NYSE, TSX: NTR
SASKATOON, May 7, 2018 /PRNewswire/ - Nutrien Ltd. (Nutrien)
announced today its 2018 first-quarter results, with a net loss
from continuing operations of $1
million1 ($nil2 diluted earnings per
share) and EBITDA3 of $487
million.
HIGHLIGHTS
- Nutrien first-quarter earnings from continuing operations,
adjusted for purchase price allocation ($74
million or $0.08 per share)
and merger-related costs ($66 million
or $0.08 per share) not included in
guidance, were $0.16 per
share4. First-quarter EBITDA adjusted for merger related
costs was $553
million4.
- Retail earnings in the first quarter were impacted by a late
spring season in North America,
with sales and earnings shifted to the second quarter.
- Nutrien acquired 29 retail locations with estimated annual
revenues of approximately $280
million through April 2018;
announced the newly branded Retail business, Nutrien Ag
Solutions™; and launched an integrated digital
platform enabling year-round commercial and agronomic digital
management for growers.
- Potash segment earnings in the first quarter increased due to
higher prices, lower production costs, merger synergies and strong
offshore sales volumes, despite experiencing significant rail
issues during the quarter.
- Nutrien full-year 2018 guidance was raised to $2.20 to $2.60
diluted earnings per share from continuing operations, up from
$2.10 to $2.60 previously, and first-half 2018 guidance is
provided at $1.50 to $1.65 earnings per share.
- Nutrien executed on its capital priorities by declaring a
quarterly dividend of $0.40 per share
and repurchasing 10.3 million shares under its normal course issuer
bid program year-to-date (approximately 1.6 percent of shares
outstanding).
- Nutrien has achieved $150 million
in run-rate synergies as at March 31,
2018.
- We completed our obligor exchange and successfully converted
legacy company bonds to a simplified Nutrien indenture platform
that aligns covenants and reduces administrative costs.
"Nutrien's first quarter was affected by a late start to the
spring season across North America
and west coast rail performance issues. However, we expect a strong
second quarter with improved grower margins and strong demand and
firm prices for most crop inputs," commented Chuck Magro, Nutrien's President and CEO.
"We executed on our strategic and capital priorities with a
meaningful return of capital to shareholders, including an increase
in our dividend and half a billion dollars in shares
repurchased. We made significant progress towards achieving
our annual synergy target of $500
million. We also continued to grow our leading global
retail network, through numerous accretive acquisitions and the
launch of our digital platform. The divestiture of equity
investments remains on track and the expected funds will provide
further opportunity to accelerate growth and enhance shareholder
returns," added Mr. Magro.
MARKET OUTLOOK
Agriculture Fundamentals
- Delayed planting in North
America has supported crop prices. Additional support has
been provided by the continued degradation of the Argentine corn
and soybean crops, which the United States Department of
Agriculture (USDA) projects will decline by 20 percent and more
than 30 percent, respectively, reducing export supplies and
supporting export demand for U.S. and Brazilian corn and
soybeans.
- Despite the second-highest production of global grains and
oilseeds on record, the USDA projects that inventories of those
crops will decline by nearly three percent in 2017/18, the first
decline in five years and the largest year-over-year decline since
2010/11. While relatively high carry-in inventories provide a
buffer, tightened ending stocks increase the importance of strong
production in 2018.
- Extended winter weather throughout much of North America delayed nutrient applications
and planting, which we expect will lead to a more compressed
planting season. Depending on weather over the coming weeks, there
is some risk to total crop nutrient demand in the first half of
2018, in particular for ammonia. Growers could potentially cover a
higher proportion of nitrogen needs through top and side dress
applications after plantings are complete.
- North American growers are generally positive going into the
spring season, despite the late start to planting and uncertainty
over trade issues. This includes a potential escalation of trade
restrictions between the U.S. and China and the ongoing negotiations of the
North American Free Trade Agreement (NAFTA).
- The USDA projects that U.S. combined corn, soybean and cotton
area will decline by just over one percent year-over-year, which
may lead to lower overall seed expenditures in 2018. However, we
expect U.S. soybean growers to continue their rapid adoption of
dicamba-resistant soybeans.
Potash
- Strong customer engagement and positive potash sector
fundamentals continued to support potash deliveries during the
first quarter of 2018, and we expect potash demand to remain robust
as a result of high underlying consumption and relatively low
inventory levels in most major markets. We have increased our
global potash shipment forecast to 64.5 to 66.5 million tonnes for
2018.
- We expect normal North American potash application rates,
supported by affordable potash prices and the need to replace
nutrients removed by last year's harvest.
- Prices continued to firm in key spot markets, particularly in
Brazil, where granular potash
prices have continued to increase on new sales since the beginning
of 2018. The Brazilian potash import pace is relatively flat
compared to the record level in 2017, mostly supported by strong
crop production and improved crop economics, particularly for
soybeans.
- In China, potash demand
continued to be underpinned by supportive crop prices and farmers
switching to more intensive fruit and vegetable production. In
India, consecutive years of strong
crop production in combination with some improvements in agronomic
management have supported underlying potash consumption growth. We
do not expect the recent reductions in the potash subsidy rates and
the slight increase in the maximum retail prices to have a
significant impact on Indian consumption growth in 2018. Potash
demand remains reasonably strong in other Asian countries amid
stable and profitable prices for a wide range of key crops.
- Several global potash suppliers, including
Canpotex5, announced they are fully committed through at
least June 2018. There has been
limited saleable production from new greenfield mines to date and
while these projects are anticipated to continue to ramp up, a
portion of the new capacity is expected to be offset by the closure
of mines reaching end of life and product mix changes by some
producers.
Nitrogen
- The delayed start to the spring application season led to
pressure on nitrogen prices as the supply chain filled and
retailers were comfortable with inventory positions entering the
spring application season.
- However, we expect that the North American in-market urea and
urea ammonium nitrate (UAN) supply and demand balance will remain
tight through the end of the spring season, as combined supplies of
the two products are down approximately 10 percent in the
fertilizer-year-to-date due to the slow pace of offshore
imports.
- Chinese exportable urea supplies remain low and port
inventories are down significantly year-over-year. Production
levels have increased since early February
2018, which was expected in order to meet domestic spring
demand. We expect between three and four million tonnes of Chinese
urea exports in 2018, down from 4.7 million tonnes last year.
- India has been an important
source of urea demand in early 2018 as inventories began the year
at low levels. Indian imports were up 100 percent year-over-year in
the first quarter of 2018 and we expect imports to be supported by
low inventories, but potential policy changes and the monsoon
rainfall will be important drivers in the second half of the
year.
Phosphate and Sulfate
- Phosphate fertilizer prices have remained relatively firm and
there is optimism among analysts about Indian demand, driven by
tight diammonium phosphate (DAP) inventories and the increase in
the second-quarter phosphoric acid price. However, exportable
supplies are expected to increase in the second quarter as Chinese
prices have become more competitive, and new supply ramps up in
Saudi Arabia and Morocco.
- Sulfur prices have remained firm in the U.S., driven by tight
supplies from traditional offshore suppliers, resulting in higher
year-over-year production costs.
FINANCIAL OUTLOOK AND GUIDANCE
Taking the above market factors into consideration, we have
raised the guidance range for Potash sales volumes and EBITDA to
12.0 to 12.5 million tonnes and $1.2
to $1.4 billion respectively. Our
guidance for Nitrogen EBITDA increased to $1.0 to $1.2
billion.
We are providing Phosphate and Sulfate EBITDA guidance of
$0.20 billion to $0.25 billion, which is in line with our previous
year's results.
Our effective tax rate on continuing operations range of 22 to
24 percent is down from our previous guidance primarily due to
changes in forecasted earnings mix.
Income from investments in Arab Potash Company (APC) and
Sociedad Quimica y Minera de Chile S.A. (SQM) will be recorded as
dividend income (net of tax) in discontinued operations and is
expected to range between $140 to
$150 million. These amounts are
included in our earnings per share guidance but are not included in
EBITDA guidance.
We have revised our full-year foreign exchange rate assumption
to CAD$1.27 per US dollar, slightly
higher than previous guidance.
Based on these factors, we are increasing our full-year 2018
earnings guidance to $2.20 to
$2.60 per share and providing first
half 2018 guidance of $1.50 to
$1.65 earnings per share.
All of the guidance numbers include the impact of expected
in-year realized cash synergies of $175 to $225
million. Excluded from guidance are costs to achieve these
ongoing synergies of $50 to
$75 million as well as the impact of
incremental depreciation and amortization of $250 million to $350
million resulting from the fair valuing of Agrium's assets
and liabilities as of January 1, 2018
in accordance with purchase accounting.
All annual guidance numbers, including those noted above, are
outlined in the table below:
|
|
|
2018 Guidance
Ranges
|
Low
|
High
|
(Annual Guidance,
except where noted)
|
|
|
Adjusted annual
earnings per share
|
$2.20
|
$2.60
|
Adjusted
first-half 2018 earnings per share
|
$1.50
|
$1.65
|
Consolidated
EBITDA (billions)
|
$3.3
|
$3.7
|
Retail EBITDA
(billions)
|
$1.2
|
$1.3
|
Potash EBITDA
(billions)
|
$1.2
|
$1.4
|
Nitrogen EBITDA
(billions)
|
$1.0
|
$1.2
|
Phosphate and
Sulfate EBITDA (billions)
|
$0.2
|
$0.25
|
Potash sales
tonnes (millions) (a)
|
12.0
|
12.5
|
Nitrogen sales
tonnes (millions) (a)
|
10.0
|
10.4
|
Depreciation and
amortization including purchase price allocation impact
(billions)
|
$1.5
|
$1.7
|
Integration and
synergy costs (millions)
|
$50
|
$75
|
Effective tax rate
on continuing operations
|
22%
|
24%
|
Sustaining capital
expenditures (billions)
|
$1.0
|
$1.1
|
|
2018 Annual
Assumptions & Sensitivities
|
|
FX rate CAD to
USD
|
|
$1.27
|
NYMEX natural gas
($US/MMBtu)
|
|
$3.00
|
$1/MMBtu increase
in NYMEX ($/share) (b)
|
|
$(0.19)
|
$20/tonne change
in realized Potash selling prices
($/share)(b)
|
|
$0.25
|
$20/tonne change
in realized Ammonia selling prices
($/share)(b)
|
|
$0.06
|
$20/tonne change
in realized Urea selling prices
($/share)(b)
|
|
$0.09
|
(a)
|
Potash and nitrogen
sales tonnes include manufactured product only. Nitrogen sales
tonnes exclude ESN® and Rainbow products.
|
(b)
|
Sensitivities are
calculated pre-synergies.
|
FIRST QUARTER RESULTS
The comparative figures throughout this release are the
historical combined results of legacy Potash Corporation of
Saskatchewan Inc. (PotashCorp) and Agrium Inc. (Agrium) for the
three months ended March 31, 2017 and
are considered to be non-IFRS measures. For IFRS purposes, the
comparative amounts are the results of legacy PotashCorp, which is
the accounting acquirer. Compared to the IFRS figures, the change
is the result of the merger involving Agrium and PotashCorp. Refer
to the Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental information section.
Consolidated
|
|
|
|
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
|
|
2018
Actual
|
2017
Combined
|
Change
|
Sales
|
|
|
3,695
|
3,737
|
(42)
|
Freight,
transportation and distribution
|
|
|
(208)
|
(215)
|
7
|
Cost of goods
sold
|
|
|
(2,640)
|
(2,684)
|
44
|
Gross
margin
|
|
|
847
|
838
|
9
|
Expenses
|
|
|
(771)
|
(616)
|
(155)
|
Net
(loss) earnings from continuing operations
|
|
|
(1)
|
97
|
(98)
|
Nutrien first-quarter loss from continuing operations totaled
$1 million, down from the
$97 million earned in the first
quarter of 2017. Results for the quarter were impacted by a late
spring season in North America,
shifting planting, applications and associated retail crop input
purchases to the second quarter of 2018. Additionally, depreciation
and amortization increased by $112
million this quarter, primarily the result of the purchase
price allocation (PPA) impact. Stronger global crop nutrient prices
compared to last year and higher potash sales volumes partially
offset the late start to the spring season and the PPA adjustment.
The comparative amount of PotashCorp for IFRS purposes is detailed
in the financial report of Nutrien for the first-quarter 2018 and
its management's discussion and analysis for the same period, both
of which are available under Nutrien's profile, provided on SEDAR
at www.sedar.com and on EDGAR at www.sec.gov.
Retail
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
2018
Actual
|
2017
Combined
|
Change
|
Sales
|
2,099
|
2,240
|
(141)
|
Cost of goods
sold
|
(1,691)
|
(1,806)
|
115
|
Gross
margin
|
408
|
434
|
(26)
|
EBIT6
|
(133)
|
(32)
|
(101)
|
EBITDA
|
(10)
|
39
|
(49)
|
Selling and
general and administrative expenses
|
(546)
|
(473)
|
(73)
|
- EBITDA – Retail EBITDA decreased by $49 million in the first quarter compared to the
same period last year due to a delayed spring season in
North America, moving applications
and expected earnings into the second quarter.
- North American Retail EBITDA decreased by $72 million this quarter compared to the same
period last year, with poor weather impacting crop input demand in
both the U.S. and Canada.
International Retail operations achieved a record first quarter,
with EBITDA up 46 percent year-over-year, supported by another
record quarter for our Australian operations.
- Selling and general and administrative expenses – Retail
selling and general and administrative expenses increased by 15
percent this quarter compared to the same period in 2017, primarily
resulting from higher depreciation and amortization expense as a
result of the PPA and from recently acquired businesses. Selling
and general and administrative expenses as a percentage of sales
increased to 26 percent this quarter compared to 21 percent in the
same period of 2017 due to lower sales related to the delayed
spring season and from higher depreciation and amortization.
|
(millions of U.S.
dollars, except
|
Three months ended
March 31
|
where
noted)
|
Sales
|
|
Gross
margin
|
|
Gross margin
(%)
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Change
|
|
2018
|
2017
|
Crop
nutrients
|
684
|
714
|
(30)
|
|
123
|
141
|
(18)
|
|
18
|
20
|
Crop protection
products
|
774
|
872
|
(98)
|
|
128
|
130
|
(2)
|
|
17
|
15
|
Seed
|
341
|
382
|
(41)
|
|
44
|
54
|
(10)
|
|
13
|
14
|
Merchandise
|
149
|
134
|
15
|
|
23
|
22
|
1
|
|
15
|
16
|
Services and
other
|
151
|
138
|
13
|
|
90
|
87
|
3
|
|
60
|
63
|
- Crop nutrients – Sales were 4 percent lower this quarter
compared to the same period last year, due primarily to lower
volumes resulting from the delayed spring season in North America. Gross margin was 13 percent
lower this quarter and gross margin per tonne decreased by 6
percent as the sales volume mix was impacted by a higher percentage
of lower margin per tonne sales from the International Retail
operations.
- Crop protection products – First-quarter sales decreased
by 11 percent compared to the same period last year, due to weather
challenges across the U.S. and dry conditions in Australia. Gross margin rates were up compared
to last year due to lower wholesale customer mix, despite slightly
lower proprietary product sales this quarter.
- Seed – Gross margin in the first quarter decreased 19
percent compared to the same period last year as a late spring
season delayed seed sales into the second quarter of 2018. Gross
margin percentage decreased by one percentage point in the first
quarter compared to last year due to competitive market
pressure.
- Merchandise – Sales increased 11 percent and gross
margin was up 5 percent in the first quarter of this year relative
to the same period last year. The increase was due to higher sales
in Australia related to animal
health management and fencing.
- Services and other – Sales increased by 9 percent and
gross margin by 3 percent this quarter compared to the same period
last year, due to higher livestock export shipments and wool
commissions in Australia.
Potash
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
|
|
|
|
2018 Actual
|
2017
Combined
|
Change
|
Net
sale(4)
|
|
|
|
|
575
|
469
|
106
|
Cost of goods
sold
|
|
|
|
|
(280)
|
(269)
|
(11)
|
Gross
margin
|
|
|
|
|
295
|
200
|
95
|
EBIT
|
|
|
|
|
237
|
156
|
81
|
EBITDA
|
|
|
|
|
328
|
240
|
88
|
Provincial mining
taxes
|
|
|
|
|
(48)
|
(36)
|
(12)
|
- EBITDA – Potash EBITDA in the quarter was up 37 percent
due to higher sales volumes, increased realized selling prices and
a lower cost per tonne.
|
|
|
Three months ended
March 31
|
|
2018
Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
|
North
America
|
1,254
|
1,237
|
17
|
|
Offshore
|
1,871
|
1,578
|
293
|
|
Total
|
3,125
|
2,815
|
310
|
Net selling price
($/tonne)
|
|
|
|
|
North
America
|
199
|
185
|
14
|
|
Offshore
|
173
|
150
|
23
|
|
Average
|
184
|
165
|
19
|
Cost of goods sold
($/tonne)
|
(90)
|
(94)
|
4
|
Gross margin
($/tonne)
|
94
|
71
|
23
|
Depreciation and
amortization ($/tonne)
|
29
|
30
|
(1)
|
Gross margin
excluding depreciation and
amortization ($/tonne)4
|
123
|
101
|
22
|
- Volumes – Potash sales volumes were up 11 percent in the
first quarter due to strong global demand and a higher Canpotex
allocation compared to the first quarter of 2017. The majority of
Canpotex's volumes for the quarter were sold to China (32 percent) and other Asian markets
outside of China and India (29 percent), while Latin America and India accounted for 21 percent and 6 percent,
respectively.
- Price – Offshore selling prices were up 15 percent and
North American selling prices were up 8 percent in the first
quarter compared to the same period in 2017, reflective of global
benchmark pricing strength. The weighted average realized potash
selling price was up 12 percent from the first quarter of 2017.
- Costs – Cost per tonne of product sold was 4 percent
lower versus the prior year's first quarter, due to a higher
proportion of supply produced at our lowest cost facility in
Rocanville, a higher volume base
which to allocate fixed costs and fewer overall down days during
the period.
Nitrogen
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
|
|
|
|
2018 Actual
|
2017
Combined
|
Change
|
Net
sales
|
|
|
|
|
672
|
706
|
(34)
|
Cost of goods
sold
|
|
|
|
|
(524)
|
(518)
|
(6)
|
Gross
margin
|
|
|
|
|
148
|
188
|
(40)
|
EBIT
|
|
|
|
|
132
|
182
|
(50)
|
EBITDA
|
|
|
|
|
261
|
250
|
11
|
- EBITDA – Total nitrogen EBITDA was up 4 percent this
quarter compared to the same period last year, as higher
utilization rates, lower production costs and higher average
selling prices more than offset lower sales volumes caused by a
delayed North American planting season.
|
|
|
Three months ended
March 31
|
|
2018 Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
|
Ammonia
|
744
|
815
|
(71)
|
|
Urea
|
724
|
681
|
43
|
|
Solutions and
nitrates
|
835
|
885
|
(50)
|
|
Total
|
2,303
|
2,381
|
(78)
|
Net selling price
($/tonne)
|
|
|
|
|
Ammonia
|
280
|
284
|
(4)
|
|
Urea
|
294
|
278
|
16
|
|
Solutions and
nitrates
|
163
|
168
|
(5)
|
|
Average
|
242
|
239
|
3
|
Cost of goods sold
($/tonne)
|
(185)
|
(167)
|
(18)
|
Gross margin
($/tonne)
|
57
|
72
|
(15)
|
Depreciation and
amortization ($/tonne)
|
56
|
29
|
27
|
Gross margin
excluding depreciation and
amortization ($/tonne)
|
113
|
101
|
12
|
- Volumes – Total nitrogen sales volumes for the first
quarter were 3 percent lower due to a delayed North American spring
season. Ammonia sales volumes in the current quarter decreased as a
result of the unfavorable weather but also reflected the ramp-up of
our urea expansion project at Borger,
Texas, which decreased our ammonia volumes available for
sale.
- Price – Our weighted average realized selling price for
nitrogen was up 1 percent from the first quarter of 2017. Higher
realized prices for urea more than offset lower realized prices for
ammonia and some other nitrogen products.
- Costs – Cost of goods sold per tonne of nitrogen was 11
percent higher than the same period in 2017 due to higher
depreciation and amortization costs associated with the PPA.
Excluding depreciation and amortization (which includes PPA), cost
of goods sold in the first quarter declined by $9 per tonne compared to last year as a result of
lower overall gas costs and higher production volumes.
Given the significant impact of the PPA on the nitrogen gross
margin per tonne, nitrogen gross margin excluding depreciation and
amortization is more indicative of operational performance and
increased by 12 percent in the first quarter compared to the same
period last year.
|
|
|
Three months ended
March 31
|
Natural Gas
Prices
(U.S. dollars per
MMBtu)
|
2018 Actual
|
2017
Combined
|
Change
|
Overall gas cost
excluding realized derivative
impact
|
2.73
|
2.90
|
(0.17)
|
Realized
derivative impact
|
0.29
|
0.31
|
(0.02)
|
Overall gas
cost
|
3.02
|
3.21
|
(0.19)
|
Average
NYMEX
|
3.00
|
3.32
|
(0.32)
|
Average
AECO
|
1.48
|
2.21
|
(0.73)
|
Phosphate and Sulfate
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
|
|
|
|
|
2018 Actual
|
2017
Combined
|
Change
|
Net
sales
|
|
|
|
|
|
404
|
339
|
65
|
Cost of goods
sold
|
|
|
|
|
|
(375)
|
(305)
|
(70)
|
Gross
margin
|
|
|
|
|
|
29
|
34
|
(5)
|
EBIT
|
|
|
|
|
|
23
|
25
|
(2)
|
EBITDA
|
|
|
|
|
|
74
|
88
|
(14)
|
- EBITDA – Total phosphate EBITDA was down 16 percent from
the first quarter in 2017, due primarily to higher sulfur costs
that more than offset higher sales volumes and average realized
prices.
|
|
|
Three months ended
March 31
|
|
2018
Actual
|
2017
Combined
|
Change
|
Manufactured
products
|
|
|
|
Sales volumes
(tonnes 000's)
|
|
|
|
|
Fertilizer
|
605
|
506
|
99
|
|
Industrial and
feed
|
221
|
239
|
(18)
|
|
Ammonium
sulfate
|
72
|
88
|
(16)
|
|
Total
|
898
|
833
|
65
|
Net selling price
($/tonne)
|
|
|
|
|
Fertilizer
|
396
|
376
|
20
|
|
Industrial and
feed
|
481
|
492
|
(11)
|
|
Ammonium
sulfate
|
241
|
228
|
13
|
|
Average
|
404
|
394
|
10
|
Cost of goods sold
($/tonne)
|
(373)
|
(354)
|
(19)
|
Gross margin
($/tonne)
|
31
|
40
|
(9)
|
Depreciation and
amortization ($/tonne)
|
57
|
76
|
(19)
|
Gross margin
excluding depreciation and
amortization ($/tonne)
|
88
|
116
|
(28)
|
- Volumes – Total phosphate sales volumes for the quarter
were 8 percent higher than the same period last year, supported by
strong fertilizer demand and increased production levels at our
phosphate facilities.
- Price – The average realized selling price for phosphate
was up 3 percent due to firm global fertilizer prices, which were
driven by improved market fundamentals and higher input costs.
- Costs – Cost of goods sold per tonne was 5 percent
higher than the first quarter of 2017, as higher sulfur costs more
than offset lower depreciation and amortization costs.
Others
|
|
|
|
|
Three months ended
March 31
|
(millions of U.S.
dollars)
|
|
2018
Actual
|
2017
Combined
|
Change
|
General and
administrative expenses
|
|
(84)
|
(73)
|
(11)
|
Other
expenses
|
|
(72)
|
(22)
|
(50)
|
Finance
costs
|
|
(119)
|
(118)
|
(1)
|
Income tax
recovery (expense)
|
|
42
|
(7)
|
49
|
- Other expenses increased due to $41 million higher merger and integration-related
costs.
- Tax - The income tax recovery in the first quarter of
2018 was due to a net loss from continuing operations, compared to
income from continuing operations in the first quarter of
2017.
SYNERGIES
Synergy Program Commitments
|
|
|
Category
|
December 31, 2019
Synergy
Run Rate – Initial Target
|
Synergy Run Rate
Achieved
to March 31, 2018
|
Distribution and
retail
integration/optimization
|
~$150
million
|
$52
million
|
Production
optimization
|
~$125
million
|
$42
million
|
SG&A
optimization
|
~$125
million
|
$32
million
|
Procurement
|
~$100
million
|
$24
million
|
Total
|
$500
million
|
$150
million
|
- Nutrien remains on target to achieve its commitment of
delivering a run rate of $500 million
in annual synergies by December 31,
2019. As at March 31, 2018, a
run rate of $150 million reflecting
prospective annual synergies has been achieved. These prospective
synergies will be reflected in the Income Statement of $112 million and through the reduction of capital
spending of $38 million. Cumulative
synergies realized to date of $23
million have been reflected in the March 31, 2018 financial statements. To date in
2018, including severance accruals, Nutrien has recorded expenses
of $66 million for synergy and
integration related initiatives. Capital spending on synergy
initiatives has totaled $5 million in
2018 to date.
Notes
1. All amounts are stated in U.S.
dollars.
2. All references to per-share amounts pertain
to diluted net earnings per share.
3. EBITDA is
calculated as net (loss) earnings from continuing operations before
finance costs, income tax (recovery) expense, depreciation and
amortization. This is a non-IFRS measure. Refer to Non-IFRS
Financial Measures and Reconciliations.
4. This is a
non-IFRS measure. Refer to Selected Non-IFRS Financial Measures and
Reconciliations.
5. Canpotex Limited (Canpotex), the
offshore marketing company for Nutrien and one other Saskatchewan potash producer.
6.
EBIT is calculated as net (loss) earnings from continuing
operations before finance costs and income tax (recovery)
expense.
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 over
26 million tonnes of potash, nitrogen and phosphate and sulfate
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 visit us at
www.nutrien.com.
Forward-Looking Statements
Certain statements and other information included in this
news release 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 news release, other
than those relating to historical information or current
conditions, are forward-looking statements, including, but not
limited to: Nutrien's 2018 annual and first half guidance,
including expectations regarding our diluted earnings per share and
EBITDA (both consolidated and by segment); expectations regarding
net proceeds to be realized from the on-going sale of equity
interests; capital spending expectations for 2018; expectations
regarding performance of our business segments in 2018; our market
outlook for 2018, including potash, nitrogen and phosphate and
sulfate outlook and including 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 currency fluctuations and import and
export volumes; expectations regarding completion of previously
announced expansion projects (including timing and volumes of
production associated therewith) and acquisitions and divestitures;
and the expected synergies associated with the merger of Agrium and
PotashCorp, including timing thereof. 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 Nutrien believes that these
assumptions are reasonable, 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. The additional key assumptions
that have been made include, among other things, assumptions with
respect to Nutrien's ability to successfully integrate and realize
the anticipated benefits of its already completed (including the
merger of Agrium and PotashCorp) and future acquisitions, and that
we will be able to implement our standards, controls, procedures
and policies at any acquired businesses to realize the expected
synergies; that future business, regulatory and industry conditions
will be within the parameters expected by Nutrien, including with
respect to prices, margins, demand, supply, product availability,
supplier agreements, availability and cost of labor and interest,
exchange and effective tax rates; the completion of our expansion
projects on schedule, as planned and on budget; assumptions with
respect to global economic conditions and the accuracy of our
market outlook expectations for 2018 and in the future (including
as outlined under "Market Outlook"); 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; ability to maintain
investment grade rating and achieve our performance targets;
assumptions in respect of our ability to sell equity positions,
including the ability to find suitable buyers at expected prices
and successfully complete such transactions in a timely manner; the
receipt, on time, of all necessary permits, utilities and project
approvals with respect to our expansion projects and that we will
have the resources necessary to meet the projects' approach.
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; the failure to successfully integrate and
realize the expected synergies associated with the merger of Agrium
and PotashCorp, including within the expected timeframe; 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, 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 security risks
related to our systems; the inability to find suitable buyers for
our equity positions and counterparty and transaction risk
associated therewith; regional natural gas supply restrictions;
counterparty and sovereign risk; delays in completion of
turnarounds at our major facilities; gas supply interruptions at
our Egyptian and Argentinian facilities; any significant impairment
of the carrying value 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; and other
risk factors detailed from time to time in Agrium, PotashCorp and
Nutrien reports filed with the Canadian securities regulators and
the Securities and Exchange Commission in the United States, including those
disclosed in Nutrien's business acquisition report dated
February 20, 2018, related to the
merger of Agrium and PotashCorp.
The purpose of our expected diluted earnings per share,
consolidated EBITDA and EBITDA by segment guidance range is to
assist readers in understanding our expected and targeted financial
results, and this information may not be appropriate for other
purposes.
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 U.S. federal securities laws or applicable
Canadian securities legislation.
Investor and Media Relations:
Richard Downey
Vice President, Investor & Corporate Relations
(403) 225-7357
Investors@nutrien.com
Investor Relations:
Jeff Holzman
Senior Director, Investor Relations
(306) 933-8545
Todd Coakwell
Director, Investor Relations
(403) 225-7437
Contact us at: www.nutrien.com
__________________________________________________________________________
Nutrien will host a Conference Call on Tuesday, May 8, 2018 at 10:00 am Eastern Time.
Telephone
Conference:
|
Dial-in
numbers:
|
|
•
|
From Canada and the
U.S. 1-877-269-7756 or 1-201-689-7817
|
|
•
|
No access code
required. Please dial in 15 minutes prior to ensure you get on the
call.
|
|
|
|
Live Audio
Webcast:
|
Visit
https://www.nutrien.com/investors/events/2018-q1-earnings-conference-call
|
Nutrien
Ltd.
|
|
|
Condensed
Consolidated Statements of (Loss) Earnings
|
|
|
(in millions of US
dollars except as otherwise noted)
|
|
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
(Note
12)
|
|
|
|
|
|
|
Sales (Note
3)
|
|
|
|
$
|
3,695
|
$
|
1,112
|
Freight,
transportation and distribution
|
|
|
|
(208)
|
(133)
|
Cost of goods sold
(Note 3)
|
|
|
|
(2,640)
|
(706)
|
Gross
Margin
|
|
|
|
847
|
273
|
Selling
expenses
|
|
|
|
(532)
|
(9)
|
General and
administrative expenses
|
|
|
|
(119)
|
(41)
|
Provincial mining and
other taxes
|
|
|
|
(48)
|
(33)
|
Earnings of
equity-accounted investees
|
|
|
|
7
|
-
|
Other expenses (Note
4)
|
|
|
|
(79)
|
(15)
|
Earnings before
Finance Costs and Income Taxes
|
|
|
|
76
|
175
|
Finance
costs
|
|
|
|
(119)
|
(59)
|
(Loss) Earnings
before Income Taxes
|
|
|
|
(43)
|
116
|
Income tax recovery
(expense) (Note 5)
|
|
|
|
42
|
(10)
|
Net (Loss)
Earnings from Continuing Operations
|
|
|
|
(1)
|
106
|
Net earnings from
discontinued operations (Note 6)
|
|
|
|
-
|
43
|
Net (Loss)
Earnings
|
|
|
|
$
|
(1)
|
$
|
149
|
|
|
|
|
|
|
Net Earnings per
Share from Continuing Operations
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
-
|
$
|
0.13
|
|
Diluted
|
|
|
|
$
|
-
|
$
|
0.13
|
|
|
|
|
|
|
Net Earnings per
Share from Continuing and Discontinued
Operations
|
|
|
|
|
|
|
Basic
|
|
|
|
$
|
-
|
$
|
0.18
|
|
Diluted
|
|
|
|
$
|
-
|
$
|
0.18
|
|
|
|
|
|
|
Dividends Declared
per Share
|
|
|
|
$
|
0.40
|
$
|
0.10
|
|
|
|
|
|
|
Weighted Average
Shares Outstanding (Note 2)
|
|
|
|
|
|
|
Basic
|
|
|
|
642,690,000
|
839,911,000
|
|
Diluted
|
|
|
|
643,218,000
|
840,211,000
|
|
|
|
|
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
|
|
|
|
|
Nutrien
Ltd.
|
Condensed
Consolidated Statements of Comprehensive (Loss)
Income
|
(in millions of US
dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31
|
|
|
|
|
2018
|
2017
|
(Net of related
income taxes)
|
|
|
|
|
(Note
12)
|
|
|
|
|
|
|
Net (Loss)
Earnings
|
|
|
|
$
|
(1)
|
$
|
149
|
Other Comprehensive
(Loss) Income
|
|
|
|
|
|
|
Items that will not
be reclassified to net (loss) earnings:
|
|
|
|
|
|
|
|
Net actuarial gain on
defined benefit plans(1)
|
|
|
|
57
|
-
|
|
|
Financial instruments
measured at FVTOCI (2)
|
|
|
|
|
|
|
|
|
Net fair value (loss)
gain on investments
|
|
|
|
(83)
|
33
|
|
Items that have been
or may be subsequently reclassified to
|
|
|
|
|
|
|
|
net (loss)
earnings:
|
|
|
|
|
|
|
|
Cash flow
hedges
|
|
|
|
|
|
|
|
|
Net fair value loss
during the period (3)
|
|
|
|
(2)
|
(5)
|
|
|
|
Reclassification to
earnings of net loss (4)
|
|
|
|
-
|
8
|
|
|
Foreign currency
translation
|
|
|
|
|
|
|
|
|
Loss on translation
of net foreign operations
|
|
|
|
(41)
|
-
|
|
|
Equity-accounted
investees
|
|
|
|
|
|
|
|
|
Share of other
comprehensive (loss)
income
|
|
|
|
(1)
|
3
|
Other
Comprehensive (Loss) Income
|
|
|
|
(70)
|
39
|
Comprehensive
(Loss) Income
|
|
|
|
$
|
(71)
|
$
|
188
|
(1) Net of
income taxes of $(17) (2017 - $NIL).
|
(2) As at
March 31, 2018, financial instruments measured at fair value
through other comprehensive income ("FVTOCI") are comprised of
shares in Sinofert Holdings Limited ("Sinofert") and other (March
31, 2017 - Israel Chemicals Ltd. ("ICL"), Sinofert and other). The
company's investment in ICL was classified as held for sale at
December 31, 2017 and the divestiture of all equity interests in
ICL was completed on January 24, 2018.
|
(3) Cash
flow hedges are comprised of natural gas derivative instruments and
were net of income taxes of $1 (2017 -$3).
|
(4) Net of
income taxes of $NIL (2017 - $(5)). See Note 1 for impact of
adoption of new standard.
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
|
Condensed
Consolidated Statements of Cash Flows
|
(in millions of US
dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
March
31
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
Operating
Activities
|
|
|
|
|
Net (loss)
earnings
|
|
|
$
|
(1)
|
$
|
149
|
Adjustments to
reconcile net (loss) earnings to cash (used in)
|
|
|
|
|
|
provided by operating
activities (Note 7)
|
|
|
401
|
144
|
Changes in non-cash
operating working capital (Note 7)
|
|
|
(740)
|
(70)
|
Cash (used in)
provided by operating activities
|
|
|
(340)
|
223
|
|
|
|
|
|
|
Investing
Activities
|
|
|
|
|
Cash acquired in
Merger (Note 2)
|
|
|
466
|
-
|
Business
acquisitions, net of cash acquired
|
|
|
(185)
|
-
|
Additions to
property, plant and equipment
|
|
|
(238)
|
(133)
|
Proceeds from
disposal of discontinued operations (Note 6)
|
|
|
752
|
-
|
Other
|
|
|
1
|
1
|
Cash provided by
(used in) investing activities
|
|
|
796
|
(132)
|
|
|
|
|
|
|
Financing
Activities
|
|
|
|
|
Finance costs on
long-term debt
|
|
|
(6)
|
(1)
|
Proceeds from
short-term debt
|
|
|
496
|
21
|
Dividends
paid
|
|
|
(205)
|
(82)
|
Repurchase of common
shares (Note 10)
|
|
|
(401)
|
-
|
Issuance of common
shares
|
|
|
1
|
1
|
Cash used in
financing activities
|
|
|
(115)
|
(61)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
|
3
|
-
|
Increase in Cash
and Cash Equivalents
|
|
|
344
|
30
|
Cash and Cash
Equivalents, Beginning of Period
|
|
|
116
|
32
|
Cash and Cash
Equivalents, End of Period
|
|
|
$
|
460
|
$
|
62
|
|
|
|
|
|
|
Cash and cash
equivalents comprised of:
|
|
|
|
|
|
Cash
|
|
|
$
|
325
|
$
|
44
|
|
Short-term
investments
|
|
|
135
|
18
|
|
|
|
|
$
|
460
|
$
|
62
|
|
|
|
|
|
|
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
|
Condensed
Consolidated Statement of Changes in Shareholders'
Equity
|
(in millions of US
dollars)
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated Other
Comprehensive Income (Loss)
|
|
|
|
|
|
|
Net
|
|
Comprehensive
|
Total
|
|
|
|
|
|
|
Net fair
value
|
Net loss
|
actuarial
|
Translation
loss
|
loss
of
|
Accumulated
|
|
|
|
|
|
|
loss on
|
on
derivatives
|
gain on
|
of net
foreign
|
equity-accounted
|
Other
|
|
|
|
|
Share
|
Contributed
|
investments
|
designated
as
|
defined
|
operations
|
investees
|
Comprehensive
|
Retained
|
Total
|
|
|
Capital
|
Surplus
|
(1),(2)
|
cash flow
hedges
|
benefit plans
(3)
|
(Note 12)
|
(Note 12)
|
Income
(Loss)
|
Earnings
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December
31, 2017
|
$
|
1,806
|
$
|
230
|
$
|
73
|
$
|
(43)
|
$
|
-
|
$
|
(2)
|
$
|
(3)
|
$
|
25
|
$
|
6,242
|
$
|
8,303
|
Merger impact (Note
2)
|
15,898
|
7
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
15,904
|
Net loss
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(1)
|
(1)
|
Other comprehensive
(loss)
|
|
|
|
|
|
|
|
|
|
|
|
income
|
-
|
-
|
(83)
|
(2)
|
57
|
(41)
|
(1)
|
(70)
|
-
|
(70)
|
Shares
repurchased
|
(256)
|
(23)
|
-
|
-
|
-
|
-
|
-
|
-
|
(178)
|
(457)
|
Dividends
declared
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
(258)
|
(258)
|
Effect of
share-based
|
|
|
|
|
|
|
|
|
|
|
|
compensation
|
|
|
|
|
|
|
|
|
|
|
|
including issuance
of
|
|
|
|
|
|
|
|
|
|
|
|
common
shares
|
1
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
1
|
Transfer of net
actuarial
|
|
|
|
|
|
|
|
|
|
|
|
gain on
defined
|
|
|
|
|
|
|
|
|
|
|
|
benefit
plans
|
-
|
-
|
-
|
-
|
(57)
|
-
|
-
|
(57)
|
57
|
-
|
Transfer of net loss
on sale
|
|
|
|
|
|
|
|
|
|
|
|
of
investment
|
-
|
-
|
19
|
-
|
-
|
-
|
-
|
19
|
(19)
|
-
|
Transfer of net loss
on cash
|
|
|
|
|
|
|
|
|
|
|
|
flow hedges
(4)
|
-
|
-
|
-
|
9
|
-
|
-
|
-
|
9
|
-
|
9
|
Balance - March
31, 2018
|
$
|
17,449
|
$
|
214
|
$
|
9
|
$
|
(36)
|
$
|
-
|
$
|
(43)
|
$
|
(4)
|
$
|
(74)
|
$
|
5,842
|
$
|
23,431
|
(1) The
company adopted IFRS 9 "Financial Instruments" in 2018 and
reclassified available-for-sale investments as financial
instruments measured at FVTOCI.
|
(2) The
company divested its equity interests in the investment in ICL on
January 24, 2018. The loss on sale of ICL of $(19) was transferred
to retained earnings at March 31, 2018. The cumulative net
unrealized gain at December 31, 2017 was $4.
|
(3) Any
amounts incurred during a period are closed out to retained
earnings at each period-end. Therefore, no balance exists at the
beginning or end of period.
|
(4) Net of
income taxes of $(2).
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien
Ltd.
|
Condensed
Consolidated Balance Sheet
|
(in millions of US
dollars except share amounts)
|
(unaudited)
|
|
|
|
|
|
|
March
31
|
December
31
|
|
|
2018
|
2017
|
As at
|
|
|
(Note
12)
|
|
|
|
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
460
|
$
|
116
|
|
|
Receivables
|
|
3,230
|
489
|
|
|
Inventories
|
|
5,915
|
788
|
|
|
Prepaid expenses and
other current assets
|
|
546
|
72
|
|
|
10,151
|
1,465
|
|
|
Assets held for sale
(Note 6)
|
|
1,150
|
1,858
|
|
|
11,301
|
3,323
|
|
Non-current
assets
|
|
|
|
|
|
Property, plant and
equipment
|
|
20,576
|
12,971
|
|
|
Goodwill (Note
2)
|
|
10,576
|
97
|
|
|
Other intangible
assets
|
|
2,333
|
69
|
|
|
Investments
|
|
778
|
292
|
|
|
Other
assets
|
|
474
|
246
|
Total
Assets
|
|
$
|
46,038
|
$
|
16,998
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Short-term
debt
|
|
$
|
2,091
|
$
|
730
|
|
|
Current portion of
long-term debt
|
|
524
|
-
|
|
|
Payables and accrued
charges
|
|
6,920
|
836
|
|
|
9,535
|
1,566
|
|
|
Deferred income tax
liabilities on assets held for sale (Note 6)
|
|
36
|
36
|
|
|
9,571
|
1,602
|
|
Non-current
liabilities
|
|
|
|
|
|
Long-term debt (Note
8)
|
|
8,091
|
3,711
|
|
|
Deferred income tax
liabilities
|
|
2,762
|
2,205
|
|
|
Pension and other
post-retirement benefit liabilities (Note 9)
|
|
519
|
440
|
|
|
Asset retirement
obligations and accrued environmental costs
|
|
1,486
|
651
|
|
|
Other non-current
liabilities
|
|
178
|
86
|
Total
Liabilities
|
|
22,607
|
8,695
|
|
|
|
|
Shareholders'
Equity
|
|
|
|
|
Share capital (Note
10)
|
|
17,449
|
1,806
|
|
|
Unlimited
authorization of common shares without par value;
|
|
|
|
|
|
issued and
outstanding 634,911,735 and 840,223,041 at
|
|
|
|
|
|
March 31, 2018 and
December 31, 2017, respectively
|
|
|
|
|
Contributed
surplus
|
|
214
|
230
|
|
Accumulated other
comprehensive (loss) income
|
|
(74)
|
25
|
|
Retained
earnings
|
|
5,842
|
6,242
|
Total
Shareholders' Equity
|
|
23,431
|
8,303
|
Total Liabilities
and Shareholders' Equity
|
|
$
|
46,038
|
$
|
16,998
|
|
|
|
|
|
|
(See Notes to the
Condensed Consolidated Financial Statements)
|
Nutrien Ltd.
Notes to the Condensed Consolidated Financial Statements
As at and for the Three Months Ended March
31, 2018
(in millions of US dollars except as otherwise noted)
(unaudited)
1. Significant Accounting Policies
On January 1, 2018, after
receiving all required regulatory approvals, Potash Corporation of
Saskatchewan Inc. ("PotashCorp") and Agrium Inc. ("Agrium")
combined their businesses in a merger of equals by becoming wholly
owned subsidiaries of a new parent company named Nutrien Ltd.
("Nutrien"). With it's subsidiaries, Nutrien - also known as "the
company" except to the extent the context otherwise requires - is
the world's largest provider of crop inputs and services.
The company's accounting policies are in accordance with
International Financial Reporting Standards as issued by the
International Accounting Standards Board ("IFRS"). The accounting
policies and methods of computation used in preparing these
unaudited interim condensed consolidated financial statements are
consistent with those used in the preparation of PotashCorp's, the
accounting acquirer, 2017 annual consolidated financial statements,
with the exception of IFRS 9 "Financial Instruments" and IFRS 15
"Revenue from Contracts with Customers" which were adopted
effective January 1, 2018. Under IFRS
9, the impact of the adoption resulted in reclassification of the
company's available-for-sale investments to investments measured at
FVTOCI and the transfer of realized cash flow hedges as a basis
adjustment to finished goods inventory directly through accumulated
other comprehensive income (net of income taxes). The adoption of
IFRS 15 resulted in additional disclosures in the company's
financial statements. Figures and related notes for 2017 and prior
reflect the historical operations of PotashCorp. The financial
statements and related notes of Nutrien in 2018 and beyond reflect
the consolidated operations of Nutrien.
These unaudited interim 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. Further, while the
financial figures included in this preliminary interim results
press release have been computed in accordance with IFRS applicable
to interim periods, this press release does not contain sufficient
information to constitute an interim financial report as that term
is defined in International Accounting Standard ("IAS") 34,
"Interim Financial Reporting". The company expects to file an
interim financial report that complies with IAS 34 in its Quarterly
Report in May 2018.
In management's opinion, the unaudited interim condensed
consolidated financial statements include all adjustments necessary
to present fairly such information in all material respects.
Interim results are not necessarily indicative of the results
expected for the fiscal year.
2. Merger of Equals
On January 2, 2018, the first day
Nutrien began trading, shareholders of PotashCorp received 0.400
common shares of Nutrien for each PotashCorp share held and
shareholders of Agrium received 2.230 common shares of Nutrien for
each Agrium share held. The exchange ratios represent the
respective closing share prices of each company's common shares at
market close on the NYSE on August 29,
2016, the last trading day prior to when the companies
announced that they were in preliminary discussions regarding a
merger of equals, which is consistent with the weighted average
prices through that date. The purchase consideration was
$16 billion. Merger and related costs
of $66 for the three months ended
March 31, 2018 are included in other
expenses (2017 - $9).
The company has engaged independent valuation experts to assist
in determining the fair value of certain assets acquired and
liabilities assumed and related deferred income tax impacts. The
purchase price allocation is not final as the company is continuing
to obtain and verify information required to determine the fair
value of certain assets and liabilities and the amount of deferred
income taxes arising on their recognition. The company expects to
finalize the amounts recognized as it obtains the information
necessary to complete the analysis, not later than December 31, 2018.
The table below presents the preliminary value that was
allocated to Agrium's assets and liabilities based upon fair
values:
|
|
|
|
January
1,
|
As at
|
|
|
|
2018
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
|
|
$
|
466
|
|
Receivables
|
|
|
|
2,424
|
|
Inventories
|
|
|
|
3,321
|
|
Prepaid expenses and
other current assets
|
|
|
|
1,124
|
|
Assets held for
sale
|
|
|
|
105
|
|
Property, plant and
equipment
|
|
|
|
7,783
|
|
Goodwill
|
|
|
|
10,455
|
|
Other intangible
assets
|
|
|
|
2,318
|
|
Investments
|
|
|
|
522
|
|
Other
assets
|
|
|
|
123
|
Total
Assets
|
|
|
|
28,641
|
|
|
|
|
|
|
Short-term
debt
|
|
|
|
$
|
867
|
|
Payables and accrued
charges
|
|
|
|
5,223
|
|
Long-term
debt
|
|
|
|
4,941
|
|
Deferred income tax
liabilities
|
|
|
|
498
|
|
Pension and other
post-retirement benefits liabilities
|
|
|
|
142
|
|
Asset retirement
obligations and accrued environmental costs
|
|
|
|
888
|
|
Other non-current
liabilities
|
|
|
|
72
|
Total
Liabilities
|
|
|
|
12,631
|
Net assets
(consideration for the merger)
|
|
|
|
$
|
16,010
|
3. Segment Information
Prior to the Merger, the company identified the Chief Executive
Officer as the Chief Operating Decision Maker ("CODM") and used
gross margin as the measure of the segments' profit or loss. The
operating segments were limited to the following: potash,
nitrogen and phosphate. The changes in the structure of the
company's internal organization as a result of the Merger caused
the composition of the operating segments to change as well as who
the company has identified to be the CODM.
Post-Merger, the company has four reportable operating segments:
retail, potash, nitrogen and phosphate and sulfate. The CODM has
been identified as the Executive Leadership Team ("ELT") which is
comprised of officers at the Executive Vice President level and
above, and are responsible for strategic decision making, resource
allocation and assessing financial performance. The CODM uses net
(loss) earnings from continuing operations before finance costs,
income tax (recovery) expense and depreciation and amortization
("EBITDA") to measure performance and allocate resources to the
operating segments. The CODM believes EBITDA to be an important
measure as it excludes the effects of items that primarily reflect
the impact of long-term investment and financing decision, rather
than the performance of the company's day-to-day operations.
The accounting policies of the segments are the same as those
described in Note 1. Inter-segment sales are made under terms that
approximate market value.
|
Three Months Ended
March 31, 2018
|
|
|
|
|
Phosphate
|
|
|
|
|
Retail
|
Potash
|
Nitrogen
|
and
Sulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
$
|
2,088
|
$
|
602
|
$
|
624
|
$
|
381
|
$
|
-
|
$
|
-
|
$
|
3,695
|
|
-
intersegment
|
11
|
68
|
122
|
81
|
|
(282)
|
-
|
Sales
|
- total
|
2,099
|
670
|
746
|
462
|
-
|
(282)
|
3,695
|
Freight,
transportation and
|
|
|
|
|
|
|
|
|
distribution
|
-
|
(95)
|
(74)
|
(58)
|
-
|
19
|
(208)
|
Net sales
|
2,099
|
575
|
672
|
404
|
-
|
(263)
|
|
Cost of goods
sold
|
(1,691)
|
(280)
|
(524)
|
(375)
|
|
230
|
(2,640)
|
Gross
margin
|
408
|
295
|
148
|
29
|
-
|
(33)
|
847
|
|
Selling
expenses
|
(523)
|
(3)
|
(8)
|
(3)
|
5
|
-
|
(532)
|
|
General and
administrative expenses
|
(23)
|
(3)
|
(6)
|
(3)
|
(84)
|
-
|
(119)
|
|
Provincial mining and
other taxes
|
-
|
(48)
|
-
|
-
|
-
|
-
|
(48)
|
|
Earnings of
equity-accounted
|
|
|
|
|
|
|
|
|
|
investees
|
2
|
-
|
4
|
-
|
1
|
-
|
7
|
|
Other income
(expenses)
|
3
|
(4)
|
(6)
|
-
|
(72)
|
-
|
(79)
|
Earnings before
finance costs and
|
|
|
|
|
|
|
|
|
income
taxes
|
(133)
|
237
|
132
|
23
|
(150)
|
(33)
|
76
|
Depreciation and
amortization
|
123
|
91
|
129
|
51
|
17
|
-
|
411
|
EBITDA
(1)
|
(10)
|
328
|
261
|
74
|
(133)
|
(33)
|
487
|
(1) See
reconciliation of non-IFRS measure in the Selected Non-IFRS
Financial Measures and Reconciliations and Supplemental Information
section.
|
|
|
|
|
|
Three Months Ended
March 31, 2017
|
|
|
|
|
|
Phosphate
|
|
|
|
|
|
|
Potash
|
Nitrogen
|
and
Sulfate
|
Others
|
Eliminations
|
Consolidated
|
|
|
|
|
|
|
|
|
|
Sales
|
- third
party
|
|
|
$
|
429
|
$
|
375
|
$
|
308
|
$
|
-
|
$
|
-
|
$
|
1,112
|
|
-
intersegment
|
|
|
-
|
22
|
-
|
-
|
(22)
|
-
|
Sales
|
- total
|
|
|
429
|
397
|
308
|
-
|
(22)
|
1,112
|
Freight,
transportation and
|
|
|
|
|
|
|
|
|
|
distribution
|
|
|
(64)
|
(32)
|
(37)
|
-
|
-
|
(133)
|
Net sales
|
|
|
365
|
365
|
271
|
-
|
(22)
|
|
Cost of goods
sold
|
|
|
(200)
|
(268)
|
(260)
|
-
|
22
|
(706)
|
Gross
margin
|
|
|
165
|
97
|
11
|
-
|
-
|
273
|
|
Selling
expenses
|
|
|
(2)
|
(4)
|
(2)
|
(1)
|
-
|
(9)
|
|
General and
administrative expenses
|
|
|
(2)
|
(1)
|
(1)
|
(37)
|
-
|
(41)
|
|
Provincial mining and
other taxes
|
|
|
(33)
|
-
|
-
|
-
|
-
|
(33)
|
|
Other
expenses
|
|
|
(5)
|
(2)
|
(1)
|
(7)
|
-
|
(15)
|
Earnings before
finance costs and
|
|
|
|
|
|
|
|
|
|
income
taxes
|
|
|
123
|
90
|
7
|
(45)
|
-
|
175
|
|
|
Depreciation and
amortization
|
|
|
55
|
50
|
58
|
9
|
-
|
172
|
EBITDA
|
|
|
178
|
140
|
65
|
(36)
|
-
|
347
|
4. Other Expenses
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
|
|
|
|
March
31
|
|
|
|
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
|
|
|
|
(Note
12)
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
|
$
|
2
|
$
|
1
|
Merger and related
costs
|
|
|
|
|
|
|
|
|
(66)
|
(9)
|
Other
expenses
|
|
|
|
|
|
|
|
|
(15)
|
(7)
|
|
|
|
|
|
|
|
|
|
$
|
(79)
|
$
|
(15)
|
5. Income Tax Recovery (Expense)
A separate estimated average annual effective tax rate was
determined for each taxing jurisdiction and applied individually to
the interim period pre-tax income from continuing operations of
each jurisdiction.
|
|
Three Months
Ended
|
|
|
March
31
|
Income Tax Related to
Continuing Operations
|
|
2018
|
2017
|
Income tax recovery
(expense)
|
|
$
|
42
|
$
|
(10)
|
Actual effective tax
rate on ordinary earnings
|
|
89%
|
12%
|
Actual effective tax
rate including discrete items
|
|
95%
|
8%
|
Discrete tax
adjustments that impacted the tax rate
|
|
$
|
3
|
$
|
5
|
Ordinary earnings for the three months ended March 31, 2018 were negative as compared to
positive earnings for the three months ended March 31, 2017. This produced very different
weightings between jurisdictions on a quarter-over-quarter basis.
This resulted in an increase in the actual effective tax rate on
ordinary earnings. Compared to the same period last year, earnings
were significantly lower in the United
States and Canada and
higher in lower-tax jurisdictions resulting in overall lower income
taxes.
6. Investments Held for Sale and Discontinued
Operations
The company's investments in Sociedad Quimica y Minera de Chile
S.A. ("SQM"), ICL and Arab Potash Company ("APC") were classified
as held for sale and as discontinued operations in December 2017, due to regulatory requirements to
dispose of these investments in connection with the Merger. Share
of earnings, dividend income and associated income tax recovery
(expense) pertaining to these investments were reclassified from
(loss) earnings before income taxes and income taxes recovery
(expense) to net earnings from discontinued operations on the
condensed consolidated statement of (loss) earnings. The company is
actively seeking buyers for its investments in SQM and APC and
expects to complete the sales in 2018. On January 24, 2018, the company completed the sale
of its equity interests in ICL through a private secondary offering
for net proceeds of $685, resulting
in a loss on disposal of $19 recorded
through AOCI, net of income taxes of $NIL.
Net Earnings from Discontinued Operations
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31
|
|
|
|
|
|
2018
|
2017
|
Share of earnings of
SQM and APC
|
|
|
|
|
$
|
-
|
$
|
38
|
Dividend income
(1)
|
|
|
|
|
-
|
8
|
Income tax
expense
|
|
|
|
|
-
|
(3)
|
Net earnings from
discontinued operations
|
|
|
|
|
$
|
-
|
$
|
43
|
(1)ICL.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Earnings per
Share from Discontinued Operations
|
|
|
|
|
|
|
|
Basic
|
|
|
|
|
$
|
-
|
$
|
0.05
|
|
Diluted
|
|
|
|
|
$
|
-
|
$
|
0.05
|
7. Consolidated Statements of Cash Flows
|
Three Months
Ended
|
|
March
31
|
|
2018
|
2017
|
|
|
(Note
12)
|
Reconciliation of
cash (used in) provided by operating activities
|
|
|
Net (loss)
earnings
|
$
|
(1)
|
$
|
149
|
Adjustments to
reconcile net (loss) earnings to cash (used in) provided
by
|
|
|
|
operating
activities
|
|
|
|
|
Depreciation and
amortization
|
411
|
172
|
|
|
Net undistributed
earnings of equity-accounted investees
|
(6)
|
(37)
|
|
|
Share-based
compensation
|
16
|
5
|
|
|
Recovery of deferred
income tax
|
(8)
|
(14)
|
|
|
Asset retirement
obligations and accrued environmental costs
|
(18)
|
(1)
|
|
|
Other long-term
liabilities and miscellaneous
|
6
|
19
|
|
|
Subtotal of
adjustments
|
401
|
144
|
|
|
|
|
|
Changes in
non-cash operating working capital
|
|
|
|
|
Receivables
|
(187)
|
15
|
|
|
Inventories
|
(1,701)
|
(49)
|
|
|
Prepaid expenses and
other current assets
|
645
|
(5)
|
|
|
Payables and accrued
charges
|
503
|
(31)
|
|
|
Subtotal of changes
in non-cash operating working capital
|
(740)
|
(70)
|
Cash (used in)
provided by operating activities
|
$
|
(340)
|
$
|
223
|
|
|
|
Supplemental cash
flows disclosure
|
|
|
|
|
|
Interest
paid
|
$
|
114
|
$
|
29
|
|
|
|
Income taxes
paid
|
$
|
29
|
$
|
15
|
8. Long-Term Debt
During the first quarter of 2018, the company commenced offers
to exchange the senior notes and debentures for new notes issued by
Nutrien (the "Nutrien Notes"). The Nutrien Notes have interest
rates and maturities identical to those of the applicable exchanged
series of senior notes or debentures. Subsequent to March 31, 2018, approximately $7,578 of senior notes and debentures were
tendered and accepted in exchange for $7,578 of Nutrien Notes. A small portion of
senior notes and debentures, excluding the 2027 debentures, were
not exchanged and remained outstanding with the issuing subsidiary.
In accordance with the amended terms of the senior notes and
debentures, the company is not required to provide additional
financial reporting at the issuing subsidiary level. The indentures
governing these remaining senior notes and debentures have been
amended to eliminate certain covenants and events of default
provisions. In addition, none of the 2027 debentures were
exchanged, but debt holders have consented to amend certain
covenants of the indenture governing this series such that the
financial reporting of Nutrien rather than the issuing subsidiary
will satisfy any financial reporting requirements.
Also subsequent to March 31, 2018,
the company replaced the existing $3,500 unsecured revolving credit facility and
the $2,500 multi-jurisdictional
unsecured revolving credit facility with a new Nutrien $4,500 unsecured revolving credit facility
("Nutrien Credit Facility"). The Nutrien Credit Facility matures
April 10, 2023, subject to extension
at the request of Nutrien provided that the resulting maturity date
shall not exceed five years from the date specified in the request.
Principal covenants and events of default under the Nutrien Credit
Facility include a debt to capital ratio of less than or equal to
0.65:1 and other customary events of default and covenant
provisions. Non-compliance with such covenants could result in
accelerated repayment and/or termination of the credit
facility.
9. Pension and Other Post-Retirement Benefits
As a result of the Merger, the company assumed the post employee
benefit liability of legacy Agrium, which resulted in an increase
in the defined benefit plan assets and liabilities of $142 as January 1,
2018. A remeasurement of the defined benefit plan assets and
liabilities was performed at March 31,
2018. Due to a change in the discount rate and actual return
on plan assets, the company's defined benefit pension and other
post-retirement benefit obligations decreased by $110, plan assets decreased by $36 and deferred income taxes increased by
$17. As a result, the company
recorded net actuarial gains on defined benefit plan obligations of
$57 in OCI, which was recognized
immediately in retained earnings at March
31, 2018. There was no such remeasurement during the three
months ended March 31, 2017.
The net impact on assets and liabilities within the
condensed consolidated balance sheet at March 31, 2018 was as follows:
|
|
|
|
|
|
(Decrease)
|
|
|
|
|
|
|
Increase
|
Non-current
assets
|
|
|
|
|
|
|
|
Other
assets
|
|
|
|
|
|
$
|
30
|
Non-current
liabilities
|
|
|
|
|
|
|
|
Deferred income tax
liabilities
|
|
|
|
|
|
17
|
|
Pension and other
post-retirement benefit liabilities
|
|
|
|
|
|
(104)
|
The discount rate used to determine the benefit obligation for
the company's significant plans at March 31,
2018 was 3.93 percent (December 31,
2017 — 3.65 percent).
10. Share Capital
On February 20, 2018, the
company's Board of Directors approved a share repurchase program of
up to five percent of the company's outstanding common shares over
a one-year period through a normal course issuer bid. Purchases
under the normal course issuer bid will be made through open market
purchases at market price, as well as by other means as may be
permitted by applicable securities regulatory authorities,
including private agreements. Any purchases made by private
agreement under an issuer bid exemption order issued by a
securities regulatory authority will be at a discount to the
prevailing market price as provided in any exemption order.
Purchases of common shares commenced on February 23, 2018 and will expire on the earlier
of February 22, 2019, the date on
which the company has acquired the maximum number of common shares
allowable or the date the company announces that it has otherwise
decided not to make any further repurchases.
The company repurchased for cancellation 9,321,587 common shares
during the three months ended March 31,
2018, at a cost of $457 and an
average price per share of $49.02.
The repurchase resulted in a reduction of share capital of
$256, and the excess of net cost over
the average book value of the shares was recorded as a reduction of
contributed surplus of $23 and a
reduction of retained earnings of $178.
11. Share-Based Compensation
During the three months ended March 31,
2018, the company issued stock options under a new stock
option plan (the "2018 Stock Option Plan") and performance share
units ("PSUs") and restricted share units ("RSUs") under a new
PSU/RSU plan (the "2018 PSU/RSU Plan"), in each case to eligible
employees. Stock options granted during the three months ended
March 31, 2018 are subject to
shareholder approval. In connection with the completion of the
Merger, the outstanding legacy share-based compensation plans of
PotashCorp and Agrium were assumed by, and are now settled in or
with reference to shares of, Nutrien on the basis of the exchange
ratios described in Note 2. Total compensation expense for all
share-based compensation plans for the three months ended
March 31, 2018 was $16 (March 31, 2017
- $6). The weighted average grant
date fair value per unit of stock options granted during the three
months ended March 31, 2018 was
$9.71. The details of the Nutrien
plans are outlined below.
Stock Options
Under Nutrien's 2018 Stock Option Plan one-quarter of stock
options generally vest and become exercisable on the annual
anniversary of the grant date, subject to continuous employment or
retirement, and have a maximum term of 10 years. The weighted
average fair value of stock options granted was estimated as of the
date of grant using the Black-Scholes-Merton option-pricing model
with the following weighted average assumptions:
Exercise price per
option
|
|
|
|
|
|
|
|
$
|
44.50
|
Expected annual
dividend yield
|
|
|
|
|
|
|
|
3.58%
|
Expected
volatility
|
|
|
|
|
|
|
|
29%
|
Risk-free interest
rate
|
|
|
|
|
|
|
|
2.79%
|
Average expected life
of options
|
|
|
|
|
|
|
|
7.5
years
|
Stock options granted during the three months ended March 31, 2018 were 1,875,162. Total outstanding
options at March 31, 2018 was
11,031,054.
Performance Share Units
PSUs granted under the 2018 PSU/RSU Plan vest based on total
shareholder return over a three-year performance cycle, compared to
the average total shareholder return of a peer group of companies
over the same period. PSUs granted settle in cash. PSUs granted
during the three months ended March 31,
2018 were 623,643. Total outstanding PSUs at March 31, 2018 was 2,045,769.
Restricted Share Units
RSUs granted under the 2018 PSU/RSU Plan vest on December 31 of the calendar year three years
after the calendar year in which the grant date occurs and are
settled in cash. RSUs granted during the three months ended
March 31, 2018 were 444,001. Total
outstanding RSUs at March 31, 2018
was 969,620.
12. Comparative Figures
As described in Note 1, the comparative figures are PotashCorp
only. To conform with Nutrien's new method of presentation and as a
result of discontinued operations described in Note 6, comparative
figures were reclassified as follows, with no impact to the
condensed consolidated statement of net (loss) earnings,
comprehensive income (loss), cash flows, shareholders' equity or
balance sheet.
Condensed Consolidated Statement of (Loss)
Earnings
|
|
Previously
Reported
|
|
|
|
|
|
at
|
Reclassification
|
|
Reported
after
|
|
|
March 31,
2017
|
Amounts
|
|
Reclassifications
|
Cost of goods
sold
|
|
$
|
(711)
|
$
|
5
|
|
$
|
(706)
|
Other
expenses
|
|
(10)
|
(5)
|
|
(15)
|
|
|
$
|
(721)
|
$
|
-
|
|
$
|
(721)
|
|
|
|
|
|
|
Selling and
administrative expenses
|
|
$
|
(50)
|
$
|
50
|
|
$
|
-
|
Selling
expenses
|
|
-
|
(9)
|
|
(9)
|
General and
administrative expenses
|
|
-
|
(41)
|
|
(41)
|
|
|
$
|
(50)
|
$
|
-
|
|
$
|
(50)
|
|
|
|
|
|
|
Earnings of
equity-accounted investees
|
|
$
|
39
|
$
|
(39)
|
(1)
|
$
|
-
|
Provincial mining and
other taxes
|
|
(34)
|
1
|
|
(33)
|
Dividend
income
|
|
8
|
(8)
|
(1)
|
-
|
Income
taxes
|
|
(13)
|
3
|
(1)
|
(10)
|
Net earnings from
discontinued operations
|
|
-
|
43
|
(1)
|
43
|
|
|
$
|
-
|
$
|
-
|
|
$
|
-
|
(1)
Reclassified as a result of discontinued operations described in
Note 6.
|
Condensed Consolidated Statement of Comprehensive Income
(Loss)
|
|
Previously
Reported
|
|
|
|
|
at
|
Reclassification
|
Reported
after
|
|
|
March 31,
2017
|
Amounts
|
Reclassifications
|
Other
|
|
$
|
3
|
$
|
(3)
|
$
|
-
|
Comprehensive income
of associates and joint ventures
|
|
-
|
|
3
|
|
3
|
|
|
$
|
3
|
$
|
-
|
$
|
3
|
Condensed Consolidated Statement of Cash Flows
|
|
Previously
Reported
|
|
|
|
|
|
at
|
Reclassification
|
|
Reported
after
|
|
|
March 31,
2017
|
Amounts
|
|
Reclassifications
|
Pension and other
post-retirement benefits
|
|
$
|
15
|
$
|
(15)
|
|
$
|
-
|
Other long-term
liabilities and deferred credits
|
|
4
|
15
|
|
19
|
|
|
$
|
19
|
$
|
-
|
|
$
|
19
|
Condensed Consolidated Statement of Shareholders'
Equity
|
Previously
Reported
|
|
|
|
|
at
|
Reclassification
|
|
Reported
after
|
|
December 31,
2017
|
Amounts
|
|
Reclassifications
|
Other
|
$
|
(5)
|
$
|
5
|
|
$
|
-
|
Translation loss of
net foreign operations
|
-
|
(2)
|
|
(2)
|
Comprehensive loss of
equity-accounted investees
|
-
|
(3)
|
|
(3)
|
|
$
|
(5)
|
$
|
-
|
|
$
|
(5)
|
Condensed Consolidated Balance Sheet
|
Previously
Reported
|
|
|
|
|
at
|
Reclassification
|
|
Reported
after
|
|
December 31,
2017
|
Amounts
|
|
Reclassifications
|
Intangible
assets
|
$
|
166
|
$
|
(166)
|
|
$
|
-
|
Goodwill
|
-
|
97
|
|
97
|
Other intangible
assets
|
-
|
69
|
|
69
|
|
$
|
166
|
$
|
-
|
|
$
|
166
|
|
|
|
|
|
Investments in
equity-accounted investees
|
$
|
30
|
$
|
(30)
|
|
$
|
-
|
Available-for-sale
investments
|
262
|
(262)
|
|
-
|
Investments
|
-
|
292
|
|
292
|
|
$
|
292
|
$
|
-
|
|
$
|
292
|
|
|
|
|
|
Short-term debt and
current portion of long-term debt
|
$
|
730
|
$
|
(730)
|
|
$
|
-
|
Short-term
debt
|
-
|
730
|
|
730
|
|
$
|
730
|
$
|
-
|
|
$
|
730
|
|
|
|
|
|
Payables and accrued
charges
|
$
|
807
|
$
|
29
|
|
$
|
836
|
Current portion of
derivative instrument liabilities
|
29
|
(29)
|
|
-
|
|
$
|
836
|
$
|
-
|
|
$
|
836
|
|
|
|
|
|
Other non-current
liabilities
|
$
|
51
|
$
|
35
|
|
$
|
86
|
Derivative instrument
liabilities
|
35
|
(35)
|
|
-
|
|
$
|
86
|
$
|
-
|
|
$
|
86
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
Three Months
Ended
|
|
|
|
March
31
|
|
|
|
2018
|
2017
|
|
|
|
|
(Nutrien)
(1)
|
Retail
Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
|
Crop
nutrients
|
|
|
$
|
684
|
$
|
714
|
|
|
Crop protection
products
|
|
|
774
|
872
|
|
|
Seed
|
|
|
341
|
382
|
|
|
Merchandise
|
|
|
149
|
134
|
|
|
Services and
other
|
|
|
151
|
138
|
|
|
Sales
|
|
|
$
|
2,099
|
$
|
2,240
|
|
|
|
|
|
Retail Gross
Margin
|
|
|
|
|
|
|
Crop
nutrients
|
|
|
$
|
123
|
$
|
141
|
|
|
Crop protection
products
|
|
|
128
|
130
|
|
|
Seed
|
|
|
44
|
54
|
|
|
Merchandise
|
|
|
23
|
22
|
|
|
Services and
other
|
|
|
90
|
87
|
|
|
Gross
Margin
|
|
|
$
|
408
|
$
|
434
|
|
|
|
|
|
Crop Nutrients
Sales (tonnes - thousands)
|
|
|
|
|
|
|
North
America
|
|
|
1,285
|
1,490
|
|
|
International
|
|
|
418
|
352
|
|
|
Crop
Nutrients
|
|
|
1,703
|
1,842
|
|
|
|
|
|
Crop Nutrients
Sales Price per Tonne
|
|
|
|
|
|
|
North
America
|
|
|
$
|
425
|
$
|
409
|
|
|
International
|
|
|
329
|
296
|
|
|
Crop Nutrients Sales
per Tonne
|
|
|
$
|
401
|
$
|
388
|
|
|
|
|
|
Crop Nutrients
Gross Margin per Tonne
|
|
|
|
|
|
|
North
America
|
|
|
$
|
85
|
$
|
87
|
|
|
International
|
|
|
34
|
31
|
|
|
Crop Nutrients Gross
Margin per
Tonne
|
|
|
$
|
72
|
$
|
77
|
|
|
|
|
|
Proprietary
products sales as a percentage of product line sales
|
|
|
|
|
|
|
|
|
Crop
nutrients
|
|
|
9%
|
9%
|
|
|
Crop protection
products
|
|
|
25%
|
24%
|
|
|
Seed
|
|
|
19%
|
18%
|
|
|
All
Products
|
|
|
15%
|
15%
|
|
|
|
|
|
|
|
|
|
|
Retail Financial
Measures (%) (1)
|
|
|
|
Rolling four
quarters
|
|
|
|
Annual
|
March 31,
2018
|
|
|
|
Target (2)
|
Actuals
|
Average working
capital to sales
|
|
|
19%
|
18%
|
Cash operating
coverage ratio (3)
|
|
|
59%
|
63%
|
EBITDA to
sales
|
|
|
10%
|
9%
|
(1)
Amounts represent combined historical results of PotashCorp and
Agrium. Retail Sales and Gross Margin are considered non-IFRS
measures.
See reconciliation and descriptions of these non-IFRS measures in
the Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental
Information section.
|
(2)
Targets are for the 2018 calendar year.
|
(3)
Excludes depreciation and amortization.
|
|
|
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
March
31
|
|
|
|
2018
|
2017
|
|
|
|
|
(Nutrien)
(1)
|
|
|
|
|
|
Potash Sales
(tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
|
|
1,254
|
1,237
|
|
|
Offshore
|
|
|
1,871
|
1,578
|
|
Manufactured
Product
|
|
|
3,125
|
2,815
|
|
|
|
|
|
Potash Net
Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
North
America
|
|
|
$
|
250
|
$
|
229
|
|
|
Offshore
|
|
|
324
|
236
|
|
Other potash and
purchased products
|
|
|
1
|
4
|
|
Net Sales
|
|
|
$
|
575
|
$
|
469
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized
Sales Price per Tonne
|
|
|
|
|
|
|
North
America
|
|
|
$
|
199
|
$
|
185
|
|
|
Offshore
|
|
|
$
|
173
|
$
|
150
|
|
|
Average
|
|
|
$
|
184
|
$
|
165
|
|
Cost of Goods Sold
per Tonne
|
|
|
$
|
(90)
|
$
|
(94)
|
|
Gross Margin per
Tonne
|
|
|
$
|
94
|
$
|
71
|
(1)
Amounts represent combined historical results of PotashCorp and
Agrium. Potash Net Sales is considered a non-IFRS measure. See
reconciliation and
descriptions of these in the Selected Non-IFRS Financial Measures
and Reconciliations and Supplemental Information
section.
|
|
|
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
(Nutrien)
(1)
|
|
|
|
|
|
|
|
Average Natural Gas
Cost in Production per MMBtu
|
|
|
$
|
3.02
|
$
|
3.21
|
Nitrogen Sales
(tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
|
|
|
744
|
815
|
|
|
Urea
|
|
|
724
|
681
|
|
|
Solutions and
nitrates
|
|
|
835
|
885
|
|
Manufactured
Product
|
|
|
2,303
|
2,381
|
|
|
|
|
|
|
|
|
Fertilizer sales
tonnes
|
|
|
1,190
|
1,167
|
|
Industrial/Feed sales
tonnes
|
|
|
1,113
|
1,214
|
|
Manufactured
Product
|
|
|
2,303
|
2,381
|
|
|
|
|
|
|
|
Nitrogen Net
Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Ammonia
|
|
|
$
|
208
|
$
|
232
|
|
|
Urea
|
|
|
212
|
190
|
|
|
Solutions and
nitrates
|
|
|
137
|
149
|
|
Other nitrogen and
purchased products
|
|
|
115
|
135
|
|
Net
Sales
|
|
|
$
|
672
|
$
|
706
|
|
|
|
|
|
|
|
Fertilizer net
sales
|
|
|
$
|
305
|
$
|
284
|
|
Industrial/Feed net
sales
|
|
|
252
|
287
|
|
Other nitrogen and
purchased products
|
|
|
115
|
135
|
|
Net
Sales
|
|
|
$
|
672
|
$
|
706
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized
Sales Price per Tonne
|
|
|
|
|
|
|
Ammonia
|
|
|
$
|
280
|
$
|
284
|
|
|
Urea
|
|
|
$
|
294
|
$
|
278
|
|
|
Solutions and
nitrates
|
|
|
$
|
163
|
$
|
168
|
|
|
Average
|
|
|
$
|
242
|
$
|
239
|
|
|
Fertilizer average
price per Tonne
|
|
|
$
|
257
|
$
|
242
|
|
|
Industrial/Feed
average price per Tonne
|
|
|
$
|
226
|
$
|
236
|
|
|
Average
|
|
|
$
|
242
|
$
|
239
|
|
Cost of Goods Sold
per Tonne
|
|
|
$
|
(185)
|
$
|
(167)
|
|
Gross Margin per
Tonne
|
|
|
$
|
57
|
$
|
72
|
(1)
Amounts represent combined historical results of PotashCorp and
Agrium. Nitrogen Net Sales is considered a non-IFRS measure.
See reconciliation and descriptions of these non-IFRS measures in
the Selected Non-IFRS Financial Measures and Reconciliations and
Supplemental
Information section.
|
|
|
|
Nutrien
Ltd.
|
Selected Financial
Data
|
(unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
(Nutrien)
(1)
|
|
|
|
|
|
|
|
Phosphate and
Sulfate Sales (tonnes - thousands)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
|
|
605
|
506
|
|
|
Feed and
Industrial
|
|
|
221
|
239
|
|
|
Ammonium
sulfate
|
|
|
72
|
88
|
|
Manufactured
Product
|
|
|
898
|
833
|
|
|
|
|
|
|
|
Phosphate and
Sulfate Net Sales
|
|
|
|
|
|
(US $
millions)
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
|
Fertilizer
|
|
|
$
|
240
|
$
|
190
|
|
|
Feed and
Industrial
|
|
|
106
|
118
|
|
|
Ammonium
sulfate
|
|
|
18
|
20
|
|
Other phosphate and
purchased products
|
|
|
40
|
11
|
|
Net Sales
|
|
|
$
|
404
|
$
|
339
|
|
|
|
|
|
|
|
Manufactured
Product
|
|
|
|
|
|
Average Realized
Sales Price per Tonne
|
|
|
|
|
|
|
Fertilizer
|
|
|
$
|
396
|
$
|
376
|
|
|
Feed and
Industrial
|
|
|
$
|
481
|
$
|
492
|
|
|
Ammonium
sulfate
|
|
|
$
|
241
|
$
|
228
|
|
|
Average
|
|
|
$
|
404
|
$
|
394
|
|
Cost of Goods Sold
per Tonne
|
|
|
$
|
(373)
|
$
|
(354)
|
|
Gross Margin per
Tonne
|
|
|
$
|
31
|
$
|
40
|
(1)Amounts
represent combined historical results of PotashCorp and Agrium.
Nitrogen Net Sales is considered a non-IFRS
measure. See reconciliation and descriptions of these non-IFRS
measures in the Selected Non-IFRS Financial Measures and
Reconciliations and
Supplemental Information section.
|
|
|
|
Nutrien
Ltd.
|
Selected
Additional Data
|
(unaudited)
|
|
|
|
|
|
|
|
Exchange Rate
(Cdn$/US$)
|
|
|
|
|
|
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
|
December
31
|
|
|
|
|
|
1.2545
|
March 31
|
|
|
|
|
1.2894
|
1.3310
|
First-quarter average
conversion rate
|
|
|
|
|
1.2621
|
1.3210
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
(Nutrien)
(3)
|
|
|
|
|
|
|
|
Production
|
|
|
|
|
|
|
Potash production
(Product Tonnes - thousands)
|
|
|
|
|
3,498
|
3,118
|
Potash shutdown weeks
(1)
|
|
|
|
|
6
|
8
|
Nitrogen production
(Product Tonnes - thousands)
|
|
|
|
|
1,680
|
1,603
|
Ammonia operating
rate (2)
|
|
|
|
|
96%
|
93%
|
Phosphate production
(P2O5 Tonnes - thousands)
|
|
|
|
|
466
|
400
|
Phosphate
P2O5 operating
rate
|
|
|
|
|
92%
|
79%
|
|
(1)
Represents weeks of full production shutdown; excludes the impact
of any periods of reduced operating rates and
planned routine annual maintenance shutdowns and announced
workforce reductions.
|
(2)
Excludes Trinidad and Joffre.
|
(3) Amount
presented is the combined historical results.
|
Nutrien Ltd.
Selected Non-IFRS Financial Measures
and Reconciliations and Supplemental Information
(in millions of US dollars except percentage and per share
amounts)
(unaudited)
Generally, a non-IFRS financial measure is a numerical measure
of a company's performance, cash flows or financial position that
either excludes or includes amounts that are not normally excluded
or included in the most directly comparable measure calculated and
presented in accordance with IFRS. Adjusted net earnings (in total
and per share), consolidated EBITDA, adjusted EBITDA, adjusted
EBITDA margin, free cash flow and combined Nutrien historical
information for 2017 described as Nutrien are not measures of
financial performance (nor do they have standardized meanings)
under IFRS. In evaluating these measures, investors should consider
that the methodology applied in calculating such measures may
differ among companies and analysts. Retail EBITDA to sales, retail
working capital to sales, retail cash operating coverage ratio are
considered to be non-IFRS financial measures as they are calculated
using the rolling four quarters.
The company uses both IFRS and certain non-IFRS measures to
assess operational performance, as a valuation measurement and as a
component of employee remuneration. Management believes these
non-IFRS measures provide useful supplemental information to
investors in order that they may evaluate Nutrien's financial
performance using the same measures as management. Management
believes that, as a result, the investor is afforded greater
transparency in assessing the financial performance of the company.
These non-IFRS financial measures should not be considered as a
substitute for, nor superior to, measures of financial performance
prepared in accordance with IFRS.
A. ADJUSTED NET EARNINGS, EBITDA, ADJUSTED
EBITDA, ADJUSTED EBITDA MARGIN and RETAIL EBITDA TO SALES
Set forth below is a reconciliation of "adjusted net earnings"
(in total and per share) to net (loss) earnings from continuing
operations (in total and per share). Adjusted net earnings is
calculated as net (loss) earnings from continuing operations before
purchase price allocation and Merger and related costs net of tax.
Nutrien uses adjusted net earnings to assess operational
performance. Management believes adjusted net earnings to be an
important measure as it excludes the effects of non-operating items
supporting a focus on the performance of the company's day-to-day
operations. As compared to net loss from continuing operations
according to IFRS, this measure is limited in that it does not
reflect the periodic costs of charges associated with the purchase
price allocation or Merger and related costs. Management evaluates
such items through other financial measures such as cash flow used
in operating activities. The company believes that this measurement
is useful as a valuation measurement.
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2018
|
|
|
|
Expense
|
Net earnings
from
continuing
operations
impact
(post-tax)
|
Per
share
|
Net loss from
continuing operations
|
|
|
|
$
|
(1)
|
$
|
-
|
Adjustments:
|
|
|
|
|
|
|
Purchase price
allocation
|
|
|
74
|
56
|
0.08
|
|
Merger and related
costs
|
|
|
66
|
50
|
0.08
|
Adjusted net
earnings
|
|
|
|
$
|
105
|
$
|
0.16
|
Set forth below is a reconciliation of "EBITDA" and "adjusted
EBITDA" to net (loss) earnings from continuing operations and
retail "EBITDA" to retail sales for the last four rolling quarters.
EBITDA and retail EBITDA are calculated as net (loss) earnings from
continuing operations before finance costs, income tax (recovery)
expense and depreciation and amortization. Adjusted EBITDA is
calculated as net (loss) earnings from continuing operations before
finance costs, income tax (recovery) expense and depreciation and
amortization and Merger and related costs. Retail EBITDA to retail
sales is calculated as retail EBITDA divided by retail sales for
the last four rolling quarters, which does not have any directly
comparable IFRS measure. Nutrien uses EBITDA as a supplemental
financial measure of its operational performance. Management
believes EBITDA, adjusted EBITDA, retail EBITDA and retail EBITDA
to sales to be important measures as they exclude the effects of
items that primarily reflect the impact of long-term investment and
financing decisions, rather than the performance of the company's
day-to-day operations. As compared to net loss from continuing
operations according to IFRS, these measures are limited in that
they do not reflect the periodic costs of certain capitalized
tangible and intangible assets used in generating revenues in the
company's business, the charges associated with Merger and related
costs and selected corporate expenses. Management evaluates such
items through other financial measures such as capital
expenditures, cash flow used in operating activities and capital
management ratios. The company believes that these measurements are
useful to measure a company's ability to service debt and to meet
other payment obligations or as a valuation measurement.
Adjusted EBITDA margin is calculated as adjusted EBITDA divided
by net sales (sales less freight, transportation and distribution).
Management believes comparing adjusted EBITDA to net sales earned
(net of costs to deliver product) is an important indicator of
efficiency. In addition to the limitations given below in using
adjusted EBITDA as compared to net (loss) earnings from continuing
operations, adjusted EBITDA margin as compared to net (loss)
earnings from continuing operations as a percentage of sales is
also limited in that freight, transportation and distribution costs
are incurred and valued independently of sales; adjusted EBITDA
also includes earnings from equity investees from continuing
operations whose sales are not included in consolidated sales.
Management evaluates these items individually on the consolidated
statements of earnings.
|
|
Three Months
Ended
|
|
|
March
31
|
|
|
2018
|
2017
|
|
|
|
(Nutrien)
(1)
|
Net (loss)
earnings from continuing operations
|
|
$
|
(1)
|
$
|
97
|
Finance
costs
|
|
119
|
118
|
Income tax (recovery)
expense
|
|
(42)
|
7
|
Depreciation and
amortization
|
|
411
|
299
|
EBITDA
|
|
$
|
487
|
$
|
521
|
Merger and related
costs
|
|
66
|
25
|
Adjusted
EBITDA
|
|
$
|
553
|
$
|
546
|
(1) Amount
presented is the combined historical results.
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
March
31
|
|
|
2018
|
2017
|
|
|
|
(Nutrien)(1)
|
Sales
|
|
$
|
3,695
|
$
|
3,737
|
Freight,
transportation and distribution
|
|
(208)
|
(215)
|
Net
sales
|
|
$
|
3,487
|
$
|
3,522
|
(1) Amount
presented is the combined historical results.
|
|
|
|
|
|
|
|
Net (loss)
earnings from continuing operations as a percentage of
sales
|
|
0%
|
3%
|
Adjusted EBITDA
margin
|
|
16%
|
16%
|
Retail EBITDA to sales is calculated as retail EBITDA divided by
retail sales for the last four rolling quarters. Management
believes comparing retail EBITDA to sales earned is an important
indicator of efficiency and retail's operational performance.
Retail EBITDA to Sales
|
Rolling four
quarters ended March 31, 2018
|
|
Q2 2017
(1)
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Total
|
Retail
EBITDA
|
760
|
105
|
241
|
(10)
|
1,096
|
Retail
Sales
|
5,707
|
2,067
|
2,089
|
2,099
|
11,962
|
(1)
Represents information for Agrium in 2017. PotashCorp did not have
retail
operations.
|
|
|
|
|
|
|
EBITDA to
Sales
|
|
|
|
|
9%
|
B. FREE CASH FLOW, RETAIL AVERAGE WORKING
CAPITAL, RETAIL CASH OPERATING COVERAGE RATIO
Set forth below is a reconciliation of "free cash flow" to cash
(used in) provided by operating activities, the most directly
comparable financial measure calculated and presented in accordance
with IFRS. The company uses free cash flow as a supplemental
financial measure in its evaluation of liquidity and financial
strength. Free cash flow is calculated as cash used in operating
activities before sustaining capital expenditures and changes in
non-cash operating working capital. Sustaining capital expenditures
include the cost of replacements and betterments for the company's
facilities. Management believes that adjusting principally for the
swings in non-cash operating working capital items due to
seasonality or other timing issues and sustaining capital
expenditures assists management in the long-term assessment of
liquidity and financial strength. Management also believes that
this measurement is useful as an indicator of its ability to
service its debt, meet other payment obligations and make strategic
investments. Readers should be aware that free cash flow does not
represent residual cash flow available for discretionary
expenditures.
|
|
|
|
|
Three Months
Ended
|
|
|
|
|
|
March
31
|
|
|
|
|
|
2018
|
2017
|
|
|
|
|
|
|
(Nutrien)
(1)
|
Cash (used in)
provided by operating activities
|
|
|
|
|
$
|
(340)
|
$
|
401
|
Sustaining capital
expenditures
|
|
|
|
|
(183)
|
(123)
|
Changes in non-cash
operating working capital
|
|
|
|
|
740
|
(66)
|
Free cash
flow
|
|
|
|
|
$
|
217
|
$
|
212
|
(1) Amount
presented is the combined historical results.
|
|
|
|
|
|
|
|
|
Set forth below is a reconciliation of Retail's average working
capital to sales. The company uses retail average working capital
to sales to evaluate operational efficiency. Retail's average
working capital to sales is calculated as the average working
capital divided by sales for the last four rolling quarters.
Management believes that adjusting principally for the swings in
operating working capital items due to seasonality and other timing
issues assists management in the long-term assessment of liquidity
and financial strength. Management also believes that this
measurement is useful as a lower or higher percentage represents
increased or decreased efficiency, respectively.
Retail average working capital to sales
|
Rolling four
quarters ended March 31, 2018
|
|
Q2 2017
(1)
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Average
|
Working
capital
|
2,508
|
2,841
|
1,587
|
1,781
|
2,179
|
Sales
|
5,707
|
2,067
|
2,089
|
2,099
|
11,962
|
(1)
Represents information for Agrium in 2017. PotashCorp did not have
retail
operations.
|
|
|
|
|
|
|
|
|
|
|
|
Average working
capital to sales
|
|
|
|
|
18%
|
|
Set forth below is a reconciliation of "cash operating coverage
ratio", which assists management and investors in understanding the
costs and underlying economics of the company's operations and
assessing the company's operating performance and the company's
ability to generate free cash flow from our segments and overall as
a company. Cash operating coverage ratio represents gross margin
excluding depreciation and amortization less EBITDA, divided by
gross margin excluding depreciation and amortization expense.
Retail cash operating coverage ratio (%)
|
Rolling four
quarters ended March 31, 2018
|
|
Q2 2017
(1)
|
Q3 2017
(1)
|
Q4 2017
(1)
|
Q1
2018
|
Total
|
Gross
margin
|
$
|
1,299
|
$
|
518
|
$
|
695
|
$
|
408
|
$
|
2,920
|
Depreciation and
amortization in cost of goods sold
|
1
|
3
|
1
|
2
|
7
|
Gross margin
excluding depreciation and amortization
|
$
|
1,300
|
$
|
521
|
$
|
696
|
$
|
410
|
$
|
2,927
|
EBITDA
|
$
|
760
|
$
|
105
|
$
|
241
|
$
|
(10)
|
$
|
1,096
|
Operating expenses
excluding depreciation and amortization
|
$
|
540
|
$
|
416
|
$
|
455
|
$
|
420
|
$
|
1,831
|
(1)
Represents information for Agrium in 2017. PotashCorp did not have
retail operations.
|
|
|
|
|
|
|
|
|
Cash operating
coverage ratio (%)
|
|
|
|
|
63%
|
C. NUTRIEN COMBINED 2017 HISTORICAL
INFORMATION
Nutrien uses non-IFRS combined historical information in the
evaluation of its operations and financial position. This
information is useful as it provides a measure of what the combined
results may have been had PotashCorp and Agrium merged on
January 1, 2017. The combined
historical results for Nutrien were calculated by adding the
historical IFRS financial statements prepared by PotashCorp and
Agrium and then eliminating intercompany transactions and
reclassifying line items to conform with Nutrien's financial
statement presentation. This combined historical information does
not include, among other things, estimated cost synergies,
adjustments related to restructuring or integration activities and
the impact of discontinued operations.
The combined historical information may differ from the Nutrien
pro forma earnings and balance sheet presented in the Business
Acquisition Report as the pro forma information therein required
certain adjustments under applicable securities laws and accounting
standards that the company believes do not provide as useful a
measure as the combined historical financial information. The
primary differences in the statement of earnings were the pro forma
finance costs were reduced by the amortization of the change in
carrying amount of Agrium's debt resulting from the purchase price
allocation ("PPA") and the pro forma other expenses were
adjusted to remove any Merger related costs. There were no
comparable adjustments in the combined historical financial
information. The primary differences in the balance sheet were the
pro forma adjusted for the estimated proceeds from the sale of SQM,
APC, ICL and Agrium's Conda Idaho phosphate production facility and
adjacent phosphate mineral rights at December 31, 2017 while there was no adjustment
in the combined historical financial information and the PPA
in the pro forma was largely allocated to goodwill as fewer
provisional fair value adjustments were known at the time of its
preparation.
|
Three Months
Ended
|
|
March 31,
2017
|
|
|
|
|
Phosphate
|
|
|
|
|
Retail
|
Potash
|
Nitrogen
|
and
Sulfate
|
Others
|
Eliminations
|
Nutrien
|
Sales
|
$
|
2,240
|
$
|
561
|
$
|
785
|
$
|
383
|
$
|
-
|
$
|
(232)
|
$
|
3,737
|
Freight,
transportation and distribution
|
-
|
(92)
|
(79)
|
(44)
|
-
|
-
|
(215)
|
Net Sales
|
2,240
|
469
|
706
|
339
|
-
|
(232)
|
3,522
|
Cost of goods
sold
|
(1,806)
|
(269)
|
(518)
|
(305)
|
-
|
214
|
(2,684)
|
Gross
Margin
|
434
|
200
|
188
|
34
|
-
|
(18)
|
838
|
Selling expenses
|
(448)
|
(3)
|
(9)
|
(3)
|
3
|
-
|
(460)
|
General and
administrative expenses
|
(25)
|
(1)
|
(2)
|
(3)
|
(73)
|
-
|
(104)
|
Provincial mining and
other taxes
|
-
|
(36)
|
-
|
-
|
-
|
-
|
(36)
|
Earnings of
equity-accounted investees
|
6
|
-
|
17
|
-
|
1
|
-
|
24
|
Other income
(expenses)
|
1
|
(4)
|
(12)
|
(3)
|
(22)
|
-
|
(40)
|
(Loss) earnings
before finance costs
|
|
|
|
|
|
|
|
|
and income
taxes
|
(32)
|
156
|
182
|
25
|
(91)
|
(18)
|
222
|
Finance
costs
|
-
|
-
|
-
|
-
|
(118)
|
-
|
(118)
|
(Loss) earnings
before income taxes
|
(32)
|
156
|
182
|
25
|
(209)
|
(18)
|
104
|
Income tax
recovery
|
-
|
-
|
-
|
-
|
(7)
|
-
|
(7)
|
Net (loss) earnings
from
|
|
|
|
|
|
|
|
|
continuing
operations
|
(32)
|
156
|
182
|
25
|
(216)
|
(18)
|
97
|
Finance
costs
|
-
|
-
|
-
|
-
|
118
|
-
|
118
|
Income tax
recovery
|
-
|
-
|
-
|
-
|
7
|
-
|
7
|
Depreciation and
amortization
|
71
|
84
|
68
|
63
|
13
|
-
|
299
|
EBITDA
|
$
|
39
|
$
|
240
|
$
|
250
|
$
|
88
|
$
|
(78)
|
$
|
(18)
|
$
|
521
|
Retail
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
-
|
$
|
2,227
|
$
|
-
|
|
$
|
2,227
|
|
Intersegment
|
|
|
-
|
13
|
-
|
|
13
|
Total
Sales
|
|
|
-
|
2,240
|
-
|
|
2,240
|
Cost of goods
sold
|
|
|
-
|
(1,806)
|
-
|
|
(1,806)
|
Gross
Margin
|
|
|
-
|
434
|
-
|
|
434
|
Selling
expenses
|
|
|
-
|
(448)
|
-
|
|
(448)
|
General and
administrative expenses
|
|
|
-
|
(25)
|
-
|
|
(25)
|
Earnings of
equity-accounted investees
|
|
|
-
|
6
|
-
|
|
6
|
Other income
(expenses)
|
|
|
-
|
12
|
(11)
|
(1)
|
1
|
Loss before finance
costs and income taxes
|
|
|
-
|
(21)
|
(11)
|
|
(32)
|
Depreciation and
amortization
|
|
|
-
|
71
|
-
|
|
71
|
EBITDA
|
|
|
$
|
-
|
$
|
50
|
$
|
(11)
|
|
$
|
39
|
(1)
Finance costs associated with retail operations will be allocated
to retail segment, and presented in other income
(expenses).
|
Potash
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
429
|
$
|
90
|
$
|
-
|
|
$
|
519
|
|
Intersegment
|
|
|
-
|
42
|
-
|
|
42
|
Total
Sales
|
|
|
429
|
132
|
-
|
|
561
|
Freight,
transportation and distribution
|
|
|
(64)
|
-
|
(28)
|
(1)
|
(92)
|
Net Sales
|
|
|
365
|
132
|
(28)
|
|
469
|
Cost of goods
sold
|
|
|
(205)
|
(97)
|
33
|
(1),
(4)
|
(269)
|
Gross
Margin
|
|
|
160
|
35
|
5
|
|
200
|
Selling
expenses
|
|
|
-
|
(1)
|
(2)
|
(4)
|
(3)
|
General and
administrative expenses
|
|
|
-
|
(1)
|
-
|
(3),
(4)
|
(1)
|
Provincial mining and
other taxes
|
|
|
(34)
|
-
|
(2)
|
(2),
(4)
|
(36)
|
Other
expenses
|
|
|
-
|
(2)
|
(2)
|
(2),
(4)
|
(4)
|
Earnings before
finance costs and income taxes
|
|
|
126
|
31
|
(1)
|
|
156
|
Depreciation and
amortization
|
|
|
55
|
29
|
-
|
|
84
|
EBITDA
|
|
|
$
|
181
|
$
|
60
|
$
|
(1)
|
|
$
|
240
|
(1)
To separately present legacy Agrium direct and indirect freight
costs.
|
(2)
To separately present legacy Agrium provincial mining
taxes.
|
(3)
To reclassify legacy Agrium costs related to business support
functions to others.
|
(4)
To allocate legacy PotashCorp all others segment selling and
administrative expenses to the segments.
|
Nitrogen
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
375
|
$
|
182
|
$
|
117
|
(2)
|
$
|
674
|
|
Intersegment
|
|
|
22
|
58
|
31
|
(2),
(4)
|
111
|
Total
Sales
|
|
|
397
|
240
|
148
|
|
785
|
Freight,
transportation and distribution
|
|
|
(32)
|
-
|
(47)
|
(1)
|
(79)
|
Net Sales
|
|
|
365
|
240
|
101
|
|
706
|
Cost of goods
sold
|
|
|
(268)
|
(163)
|
(87)
|
(1), (2),
(4)
|
(518)
|
Gross
Margin
|
|
|
97
|
77
|
14
|
|
188
|
Selling
expenses
|
|
|
-
|
(3)
|
(6)
|
(2),
(5)
|
(9)
|
General and
administrative expenses
|
|
|
-
|
(2)
|
-
|
(2), (3),
(5)
|
(2)
|
Earnings of
equity-accounted investees
|
|
|
-
|
-
|
17
|
(2),
(5)
|
17
|
Other
expenses
|
|
|
-
|
(9)
|
(3)
|
(2),
(5)
|
(12)
|
Earnings before
finance costs and income taxes
|
|
|
97
|
63
|
22
|
|
182
|
Depreciation and
amortization
|
|
|
50
|
16
|
2
|
(2),
(4)
|
68
|
EBITDA
|
|
|
$
|
147
|
$
|
79
|
$
|
24
|
|
$
|
250
|
(1)
To separately present legacy Agrium direct and indirect freight
costs.
|
(2)
To reclassify legacy wholesale other Agrium segment between
nitrogen and phosphate and sulfate.
|
(3)
To reclassify legacy Agrium costs related to business support
functions to others.
|
(4)
To record profit on legacy Agrium transfers of ammonia to phosphate
and sulfate segment not previously recorded.
|
(5)
To allocate legacy PotashCorp all others selling and administrative
expenses to the segments.
|
Phosphate and Sulfate
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
308
|
$
|
90
|
$
|
(62)
|
(2), (3),
(6)
|
$
|
336
|
|
Intersegment
|
|
|
-
|
44
|
3
|
(2),
(3)
|
47
|
Total
Sales
|
|
|
308
|
134
|
(59)
|
|
383
|
Freight,
transportation and distribution
|
|
|
(37)
|
-
|
(7)
|
(1), (3),
(6)
|
(44)
|
Net Sales
|
|
|
271
|
134
|
(66)
|
|
339
|
Cost of goods
sold
|
|
|
(260)
|
(127)
|
82
|
(1), (2), (3),
(4), (6)
|
(305)
|
Gross
Margin
|
|
|
11
|
7
|
16
|
|
34
|
Selling
expenses
|
|
|
-
|
(1)
|
(2)
|
(5)
|
(3)
|
General and
administrative expenses
|
|
|
-
|
(1)
|
(2)
|
(2),
(5)
|
(3)
|
Other
expenses
|
|
|
-
|
(2)
|
(1)
|
(3),
(5)
|
(3)
|
Earnings before
finance costs and income taxes
|
|
|
11
|
3
|
11
|
|
25
|
Depreciation and
amortization
|
|
|
58
|
16
|
(11)
|
(2), (3),
(4)
|
63
|
EBITDA
|
|
|
$
|
69
|
$
|
19
|
$
|
-
|
|
$
|
88
|
(1) To
separately present legacy Agrium direct and indirect freight
costs.
|
(2) To
reclassify legacy wholesale other Agrium segment between nitrogen
and phosphate and sulfate.
|
(3) To
remove the operating results of Conda from legacy Agrium historical
financial statements.
|
(4) To
record incremental cost on legacy Agrium transfers of ammonia to
phosphate and sulfate segment not previously recorded.
|
(5) To
allocate legacy PotashCorp all others selling and administrative
expenses to the segments.
|
(6) To
reclassify certain products to others segment.
|
Others
|
|
|
Three Months
Ended
|
|
|
|
March 31,
2017
|
|
|
|
Historical
|
Historical
|
|
|
|
|
|
|
PotashCorp
|
Agrium
|
Adjustments
|
|
Nutrien
|
Sales
|
|
|
|
|
|
|
|
|
External
|
|
|
$
|
-
|
$
|
-
|
$
|
-
|
|
$
|
-
|
|
Intersegment
|
|
|
-
|
(195)
|
(37)
|
(1), (2), (9),
(11)
|
(232)
|
Total
Sales
|
|
|
-
|
(195)
|
(37)
|
|
(232)
|
Freight,
transportation and distribution
|
|
|
-
|
-
|
-
|
|
-
|
Net Sales
|
|
|
-
|
(195)
|
(37)
|
|
(232)
|
Cost of goods
sold
|
|
|
-
|
177
|
37
|
(1), (2), (9),
(11)
|
214
|
Gross
Margin
|
|
|
-
|
(18)
|
-
|
|
(18)
|
Selling and
administrative expenses
|
|
|
(50)
|
-
|
50
|
(10)
|
-
|
Selling
expenses
|
|
|
-
|
4
|
(1)
|
(10)
|
3
|
General and
administrative expenses
|
|
|
-
|
(29)
|
(44)
|
(4), (5),
(10)
|
(73)
|
Share-based
payments
|
|
|
-
|
(3)
|
3
|
(4)
|
-
|
Earnings of
equity-accounted investees
|
|
|
39
|
1
|
(39)
|
(7),
(10)
|
1
|
Dividend
income
|
|
|
8
|
-
|
(8)
|
(8)
|
-
|
Other
expenses
|
|
|
(10)
|
(8)
|
(4)
|
(10),
(12)
|
(22)
|
Loss before finance
costs and income taxes
|
|
|
(13)
|
(53)
|
(43)
|
|
(109)
|
Finance
costs
|
|
|
(59)
|
(23)
|
(36)
|
(3),
(6)
|
(118)
|
Finance costs related
to long-term debt
|
|
|
-
|
(47)
|
47
|
(6)
|
-
|
Loss before
taxes
|
|
|
(72)
|
(123)
|
(32)
|
|
(227)
|
Income
tax (recovery) expense
|
|
|
(13)
|
3
|
3
|
(7)
|
(7)
|
Net loss from
continuing operations
|
|
|
(85)
|
(120)
|
(29)
|
|
(234)
|
Finance
costs
|
|
|
59
|
23
|
36
|
(3),
(6)
|
118
|
Finance costs related
to long-term debt
|
|
|
-
|
47
|
(47)
|
(6)
|
-
|
Income
taxes
|
|
|
13
|
(3)
|
(3)
|
(7)
|
7
|
Depreciation and
amortization
|
|
|
9
|
4
|
-
|
|
13
|
EBITDA
|
|
|
$
|
(4)
|
$
|
(49)
|
$
|
(43)
|
|
$
|
(96)
|
(1)
To eliminate sales made from PotashCorp to Agrium.
|
(2)
To eliminate incremental sales and cost of goods sold
related to ammonia transfers to phosphate and sulfate
segment.
|
(3)
Finance costs associated with retail operations will be allocated
to retail segment, and presented in other (expenses)
income.
|
(4)
To reclassify legacy Agrium's share-based payments to
general and administrative expenses.
|
(5)
To reclassify legacy Agrium costs related to business support
functions to others.
|
(6)
To reclassify finance costs related to long-term debt
to finance costs.
|
(7)
To eliminate the earnings of legacy PotashCorp's investments in SQM
and APC.
|
(8)
To eliminate the earnings of legacy PotashCorp's
investment in ICL.
|
(9)
To eliminate legacy PotashCorp intersegment sales between nitrogen
and phosphate and sulfate.
|
(10) To
allocate legacy PotashCorp all others selling and administrative
expenses to the segments.
|
(11) To
remove intersegment sales related to Conda.
|
(12) To
reclassify certain phosphate products to others segment.
|
View original
content:http://www.prnewswire.com/news-releases/nutriens-first-quarter-2018-impacted-by-delayed-spring-season-expect-strong-second-quarter-results-300644049.html
SOURCE Nutrien Ltd.