Mr. Ken Seitz reports

NUTRIEN REPORTS FOURTH QUARTER AND FULl yEAR 2023 RESULTS

Nutrien Ltd. has released its fourth quarter 2023 results, with net earnings of $176-million (35 cents diluted net earnings per share). Fourth quarter 2023 adjusted net earnings per share was 37 cents and adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was $1.1-billion.

"We saw a continuation of strong fertilizer market fundamentals in North America during the fourth quarter driven by improved affordability, an extended fall application season and low channel inventories. Utilizing the strengths of our integrated business, we achieved record fourth quarter potash deliveries, increased crop nutrient sales volumes across our global retail network and generated strong cash flow from operations," commented Ken Seitz, Nutrien's president and chief executive officer.

"As we look ahead to 2024, we expect to deliver higher fertilizer sales volumes and retail earnings, supported by increased crop input market stability and demand. We continue to prioritize strategic initiatives that enhance our capability to serve growers in our core markets, maintain the low-cost position and reliability of our assets, and position the company for growth," added Mr. Seitz.

Highlights:

• Generated net earnings of $1.3-billion ($2.53 diluted net earnings per share) and adjusted EBITDA of $6.1-billion ($4.44 adjusted net earnings per share) in 2023, down from the record levels achieved in 2022. Adjusted EBITDA declined primarily due to lower net realized selling prices across all segments and lower Nutrien Ag Solutions (retail) earnings. Cash provided by operating activities totalled $5.1-billion in 2023, representing 84 per cent of adjusted EBITDA.
• Retail adjusted EBITDA of $1.5-billion in 2023 decreased primarily due to lower gross margin for both crop nutrients and crop protection products, as the company sold through high-cost inventory. Crop nutrient sales volumes increased as growers returned to more normalized application rates to replenish nutrients in the soil. The company continued to grow its proprietary nutritional and biostimulant sales and margins through differentiated product offerings and expanded manufacturing capacity.
• Potash full year 2023 adjusted EBITDA declined to $2.4-billion due to lower net realized selling prices. The company delivered record fourth quarter potash sales volumes driven by strong demand in North America and increased offshore sales.
• Nitrogen full year 2023 adjusted EBITDA decreased to $1.9-billion due to lower net realized selling prices for all major nitrogen products, which more than offset lower natural gas costs and higher sales volumes.
• In the fourth quarter of 2023, Nutrien recognized a $76-million non-cash impairment in the company's nitrogen segment relating to its Trinidad property, plant and equipment due to a new natural gas contract and the resulting outlook for higher expected natural gas costs and constrained near-term availability. The company expects improved natural gas availability in Trinidad as the development of additional gas fields is anticipated to add new supply starting in 2026.
• Returned $2.1-billion to shareholders in 2023 through dividends and share repurchases. Nutrien's board of directors approved an increase in the quarterly dividend to 54 cents per share. Nutrien continues to target a stable and growing dividend with its dividend per share increasing by 35 per cent since the beginning of 2018. Nutrien's board of directors also approved the purchase of up to 5 per cent of Nutrien's outstanding common shares over a 12-month period through a normal course issuer bid (NCIB). The NCIB is subject to acceptance by the Toronto Stock Exchange.

Market outlook and guidance

Agriculture and retail

• Global grain stocks-to-use ratios remain historically low going into the 2024 growing season as tightening supplies of wheat and rice have offset increased corn supplies in the United States and Brazil. The company expects weather and geopolitical issues will continue to impact grain and oilseed production, exports and inventory levels.
• Crop prices have declined from historically high levels in 2022, but lower crop input prices have resulted in improved demand, evidenced by the strong North American fall application season in 2023. The company expects U.S. corn plantings to range from 91 million to 92 million acres in 2024 and soybean plantings to range from 87 million to 88 million acres.
• In Brazil, dry weather during the summer crop growing season and lower corn prices could result in lower corn area in 2024. Brazilian growers are expected to continue to expand soybean acreage, which the company anticipates will support the need for strong fertilizer imports in the second and third quarters of 2024.
• In Australia, growers have benefited from multiple years of above average yields and fundamentals remain supportive entering 2024. Timely precipitation led to higher-than-expected winter crop production, however if the El Nino weather pattern continues, it could pose a risk for the 2024 growing season.

Crop nutrient markets

• Global potash demand was strong through the second half of 2023, and the company estimates full year shipments were between 67 million to 68 million tonnes. The increase was supported by strong consumption and increased imports in key markets such as North America, China and Brazil.
• Nutrien expects global potash demand will continue to recover toward trend levels in 2024 with full year shipments projected between 68 million to 71 million tonnes. The company anticipates a relatively balanced global market with incremental supply from producers in Canada, Russia, Belarus and Laos.
• The company is seeing strong potash demand ahead of the North American spring application season as channel inventories were tight to start the year. Potash demand in Southeast Asia is expected to increase significantly in 2024 due to much lower inventory levels compared with the prior year and favourable economics for key crops such as oil palm and rice. The company expects lower potash imports from China compared with the record levels in 2023 but for demand to remain at historically high levels driven by increased consumption.
• The company expects nitrogen supply constraints to persist in 2024, including limited Russian ammonia exports, reduced European operating rates and Chinese urea export restrictions. North American natural gas prices remain highly competitive compared with Europe and Asia, and the company expects Henry Hub natural gas prices to average approximately $2.50 per MMBtu (million British thermal units) for the year.
• The U.S. nitrogen supply and demand balance is projected to be tight ahead of the spring application season, as nitrogen fertilizer net imports in the first half of the 2023/2024 fertilizer year were down an estimated 55 per cent compared with the three-year average. Global industrial nitrogen demand remains a risk in 2024 as industrial production, most notably in Europe and Asia, has yet to rebound to historical levels.
• Phosphate fertilizer markets have remained relatively strong in the first quarter of 2024, particularly in North America where channel inventories were low entering the year. The company expects Chinese phosphate exports to be similar to 2023 levels and tight stocks in India to support demand ahead of their key planting season.

Financial guidance

The company has revised its guidance practice in 2024 to provide forward-looking estimates on those metrics that the company believes are of value to its shareholders and are less impacted by fertilizer commodity prices. The company continues to provide guidance for retail adjusted EBITDA, fertilizer sales volumes and other key financial modelling metrics, as well as fertilizer pricing sensitivities.

• Retail adjusted EBITDA guidance of $1.65-billion to $1.85-billion assumes increased gross margins in all major product lines compared with 2023. The company anticipates that crop nutrient gross margin will be supported by higher sales volumes and per-tonne margins, in particular compared with the compressed levels in the first half of the prior year. The company expects a recovery in Brazilian crop protection margins in the second half of 2024.
• Potash sales volume guidance of 13.0 million to 13.8 million tonnes assumes demand growth in offshore markets and a return to more normal Canpotex port operations in 2024. In North America, the company expects increased first quarter sales volumes compared with the prior year due to strong customer engagement to refill depleted inventories.
• Nitrogen sales volume guidance of 10.6 million to 11.2 million tonnes assumes higher operating rates at the company's U.S. and Trinidad plants compared with 2023. Phosphate sales volume guidance of 2.6 million to 2.8 million tonnes assumes improved operating rates compared with the prior year.
• Total capital expenditures of $2.2-billion to $2.3-billion are expected to be below the prior year. This total includes approximately $500-million in investing capital expenditures focused on proprietary products, network optimization and digital capabilities in retail, mine automation projects in potash, and low-cost brownfield expansions in nitrogen.

All guidance numbers, including those noted herein are outlined in the attached table. In addition, set forth herein are anticipated fertilizer pricing and natural gas price sensitivities relating to adjusted EBITDA (consolidated) and adjusted net earnings per share.

Net earnings and adjusted EBITDA decreased in the fourth quarter and full year of 2023 compared with the same periods in 2022, mainly due to lower net realized selling prices across all segments and lower retail earnings. This was partially offset by decreased cost of goods sold from lower natural gas and royalty costs, lower provincial mining taxes, higher sales volumes for retail crop nutrients, and increased potash and nitrogen sales volumes. For the full year of 2023, the company recorded non-cash impairment of assets of $774-million in aggregate primarily related to retail -- South America goodwill and nitrogen and phosphate property, plant and equipment, resulting in lower net earnings. For the full year of 2022, the company recorded a non-cash impairment reversal of an aggregate of $780-million related to the company's phosphate assets. The decrease in cash provided by operating activities in the fourth quarter and full year 2023 compared with the same periods in 2022 was primarily due to lower earnings across all segments.

Segment results

The company's discussion of segment results set out herein is a comparison of the results for the three and 12 months ended Dec. 31, 2023, with the results for the three and 12 months ended Dec. 31, 2022, unless otherwise noted.

• Retail adjusted EBITDA decreased in the fourth quarter of 2023 primarily due to lower gross margin for crop protection products and higher expenses. For the full year, adjusted EBITDA was lower mostly due to lower gross margin for both crop nutrients and crop protection products. Included within expenses for the full year of 2023, the company recognized a $465-million non-cash impairment primarily related to goodwill of its South American retail assets. The impairment was mainly due to the impact of crop input price volatility, more moderate long-term growth assumptions and higher interest rates.
• Crop nutrients sales and gross margin decreased in the fourth quarter and full year of 2023 due to lower selling prices across all regions compared with the strong comparable periods in 2022. Sales volumes increased for both the fourth quarter and full year as growers returned to more normalized application rates to replenish nutrients in the soil. Full year sales and gross margin of the company's proprietary nutritional and biostimulant product lines increased compared with 2022 levels as the company continued to expand its differentiated product offering and manufacturing capacity.
• Crop protection products sales and gross margin were lower in the fourth quarter and full year of 2023 primarily due to decreased selling prices compared with the historically strong comparable periods in 2022. This was partially offset by higher fourth quarter sales in North America as growers returned to more normalized buying behaviours. Gross margin in 2023 was also impacted by the selling through of high-cost inventory, which in the fourth quarter was primarily related to South America.
• Seed sales and gross margin decreased in the fourth quarter of 2023 due to lower soybean sales volumes and competitive market prices in South America. Full year sales increased primarily due to increased corn sales in the U.S., while gross margin saw little change compared with the prior year.
• Nutrien Financial sales increased in the fourth quarter and full year of 2023 due to higher utilization of the company's financing offerings in the U.S. and Australia compared with the same periods in 2022.

• Potash adjusted EBITDA declined in the fourth quarter and full year of 2023 due to lower net realized selling prices, which more than offset higher North American sales volumes and lower provincial mining taxes and royalties. The company increased granular potash production in the fourth quarter to meet customer demand and reduced its controllable cash cost of product manufactured to $56 per tonne.
• Sales volumes in North America were higher in the fourth quarter and full year of 2023 due to lower channel inventory and increased grower demand supported by an extended fall application window and improved affordability. Offshore sales volumes were higher in the fourth quarter compared with the same period in the prior year driven by stronger demand in Brazil and China. Full year offshore sales volumes were lower compared with the record levels in 2022 primarily due to logistical challenges at Canpotex's West Coast port facilities and reduced shipments to customers in India and Southeast Asia.
• Net realized selling price decreased in the fourth quarter and full year of 2023 compared with the historically strong periods in 2022, due to a decline in benchmark prices and higher costs related to logistical challenges at Canpotex's West Coast port facilities.
• Cost of goods sold per tonne decreased in the fourth quarter and full year of 2023 mainly due to lower royalties. Fourth quarter costs were also lower due to the timing of turnaround activity.

• Nitrogen adjusted EBITDA was lower in the fourth quarter and full year of 2023 due to lower net realized selling prices for all major nitrogen products, which more than offset lower natural gas costs and higher sales volumes. The company's fourth quarter ammonia operating rate increased to 91 per cent compared with 83 per cent in the same period in 2022 primarily due to improved reliability and the absence of major weather-related unplanned outages. The company recognized a $76-million non-cash impairment of its Trinidad property, plant and equipment during the fourth quarter due to a new natural gas contract and the resulting outlook for higher expected natural gas costs and constrained near-term availability. The company expects improved natural gas availability in Trinidad as the development of additional gas fields is anticipated to add new supply starting in 2026.
• Sales volumes were higher in the fourth quarter and full year of 2023 primarily due to higher UAN production and sales, partially offset by lower ammonia availability mainly due to production outages at the company's plants in Trinidad.
• Net realized selling price was lower in the fourth quarter and full year of 2023 for all major nitrogen products primarily due to weaker benchmark prices resulting from lower energy prices in key nitrogen producing regions.
• Cost of goods sold per tonne decreased in the fourth quarter and full year of 2023 due to lower natural gas costs. Ammonia controllable cash cost of product manufactured per tonne increased in 2023 mainly due to the impact of lower ammonia production.

• Phosphate adjusted EBITDA increased in the fourth quarter of 2023 primarily due to lower sulphur and ammonia input costs, partially offset by lower net realized selling prices. Full year 2023 adjusted EBITDA was lower compared with the prior year mainly due to lower net realized selling prices for fertilizer products, partially offset by lower ammonia and sulphur input costs. Included in the expenses for the full year of 2023, the company recognized a $233-million non-cash impairment of its White Springs property, plant and equipment, while the company had non-cash impairment reversals of the company's phosphate assets of $780-million for the full year of 2022.
• Sales volumes increased in the fourth quarter and full year of 2023 mostly due to higher phosphate fertilizer demand, with the full year being partially offset by lower first-half production impacting the company's industrial and feed sales. Production increased in the fourth quarter and full year 2023 largely due to improved reliability at the company's Aurora plant.
• Net realized selling price decreased in the fourth quarter and full year of 2023 primarily due to lower fertilizer net realized selling prices and lower industrial and feed net realized selling prices which reflect the typical lag in price realizations relative to spot fertilizer prices.
• Cost of goods sold per tonne decreased in the fourth quarter and full year of 2023 mainly due to lower ammonia and sulphur costs, partially offset by higher depreciation from reversal of non-cash impairment of assets in 2022.

• General and administrative expenses were higher in the full year of 2023 primarily due to higher staffing costs and higher depreciation and amortization expense.
• Share-based compensation was a recovery in the fourth quarter and full year of 2023 due to a decrease in the fair value of share-based awards outstanding relative to the comparable periods in 2022. The fair value takes into consideration several factors such as the company's share price movement, the company's performance relative to its peer group and return on the company's invested capital.
• Other expenses were higher in the fourth quarter and full year of 2023 compared with the same periods in 2022 due to the following:
  • Higher expense for asset retirement obligations and accrued environmental costs related to the company's non-operating sites due to changes in closure cost estimates;
  • $92-million loss on blue chip swaps through trade transactions to remit cash from Argentina in the second quarter of 2023. The loss is a result of the significant divergence between the blue chip swap market exchange rate and the official Argentinian Central Bank rate;
  • Higher foreign exchange losses primarily from the company's retail -- South America region;
  • These expenses were partially offset by an $80-million gain recognized in the first quarter of 2023 from amendments due to design plan changes to the company's other postretirement benefit plans.

Eliminations

• Eliminations are not part of the corporate and others segment. The elimination of gross margin between operating segments was $3-million for the fourth quarter of 2023 compared with a recovery of $47-million in the same period of 2022. For the full year of 2023, there was a recovery of $69-million compared with an elimination of $28-million in the same period in 2022. These variances are due to the timing of release of intersegment inventories held by the company's retail segment.

• Finance costs were higher in the fourth quarter and full year of 2023 compared with the same periods in 2022 primarily due to higher interest rates and higher average long-term debt balances.
• Income tax (recovery) expense was lower in the fourth quarter and full year of 2023 primarily as a result of lower earnings compared with the same periods in 2022. The full year of 2023 expense and effective tax rate reflect a $134-million income tax recovery due to changes to the company's tax declarations in Switzerland (Swiss tax reform adjustment) and a $101-million income tax expense due to a change in recognition of deferred tax assets in the company's retail -- South America region. The 2023 effective tax rates also include the impact of the company's losses in retail -- South America, wherein the company did not recognize a corresponding deferred tax asset as it did not meet the accounting criteria for asset recognition.
• Other comprehensive income (loss) was primarily driven by changes in the currency translation of the company's retail foreign operations primarily due to improvements of Canadian and Australian currencies relative to the U.S. dollar for the fourth quarter and full year of 2023. For the fourth quarter and full year of 2023, Nutrien recognized actuarial gains on its defined benefit plans compared with losses on the comparative periods driven by changes in its financial and demographic assumptions and performance of its plan assets.

About Nutrien Ltd.

Nutrien is a leading 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 ag retail facilities that positions it to efficiently serve the needs of growers. The company focuses on creating long-term value by prioritizing investments that strengthen the advantages of its integrated business and by maintaining access to the resources and the relationships with stakeholders needed to achieve its goals.

Nutrien will host a conference call on Thursday, Feb. 22, 2024, at 10 a.m. Eastern Time.

Telephone conference dial-in numbers:

From Canada and the United States:  1-888-886-7786

International:  1-416-764-8658

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

We seek Safe Harbor.