Nutrien Reports Record Earnings and an Excellent Outlook

Posted: Aug 9, 2021

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

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

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

Highlights:

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

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

Management’s Discussion and Analysis

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

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

Market Outlook

Agriculture and Retail

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

Crop Nutrient Markets

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

Financial Outlook and Guidance

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

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

2021 Guidance Ranges ¹		Low			High
Adjusted net earnings per share ²	$	4.60		$	5.10
Adjusted EBITDA (billions) ²	$	6.0		$	6.4
Retail Adjusted EBITDA (billions)	$	1.6		$	1.7
Potash Adjusted EBITDA (billions)	$	2.4		$	2.6
Nitrogen Adjusted EBITDA (billions)	$	1.85		$	2.05
Phosphate Adjusted EBITDA (millions)	$	400		$	500
Potash sales tonnes (millions)³		13.5			13.9
Nitrogen sales tonnes (millions) ³		10.8			11.2
Depreciation and amortization (billions)	$	1.9		$	2.0
Effective tax rate on adjusted earnings		24	%		26	%
Sustaining capital expenditures (billions) ²	$	1.15		$	1.25
1 See the “Forward-Looking Statements” section.
2 See the “Non-IFRS Financial Measures” section.
3 Manufactured products only. Nitrogen excludes ESN® and Rainbow products.

Consolidated Results

	Three Months Ended June 30			Six Months Ended June 30
(millions of US dollars)	2021	2020	% Change	2021	2020	% Change
Sales ¹	9,763	8,431	16	14,421	12,629	14
Freight, transportation and distribution	222	237	(6)	433	449	(4)
Cost of goods sold	6,659	6,024	11	9,950	9,125	9
Gross margin ¹	2,882	2,170	33	4,038	3,055	32
Expenses ¹	1,263	1,031	23	2,141	1,834	17
Net earnings	1,113	765	45	1,246	730	71
Adjusted EBITDA ²	2,215	1,721	29	3,021	2,229	36
Cash provided by operating activities	1,966	1,756	12	1,814	1,230	47
Free cash flow (“FCF”) ²	1,413	1,173	20	1,889	1,354	40
FCF including changes in non-cash operating working capital ²	1,662	1,611	3	1,346	922	46
1 Certain immaterial figures have been reclassified for the three and six months ended June 30, 2020.
2 See the “Non-IFRS Financial Measures” section.

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

Segment Results

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

Nutrien Ag Solutions (“Retail”)

	Three Months Ended June 30
(millions of US dollars, except	Dollars			Gross Margin			Gross Margin (%)
as otherwise noted)	2021	2020	% Change	2021	2020	% Change	2021	2020
Sales
Crop nutrients	3,045	2,527	20	703	559	26	23	22
Crop protection products	2,666	2,436	9	587	547	7	22	22
Seed	1,216	1,141	7	237	219	8	19	19
Merchandise	268	253	6	45	45	–	17	18
Nutrien Financial ¹	59	40	48	59	40	48	100	100
Services and other ¹	335	400	(16)	279	250	12	83	63
Nutrien Financial elimination ²	(52)	(33)	58	(52)	(33)	58	100	100
	7,537	6,764	11	1,858	1,627	14	25	24
Cost of goods sold	5,679	5,137	11
Gross margin	1,858	1,627	14
Expenses ^1,3	938	826	14
Earnings before finance costs and taxes (“EBIT”)	920	801	15
Depreciation and amortization	169	163	4
EBITDA	1,089	964	13
Adjustments ⁴	8	–	n/m
Adjusted EBITDA	1,097	964	14
1 Certain immaterial figures have been reclassified for the three months ended June 30, 2020.
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
3 Includes selling expenses of $863 million (2020 – $764 million).
4 See Note 2 to the interim financial statements.

	Six Months Ended June 30
(millions of US dollars, except	Dollars			Gross Margin			Gross Margin (%)
as otherwise noted)	2021	2020	% Change	2021	2020	% Change	2021	2020
Sales
Crop nutrients	4,061	3,312	23	923	715	29	23	22
Crop protection products	3,751	3,446	9	763	704	8	20	20
Seed	1,679	1,535	9	306	278	10	18	18
Merchandise	498	469	6	83	79	5	17	17
Nutrien Financial ¹	84	56	50	84	56	50	100	100
Services and other ¹	508	655	(22)	423	384	10	83	59
Nutrien Financial elimination	(72)	(48)	50	(72)	(48)	50	100	100
	10,509	9,425	12	2,510	2,168	16	24	23
Cost of goods sold	7,999	7,257	10
Gross margin	2,510	2,168	16
Expenses ^1,2	1,659	1,515	10
EBIT	851	653	30
Depreciation and amortization	346	318	9
EBITDA	1,197	971	23
Adjustments ³	9	–	n/m
Adjusted EBITDA	1,206	971	24
1 Certain immaterial figures have been reclassified for the six months ended June 30, 2020.
2 Includes selling expenses of $1,530 million (2020 – $1,399 million).
3 See Note 2 to the interim financial statements.

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

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

Potash

	Three Months Ended June 30
(millions of US dollars, except	Dollars				Tonnes (thousands)				Average per Tonne
as otherwise noted)	2021	2020	% Change		2021	2020	% Change		2021	2020	% Change
Manufactured product
Net sales
North America	326	232		41	1,172	1,201		(2)	278	194		43
Offshore	491	356		38	2,449	2,414		1	200	147		36
	817	588		39	3,621	3,615		–	226	163		39
Cost of goods sold	317	310		2					88	86		2
Gross margin – total	500	278		80					138	77		79
Expenses ¹	123	52		137	Depreciation and amortization				32	30		7
EBIT	377	226		67	Gross margin excluding depreciation
Depreciation and amortization	116	109		6	and amortization – manufactured ²				170	107		59
EBITDA	493	335		47	Potash cash cost of product
Adjustments ³	2	–		n/m	manufactured ²				59	52		13
Adjusted EBITDA	495	335		48
1 Includes provincial mining taxes of $107 million (2020 – $46 million).
2 See the “Non-IFRS Financial Measures” section.
3 See Note 2 to the interim financial statements.

	Six Months Ended June 30
(millions of US dollars, except	Dollars				Tonnes (thousands)				Average per Tonne
as otherwise noted)	2021	2020	% Change		2021	2020	% Change		2021	2020	% Change
Manufactured product
Net sales
North America	658	457		44	2,642	2,348		13	249	195		28
Offshore	770	648		19	4,136	4,144		–	186	156		19
	1,428	1,105		29	6,778	6,492		4	211	170		24
Cost of goods sold	608	575		6					90	88		2
Gross margin – total	820	530		55					121	82		48
Expenses ¹	187	115		63	Depreciation and amortization				35	32		9
EBIT	633	415		53	Gross margin excluding depreciation
Depreciation and amortization	240	205		17	and amortization – manufactured				156	114		37
EBITDA	873	620		41	Potash cash cost of product
Adjustments ²	2	–		n/m	manufactured				58	56		4
Adjusted EBITDA	875	620		41
1 Includes provincial mining taxes of $165 million (2020 – $103 million).
2 See Note 2 to the interim financial statements.

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

Canpotex Sales by Market

(percentage of sales volumes, except as	Three Months Ended June 30			Six Months Ended June 30
otherwise noted)	2021	2020	Change	2021	2020	Change
Other Asian markets ¹	41	26	15	39	28	11
Latin America	35	36	(1)	33	31	2
China	11	19	(8)	12	22	(10)
Other markets	10	7	3	11	7	4
India	3	12	(9)	5	12	(7)
	100	100		100	100
1 All Asian markets except China and India.

Nitrogen

	Three Months Ended June 30
(millions of US dollars, except	Dollars				Tonnes (thousands)				Average per Tonne
as otherwise noted)	2021	2020	% Change		2021	2020	% Change		2021	2020	% Change
Manufactured product
Net sales
Ammonia	346	229		51	836	935		(11)	416	244		70
Urea	346	273		27	819	1,000		(18)	421	273		54
Solutions, nitrates and sulfates	290	194		49	1,311	1,255		4	221	154		44
	982	696		41	2,966	3,190		(7)	331	218		52
Cost of goods sold	597	508		18					201	159		26
Gross margin – manufactured	385	188		105					130	59		120
Gross margin – other ¹	31	20		55	Depreciation and amortization				52	54		(4)
Gross margin – total	416	208		100	Gross margin excluding depreciation
Expenses (income)	17	(3)		n/m	and amortization – manufactured				182	113		61
EBIT	399	211		89	Ammonia controllable cash cost of
Depreciation and amortization	155	172		(10)	product manufactured ²				51	40		28
EBITDA	554	383		45
Adjustments ³	1	–		n/m
Adjusted EBITDA	555	383		45
1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $197 million (2020 – $157 million) less cost of goods sold of $166 million (2020 – $137 million).
2 See the “Non-IFRS Financial Measures” section.
3 See Note 2 to the interim financial statements.

	Six Months Ended June 30
(millions of US dollars, except	Dollars				Tonnes (thousands)				Average per Tonne
as otherwise noted)	2021	2020	% Change		2021	2020	% Change		2021	2020	% Change
Manufactured product
Net sales
Ammonia	506	359		41	1,408	1,502		(6)	360	239		51
Urea	595	510		17	1,576	1,856		(15)	377	275		37
Solutions, nitrates and sulfates	454	357		27	2,385	2,360		1	190	151		26
	1,555	1,226		27	5,369	5,718		(6)	290	214		36
Cost of goods sold	1,037	952		9					194	166		17
Gross margin – manufactured	518	274		89					96	48		100
Gross margin – other ¹	48	31		55	Depreciation and amortization				53	56		(5)
Gross margin – total	566	305		86	Gross margin excluding depreciation
Expenses	–	8		(100)	and amortization – manufactured				149	104		43
EBIT	566	297		91	Ammonia controllable cash cost of
Depreciation and amortization	284	322		(12)	product manufactured				51	43		19
EBITDA	850	619		37
Adjustments ²	5	–		n/m
Adjusted EBITDA	855	619		38
1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $384 million (2020 – $305 million) less cost of goods sold of $336 million (2020 – $274 million).
2 See Note 2 to the interim financial statements.

Contacts

Investor Relations:
Richard Downey

Vice President, Investor Relations

(403) 225-7357

Investors@nutrien.com

Tim Mizuno

Director, Investor Relations

(306) 933-8548

Media Relations:
Megan Fielding

Vice President, Brand & Culture Communications

(403) 797-3015

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