Nutrien Ltd. (NTR) Earnings

Management highlights

**Strategic Progress & Portfolio Optimization** - Achieved record first half potash sales volumes, strong proprietary product margin growth, and improved reliability and cost position for nitrogen assets amid volatile global markets. - 53% of potash ore is now mined via automation across the six-mine low-cost network, exceeding 2024 Investor Day targets; automation increases output from existing assets, optimizes capex, and improves safety and productivity. - Since Q4 2024, Nutrien has generated ~$1 billion in gross proceeds from non-core asset divestments, including ~$90 million in completed sales since June 2026. Proceeds are used to reduce debt, increase shareholder returns, and allocate capital to higher-growth core businesses. - Strategic alternatives review for the phosphate business is progressing, with numerous non-binding bids received. Reviews for Trinidad nitrogen operations and the Brazilian retail business are also ongoing; a final strategic path is expected by the end of 2026. Operational Execution - The largest turnaround in Arsland nitrogen facility history was completed safely with zero lost time injuries, ahead of schedule, and under budget, increasing annual production capacity. - Downstream retail growth is driven by expanded product and service offerings, with growers prioritizing productivity-enhancing proprietary solutions even amid softer overall fertilizer demand. Capital Allocation - Maintained a disciplined framework focused on growing structural free cash flow, achieving a target 1.5x debt-to-EBITDA (mid-cycle), reinvesting in high-return core growth opportunities, and returning excess cash to shareholders. - Increased the pace of share repurchases to ~$75 million per month in Q3 2026, following 26% higher repurchase volumes in the first half compared to 2025. Market Context - Global agricultural markets are supported by robust grain and oilseed demand. Geopolitical uncertainty and El Nino conditions create crop production and trade risks, placing upward pressure on crop prices. - Potash markets remain constructive, with favorable affordability, healthy demand across all major markets, and stable supply relative to other commodities. - Global urea prices declined in late Q2 during a seasonal demand low exacerbated by geopolitical developments, but fundamentals have firmed in Q3 driven by trade disruptions, production outages, elevated energy prices, and rising demand.

Guidance

- Potash sales volume guidance: raised the lower bound to 14.2 to 14.8 million tons for full-year 2026, reflecting strong first half sales and improved second half order book visibility. Maintained the global 2026 potash shipment forecast of 74 to 77 million tons, consistent with current consumption levels. - Nitrogen sales volume guidance: maintained at 9.2 to 9.7 million tons for full-year 2026, accounting for planned third quarter turnarounds at Lima and Redwater facilities, with higher ammonia operating rates expected in Q4. - Phosphate sales volume guidance: maintained for full-year 2026. - Downstream retail adjusted EBITDA guidance: maintained at $1.75 to $1.95 billion for full-year 2026, supported by high single-digit proprietary product gross margin growth, higher per-ton crop nutrient margins that offset lower volumes, and strong performance from crop protection and Australian operations. - Full-year 2026 capital expenditures guidance: lowered the range by $50 million to $1.95 to $2.05 billion. - Share repurchase pace: expects to maintain the ~$75 million per month repurchase rate for the remainder of 2026; the structural buyback rate will be re-evaluated for 2027 based on free cash flow growth and balance sheet positioning.

Segment performance

1. Potash: Generated adjusted EBITDA of $658 million in Q2 2026. First half 2026 sales volumes hit record levels, with 53% of ore mined via automation, exceeding 2024 Investor Day targets. Full-year 2026 controllable cash costs remain targeted below $60 per ton, with Q2 and first half cash costs flat year-over-year. 2. Nitrogen: Generated adjusted EBITDA of $635 million in Q2 2026. Sales volumes declined year-over-year due to idled production at Trinidad and New Madrid, planned maintenance at Arsland, and deferred customer purchases during Q2 market volatility. The large planned Arsland turnaround was completed safely, ahead of schedule, and under budget, adding annual production capacity via debottlenecking. First half production met prior expectations. 3. Phosphate: Adjusted EBITDA declined in Q2 2026 due to elevated sulfur costs pressuring global producer margins. Full-year 2026 sales volume guidance is maintained, supported by first half reliability improvements. 4. Downstream Retail: Generated adjusted EBITDA of $1.24 billion in first half 2026, up 4% year-over-year. Q2 North American commodity fertilizer volumes declined (especially phosphate and nitrogen), but this was offset by strong performance of proprietary products. Proprietary crop nutrient gross margin grew 10% year-over-year in the first half, with sales volumes for some nutritional products up nearly 10x year-over-year. Company-wide: Q2 2026 adjusted EBITDA was $2.4 billion, first half 2026 adjusted EBITDA was $3.5 billion, up 6% year-over-year. Operating cash flow rose 12% year-over-year in the first half.

Risks & headwinds

- Geopolitical uncertainty (including the Middle East conflict and ongoing Russia-Ukraine war) has disrupted nitrogen trade flows, sequestered ~1.5 million tons of monthly urea supply upstream of the Strait of Hormuz, and pushed up European natural gas prices, creating market volatility and price risk. - El Nino weather conditions pose risks to crop production in Southeast Asia and other growing regions, which could impact demand and supply chain operations. - Elevated and volatile sulfur prices create sustained unsustainable margin pressure for global phosphate producers, which could force future production curtailments. - Global fertilizer demand faces downside risk from lower corn acreage in North America, delayed planting seasons, and grower purchase deferral amid price volatility. - Phosphate demand destruction is expected to continue through the second half of 2026, with demand projected to remain below historical average levels. - Global potash supply chain capacity is a constraint to hitting the upper end of the 2026 global shipment guidance range.

Analyst Q&A

• Q: Given stable potash demand across core markets, what is the second half 2026 outlook, and how comfortable is management with current order book positioning heading into year-end? /

  A: Management is constructive on potash demand for the second half, with healthy demand across all major markets supported by favorable affordability and low starting inventories that are being replenished. Summer fill programs saw strong demand, and Q3 volumes are already fully committed. Regionally, North America has a thin import pipeline and strong post-price-increase order flow; Brazil has ~4 million tons of remaining buying for the year with steady prices; China has reasonable in-channel inventory levels and buyers prioritize supply security; Southeast Asia demand is supported by high palm oil prices. The updated guidance range reflects this strong demand backdrop.

• Q: What is Nutrien's roadmap to expand potash production from ~15 million tons today to 18 million tons, what is the associated capex, and does management still target 19% to 20% global market share? /

  A: Management maintains the historical 19% to 20% global market share target, as long-standing customer relationships grow alongside global potash demand growth. Expansion leverages existing low-cost six-mine infrastructure, with automation unlocking additional low-cost incremental volume across five of the six mines. Incremental capex for 15 to 18 million tons of capacity is $200 to $300 per ton, far lower than greenfield development. Lead times are relatively short, as milling and tailings infrastructure is already in place, requiring only mining equipment, belting, and limited loadout investment.

• Q: The sequential increase in share repurchase pace in Q2 and Q3 appears significant — is this a new permanent base buyback rate, or a temporary change driven by near-term factors? /

  A: The increased buyback pace reflects a stronger balance sheet (driven by $1 billion in divestiture proceeds since Q4 2024) and confidence in full-year 2026 cash generation. The structural buyback pace increases gradually as structural free cash flow grows, with Nutrien's capital framework prioritizing shareholder returns once the 1.5x mid-cycle debt-to-EBITDA target is met, which Nutrien is now approaching. Management expects to maintain the ~$75 million per month pace for the remainder of 2026, and will reset the pace for 2027 based on prevailing market and financial conditions. Share repurchases are Nutrien's preferred method of returning excess capital to shareholders.

• Q: Domestic retail fertilizer volumes hit a multi-year low in Q2, and retail EBITDA declined year-over-year — what drove this, and what does it mean for second half market positioning? /

  A: Lower Q2 volumes were more significant than initially expected, driven by multiple factors: phosphate demand destruction from high prices linked to elevated sulfur costs, lower year-over-year corn acres, large 2025 fall application volumes that reduced 2026 spring demand, a delayed Western Canadian planting season, and some grower purchase deferral as urea prices declined. Potash demand was in line with expectations, with 1% year-over-year growth. For the second half, lower volumes are expected to be offset by higher per-ton gross margins, and an earlier fall application season is expected to support healthy nitrogen and potash volumes. Proprietary products continue to deliver strong structural gross margin growth, keeping full-year retail EBITDA guidance on track at 1.75 to 1.95 billion dollars.

• Q: What are the upside and downside drivers for the 74 to 77 million ton 2026 global potash shipment guidance range? /

  A: The upper end of the range is constrained by available effective global supply chain capacity to serve all markets for the remainder of the year. Reaching the upper end would require full supply chain functionality across all regions. The lower end of the range reflects risks from El Nino weather impacts, potential inventory build-ups in key markets, and adverse weather that disrupts application or supply chain operations. As of the call, management is comfortable with the midpoint of the range, which is reflected in the upward adjustment to the lower bound of Nutrien's own sales volume guidance.