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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Nutrien Ltd | NYSE:NTR | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
1.07 | 2.02% | 54.00 | 54.26 | 53.27 | 53.27 | 1,554,149 | 01:00:00 |
Nutrien Ltd. (TSX and NYSE: NTR) announced today its first-quarter 2021 results, with net earnings of $133 million ($0.22 diluted earnings per share). First-quarter adjusted net earnings1 were $0.29 per share and adjusted EBITDA1 was $806 million.
“Our earnings and free cash flow1 results highlight the strength of our integrated business model, execution of strategic initiatives and the recovery in global agricultural markets. Nutrien delivered a record first quarter for Retail and strong fertilizer volumes and margins,” commented Mayo Schmidt, Nutrien’s President and CEO.
“Crop prices and cash margins are at multi-year highs and growers are responding accordingly with increased seeded acreage and a focus on maximizing yields and our team at Nutrien is supporting them at every level. We are delivering the end-to-end services and products they need including our full suite of crop inputs, digital tools and innovative and sustainable solutions that help achieve higher yields. This is a very exciting time for Nutrien, and the team is focused on executing Nutrien’s strategy and achieving operational excellence across our business,” added Mr. Schmidt.
Highlights:
______________________________
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 From 2018 levels.
Management’s Discussion and Analysis
The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of May 3, 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 months ended March 31, 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 Nutrient Markets
Financial Outlook and Guidance
Based on market factors detailed above, we are raising full-year 2021 adjusted net earnings guidance to $2.55 to $3.25 per share from $2.05 to $2.75 per share and full-year 2021 adjusted EBITDA guidance to $4.4 to $4.9 billion from $4.0 to $4.5 billion. First-half 2021 guidance is provided at $2.00 to $2.20 adjusted net earnings 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
$
2.55
$
3.25
Adjusted EBITDA (billions) 2
$
4.4
$
4.9
Retail Adjusted EBITDA (billions)
$
1.55
$
1.65
Potash Adjusted EBITDA (billions)
$
1.5
$
1.7
Nitrogen Adjusted EBITDA (billions)
$
1.3
$
1.5
Phosphate Adjusted EBITDA (millions)
$
275
$
375
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
23
%
25
%
Sustaining capital expenditures (billions) 2
$
1.1
$
1.2
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 March 31
(millions of US dollars)
2021
2020
% Change
Sales 1
4,658
4,198
11
Freight, transportation and distribution
211
212
-
Cost of goods sold
3,291
3,101
6
Gross margin 1
1,156
885
31
Expenses 1
878
803
9
Net earnings (loss)
133
(35)
n/m
Adjusted EBITDA 2
806
508
59
Cash used in operating activities
(152)
(526)
71
Free cash flow ("FCF") 2
476
181
163
FCF including changes in non-cash operating working capital 2
(316)
(689)
54
1 Certain immaterial figures have been reclassified for the three months ended March 31, 2020.
2 See the "Non-IFRS Financial Measures" section.
Net earnings and adjusted EBITDA increased significantly in the first quarter of 2021 compared to the same period in 2020 due to strong Nutrien Ag Solutions (“Retail”) earnings growth, higher crop nutrient net realized selling prices and higher North American potash sales. Cash flow from operating activities increased in the first quarter of 2021 compared to the first quarter of 2020 helping to generate $476 million in free cash flow, more than double compared to the amount generated in the first quarter of 2020. The COVID-19 pandemic had limited impact on our results during the periods.
Segment Results
Our discussion of segment results set out on the following pages is a comparison of the results for the three months ended March 31, 2021 to the results for the three months ended March 31, 2020, unless otherwise noted.
Nutrien Ag Solutions (“Retail”)
Three Months Ended March 31
(millions of US dollars, except
Dollars
Gross Margin
Gross Margin (%)
as otherwise noted)
2021
2020
% Change
2021
2020
% Change
2021
2020
Sales
Crop nutrients
1,016
785
29
220
156
41
22
20
Crop protection products
1,085
1,010
7
176
157
12
16
16
Seed
463
394
18
69
59
17
15
15
Merchandise
230
216
6
38
34
12
17
16
Nutrien Financial
25
16
56
25
16
56
100
100
Services and other 1
173
255
(32)
144
134
7
83
53
Nutrien Financial elimination 2
(20)
(15)
33
(20)
(15)
33
100
100
2,972
2,661
12
652
541
21
22
20
Cost of goods sold
2,320
2,120
9
Gross margin
652
541
21
Expenses 1,3
721
689
5
Earnings (loss) before finance
costs and taxes ("EBIT")
(69)
(148)
(53)
Depreciation and amortization
177
155
14
EBITDA
108
7
n/m
Integration and restructuring
related costs
1
-
n/m
Adjusted EBITDA
109
7
n/m
1 Certain immaterial figures have been reclassified for the three months ended March 31, 2020.
2 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
3 Includes selling expenses of $667 million (2020 – $635 million).
_________________________________
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.
Potash
Three Months Ended March 31
(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
332
225
48
1,470
1,147
28
226
196
15
Offshore
279
292
(4)
1,687
1,730
(2)
166
169
(2)
611
517
18
3,157
2,877
10
194
180
8
Cost of goods sold
291
265
10
92
92
-
Gross margin - total
320
252
27
102
88
16
Expenses 1
64
63
2
Depreciation and amortization
39
33
18
EBIT
256
189
35
Gross margin excluding depreciation
Depreciation and amortization
124
96
29
and amortization - manufactured 2
141
121
17
Potash cash cost of product
EBITDA / Adjusted EBITDA
380
285
33
manufactured 2
57
60
(5)
1 Includes provincial mining taxes of $58 million (2020 – $57 million).
2 See the "Non-IFRS Financial Measures" section.
Canpotex Sales by Market
Three Months Ended March 31
(percentage of sales volumes, except as otherwise noted)
2021
2020
Change
Other Asian markets 1
37
29
8
Latin America
30
25
5
China
15
27
(12)
Other markets
12
7
5
India
6
12
(6)
100
100
1 All Asian markets except China and India.
Nitrogen
Three Months Ended March 31
(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
160
130
23
572
567
1
278
229
21
Urea
249
237
5
757
856
(12)
329
277
19
Solutions, nitrates and
sulfates
164
163
1
1,074
1,105
(3)
153
148
3
573
530
8
2,403
2,528
(5)
238
210
13
Cost of goods sold
440
444
(1)
183
176
4
Gross margin - manufactured
133
86
55
55
34
62
Gross margin - other 1
17
11
55
Depreciation and amortization
54
59
(8)
Gross margin - total
150
97
55
Gross margin excluding depreciation
(Income) expenses
(17)
11
n/m
and amortization - manufactured
109
93
17
EBIT
167
86
94
Ammonia controllable cash cost of
Depreciation and amortization
129
150
(14)
product manufactured 2
52
47
11
EBITDA
296
236
25
Impairment of assets
4
-
n/m
Adjusted EBITDA
300
236
27
1 Includes other nitrogen (including ESN® and Rainbow) and purchased products and is comprised of net sales of $187 million (2020 – $148 million) less cost of goods sold of $170 million (2020 – $137 million).
2 See the "Non-IFRS Financial Measures" section.
Natural Gas Prices in Cost of Production
Three Months Ended March 31
(US dollars per MMBtu, except as otherwise noted)
2021
2020
% Change
Overall gas cost excluding realized derivative impact
3.17
2.24
42
Realized derivative impact
0.02
0.05
(60)
Overall gas cost
3.19
2.29
39
Average NYMEX
2.69
1.95
38
Average AECO
2.30
1.62
42
Phosphate
Three Months Ended March 31
(millions of US dollars, except
Dollars
Tonnes (thousands)
Average per Tonne
as otherwise noted)
2021
2020
% Change
2021
2020
% Change
2021
2020
% Change
Manufactured product
Net sales
Fertilizer
230
173
33
509
568
(10)
453
305
49
Industrial and feed
114
106
8
193
191
1
589
556
6
344
279
23
702
759
(8)
490
368
33
Cost of goods sold
282
287
(2)
401
379
6
Gross margin - manufactured
62
(8)
n/m
89
(11)
n/m
Gross margin - other 1
4
1
300
Depreciation and amortization
54
83
(35)
Gross margin - total
66
(7)
n/m
Gross margin excluding depreciation
Expenses
7
10
(30)
and amortization - manufactured
143
72
99
EBIT
59
(17)
n/m
Depreciation and amortization
38
63
(40)
EBITDA / Adjusted EBITDA
97
46
111
1 Includes other phosphate and purchased products and is comprised of net sales of $41 million (2020 - $34 million) less cost of goods sold of $37 million (2020 - $33 million).
Corporate and Others
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2021
2020
% Change
Sales 1
-
27
(100)
Cost of goods sold
-
25
(100)
Gross margin
-
2
(100)
Selling expenses
(6)
(5)
20
General and administrative expenses
58
60
(3)
Share-based compensation expense (recovery)
23
(32)
n/m
Other expenses
28
7
300
EBIT
(103)
(28)
268
Depreciation and amortization
12
9
33
EBITDA
(91)
(19)
379
Adjustments 2
43
(47)
n/m
Adjusted EBITDA
(48)
(66)
(27)
1 Primarily relates to our non-core Canadian business that was sold in 2020.
2 See Note 2 to the interim financial statements.
Finance Costs, Income Tax Expense (Recovery) and
Other Comprehensive Income (Loss)
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2021
2020
% Change
Finance costs
120
133
(10)
Income tax expense (recovery)
25
(16)
n/m
Other comprehensive income (loss)
24
(358)
n/m
Financial Condition Review
The following balance sheet categories contained variances that were considered significant:
As at
(millions of US dollars, except as otherwise noted)
March 31, 2021
December 31, 2020
$ Change
% Change
Assets
Cash and cash equivalents
712
1,454
(742)
(51)
Receivables
4,230
3,581
649
18
Inventories
6,714
4,930
1,784
36
Prepaid expenses and other current assets
819
1,505
(686)
(46)
Property, plant and equipment
19,451
19,660
(209)
(1)
Other assets
678
914
(236)
(26)
Liabilities and Equity
Payables and accrued charges
8,742
8,058
684
8
Retained earnings
6,471
6,606
(135)
(2)
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under our existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures and other cash requirements for the foreseeable future. As further developments and impacts of the COVID-19 pandemic continue to be highly uncertain and cannot be predicted, we continue to monitor our liquidity position. Refer to the “Capital Structure and Management” section for details on our existing long-term debt and credit facilities.
Key uses and sources of cash and cash equivalents in the first quarter of 2021 included:
Sources and Uses of Cash
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2021
2020
% Change
Cash used in operating activities
(152)
(526)
(71)
Cash used in investing activities
(388)
(445)
(13)
Cash (used in) provided by financing activities
(191)
3,519
n/m
Effect of exchange rate changes on cash and cash
equivalents
(11)
(37)
(70)
(Decrease) increase in cash and cash equivalents
(742)
2,511
n/m
Cash and cash equivalents decreased by $742 million in the first quarter of 2021 compared to an increase of $2,511 million in the first quarter of 2020 due to:
The above factor was partially offset by:
Capital Structure and Management
Principal Debt Instruments
We continue to closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the three months ended March 31, 2021.
As at March 31, 2021
Outstanding and Committed
(millions of US dollars)
Rate of Interest (%)
Total Facility Limit
Short-term debt
Long-term debt
Credit facilities
Unsecured revolving term credit facility
n/a
4,500
-
-
Uncommitted revolving demand facility
n/a
500
-
-
Other credit facilities 1
0.8 - 8.3
810
252
63
Commercial paper
n/a
-
-
Total
252
63
1 Other credit facilities are unsecured and consist of South American facilities with debt of $135 million and interest rates ranging from 1.4 percent to 8.3 percent, Australian facilities with debt of $131 million and an interest rate of 0.8 percent, and other facilities with debt of $49 million and interest rates ranging from 1.8 percent to 4.1 percent.
The amount available under the commercial paper program is limited to the availability of backup funds under the $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities.
Our long-term debt consists primarily of notes. See the “Capital Structure and Management” section of our 2020 Annual Report for information on balances, rates and maturities for our notes.
Outstanding Share Data
As at April 30, 2021
Common shares
570,208,107
Options to purchase common shares
11,156,972
For more information on our capital structure and management, see Note 24 to our 2020 financial statements.
Quarterly Results
(millions of US dollars, except as otherwise noted)
Q1 2021
Q4 2020
Q3 2020
Q2 2020
Q1 2020
Q4 2019
Q3 2019
Q2 2019
Sales 1
4,658
4,052
4,227
8,431
4,198
3,462
4,185
8,704
Net earnings (loss) attributable to equity holders
of Nutrien
127
316
(587)
765
(35)
(48)
141
858
Adjusted EBITDA
806
768
670
1,721
508
664
787
1,870
Net earnings (loss) per share attributable to
equity holders of Nutrien
Basic
0.22
0.55
(1.03)
1.34
(0.06)
(0.08)
0.25
1.48
Diluted
0.22
0.55
(1.03)
1.34
(0.06)
(0.08)
0.24
1.47
1 Certain immaterial figures have been reclassified in the first three quarters of 2020.
Seasonality in our business results from increased demand for products during the planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are concentrated in December and January and inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
Since the fourth quarter of 2019, and up to the fourth quarter of 2020, Potash earnings were impacted by lower net realized selling prices caused by a temporary slowdown in global demand. In the third quarter of 2020, earnings were impacted by non-cash impairments of property, plant and equipment primarily in the Phosphate segment as a result of lower forecasted global phosphate prices. In the fourth quarter of 2020, earnings were impacted by a net gain on disposal of our investment in Misr Fertilizers Production Company S.A.E. (“MOPCO”).
Critical Accounting Estimates
Our critical accounting policies are disclosed in our 2020 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board. Our critical accounting estimates are discussed on page 53 of our 2020 Annual Report. There were no significant changes in the first three months of 2021.
Controls and Procedures
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.
There has been no change in our internal control over financial reporting during the three months ended March 31, 2021 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
Forward-Looking Statements
Certain statements and other information included in this document, including within the "Financial Outlook and Guidance" section, constitute “forward-looking information” or “forward-looking statements” (collectively, “forward-looking statements”) under applicable securities laws (such statements are often accompanied by words such as “anticipate”, “forecast”, “expect”, “believe”, “may”, “will”, “should”, “estimate”, “intend” or other similar words). All statements in this document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's business strategies, plans, prospects and opportunities; Nutrien's full-year and first-half 2021 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 Nutrien's Feeding the Future Plan and 2021 ESG Report including its 2030 commitments and ESG performance targets; Nutrien's ability to develop innovative and sustainable solutions; the negotiation of sales contracts; Nutrien's ability to launch and scale its 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; and our ability to successfully implement new initiatives and programs.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; climate change and weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our products; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy (including tariffs, trade restrictions and climate change initiatives), government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof; political risks, including civil unrest, actions by armed groups or conflict and malicious acts including terrorism; the occurrence of a major environmental or safety incident; innovation and cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount of certain assets; risks related to reputational loss; certain complications that may arise in our mining processes; the ability to attract, engage and retain skilled employees and strikes or other forms of work stoppages; the COVID-19 pandemic 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 (full year and first-half 2021), adjusted EBITDA (consolidated and by segment) and sustaining capital expenditures guidance ranges, are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
The forward-looking statements in this document are made as of the date hereof and Nutrien disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable Canadian securities legislation or applicable US federal securities laws.
Terms and Definitions
For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company names and sources, see the “Terms and Definitions” section of our 2020 Annual Report. All references to per share amounts pertain to diluted net earnings (loss) per share, “n/m” indicates information that is not meaningful and all financial amounts are stated in millions of US dollars, unless otherwise noted.
About Nutrien
Nutrien is the world's largest provider of crop inputs and services, playing a critical role in helping growers increase food production in a sustainable manner. We produce and distribute 27 million tonnes of potash, nitrogen and phosphate products world-wide. With this capability and our leading agriculture retail network, we are well positioned to supply the needs of our customers. We operate with a long-term view and are committed to working with our stakeholders as we address our economic, environmental and social priorities. The scale and diversity of our integrated portfolio provides a stable earnings base, multiple avenues for growth and the opportunity to return capital to shareholders.
Contact us at: www.nutrien.com
Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool
Such data is not incorporated by reference herein.
Nutrien will host a Conference Call on Tuesday, May 4, 2021 at 10:00 am Eastern Time.
Appendix A - Selected Additional Financial Data
Selected Retail measures
Three Months Ended March 31
2021
2020
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients
21
31
Crop protection products
43
40
Seed
40
36
All products
23
25
Crop nutrients sales volumes (tonnes - thousands)
North America
1,597
1,426
International
803
599
Total
2,400
2,025
Crop nutrients selling price per tonne
North America
458
416
International
355
318
Total
423
387
Crop nutrients gross margin per tonne
North America
113
93
International
49
38
Total
92
77
Financial performance measures
2021
Retail adjusted EBITDA to sales (%) 1
10
Retail adjusted average working capital to sales (%) 1, 2
14
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 2
3
Retail cash operating coverage ratio (%) 1, 2
60
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2
1,159
Nutrien Financial net interest margin (%) 1, 2
5.5
1 Rolling four quarters ended March 31, 2021.
2 See the "Non-IFRS Financial Measures" section.
Nutrien Financial
As at March 31, 2021
(millions of US dollars)
Current
<31 days
past due
31-90 days
past due
>90 days
past due
Gross Receivables
Allowance 1
Total
North America
860
54
62
52
1,028
(25)
1,003
International
163
3
12
42
220
(2)
218
Nutrien Financial receivables
1,023
57
74
94
1,248
(27)
1,221
1 Bad debt expense on the above receivables for the three months ended March 31, 2021 was $5 million (2020 - $3 million) in the Retail segment.
Selected Nitrogen measures
Three Months Ended March 31
2021
2020
Sales volumes (tonnes - thousands)
Fertilizer
1,305
1,411
Industrial and feed
1,098
1,117
Net sales (millions of US dollars)
Fertilizer
332
318
Industrial and feed
241
212
Net selling price per tonne
Fertilizer
254
226
Industrial and feed
220
190
Production measures
Three Months Ended March 31
2021
2020
Potash production (Product tonnes - thousands)
3,536
3,035
Potash shutdown weeks 1
-
12
Ammonia production - total 2
1,449
1,447
Ammonia production - adjusted 2, 3
1,053
991
Ammonia operating rate (%) 3
97
91
P2O5 production (P2O5 tonnes - thousands)
378
372
P2O5 operating rate (%)
90
88
1 Represents weeks of full production shutdown, excluding the impact of any periods of reduced operating rates and planned routine annual maintenance shutdowns and announced workforce reductions.
2 All figures are provided on a gross production basis in thousands of product tonnes.
3 Excludes Trinidad and Joffre.
Appendix B - Non-IFRS Financial Measures
We use both IFRS and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are numerical measures of a company’s historical or future financial performance, financial position or cash flow that are not specified, defined or determined under IFRS, and are not presented in our interim financial statements. Non-IFRS measures either exclude amounts that are included in, or include amounts that are excluded from, the most directly comparable measure specified, defined or determined under IFRS. In evaluating these measures, investors should consider that the methodology applied in calculating such measures may differ among companies and analysts.
Management believes the non-IFRS financial measures provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following section outlines our non-IFRS financial measures, their definitions, and why management uses each measure. It includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As non-recurring or unusual items arise, we generally exclude these items in our calculation of the applicable non-IFRS financial measure.
Adjusted EBITDA (Consolidated)
Most directly comparable IFRS financial measure: Net earnings (loss).
Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, certain integration and restructuring related costs, share-based compensation, impairment of assets, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses, loss on disposal of business and net gain on disposal of investment in MOPCO. COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs and costs related to construction delays from access limitations and other government restrictions. In 2021, we amended our calculation of adjusted EBITDA to adjust for the impact of restructuring and related costs. There were no similar expenses in the comparative period.
Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations.
Three Months Ended March 31
(millions of US dollars)
2021
2020
Net earnings (loss)
133
(35)
Finance costs
120
133
Income tax expense (recovery)
25
(16)
Depreciation and amortization
480
473
EBITDA
758
555
Integration and restructuring related costs
10
10
Share-based compensation expense (recovery)
23
(32)
Impairment of assets
4
-
COVID-19 related expenses
9
2
Foreign exchange loss (gain), net of related derivatives
2
(27)
Adjusted EBITDA
806
508
Adjusted EBITDA (Consolidated), Adjusted Net Earnings Per Share and Sustaining Capital Expenditures Guidance
Adjusted EBITDA, adjusted net earnings per share and sustaining capital expenditures guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS due to unknown variables and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine, without unreasonable efforts. Guidance for adjusted EBITDA and adjusted net earnings per share excludes the impacts of integration and restructuring related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), 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 integration and restructuring related costs, share-based compensation, certain foreign exchange gain/loss (net of related derivatives), COVID-19 related expenses (including those recorded under finance costs for managing our liquidity position in response to the COVID-19 pandemic in 2020), loss on disposal of business, net gain on disposal of investment in MOPCO and impairment of assets, net of tax. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment. In 2021, we amended our calculation of adjusted net earnings to adjust for the impact of restructuring and related costs. There were no similar expenses in the comparative period.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations excluding the effects of non-operating items.
Three Months Ended
March 31, 2021
Per
Increases
Diluted
(millions of US dollars, except as otherwise noted)
(Decreases)
Post-Tax
Share
Net earnings attributable to equity holders of Nutrien
127
0.22
Adjustments:
Integration and restructuring related costs
10
8
0.01
Share-based compensation expense
23
18
0.04
Impairment of assets
4
3
0.01
COVID-19 related expenses
9
7
0.01
Foreign exchange loss, net of related derivatives
2
2
-
Adjusted net earnings
165
0.29
Free Cash Flow and Free Cash Flow Including Changes in Non-Cash Operating Working Capital
Most directly comparable IFRS financial measure: Cash from operations before working capital changes.
Definition: Cash from operations before working capital changes less sustaining capital expenditures. We also calculate a similar measure that includes changes in non-cash operating working capital.
Why we use the measure and why it is useful to investors: For evaluation of liquidity and financial strength. These are also useful as indicators of our ability to service debt, meet other payment obligations and make strategic investments. These do not represent residual cash flow available for discretionary expenditures.
Three Months Ended March 31
(millions of US dollars)
2021
2020
Cash from operations before working capital changes
640
344
Sustaining capital expenditures
(164)
(163)
Free cash flow
476
181
Changes in non-cash operating working capital
(792)
(870)
Free cash flow including changes in non-cash
operating working capital
(316)
(689)
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 March 31
(millions of US dollars, except as otherwise noted)
2021
2020
Total COGS - Potash
291
265
Change in inventory
27
8
Other adjustments
(4)
(2)
COPM
314
271
Depreciation and amortization included in COPM
(111)
(89)
Cash COPM
203
182
Production tonnes (tonnes - thousands)
3,536
3,035
Potash cash COPM per tonne
57
60
Ammonia Controllable Cash COPM
Most directly comparable IFRS financial measure: COGS for the Nitrogen segment.
Definition: The total of COGS for the Nitrogen segment excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.
Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.
Three Months Ended March 31
(millions of US dollars, except as otherwise noted)
2021
2020
Total COGS - Nitrogen
610
581
Depreciation and amortization in COGS
(108)
(130)
Cash COGS for products other than ammonia
(393)
(361)
Ammonia
Total cash COGS before other adjustments
109
90
Other adjustments 1
(3)
11
Total cash COPM
106
101
Natural gas and steam costs
(74)
(66)
Controllable cash COPM
32
35
Production tonnes (net tonnes 2 - thousands)
602
744
Ammonia controllable cash COPM per tonne
52
47
1 Includes changes in inventory balances and other adjustments.
2 Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.
Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured
Most directly comparable IFRS financial measure: Gross margin.
Definition: Gross margin from manufactured products per tonne less depreciation and amortization per tonne. Reconciliations are provided in the “Segment Results” section.
Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.
Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working Capital to Sales Excluding Nutrien Financial
Most directly comparable IFRS financial measure: (Current assets minus current liabilities for Retail) divided by Retail sales.
Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the working capital and sales of certain acquisitions (such as Ruralco) during the first year following the acquisition. We amended our calculation to adjust for the sales of certain recently acquired businesses. We also look at this metric excluding the sales and working capital of Nutrien Financial.
Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.
Rolling four quarters ended March 31, 2021
(millions of US dollars, except as otherwise noted)
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Average/Total
Working capital
2,030
3,216
1,157
1,630
Working capital from certain recent acquisitions
63
-
-
-
Adjusted working capital
2,093
3,216
1,157
1,630
2,024
Nutrien Financial working capital
(2,108)
(1,711)
(1,392)
(1,221)
Adjusted working capital excluding Nutrien Financial
(15)
1,505
(235)
409
416
Sales 1
6,764
2,742
2,618
2,972
Sales from certain recent acquisitions
(338)
-
-
-
Adjusted sales
6,426
2,742
2,618
2,972
14,758
Nutrien Financial revenue 1
(40)
(36)
(37)
(25)
Adjusted sales excluding Nutrien Financial
6,386
2,706
2,581
2,947
14,620
1 Certain immaterial figures have been reclassified for the second and third quarters of 2020.
Adjusted average working capital to sales (%)
14
Adjusted average working capital to sales excluding Nutrien Financial (%)
3
Nutrien Financial Net Interest Margin
Most directly comparable IFRS financial measure: Nutrien Financial gross margin divided by average Nutrien Financial receivables.
Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.
Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate financial performance of Nutrien Financial.
Rolling four quarters ended March 31, 2021
(millions of US dollars, except as otherwise noted)
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Total/Average
Nutrien Financial revenue
40
36
37
25
Deemed interest expense 1
(15)
(15)
(14)
(6)
Net interest
25
21
23
19
88
Average Nutrien Financial receivables
2,108
1,711
1,392
1,221
1,608
Nutrien Financial net interest margin (%)
5.5
1 Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.
Retail Cash Operating Coverage Ratio
Most directly comparable IFRS financial measure: Retail operating expenses as a percentage of Retail gross margin.
Definition: Retail operating expenses, excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.
Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.
Rolling four quarters ended March 31, 2021
(millions of US dollars, except as otherwise noted)
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Total
Operating expenses 1, 2
826
691
768
721
3,006
Depreciation and amortization in operating expenses
(161)
(167)
(177)
(175)
(680)
Operating expenses excluding depreciation and amortization
665
524
591
546
2,326
Gross margin 2
1,627
683
885
652
3,847
Depreciation and amortization in cost of goods sold
2
3
3
2
10
Gross margin excluding depreciation and amortization
1,629
686
888
654
3,857
Cash operating coverage ratio (%)
60
1 Includes Retail expenses below gross margin including selling expenses, general and administrative expenses and other (income) expenses.
2 Certain immaterial figures have been reclassified for the second and third quarters of 2020.
Retail Adjusted EBITDA per US Selling Location
Most directly comparable IFRS financial measure: Retail US adjusted EBITDA.
Definition: Total Retail US adjusted EBITDA for the last four rolling quarters, adjusted for acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations.
Why we use the measure and why it is useful to investors: To assess our US Retail operating performance. This measure includes locations we have owned for more than 12 months.
Rolling four quarters ended March 31, 2021
(millions of US dollars, except as otherwise noted)
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Total
Adjusted US EBITDA
766
86
177
29
1,058
Adjustments for acquisitions
(6)
Adjusted US EBITDA adjusted for acquisitions
1,052
Number of US selling locations adjusted for acquisitions
908
Adjusted EBITDA per US selling location (thousands of US dollars)
1,159
Condensed Consolidated Financial Statements
Unaudited - in millions of US dollars except as otherwise noted
Condensed Consolidated Statements of Earnings (Loss)
Three Months Ended
March 31
Note
2021
2020
Note 1
SALES
2
4,658
4,198
Freight, transportation and distribution
211
212
Cost of goods sold
3,291
3,101
GROSS MARGIN
1,156
885
Selling expenses
673
642
General and administrative expenses
103
104
Provincial mining taxes
58
57
Share-based compensation expense (recovery)
3
23
(32)
Other expenses
4
21
32
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES
278
82
Finance costs
120
133
EARNINGS (LOSS) BEFORE INCOME TAXES
158
(51)
Income tax expense (recovery)
5
25
(16)
NET EARNINGS (LOSS)
133
(35)
Attributable to
Equity holders of Nutrien
127
(35)
Non-controlling interest
6
-
NET EARNINGS (LOSS)
133
(35)
NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")
Basic
0.22
(0.06)
Diluted
0.22
(0.06)
Weighted average shares outstanding for basic EPS
569,658,000
571,168,000
Weighted average shares outstanding for diluted EPS
570,901,000
571,168,000
Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended
March 31
(Net of related income taxes)
2021
2020
NET EARNINGS (LOSS)
133
(35)
Other comprehensive income (loss)
Items that will not be reclassified to net earnings (loss):
Net actuarial gain on defined benefit plans
-
3
Net fair value gain (loss) on investments
48
(19)
Items that have been or may be subsequently reclassified to
net earnings (loss):
Loss on currency translation of foreign operations
(30)
(315)
Other
6
(27)
OTHER COMPREHENSIVE INCOME (LOSS)
24
(358)
COMPREHENSIVE INCOME (LOSS)
157
(393)
Attributable to
Equity holders of Nutrien
151
(393)
Non-controlling interest
6
-
COMPREHENSIVE INCOME (LOSS)
157
(393)
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Cash Flows
Three Months Ended
March 31
Note
2021
2020
OPERATING ACTIVITIES
Net earnings (loss)
133
(35)
Adjustments for:
Depreciation and amortization
480
473
Share-based compensation expense (recovery)
23
(32)
Impairment of assets
4
-
Provision for (recovery of) deferred income tax
10
(22)
Other long-term assets, liabilities and miscellaneous
(10)
(40)
Cash from operations before working capital changes
640
344
Changes in non-cash operating working capital:
Receivables
(392)
(323)
Inventories
(1,785)
(1,428)
Prepaid expenses and other current assets
688
766
Payables and accrued charges
697
115
CASH USED IN OPERATING ACTIVITIES
(152)
(526)
INVESTING ACTIVITIES
Additions to property, plant and equipment
(325)
(363)
Additions to intangible assets
(33)
(32)
Business acquisitions, net of cash acquired
(21)
(57)
Other
(9)
7
CASH USED IN INVESTING ACTIVITIES
(388)
(445)
FINANCING ACTIVITIES
Proceeds from short-term debt, net
101
4,494
Proceeds from long-term debt
-
6
Repayment of long-term debt
-
(501)
Repayment of principal portion of lease liabilities
(78)
(64)
Dividends paid to Nutrien's shareholders
7
(255)
(256)
Repurchase of common shares
7
(1)
(160)
Issuance of common shares
42
-
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
(191)
3,519
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND
CASH EQUIVALENTS
(11)
(37)
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
(742)
2,511
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD
1,454
671
CASH AND CASH EQUIVALENTS – END OF PERIOD
712
3,182
Cash and cash equivalents comprised of:
Cash
601
389
Short-term investments
111
2,793
712
3,182
SUPPLEMENTAL CASH FLOWS INFORMATION
Interest paid
76
96
Income taxes paid
39
35
Total cash outflow for leases
97
92
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Statements of Changes in Shareholders’ Equity
Accumulated Other Comprehensive (Loss) Income ("AOCI")
Net
Actuarial
Loss on
Equity
Net Fair Value
Gain on
Currency
Holders
Non-
Number of
(Loss) Gain
Defined
Translation
of
Controlling
Common
Share
Contributed
on
Benefit
of Foreign
Total
Retained
Nutrien
Interest
Total
Shares
Capital
Surplus
Investments
Plans 1
Operations
Other
AOCI
Earnings
(Note 1)
(Note 1)
Equity
BALANCE – DECEMBER 31, 2019
572,942,809
15,771
248
(29)
-
(204)
(18)
(251)
7,101
22,869
38
22,907
Net loss
-
-
-
-
-
-
-
-
(35)
(35)
-
(35)
Other comprehensive (loss) income
-
-
-
(19)
3
(315)
(27)
(358)
-
(358)
-
(358)
Shares repurchased (Note 7)
(3,832,580)
(105)
(55)
-
-
-
-
-
-
(160)
-
(160)
Dividends declared
-
-
-
-
-
-
-
-
(254)
(254)
-
(254)
Effect of share-based
compensation including
issuance of common shares
35,706
1
4
-
-
-
-
-
-
5
-
5
Transfer of net loss on
cash flow hedges
-
-
-
-
-
-
5
5
-
5
-
5
Transfer of net actuarial gain
on defined benefit plans
-
-
-
-
(3)
-
-
(3)
3
-
-
-
BALANCE – MARCH 31, 2020
569,145,935
15,667
197
(48)
-
(519)
(40)
(607)
6,815
22,072
38
22,110
BALANCE – DECEMBER 31, 2020
569,260,406
15,673
205
(36)
-
(62)
(21)
(119)
6,606
22,365
38
22,403
Net earnings
-
-
-
-
-
-
-
-
127
127
6
133
Other comprehensive income (loss)
-
-
-
48
-
(30)
6
24
-
24
-
24
Shares repurchased (Note 7)
(14,978)
(1)
-
-
-
-
-
-
-
(1)
-
(1)
Dividends declared
-
-
-
-
-
-
-
-
(262)
(262)
-
(262)
Dividends of non-controlling interest
-
-
-
-
-
-
-
-
-
-
(1)
(1)
Non-controlling interest transactions
-
-
-
-
-
-
-
-
-
-
(1)
(1)
Effect of share-based
compensation including
issuance of common shares
965,744
50
(3)
-
-
-
-
-
-
47
-
47
Transfer of net gain on
cash flow hedges
-
-
-
-
-
-
(3)
(3)
-
(3)
-
(3)
BALANCE – MARCH 31, 2021
570,211,172
15,722
202
12
-
(92)
(18)
(98)
6,471
22,297
42
22,339
1 Any amounts incurred during a period were transferred to retained earnings at each period-end. Therefore, no balance exists at the beginning or end of period.
(See Notes to the Condensed Consolidated Financial Statements)
Condensed Consolidated Balance Sheets
March 31
December 31
As at
Note
2021
2020
2020
Note 1
Note 1
ASSETS
Current assets
Cash and cash equivalents
712
3,182
1,454
Receivables
4,230
3,837
3,581
Inventories
6,714
6,290
4,930
Prepaid expenses and other current assets
819
716
1,505
12,475
14,025
11,470
Non-current assets
Property, plant and equipment
19,451
20,209
19,660
Goodwill
12,199
11,893
12,198
Other intangible assets
2,460
2,379
2,388
Investments
630
810
562
Other assets
678
552
914
TOTAL ASSETS
47,893
49,868
47,192
LIABILITIES
Current liabilities
Short-term debt
252
5,498
159
Current portion of long-term debt
14
-
14
Current portion of lease liabilities
260
221
249
Payables and accrued charges
8,742
7,362
8,058
9,268
13,081
8,480
Non-current liabilities
Long-term debt
10,040
8,544
10,047
Lease liabilities
876
848
891
Deferred income tax liabilities
5
3,168
3,130
3,149
Pension and other post-retirement benefit liabilities
456
426
454
Asset retirement obligations and accrued environmental costs
1,610
1,620
1,597
Other non-current liabilities
136
109
171
TOTAL LIABILITIES
25,554
27,758
24,789
SHAREHOLDERS’ EQUITY
Share capital
7
15,722
15,667
15,673
Contributed surplus
202
197
205
Accumulated other comprehensive loss
(98)
(607)
(119)
Retained earnings
6,471
6,815
6,606
Equity holders of Nutrien
22,297
22,072
22,365
Non-controlling interest
42
38
38
TOTAL SHAREHOLDERS’ EQUITY
22,339
22,110
22,403
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY
47,893
49,868
47,192
(See Notes to the Condensed Consolidated Financial Statements)
Notes to the Condensed Consolidated Financial Statements
As at and for the Three Months Ended March 31, 2021
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.
These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are consistent with those used in the preparation of our 2020 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2020 annual consolidated financial statements. In April 2021, the IFRS Interpretations Committee published a final agenda decision clarifying how to recognize certain configuration and customization expenditures related to cloud computing. We are currently evaluating the impact of this agenda decision; however, we do not anticipate it will have a material impact on our financial statements. We expect to implement the change in 2021.
Certain immaterial 2020 figures have been reclassified in the condensed consolidated statements of earnings (loss), condensed consolidated statements of changes in shareholders’ equity, condensed consolidated balance sheets and segment information.
In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year.
We prepare our interim financial statements in accordance with IFRS, which requires us to make judgments, assumptions and estimates in applying accounting policies. We have assessed our accounting estimates and other matters that require the use of forecasted financial information for the impacts arising from the novel coronavirus (“COVID-19”) pandemic. The future assessment of these estimates, including expectations about the severity, duration and scope of the pandemic, could differ materially in future reporting periods. As a result of the COVID-19 pandemic, we incurred directly attributable and incremental COVID-19 related expenses in other expenses (Note 4).
These interim financial statements were authorized by the audit committee of the Board of Directors for issue on May 3, 2021.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produce.
Three Months Ended March 31, 2021
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
2,960
631
695
372
-
-
4,658
– intersegment
12
90
160
72
-
(334)
-
Sales
– total
2,972
721
855
444
-
(334)
4,658
Freight, transportation and distribution
-
110
95
59
-
(53)
211
Net sales
2,972
611
760
385
-
(281)
4,447
Cost of goods sold
2,320
291
610
319
-
(249)
3,291
Gross margin
652
320
150
66
-
(32)
1,156
Selling expenses
667
3
7
2
(6)
-
673
General and administrative expenses
39
2
2
2
58
-
103
Provincial mining taxes
-
58
-
-
-
-
58
Share-based compensation expense
-
-
-
-
23
-
23
Other expenses (income)
15
1
(26)
3
28
-
21
(Loss) earnings before finance costs and income taxes
(69)
256
167
59
(103)
(32)
278
Depreciation and amortization
177
124
129
38
12
-
480
EBITDA
108
380
296
97
(91)
(32)
758
Integration and restructuring related costs
1
-
-
-
9
-
10
Share-based compensation expense
-
-
-
-
23
-
23
Impairment of assets
-
-
4
-
-
-
4
COVID-19 related expenses
-
-
-
-
9
-
9
Foreign exchange loss, net of
related derivatives
-
-
-
-
2
-
2
Adjusted EBITDA
109
380
300
97
(48)
(32)
806
Assets – at March 31, 2021
21,624
11,817
10,240
1,391
3,257
(436)
47,893
Three Months Ended March 31, 2020
Corporate
Retail
Potash
Nitrogen
Phosphate
and Others
Eliminations
Consolidated
Sales
– third party
2,652
547
646
326
27
-
4,198
– intersegment
9
64
132
57
-
(262)
-
Sales
– total
2,661
611
778
383
27
(262)
4,198
Freight, transportation and distribution
-
94
100
70
-
(52)
212
Net sales
2,661
517
678
313
27
(210)
3,986
Cost of goods sold
2,120
265
581
320
25
(210)
3,101
Gross margin
541
252
97
(7)
2
-
885
Selling expenses
635
3
7
2
(5)
-
642
General and administrative expenses
38
2
2
2
60
-
104
Provincial mining taxes
-
57
-
-
-
-
57
Share-based compensation recovery
-
-
-
-
(32)
-
(32)
Other expenses
16
1
2
6
7
-
32
(Loss) earnings before finance costs and income taxes
(148)
189
86
(17)
(28)
-
82
Depreciation and amortization
155
96
150
63
9
-
473
EBITDA
7
285
236
46
(19)
-
555
Integration and restructuring related costs
-
-
-
-
10
-
10
Share-based compensation recovery
-
-
-
-
(32)
-
(32)
COVID-19 related expenses
-
-
-
-
2
-
2
Foreign exchange gain, net of
related derivatives
-
-
-
-
(27)
-
(27)
Adjusted EBITDA
7
285
236
46
(66)
-
508
Assets – at December 31, 2020 ¹
20,526
11,707
10,077
1,388
3,917
(423)
47,192
1 In 2021, certain assets related to transportation, distribution and logistics were reclassified under Corporate and Others as these are centrally managed. Depreciation expense related to these assets remains allocated to the rest of the segments based on usage.
Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment.
Three Months Ended
March 31
2021
2020
Retail sales by product line
Crop nutrients
1,016
785
Crop protection products
1,085
1,010
Seed
463
394
Merchandise
230
216
Nutrien Financial
25
16
Services and other
173
255
Nutrien Financial elimination 1
(20)
(15)
2,972
2,661
Potash sales by geography
Manufactured product
North America
442
319
Offshore 2
279
292
721
611
Nitrogen sales by product line
Manufactured product
Ammonia
188
156
Urea
274
262
Solutions, nitrates and sulfates
197
196
Other nitrogen and purchased products
196
164
855
778
Phosphate sales by product line
Manufactured product
Fertilizer
272
221
Industrial and feed
126
120
Other phosphate and purchased products
46
42
444
383
1 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
2 Relates to Canpotex Limited ("Canpotex") (Note 9).
NOTE 3 SHARE-BASED COMPENSATION
The following table summarizes the awards granted under our existing share-based compensation plans described in Note 5 of our 2020 annual consolidated financial statements:
Three Months Ended
March 31
2021
2020
Stock options:
Granted (number of units)
1,518,490
2,293,802
Weighted average grant date fair value (US dollars)
11.77
7.18
Cash-settled share-based awards granted (number of units)
1,198,148
1,278,324
NOTE 4 OTHER (INCOME) EXPENSES
Three Months Ended
March 31
2021
2020
Integration and restructuring related costs
10
10
Foreign exchange loss (gain), net of related derivatives
2
(31)
Earnings of equity-accounted investees
(20)
(10)
Bad debt expense
2
6
COVID-19 related expenses
9
2
Impairment of assets
4
-
Other expenses
14
55
21
32
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.
Three Months Ended
March 31
2021
2020
Income tax expense (recovery)
25
(16)
Actual effective tax rate on earnings/loss (%)
16
37
Actual effective tax rate including discrete items (%)
16
32
Discrete tax adjustments that impacted the tax rate
-
2
Income tax balances within the condensed consolidated balance sheets were comprised of the following:
Income Tax Assets and Liabilities
Balance Sheet Location
As at March 31, 2021
As at December 31, 2020
Income tax assets
Current
Receivables
373
83
Non-current
Other assets
89
305
Deferred income tax assets
Other assets
249
242
Total income tax assets
711
630
Income tax liabilities
Current
Payables and accrued charges
79
48
Non-current
Other non-current liabilities
42
40
Deferred income tax liabilities
Deferred income tax liabilities
3,168
3,149
Total income tax liabilities
3,289
3,237
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 10 of the 2020 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.
The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:
March 31, 2021
December 31, 2020
Carrying
Carrying
Financial assets (liabilities) measured at
Amount
Level 1 1
Level 2 1
Level 3
Amount
Level 1 1
Level 2 1
Fair value on a recurring basis
Cash and cash equivalents
712
-
712
-
1,454
-
1,454
Derivative instrument assets
41
-
41
-
45
-
45
Other current financial assets
- marketable securities 2
166
24
142
-
161
24
137
Investments at FVTOCI 3
211
201
-
10
153
153
-
Derivative instrument liabilities
(43)
-
(43)
-
(48)
-
(48)
Amortized cost
Current portion of long-term debt
Fixed and floating rate debt
(14)
-
(14)
-
(14)
-
(14)
Long-term debt
Notes and debentures
(9,991)
(7,994)
(3,177)
-
(9,994)
(3,801)
(7,955)
Fixed and floating rate debt
(49)
-
(49)
-
(53)
-
(53)
1 During the periods ended March 31, 2021 and December 31, 2020, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value on a recurring basis.
2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk.
3 Investments at fair value through other comprehensive income ("FVTOCI") is primarily comprised of shares in Sinofert Holdings Ltd.
NOTE 7 SHARE CAPITAL
Share repurchase programs
Maximum
Maximum
Number of
Commencement
Shares for
Shares for
Shares
Date
Expiry
Repurchase
Repurchase (%)
Repurchased
2019 Normal Course Issuer Bid
February 27, 2019
February 26, 2020
42,164,420
7
33,256,668
2020 Normal Course Issuer Bid
February 27, 2020
February 26, 2021
28,572,458
5
710,100
2021 Normal Course Issuer Bid 1
March 1, 2021
February 28, 2022
28,468,448
5
14,978
1 The 2021 normal course issuer will expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.
Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities regulatory authorities, including private agreements.
The following table summarizes our share repurchase activities during the period:
Three Months Ended
March 31
2021
2020
Number of common shares repurchased for cancellation
14,978
3,832,580
Average price per share (US dollars)
52.93
41.96
Total cost
1
160
Dividends declared
We declared a dividend per share of $0.46 (2020 – $0.45) during the three months ended March 31, 2021, payable on April 15, 2021 to shareholders of record on March 31, 2021.
Anti-dilutive shares
As we recorded a net loss for the three months ended March 31, 2020, all stock options had an anti-dilutive effect. If we had net earnings, the diluted weighted average shares calculation would have included 66,806 stock options for the three months ended March 31, 2020.
NOTE 8 SEASONALITY
Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
NOTE 9 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively through Canpotex. Canpotex sells potash to buyers in export markets pursuant to term and spot contracts at agreed upon prices. Our revenue is recognized at the amount received from Canpotex representing proceeds from their sale of potash, less net costs of Canpotex. Sales to Canpotex are shown in Note 2.
As at
March 31, 2021
December 31, 2020
Receivables from Canpotex
161
122
View source version on businesswire.com: https://www.businesswire.com/news/home/20210503005773/en/
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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