Exhibit 99.2

 

NUTRIEN LTD.

MANAGEMENT’S DISCUSSION AND ANALYSIS

AS AT AND FOR THE THREE MONTHS ENDED

MARCH 31, 2022

 

 

Management’s Discussion and Analysis

The following management’s discussion and analysis (“MD&A”) is the responsibility of management and is dated as of May 2, 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, which includes our annual audited consolidated financial statements and MD&A, and our Annual Information Form dated February 17, 2022, 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 months ended March 31, 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 inventories were well below historical average levels entering 2022 due to strong demand and less than expected supply in recent growing seasons. The Russia and Ukraine conflict has led to further tightening of crop export supplies and heightened global food security concerns. Prices for key crops such as corn, soybean and wheat are 50 to 90 percent above the 10-year average, providing a strong incentive for growers to increase production.

 

•

The US Department of Agriculture (“USDA”) expects combined planted acreage of US corn, soybeans, and cotton could set a record in 2022. Wet and cool weather delayed the start of the North American spring season and could impact planting decisions and the timing of input demand.

 

•

While drought conditions reduced the size of the South American soybean crop, the safrinha corn crop is reported to be in relatively good condition. Prospective corn and soybean margins remain well above historical average levels, and we expect strong demand for crop inputs in 2022.

 

•

Soil moisture conditions are favorable entering the Australian winter planting season as some of the drier areas in Western Australia have received rains and areas that have experienced flooding are not expected to materially change cropping area.

Crop Nutrient Markets

 

•

Russia and Belarus account for approximately 40 percent of global potash production and exports. Financial sanctions and other restrictions imposed on Russia and Belarus have significantly constrained supply with reported potash exports from the region approximately 20 percent lower in the first quarter of 2022 compared to the same period in 2021. As a result, we have reduced our projected range of global potash shipments to between 60 and 65 million tonnes in 2022. We are estimating a wider than normal range of global potash shipments given the level of uncertainty of supply from Russia and Belarus.

 

•

Global nitrogen supplies have tightened due to reduced availability from Russia, the largest global exporter of nitrogen products, as well as the Chinese government restrictions on urea exports. Russian natural gas supply uncertainty has also contributed to very high and volatile natural gas prices in Europe, which has led to reduced nitrogen operating rates in the region. While underlying agricultural and industrial fundamentals support nitrogen demand, tight supplies could constrain demand in markets such as Europe and in some regions of North America. We expect Henry Hub natural gas prices to average between $5.50 to $6.50 per MMBtu in 2022, well below import pricing levels in Europe and Asia.

 

•

Global phosphate supply has been impacted by a reduction in Russian and Chinese DAP and MAP fertilizer exports. Phosphate markets have been further supported by a significant increase in sulfur and ammonia costs.

 

2

Financial Guidance

 

•

We are raising our full-year 2022 adjusted EBITDA guidance1 and full-year 2022 adjusted net earnings per share guidance1 primarily due to the expectation of higher realized selling prices, increased potash sales volumes and higher Retail crop nutrients and crop protection products gross margins. Adjusted net earnings per share guidance includes our plans to allocate a minimum of $2 billion to share repurchases in 2022 on a balanced cadence throughout the year.

 

•

Nutrien has raised potash sales volume guidance to between 14.5 to 15.1 million tonnes in 2022. This incorporates our announcement on March 16, 2022 of our intention to increase potash production capability by nearly one million tonnes compared to previous expectations, with the majority of additional volume expected to be produced in the second half of 2022.

 

•

Nutrien has lowered nitrogen sales volume guidance to between 10.7 to 11.1 million tonnes in 2022. This reflects the impact of unplanned plant outages that occurred during the first quarter of 2022.

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.

 

		Guidance Ranges1 as of
		May 2, 2022								February 16, 2022
(billions of US dollars, except as otherwise noted)		Low				High				Low				High
Adjusted net earnings per share 2			16.20				18.70				10.20				11.80
Adjusted EBITDA 2			14.5				16.5				10.0				11.2
Retail adjusted EBITDA			1.8				1.9				1.7				1.8
Potash adjusted EBITDA			7.5				8.3				5.0				5.5
Nitrogen adjusted EBITDA			5.0				5.8				3.2				3.6
Phosphate adjusted EBITDA (in US millions)			800				900				500				600
Potash sales tonnes (millions) 3			14.5				15.1				13.7				14.3
Nitrogen sales tonnes (millions) 3			10.7				11.1				10.8				11.3
Depreciation and amortization			2.0				2.1				2.0				2.1
Effective tax rate on adjusted earnings (%)			25.5				26.5				25				26
Sustaining capital expenditures 4			1.2				1.3				1.2				1.3

  1  See the “Forward-Looking Statements” section.

  2  These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

  3  Manufactured product only. Nitrogen sales tonnes excludes ESN^® products.

  4  This is a supplementary financial measure. See the “Other Financial Measures” section.

Consolidated Results

 

		Three Months Ended March 31
(millions of US dollars, except as otherwise noted)			2022				2021				% Change
Sales			7,657				4,658				64
Freight, transportation and distribution			203				211				(4	)
Cost of goods sold			4,197				3,291				28
Gross margin			3,257				1,156				182
Expenses			1,258				878				43
Net earnings			1,385				133				941
Adjusted EBITDA 1			2,615				806				224
Diluted net earnings per share			2.49				0.22				n/m
Adjusted net earnings per share 1			2.70				0.29				831
Cash used in operating activities			(62	)			(152	)			(59	)
Free cash flow 1			1,814				476				281
Free cash flow including changes in non-cash operating working capital 1			(256	)			(316	)			(19	)

  1  These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

Net earnings and adjusted EBITDA increased significantly in the first quarter compared to the same period in 2021. This was mainly due to higher net realized selling prices from global supply uncertainties across our nutrient businesses. Cash flow used in operating activities decreased in the first quarter of 2022 compared to the same period in 2021 due primarily to higher net earnings.

1 These (and any related guidance, if applicable) are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section for further information.

 

3

Segment Results

Our discussion of segment results set out on the following pages is a comparison of the results for the three months ended March 31, 2022 to the results for the three months ended March 31, 2021, unless otherwise noted.

 

 

		Three Months Ended March 31
(millions of US dollars, except		Dollars																Gross Margin																Gross Margin (%)
as otherwise noted)		2022				2021				% Change								2022				2021				% Change								2022				2021
Sales
Crop nutrients			1,587				1,016				56								292				220				33								18				22
Crop protection products			1,387				1,085				28								282				176				60								20				16
Seed			458				463				(1	)							66				69				(4	)							14				15
Merchandise			234				230				2								41				38				8								18				17
Nutrien Financial			49				25				96								49				25				96								100				100
Services and other 1			175				165				6								144				136				6								82				82
Nutrien Financial elimination 1, 2			(29	)			(12	)			142								(29	)			(12	)			142								100				100
			3,861				2,972				30								845				652				30								22				22
Cost of goods sold			3,016				2,320				30
Gross margin			845				652				30
Expenses 3			755				721				5
Earnings (loss) before finance costs and taxes (“EBIT”)			90				(69	)			n/m
Depreciation and amortization			169				177				(5	)
EBITDA			259				108				140
Adjustments 4			(19	)			1				n/m
Adjusted EBITDA			240				109				120
1  Certain immaterial figures have been reclassified for the three months ended March 31, 2021.
2  Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
3  Includes selling expenses of $722 million (2021 – $667 million).
4  See Note 2 to the interim financial statements.

 

•

Adjusted EBITDA increased in the first quarter of 2022 due to higher sales and gross margins across most 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 favorably declined to 57 percent in the first quarter of 2022 from 60 percent in the same period in 2021 due to significantly higher gross margin.

 

•

Crop nutrients sales and gross margin increased in the first quarter of 2022 due to higher selling prices. Gross margin per tonne increased compared to the same period in the prior year due to the timing of inventory purchases in a rising price environment. Sales volumes decreased due to a pull forward of sales into the fourth quarter of 2021 and delayed spring field activity in North America, partially offset by strong demand in South America and Australia.

 

•

Crop protection products sales and gross margin increased in the first quarter of 2022 due to higher prices, strong demand and favorable application conditions in Australia. Gross margin increase was supported by the reliability of our supply chain and strategic procurement in a rising price environment.

 

•

Seed sales decreased in the first quarter of 2022 primarily due to delayed North American field activity caused by wet and cool weather. This was partially offset by favorable weather conditions in Australia.

 

•

Merchandise sales increased in the first quarter of 2022 primarily driven by favorable market conditions in Australia, with increased flock and heard sizes along with higher fencing sales due to replacement from the Northeast flood damage.

 

•

Nutrien Financial sales increased in the first quarter of 2022 due to higher utilization and adoption of our programs, minimal credit loss due to strong credit evaluation and collection processes, as well as favorable market conditions driven by strong commodity pricing and government programs for our grower customers.

 

•

Services and other sales increased in the first quarter of 2022 compared to the same period in 2021 due to favorable conditions in Australia, in particular the livestock market with increased cattle prices.

1 This is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section for further information.

 

4

 

		Three Months Ended March 31
(millions of US dollars, except		Dollars																Tonnes (thousands)														Average per Tonne
as otherwise noted)		2022				2021				% Change								2022		2021				% Change								2022				2021				% Change
Manufactured product
Net sales
North America			833				332				151							1,218			1,470				(17	)							684				226				203
Offshore			1,017				279				265							1,825			1,687				8								557				166				236
			1,850				611				203							3,043			3,157				(4	)							608				194				213
Cost of goods sold			305				291				5																						100				92				9
Gross margin - total			1,545				320				383																						508				102				398
Expenses 1			251				64				292							Depreciation and amortization															37				39				(6	)
EBIT			1,294				256				405							Gross margin excluding depreciation
Depreciation and amortization			112				124				(10	)						and amortization - manufactured 2															545				141				286
Adjusted EBITDA			1,406				380				270							Potash controllable cash cost of   product manufactured 2															50				49				2

 1  Includes provincial mining taxes of $249 million (2021 – $58 million).

 2  These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

 

•

Adjusted EBITDA increased in the first quarter of 2022 due to higher net realized selling prices, which more than offset a small reduction in total sales volumes and higher royalties and provincial mining taxes.

 

•

Sales volumes in the first quarter of 2022 decreased as wet and cool weather in North America delayed planting. Offshore sales volumes increased during the quarter due to strong demand, although were impeded by a Canadian Pacific Railway labor strike and weather-related issues that temporarily impacted rail deliveries.

 

•

Net realized selling price increased in the first quarter of 2022 due to strong global demand supported by higher crop prices and supply constraints, in particular related to uncertainty on future supply from Russia and Belarus.

 

•

Cost of goods sold per tonne increased in the first quarter of 2022 primarily due to higher royalties resulting from increased selling prices. We are now reporting potash controllable cash cost of product manufactured per tonne as we believe it is a better indicator of potash costs that management considers to be within its control and not primarily driven by regulatory and market conditions. Controllable cash cost of product manufactured was relatively flat for the first quarter of 2022 compared to the same period last year, as higher production volumes mostly offset higher input costs.

Canpotex Sales by Market

 

		Three Months Ended March 31
(percentage of sales volumes, except as otherwise noted)			2022				2021				Change
Other Asian markets 1			45				37				8
Latin America			32				30				2
China			13				15				(2	)
Other markets			9				12				(3	)
India			1				6				(5	)
			100				100

 1  All Asian markets except China and India.

 

5

 

		Three Months Ended March 31
(millions of US dollars, except		Dollars																Tonnes (thousands)														Average per Tonne
as otherwise noted)		2022				2021				% Change								2022		2021				% Change								2022				2021				% Change
Manufactured product
Net sales
Ammonia			560				160				250							595			572				4								940				278				238
Urea			463				249				86							591			757				(22	)							783				329				138
Solutions, nitrates and sulfates			439				164				168							1,079			1,074				-								407				153				166
			1,462				573				155							2,265			2,403				(6	)							645				238				171
Cost of goods sold			640				440				45																						282				183				54
Gross margin - manufactured			822				133				518																						363				55				560
Gross margin - other 1			38				17				124							Depreciation and amortization															54				54				1
Gross margin - total			860				150				473							Gross margin excluding depreciation   and amortization - manufactured 3
Income			(12	)			(17	)			(29	)																					417				109				284
EBIT			872				167				422							Ammonia controllable cash cost of
Depreciation and amortization			123				129				(5	)						product manufactured 3															56				52				8
EBITDA			995				296				236
Adjustments 2			-				4				(100	)
Adjusted EBITDA			995				300				232

1  Includes other nitrogen (including ESN^®) and purchased products and comprises net sales of $279 million (2021 – $187 million) less cost of goods sold of $241 million (2021 – $170 million).

2  See Note 2 to the interim financial statements.

3  These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

 

•

Adjusted EBITDA increased in the first quarter of 2022 primarily due to higher net realized selling prices, which more than offset higher natural gas costs and lower volumes.

 

•

Sales volumes decreased in the first quarter of 2022 due to unplanned plant outages that impacted ammonia and urea production, along with the delayed planting in North America.

 

•

Net realized selling price was higher due to higher benchmark prices resulting from the strength in global demand and tight supply, along with higher energy prices in key nitrogen exporting regions.

 

•

Cost of goods sold per tonne increased primarily due to higher natural gas costs and higher raw material costs.

Natural Gas Prices in Cost of Production

 

		Three Months Ended March 31
(US dollars per MMBtu, except as otherwise noted)			2022				2021				% Change
Overall gas cost excluding realized derivative impact			6.86				3.17				116
Realized derivative impact			(0.01	)			0.02				n/m
Overall gas cost			6.85				3.19				115
Average NYMEX			4.95				2.69				84
Average AECO			3.61				2.30				57

 

•

Natural gas prices in our cost of production increased in the first quarter of 2022 as a result of higher North American gas index prices and increased gas costs in Trinidad, where our gas prices are linked to ammonia benchmark prices.

 

6

 

		Three Months Ended March 31
(millions of US dollars, except		Dollars																Tonnes (thousands)																Average per Tonne
as otherwise noted)		2022				2021				% Change								2022				2021				% Change								2022				2021				% Change
Manufactured product
Net sales
Fertilizer			393				230				71								460				509				(10	)							854				453				89
Industrial and feed			170				114				49								191				193				(1	)							891				589				51
			563				344				64								651				702				(7	)							865				490				77
Cost of goods sold			360				282				28																								552				401				38
Gross margin - manufactured			203				62				227																								313				89				252
Gross margin - other 1			4				4				-								Depreciation and amortization																63				54				16
Gross margin - total			207				66				214								Gross margin excluding depreciation
Expenses			9				7				29								and amortization –manufactured 2																376				143				163
EBIT			198				59				236
Depreciation and amortization			41				38				8
Adjusted EBITDA			239				97				146
1 Includes other phosphate and purchased products and comprises net sales of $72 million (2021 – $41 million) less cost of goods sold of $68 million (2021 – $37 million).  2 This is a non-IFRS financial measure. See the “Non-IFRS Financial Measures” section.

 

•

Adjusted EBITDA increased in the first quarter of 2022 due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes.

 

•

Sales volumes decreased particularly in fertilizer, as a wet and cool spring in North America delayed planting.

 

•

Net realized selling price increased in connection with the increase in global benchmark prices. Industrial and feed net selling prices increased to a lesser extent than fertilizer prices due to a lag in price realizations relative to spot prices.

 

•

Cost of goods sold per tonne increased primarily due to significantly higher sulfur and ammonia input costs.

 

 

		Three Months Ended March 31
(millions of US dollars, except as otherwise noted)			2022				2021				% Change
Selling expenses			(2	)			(6	)			(67	)
General and administrative expenses			70				58				21
Share-based compensation expense			135				23				487
Other expenses			53				28				89
EBIT			(256	)			(103	)			149
Depreciation and amortization			16				12				33
EBITDA			(240	)			(91	)			164
Adjustments 1			174				43				305
Adjusted EBITDA			(66	)			(48	)			38
1 See Note 2 to the interim financial statements.

 

•

Share-based compensation expense was higher in the first quarter of 2022 compared to the same period in 2021 due to a significant increase in our share price, which resulted in a higher value of share-based awards outstanding.

 

•

Other expenses were higher in the first quarter of 2022 compared to the same period in 2021 mainly due to higher foreign exchange losses related to our international operations.

 

7

Eliminations of gross margin between operating segments were $(200) million in the first quarter of 2022 compared to $(32) million for the same period in 2021. We had significant eliminations in the first quarter of 2022 due to higher-margin inventories held by our Retail segment as global commodity benchmark prices increased. Eliminations are not part of the Corporate and Others segment.

Finance Costs, Income Taxes and Other Comprehensive Income

 

(millions of US dollars, except as otherwise noted)		Three Months Ended March 31
			2022				2021				% Change
Finance costs			109				120				(9	)
Income tax expense			505				25				n/m
Other comprehensive income			176				24				633

 

•

Income tax expense was higher as a result of significantly higher earnings in the first quarter of 2022 compared to the same period in 2021.

 

•

Other comprehensive income is primarily driven by changes in the currency translation of our foreign operations. In the first quarter of 2022, we had a significant gain on translation of our Retail operations in Australia and Brazil as these currencies appreciated relative to the US dollar as at March 31, 2022 compared to December 31, 2021 levels.

Liquidity and Capital Resources

Sources and Uses of Liquidity

We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under our new or existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures, planned growth and development activities, and other cash requirements for the foreseeable future. Refer to the “Capital Structure and Management” section for details on our existing long-term debt and credit facilities.

Sources and Uses of Cash

 

(millions of US dollars, except as otherwise noted)		Three Months Ended March 31
			2022				2021				% Change
Cash used in operating activities			(62	)			(152	)			(59	)
Cash used in investing activities			(457	)			(388	)			18
Cash provided by (used in) financing activities			588				(191	)			n/m
Effect of exchange rate changes on cash and cash equivalents			9				(11	)			n/m
Increase (decrease) in cash and cash equivalents			78				(742	)			n/m

 

Cash used in operating activities		• Lower cash used in operating activities in the first quarter of 2022 compared to the same period in 2021 due to higher earnings driven by higher crop input prices from tight global supply, offset with seasonal working capital requirements.
Cash used in investing activities		• Cash used in investing activities in the first quarter of 2022 was higher compared to the same period in 2021 due to higher spending to maintain the safety and reliability of our assets and to increase our production capabilities, and the timing of supplier payments.
Cash provided by (used in) financing activities		• Higher cash provided by financing activities in the first quarter of 2022 compared to the same period in 2021 due to increased commercial paper drawdowns to temporarily finance working capital requirements, partially offset by increased share repurchases.

 

8

Financial Condition Review

The following balance sheet categories contained variances that were considered material:

 

		As at
(millions of US dollars, except as otherwise noted)			March 31, 2022				December 31, 2021				$ Change				% Change
Assets
Receivables			6,437				5,366				1,071				20
Inventories			9,068				6,328				2,740				43
Prepaid expenses and other current assets			943				1,653				(710	)			(43	)
Liabilities and Equity
Short-term debt			3,033				1,560				1,473				94
Payables and accrued charges			11,013				10,052				961				10
Retained earnings			8,931				8,192				739				9

 

•

Receivables increased due to higher sales across all of our segments as a result of higher crop nutrient net realized selling prices consistent with higher benchmark pricing.

 

•

Inventories increased due to seasonal Retail inventory build-up for the spring planting and application seasons in North America. The increase was also attributable to higher cost to produce or purchase inventory due to inflation and tight global supply.

 

•

Prepaid expenses and other current assets decreased due to the drawdown of prepaid inventory in preparation for the spring planting and application seasons in North America.

 

•

Short-term debt increased due to additional commercial paper issuances as part of our seasonal working capital management.

 

•

Payables and accrued charges increased due to higher input costs from inflation and tight global supply, and seasonal Retail build-up of inventory purchases driving higher payables and accrued charges.

 

•

Retained earnings increased as net earnings in the first quarter of 2022 exceeded dividends declared and share repurchases.

Capital Structure and Management

Principal Debt Instruments

As part of the normal course of business, we closely monitor our liquidity position. We use a combination of cash generated from operations and short-term and long-term debt to finance our operations. We were in compliance with our debt covenants and did not have any changes to our credit ratings in the three months ended March 31, 2022.

 

		As at March 31, 2022
										Outstanding and Committed
(millions of US dollars)		Rate of Interest (%)				Total Facility Limit				Short-Term Debt				Long-Term Debt
Credit facilities
Unsecured revolving term credit facility			n/a				4,500				-				-
Uncommitted revolving demand facility			n/a				500				-				-
Other credit facilities							720
South American			1.7 - 13.3								124				144
Australian			0.8 - 0.9								180				-
Other			1.0 - 3.9								23				3
Commercial paper			0.5 - 1.3								2,640				-
Other short-term debt			n/a								66				-
Total											3,033				147

We also have a commercial paper program, which is limited to the availability of backup funds under the $4,500 million unsecured revolving term credit facility and excess cash invested in highly liquid securities.

Our long-term debt consists primarily of notes. See the “Capital Structure and Management” section of our 2021 Annual Report for information on balances, rates and maturities for our notes.

 

9

Outstanding Share Data

 

		As at April 29, 2022
Common shares			551,299,995
Options to purchase common shares			4,116,888

For more information on our capital structure and management, see Note 24 to our 2021 annual financial statements.

Quarterly Results

 

(millions of US dollars, except as otherwise noted)		Q1 2022				Q4 2021				Q3 2021				Q2 2021				Q1 2021				Q4 2020				Q3 2020				Q2 2020
Sales 1			7,657				7,267				6,024				9,763				4,658				4,052				4,227				8,431
Net earnings (loss)			1,385				1,207				726				1,113				133				316				(587	)			765
Net earnings (loss) attributable to equity holders of Nutrien			1,378				1,201				717				1,108				127				316				(587	)			765
Net earnings (loss) per share attributable to equity holders of Nutrien
Basic			2.49				2.11				1.26				1.94				0.22				0.55				(1.03	)			1.34
Diluted			2.49				2.11				1.25				1.94				0.22				0.55				(1.03	)			1.34
1  Certain immaterial figures have been reclassified in the second and third quarters of 2020.

Seasonality in our 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. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are concentrated in December and January and inventory prepayments paid to our suppliers are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.

Our 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 fourth quarter of 2021, earnings were impacted by a $142 million loss resulting from the early extinguishment of long-term debt. In the fourth quarter of 2020, earnings were impacted by a $250 million net gain on disposal of our investment in Misr Fertilizers Production Company S.A.E.. In the third quarter of 2020, earnings were impacted by an $823 million non-cash impairment of assets primarily in the Phosphate segment as a result of lower long-term forecasted global phosphate prices.

Critical Accounting Estimates

Our significant accounting policies are disclosed in our 2021 Annual Report. We have discussed the development, selection and application of our key accounting policies, and the critical accounting estimates and assumptions they involve, with the audit committee of the Board. Our critical accounting estimates are discussed on page 49 of our 2021 Annual Report. There were no material changes in the three months ended March 31, 2022 to our critical accounting estimates.

 

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Risk Factors

Russia and Ukraine Conflict

The current conflict between Ukraine and Russia and the international response has, and may continue to have, potential wide-ranging consequences for global market volatility and economic conditions, including energy and commodity prices. Certain countries including Canada, the United States, Australia and certain European countries have imposed strict financial and trade sanctions against Russia, with Russia and Belarus imposing retaliatory sanctions of their own, which may have continued far-reaching effects on the global economy, energy and commodity prices, food security and crop nutrient supply and prices. The short-, medium- and long-term implications of the conflict in Ukraine are difficult to predict with any degree of certainty at this time. While Nutrien does not have operations in Ukraine or Russia, there remains uncertainty relating to the potential impact of the conflict and its effect on global food security, growers and the market outlook for crop nutrient market supply and demand fundamentals and nutrient prices, and it could have a material and adverse effect on our business, financial condition and results of operations. Depending on the extent, duration, and severity of the conflict, it may have the effect of heightening many of the other risks Nutrien is subject to and which are described in our 2021 Annual Report and 2021 Annual Information Form, including, without limitation, risks relating to market fundamentals and conditions (such as sanctions and trade flows and the impact thereof on crop nutrient supply and demand); cybersecurity threats; energy and commodity prices; inflationary pressures, interest rates and costs of capital; and supply chains and cost-effective and timely transportation.

Controls and Procedures

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended, and National Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings. Internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and preparation of financial statements for external purposes in accordance with IFRS. Any system of internal control over financial reporting, no matter how well designed, has inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

There has been no change in our internal control over financial reporting during the three months ended March 31, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

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Forward-Looking Statements

Certain statements and other information included in this document, including within the “Financial Outlook and Guidance” section, 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 document, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien’s business strategies, plans, prospects and opportunities; Nutrien’s 2022 full-year guidance, including expectations regarding our adjusted net earnings per share and adjusted EBITDA (consolidated and by segment); expectations regarding our growth and capital allocation intentions and strategies; capital spending expectations for 2022; expectations regarding performance of our operating segments in 2022, including our operating segment market outlooks and market conditions for 2022, and the anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, grower crop investment, crop mix, prices and the impact of import and export volumes and economic sanctions; Nutrien’s ability to develop innovative and sustainable solutions; the negotiation of sales contracts; and acquisitions and divestitures. 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 we believe that these assumptions are reasonable, having regard to our experience and our perception of historical trends, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place undue reliance on these assumptions and such forward-looking statements. Current conditions, economic and otherwise, render assumptions, although reasonable when made, subject to greater uncertainty. The additional key assumptions that have been made include, among other things, assumptions with respect to our ability to successfully complete, integrate and realize the anticipated benefits of our already completed and future acquisitions and divestitures, and that we will be able to implement our standards, controls, procedures and policies in respect of any acquired businesses and to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2022 and in the future; our expectations regarding the impacts, direct and indirect, of the COVID-19 pandemic on our business, customers, business partners, employees, supply chain, other stakeholders and the overall global economy; our expectations regarding the impacts, direct and indirect, of the conflict between Ukraine and Russia on, among other things, global supply and demand, energy and commodity prices; interest rates, supply chains and the global economy; 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; our ability to maintain investment grade ratings and achieve our performance targets; our ability to successfully negotiate sales contracts; and our ability to successfully implement new initiatives and programs.

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; failure to complete announced and future acquisitions or divestitures at all or on the expected terms and within the expected timeline; climate change and 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 (including tariffs, trade restrictions and climate change initiatives), 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 cybersecurity risks related to our systems, including our costs of addressing or mitigating such risks; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; interruptions of or constraints in availability of key inputs, including natural gas and sulfur; any significant impairment of the carrying amount 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; the COVID-19 pandemic, including variants of the COVID-19 virus and the efficiency and distribution of vaccines, and its resulting effects on economic conditions, restrictions imposed by public health authorities or governments, including government-imposed vaccine mandates, fiscal and monetary responses by governments and financial institutions and disruptions to global supply chains; the conflict between Ukraine and Russia and its potential impact on, among other things, global market conditions and supply and demand, energy and commodity prices; interest rates, supply chains and the global economy generally; and other risk factors detailed from time to time in Nutrien reports filed with the Canadian securities regulators and the SEC in the United States.

The purpose of our adjusted net earnings per share, adjusted EBITDA (consolidated and by segment) and sustaining capital expenditures guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

 

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The forward-looking statements in this document are made as of the date hereof and 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 Canadian securities legislation or applicable US federal securities laws.

Terms and Definitions

For the definitions of certain financial and non-financial terms used in this document, as well as a list of abbreviated company namesand sources, see the “Terms & Definitions” section of our 2021 Annual Report. All references to per share amounts pertain to dilutednet earnings (loss) per share, “n/m” indicates information that is not meaningful, and all financial amounts are stated in millions of US dollars, unless otherwise noted.

 

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Appendix A - Selected Additional Financial Data

 

Selected Retail Measures		Three Months Ended March 31
		2022		2021
Proprietary products margin as a percentage of product line margin (%)
Crop nutrients		15			21
Crop protection products		39			43
Seed		38			40
All products		22			23
Crop nutrients sales volumes (tonnes – thousands)
North America		1,242			1,597
International		933			803
Total		2,175			2,400
Crop nutrients selling price per tonne
North America		867			458
International		547			355
Total		729			423
Crop nutrients gross margin per tonne
North America		185			113
International		67			49
Total		134			92
Financial performance measures		2022			2021
Retail adjusted EBITDA margin (%) 1, 2		11			10
Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3		1,583			1,159
Retail adjusted average working capital to sales (%) 1, 4		14			14
Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4		-			3
Nutrien Financial adjusted net interest margin (%) 1, 4		6.9			5.5
Retail cash operating coverage ratio (%) 1, 4		57			60
1   Rolling four quarters ended March 31, 2022 and 2021.
2   These are supplementary financial measures. See the “Other Financial Measures” section.
3   Excluding acquisitions.
4   These are non-IFRS financial measures. See the “Non-IFRS Financial Measures” section.

 

Nutrien Financial		As at March 31, 2022																												As at Dec 31, 2021
(millions of US dollars)		Current				<31 days past due				31–90 days past due				>90 days past due				Gross Receivables				Allowance 1				Net Receivables				Net Receivables
North America			1,182				77				74				58				1,391				(26	)			1,365				1,488
International			770				40				80				22				912				(3	)			909				662
Nutrien Financial receivables			1,952				117				154				80				2,303				(29	)			2,274				2,150
1   Bad debt expense on the above receivables for the three months ended March 31, 2022 was $1 million (2021 – $5 million) in the Retail segment.

 

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Selected Nitrogen Measures		Three Months Ended March 31
		2022		2021
Sales volumes (tonnes – thousands)
Fertilizer		1,093		1,305
Industrial and feed		1,172		1,098
Net sales (millions of US dollars)
Fertilizer		774		332
Industrial and feed		688		241
Net selling price per tonne
Fertilizer		708		254
Industrial and feed		587		220
Production Measures		Three Months Ended March 31
		2022		2021
Potash production (Product tonnes – thousands)		3,703		3,536
Potash shutdown weeks 1		-		-
Ammonia production – total 2		1,403		1,449
Ammonia production – adjusted 2, 3		958		1,053
Ammonia operating rate (%) 3		89		97
P2O5 production (P2O5 tonnes – thousands)		378		378
P2O5 operating rate (%)		90		90
1   Represents weeks of full production shutdown, including inventory adjustments and unplanned events, excluding the impact of any periods of reduced operating rates, planned routine annual maintenance shutdowns and announced workforce reductions. 2   All figures are provided on a gross production basis in thousands of product tonnes. 3   Excludes Trinidad and Joffre.

 

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