) | **** | 182 | 181 | 1 | **** | 551 | 581 | (5 | ) | |||||||
| **** | 280 | **** | 260 | 8 | **** | 648 | 647 | - | **** | 433 | 403 | 7 | ||||||||||
| Cost of goods sold | **** | 265 | **** | 255 | 4 | **** | 410 | 395 | 4 | |||||||||||||
| Gross margin - manufactured | **** | 15 | **** | 5 | 200 | **** | 23 | 8 | 188 | |||||||||||||
| Gross margin - other ^1^ | **** | 1 | **** | 1 | - | Depreciation and amortization | **** | 60 | 88 | (32 | ) | |||||||||||
| Gross margin - total | **** | 16 | **** | 6 | 167 | Gross margin excluding depreciation | ||||||||||||||||
| (Income) Expenses | **** | (8 | ) | 9 | n/m | and<br>amortization - manufactured | **** | 83 | 96 | (14 | ) | |||||||||||
| EBIT | **** | 24 | **** | (3 | ) | n/m | ||||||||||||||||
| Depreciation and amortization | **** | 39 | **** | 57 | (32 | ) | ||||||||||||||||
| EBITDA | **** | 63 | **** | 54 | 17 | |||||||||||||||||
| Impairment of assets | **** | - | **** | - | - | |||||||||||||||||
| Adjusted EBITDA | **** | 63 | **** | 54 | 17 | |||||||||||||||||
| 1 | Includes other phosphate and purchased products and is comprised of net sales of $40 million (2019 - $27 million)<br>less cost of goods sold of $39 million (2019 - $26 million). | |||||||||||||||||||||
| --- | --- |
8
| Twelve Months Ended December 31 | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except | Dollars | Tonnes (thousands) | Average per Tonne^^ | |||||||||||||||||||||
| as otherwise noted) | 2020 | 2019 | % Change | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||
| Manufactured product | ||||||||||||||||||||||||
| Net sales | **** | **** | **** | |||||||||||||||||||||
| Fertilizer | **** | 671 | **** | 790 | (15 | ) | **** | 2,048 | 2,130 | (4 | ) | **** | 328 | 371 | (12 | ) | ||||||||
| Industrial and feed | **** | 404 | **** | 426 | (5 | ) | **** | 733 | 759 | (3 | ) | **** | 552 | 561 | (2 | ) | ||||||||
| **** | 1,075 | **** | 1,216 | (12 | ) | **** | 2,781 | 2,889 | (4 | ) | **** | 387 | 421 | (8 | ) | |||||||||
| Cost of goods sold | **** | 1,044 | **** | 1,218 | (14 | ) | **** | 376 | 422 | (11 | ) | |||||||||||||
| Gross margin - manufactured | **** | 31 | **** | (2 | ) | n/m | **** | 11 | (1 | ) | n/m | |||||||||||||
| Gross margin - other ^1^ | **** | 5 | **** | (3 | ) | n/m | Depreciation and amortization | **** | 78 | 82 | (5 | ) | ||||||||||||
| Gross margin - total | **** | 36 | **** | (5 | ) | n/m | Gross margin excluding depreciation | |||||||||||||||||
| Expenses | **** | 791 | **** | 38 | n/m | and amortization - manufactured | **** | 89 | 81 | 10 | ||||||||||||||
| EBIT | **** | (755 | ) | (43 | ) | n/m | ||||||||||||||||||
| Depreciation and amortization | **** | 218 | **** | 237 | (8 | ) | ||||||||||||||||||
| EBITDA | **** | (537 | ) | 194 | n/m | |||||||||||||||||||
| Impairment of assets | **** | 769 | **** | - | n/m | |||||||||||||||||||
| Adjusted EBITDA | **** | 232 | **** | 194 | 20 | |||||||||||||||||||
| 1 | Includes other phosphate and purchased products and is comprised of net sales of $127 million (2019 - $152<br>million) less cost of goods sold of $122 million (2019 - $155 million). | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Adjusted EBITDA increased in the fourth quarter of 2020 due to higher net realized selling prices resulting from<br>higher phosphate fertilizer prices compared to the same period in 2019 and a gain on the sale of land in the fourth quarter of 2020. Full year 2020 adjusted EBITDA increased primarily due to lower costs of goods sold per tonne compared to the same<br>periods in 2019. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Sales volumes were stable in the fourth quarter of 2020 relative to the same quarter in 2019 as higher sales into<br>the North American fertilizer market were offset by lower phosphoric acid exports that carry a lower margin. Sales volumes in 2020 were lower than in 2019 due to the conversion of the Redwater phosphate facility to ammonium sulfate production in<br>2019 and a lower phosphate operating rate. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Net realized selling price of phosphate fertilizer was higher in the fourth quarter of 2020 than in the fourth<br>quarter of 2019 year following a recovery in global benchmark prices, which was partially offset by lower industrial and feed prices and was impacted by timing lags to benchmark prices. Net realized selling prices in 2020 were lower than in 2019<br>consistent with lower global benchmark prices. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| • | Cost of goods sold per tonne increased in the fourth quarter of 2020 compared to the fourth quarter of 2019 due to<br>higher raw material input costs and lower production volumes that offset lower depreciation and amortization following the non-cash impairment in the third quarter of 2020. Cost of goods sold per tonne was<br>lower in 2020 relative to 2019 due to lower raw material costs, favorable non-cash inventory adjustments and a change in estimate related to an asset retirement obligation recorded in the second quarter of<br>2020. | |||||||||||||||||||||||
| --- | --- |
9
Forward-Looking Statements
Certain statements and other information included in this document, including within the “Financial Outlook and Guidance” section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien’s business strategies, plans, prospects and opportunities; Nutrien’s 2021 annual guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment); expectations regarding our growth and capital allocation intentions and strategies; capital spending expectations for 2021; expectations regarding performance of our operating segments in 2021, including our operating segment market outlooks and market conditions for 2021, and the anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of import and export volumes; expectations regarding repurchases of our common shares, including the timing thereof; the negotiation of sales contracts; the implementation of our carbon program and the benefits to Nutrien and growers therefrom; and acquisitions and divestitures. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2021 and in the future; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall economy; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; our ability to maintain investment grade ratings and achieve our performance targets; our ability to successfully negotiate sales contracts; our ability to successfully implement new initiatives and programs; and our ability to redeploy capital to generate higher returns for shareholders.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; the COVID-19 pandemic and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, fiscal and monetary responses by governments and financial institutions and disruptions to global supply chains; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States.
The purpose of our expected adjusted net earnings per share and adjusted EBITDA (consolidated and by segment) guidance ranges, as well as our adjusted earnings per share and adjusted EBITDA price and input costs sensitivities 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.
10
Terms and Definitions
For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms and Definitions” section of our 2019 Annual Report dated February 19, 2020. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful and all financial amounts are stated in millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world’s largest provider of crop inputs and services, playing a critical role in helping growers increase food production in a sustainable manner. We produce and distribute 27 million tonnes of potash, nitrogen and phosphate products world-wide. With this capability and our leading agriculture retail network, we are well positioned to supply the needs of our customers. We operate with a long-term view and are committed to working with our stakeholders as we address our economic, environmental and social priorities. The scale and diversity of our integrated portfolio provides a stable earnings base, multiple avenues for growth and the opportunity to return capital to shareholders.
For Further Information:
Investor Relations:
Richard Downey
Vice President, Investor Relations
(403) 225-7357
Investors@nutrien.com
Tim Mizuno
Director, Investor Relations
(306) 933-8548
MediaRelations:
Megan Fielding
Vice President, Brand & Culture Communications
(403) 797-3015
Contact us at: www.nutrien.com
Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Thursday, February 18, 2021 at 10:00 am Eastern Time.
| • | In order to expedite access to our conference call, each participant will be required to pre-register for the event: |
|---|---|
| • | Online: http://www.directeventreg.com/registration/event/5869929. |
| --- | --- |
| • | Via Phone:<br>1-888-869-1189 Conference ID 5869929. |
| --- | --- |
| • | Once the registration is complete, a confirmation will be sent providing the dial in number and both the Direct Event<br>Passcode and your unique Registrant ID to join this call. For security reasons, please do not share your information with anyone else. |
| --- | --- |
| • | Live Audio Webcast: Visit<br>http://www.nutrien.com/investors/events/2020-q4-earnings-conference-call |
| --- | --- |
11
Appendix A - Selected Additional Financial Data
| Selected Retail measures | Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | ****2019 | 2020 | ****2019 | ||||||||||
| Proprietary products margin as a percentage of<br><br><br>product line margin (%) | |||||||||||||
| Crop nutrients | **** | 14 | 15 | **** | 25 | 23 | |||||||
| Crop protection products | **** | 11 | 8 | **** | 32 | 34 | |||||||
| Seed | **** | 37 | 11 | **** | 46 | 38 | |||||||
| All products | **** | 10.8 | 8.2 | **** | 22.9 | 23.3 | |||||||
| All products before reclassification ^1^ | **** | 11.1 | 8.4 | **** | 23.3 | 23.7 | |||||||
| Crop nutrients sales volumes (tonnes - thousands) | |||||||||||||
| North America | **** | 2,063 | 1,558 | **** | 9,746 | 8,812 | |||||||
| International | **** | 622 | 559 | **** | 2,986 | 2,236 | |||||||
| Total | **** | 2,685 | 2,117 | **** | 12,732 | 11,048 | |||||||
| Crop nutrients selling price per tonne | |||||||||||||
| North America | **** | 413 | 436 | **** | 421 | 465 | |||||||
| International | **** | 413 | 408 | **** | 367 | 398 | |||||||
| Total | **** | 413 | 428 | **** | 408 | 452 | |||||||
| Crop nutrients gross margin per tonne | |||||||||||||
| North America | **** | 89 | 95 | **** | 99 | 102 | |||||||
| International | **** | 85 | 68 | **** | 55 | 60 | |||||||
| Total | **** | 88 | 88 | **** | 89 | 93 | |||||||
| 1 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures. | |||||||||||||
| Financial performance measures | 2020 Target | 2020 Actuals | |||||||||||
| Retail adjusted EBITDA to sales (%) ^1^ | **** | 10 | **** | 10 | |||||||||
| Retail adjusted average working capital to sales (%) ^1, 2^ | **** | 21 | **** | 15 | |||||||||
| Retail adjusted average working capital to sales excluding Nutrien Financial (%) ^1, 2^ | **** | 5 | |||||||||||
| Retail cash operating coverage ratio (%) ^1, 2^ | **** | 61.8 | |||||||||||
| Retail cash operating coverage ratio before reclassification (%) ^1, 2, 3^ | **** | 61 | **** | 61.1 | |||||||||
| Retail normalized comparable store sales (%) ^2^ | **** | 6 | |||||||||||
| Retail adjusted EBITDA per US selling location (thousands of US dollars) ^1, 2^ | **** | 1,000 | **** | 1,075 | |||||||||
| Nutrien Financial net interest margin (%) ^1, 2^ | **** | 5.3 | |||||||||||
| 1 Rolling four quarters ended December 31, 2020.<br><br><br>2 See the “Non-IFRS Financial Measures” section.<br><br><br>3 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures. | |||||||||||||
| Nutrien Financial | As at December 31, 2020 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (millions of US dollars) | Current | <31 days<br><br><br>past due | 31-90 days<br><br><br>past due | >90 days<br><br><br>past due | Allowance ^1^ | Total | |||||||
| North America | 962 | 130 | 44 | 38 | (24 | ) | **** | 1,150 | |||||
| International | 178 | 2 | 16 | 47 | (1 | ) | **** | 242 | |||||
| Nutrien Financial receivables<br>^2^ | 1,140 | 132 | 60 | 85 | (25 | ) | **** | 1,392 |
1 Bad debt expense on the above receivables was $26 million (2019 - $5 million) in the Retail segment.
2 Includes $1,147 million (2019 - $762 million) of very low risk of default and $270 million (2019 - $64 million) of low risk of default.
12
| Selected Nitrogen measures | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||
|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | ****2019 | |||||
| Sales volumes (tonnes - thousands) | ||||||||
| Fertilizer | **** | 1,740 | 1,350 | **** | 6,750 | 5,554 | ||
| Industrial and feed | **** | 1,105 | 1,012 | **** | 4,216 | 4,716 | ||
| Net sales (millions of US dollars) | ||||||||
| Fertilizer | **** | 359 | 311 | **** | 1,467 | 1,466 | ||
| Industrial and feed | **** | 196 | 189 | **** | 755 | 915 | ||
| Net selling price per tonne | ||||||||
| Fertilizer | **** | 206 | 230 | **** | 217 | 264 | ||
| Industrial and feed | **** | 178 | 187 | **** | 179 | 194 | ||
| Production measures | Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||
| 2020 | 2019 | 2020 | ****2019 | |||||
| Potash production (Product tonnes - thousands) | **** | 2,784 | 1,939 | **** | 12,595 | 11,700 | ||
| Potash shutdown weeks ^1^ | **** | - | 28 | **** | 38 | 55 | ||
| Ammonia production - total ^2^ | **** | 1,584 | 1,401 | **** | 6,063 | 6,164 | ||
| Ammonia production - adjusted ^2, 3^ | **** | 1,035 | 1,036 | **** | 4,102 | 3,978 | ||
| Ammonia operating rate (%) ^3^ | **** | 94 | 94 | **** | 93 | 91 | ||
| P2O5 production (P2O5 tonnes - thousands) ^4^ | **** | 361 | 390 | **** | 1,444 | 1,514 | ||
| P2O5 operating rate (%)^4^ | **** | 84 | 91 | **** | 85 | 89 | ||
| 1 | Represents weeks of full production shutdown, excluding the impact of any periods of reduced operating rates and planned<br>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. | |||||||
| --- | --- | |||||||
| 4 | Excludes Redwater. | |||||||
| --- | --- |
13
Appendix B - Non-IFRS Financial Measures
We use both IFRS and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are numerical measures of a company’s historical or future financial performance, financial position or cash flow that are not specified, defined or determined under IFRS, and are not presented in our financial statements. Non-IFRS measures either exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure specified, defined or determined under IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts.
Management believes the non-IFRS financial measures provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures, their definitions, and why management uses each measure. It includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As non-recurring or unusual items arise, we generally exclude these items in our calculation.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, Merger and related costs, certain acquisition and integration related costs, share-based compensation, impairment of assets, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses, loss on disposal of business and net gain on disposal of investment in MOPCO. In 2020, we amended our calculation of adjusted EBITDA to adjust for the impact of COVID-19 related expenses, loss on disposal of business and net gain on disposal of investment in MOPCO. There were no similar income or expenses in the comparative period. To align with the change in our segment performance measure effective in 2020, we will primarily use adjusted EBITDA going forward as our consolidated performance measure.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations.
| Three Months Ended December 31 | Twelve Months Ended December 31 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars) | 2020 | 2019 | 2020 | 2019 | |||||||
| Net earnings (loss) | **** | 316 | **** | (48 | ) | **** | 459 | **** | 992 | ||
| Finance costs | **** | 119 | **** | 141 | **** | 520 | **** | 554 | |||
| Income tax (recovery) expense | **** | (32 | ) | (30 | ) | **** | (77 | ) | 316 | ||
| Depreciation and amortization | **** | 499 | **** | 436 | **** | 1,989 | **** | 1,799 | |||
| EBITDA | **** | 902 | **** | 499 | **** | 2,891 | **** | 3,661 | |||
| Merger and related costs | **** | - | **** | 25 | **** | - | **** | 82 | |||
| Acquisition and integration related costs | **** | 22 | **** | 16 | **** | 60 | **** | 16 | |||
| Share-based compensation expense | **** | 60 | **** | 9 | **** | 69 | **** | 104 | |||
| Impairment of assets | **** | 1 | **** | 87 | **** | 824 | **** | 120 | |||
| COVID-19 related expenses | **** | 18 | **** | - | **** | 48 | **** | - | |||
| Foreign exchange loss, net of related derivatives | **** | 15 | **** | 28 | **** | 19 | **** | 42 | |||
| Loss on disposal of business | **** | - | **** | - | **** | 6 | **** | - | |||
| Net gain on disposal of investment in MOPCO | **** | (250 | ) | - | **** | (250 | ) | - | |||
| Adjusted EBITDA | **** | 768 | **** | 664 | **** | 3,667 | **** | 4,025 |
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Adjusted EBITDA (Consolidated), Adjusted Net Earnings Per Share and Sustaining Capital Expenditures Guidance
Adjusted EBITDA, adjusted net earnings per share and sustaining capital expenditures guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS due to unknown variables and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine, without unreasonable efforts. Guidance for adjusted EBITDA and adjusted net earnings per share excludes the impacts of acquisition and integration related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), and COVID-19 related expenses. Guidance for sustaining capital expenditures includes expected expenditures required to sustain operations at existing levels and includes major repairs and maintenance and plant turnarounds.
Adjusted Net Earnings and Adjusted Net Earnings Per Share
Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.
Definition: Net earnings (loss) before certain acquisition and integration related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses (including those recorded under finance costs), loss on disposal of business, net gain on disposal of investment in MOPCO and impairment of assets, net of tax. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment. In 2020, we amended our calculation of adjusted net loss to adjust for the impact of COVID-19 related expenses, loss on disposal of business and net gain on disposal of investment in MOPCO.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations excluding the effects of non-operating items.
| Three Months Ended<br><br><br>December 31, 2020 | Twelve Months Ended<br><br><br>December 31, 2020 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise<br><br><br>noted) | Increases<br><br><br>(Decreases) | Post-Tax | Per<br><br><br>Diluted<br> <br>Share | Increases<br><br><br>(Decreases) | Post-Tax | Per<br><br><br>Diluted<br> <br>Share | ||||||||||||
| Net earnings | 316 | 0.55 | 459 | 0.81 | ||||||||||||||
| Adjustments: | ||||||||||||||||||
| Acquisition and integration related costs | 22 | 13 | 0.03 | 60 | 44 | 0.08 | ||||||||||||
| Share-based compensation expense | 60 | 36 | 0.06 | 69 | 50 | 0.09 | ||||||||||||
| Impairment of assets | 1 | 1 | - | 824 | 657 | 1.15 | ||||||||||||
| COVID-19 related expenses | 22 | 13 | 0.02 | 67 | 49 | 0.09 | ||||||||||||
| Foreign exchange loss, net of related derivatives | 15 | 9 | 0.02 | 19 | 14 | 0.02 | ||||||||||||
| Loss on disposal of business | - | - | - | 6 | 4 | - | ||||||||||||
| Net gain on disposal of investment in MOPCO | (250 | ) | (250 | ) | (0.44 | ) | (250 | ) | (250 | ) | (0.44 | ) | ||||||
| Adjusted net earnings | **** | 138 | **** | **** | 0.24 | **** | **** | 1,027 | **** | **** | 1.80 | **** |
Free Cash Flow and Free Cash Flow Including Changes in Non-Cash Operating Working Capital
Most directly comparable IFRS financial measure: Cash from operations before working capital changes.
Definition: Cash from operations before working capital changes less sustaining capital expenditures. We also calculate a similar measure that includes changes in non-cash operating working capital.
Why we use the measure and why it is useful toinvestors: For evaluation of liquidity and financial strength. These are also useful as indicators of our ability to service debt, meet other payment obligations and make strategic investments. These do not represent residual cash flow available for discretionary expenditures.
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| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Cash from operations before working capital changes | **** | 604 | **** | 489 | **** | 2,749 | **** | 3,175 | ||||
| Sustaining capital expenditures | **** | (408 | ) | (351 | ) | **** | (919 | ) | (1,018 | ) | ||
| Free cash flow | **** | 196 | **** | 138 | **** | 1,830 | **** | 2,157 | ||||
| Changes in non-cash<br>operating working capital | **** | 2,174 | **** | 1,930 | **** | 574 | **** | 490 | ||||
| Free cash flow including changes in non-cash<br> <br>operating working capital | **** | 2,370 | **** | 2,068 | **** | 2,404 | **** | 2,647 |
Potash Cash Cost of Product Manufactured (“COPM”)
Most directly comparable IFRS financial measure: Cost of goods sold (“COGS”) for the Potash segment.
Definition: Potash COGS for the period excluding depreciation and amortization expense and inventory and other adjustments divided by the production tonnes for the period.
Why we use the measure and why it is useful to investors: To assess operational performance. Potash cash COPM excludes the effects of production from other periods and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total COGS - Potash | **** | 305 | **** | 211 | **** | 1,183 | **** | 1,103 | ||||
| Change in inventory | **** | 18 | **** | 11 | **** | (10 | ) | 10 | ||||
| Other adjustments | **** | (7 | ) | - | **** | (12 | ) | (16 | ) | |||
| COPM | **** | 316 | **** | 222 | **** | 1,161 | **** | 1,097 | ||||
| Depreciation and amortization included in COPM | **** | (119 | ) | (63 | ) | **** | (424 | ) | (355 | ) | ||
| Cash COPM | **** | 197 | **** | 159 | **** | 737 | **** | 742 | ||||
| Production tonnes (tonnes - thousands) | **** | 2,784 | **** | 1,939 | **** | 12,595 | **** | 11,700 | ||||
| Potash cash COPM per tonne | **** | 71 | **** | 82 | **** | 59 | **** | 63 |
Ammonia Controllable Cash COPM
Most directly comparable IFRS financial measure: COGS for the Nitrogen segment.
Definition: The total of COGS for the Nitrogen segment excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.
Why we use the measure and whyit is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
| Three Months Ended December 31 | Twelve Months Ended December 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | 2020 | 2019 | 2020 | 2019 | ||||||||
| Total COGS - Nitrogen | **** | 557 | **** | 496 | **** | 2,265 | **** | 2,148 | ||||
| Depreciation and amortization in COGS | **** | (127 | ) | (122 | ) | **** | (522 | ) | (462 | ) | ||
| Cash COGS for products other than ammonia | **** | (325 | ) | (274 | ) | **** | (1,342 | ) | (1,226 | ) | ||
| Ammonia | ||||||||||||
| Total cash COGS before other adjustments | **** | 105 | **** | 100 | **** | 401 | **** | 460 | ||||
| Other adjustments<br>^1^ | **** | (6 | ) | (22 | ) | **** | (52 | ) | (57 | ) | ||
| Total cash COPM | **** | 99 | **** | 78 | **** | 349 | **** | 403 | ||||
| Natural gas and steam costs | **** | (71 | ) | (52 | ) | **** | (235 | ) | (273 | ) | ||
| Controllable cash COPM | **** | 28 | **** | 26 | **** | 114 | **** | 130 | ||||
| Production tonnes (net tonnes ^2^ - thousands) | **** | 704 | **** | 544 | **** | 2,649 | **** | 2,887 | ||||
| Ammonia controllable cash COPM per tonne | **** | 40 | **** | 48 | **** | 43 | **** | 45 |
1 Includes changes in inventory balances and other adjustments.
2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.
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Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin from manufactured products per tonne less depreciation and amortization per tonne. Reconciliations are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working Capital to Sales Excluding Nutrien Financial
Most directly comparable IFRS financial measure: (Current assets minus current liabilities for Retail) divided by Retail sales.
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the working capital and sales of certain acquisitions (such as Ruralco) during the first year following the acquisition. We amended our calculation to adjust for the sales of certain recently acquired businesses. We also look at this metric excluding the sales and working capital of Nutrien Financial.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.
| Rolling four quarters ended December 31, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Average/Total | |||||||||
| Working capital | 2,288 | 2,030 | 3,216 | 1,157 | ||||||||||
| Working capital from certain recent acquisitions | (108 | ) | 63 | - | - | |||||||||
| Adjusted working capital | 2,180 | 2,093 | 3,216 | 1,157 | **** | 2,162 | ||||||||
| Nutrien Financial working capital | (795 | ) | (2,108 | ) | (1,711 | ) | (1,392 | ) | ||||||
| Adjusted working capital excluding Nutrien<br>Financial | 1,385 | (15 | ) | 1,505 | (235 | ) | **** | 660 | ||||||
| Sales ^1^ | 2,661 | 6,764 | 2,742 | 2,618 | ||||||||||
| Sales from certain recent acquisitions | (348 | ) | (338 | ) | - | - | ||||||||
| Adjusted sales | 2,313 | 6,426 | 2,742 | 2,618 | **** | 14,099 | ||||||||
| Nutrien Financial sales ^1^ | (16 | ) | (40 | ) | (36 | ) | (37 | ) | ||||||
| ****Adjusted sales excluding Nutrien<br>Financial | 2,297 | 6,386 | 2,706 | 2,581 | **** | 13,970 | ||||||||
| 1 Certain immaterial figures have been reclassified for the first three quarters of 2020. | ||||||||||||||
| Adjusted average working capital to sales (%) | **** | 15 | ||||||||||||
| Adjusted average working capital to sales excluding Nutrien Financial(%) | **** | **** | 5 |
Nutrien Financial Net Interest Margin
Most directly comparable IFRS financial measure: Nutrien Financial gross margin divided by average Nutrien Financial receivables.
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate financial performance of Nutrien Financial.
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| Rolling four quarters ended December 31, 2020 | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Total/Average | |||||||||
| Nutrien Financial revenue | 16 | 40 | 36 | 37 | ||||||||||
| Deemed interest expense ^1^ | (5 | ) | (15 | ) | (15 | ) | (14 | ) | ||||||
| Net interest | 11 | 25 | 21 | 23 | **** | 80 | ||||||||
| Average Nutrien Financial receivables | 795 | 2,108 | 1,711 | 1,392 | **** | 1,502 | ||||||||
| Nutrien Financial net interest margin (%) | **** | 5.3 |
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Most directly comparable IFRS financial measure: Retail operating expenses^1^ as a percentage of Retail gross margin.
Definition: Retail operating expenses, excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.
Why we use the measure and whyit 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, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Total | ||||||||||
| Operating expenses ^1, 2^ | 689 | 826 | 691 | 768 | **** | 2,974 | **** | ||||||||
| Depreciation and amortization in operating<br>expenses | (153 | ) | (161 | ) | (167 | ) | (177 | ) | **** | (658 | ) | ||||
| Operating expenses excluding depreciation and<br>amortization | 536 | 665 | 524 | 591 | **** | 2,316 | **** | ||||||||
| Gross margin ^2^ | 541 | 1,627 | 683 | 885 | **** | 3,736 | **** | ||||||||
| Depreciation and amortization in cost of goods<br>sold | 2 | 2 | 3 | 3 | **** | 10 | **** | ||||||||
| Gross margin excluding depreciation and<br>amortization | 543 | 1,629 | 686 | 888 | **** | 3,746 | **** | ||||||||
| Cash operating coverage ratio (%) | **** | 61.8 | **** | ||||||||||||
| Cash operating coverage ratio before reclassification(%) ^3^ | **** | 61.1 | **** |
1 Includes Retail expenses below gross margin including selling expenses, general and administrative expenses and other (income) expenses.
2 Certain immaterial figures have been reclassified for the first three quarters of 2020.
3 Adjusted to reflect what the metric would have been prior to a reclassification of certain immaterial figures.
Retail Adjusted EBITDA per US Selling Location
Mostdirectly comparable IFRS financial measure: Retail US adjusted EBITDA.
Definition: Total Retail US adjusted EBITDA for the last four rolling quarters, adjusted for acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations.
Why we use the measure and why it is useful to investors: To assess our US Retail operating performance. This measure includes locations we have owned for more than 12 months. In the third quarter of 2020, we revised this measure from US EBITDA to US adjusted EBITDA to align with how we evaluate Retail results. There were no changes to this measure as a result of the change.
| Rolling four quarters ended December 31, 2020 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (millions of US dollars, except as otherwise noted) | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Total | |||||||
| Adjusted US EBITDA | (44 | ) | 766 | 86 | 177 | **** | 985 | **** | ||||
| Adjustments for acquisitions | **** | (5 | ) | |||||||||
| Adjusted US EBITDA adjusted for acquisitions | **** | 980 | **** | |||||||||
| Number of US selling locations adjusted for<br>acquisitions | **** | 912 | **** | |||||||||
| Adjusted EBITDA per US selling location(thousands of US dollars) | **** | **** | 1,075 | **** |
18
Retail Normalized Comparable Store Sales
Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.
Definition: Prior year comparable store sales adjusted for published potash, nitrogen and phosphate benchmark prices and foreign exchange rates used in the current year. We retain sales of closed locations in the comparable base if the closed location is in close proximity to an existing location, unless we plan to exit the market area or are unable to economically or logistically serve it. We do not adjust for temporary closures, expansions or renovations of stores.
Why we use the measure and why it is useful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.
| Twelve Months Ended December 31 | ||||
|---|---|---|---|---|
| (millions of US dollars, except as otherwise<br>noted) | **** | 2020 | 2019 | |
| Sales from comparable base | ||||
| Current period | **** | 13,546 | 12,568 | |
| Prior period ^1^ | **** | 13,282 | 12,520 | |
| Comparable store sales (%) | **** | 2 | 0 | |
| Prior period normalized for benchmark prices and foreign<br>exchange rates ^1^ | **** | 12,784 | 12,636 | |
| Normalized comparable store sales (%) | **** | 6 | (1 | ) |
1 Certain immaterial figures have been reclassified in 2020.
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| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Financial Statements
Condensed ConsolidatedStatements of Earnings (Loss)
| Three Months EndedDecember 31 | Twelve Months EndedDecember 31 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Note | 2020 | 2019 | 2020 | 2019 | ||||||||||
| Note 1 | Note 1 | |||||||||||||
| SALES | 2 | **** | 4,052 | **** | 3,462 | **** | 20,908 | **** | 20,084 | |||||
| Freight, transportation and distribution | **** | 202 | **** | 172 | **** | 855 | **** | 768 | ||||||
| Cost of goods sold | **** | 2,685 | **** | 2,256 | **** | 14,814 | **** | 13,814 | ||||||
| GROSS MARGIN | **** | 1,165 | **** | 1,034 | **** | 5,239 | **** | 5,502 | ||||||
| Selling expenses | **** | 732 | **** | 670 | **** | 2,813 | **** | 2,505 | ||||||
| General and administrative expenses | **** | 117 | **** | 117 | **** | 429 | **** | 404 | ||||||
| Provincial mining and other taxes | **** | 41 | **** | 39 | **** | 204 | **** | 292 | ||||||
| Share-based compensation expense | **** | 60 | **** | 9 | **** | 69 | **** | 104 | ||||||
| Impairment of assets | **** | 1 | **** | 87 | **** | 824 | **** | 120 | ||||||
| Other (income) expenses | 3 | **** | (189 | ) | 49 | **** | (2 | ) | 215 | |||||
| EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES | **** | 403 | **** | 63 | **** | 902 | **** | 1,862 | ||||||
| Finance costs | **** | 119 | **** | 141 | **** | 520 | **** | 554 | ||||||
| EARNINGS (LOSS) BEFORE INCOME TAXES | **** | 284 | **** | (78 | ) | **** | 382 | **** | 1,308 | |||||
| Income tax (recovery) expense | **** | (32 | ) | (30 | ) | **** | (77 | ) | 316 | |||||
| NET EARNINGS (LOSS) | **** | 316 | **** | (48 | ) | **** | 459 | **** | 992 | |||||
| NET EARNINGS (LOSS) PER SHARE (“EPS”) | ||||||||||||||
| Basic | **** | 0.55 | **** | (0.08 | ) | **** | 0.81 | **** | 1.70 | |||||
| Diluted | **** | 0.55 | **** | (0.08 | ) | **** | 0.81 | **** | 1.70 | |||||
| Weighted average shares outstanding for basic EPS | **** | 569,180,000 | **** | 572,916,000 | **** | 569,657,000 | **** | 582,269,000 | ||||||
| Weighted average shares outstanding for diluted EPS | **** | 569,393,000 | **** | 572,916,000 | **** | 569,686,000 | **** | 583,102,000 | ||||||
| Condensed Consolidated Statements of Comprehensive Income | **** | |||||||||||||
| Three Months EndedDecember 31 | Twelve Months EndedDecember 31 | |||||||||||||
| (Net of related income taxes) | 2020 | 2019 | 2020 | 2019 | ||||||||||
| NET EARNINGS (LOSS) | **** | 316 | **** | (48 | ) | **** | 459 | **** | 992 | |||||
| Other comprehensive income | ||||||||||||||
| Items that will not be reclassified to net earnings (loss): | ||||||||||||||
| Net actuarial gain on defined benefit plans | **** | 72 | **** | 7 | **** | 75 | **** | 7 | ||||||
| Net fair value gain (loss) on investments | **** | 18 | **** | 1 | **** | (7 | ) | (25 | ) | |||||
| Items that have been or may be subsequently reclassified to<br><br><br>net earnings (loss): | ||||||||||||||
| Gain on currency translation of foreign operations | **** | 194 | **** | 83 | **** | 142 | **** | 47 | ||||||
| Other | **** | (4 | ) | 2 | **** | (16 | ) | 7 | ||||||
| OTHER COMPREHENSIVE INCOME | **** | 280 | **** | 93 | **** | 194 | **** | 36 | ||||||
| COMPREHENSIVE INCOME | **** | 596 | **** | 45 | **** | 653 | **** | 1,028 |
(See Notes to the Condensed Consolidated Financial Statements)
20
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Statements of Cash Flows
| Three Months EndedDecember 31 | Twelve Months EndedDecember 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| OPERATING ACTIVITIES | ||||||||||||
| Net earnings (loss) | **** | 316 | **** | (48 | ) | **** | 459 | **** | 992 | |||
| Adjustments for: | ||||||||||||
| Depreciation and amortization | **** | 499 | **** | 436 | **** | 1,989 | **** | 1,799 | ||||
| Share-based compensation expense | **** | 60 | **** | 9 | **** | 69 | **** | 104 | ||||
| Impairment of assets | **** | 1 | **** | 87 | **** | 824 | **** | 120 | ||||
| Net gain on disposal of investment in Misr Fertilizers Production Company S.A.E.<br>(“MOPCO”) | **** | (250 | ) | - | **** | (250 | ) | - | ||||
| Provision for (recovery of) deferred income tax | **** | 90 | **** | (1 | ) | **** | (9 | ) | 177 | |||
| Other long-term assets, liabilities and miscellaneous | **** | (112 | ) | 6 | **** | (333 | ) | (17 | ) | |||
| Cash from operations before working capital changes | **** | 604 | **** | 489 | **** | 2,749 | **** | 3,175 | ||||
| Changes in non-cash operating working capital: | ||||||||||||
| Receivables | **** | 1,600 | **** | 1,363 | **** | 145 | **** | (64 | ) | |||
| Inventories | **** | (1,068 | ) | (1,049 | ) | **** | 85 | **** | 190 | |||
| Prepaid expenses and other current assets | **** | (946 | ) | (1,039 | ) | **** | (10 | ) | (238 | ) | ||
| Payables and accrued charges | **** | 2,588 | **** | 2,655 | **** | 354 | **** | 602 | ||||
| CASH PROVIDED BY OPERATING ACTIVITIES | **** | 2,778 | **** | 2,419 | **** | 3,323 | **** | 3,665 | ||||
| INVESTING ACTIVITIES | ||||||||||||
| Additions to property, plant and equipment | **** | (496 | ) | (551 | ) | **** | (1,423 | ) | (1,728 | ) | ||
| Additions to intangible assets | **** | (39 | ) | (45 | ) | **** | (126 | ) | (163 | ) | ||
| Business acquisitions, net of cash acquired | **** | (17 | ) | (74 | ) | **** | (233 | ) | (911 | ) | ||
| Proceeds from disposal of investment in MOPCO | **** | 540 | **** | - | **** | 540 | **** | - | ||||
| Proceeds from disposal of discontinued operations, net of tax | **** | - | **** | - | **** | - | **** | 55 | ||||
| Purchase of investments | **** | (23 | ) | (34 | ) | **** | (102 | ) | (198 | ) | ||
| Other | **** | 40 | **** | 39 | **** | 140 | **** | 147 | ||||
| CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES | **** | 5 | **** | (665 | ) | **** | (1,204 | ) | (2,798 | ) | ||
| FINANCING ACTIVITIES | ||||||||||||
| Transaction costs on long-term debt | **** | - | **** | - | **** | (15 | ) | (29 | ) | |||
| (Repayment of) proceeds from short-term debt, net | **** | (1,493 | ) | (1,318 | ) | **** | (892 | ) | 216 | |||
| Proceeds from long-term debt | **** | 21 | **** | - | **** | 1,541 | **** | 1,510 | ||||
| Repayment of long-term debt | **** | (2 | ) | - | **** | (509 | ) | (1,010 | ) | |||
| Repayment of principal portion of lease liabilities | **** | (71 | ) | (68 | ) | **** | (274 | ) | (234 | ) | ||
| Dividends paid | **** | (259 | ) | (258 | ) | **** | (1,030 | ) | (1,022 | ) | ||
| Repurchase of common shares | **** | - | **** | - | **** | (160 | ) | (1,930 | ) | |||
| Issuance of common shares | **** | - | **** | 2 | **** | - | **** | 20 | ||||
| CASH USED IN FINANCING ACTIVITIES | **** | (1,804 | ) | (1,642 | ) | **** | (1,339 | ) | (2,479 | ) | ||
| EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASHEQUIVALENTS | **** | 10 | **** | (9 | ) | **** | 3 | **** | (31 | ) | ||
| INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS | **** | 989 | **** | 103 | **** | 783 | **** | (1,643 | ) | |||
| CASH AND CASH EQUIVALENTS – BEGINNING OFPERIOD | **** | 465 | **** | 568 | **** | 671 | **** | 2,314 | ||||
| CASH AND CASH EQUIVALENTS – END OF PERIOD | **** | 1,454 | **** | 671 | **** | 1,454 | **** | 671 | ||||
| Cash and cash equivalents comprised of: | ||||||||||||
| Cash | **** | 1,375 | **** | 532 | **** | 1,375 | **** | 532 | ||||
| Short-term investments | **** | 79 | **** | 139 | **** | 79 | **** | 139 | ||||
| **** | 1,454 | **** | 671 | **** | 1,454 | **** | 671 | |||||
| SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||||||
| Interest paid | **** | 164 | **** | 152 | **** | 498 | **** | 505 | ||||
| Income taxes paid | **** | 64 | **** | 28 | **** | 156 | **** | 29 | ||||
| Total cash outflow for leases | **** | 79 | **** | 92 | **** | 345 | **** | 345 |
(See Notes to the Condensed Consolidated Financial Statements)
21
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Statements of Changes in Shareholders’ Equity
| Accumulated Other Comprehensive (Loss) Income (“AOCI”) | ||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Number of<br>Common<br>Shares | Share<br>Capital | Contributed<br>Surplus | Net Fair<br>Value<br>Loss on<br>Investments | Net<br><br><br>Actuarial<br>Gain on<br>Defined<br>Benefit<br>Plans ^1^ | Loss on<br>Currency<br>Translation<br>of Foreign<br>Operations | Other | Total<br>AOCI | Retained<br>Earnings | Total<br>Equity ^2^ | |||||||||||||||||||||
| BALANCE – DECEMBER 31, 2018 | 608,535,477 | 16,740 | 231 | (7 | ) | - | (251 | ) | (33 | ) | (291 | ) | 7,745 | 24,425 | ||||||||||||||||
| Net earnings | - | - | - | - | - | - | - | - | 992 | 992 | ||||||||||||||||||||
| Other comprehensive (loss) income | - | - | - | (25 | ) | 7 | 47 | 7 | 36 | - | 36 | |||||||||||||||||||
| Shares repurchased | (36,067,323 | ) | (992 | ) | - | - | - | - | - | - | (886 | ) | (1,878 | ) | ||||||||||||||||
| Dividends declared | - | - | - | - | - | - | - | - | (754 | ) | (754 | ) | ||||||||||||||||||
| Effect of share-based compensation including issuance of common shares | 474,655 | 23 | 17 | - | - | - | - | - | - | 40 | ||||||||||||||||||||
| Transfer of net loss on sale of investment | - | - | - | 3 | - | - | - | 3 | (3 | ) | - | |||||||||||||||||||
| Transfer of net loss on cash flow hedges | - | - | - | - | - | - | 8 | 8 | - | 8 | ||||||||||||||||||||
| Transfer of net actuarial gain on defined benefit<br>plans | - | - | - | - | (7 | ) | - | - | (7 | ) | 7 | - | ||||||||||||||||||
| BALANCE – DECEMBER 31, 2019 | 572,942,809 | 15,771 | 248 | (29 | ) | - | (204 | ) | (18 | ) | (251 | ) | 7,101 | 22,869 | ||||||||||||||||
| Net earnings | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 459 | **** | **** | 459 | **** |
| Other comprehensive (loss) income | **** | - | **** | **** | - | **** | **** | - | **** | **** | (7 | ) | **** | 75 | **** | **** | 142 | **** | **** | (16 | ) | **** | 194 | **** | **** | - | **** | **** | 194 | **** |
| Shares repurchased | **** | (3,832,580 | ) | **** | (105 | ) | **** | (55 | ) | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (160 | ) |
| Dividends declared | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (1,029 | ) | **** | (1,029 | ) |
| Effect of share-based compensation including issuance of common shares | **** | 150,177 | **** | **** | 7 | **** | **** | 12 | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 19 | **** |
| Transfer of net loss on cash flow hedges | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 13 | **** | **** | 13 | **** | **** | - | **** | **** | 13 | **** |
| Transfer of net actuarial gain on defined benefit<br>plans | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | (75 | ) | **** | - | **** | **** | - | **** | **** | (75 | ) | **** | 75 | **** | **** | - | **** |
| BALANCE – DECEMBER 31, 2020 | **** | 569,260,406 | **** | **** | 15,673 | **** | **** | 205 | **** | **** | (36 | ) | **** | - | **** | **** | (62 | ) | **** | (21 | ) | **** | (119 | ) | **** | 6,606 | **** | **** | 22,365 | **** |
1 Any amounts incurred during a period were transferred to retained earnings at each period-end. Therefore, no balance exists at the beginning or end of period.
2 All equity transactions were attributable to common shareholders.
(See Notes to the Condensed Consolidated Financial Statements)
22
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
Condensed Consolidated Balance Sheets
| December 31 | December 31 | |||||
|---|---|---|---|---|---|---|
| As at | 2020 | 2019 | ||||
| ASSETS | ||||||
| Current assets | ||||||
| Cash and cash equivalents | **** | 1,454 | **** | 671 | ||
| Receivables | **** | 3,581 | **** | 3,542 | ||
| Inventories | **** | 4,930 | **** | 4,975 | ||
| Prepaid expenses and other current assets | **** | 1,505 | **** | 1,477 | ||
| **** | 11,470 | **** | 10,665 | |||
| Non-current assets | ||||||
| Property, plant and equipment | **** | 19,660 | **** | 20,335 | ||
| Goodwill | **** | 12,198 | **** | 11,986 | ||
| Other intangible assets | **** | 2,388 | **** | 2,428 | ||
| Investments | **** | 562 | **** | 821 | ||
| Other assets | **** | 914 | **** | 564 | ||
| TOTAL ASSETS | **** | 47,192 | **** | 46,799 | ||
| LIABILITIES | ||||||
| Current liabilities | ||||||
| Short-term debt | **** | 159 | **** | 976 | ||
| Current portion of long-term debt | **** | 14 | **** | 502 | ||
| Current portion of lease liabilities | **** | 249 | **** | 214 | ||
| Payables and accrued charges | **** | 8,058 | **** | 7,437 | ||
| **** | 8,480 | **** | 9,129 | |||
| Non-current liabilities | ||||||
| Long-term debt | **** | 10,047 | **** | 8,553 | ||
| Lease liabilities | **** | 891 | **** | 859 | ||
| Deferred income tax liabilities | **** | 3,149 | **** | 3,145 | ||
| Pension and other post-retirement benefit liabilities | **** | 454 | **** | 433 | ||
| Asset retirement obligations and accrued environmental costs | **** | 1,597 | **** | 1,650 | ||
| Other non-current<br>liabilities | **** | 209 | **** | 161 | ||
| TOTAL LIABILITIES | **** | 24,827 | **** | 23,930 | ||
| SHAREHOLDERS’ EQUITY | ||||||
| Share capital | **** | 15,673 | **** | 15,771 | ||
| Contributed surplus | **** | 205 | **** | 248 | ||
| Accumulated other comprehensive loss | **** | (119 | ) | (251 | ) | |
| Retained earnings | **** | 6,606 | **** | 7,101 | ||
| TOTAL SHAREHOLDERS’ EQUITY | **** | 22,365 | **** | 22,869 | ||
| TOTAL LIABILITIES AND SHAREHOLDERS’EQUITY | **** | 47,192 | **** | 46,799 |
(See Notes to the Condensed Consolidated Financial Statements)
23
| 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, 2020
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.
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 consistent with those used in the preparation of our 2019 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 2019 annual consolidated financial statements. Our 2020 annual consolidated financial statements, which are expected to be issued in February 2021, will include additional information under IFRS.
Certain immaterial 2019 figures have been reclassified in the condensed consolidated statements of earnings (loss) and segment information.
In management’s opinion, the unaudited condensed consolidated financial statements include all adjustments necessary to fairly present such information in all material respects.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Retail Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produce. Sales reported under our Corporate and Others segment primarily relates to our non-core Canadian business, which was sold in 2020.
In the third quarter of 2020, the Chief Operating Decision Maker changed the measure used to evaluate the performance of our operating segments from net earnings (loss) before finance costs, income taxes, and depreciation and amortization (“EBITDA”) to adjusted EBITDA. Adjusted EBITDA provides a better indication of the segment’s performance as it excludes the impact of impairments and other costs that are centrally managed by our corporate function. Due to the change in the measurement of the segments, we have presented adjusted EBITDA for the comparative periods.
24
| Unaudited | In millions of US dollars except as otherwise noted | ||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Three Months Ended December 31, 2020 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Retail | Potash | Nitrogen | Phosphate | Corporateand Others | Eliminations | Consolidated | |||||||||||||||
| Sales – third party | **** | 2,608 | **** | **** | 467 | **** | **** | 647 | **** | **** | 318 | **** | **** | 12 | **** | **** | - | **** | **** | 4,052 | **** |
| – intersegment | **** | 10 | **** | **** | 57 | **** | **** | 147 | **** | **** | 56 | **** | **** | - | **** | **** | (270 | ) | **** | - | **** |
| Sales – total | **** | 2,618 | **** | **** | 524 | **** | **** | 794 | **** | **** | 374 | **** | **** | 12 | **** | **** | (270 | ) | **** | 4,052 | **** |
| Freight, transportation and distribution | **** | - | **** | **** | 74 | **** | **** | 125 | **** | **** | 54 | **** | **** | - | **** | **** | (51 | ) | **** | 202 | **** |
| Net sales | **** | 2,618 | **** | **** | 450 | **** | **** | 669 | **** | **** | 320 | **** | **** | 12 | **** | **** | (219 | ) | **** | 3,850 | **** |
| Cost of goods sold | **** | 1,733 | **** | **** | 305 | **** | **** | 557 | **** | **** | 304 | **** | **** | 11 | **** | **** | (225 | ) | **** | 2,685 | **** |
| Gross margin | **** | 885 | **** | **** | 145 | **** | **** | 112 | **** | **** | 16 | **** | **** | 1 | **** | **** | 6 | **** | **** | 1,165 | **** |
| Selling expenses | **** | 727 | **** | **** | 2 | **** | **** | 8 | **** | **** | 2 | **** | **** | (7 | ) | **** | - | **** | **** | 732 | **** |
| General and administrative expenses | **** | 33 | **** | **** | 2 | **** | **** | 1 | **** | **** | 3 | **** | **** | 78 | **** | **** | - | **** | **** | 117 | **** |
| Provincial mining and other taxes | **** | - | **** | **** | 40 | **** | **** | - | **** | **** | - | **** | **** | 1 | **** | **** | - | **** | **** | 41 | **** |
| Share-based compensation expense | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 60 | **** | **** | - | **** | **** | 60 | **** |
| Impairment of assets | **** | - | **** | **** | 1 | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 1 | **** |
| Other expenses (income) | **** | 8 | **** | **** | 4 | **** | **** | (263 | ) | **** | (13 | ) | **** | 75 | **** | **** | - | **** | **** | (189 | ) |
| Earnings (loss) before finance costs and income taxes | **** | 117 | **** | **** | 96 | **** | **** | 366 | **** | **** | 24 | **** | **** | (206 | ) | **** | 6 | **** | **** | 403 | **** |
| Depreciation and amortization | **** | 180 | **** | **** | 123 | **** | **** | 146 | **** | **** | 39 | **** | **** | 11 | **** | **** | - | **** | **** | 499 | **** |
| EBITDA | **** | 297 | **** | **** | 219 | **** | **** | 512 | **** | **** | 63 | **** | **** | (195 | ) | **** | 6 | **** | **** | 902 | **** |
| Acquisition and integration related costs | **** | - | **** | **** | - | **** | **** | 4 | **** | **** | - | **** | **** | 18 | **** | **** | - | **** | **** | 22 | **** |
| Share-based compensation expense | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 60 | **** | **** | - | **** | **** | 60 | **** |
| Impairment of assets | **** | - | **** | **** | 1 | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 1 | **** |
| COVID-19 related expenses | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 18 | **** | **** | - | **** | **** | 18 | **** |
| Foreign exchange loss, net of related derivatives | **** | - | **** | **** | - | **** | **** | - | **** | **** | - | **** | **** | 15 | **** | **** | - | **** | **** | 15 | **** |
| Net gain on disposal of investment in MOPCO | **** | - | **** | **** | - | **** | **** | (250 | ) | **** | - | **** | **** | - | **** | **** | - | **** | **** | (250 | ) |
| Adjusted EBITDA | **** | 297 | **** | **** | 220 | **** | **** | 266 | **** | **** | 63 | **** | **** | (84 | ) | **** | 6 | **** | **** | 768 | **** |
| Assets – at December 31, 2020 | **** | 20,526 | **** | **** | 12,032 | **** | **** | 10,612 | **** | **** | 1,462 | **** | **** | 2,983 | **** | **** | (423 | ) | **** | 47,192 | **** |
| Three Months Ended December 31, 2019 | |||||||||||||||||||||
| Retail | Potash | Nitrogen | Phosphate | Corporate<br>and Others | Eliminations | Consolidated | |||||||||||||||
| Sales – third party | 2,181 | 374 | 575 | 298 | 34 | - | 3,462 | ||||||||||||||
| – intersegment | 10 | 29 | 125 | 43 | - | (207 | ) | - | |||||||||||||
| Sales – total | 2,191 | 403 | 700 | 341 | 34 | (207 | ) | 3,462 | |||||||||||||
| Freight, transportation and distribution | - | 53 | 97 | 54 | - | (32 | ) | 172 | |||||||||||||
| Net sales | 2,191 | 350 | 603 | 287 | 34 | (175 | ) | 3,290 | |||||||||||||
| Cost of goods sold | 1,435 | 211 | 496 | 281 | 34 | (201 | ) | 2,256 | |||||||||||||
| Gross margin | 756 | 139 | 107 | 6 | - | 26 | 1,034 | ||||||||||||||
| Selling expenses | 668 | 2 | 4 | - | (4 | ) | - | 670 | |||||||||||||
| General and administrative expenses | 30 | 6 | 4 | 4 | 73 | - | 117 | ||||||||||||||
| Provincial mining and other taxes | - | 50 | - | - | (11 | ) | - | 39 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 9 | - | 9 | ||||||||||||||
| Impairment of assets | - | - | - | - | 87 | - | 87 | ||||||||||||||
| Other (income) expenses | (11 | ) | (2 | ) | (19 | ) | 5 | 76 | - | 49 | |||||||||||
| Earnings (loss) before finance costs and income taxes | 69 | 83 | 118 | (3 | ) | (230 | ) | 26 | 63 | ||||||||||||
| Depreciation and amortization | 162 | 66 | 141 | 57 | 10 | - | 436 | ||||||||||||||
| EBITDA | 231 | 149 | 259 | 54 | (220 | ) | 26 | 499 | |||||||||||||
| Merger and related costs | - | - | - | - | 25 | - | 25 | ||||||||||||||
| Acquisition and integration related costs | - | - | - | - | 16 | - | 16 | ||||||||||||||
| Share-based compensation expense | - | - | - | - | 9 | - | 9 | ||||||||||||||
| Impairment of assets | - | - | - | - | 87 | - | 87 | ||||||||||||||
| Foreign exchange loss, net of related derivatives | - | - | - | - | 28 | - | 28 | ||||||||||||||
| Adjusted EBITDA | 231 | 149 | 259 | 54 | (55 | ) | 26 | 664 | |||||||||||||
| Assets – at December 31, 2019 | 19,990 | 11,696 | 10,991 | 2,198 | 2,129 | (205 | ) | 46,799 |
25
| Unaudited | In millions of US dollars except as otherwise noted | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Twelve Months Ended December 31, 2020 | ||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Retail | Potash | Nitrogen | Phosphate | Corporateand Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | **** | 14,748 | **** | 2,265 | **** | **** | 2,572 | **** | **** | 1,241 | **** | **** | 82 | **** | **** | - | **** | **** | 20,908 | **** |
| – intersegment | **** | 37 | **** | 248 | **** | **** | 628 | **** | **** | 202 | **** | **** | - | **** | **** | (1,115 | ) | **** | - | **** |
| Sales – total | **** | 14,785 | **** | 2,513 | **** | **** | 3,200 | **** | **** | 1,443 | **** | **** | 82 | **** | **** | (1,115 | ) | **** | 20,908 | **** |
| Freight, transportation and distribution | **** | - | **** | 367 | **** | **** | 460 | **** | **** | 241 | **** | **** | - | **** | **** | (213 | ) | **** | 855 | **** |
| Net sales | **** | 14,785 | **** | 2,146 | **** | **** | 2,740 | **** | **** | 1,202 | **** | **** | 82 | **** | **** | (902 | ) | **** | 20,053 | **** |
| Cost of goods sold | **** | 11,049 | **** | 1,183 | **** | **** | 2,265 | **** | **** | 1,166 | **** | **** | 74 | **** | **** | (923 | ) | **** | 14,814 | **** |
| Gross margin | **** | 3,736 | **** | 963 | **** | **** | 475 | **** | **** | 36 | **** | **** | 8 | **** | **** | 21 | **** | **** | 5,239 | **** |
| Selling expenses | **** | 2,795 | **** | 9 | **** | **** | 27 | **** | **** | 6 | **** | **** | (24 | ) | **** | - | **** | **** | 2,813 | **** |
| General and administrative expenses | **** | 135 | **** | 7 | **** | **** | 8 | **** | **** | 10 | **** | **** | 269 | **** | **** | - | **** | **** | 429 | **** |
| Provincial mining and other taxes | **** | - | **** | 201 | **** | **** | 1 | **** | **** | - | **** | **** | 2 | **** | **** | - | **** | **** | 204 | **** |
| Share-based compensation expense | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | 69 | **** | **** | - | **** | **** | 69 | **** |
| Impairment of assets | **** | - | **** | 23 | **** | **** | 27 | **** | **** | 769 | **** | **** | 5 | **** | **** | - | **** | **** | 824 | **** |
| Other expenses (income) | **** | 44 | **** | 8 | **** | **** | (288 | ) | **** | 6 | **** | **** | 228 | **** | **** | - | **** | **** | (2 | ) |
| Earnings (loss) before finance costs and income taxes | **** | 762 | **** | 715 | **** | **** | 700 | **** | **** | (755 | ) | **** | (541 | ) | **** | 21 | **** | **** | 902 | **** |
| Depreciation and amortization | **** | 668 | **** | 452 | **** | **** | 599 | **** | **** | 218 | **** | **** | 52 | **** | **** | - | **** | **** | 1,989 | **** |
| EBITDA | **** | 1,430 | **** | 1,167 | **** | **** | 1,299 | **** | **** | (537 | ) | **** | (489 | ) | **** | 21 | **** | **** | 2,891 | **** |
| Acquisition and integration related costs | **** | - | **** | - | **** | **** | 4 | **** | **** | - | **** | **** | 56 | **** | **** | - | **** | **** | 60 | **** |
| Share-based compensation expense | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | 69 | **** | **** | - | **** | **** | 69 | **** |
| Impairment of assets | **** | - | **** | 23 | **** | **** | 27 | **** | **** | 769 | **** | **** | 5 | **** | **** | - | **** | **** | 824 | **** |
| COVID-19 related expenses | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | 48 | **** | **** | - | **** | **** | 48 | **** |
| Foreign exchange loss, net of related derivatives | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | 19 | **** | **** | - | **** | **** | 19 | **** |
| Loss on disposal of business | **** | - | **** | - | **** | **** | - | **** | **** | - | **** | **** | 6 | **** | **** | - | **** | **** | 6 | **** |
| Net gain on disposal of investment in MOPCO | **** | - | **** | - | **** | **** | (250 | ) | **** | - | **** | **** | - | **** | **** | - | **** | **** | (250 | ) |
| Adjusted EBITDA | **** | 1,430 | **** | 1,190 | **** | **** | 1,080 | **** | **** | 232 | **** | **** | (286 | ) | **** | 21 | **** | **** | 3,667 | **** |
| Assets – at December 31, 2020 | **** | 20,526 | **** | 12,032 | **** | **** | 10,612 | **** | **** | 1,462 | **** | **** | 2,983 | **** | **** | (423 | ) | **** | 47,192 | **** |
| Twelve Months Ended December 31, 2019 | ||||||||||||||||||||
| Retail | Potash | Nitrogen | Phosphate | Corporate<br>and Others | Eliminations | Consolidated | ||||||||||||||
| Sales – third party | 13,244 | 2,702 | 2,608 | 1,397 | 133 | - | 20,084 | |||||||||||||
| – intersegment | 38 | 207 | 612 | 203 | - | (1,060 | ) | - | ||||||||||||
| Sales – total | 13,282 | 2,909 | 3,220 | 1,600 | 133 | (1,060 | ) | 20,084 | ||||||||||||
| Freight, transportation and distribution | - | 305 | 372 | 232 | - | (141 | ) | 768 | ||||||||||||
| Net sales | 13,282 | 2,604 | 2,848 | 1,368 | 133 | (919 | ) | 19,316 | ||||||||||||
| Cost of goods sold | 9,981 | 1,103 | 2,148 | 1,373 | 133 | (924 | ) | 13,814 | ||||||||||||
| Gross margin | 3,301 | 1,501 | 700 | (5 | ) | - | 5 | 5,502 | ||||||||||||
| Selling expenses | 2,484 | 9 | 25 | 5 | (18 | ) | - | 2,505 | ||||||||||||
| General and administrative expenses | 112 | 6 | 15 | 7 | 264 | - | 404 | |||||||||||||
| Provincial mining and other taxes | - | 287 | 2 | 1 | 2 | - | 292 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 104 | - | 104 | |||||||||||||
| Impairment of assets | - | - | - | - | 120 | - | 120 | |||||||||||||
| Other expenses (income) | 69 | (4 | ) | (46 | ) | 25 | 171 | - | 215 | |||||||||||
| Earnings (loss) before finance costs and income taxes | 636 | 1,203 | 704 | (43 | ) | (643 | ) | 5 | 1,862 | |||||||||||
| Depreciation and amortization | 595 | 390 | 535 | 237 | 42 | - | 1,799 | |||||||||||||
| EBITDA | 1,231 | 1,593 | 1,239 | 194 | (601 | ) | 5 | 3,661 | ||||||||||||
| Merger and related costs | - | - | - | - | 82 | - | 82 | |||||||||||||
| Acquisition and integration related costs | - | - | - | - | 16 | - | 16 | |||||||||||||
| Share-based compensation expense | - | - | - | - | 104 | - | 104 | |||||||||||||
| Impairment of assets | - | - | - | - | 120 | - | 120 | |||||||||||||
| Foreign exchange loss, net of related derivatives | - | - | - | - | 42 | - | 42 | |||||||||||||
| Adjusted EBITDA | 1,231 | 1,593 | 1,239 | 194 | (237 | ) | 5 | 4,025 | ||||||||||||
| Assets – at December 31, 2019 | 19,990 | 11,696 | 10,991 | 2,198 | 2,129 | (205 | ) | 46,799 |
26
| Unaudited | In millions of US dollars except as otherwise noted |
|---|
NOTE 3 OTHER (INCOME) EXPENSES
| Three Months EndedDecember 31 | Twelve Months EndedDecember 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2020 | 2019 | 2020 | 2019 | |||||||||
| Merger and related costs | **** | - | **** | 25 | **** | - | **** | 82 | ||||
| Acquisition and integration related costs | **** | 22 | **** | 16 | **** | 60 | **** | 16 | ||||
| Foreign exchange loss, net of related derivatives | **** | 17 | **** | 28 | **** | 18 | **** | 42 | ||||
| Earnings of equity-accounted investees | **** | (27 | ) | (13 | ) | **** | (73 | ) | (66 | ) | ||
| Bad debt (recovery) expense | **** | (3 | ) | (14 | ) | **** | 6 | **** | 24 | |||
| COVID-19 related expenses | **** | 18 | **** | - | **** | 48 | **** | - | ||||
| Loss on disposal of business | **** | - | **** | - | **** | 6 | **** | - | ||||
| Net gain on disposal of investment in MOPCO | **** | (250 | ) | - | **** | (250 | ) | - | ||||
| Other expenses | **** | 34 | **** | 7 | **** | 183 | **** | 117 | ||||
| **** | (189 | ) | 49 | **** | (2 | ) | 215 |
In the fourth quarter of 2020, as a result of our strategic decision to dispose of our investment in MOPCO, we received cash consideration of $540 for the disposal of the investment and settlement of legal claims. This resulted in a pre-tax gain of $250 recorded in other (income) expenses.
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