Mr. Ken Seitz reports

NUTRIEN REPORTS FIRST QUARTER 2023 RESULTS

Nutrien Ltd. today released its first quarter 2023 results, with net earnings of $600-million ($1.14 diluted net earnings per share). First quarter 2023 adjusted net earnings per share was $1.11 and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.4-billion.

"Nutrien delivered adjusted EBITDA of $1.4-billion in the first quarter and continued to demonstrate the advantages of our flexible, low-cost production assets and global distribution network. We invested in initiatives to sustain and grow our asset base and returned $1.1-billion to shareholders during the quarter," commented Ken Seitz, Nutrien's president and chief executive officer.

"Crop input demand has strengthened as the spring planting season progresses in the northern hemisphere and higher cost inventory is moving through the channel. We are encouraged by the continued stabilization of fertilizer markets following a year of unprecedented volatility and anticipate increased demand in the second half of 2023 due to strong agriculture fundamentals, improved grower affordability and lower inventory levels. With fertilizer prices near mid-cycle levels, we expect to generate strong operating cash flows in 2023 and to maintain a balanced and disciplined approach to capital allocation," added Mr. Seitz.

Highlights:

• Nutrien Ag Solutions (retail) adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) declined to $(34)-million in the first quarter of 2023 primarily due to lower sales and gross margins for crop nutrients and crop protection products compared with the record levels achieved in 2022. Crop nutrient margins were below normalized levels in the first quarter as prices declined and the company worked through higher cost inventory.
• Potash adjusted EBITDA declined to $676-million in the first quarter of 2023 due to lower net realized selling prices and lower sales volumes. North American sales volumes were impacted by just-in-time buying. Lower offshore demand from customers in Asia was largely offset by record first quarter Canpotex sales volumes to Brazil.
• Nitrogen adjusted EBITDA declined to $676-million in the first quarter of 2023 due to lower net realized selling prices for all major nitrogen products. This was partially offset by lower natural gas costs and increased operating rates at the company's North American nitrogen plants.
• Nutrien repurchased 11.8 million shares year to date as of March 31, 2023, under its normal course issuer bid programs, for approximately $900-million. The company's total shares outstanding declined to 496 million as at the end of the first quarter of 2023, representing a 10-per-cent reduction compared with the same period in 2022.
• Nutrien full year 2023 adjusted EBITDA and adjusted net earnings per share guidance was revised to $6.5-billion to $8.0-billion and $5.50 to $7.50 per share, respectively.

Market outlook and guidance

Agriculture and retail

• Geopolitical and weather-related challenges continue to impact global agriculture commodity markets, including significant production and export reductions from Ukraine and severe drought conditions in Argentina. The global grain stocks-to-use ratio is projected to end the current growing season at the lowest level in over 25 years. Corn, soybeans and wheat prices have softened recently due to seasonal pressure resulting from the expectation of higher Brazilian and U.S. crop production. However, new crop futures are still approximately 15 per cent above the 10-year average and grower margins remain healthy, providing incentive to invest in their crop and boost production.
• The company expects an eight million acre increase in United States major crop planted area in 2023, including an additional three million acres of corn, which is supportive of crop input demand. Planting activity is progressing well in North America and fertilizer application rates have been in line with historical average levels and well above rates in the spring of 2022. The combination of strong demand and logistical challenges has tightened North American fertilizer supply.
• South American crop production has been mixed as record Brazilian soybean production and strong prospects for the safrinha corn crop are balanced against the impacts of severe drought in Argentina. The company expects increased application rates for the 2023 summer crop planting season due to improved affordability ratios compared with the previous year. Australian winter crop planting is progressing well, with no major shifts in acreage expected from record 2022 levels.

Crop nutrient markets

• Potash demand has strengthened in North America as the spring application season has progressed, while engagement in offshore markets has been more variable. The company anticipates increased global potash demand in the second half of 2023 as a result of lower expected inventories and improved grower affordability compared with 2022.
• Potash shipments from Belarus are projected to be above the company's previous expectation for 2023, partially offset by lower expected exports from Russia. The company now projects Belarusian shipments will be down 25 to 40 per cent this year and Russian shipments down 25 to 35 per cent compared with 2021. The company has maintained its global potash shipment forecast between 63 and 67 million tonnes in 2023.
• North American nitrogen supply has tightened during the spring season due to strong demand and lower net imports. Global nitrogen trade has been impacted by weaker industrial demand in Asia and Europe, and lower Indian urea imports. The company expects ammonia markets will strengthen as demand increases and supply remains challenged with approximately 40 per cent of European capacity currently curtailed and Russian ammonia exports are constrained.
• North American dry phosphate prices firmed during the spring season driven by tight supplies and strong demand, while international prices have remained relatively stable, supported by demand in Brazil and India. Lower ammonia and sulfur prices have been supportive of margins. The company expects Chinese phosphate exports to increase moderately year over year due to expected loosening of government restrictions.

Financial guidance

• Based on market factors detailed herein, the company is revising full-year 2023 adjusted EBITDA guidance to $6.5-billion to $8.0-billion and full year 2023 adjusted net earnings guidance to $5.50 to $7.50 per share. The company now projects cash from operations of $5.0-billion to $5.8-billion, which is expected to be relatively stable due to an anticipated release in working capital.
• Retail adjusted EBITDA guidance was lowered primarily due to the expectation of below normal crop nutrient gross margins in the first half of 2023 as the company works through higher cost inventory.
• Potash adjusted EBITDA guidance decreased due to lower forecasted benchmark fertilizer prices and sales tonnes. Potash sales tonnes guidance of 13.5 million to 14.3 million tonnes assumes increased demand year over year in the company's key markets of North America and Brazil, partially offset by lower shipments to China due to delayed contract negotiations with Canpotex.
• Nitrogen adjusted EBITDA guidance decreased due to lower forecasted benchmark fertilizer prices, partially offset by the expectation for lower North American natural gas prices.

All guidance numbers, including those noted herein are outlined in the attached table.

Net earnings and adjusted EBITDA decreased in the first quarter of 2023 compared with the same period in 2022, due to lower net realized selling prices in all segments and lower sales volumes in retail, potash and phosphate. This was partially offset by decreased cost of goods sold from lower natural gas costs and increased operating rates at the company's North American nitrogen plants. The increase in cash used in operating activities was primarily due to lower earnings across all segments. The increase in cash used in investing activities reflects higher capital expenditures to sustain and grow the company's asset base and incremental cash used for retail business acquisitions. Cash used for dividends and share repurchases increased in the first quarter of 2023 compared with the same period in 2022 due to higher share repurchases under the company's normal course issuer bid programs.

Seasonality in the company's business results from increased demand for products during the planting season. Crop input sales are generally higher in the spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The company's cash collections generally occur after the application season is complete, while customer prepayments made to the company are concentrated in December and January, and inventory prepayments paid to the company's suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

The company's earnings are significantly affected by fertilizer benchmark prices, which have been volatile over the last two years and are affected by demand-supply conditions, grower affordability and weather.

In the second and third quarters of 2022, earnings were impacted by $450-million and $330-million non-cash impairment reversals at Aurora and White Springs, respectively, of property, plant and equipment in the phosphate segment related to higher forecasted global prices and a more favourable outlook for phosphate margins. In the fourth quarter of 2021, earnings were impacted by a $142-million loss resulting from the early extinguishment of long-term debt.

About Nutrien Ltd.

Nutrien is the world's largest provider of crop inputs and services, helping to safely and sustainably feed a growing world. The company operates a world-class network of production, distribution and retail facilities that positions it to efficiently serve the needs of growers. Nutrien focuses on creating long-term value for all stakeholders by advancing its key environmental, social and governance priorities.

Nutrien will host a Conference Call on Thursday, May 11, 2023, at 10 a.m. Eastern Time.

Telephone conference dial-in numbers:

From Canada and the United States:  1-888-396-8049

International:  1-416-764-8683

No access code required. Please dial in 15 minutes prior to ensure you are placed on the call in a timely manner.

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