Nutrien Q2 2018 Results Presentation - August 1, 2018
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Nutrien Q2 2018
Results Presentation
August 1, 2018
August 1, 2018
Forward Looking Statements 2
Certain statements and other information included in this presentation 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
presentation, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's 2018 annual and second half guidance, including
expectations regarding our diluted adjusted earnings per share and adjusted EBITDA (both adjusted 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 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 “Outlook and Guidance”); 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 adjusted
earnings per share, consolidated adjusted 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.
Non-IFRS Financial Measures Advisory
We consider net earnings from continuing operations before finance costs, income tax (recovery) expense and depreciation and amortization("EBITDA"), adjusted net earnings per share, Nutrien combined
2017 historical information and adjusted EBITDA, all of which are non-IFRS financial measures, to provide useful information to both management and investors in measuring our financial performance and
financial condition. Refer to the disclosure under the heading “Selected Non-IFRS Financial Measures and Reconciliations and Supplemental Information” included in our news release dated August 1, 2018
announcing our second quarter 2018 results, as filed on SEDAR at www.sedar.com and EDGAR at www.sec.gov under our corporate profile, for a reconciliation of these non-IFRS measures to the most
directly comparable measures calculated in accordance with IFRS and for a further discussion of how these measures are calculated and their usefulness to users including management. Non-IFRS
financial measures are not recognized measures under IFRS and our method of calculation may not be comparable to that of other companies. These non-IFRS financial measures should not be
considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. The purpose of our adjusted annual earnings per share and adjusted consolidated
EBITDA guidance ranges 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.
August 1, 2018
Second Quarter and First Half
2018 Results
Q2 2018 RESULTS PRESENTATION August 1, 2018
Q2 2018 and 1H 2018 Financial Highlights 4
• Nutrien Q2’18 net earnings from continuing operations was $741 million ($1.17 earnings per
share1) and EBITDA2 was $1.5 billion.
• Q2’18 adjusted net earnings per share was $1.483 (adjusted EBITDA of $1.6 billion3),
demonstrating the value of our world class distribution and logistical network in a compressed
season.
• Retail EBITDA grew 10% in 1H184 & 17% in Q2’184, as a result of strong demand and solid
margins.
• Potash EBITDA was 34% higher in 1H18 & 32% higher in Q2’18 due to strong offshore sales
volumes, higher prices, lower cost per tonne, including synergy realization.
• Nitrogen EBITDA improved 17% in 1H18 & 29% in Q2’18, on lower production costs, higher urea
prices & increased sales volumes.
• Nutrien full-year 2018 adjusted annual earnings per share and adjusted consolidated EBITDA
guidance were raised to $2.40 to $2.70 and $3.7 to $4.0B, respectively (up from $2.20 to $2.60
EPS and $3.3 to $3.7B). The adjusted annual earnings per share guidance includes
approximately $100 million in additional annual depreciation and amortization in phosphate &
sulfate, related to the conversion of our Redwater phosphate facility to produce ammonium
sulfate.
1 All references to per-share amounts pertain to diluted net earnings per share
2 EBITDA is net earnings from continuing operations before finance costs, income tax (recovery) expense and depreciation and amortization
3 See “Selected Non-IFRS Financial Measures and Reconciliations and Supplemental Information” in Nutrien’s Q2 2018 news release August 1, 2018
4 Dollar and percentage changes throughout the presentation are comparing Nutrien's 2018 results to Nutrien's 'Combined Historical' 2017 results, a non-IFRS measure
discussed in Nutrien's Q2 2018 news release
Strategic and Operational Highlights 5
• Nutrien repurchased 29.3 million shares under its normal course issuer bid program year-to-
date (~ 4.6% of shares outstanding).
• Nutrien enhanced its digital ag and omni-channel offering with the announced acquisitions of
Waypoint Analytical, Inc. and Agrible, Inc.
• We achieved $246 million in run-rate synergies on a year-to-date basis and raised our synergy
run-rate target to $350 million for 2018.
• The small Geismar phosphate facility will close later in 2018, and the company will no longer
require offshore phosphate rock imports beginning in 2019.
• Nutrien made significant progress on all regulatory-required equity divestments. In the year,
Nutrien closed two transactions and entered definitive agreements for the two remaining
investments - which are expected to close by the end of 2018. Total net proceeds from all
divestments is estimated to be approximately $5.0 billion.
August 1, 2018
Nutrien Q2 2018 Adjusted EBITDA1 Comparison 6
• Retail EBITDA grew 17 percent in Q2 and 10 percent in 1H18 as a result of strong demand, solid margins
and the ability of our distribution network to deliver in a compressed season.
• Potash EBITDA was up 32 percent in Q2 and 34 percent in 1H18 due to higher sales volumes, increased
realized selling prices and a lower cost per tonne.
• Nitrogen EBITDA was up 29 percent in Q2 and 17 percent in 1H18 as a result of lower production costs,
higher urea realized selling prices and increased sales volumes.
• Total Phosphate & Sulfate EBITDA was up 42 percent in Q2 and 7 percent in 1H18 due to higher sales
volumes and increased realized selling prices.
US$ Millions
Q2 2017 ² Q2 2018
$1,604 +17%
$1,335
+32%
+29%
$886 +42%
$522 $760
$386 $487
$292 $335 $81
$260 $57
-$34 -$84
Consolidated Retail Potash Nitrogen Phosphate and Others
Sulfate
1 See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news release August 1, 2018
Source: Nutrien 2 Q2 2017 amounts are the historical combined results of legacy PotashCorp and Agrium for the three months ended June 30, 2017 and are
considered to be non-IFRS measures. See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news release
Nutrien Q2 2018 Retail Gross Margin Bridge 7
• Retail gross margin increased by 10 percent with significant growth achieved in all major product
categories and geographies.
• Gross margin was supported by strong seed and crop protection product margins and excellent demand
for crop inputs.
US$ Millions
-$1
$1,432
$1,299
$1,299
1 Q2 2017 amounts are the historical combined results of legacy PotashCorp and Agrium for the three months ended June 30, 2017 and are August 1, 2018
Source: Nutrien considered to be non-IFRS measures. See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news release
Nutrien Q2 2018 Potash Gross Margin Bridge 8
• Potash gross margin was up 39 percent due to higher realized prices, increased sales volumes and a
lower cost of product sold.
• Average realized selling prices increased $27 per tonne while offshore sales volumes increased due to
strong global demand and a higher Canpotex allocation.
• Total cost of sales decreased due to a larger proportion of supply produced at our lowest cost mines and
realized synergies.
US$ Millions
$85 $364
$262
1 Q2 2017 amounts are the historical combined results of legacy PotashCorp and Agrium for the three months ended June 30, 2017 and are August 1, 2018
Source: Nutrien considered to be non-IFRS measures. See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news releaseNutrien Q2 2018 Nitrogen Gross Margin Bridge 9
• Nitrogen gross margin increased 33 percent from higher sales volumes and lower cost of goods sold that
more than offset lower selling prices for ammonia
• Average nitrogen selling prices were down 1 percent due to lower ammonia selling prices that were
mostly offset by higher urea, solutions and nitrates prices.
• Cost of goods sold per tonne was down 10 percent, primarily due to lower gas costs (U.S. gas
benchmark prices down 12 percent, CDN gas benchmark prices down 61 percent)
US$ Millions
-$7
$6 $2
$19
$10 $48 $261
-$55
-$10
$196
Q2'17 ¹ Net Selling Price COGS Volumes Other Nitrogen and Non-cash Q2'18
Gross Margin Purchased PPA Adjustment Gross Margin
Products
1 Q2 2017 amounts are the historical combined results of legacy PotashCorp and Agrium for the three months ended June 30, 2017 and are August 1, 2018
Source: Nutrien considered to be non-IFRS measures. See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news releaseNutrien Q2 2018 Phosphate and Sulfate
10
Gross Margin Bridge
• Phosphate gross margin increased due to higher selling prices and increased sales volumes.
• Phosphate prices increased due to rising input costs, slower than expected ramp-up of new capacity and
strong global demand.
• Cost of goods sold excluding depreciation was impacted by higher sulfur prices. Global sulfur benchmark
prices were 40-60 percent higher in Q2 2018 versus Q2 2017.
US$ Millions
$42
$2 $6 2
$2 $36
$33 -$31
Q2'17 ¹ Net Selling Price Volumes COGS Non-cash PPA Q2'18 ²
Gross Margin Adjustment Gross Margin
1 Q2 2017 amounts are the historical combined results of legacy PotashCorp and Agrium for the three months ended June 30, 2017 and are August 1, 2018
Source: Nutrien considered to be non-IFRS measures. See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news release
2 Refers to gross margin excluding the effect of Non-cash PPA adjustments.Outlook and Guidance
Q2 2018 RESULTS PRESENTATION August 1, 2018New Crop Prices & Corn Condition Ratings 12
U.S. New Crop Corn & Soybean Futures U.S. Corn Condition Ratings Index1
Corn ($/bu) Soybeans ($/bu) As of July 29, 2018
4.50 12.00 400
4.00
10.00 390
3.50
380
3.00 8.00
Corn Soybeans
2.50 370
6.00
2.00 360
1.50 4.00
350
1.00 10-Year Avg. 2016 2017 2018
2.00 340
0.50
0.00 0.00 330
New crop corn and soybean prices pressured by above-average crop condition ratings
and trade concerns
Source: CME Group, USDA, Nutrien
1 The Corn Condition Ratings Index is calculated using the USDA’s national average weekly crop condition ratings
August 1, 2018Chinese Soybean Imports & Brazil-US Price Spread 13
Chinese Soybean Imports Brazil-US Price Spread & US Export Sales
Million Tonnes $/bu Spread Export Sales (Mmt)
1.60 10
Other U.S. 1.40 9
1.20 8
1.00 7
61 0.80
57 6
0.60
49
53 5
0.40
43 4
0.20
36 38 3
28 28 0.00
22 -0.20 2
24
-0.40 1
36 36
24 24 28 30 30 -0.60 0
19 22 22
May-18
May-15
Sep-15
May-16
Sep-16
May-17
Sep-17
Jan-15
Jan-16
Jan-17
Jan-18
13
U.S. Export Sales Brazil-USG Spread
Chinese soybean imports have grown at 8.5% CAGR – U.S. supply is likely needed to meet growth
Brazil soybean price premium is historically high, which tends to support U.S. export demand
Source: USDA, Bloomberg, Nutrien August 1, 2018
Note: Forecast based on flat corn acreage in China with trend yields while consumption excluding ethanol is expected to continue to grow at historical rates.Global Crop Nutrient Prices 14
Selected Fertilizer Prices
450 Potash - CFR Brazil ($/mt) DAP - FOB Tampa ($/mt)
Urea – New Orleans Barge FOB ($/mt)
400
350
300
250
200
150
Jan Mar May Jul Sep Nov Jan Mar May Jul Sep Nov Jan Mar May Jul Sep
2016 2017 2018
Potash Nitrogen Phosphate
Continued robust Tight export supplies Slow ramp-ups of
2018 demand has supported from China and the greenfield production in
a strong sold position Black Sea and addition to increased
Drivers for Q3 2018 and new uncertainty regarding raw material costs have
supply from greenfield Iran, in addition to supported phosphate
projects continues to be strong energy prices prices
delayed have supported prices
Source: Fertilizer Week, Nutrien August 1, 2018Record Global Potash Demand Projected in 2018 15
Global Potash Shipments by Region
Million Tonnes KCl
20
Previous Record:
15.8mmt (2015)
Previous Record:
15 Previous Record:
13.7mmt (1997)
12.2mmt (2017)
Previous Record:
Previous Record:
11.1mmt (1997)
10.1mmt (2017)
10
Previous Record:
6.3mmt (2010)
5
0
15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F 15 16 17E 18F
India Other Asia North America Latin America China Other
4.5 – 5.0Mmt 10.0 – 10.5Mmt 9.5 – 10.0Mmt 12.5 – 13.0Mmt 15.5 – 16.0Mmt 12.5 – 13.0Mmt
Highlights
• Expect modest • Demand supported • Steady demand • Improved crop • Strong consumption • Good affordability
2018
demand growth in by record palm oil supported by strong economics and trends supported by and growing demand
line with positive production and affordability and acreage growth in affordability and a for NPK fertilizers,
consumption trends robust crop significant removal nutrient deficient shift to more including in Africa,
despite reduced economics for a wide of nutrients following regions has potassium-intensive are expected to
subsidy rates for range of key crops consecutive large supported strong crops like fruits and boost potash
2018/19 FY harvests potash demand vegetables demand
Source: CRU, Fertecon, IFA, Nutrien August 1, 2018Record Global Potash Sales Expected in 2018 16
Global Potash Sales Changes by Region
Million Tonnes KCl
68
67
66
65
64
63
62
61
60
2017 North FSU Asia South Europe Middle East 2018F
Producer America America Producer
Sales Sales
North American producers are expected to fill the void left by lower 2018 production in
the rest of the world
Source: CRU, Fertecon, Company Reports, Nutrien August 1, 2018Increased Energy Costs Support Nitrogen Prices 17
$175 $180
Brent Chinese $151 $149
Anthracite $127
Crude Oil $109 $99 $106
Price $74 Coal Prices
$52 $44 $54 (US$/MT)
(US$/Barrel)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Current Current
$10.55
NYMEX European
$8.22 $7.57
Natural Gas Hub Natural $6.47
(US$/MMBtu) $5.71
$3.73 $4.26
Gas (TTF) $4.54
$2.63 $2.55 $3.02 $2.80 (US$/MMBtu)
2013 2014 2015 2016 2017 2018 2013 2014 2015 2016 2017 2018
Current Current
Increased global energy prices supports marginal nitrogen costs and prices;
While low and stable North American prices supports margins
Source: Bloomberg, NYMEX, CRU, Fertecon, Nutrien August 1, 2018Expect Lower China DAP/MAP Exports 18
China P2O5 Capacity Operating Rate Chinese DAP/MAP Exports
Million Tonnes Percent Million Tonnes
23 Operating Rate Capacity 85 12
10.8
22
10
80 8.9
21 8.8
7.5-8.5
8
20 7.2
75
19 6
70 4.5 4.5
18
4
17
65
2
16
15 60 0
2012 2013 2014 2015 2016 2017 2018F 2012 2013 2014 2015 2016 2017 2018F
Environmental pressures are expected to continue to impact Chinese production
and future export capabilities
Source: CRU, Nutrien August 1, 2018Nutrien 2018 Annual Guidance 19
2018 Guidance Ranges (a)
(annual guidance except where noted)
Low High
Adjusted annual earnings per share (a) (b) $2.40 $2.70
Adjusted Consolidated EBITDA (billions) (a) $3.7 $4.0
Retail EBITDA (billions) $1.2 $1.3
Potash EBITDA (billions) $1.4 $1.6
Nitrogen EBITDA (billions) $1.1 $1.2
Phosphate and Sulfate EBITDA (billions) $0.2 $0.3
Potash sales tonnes (millions) (c) 12.3 12.8
Nitrogen sales tonnes (millions) (c) 10.3 10.7
Depreciation & amortization including purchase price allocation impact (billions) $1.5 $1.7
Integration & synergy costs (millions) $50 $75
Effective tax rate on continuing operations 23% 25%
Sustaining capital expenditures (billions) $1.0 $1.1
2018 Annual Assumptions and Sensitivities
FX rate CAD to USD $1.28
NYMEX natural gas ($US/MMBtu) $2.90
$1/MMBtu increase in NYMEX ($/share) (d) $(0.20)
$20/tonne change in realized Potash selling prices ($/share) (d) $0.26
$20/tonne change in realized Ammonia selling prices ($/share) (d) $0.06
$20/tonne change in realized Urea selling prices ($/share) (d) $0.09
Note: Excluded from guidance are costs to achieve these ongoing synergies of $50 to $75 million, share-based compensation as well as the impact of incremental depreciation and amortization of
approximately $150 million to $225 million resulting from the fair valuing of Agrium’s assets and liabilities as of January 1, 2018 in accordance with purchase accounting. 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 be approximately $130 million.
These amounts are included in our earnings per share guidance but are not included in EBITDA guidance.
(a) See “Non-IFRS Financial Measures” in Nutrien’s Q2 2018 news release
(b) All references to per-share amounts pertain to diluted net earnings per share August 1, 2018
(c) Potash and nitrogen sales tonnes include manufactured product only. Nitrogen sales tonnes exclude ESN® and Rainbow products.
(d) Sensitivities are calculated pre-synergiesNutrien Strategic Priorities
Q2 2018 RESULTS PRESENTATION August 1, 2018Executing on Our Strategic Priorities 21
Year-to-date Achievements
• Achieved $246M of run-rate synergies as at June
30, 2018
Integration & • Completed divestment of ICL and SQM B shares,
Synergies
agreements in place for APC & SQM A Shares
• Strong Retail proprietary products performance
and acquisition execution
Growth • Launched integrated digital platform for growers
Initiatives
• Declared annualized dividend of $1.60/share
• Repurchased 29.3 million shares year-to-date
Shareholder under existing 5% NCIB
Returns
August 1, 2018Significant Value Creation from Merger Synergies 22
Run-Rate Synergies
US$ Millions
Achieved run-rate synergy as at June 30, 2018 $500
$125
Balance of synergy target
$50
$100 $75
$254
$57
$125 $43 +
$65
$150
$60
$246
$82
$68 ++
Distribution/ Production Procurement SG&A 2019 Target EOY
Optimization Optimization
Highly confident in full synergy realization by the end of 2019
August 1, 2018Significant Progress to Accelerate Digital Ag and 23
Omni-Channel Capabilities
Launched Nutrien Ag Solutions’
Integrated Digital Platform
• New, integrated digital platform provides growers with year-round
commercial and agronomic digital management - increasing ease of
business and improving customer experience
Acquired Waypoint
Acquired Agrible
• Largest U.S. agricultural lab group, analyzing
• Advanced digital offering across agronomic &
approximately 1.8M samples annually
on-farm advisory, combined with data science
• Enhances ability to provide integrated science-based
capabilities, predictive analytics and a leading
insights, services and unique digital product
global sustainability platform
offerings that support optimal fertility advice
Highly complementary investments in digital capabilities will augment Nutrien’s industry-leading distribution
network, product offering, advice and services – providing unparalleled value for growers
August 1, 2018Nutrien Has Multiple Avenues to Deliver Strong
24
Retail Earnings Growth
TUCK-IN/ROLL UP
Grow Continue to acquire farm centers across
North America and Australia
DIGITAL PLATFORM
Deliver Deliver a world-class integrated platform
that supports growers ease of business
Nutrien
BRAZILIAN AG-RETAIL
Build Build the retail business, leveraging our
proven strengths and experience
Ag Solutions
PROPRIETARY PRODUCT
Strategy
Increase Increase our proprietary
product offerings & sales
AG CREDIT FINANCE
Expand Expand the credit & finance business
earnings, retain & attract new customers
August 1, 2018Thank you!
For further information please visit Nutrien’s website at: www.nutrien.com
Follow Nutrien on:
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linkedin.com/company/nutrien
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