Nutrien Delivers Record First Half Earnings and Expects Strong Second Half

Nutrien is accelerating growth initiatives and announces intention to complete its existing 10 percent share repurchase program in 2022

All amounts are in US dollars except as otherwise noted

SASKATOON, Saskatchewan–(BUSINESS WIRE)–Nutrien Ltd. (TSX and NYSE: NTR) announced today its second quarter 2022 results, with net earnings of $3.6 billion ($6.51 diluted net earnings per share), which includes a non-cash impairment reversal of $450 million relating to our Phosphate operations. Second quarter 2022 adjusted net earnings per share¹ were $5.85 and adjusted EBITDA¹ was $5.0 billion.

“Nutrien delivered record earnings in the first half of 2022 due to the strength of market fundamentals, strong operating performance, the advantaged position of our global production assets and the excellent results of Retail. We generated strong results across our integrated business and demonstrated our unmatched capability to efficiently supply our customers with the products they need to help sustainably feed a growing world,” commented Ken Seitz, Nutrien’s Interim President and CEO.

“We expect supply challenges across global energy, agriculture and fertilizer markets to persist well beyond 2022. The strength of our projected cash flow provides an opportunity to accelerate high-return strategic growth initiatives and return significant capital to shareholders. We intend on completing our 10 percent share repurchase program in 2022, increasing the total amount of capital returned to shareholders to approximately $6 billion during the year,” added Mr. Seitz.

Highlights:

• Nutrien generated net earnings of $5.0 billion and adjusted EBITDA¹ of $7.6 billion in the first half of 2022 due to higher realized prices and strong Retail performance, more than offsetting a reduction in fertilizer sales volumes. As a result, cash provided by operating activitiesincreased to $2.5 billion in the first half of 2022.
• Nutrien revised full-year 2022 adjusted EBITDA guidance¹ and adjusted net earnings per share guidance¹ to $14.0 to $15.5 billion and $15.80 to $17.80 per share, respectively. Adjusted net earnings per share guidance includes our plans to allocate approximately $5 billion to share repurchases in 2022.
• Nutrien Ag Solutions (“Retail”) delivered record adjusted EBITDA in the second quarter and the first half of 2022. First-half adjusted EBITDA was up 38 percent year-over-year as a result of strong sales and gross margin growth, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio¹ improved to 54 percent compared to 60 percent for the same period in 2021 driven by higher margins.
• Potash adjusted EBITDA in the second quarter and the first half of 2022 increased compared to the prior year due to higher net realized selling prices and strong offshore sales volumes. North American sales volumes were lower than the same period last year due to a compressed application season.
• Nitrogen second quarter and first half adjusted EBITDA increased compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower sales volumes.
• In the second quarter of 2022, we recognized a non-cash impairment reversal of $450 million associated with our Phosphate operations due to a more favorable outlook for phosphate margins.
• Nutrien repurchased approximately 22 million shares year-to-date as of August 2, 2022, under our share repurchase programs, for a total of approximately $1.8 billion.
• On May 18, 2022, Nutrien announced it is evaluating its existing site at Geismar, Louisiana to build the world’s largest clean ammonia facility. The project would leverage low-cost natural gas, tidewater access to world markets, and high-quality carbon capture and sequestration infrastructure to serve growing demand in agricultural, industrial and emerging energy markets.
• On June 9, 2022, Nutrien announced its intention to increase potash production capability to 18 million tonnes by 2025 in response to the uncertainty of potash supply from Eastern Europe being able to meet global demand.
• Nutrien announced agreements to acquire Brazilian ag retail companies Casa do Adubo S.A. and Marca Agro Mercantil. These acquisitions support Nutrien’s Retail growth strategy in Brazil and upon completion of the acquisitions, we expect to surpass our stated target of $100 million annual adjusted EBITDA in Brazil by 2023.

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of August 3, 2022. The Board of Directors (“Board”) of Nutrien carries out its responsibility for review of this disclosure principally through its audit committee, comprised exclusively of independent directors. The audit committee reviews and, prior to its publication, approves this disclosure pursuant to the authority delegated to it by the Board. The term “Nutrien” refers to Nutrien Ltd. and the terms “we”, “us”, “our”, “Nutrien” and “the Company” refer to Nutrien and, as applicable, Nutrien and its direct and indirect subsidiaries on a consolidated basis. Additional information relating to Nutrien (which, except as otherwise noted, is not incorporated by reference herein), including our annual report dated February 17, 2022 (“2021 Annual Report”), which includes our annual audited consolidated financial statements and MD&A, and our annual information form dated February 17, 2022 (“2021 Annual Information Form”), each for the year ended December 31, 2021, can be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. No update is provided to the disclosure in our 2021 annual MD&A except for material information since the date of our annual MD&A. The Company is a foreign private issuer under the rules and regulations of the US Securities and Exchange Commission (the “SEC”).

This MD&A is based on and should be read in conjunction with the Company’s unaudited interim condensed consolidated financial statements as at and for the three and six months ended June 30, 2022 (“interim financial statements”) based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and prepared in accordance with International Accounting Standard 34 “Interim Financial Reporting”, unless otherwise noted. This MD&A contains certain non-IFRS financial measures and ratios and forward-looking statements, which are described in the “Non-IFRS Financial Measures” and the “Forward-Looking Statements” sections, respectively.

Market Outlook and Guidance

Agriculture and Retail

• Global grain and oilseed stocks-to-use ratios remain well below historical average levels, which we believe will continue to be supportive for crop prices. Prices for key crops such as corn, soybeans and wheat are up 25 to 35 percent compared to the 10-year average, providing strong incentive for growers to increase production.
• The US Department of Agriculture (USDA) projects that Ukrainian wheat and corn production will be down by more than 40 percent and combined Ukrainian exports of corn, wheat and barley will be down by approximately 60 percent year-over-year in 2022/23. While diplomatic efforts to restore exports from Ukrainian ports has progressed, the overall reduction in Ukrainian production in 2022 is expected to continue to constrain supplies for the forthcoming year.
• US crop conditions started the 2022 growing season favorably, however, recent hot and dry weather has accelerated crop development and could limit yield potential. In Western Canada, growing conditions have improved from the severe 2021 drought. We expect the combination of robust grower economics and favorable growing conditions to support demand for crop nutritional products, fungicides and insecticides in the third quarter of 2022.
• Prospective Brazilian grower margins remain historically high and analysts expect a 2 to 4 percent increase in soybean planted area in the 2022 planting season. While we expect this to support overall crop input demand, fertilizer inventories have been slow to move from port to inland positions and we expect import demand will resurface as these inventories move inland for Brazil’s spring planting season in the second half of 2022.

Crop Nutrient Markets

• Restricted supplies of potash from Russia and Belarus kept potash prices at historically high levels through the first half of 2022. Potash shipments from Russia and Belarus were estimated to be down approximately 25 and 50 percent respectively in the first half of 2022, with the majority of Belarus exports occurring in the first quarter. We have narrowed our global potash shipment forecast to between 61 and 64 million tonnes in 2022 and continue to expect demand to be constrained by restrictions on exports from Russia and Belarus.
• A dramatic increase in European natural gas prices has once again led to reduced nitrogen operating rates in the region. Tightening European ammonia supplies and significantly reduced Russian ammonia exports from the Black Sea are pressuring global ammonia availability. We expect strong seasonal nitrogen demand in the second half of 2022 following a period of delayed purchases due to benchmark price volatility.
• The Chinese government continues to impose export restrictions on urea and phosphate fertilizers that are expected to limit its export volumes in the second half of 2022.

Financial Guidance

• Nutrien revised full-year 2022 adjusted EBITDA guidance¹ and full-year 2022 adjusted net earnings per share guidance¹ primarily due to lower expected Nitrogen earnings as a result of lower nitrogen benchmark pricing and higher natural gas costs. Retail adjusted EBITDA guidance was increased to reflect strong performance in the second quarter. Adjusted net earnings per share guidance includes our plans to allocate approximately $5 billion to share repurchases in 2022.
• Nutrien lowered potash and nitrogen sales volume guidance to reflect the impact of lower application in North America this spring.

All guidance numbers, including those noted above are outlined in the table below. Refer to page 53 of Nutrien’s 2021 Annual Report for related assumptions and sensitivities.

Consolidated Results

Net earnings and adjusted EBITDA more than doubled in the second quarter and first half of 2022 compared to the same period in 2021. This was due to higher net realized selling prices from global supply uncertainties across our nutrient businesses and strong Retail performance. In the second quarter of 2022, we recorded a non-cash impairment reversal of $450 million related to our Phosphate operations which impacted net earnings. Cash provided by operating activities increased in the second quarter and first half of 2022 compared to the same period in 2021 due primarily to higher net earnings.

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three and six months ended June 30, 2022 to the results for the three and six months ended June 30, 2021, unless otherwise noted.

Nutrien Ag Solutions (“Retail”)

• Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher sales and gross margins across nearly all product categories and regions where we operate. This was supported by strong agriculture fundamentals, higher selling prices and growth in proprietary products sales. Retail cash operating coverage ratio¹ improved as at June 30, 2022 to 54 percent from 60 percent in the same period in 2021 due to significantly higher gross margin.
• Crop nutrients sales and gross margin increased significantly in the second quarter and first half of 2022 due to higher selling prices. Gross margin per tonne increased in the second quarter and first half of 2022 compared to the same periods in the prior year due to strategic procurement and the timing of inventory purchases. Sales volumes decreased due to a pull forward of sales into the fourth quarter of 2021 and reduced application resulting from a delayed planting season in North America.
• Crop protection products sales and gross margin increased in the second quarter and first half of 2022 in all regions we operate due to higher prices, along with increased sales and gross margin in proprietary products. Gross margin percent increased by 5 percentage points in the second quarter and first half of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment.
• Seed sales and gross margin increased in the second quarter and first half of 2022 due to higher pricing, an increase in proprietary seed margins and strong demand in Australia.
• Merchandise sales increased in the second quarter and first half of 2022 primarily driven by favorable market conditions for Australia animal health products, with increased flock and herd sizes along with higher fencing sales.
• Nutrien Financial sales increased in the second quarter and first half of 2022 due to higher utilization and adoption of our programs and a higher interest-bearing trade receivable balance, driven by strong commodity pricing.
• Services and other sales decreased in the second quarter due to lower fertilizer application services, and held flat through the first half of 2022, due to favorable weather conditions in Australia in the first quarter.

Potash

• Adjusted EBITDA increased in the second quarter and first half of 2022 due to higher net realized selling prices and strong offshore sales volumes, which more than offset lower North American sales volumes, higher royalties and provincial mining taxes.
• Sales volumes were the highest of any second quarter on record due to strong demand in offshore markets. North American sales volumes were impacted by delayed planting and a compressed application window.
• Net realized selling price increased in the second quarter and first half of 2022 due to the impact of supply constraints, in particular related to uncertainty on future supply from Russia and Belarus.
• Cost of goods sold per tonne increased in the second quarter and first half of 2022 primarily due to higher royalties resulting from increased net realized selling prices. Potash controllable cash cost of product manufactured increased slightly in the second quarter and first half of 2022 due to higher input costs driven by inflation.

Canpotex Sales by Market

Nitrogen

Contacts

Investor Relations:
Jeff Holzman

Vice President, Investor Relations

(306) 933-8545

Investors@nutrien.com

Media Relations:
Megan Fielding

Vice President, Brand & Culture Communications

(403) 797-3015

Contact us at: www.nutrien.com

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