Nutrien Ltd. Q1 FY2025 earnings call

Management Statement and Operational Highlights

• Operational Efficiency: Nutrien is on track to achieve a $200 million target for consolidated annual cost savings in 2025, one year earlier than the original goal. Planned capital expenditures are down more than $500 million compared to 2023 levels. The divestiture of non-core assets has provided incremental cash flow, with total proceeds from the divestiture of Sinofert shares amounting to $223 million.
• Business Segments: Upstream: Leveraging world-class asset base to bring on incremental, low-cost fertilizer volumes; investing in midstream distribution network. Downstream retail: Well-defined growth opportunities including expansion of proprietary products business, network optimization projects, and tuck-in acquisitions. Completed two U.S. retail acquisitions in Q1.
• Market Fundamentals: Fertilizer market fundamentals strengthened by strong global demand and tight supplies. Potash spot prices up, urea and nitrogen solutions markets strengthened. U.S. farmers intending to increase corn acres by approximately 5% in 2025, positive for crop input demand

Segment Performance

• Retail: In Q1, retail adjusted EBITDA totaled $46 million. Full-year guidance range for retail adjusted EBITDA is $1.65 billion to $1.85 billion. U.S. retail fertilizer sales volumes were up 8% in April 2025 compared to the same period in 2024.
• Potash: Adjusted EBITDA in Q1 was $446 million. The annual global potash shipment forecast is in the range of 71 to 75 million tonnes. Spot market prices have increased by 10% to 20% since the beginning of 2025. Canpotex is fully committed for the second quarter due to strong demand in major offshore spot markets.
• Nitrogen: Adjusted EBITDA in Q1 was $408 million. Annual nitrogen sales volumes are expected to be in the range of 10.7 to 11.2 million tonnes. Henry Hub natural gas prices are projected to average between $3.25 and $4 per MMBtu in 2025.
• Phosphate: Adjusted EBITDA in Q1 was $61 million. Lower production volumes and higher input costs impacted results. Lower production levels are expected in the first half of 2025 compared to last year, with improved operating rates in the second half following planned turnaround activity

Guidance

• Maintained 2025 full-year guidance ranges. Retail adjusted EBITDA guidance: $1.65 billion to $1.85 billion. Potash: Annual global shipment forecast 71-75 million tonnes. Nitrogen: Annual sales volumes 10.7-11.2 million tonnes.
• Capital allocation: $2 billion to $2.1 billion in capital committed to sustain safe and reliable operations and progress growth investments. Deployed capital on U.S. retail acquisitions and share repurchases, with $188 million spent on repurchasing 3.6 million shares as of May 6th

Risks

• Geopolitical events and trade disruptions creating volatility in global financial markets. Crop protection market facing generic pressure. Phosphate business affected by sulfur cost inflation and production challenges. Potential tariff impacts on crop protection products from trade disputes between China and the U.S.

Question and Answer

Q: Joel Jackson from BMO Capital Markets asked if the outlook is improving compared to three months ago.

A: Mark Thompson responded that they agree the outlook is constructive, with strength in demand across fertilizer products, potash supply commitments, and retail planting season progress Q: Andrew Wong from RBC Capital Markets asked for an update on Brazil retail and if it's on track to break even.

A: Ken Seitz and Jeff Tarsi responded that Brazil retail is on track, with growers in a better position, progress on cost management, and focus on proprietary products Q: Vincent Andrews from Morgan Stanley asked about the first half shape up in wholesale and sequential price improvement.

A: Ken Seitz responded that the first half is constructive across upstream businesses, with strong demand in various markets and strengthening prices Q: Richard Garchitorena from Wells Fargo asked about nitrogen segment costs and tariffs.

A: Mark Thompson and Chris Reynolds responded that nitrogen costs were affected by higher gas prices, and tariffs on some nitrogen products are a factor but demand is driving prices Q: Ben Isaacson of Scotiabank asked about potash shipment guidance and price response.

A: Ken Seitz responded that they maintain the guidance range, and prices are strengthening with strong demand across markets Q: Chris Parkinson of Wolf Research asked about potash market sustainability and supply constraints.

A: Ken Seitz responded that global demand is beating supply ability, leading to price strengthening and confidence in the balance of the year Q: Steve Byrne from Bank of America asked about retail acquisitions, proprietary brands, and Infinity product.

A: Mark Thompson and Jeff Tarsi responded that acquisitions are strategic with potential synergies, proprietary brands are growing, and Infinity product launch is ongoing Q: Edlain Rodriguez of Mizuho asked about potash vs phosphate fundamentals.

A: Ken Seitz responded that phosphate will stay strong and potash is becoming stronger with strong demand Q: Hamir Patel from CIBC Capital Markets asked about M&A pipeline for retail and 2026 objectives.

A: Ken Seitz and Jeff Tarsi responded that they are on track for 2026 objectives, with disciplined approach to tuck-in acquisitions and valuation Q: Duffy Fischer from Goldman Sachs asked about crop protection pricing and tariffs.

A: Jeff Tarsi and Ken Seitz responded that crop protection pricing is affected by generic pressure and tariffs, but proprietary products provide offset Q: Jeff Zekauskas of JPMorgan asked about crop protection proprietary vs non-proprietary, potash negotiations, and nitrogen retail.

A: Jeff Tarsi, Chris Reynolds, and Mark Thompson responded that differences are due to timing and mix, potash negotiations ongoing, and nitrogen retail well-positioned with strong demand Q: Steve Hansen of Raymond James asked about cost synergies and non-core assets.

A: Ken Seitz responded that they are ahead on cost synergies and reviewing non-core assets, including Latin American South retail and Profertil Q: Ben Theurer of Barclays asked about phosphate volume and demand destruction.

A: Ken Seitz responded that phosphate demand is strong, with production challenges in first half but expected improvement in second half Q: Lucas Beaumont of UBS asked about crop chem tariff exposure and imports.

A: Ken Seitz and Jeff Tarsi responded that tariffs are being watched, with most proprietary products covered for 2025, and focus on positioning for future cycles Q: Unidentified Analyst asked about phosphate sulfur costs.

A: Ken Seitz and Jason Newton responded that sulfur costs are affecting phosphate earnings, with tightening market fundamentals and expected changes in second half