Nutrien Ltd. Q3 FY2024 earnings call

• Accelerated the timeline for achieving $200 million in annual operational efficiency and cost savings to 2025, with cost reductions evenly split between retail and corporate.
• Increased upstream fertilizer sales volumes by 1.3 million tons through the first nine months of 2024, aiming to increase by 2 to 3 million tons compared to 2023 levels by 2026.
• Focused on downstream retail growth platforms including expansion of proprietary products, network optimization, tuck-in acquisitions, and improvement plan in Brazil.
• Expected to optimize capital expenditures in 2025 to a range of $2 billion to $2.1 billion.
• Generated adjusted EBITDA of $4.3 billion in the first nine months of 2024 supported by increased downstream retail earnings, higher upstream fertilizer volumes, and lower operating costs.

Upstream (Potash): Adjusted EBITDA was $1.6 billion in the first nine months of 2024, down from the prior year due to lower benchmark prices. Production increased across the six-mine network, and controllable cash cost of production was $52 per tonne. Annual potash sales volume guidance was raised to 13.5 to 13.9 million tons. Downstream Retail: Adjusted EBITDA totaled $1.4 billion in the first nine months, up 10% from the prior year. However, it faced headwinds from a prolonged recovery in Brazil and softening North American ag commodity prices. Full-year adjusted EBITDA guidance was revised to $1.5 billion to $1.6 billion. Nitrogen: Adjusted EBITDA was $1.4 billion in the first nine months, down from the prior year. Sales volume guidance was revised to 10.6 million to 10.8 million tonnes due to extended turnarounds and unplanned outages in the third quarter, but higher operating rates were expected in the fourth quarter.

• Raised annual potash sales volume guidance to 13.5 to 13.9 million tons.
• Revised nitrogen sales volume guidance to 10.6 million to 10.8 million tonnes.
• Retail adjusted EBITDA guidance revised to $1.5 billion to $1.6 billion.
• Expected $2 billion to $2.1 billion in capital expenditures in 2025.
• Global potash shipment forecast raised to 70 to 72 million tons in 2024, expecting growth in 2025 with limited new global capacity additions.

• Downstream retail faced headwinds from prolonged recovery in Brazil and softening North American ag commodity prices.
• Geopolitical issues like conflicts in Eastern Europe and Red Sea disruptions impacted fertilizer shipments, increasing cost to serve.
• Weather-related events affected phosphate operating rates and nitrogen production volumes.

Q: Provide any update on how you plan on implementing a buyback program going forward with maybe more regular or systemic or dramatic type repurchases? And just given where your shares trade today, how would you view buybacks versus any FX spending on growth?

A: Ken Seitz and Mark Thompson discussed continuing share repurchases, focusing on ratable activity, and evaluating buybacks vs. growth investments based on value and free cash flow per share.

Q: Can you talk about your confidence level that potash demand will grow next year in line with your new forecast despite softening field activity?

A: Ken Seitz cited factors like inventory levels, nutrient replacement needs, and return to trend demand, expecting potash demand to grow to 71 to 74 million tonnes in 2025.

Q: What is your perspective on nitrogen supply dynamics and future outlook?

A: Chris Reynolds discussed demand trends, supply side considerations like European natural gas prices and delays in new production, and North America's advantaged position in nitrogen production.