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Nutrien Reports Fourth Quarter and Full-Year 2022 Results

15.02.2023  |  Business Wire

Delivered record net earnings, advanced strategic initiatives and returned $5.6 billion to shareholders in 2022. Expect strong market fundamentals in 2023 and announced a 10 percent increase in the quarterly dividend.

All amounts are in US dollars except as otherwise noted

Nutrien Ltd. (TSX and NYSE: NTR) announced today its fourth quarter 2022 results, with net earnings of $1.1 billion ($2.15 diluted net earnings per share). Fourth quarter 2022 adjusted net earnings per share1 was $2.02 and adjusted EBITDA1 was $2.1 billion.

"Geopolitical events caused an unprecedented level of supply disruption and market volatility across agriculture, energy and fertilizer markets in 2022. Nutrien delivered record net earnings and cash flow in this environment due to the advantages of our world-class production, distribution and retail network. We returned $5.6 billion to shareholders, invested in our global Retail network and advanced a number of long-term strategic initiatives that position our company for future growth and sustainability," commented Ken Seitz, Nutrien's President and CEO.

"The outlook for our business is strong as we expect global supply issues to persist and demand for crop inputs to increase in 2023. We remain disciplined in our capital allocation approach as we position the company to best serve the needs of our customers, while delivering meaningful returns for our shareholders," added Mr. Seitz.

Highlights:

  • Nutrien generated net earnings of $7.7 billion ($14.18 diluted net earnings per share) and adjusted EBITDA1 of $12.2 billion in 2022 supported by higher realized fertilizer prices and record Nutrien Ag Solutions ("Retail") performance, more than offsetting a reduction in fertilizer sales volumes. Cash provided by operating activities increased to $8.1 billion in 2022, more than doubling the prior year's total.
  • Nutrien repurchased 53 million shares in 2022 and an additional 8 million shares in 2023, completing its normal course issuer bid ("NCIB") in early February 2023. Nutrien's Board of Directors approved a 10 percent increase in the quarterly dividend to $0.53 per share and approved the purchase of up to 5 percent of Nutrien's outstanding common shares over a twelve-month period through a NCIB. The NCIB is subject to acceptance by the Toronto Stock Exchange.
  • Nutrien allocated $1.2 billion of growth capital1 (cash used in investing activities of $2.9 billion) in 2022 to advance strategic initiatives across our Retail, Potash and Nitrogen businesses. This included expanding our Retail network by completing 21 acquisitions in Brazil, the US and Australia for a total investment of approximately $400 million.
  • Retail delivered record adjusted EBITDA of $2.3 billion for the full year of 2022, due to supportive market conditions in key regions where we operate. Retail cash operating coverage ratio1 as at December 31, 2022 improved to 55 percent compared to 58 percent for the same period in 2021 driven by higher margins.
  • Potash adjusted EBITDA of $5.8 billion for the full year of 2022 more than doubled compared to the prior year due to higher net realized selling prices and record offshore sales volumes, more than offsetting lower North American sales volumes.
  • Nitrogen full year 2022 adjusted EBITDA of $3.9 billion increased 70 percent compared to the prior year due to higher net realized selling prices that more than offset higher natural gas costs and lower sales volumes.
  • Nutrien issued full-year 2023 adjusted EBITDA and adjusted net earnings per share guidance1 of $8.4 to $10.0 billion and $8.45 to $10.65 per share, respectively.
  • Nutrien is adjusting the ramp up timing of its existing low-cost potash capacity to optimize capital expenditures in-line with the pace of expected demand recovery in 2023 and beyond. We will maintain a flexible approach and now expect to reach 18 million tonnes of annual operational capability in 2026. Nutrien continues to believe long-term fundamentals support the need for our low-cost, incremental potash capability and there is significant value in having flexibility to increase production when the market needs it.

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

Market Outlook and Guidance

Agriculture and Retail

  • Agricultural fundamentals remain strong and are supported by the lowest global grain stocks-to-use ratio in over 25 years. We expect Ukrainian crop production and exports will continue to be constrained by the impact of the war with Russia and believe it will take more than one growing season to alleviate the supply risk from the market. Spot prices for corn, soybeans, and wheat are up 25 to 50 percent compared to the 10-year average, which supports grower returns and provides an incentive to increase crop production in 2023.
  • We anticipate US major crop acreage will increase by approximately 4 percent in 2023, assuming a more normal planting window compared to the spring of 2022. We expect corn plantings to increase to 91 to 93 million acres in 2023, which is supportive of crop input demand.
  • Brazilian grower economics for soybeans and corn are strong, which we expect will support another year of above-trend acreage growth. Safrinha corn planting and crop input purchases have been delayed due to wet weather, but we expect strong demand as the planting season progresses. Australian growers have benefitted from multiple years of above-average yields and historically high crop prices, positioning them very well financially entering 2023. We expect another year of strong crop production and input demand assuming favorable weather conditions.

Crop Nutrient Markets

  • We believe potash inventories have been drawn down in Brazil and the US following a historic decline in the pace of potash shipments in the second half of 2022. We have seen improved potash demand in early 2023, however buyers continue to take a cautious approach to managing inventories that could lead to a more condensed shipment period as we approach the primary application seasons. Our estimate for global potash shipments in 2023 is 63 to 67 million tonnes, which is still constrained compared to the historical trend demand estimated at around 70 million tonnes.
  • Belarus potash shipments in 2023 are projected to be down 40 to 60 percent and Russian shipments down 15 to 30 percent compared to 2021. We anticipate the reduction in supply will be most apparent in the first quarter of 2023 compared to the same period in 2022, as both Belarusian and Russian exports were heavily weighted to early 2022 before sanctions and export restrictions were imposed.
  • Global nitrogen prices have declined since the beginning of 2023 due to lower European natural gas prices and buyer deferrals. We expect European natural gas prices to be volatile throughout the year and around 30 percent of the region's nitrogen capacity is currently offline. North American natural gas prices remain highly competitive compared to European and Asian natural gas prices and we expect Henry Hub spot prices between $2.50 to $4.50 per MMBtu in 2023.
  • We anticipate nitrogen supply constraints will persist in 2023, including lower Russian ammonia exports, reduced European operating rates and continued Chinese urea export restrictions. We expect a tight US supply and demand balance ahead of the 2023 spring season due to higher corn acreage and increased US nitrogen exports over the past six months.
  • We expect Chinese phosphate export restrictions to be in place until at least April 2023, anticipate improved demand in North America and Brazil, and the continuation of strong demand in India. Phosphate product margins are expected to be supported by lower raw material sulfur prices due to reduced operating rates and demand in China.

Financial Guidance

Based on market factors detailed above, we are issuing full-year 2023 adjusted EBITDA guidance of $8.4 to $10.0 billion and full-year 2023 adjusted net earnings guidance of $8.45 to $10.65 per share.

  • Retail adjusted EBITDA guidance assumes strong demand for crop inputs in each of the markets we serve. We expect gross margins for crop nutrients and crop protection products will be lower compared to the record levels achieved in 2022.
  • Potash sales tonnes guidance of 13.8 to 14.6 million tonnes assumes increased demand in our key markets of North America and Brazil and continued global supply constraints in 2023. We have maintained capability to increase sales volumes to our previous expectation of approximately 15 million tonnes if we see stronger demand in the market.
  • Nitrogen sales tonnes guidance of 10.8 to 11.4 million tonnes assumes higher operating rates at our North American plants and a continuation of gas curtailments in Trinidad in 2023. Nitrogen sales tonnes guidance includes 300,000 to 350,000 tonnes of projected ESN® product sales that prior to 2023 were included in the other product category.

All guidance numbers, including those noted above and related sensitives are outlined in the table below.

2023 Guidance Ranges 1

(billions of US dollars, except as otherwise noted)

Low

High

Adjusted net earnings per share in US dollars ("Adjusted EPS")2,3

8.45

10.65

Adjusted EBITDA 2

8.4

10.0

Retail adjusted EBITDA

1.85

2.05

Potash adjusted EBITDA

3.7

4.5

Nitrogen adjusted EBITDA

2.5

3.2

Phosphate adjusted EBITDA (in millions of US dollars)

550

750

Potash sales tonnes (millions) 4

13.8

14.6

Nitrogen sales tonnes (millions) 4

10.8

11.4

Depreciation and amortization

2.1

2.2

Effective tax rate on adjusted earnings (%)

23.5

24.5

Impact to

2023 Annual Assumptions & Sensitivities 1

Adjusted

Adjusted

(millions of US dollars, except EPS amounts or as otherwise noted)

EBITDA

EPS 3

$1/MMBtu change in NYMEX 5

180

0.27

$25/tonne change in realized potash selling prices

300

0.45

$25/tonne change in realized ammonia selling prices

50

0.07

$25/tonne change in realized urea selling prices

80

0.12

2023 average Canadian to US dollar exchange rate

1.33

2023 NYMEX natural gas (US dollars per MMBtu)

~$3.50

1. See the "Forward-Looking Statements" section.

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

3. Assumes 503 million shares outstanding for all EPS guidance and sensitivities.
4. Manufactured products only. Nitrogen sales tonnes guidance includes ESN® products that prior to 2023 were included in the other category.
5. Nitrogen related impact.

Consolidated Results

Three Months Ended December 31

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2022

2021

% Change

2022

2021

% Change

Sales

7,533

7,267

4

37,884

27,712

37

Freight, transportation and distribution

244

198

23

872

851

2

Cost of goods sold

4,383

3,863

13

21,588

17,452

24

Gross margin

2,906

3,206

(9)

15,424

9,409

64

Expenses

1,247

1,379

(10)

4,615

4,628

?

Net earnings

1,118

1,207

(7)

7,687

3,179

142

Adjusted EBITDA 1

2,095

2,463

(15)

12,170

7,126

71

Diluted net earnings per share

2.15

2.11

2

14.18

5.52

157

Adjusted net earnings per share 1

2.02

2.47

(18)

13.19

6.23

112

Cash provided by operating activities

4,736

3,637

30

8,110

3,886

109

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

Net earnings and adjusted EBITDA increased for the full year of 2022 compared to the same periods in 2021, due to higher net realized selling prices resulting primarily from global supply uncertainties across our nutrient businesses and strong Retail performance. Net earnings and adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period in 2021, due to lower sales volumes partially offset by higher net realized selling prices. In 2022, we recorded a non-cash impairment reversal of $780 million related to our Phosphate operations, which positively impacted net earnings. Cost of goods sold increased in the fourth quarter and full year of 2022 due to higher input costs, in particular higher cost of inventory, natural gas and sulfur. Cash provided by operating activities increased in the full year of 2022 compared to the same period in 2021 primarily due to higher net earnings and increased in the fourth quarter of 2022 compared to the same period in 2021 due to a higher release of working capital.

Segment Results

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

Nutrien Ag Solutions ("Retail")

Three Months Ended December 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

2,320

2,035

14

349

428

(18)

15

21

Crop protection products

981

1,113

(12)

413

414

?

42

37

Seed

251

189

33

46

57

(19)

18

30

Merchandise

264

270

(2)

41

45

(9)

16

17

Nutrien Financial

62

51

22

62

51

22

100

100

Services and other 1

237

243

(2)

194

201

(3)

82

83

Nutrien Financial elimination 1, 2

(28)

(23)

22

(28)

(23)

22

100

100

4,087

3,878

5

1,077

1,173

(8)

26

30

Cost of goods sold

3,010

2,705

11

Gross margin

1,077

1,173

(8)

Expenses 3

888

911

(3)

Earnings before finance costs and taxes ("EBIT")

189

262

(28)

Depreciation and amortization

202

178

13

EBITDA

391

440

(11)

Adjustments 4

?

2

(100)

Adjusted EBITDA

391

442

(12)

1. Certain immaterial figures have been reclassified for the three months ended December 31, 2021.

2. Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.

3. Includes selling expenses of $836 million (2021 - $848 million).

4. See Note 2 to the unaudited condensed consolidated financial statements.

Twelve Months Ended December 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

10,060

7,290

38

1,766

1,597

11

18

22

Crop protection products

7,067

6,333

12

1,936

1,551

25

27

24

Seed

2,112

2,008

5

428

419

2

20

21

Merchandise

1,019

1,033

(1)

174

172

1

17

17

Nutrien Financial

267

189

41

267

189

41

100

100

Services and other 1

966

980

(1)

749

771

(3)

78

79

Nutrien Financial elimination 1

(141)

(99)

42

(141)

(99)

42

100

100

21,350

17,734

20

5,179

4,600

13

24

26

Cost of goods sold

16,171

13,134

23

Gross margin

5,179

4,600

13

Expenses 2

3,621

3,378

7

EBIT

1,558

1,222

27

Depreciation and amortization

752

706

7

EBITDA

2,310

1,928

20

Adjustments 3

(17)

11

n/m

Adjusted EBITDA

2,293

1,939

18

1. Certain immaterial figures have been reclassified for the twelve months ended December 31, 2021.

2. Includes selling expenses of $3,392 million (2021 - $3,124 million).

3. See Note 2 to the unaudited condensed consolidated financial statements.

  • Adjusted EBITDA for the full year of 2022 increased 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 product margins. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the prior year's record results as strong sales prices in most product categories were offset by lower volumes and higher cost inventory. Our Retail cash operating coverage ratio1 improved as at December 31, 2022 to 55 percent from 58 percent in the same period in 2021 due to higher gross margin.
  • Crop nutrients sales increased in the fourth quarter and the full year of 2022 due to higher selling prices. Gross margin increased for the full year of 2022 compared to the same period last year due to strategic procurement and the timing of inventory purchasing in the first half of 2022, with a decrease in the fourth quarter of 2022 due to higher cost inventory. Sales volumes decreased for the full year 2022 due to reduced application resulting from a delayed planting season in North America and stronger fourth quarter engagement in 2021 in a rising price environment, slightly offset by increased South American volumes attributed to recent acquisitions.
  • Crop protection products sales and gross margin increased for the full year of 2022, particularly in North America, due to higher selling prices along with increased sales and gross margin in proprietary products. Gross margin was flat in the fourth quarter as higher sales pricing and a favorable sales mix in North America offset a decline in sales volumes compared to a very strong period of demand in the fourth quarter of 2021. Gross margin as a percentage of sales increased for the full year of 2022, supported by the reliability of our supply chain and strategic procurement in a rising price environment.
  • Seed sales increased in the fourth quarter and the full year of 2022 due to higher pricing along with strong North America corn sales, Latin America soybean sales and Australia canola sales. Gross margin increased for the full year of 2022 due to higher pricing with a decrease in the fourth quarter of 2022 attributed to the timing and mix of seed sales compared to the same period in 2021.
  • Merchandise gross margin increased for the full year of 2022 due to strong margin performance in Australia animal management, farm services and general merchandise, with a decrease in the fourth quarter of 2022 due to an unfavorable foreign exchange rate impact on Australian dollars.
  • Nutrien Financial sales increased in the fourth quarter and full year 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 and gross margin decreased in the fourth quarter and full year of 2022 mainly due to lower livestock volumes in Australia, along with an unfavorable foreign exchange rate impact on Australian dollars. Fourth quarter 2022 sales benefited from improved selling rates on North American custom application services.
1. These (and any related guidance, if applicable) are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section for further information.

Potash

Three Months Ended December 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

536

497

8

959

1,002

(4)

560

494

13

Offshore

841

923

(9)

1,659

2,054

(19)

506

450

12

1,377

1,420

(3)

2,618

3,056

(14)

526

465

13

Cost of goods sold

310

305

2

118

100

18

Gross margin - total

1,067

1,115

(4)

408

365

12

Expenses 1

198

179

11

Depreciation and amortization

34

38

(11)

EBIT

869

936

(7)

Gross margin excluding depreciation

Depreciation and amortization

89

117

(24)

and amortization - manufactured 2

442

403

10

EBITDA/ Adjusted EBITDA

958

1,053

(9)

Potash controllable cash cost of

product manufactured 2

65

52

25

1. Includes provincial mining taxes of $190 million (2021 - $173 million).

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

Twelve Months Ended December 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

2,485

1,638

52

3,729

5,159

(28)

667

317

110

Offshore

5,414

2,398

126

8,808

8,466

4

615

283

117

7,899

4,036

96

12,537

13,625

(8)

630

296

113

Cost of goods sold

1,400

1,285

9

112

94

19

Gross margin - total

6,499

2,751

136

518

202

156

Expenses 1

1,173

512

129

Depreciation and amortization

35

36

(1)

EBIT

5,326

2,239

138

Gross margin excluding depreciation

Depreciation and amortization

443

488

(9)

and amortization - manufactured

553

238

133

EBITDA

5,769

2,727

112

Potash controllable cash cost of

Adjustments 2

?

9

(100)

product manufactured

58

52

12

Adjusted EBITDA

5,769

2,736

111

1. Includes provincial mining taxes of $1,149 million (2021 - $466 million).

2. See Note 2 to the unaudited condensed consolidated financial statements.

  • Adjusted EBITDA increased in the full year 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. Adjusted EBITDA decreased in the fourth quarter of 2022 compared to the same period last year mainly due to lower volumes from cautious purchasing in a declining price environment, partially offset by higher net realized selling prices.
  • Sales volumes decreased for the full year of 2022 due to a compressed North American spring application season that resulted in high inventory carry-over and cautious purchasing in key markets during the second half of 2022. Offshore sales volumes were the highest of any full year period on record due to reduced supply from Eastern Europe.
  • Net realized selling price increased in the fourth quarter and full year of 2022 due to the impact of reduced supply from Eastern Europe. Net realized selling prices decreased from the third quarter of 2022 due to a decline in benchmark pricing.
  • Cost of goods sold per tonne in 2022 increased primarily due to higher royalties resulting from increased net realized selling prices. Potash controllable cash cost of product manufactured increased due to lower production volumes and a pull forward of maintenance activities in the second half of 2022.

Canpotex Sales by Market

(percentage of sales volumes, except as

Three Months Ended December 31

Twelve Months Ended December 31

otherwise noted)

2022

2021

Change

2022

2021

Change

Latin America

28

37

(9)

34

38

(4)

Other Asian markets 1

35

34

1

34

35

(1)

China

16

12

4

14

11

3

Other markets

10

11

(1)

10

10

?

India

11

6

5

8

6

2

100

100

100

100

1. All Asian markets except China and India.

Nitrogen

Three Months Ended December 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

689

519

33

776

790

(2)

887

656

35

Urea

463

552

(16)

705

824

(14)

657

670

(2)

Solutions, nitrates and sulfates

389

385

1

1,056

1,221

(14)

368

316

16

1,541

1,456

6

2,537

2,835

(11)

607

514

18

Cost of goods sold

846

725

17

333

256

30

Gross margin - manufactured

695

731

(5)

274

258

6

Gross margin - other 1

4

23

(83)

Depreciation and amortization

61

52

17

Gross margin - total

699

754

(7)

Gross margin excluding depreciation

Expenses (income) ²

13

(2)

n/m

and amortization - manufactured 4

335

310

8

EBIT

686

756

(9)

Ammonia controllable cash cost of

Depreciation and amortization

155

148

5

product manufactured 4

57

45

27

EBITDA

841

904

(7)

Adjustments 3

?

17

(100)

Adjusted EBITDA

841

921

(9)

1. Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $251 million (2021 - $193 million) less cost of goods sold of $247 million (2021 - $170 million).

2. Includes earnings from equity-accounted investees of $41 million (2021 - $41 million).

3. See Note 2 to the unaudited condensed consolidated financial statements.

4. These are non-IFRS financial measures. See the "Non-IFRS Financial Measures" section.

Twelve Months Ended December 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

2,641

1,393

90

2,715

2,919

(7)

973

477

104

Urea

1,920

1,463

31

2,757

3,059

(10)

696

478

46

Solutions, nitrates and sulfates

1,829

1,128

62

4,551

4,747

(4)

402

238

69

6,390

3,984

60

10,023

10,725

(7)

638

371

72

Cost of goods sold

3,197

2,353

36

319

219

46

Gross margin - manufactured

3,193

1,631

96

319

152

110

Gross margin - other 1

88

95

(7)

Depreciation and amortization

56

52

7

Gross margin - total

3,281

1,726

90

Gross margin excluding depreciation

(Income) expenses ²

(92)

(3)

n/m

and amortization - manufactured

375

204

84

EBIT

3,373

1,729

95

Ammonia controllable cash cost of

Depreciation and amortization

558

557

?

product manufactured

59

50

18

EBITDA

3,931

2,286

72

Adjustments 3

?

22

(100)

Adjusted EBITDA

3,931

2,308

70

1. Includes other nitrogen (including ESN®) and purchased products and comprises net sales of $1,143 million (2021 - $705 million) less cost of goods sold of $1,055 million (2021 - $610 million).

2. Includes earnings from equity-accounted investees of $233 million (2021 - $76 million).

3. See Note 2 to the unaudited condensed consolidated financial statements.

  • Adjusted EBITDA increased in the full year of 2022 primarily due to higher net realized selling prices and higher earnings from equity-accounted investees, which more than offset higher natural gas costs and lower sales volumes. Adjusted EBITDA in the fourth quarter of 2022 decreased as lower sales volumes more than offset an increase in net realized selling prices.
  • Sales volumes decreased in the fourth quarter primarily due to Trinidad gas curtailments, unplanned plant outages that included the impact of extreme cold weather in the quarter and cautious buying activity. Full-year sales volumes were also impacted by a compressed North American spring application season.
  • Net realized selling price was higher in the fourth quarter and full year of 2022 due to strong benchmark prices, in particular for ammonia, resulting from tight global supply and higher energy prices in key nitrogen producing regions.
  • Cost of goods sold per tonne in the fourth quarter and full year of 2022 increased primarily due to higher natural gas, raw material and other input costs. Ammonia controllable cash cost of product manufactured increased in the fourth quarter and full year of 2022 due to lower production volumes and higher input costs, mainly electricity costs.

Natural Gas Prices in Cost of Production

Three Months Ended December 31

Twelve Months Ended December 31

(US dollars per MMBtu, except as otherwise noted)

2022

2021

% Change

2022

2021

% Change

Overall gas cost excluding realized derivative impact

7.49

6.43

16

7.82

4.60

70

Realized derivative impact

(0.05)

(0.03)

67

(0.05)

0.01

n/m

Overall gas cost

7.44

6.40

16

7.77

4.61

69

Average NYMEX

6.26

5.83

7

6.64

3.84

73

Average AECO

4.11

3.93

5

4.28

2.84

51

  • Natural gas prices in our cost of production increased in the fourth quarter and full year 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.

Phosphate

Three Months Ended December 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

274

377

(27)

391

509

(23)

700

741

(6)

Industrial and feed

155

155

?

140

202

(31)

1,107

766

45

429

532

(19)

531

711

(25)

807

749

8

Cost of goods sold

405

374

8

762

526

45

Gross margin - manufactured

24

158

(85)

45

223

(80)

Gross margin - other 1

(8)

5

n/m

Depreciation and amortization

109

55

99

Gross margin - total

16

163

(90)

Gross margin excluding depreciation

Expenses

46

10

360

and amortization - manufactured 3

154

278

(44)

EBIT

(30)

153

n/m

Depreciation and amortization

58

39

49

EBITDA

28

192

(85)

Adjustments 2

?

4

(100)

Adjusted EBITDA

28

196

(86)

1. Includes other phosphate and purchased products and comprises net sales of $72 million (2021 - $61 million) less cost of goods sold of $80 million (2021 - $56 million).

2. See Note 2 to the unaudited condensed consolidated financial statements.

3. This is a non-IFRS financial measure. See the "Non-IFRS Financial Measures" section.

Twelve Months Ended December 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

1,367

1,108

23

1,696

1,840

(8)

806

602

34

Industrial and feed

706

520

36

682

779

(12)

1,035

667

55

2,073

1,628

27

2,378

2,619

(9)

872

622

40

Cost of goods sold

1,562

1,227

27

657

469

40

Gross margin - manufactured

511

401

27

215

153

41

Gross margin - other 1

(18)

20

n/m

Depreciation and amortization

79

58

37

Gross margin - total

493

421

17

Gross margin excluding depreciation

(Income) expenses

(693)

36

n/m

and amortization - manufactured

294

211

40

EBIT

1,186

385

208

Depreciation and amortization

188

151

25

EBITDA

1,374

536

156

Adjustments 2

(780)

4

n/m

Adjusted EBITDA

594

540

10

1. Includes other phosphate and purchased products and comprises net sales of $304 million (2021 - $201 million) less cost of goods sold of $322 million (2021 - $181 million).

2. See Note 2 to the unaudited condensed consolidated financial statements. Includes reversal of impairment of assets of $780 million (2021 - nil).

  • Adjusted EBITDA increased for the full year of 2022 mainly due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes. Adjusted EBITDA in the fourth quarter decreased due to lower sales volumes as a result of unplanned plant outages. Included with expenses for the full year of 2022, we recognized a $780 million non-cash impairment of assets reversal due to a more favorable outlook for phosphate margins, which is deducted from adjusted EBITDA.
  • Sales volumes decreased in the fourth quarter and full year of 2022 due to lower production volumes and a condensed North American spring application season.
  • Net realized selling price increased for the full year of 2022 aligned with the increase in global benchmark prices. In the fourth quarter of 2022, higher industrial and feed net realized selling prices more than offset the decline in fertilizer net realized selling prices.
  • Cost of goods sold per tonne increased in the fourth quarter and full year of 2022 primarily due to significantly higher sulfur and ammonia input costs, along with lower production volumes.

Corporate and Others

(millions of US dollars, except as otherwise

Three Months Ended December 31

Twelve Months Ended December 31

noted)

2022

2021

% Change

2022

2021

% Change

Selling expenses

5

3

67

(1)

(21)

(95)

General and administrative expenses

99

93

6

326

275

19

Share-based compensation (recovery) expense

(59)

73

n/m

63

198

(68)

Other expenses

67

112

(40)

227

253

(10)

EBIT

(112)

(281)

(60)

(615)

(705)

(13)

Depreciation and amortization

16

15

7

71

49

45

EBITDA

(96)

(266)

(64)

(544)

(656)

(17)

Adjustments 1

(84)

116

n/m

146

348

(58)

Adjusted EBITDA

(180)

(150)

20

(398)

(308)

29

1. See Note 2 to the unaudited condensed consolidated financial statements.

  • General and administrative expenses were higher in the full year of 2022 compared to the same period in 2021 mainly due to increased depreciation and amortization expense, higher donations and higher information technology-related expenses.
  • Share-based compensation (recovery) expense was a recovery in the fourth quarter of 2022 due to a decrease in share price and an expense for the comparative period in 2021 due to an increase in share price. We had a lower expense for the full year of 2022 compared to 2021 mainly due to a lower value of share-based awards outstanding.
  • Other expenses were lower in the fourth quarter of 2022 compared to the same period in 2021 mainly due to net foreign exchange gains in 2022 compared to net foreign exchange losses in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for our non-operating sites from the changes in our cost and discount rate estimates. This was partially offset by an employee special recognition award expense in 2022. Other expenses were lower in the full year of 2022 compared to the same period in 2021 mainly due to lower COVID-19 related expenses, the absence of cloud computing related expenses from our change in accounting policy in 2021 and lower expenses related to asset retirement obligations and accrued environmental costs for our non-operating sites from the changes in our cost and discount rate estimates. This was partially offset by higher information technology project feasibility costs and an employee special recognition award expense in 2022.

Eliminations

Eliminations are not part of the Corporate and Others segment. Eliminations of gross margin between operating segments were $(28) million for the full year of 2022 compared to $(89) million in the same period of 2021. We had significant eliminations in 2021 due to higher-margin inventories held by our Retail segment as global commodity benchmark prices increased. The magnitude of the rise in prices was lower in 2022.

Finance Costs, Income Taxes and Other Comprehensive Income (Loss)

(millions of US dollars, except as otherwise

Three Months Ended December 31

Twelve Months Ended December 31

noted)

2022

2021

% Change

2022

2021

% Change

Finance costs

188

246

(24)

563

613

(8)

Income tax expense

353

374

(6)

2,559

989

159

Other comprehensive income (loss)

119

72

65

(177)

78

n/m

  • Finance costs were lower in the fourth quarter and full year of 2022 compared to the same periods in 2021 mainly due to the absence of a loss of $142 million on early extinguishment of a portion of our long-term debt in the comparative periods. In the full year of 2022 short-term interest was higher due to increased interest rates and a higher average balance compared to 2021, which more than offset a decrease in long-term interest due to a lower average outstanding balance in 2022.
  • Income tax expense was higher in the full year of 2022 as a result of higher earnings in 2022 compared to the same period in 2021.
  • Other comprehensive income (loss) is primarily driven by changes in our investment in Sinofert Holdings Ltd ("Sinofert"), the currency translation of our foreign operations and net actuarial gains on defined benefit plans. In the fourth quarter of 2022, we had a fair value gain on our investment in Sinofert due to share price increases, compared to a fair value loss due to share price decreases in 2021. In addition, we had higher gains on foreign currency translation of our Retail foreign operations, mainly in Australia and Brazil, compared to the same period in 2021, as these currencies appreciated relative to the US dollar. These factors were partially offset by a lower net actuarial gain on our defined benefit pension plans in the fourth quarter of 2022 compared to the same period in 2021. For the full year of 2022, we had fair value losses on our investment in Sinofert due to share price decreases, compared to fair value gains due to share price increases for the same period in 2021. In addition, we had higher losses on foreign currency translation of our Retail foreign operations, mainly in Canada, compared to the same period in 2021, as this currency depreciated relative to the US dollar, partially offset by higher gains in Brazil, as this currency appreciated relative to the US dollar.

Forward-Looking Statements

Certain statements and other information included in this document, including within the "Market 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 2023 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; our advancement of strategic growth initiatives; capital spending expectations for 2023; expectations regarding performance of our operating segments in 2023; our intention to increase potash production capability to 18 million tonnes by 2026; our operating segment market outlooks and our expectations for market conditions and fundamentals in 2023 and beyond, 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, production expenses, shipments, consumption, prices and the impact of seasonality, import and export volumes, economic sanctions and the conflict between Ukraine and Russia; Nutrien's ability to develop innovative and sustainable solutions; the negotiation of sales contracts; acquisitions and divestitures and the anticipated benefits thereof; and expectations in connection with our ability to deliver long-term returns to shareholders. 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 on the anticipated timeline or at all; that future business, regulatory and industry conditions will be within the parameters expected by us, including with respect to prices, expenses, margins, demand, supply, product availability, shipments, consumption, 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 2023 and in the future; assumptions with respect to our intention to complete share repurchases under our share repurchase program, including TSX approval and the funding of such share repurchases, existing and future market conditions, including with respect to the price of our common shares, and compliance with respect to applicable limitations under securities laws and regulations and stock exchange policies; 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, global interest rates, supply chains and the global macroeconomic environment, including inflation; 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 expectations regarding the impact of certain factors on the carrying amount of goodwill associated with our Retail - North America group of CGUs; 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; seasonality; 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 to market conditions 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; our ability to execute on our strategies related to environmental, social and governance matters, and achieve related expectations, targets and commitments; the risk that rising interest rates and/or deteriorated business operating results may result in the impairment of assets or goodwill attributed to certain of our cash generating units; 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 and adjusted EBITDA (consolidated and by segment) guidance ranges are to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.

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 names and sources, see the "Terms & Definitions" section of our 2021 Annual Report. All references to per share amounts pertain to diluted net 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.

About Nutrien

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

More information about Nutrien can be found at www.nutrien.com.

Selected financial data for download can be found in our data tool at www.nutrien.com/investors/interactive-datatool

Such data is not incorporated by reference herein.

Nutrien will host a Conference Call on Thursday, February 16, 2023 at 10:00 a.m. Eastern Time.

Telephone Conference dial-in numbers:

  • From Canada and the US 1-888-886-7786
  • 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.

Live Audio Webcast: Visit https://www.nutrien.com/investors/events/2022-q4-earnings-conference-call

Appendix A - Selected Additional Financial Data

Selected Retail Measures

Three Months Ended December 31

Twelve Months Ended December 31

2022

2021

2022

2021

Proprietary products gross margin (millions of US dollars)

Crop nutrients

55

49

370

328

Crop protection products

58

58

675

527

Seed

(7)

22

166

183

Merchandise

5

4

12

12

All products

111

133

1,223

1,050

Proprietary products margin as a percentage of product line margin (%)

Crop nutrients

16

12

21

21

Crop protection products

14

14

35

34

Seed

n/m

39

39

44

Merchandise

11

9

7

7

All products

11

11

24

23

Crop nutrients sales volumes (tonnes - thousands)

North America

1,819

2,119

8,106

9,848

International

675

702

3,407

3,535

Total

2,494

2,821

11,513

13,383

Crop nutrients selling price per tonne

North America

942

725

916

556

International

896

708

774

512

Total

930

721

874

545

Crop nutrients gross margin per tonne

North America

151

154

182

133

International

108

144

86

82

Total

139

152

153

119

Financial performance measures

2022

2021

Retail adjusted EBITDA margin (%) 1, 2

11

11

Retail adjusted EBITDA per US selling location (thousands of US dollars) 1, 2, 3

1,923

1,481

Retail adjusted average working capital to sales (%) 1, 4

17

13

Retail adjusted average working capital to sales excluding Nutrien Financial (%) 1, 4

2

?

Nutrien Financial adjusted net interest margin (%) 1, 4

6.8

6.6

Retail cash operating coverage ratio (%) 1, 4

55

58

Retail normalized comparable store sales (%) 4

(4)

7

1. Rolling four quarters ended December 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 December 31, 2022

As at
December
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

1,658

225

75

78

2,036

(29)

2,007

1,488

International

574

53

14

28

669

(7)

662

662

Nutrien Financial receivables

2,232

278

89

106

2,705

(36)

2,669

2,150

1. Bad debt expense on the above receivables for the twelve months ended December 31, 2022 was $10 million (2021 - $10 million) in the Retail segment.

Selected Nitrogen Measures

Three Months Ended December 31

Twelve Months Ended December 31

2022

2021

2022

2021

Sales volumes (tonnes - thousands)

Fertilizer

1,408

1,578

5,371

6,028

Industrial and feed

1,129

1,257

4,652

4,697

Net sales (millions of US dollars)

Fertilizer

854

861

3,512

2,364

Industrial and feed

687

595

2,878

1,620

Net selling price per tonne

Fertilizer

607

545

654

392

Industrial and feed

608

473

619

345

Production Measures

Three Months Ended December 31

Twelve Months Ended December 31

2022

2021

2022

2021

Potash production (Product tonnes - thousands)

2,941

3,641

13,007

13,790

Potash shutdown weeks 1

3

?

18

14

Ammonia production - total 2

1,400

1,641

5,759

5,996

Ammonia production - adjusted 2, 3

920

1,069

3,935

3,932

Ammonia operating rate (%) 3

83

97

90

90

P2O5 production (P2O5 tonnes - thousands)

288

409

1,351

1,518

P2O5 operating rate (%)

67

95

79

89

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.

Appendix B - Non-IFRS Financial Measures

We use both IFRS measures and certain non-IFRS financial measures to assess performance. Non-IFRS financial measures are financial measures disclosed by a company that (a) depict historical or expected future financial performance, financial position or cash flow of a company, (b) with respect to their composition, exclude amounts that are included in, or include amounts that are excluded from, the composition of the most directly comparable financial measure disclosed in the primary financial statements of the company, (c) are not disclosed in the financial statements of the company and (d) are not a ratio, fraction, percentage or similar representation. Non-IFRS ratios are financial measures disclosed by a company that are in the form of a ratio, fraction, percentage or similar representation that has a non-IFRS financial measure as one or more of its components, and that are not disclosed in the financial statements of the company.

These non-IFRS financial measures and non-IFRS ratios are not standardized financial measures under IFRS and, therefore, are unlikely to be comparable to similar financial measures presented by other companies. Management believes these non-IFRS financial measures and non-IFRS ratios provide transparent and useful supplemental information to help investors evaluate our financial performance, financial condition and liquidity using the same measures as management. These non-IFRS financial measures and non-IFRS ratios should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.

The following section outlines our non-IFRS financial measures and non-IFRS ratios, their compositions, and why management uses each measure. It also includes reconciliations to the most directly comparable IFRS measures. Except as otherwise described herein, our non-IFRS financial measures and non-IFRS ratios are calculated on a consistent basis from period to period and are adjusted for specific items in each period, as applicable. As additional non-recurring or unusual items arise in the future, we generally exclude these items in our calculations.

Adjusted EBITDA (Consolidated)

Most directly comparable IFRS financial measure: Net earnings (loss).

Definition: Adjusted EBITDA is calculated as net earnings (loss) before finance costs, income taxes, depreciation and amortization, share-based compensation and certain foreign exchange gain/loss (net of related derivatives). We also adjust this measure for the following other income and expenses that are excluded when management evaluates the performance of our day-to-day operations: integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses, gain or loss on disposal of certain businesses and investments, and IFRS adoption transition adjustments.

Why we use the measure and why it is useful to investors: It is not impacted by long-term investment and financing decisions, but rather focuses on the performance of our day-to-day operations. It provides a measure of our ability to service debt and to meet other payment obligations, and as a component of employee remuneration calculations.

Three Months Ended December 31

Twelve Months Ended December 31

(millions of US dollars)

2022

2021

2022

2021

Net earnings

1,118

1,207

7,687

3,179

Finance costs

188

246

563

613

Income tax expense

353

374

2,559

989

Depreciation and amortization

520

497

2,012

1,951

EBITDA 1

2,179

2,324

12,821

6,732

Share-based compensation (recovery) expense

(59)

73

63

198

Foreign exchange (gain) loss, net of related derivatives

(36)

38

31

39

Integration and restructuring related costs

11

(4)

46

43

Impairment (reversal) of assets

?

21

(780)

33

COVID-19 related expenses 2

?

11

8

45

Gain on disposal of investment

?

?

(19)

?

Cloud computing transition adjustment 3

?

?

?

36

Adjusted EBITDA

2,095

2,463

12,170

7,126

1. EBITDA is calculated as net earnings before finance costs, income taxes, and depreciation and amortization.

2. COVID-19 related expenses primarily consist of increased cleaning and sanitization costs, the purchase of personal protective equipment, discretionary supplemental employee costs, and costs related to construction delays from access limitations and other government restrictions.

3. Cloud computing transition adjustment relates to cloud computing costs in prior years that no longer qualify for capitalization based on an agenda decision issued by the IFRS Interpretations Committee in April 2021.

Adjusted Net Earnings and Adjusted Net Earnings Per Share

Most directly comparable IFRS financial measure: Net earnings (loss) and net earnings (loss) per share.

Definition: Adjusted net earnings and related per share information are calculated as net earnings (loss) before share-based compensation and certain foreign exchange gain/loss (net of related derivatives), net of tax. We also adjust this measure for the following other income and expenses (net of tax) that are excluded when management evaluates the performance of our day-to-day operations: certain integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting. In 2022, we amended our calculation of adjusted net earnings to adjust for a gain on settlement of a derivative due to discontinued hedge accounting. There was no similar gain or loss in the comparative period. We generally apply the annual forecasted effective tax rate to our adjustments during the year and, at year-end, we apply the actual effective tax rate. If the effective tax rate is significantly different from our forecasted effective tax rate due to adjustments or discrete tax impacts, we apply a tax rate that excludes those items. For material adjustments, we apply a tax rate specific to the adjustment.

Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations and is used as a component of employee remuneration calculations.

Three Months Ended
December 31, 2022

Twelve Months Ended
December 31, 2022

Per

Per

(millions of US dollars, except as otherwise

Increases

Diluted

Increases

Diluted

noted)

(Decreases)

Post-Tax

Share

(Decreases)

Post-Tax

Share

Net earnings attributable to equity holders of Nutrien

1,112

2.15

7,660

14.18

Adjustments:

Share-based compensation (recovery) expense

(59)

(45)

(0.09)

63

47

0.10

Foreign exchange (gain) loss, net of related derivatives

(36)

(27)

(0.05)

31

23

0.05

Integration and restructuring related costs

11

8

0.01

46

35

0.06

Reversal of impairment of assets

?

?

?

(780)

(619)

(1.15)

COVID-19 related expenses

?

?

?

8

6

0.01

Gain on disposal of investment

?

?

?

(19)

(14)

(0.03)

Gain on settlement of discontinued hedge accounting derivative

?

?

?

(18)

(14)

(0.03)

Adjusted net earnings

1,048

2.02

7,124

13.19

Three Months Ended

December 31, 2021

Twelve Months Ended

December 31, 2021

Per

Per

(millions of US dollars, except as otherwise

Increases

Diluted

Increases

Diluted

noted)

(Decreases)

Post-Tax

Share

(Decreases)

Post-Tax

Share

Net earnings attributable to equity holders of Nutrien

1,201

2.11

3,153

5.52

Adjustments:

Share-based compensation expense

73

56

0.10

198

151

0.27

Foreign exchange loss, net of related derivatives

38

29

0.05

39

30

0.05

Integration and restructuring related (recovery) costs

(4)

(3)

(0.01)

43

33

0.06

Impairment of assets

21

16

0.03

33

25

0.04

COVID-19 related expenses

11

8

0.01

45

34

0.06

Cloud computing transition adjustment

?

?

?

36

27

0.05

Loss on early extinguishment of debt

142

104

0.18

142

104

0.18

Adjusted net earnings

1,411

2.47

3,557

6.23

Adjusted EBITDA (Consolidated) and Adjusted Net Earnings Per Share Guidance

Adjusted EBITDA and adjusted net earnings per share guidance are forward-looking non-IFRS financial measures. We do not provide a reconciliation of such forward-looking measures to the most directly comparable financial measures calculated and presented in accordance with IFRS because a meaningful or accurate calculation of reconciling items and the information is not available without unreasonable effort due to unknown variables, including the timing and amount of certain reconciling items, and the uncertainty related to future results. These unknown variables may include unpredictable transactions of significant value that may be inherently difficult to determine without unreasonable efforts. The probable significance of such unavailable information, which could be material to future results, cannot be addressed. Guidance for adjusted EBITDA and adjusted net earnings per share excludes certain items such as, but not limited to, the impacts of share-based compensation, certain foreign exchange gain/loss (net of related derivatives), integration and restructuring related costs, impairment or reversal of impairment of assets, COVID-19 related expenses (including those recorded under finance costs), gain or loss on disposal of certain businesses and investments, IFRS adoption transition adjustments, and gain/loss on early extinguishment of debt or on settlement of derivatives due to discontinuance of hedge accounting.

Growth Capital

Most directly comparable IFRS financial measure: Cash used in investing activities.

Definition: Cash used in investing activities related to growth initiatives consisting of investing capital expenditures, which are a component of capital expenditures, plus business acquisitions, net of cash acquired per the unaudited condensed consolidated statements of cash flows.

Why we use the measure and why it is useful to investors: To demonstrate how we allocate our capital to our various priorities including growth and expansion projects and acquisitions.

(millions of US dollars)

2022

2021

Cash used in investing activities

(2,901)

(1,807)

Sustaining capital expenditures

1,449

1,247

Mine development and pre-stripping capital expenditures

234

156

Borrowing costs on property, plant and equipment

(37)

(29)

Other 1

12

(64)

Net changes in non-cash working capital 1

44

(101)

Growth capital

(1,199)

(598)

1. Included in investing activities as per the unaudited condensed consolidated statement of cash flows.

Gross Margin Excluding Depreciation and Amortization Per Tonne - Manufactured

Most directly comparable IFRS financial measure: Gross margin.

Definition: Gross margin per tonne less depreciation and amortization per tonne for manufactured products. Reconciliations are provided in the "Segment Results" section.

Why we use the measure and why it is useful to investors: Focuses on the performance of our day-to-day operations, which excludes the effects of items that primarily reflect the impact of long-term investment and financing decisions.

Potash Controllable Cash Cost of Product Manufactured ("COPM") Per Tonne

Most directly comparable IFRS financial measure: Cost of goods sold ("COGS") for the Potash segment.

Definition: Total Potash COGS excluding depreciation and amortization expense included in COPM, royalties, natural gas costs and carbon taxes, change in inventory, and other adjustments, divided by potash production tonnes.

Why we use the measure and why it is useful to investors: To assess operational performance. In 2022, we replaced Potash cash COPM with this new financial measure. Potash controllable cash COPM excludes the effects of production from other periods and the impacts of our long-term investment decisions. Potash controllable cash COPM also excludes royalties and natural gas costs and carbon taxes, which management does not consider controllable, as they are primarily driven by regulatory and market conditions.

Three Months Ended December 31

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2022

2021

2022

2021

Total COGS - Potash

310

305

1,400

1,285

Change in inventory

38

64

58

22

Other adjustments 1

(12)

1

(41)

(6)

COPM

336

370

1,417

1,301

Depreciation and amortization in COPM

(89)

(115)

(406)

(430)

Royalties in COPM

(40)

(47)

(190)

(107)

Natural gas costs and carbon taxes in COPM

(17)

(17)

(62)

(51)

Controllable cash COPM

190

191

759

713

Production tonnes (tonnes - thousands)

2,941

3,641

13,007

13,790

Potash controllable cash COPM per tonne

65

52

58

52

1. Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.

Ammonia Controllable Cash COPM Per Tonne

Most directly comparable IFRS financial measure: Total manufactured COGS for the Nitrogen segment.

Definition: Total Nitrogen COGS excluding depreciation and amortization expense included in COGS, cash COGS for products other than ammonia, other adjustments, and natural gas and steam costs, divided by net ammonia production tonnes.

Why we use the measure and why it is useful to investors: To assess operational performance. Ammonia controllable cash COPM excludes the effects of production from other periods, the costs of natural gas and steam, and long-term investment decisions, supporting a focus on the performance of our day-to-day operations.

Three Months Ended December 31

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2022

2021

2022

2021

Total Manufactured COGS - Nitrogen

846

725

3,197

2,353

Total Other COGS - Nitrogen

247

170

1,055

610

Total COGS - Nitrogen

1,093

895

4,252

2,963

Depreciation and amortization in COGS

(131)

(126)

(465)

(473)

Cash COGS for products other than ammonia

(648)

(519)

(2,560)

(1,740)

Ammonia

Total cash COGS before other adjustments

314

250

1,227

750

Other adjustments 1

(65)

(30)

(210)

(96)

Total cash COPM

249

220

1,017

654

Natural gas and steam costs in COPM

(212)

(186)

(855)

(515)

Controllable cash COPM

37

34

162

139

Production tonnes (net tonnes 2 - thousands)

655

758

2,754

2,769

Ammonia controllable cash COPM per tonne

57

45

59

50

1. Other adjustments include unallocated production overhead that is recognized as part of cost of goods sold but is not included in the measurement of inventory and changes in inventory balances.

2. Ammonia tonnes available for sale, as not upgraded to other Nitrogen products.

Retail Adjusted Average Working Capital to Sales and Retail Adjusted Average Working Capital to Sales Excluding Nutrien Financial

Definition: Retail adjusted average working capital divided by Retail adjusted sales for the last four rolling quarters. We exclude in our calculations the sales and working capital of certain acquisitions during the first year following the acquisition. We also look at this metric excluding Nutrien Financial revenue and working capital.

Why we use the measure and why it is useful to investors: To evaluate operational efficiency. A lower or higher percentage represents increased or decreased efficiency, respectively. The metric excluding Nutrien Financial shows the impact that the working capital of Nutrien Financial has on the ratio.

Rolling four quarters ended December 31, 2022

(millions of US dollars, except as otherwise noted)

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Average/Total

Current assets

12,392

12,487

11,262

11,668

Current liabilities

(9,223)

(9,177)

(5,889)

(8,708)

Working capital

3,169

3,310

5,373

2,960

3,703

Working capital from certain recent acquisitions

?

?

?

?

Adjusted working capital

3,169

3,310

5,373

2,960

3,703

Nutrien Financial working capital

(2,274)

(4,404)

(3,898)

(2,669)

Adjusted working capital excluding Nutrien Financial

895

(1,094)

1,475

291

392

Sales

3,861

9,422

3,980

4,087

Sales from certain recent acquisitions

?

?

?

?

Adjusted sales

3,861

9,422

3,980

4,087

21,350

Nutrien Financial revenue

(49)

(91)

(65)

(62)

Adjusted sales excluding Nutrien Financial

3,812

9,331

3,915

4,025

21,083

Adjusted average working capital to sales (%)

17

Adjusted average working capital to sales excluding Nutrien Financial (%)

2

Rolling four quarters ended December 31, 2021

(millions of US dollars, except as otherwise noted)

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Average/Total

Current assets

9,160

9,300

8,945

9,924

Current liabilities

(7,530)

(7,952)

(5,062)

(7,828)

Working capital

1,630

1,348

3,883

2,096

2,239

Working capital from certain recent acquisitions

?

?

?

?

Adjusted working capital

1,630

1,348

3,883

2,096

2,239

Nutrien Financial working capital

(1,221)

(3,072)

(2,820)

(2,150)

Adjusted working capital excluding Nutrien Financial

409

(1,724)

1,063

(54)

(77)

Sales

2,972

7,537

3,347

3,878

Sales from certain recent acquisitions

?

?

?

?

Adjusted sales

2,972

7,537

3,347

3,878

17,734

Nutrien Financial revenue

(25)

(59)

(54)

(51)

Adjusted sales excluding Nutrien Financial

2,947

7,478

3,293

3,827

17,545

Adjusted average working capital to sales (%)

13

Adjusted average working capital to sales excluding Nutrien Financial (%)

?

Nutrien Financial Adjusted Net Interest Margin

Definition: Nutrien Financial revenue less deemed interest expense divided by average Nutrien Financial receivables outstanding for the last four rolling quarters.

Why we use the measure and why it is useful to investors: Used by credit rating agencies and other users to evaluate the financial performance of Nutrien Financial.

Rolling four quarters ended December 31, 2022

(millions of US dollars, except as otherwise noted)

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Total/Average

Nutrien Financial revenue

49

91

65

62

Deemed interest expense 1

(6)

(12)

(12)

(11)

Net interest

43

79

53

51

226

Average Nutrien Financial receivables

2,274

4,404

3,898

2,669

3,311

Nutrien Financial adjusted net interest margin (%)

6.8

Rolling four quarters ended December 31, 2021

(millions of US dollars, except as otherwise noted)

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Total/Average

Nutrien Financial revenue

25

59

54

51

Deemed interest expense 1

(6)

(8)

(10)

(12)

Net interest

19

51

44

39

153

Average Nutrien Financial receivables

1,221

3,072

2,820

2,150

2,316

Nutrien Financial adjusted net interest margin (%)

6.6

1. Average borrowing rate applied to the notional debt required to fund the portfolio of receivables from customers monitored and serviced by Nutrien Financial.

Retail Cash Operating Coverage Ratio

Definition: Retail selling, general and administrative, and other expenses (income), excluding depreciation and amortization expense, divided by Retail gross margin excluding depreciation and amortization expense in cost of goods sold, for the last four rolling quarters.

Why we use the measure and why it is useful to investors: To understand the costs and underlying economics of our Retail operations and to assess our Retail operating performance and ability to generate free cash flow.

Rolling four quarters ended December 31, 2022

(millions of US dollars, except as otherwise noted)

Q1 2022

Q2 2022

Q3 2022

Q4 2022

Total

Selling expenses

722

1,013

821

836

3,392

General and administrative expenses

45

54

50

51

200

Other (income) expenses

(12)

21

19

1

29

Operating expenses

755

1,088

890

888

3,621

Depreciation and amortization in operating expenses

(167)

(171)

(204)

(198)

(740)

Operating expenses excluding depreciation and amortization

588

917

686

690

2,881

Gross margin

845

2,340

917

1,077

5,179

Depreciation and amortization in cost of goods sold

2

4

2

4

12

Gross margin excluding depreciation and amortization

847

2,344

919

1,081

5,191

Cash operating coverage ratio (%)

55

Rolling four quarters ended December 31, 2021

(millions of US dollars, except as otherwise noted)

Q1 2021

Q2 2021

Q3 2021

Q4 2021

Total

Selling expenses

667

863

746

848

3,124

General and administrative expenses

39

41

45

43

168

Other expenses

15

34

17

20

86

Operating expenses

721

938

808

911

3,378

Depreciation and amortization in operating expenses

(175)

(166)

(180)

(173)

(694)

Operating expenses excluding depreciation and amortization

546

772

628

738

2,684

Gross margin

652

1,858

917

1,173

4,600

Depreciation and amortization in cost of goods sold

2

3

2

5

12

Gross margin excluding depreciation and amortization

654

1,861

919

1,178

4,612

Cash operating coverage ratio (%)

58

Retail Normalized Comparable Store Sales

Most directly comparable IFRS financial measure: Retail sales from comparable base as a component of total Retail sales.

Definition: Prior year comparable store sales adjusted for average selling price (which generally moves with published potash, nitrogen and phosphate benchmark prices), acquisitions of new stores and foreign exchange rates used in the current year.

Why we use the measure and why it is useful to investors: To evaluate sales growth by adjusting for fluctuations in commodity prices and foreign exchange rates. Includes locations we have owned for more than 12 months.

Twelve Months Ended December 31

(millions of US dollars, except as otherwise noted)

2022

2021

Sales from comparable base

Prior period

17,734

14,785

Adjustments 1

(64)

(476)

Revised prior period

17,670

14,309

Current period

21,092

17,511

Comparable store sales (%)

19

22

Prior period normalized for average selling prices and foreign exchange rates

21,867

16,350

Normalized comparable store sales (%)

(4)

7

1. Adjustments relate to prior period sales related to closed locations or businesses that no longer exist in the current period in order to provide a comparable base in our calculation.

Appendix C - Other Financial Measures

Supplementary Financial Measures

Supplementary financial measures are financial measures disclosed by a company that (a) are, or are intended to be, disclosed on a periodic basis to depict the historical or expected future financial performance, financial position or cash flow of a company, (b) are not disclosed in the financial statements of the company, (c) are not non-IFRS financial measures, and (d) are not non-IFRS ratios.

The following section provides an explanation of the composition of those supplementary financial measures if not previously provided.

Retail adjusted EBITDA margin: Retail adjusted EBITDA divided by Retail sales for the last four rolling quarters.

Sustaining capital expenditures: Represents capital expenditures that are required to sustain operations at existing levels and include major repairs and maintenance, and plant turnarounds.

Investing capital expenditures: Represents capital expenditures related to significant expansions of current operations or to create cost savings (synergies). Investing capital expenditures excludes capital outlays for business acquisitions and equity-accounted investees.

Retail adjusted EBITDA per US selling location: Calculated as total Retail US adjusted EBITDA for the last four rolling quarters, representing the organic EBITDA component, which excludes acquisitions in those quarters, divided by the number of US locations that have generated sales in the last four rolling quarters, adjusted for acquired locations in those quarters.

Condensed Consolidated Financial Statements

Unaudited - In millions of US dollars except as otherwise noted

Condensed Consolidated Statements of Earnings

Three Months Ended

Twelve Months Ended

December 31

December 31

Note

2022

2021

2022

2021

SALES

2

7,533

7,267

37,884

27,712

Freight, transportation and distribution

244

198

872

851

Cost of goods sold

4,383

3,863

21,588

17,452

GROSS MARGIN

2,906

3,206

15,424

9,409

Selling expenses

844

855

3,414

3,142

General and administrative expenses

162

148

565

477

Provincial mining taxes

190

173

1,149

466

Share-based compensation (recovery) expense

(59)

73

63

198

Impairment (reversal) of assets

?

21

(780)

33

Other expenses

4

110

109

204

312

EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES

1,659

1,827

10,809

4,781

Finance costs

188

246

563

613

EARNINGS BEFORE INCOME TAXES

1,471

1,581

10,246

4,168

Income tax expense

353

374

2,559

989

NET EARNINGS

1,118

1,207

7,687

3,179

Attributable to

Equity holders of Nutrien

1,112

1,201

7,660

3,153

Non-controlling interest

6

6

27

26

NET EARNINGS

1,118

1,207

7,687

3,179

NET EARNINGS PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN ("EPS")

Basic

2.15

2.11

14.22

5.53

Diluted

2.15

2.11

14.18

5.52

Weighted average shares outstanding for basic EPS

516,810,000

568,027,000

538,475,000

569,664,000

Weighted average shares outstanding for diluted EPS

517,964,000

569,653,000

540,010,000

571,289,000

Condensed Consolidated Statements of Comprehensive Income

Three Months Ended

Twelve Months Ended

December 31

December 31

(Net of related income taxes)

2022

2021

2022

2021

NET EARNINGS

1,118

1,207

7,687

3,179

Other comprehensive income (loss)

Items that will not be reclassified to net earnings:

Net actuarial gain on defined benefit plans

22

95

83

95

Net fair value gain (loss) on investments

17

(35)

(44)

81

Items that have been or may be subsequently reclassified to net earnings:

Gain (loss) on currency translation of foreign operations

73

14

(199)

(115)

Other

7

(2)

(17)

17

OTHER COMPREHENSIVE INCOME (LOSS)

119

72

(177)

78

COMPREHENSIVE INCOME

1,237

1,279

7,510

3,257

Attributable to

Equity holders of Nutrien

1,230

1,273

7,484

3,232

Non-controlling interest

7

6

26

25

COMPREHENSIVE INCOME

1,237

1,279

7,510

3,257

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Cash Flows

Three Months Ended

Twelve Months Ended

December 31

December 31

Note

2022

2021

2022

2021

Note 1

Note 1

OPERATING ACTIVITIES

Net earnings

1,118

1,207

7,687

3,179

Adjustments for:

Depreciation and amortization

520

497

2,012

1,951

Share-based compensation (recovery) expense

(59)

73

63

198

Impairment (reversal) of assets

?

21

(780)

33

Gain on disposal of investment

?

?

(19)

?

Loss on early extinguishment of debt

?

142

?

142

Cloud computing transition adjustment

?

?

?

36

Provision for (recovery of) deferred income tax

30

66

182

(31)

Long-term income tax receivables

72

?

273

?

Net undistributed earnings of equity-accounted investees

(42)

(43)

(181)

(44)

Other long-term assets, liabilities and miscellaneous

(29)

40

21

83

Cash from operations before working capital changes

1,610

2,003

9,258

5,547

Changes in non-cash operating working capital:

Receivables

2,683

1,432

(919)

(1,669)

Inventories

(937)

(1,652)

(1,281)

(1,459)

Prepaid expenses and other current assets

(904)

(1,092)

114

(227)

Payables and accrued charges

2,284

2,946

938

1,694

CASH PROVIDED BY OPERATING ACTIVITIES

4,736

3,637

8,110

3,886

INVESTING ACTIVITIES

Capital expenditures 1

(974)

(646)

(2,438)

(1,884)

Business acquisitions, net of cash acquired

(329)

(18)

(407)

(88)

Other

48

121

(12)

64

Net changes in non-cash working capital

33

78

(44)

101

CASH USED IN INVESTING ACTIVITIES

(1,222)

(465)

(2,901)

(1,807)

FINANCING ACTIVITIES

Transaction costs related to debt

(6)

?

(9)

(7)

(Repayment of) proceeds from short-term debt, net

(2,338)

307

529

1,344

Proceeds from long-term debt

5

1,004

(3)

1,045

86

Repayment of long-term debt

5

(511)

(2,207)

(561)

(2,212)

Repayment of principal portion of lease liabilities

(85)

(78)

(341)

(320)

Dividends paid to Nutrien's shareholders

(251)

(266)

(1,031)

(1,045)

Repurchase of common shares

6

(1,214)

(885)

(4,520)

(1,035)

Issuance of common shares

?

12

168

200

Other

(11)

?

(11)

(14)

CASH USED IN FINANCING ACTIVITIES

(3,412)

(3,120)

(4,731)

(3,003)

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(24)

4

(76)

(31)

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

78

56

402

(955)

CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD

823

443

499

1,454

CASH AND CASH EQUIVALENTS - END OF PERIOD

901

499

901

499

Cash and cash equivalents is composed of:

Cash

775

428

775

428

Short-term investments

126

71

126

71

901

499

901

499

SUPPLEMENTAL CASH FLOWS INFORMATION

Interest paid

202

172

482

491

Income taxes paid

379

79

1,882

435

Total cash outflow for leases

120

94

459

393

1. Includes additions to property, plant and equipment, and intangible assets for the three months ended December 31, 2022 of $910 and $64 (2021 - $606 and $40), respectively, and for the twelve months ended December 31, 2022 of $2,227 and $211 (2021 - $1,777 and $107), respectively.

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Statements of Changes in Shareholders' Equity

Accumulated Other Comprehensive

(Loss) Income ("AOCI")

Loss on

Currency

Equity

Number of

Translation

Holders

Non-

Common

Share

Contributed

of Foreign

Total

Retained

of

Controlling

Total

Shares

Capital

Surplus

Operations

Other

AOCI

Earnings

Nutrien

Interest

Equity

BALANCE - DECEMBER 31, 2020

569,260,406

15,673

205

(62)

(57)

(119)

6,606

22,365

38

22,403

Net earnings

?

?

?

?

?

?

3,153

3,153

26

3,179

Other comprehensive (loss) income

?

?

?

(114)

193

79

?

79

(1)

78

Shares repurchased (Note 6)

(15,982,154)

(442)

(47)

?

?

?

(616)

(1,105)

?

(1,105)

Dividends declared

?

?

?

?

?

?

(1,046)

(1,046)

?

(1,046)

Non-controlling interest transactions

?

?

?

?

?

?

?

?

(16)

(16)

Effect of share-based compensation including issuance of common shares

4,424,437

226

(9)

?

?

?

?

217

?

217

Transfer of net gain on cash flow hedges

?

?

?

?

(11)

(11)

?

(11)

?

(11)

Transfer of net actuarial gain on defined benefit plans

?

?

?

?

(95)

(95)

95

?

?

?

Share cancellation

(210,173)

?

?

?

?

?

?

?

?

?

BALANCE - DECEMBER 31, 2021

557,492,516

15,457

149

(176)

30

(146)

8,192

23,652

47

23,699

Net earnings

?

?

?

?

?

?

7,660

7,660

27

7,687

Other comprehensive (loss) income

?

?

?

(198)

22

(176)

?

(176)

(1)

(177)

Shares repurchased (Note 6)

(53,312,559)

(1,487)

(22)

?

?

?

(2,987)

(4,496)

?

(4,496)

Dividends declared

?

?

?

?

?

?

(1,019)

(1,019)

?

(1,019)

Non-controlling interest transactions

?

?

?

?

?

?

(1)

(1)

(28)

(29)

Effect of share-based compensation including issuance of common shares

3,066,148

202

(18)

?

?

?

?

184

?

184

Transfer of net loss on cash flow hedges

?

?

?

?

14

14

?

14

?

14

Transfer of net actuarial gain on defined benefit plans

?

?

?

?

(83)

(83)

83

?

?

?

BALANCE - DECEMBER 31, 2022

507,246,105

14,172

109

(374)

(17)

(391)

11,928

25,818

45

25,863

(See Notes to the Condensed Consolidated Financial Statements)

Condensed Consolidated Balance Sheets

December 31

December 31

As at

Note

2022

2021

ASSETS

Current assets

Cash and cash equivalents

901

499

Receivables

6,194

5,366

Inventories

7,632

6,328

Prepaid expenses and other current assets

1,615

1,653

16,342

13,846

Non-current assets

Property, plant and equipment

21,767

20,016

Goodwill

12,368

12,220

Intangible assets

2,297

2,340

Investments

843

703

Other assets

969

829

TOTAL ASSETS

54,586

49,954

LIABILITIES

Current liabilities

Short-term debt

2,142

1,560

Current portion of long-term debt

542

545

Current portion of lease liabilities

305

286

Payables and accrued charges

11,291

10,052

14,280

12,443

Non-current liabilities

Long-term debt

5

8,040

7,521

Lease liabilities

899

934

Deferred income tax liabilities

3,547

3,165

Pension and other post-retirement benefit liabilities

319

419

Asset retirement obligations and accrued environmental costs

1,403

1,566

Other non-current liabilities

235

207

TOTAL LIABILITIES

28,723

26,255

SHAREHOLDERS' EQUITY

Share capital

6

14,172

15,457

Contributed surplus

109

149

Accumulated other comprehensive loss

(391)

(146)

Retained earnings

11,928

8,192

Equity holders of Nutrien

25,818

23,652

Non-controlling interest

45

47

TOTAL SHAREHOLDERS' EQUITY

25,863

23,699

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

54,586

49,954

(See Notes to the Condensed Consolidated Financial Statements)

Notes to the Condensed Consolidated Financial Statements

As at and for the Three and Twelve Months Ended December 31, 2022

NOTE 1 BASIS OF PRESENTATION

Nutrien Ltd. (collectively with its subsidiaries, "Nutrien", "we", "us", "our" or "the Company") is the world's largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.

Our accounting policies are in accordance with International Financial Reporting Standards ("IFRS") as issued by the International Accounting Standards Board. The accounting policies and methods of computation used in preparing these unaudited condensed consolidated financial statements are materially consistent with those used in the preparation of our 2021 annual consolidated financial statements. These unaudited condensed consolidated financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2021 annual consolidated financial statements. Our 2022 annual consolidated financial statements, which are expected to be issued in February 2023, will include additional information under IFRS.

Certain immaterial 2021 figures have been reclassified in the condensed consolidated statements of cash flows.

In management's opinion, the unaudited condensed consolidated financial statements include all adjustments necessary to fairly present such information in all material respects.

NOTE 2 SEGMENT INFORMATION

The Company has four reportable operating segments: Nutrien Ag Solutions ("Retail"), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produces.

Three Months Ended December 31, 2022

Corporate

Retail

Potash

Nitrogen

Phosphate

and Others

Eliminations

Consolidated

Sales

- third party

4,089

1,255

1,677

512

?

?

7,533

- intersegment

(2)

203

272

54

?

(527)

?

Sales

- total

4,087

1,458

1,949

566

?

(527)

7,533

Freight, transportation and distribution

?

81

157

65

?

(59)

244

Net sales

4,087

1,377

1,792

501

?

(468)

7,289

Cost of goods sold

3,010

310

1,093

485

?

(515)

4,383

Gross margin

1,077

1,067

699

16

?

47

2,906

Selling expenses

836

1

6

2

5

(6)

844

General and administrative expenses

51

3

5

4

99

?

162

Provincial mining taxes

?

190

?

?

?

?

190

Share-based compensation recovery

?

?

?

?

(59)

?

(59)

Other expenses (income)

1

4

2

40

67

(4)

110

Earnings (loss) before

finance costs and income taxes

189

869

686

(30)

(112)

57

1,659

Depreciation and amortization

202

89

155

58

16

?

520

EBITDA 1

391

958

841

28

(96)

57

2,179

Integration and

restructuring related costs

?

?

?

?

11

?

11

Share-based compensation recovery

?

?

?

?

(59)

?

(59)

Foreign exchange gain,

net of related derivatives

?

?

?

?

(36)

?

(36)

Adjusted EBITDA

391

958

841

28

(180)

57

2,095

Assets - at December 31, 2022

24,451

13,921

11,807

2,661

2,622

(876)

54,586

1. EBITDA is calculated as net earnings (loss) before finance costs, income taxes, and depreciation and amortization.

Three Months Ended December 31, 2021

Corporate

Retail

Potash

Nitrogen

Phosphate

and Others

Eliminations

Consolidated

Sales

- third party

3,847

1,358

1,476

586

?

?

7,267

- intersegment

31

128

292

65

?

(516)

?

Sales

- total

3,878

1,486

1,768

651

?

(516)

7,267

Freight, transportation and distribution

?

66

119

58

?

(45)

198

Net sales

3,878

1,420

1,649

593

?

(471)

7,069

Cost of goods sold

2,705

305

895

430

?

(472)

3,863

Gross margin

1,173

1,115

754

163

?

1

3,206

Selling expenses

848

1

2

1

3

?

855

General and administrative expenses

43

2

7

3

93

?

148

Provincial mining taxes

?

173

?

?

?

?

173

Share-based compensation expense

?

?

?

?

73

?

73

Impairment of assets

?

?

17

4

?

?

21

Other expenses (income)

20

3

(28)

2

112

?

109

Earnings (loss) before

finance costs and income taxes

262

936

756

153

(281)

1

1,827

Depreciation and amortization

178

117

148

39

15

?

497

EBITDA

440

1,053

904

192

(266)

1

2,324

Integration and restructuring

related costs (recovery)

2

?

?

?

(6)

?

(4)

Share-based compensation expense

?

?

?

?

73

?

73

Impairment of assets

?

?

17

4

?

?

21

COVID-19 coronavirus pandemic

("COVID-19") related expenses

?

?

?

?

11

?

11

Foreign exchange loss,

net of related derivatives

?

?

?

?

38

?

38

Adjusted EBITDA

442

1,053

921

196

(150)

1

2,463

Assets - at December 31, 2021

22,387

13,148

11,093

1,699

2,266

(639)

49,954

Twelve Months Ended December 31, 2022

Corporate

Retail

Potash

Nitrogen

Phosphate

and Others

Eliminations

Consolidated

Sales

- third party

21,266

7,600

6,755

2,263

?

?

37,884

- intersegment

84

599

1,293

357

?

(2,333)

?

Sales

- total

21,350

8,199

8,048

2,620

?

(2,333)

37,884

Freight, transportation and distribution

?

300

515

243

?

(186)

872

Net sales

21,350

7,899

7,533

2,377

?

(2,147)

37,012

Cost of goods sold

16,171

1,400

4,252

1,884

?

(2,119)

21,588

Gross margin

5,179

6,499

3,281

493

?

(28)

15,424

Selling expenses

3,392

10

28

7

(1)

(22)

3,414

General and administrative expenses

200

9

17

13

326

?

565

Provincial mining taxes

?

1,149

?

?

?

?

1,149

Share-based compensation expense

?

?

?

?

63

?

63

Reversal of impairment of assets

?

?

?

(780)

?

?

(780)

Other expenses (income)

29

5

(137)

67

227

13

204

Earnings (loss) before

finance costs and income taxes

1,558

5,326

3,373

1,186

(615)

(19)

10,809

Depreciation and amortization

752

443

558

188

71

?

2,012

EBITDA

2,310

5,769

3,931

1,374

(544)

(19)

12,821

Integration and restructuring

related costs

2

?

?

?

44

?

46

Share-based compensation expense

?

?

?

?

63

?

63

Reversal of impairment of assets

?

?

?

(780)

?

?

(780)

COVID-19 related expenses

?

?

?

?

8

?

8

Foreign exchange loss,

net of related derivatives

?

?

?

?

31

?

31

Gain on disposal of investment

(19)

?

?

?

?

?

(19)

Adjusted EBITDA

2,293

5,769

3,931

594

(398)

(19)

12,170

Assets - at December 31, 2022

24,451

13,921

11,807

2,661

2,622

(876)

54,586

Twelve Months Ended December 31, 2021

Corporate

Retail

Potash

Nitrogen

Phosphate

and Others

Eliminations

Consolidated

Sales

- third party

17,665

4,021

4,216

1,810

?

?

27,712

- intersegment

69

386

921

236

?

(1,612)

?

Sales

- total

17,734

4,407

5,137

2,046

?

(1,612)

27,712

Freight, transportation and distribution

?

371

448

217

?

(185)

851

Net sales

17,734

4,036

4,689

1,829

?

(1,427)

26,861

Cost of goods sold

13,134

1,285

2,963

1,408

?

(1,338)

17,452

Gross margin

4,600

2,751

1,726

421

?

(89)

9,409

Selling expenses

3,124

9

24

6

(21)

?

3,142

General and administrative expenses

168

8

15

11

275

?

477

Provincial mining taxes

?

466

?

?

?

?

466

Share-based compensation expense

?

?

?

?

198

?

198

Impairment of assets

?

7

22

4

?

?

33

Other expenses (income)

86

22

(64)

15

253

?

312

Earnings (loss) before

finance costs and income taxes

1,222

2,239

1,729

385

(705)

(89)

4,781

Depreciation and amortization

706

488

557

151

49

?

1,951

EBITDA

1,928

2,727

2,286

536

(656)

(89)

6,732

Integration and

restructuring related costs

10

?

?

?

33

?

43

Share-based compensation expense

?

?

?

?

198

?

198

Impairment of assets

?

7

22

4

?

?

33

COVID-19 related expenses

?

?

?

?

45

?

45

Foreign exchange loss,

net of related derivatives

?

?

?

?

39

?

39

Cloud computing transition adjustment

1

2

?

?

33

?

36

Adjusted EBITDA

1,939

2,736

2,308

540

(308)

(89)

7,126

Assets - at December 31, 2021

22,387

13,148

11,093

1,699

2,266

(639)

49,954

NOTE 3 GOODWILL

Goodwill Impairment Testing

Goodwill by cash-generating unit or group of cash-generating units

2022

2021

Retail - North America

6,898

6,898

Retail - International

927

779

Potash

154

154

Nitrogen

4,389

4,389

12,368

12,220

We performed our annual impairment test on goodwill and did not identify any impairment.

In 2022, North American central banks increased their benchmark borrowing rates, which are a component of our discount rate for impairment testing. As a result of these increases, we revised our discount rates throughout 2022, which triggered impairment testing for our Retail - North America group of Cash Generating Units ("CGUs") as at June 30, 2022 and September 30, 2022. No impairment was recognized during these interim testing periods. There was no trigger for an impairment test to be performed in the three months ended December 31, 2022.

Goodwill is more susceptible to impairment risk if there is an increase in the discount rate, or a deterioration in business operating results or economic conditions and actual results do not meet our forecasts. As at September 30, 2022, the Retail - North America group of CGUs carrying amount approximated its recoverable amount. A 25 basis point increase in the discount rate would have resulted in an impairment of the carrying amount of goodwill of approximately $500. A decrease in forecasted EBITDA and cash flows or a reduction in the terminal growth rate could result in impairment in the future.

As at

As at

Retail - North America - Key Assumptions

September 30, 2022

June 30, 2022

Terminal growth rate (%)

2.5

2.5

Forecasted EBITDA over forecast period (billions)

7.6

7.5

Discount rate (%)

8.5

8.0

In testing for impairment of goodwill, we calculate the recoverable amount for a CGU or groups of CGUs containing goodwill. We used the fair value less cost of disposal ("FVLCD") methodology based on after-tax discounted cash flows (five-year projections plus a terminal value) and incorporated assumptions an independent market participant would apply, including considerations related to climate-change initiatives. We adjusted discount rates for each CGU or group of CGUs for the risk associated with achieving our forecasts and for the country risk premium in which we expect to generate cash flows. FVLCD is a Level 3 measurement. We use our market capitalization and comparative market multiples to ensure discounted cash flow results are reasonable.

The key assumptions with the greatest influence on the calculation of the recoverable amounts are the discount rates, terminal growth rates and cash flow forecasts. The key forecast assumptions were based on historical data and our estimates of future results from internal sources considering industry and market trends.

The remaining CGUs were tested as part of our annual impairment test and the following table indicates the key assumptions used:

Terminal Growth Rate (%)

Discount Rate (%)

2022

2021

2022

2021

Retail - International 1

2.0

-

6.0

2.0

-

6.2

8.9

-

16.0

8.0

-

15.5

Potash

2.5

2.5

8.3

7.7

Nitrogen

2.0

2.0

9.3

7.8

1. The discount rates reflect the country risk premium and size for our international groups of CGUs.

NOTE 4 OTHER EXPENSES (INCOME)

Three Months Ended

Twelve Months Ended

December 31

December 31

2022

2021

2022

2021

Integration and restructuring related costs (recovery)

11

(4)

46

43

Foreign exchange (gain) loss, net of related derivatives

(36)

38

31

42

Earnings of equity-accounted investees

(47)

(46)

(247)

(89)

Bad debt (recovery) expense

(6)

4

12

26

COVID-19 related expenses

?

11

8

45

Gain on disposal of investment

?

?

(19)

?

Project feasibility costs

22

20

79

50

Customer prepayment costs

7

8

42

45

Legal expenses

8

4

21

6

Consulting expenses

15

2

29

4

Employee special recognition award

61

?

61

?

Cloud computing transition adjustment

?

?

?

36

Other expenses

75

72

141

104

110

109

204

312

NOTE 5 LONG-TERM DEBT

In March 2022, we filed a base shelf prospectus in Canada and the US qualifying the issuance of up to $5,000 of common shares, debt and other securities during a period of 25 months from March 11, 2022. Issuance of securities requires us to file a prospectus supplement and is subject to availability of funding in capital markets. On November 7, 2022, we issued $1,000 of notes, as described below, pursuant to the base shelf prospectus and a prospectus supplement.

Repayments and issuances in the fourth quarter

Rate of interest (%)

Maturity

Amount

Notes repaid 2022

3.150

October 1, 2022

500

Notes issued

Notes issued 2022

5.900

November 7, 2024

500

Notes issued 2022

5.950

November 7, 2025

500

1,000

The notes issued in the fourth quarter of 2022 are unsecured, rank equally with our existing unsecured notes and debentures, and have no sinking fund requirements prior to maturity. Each series of notes is redeemable and provides for redemption prior to maturity, at our option, at specified prices.

NOTE 6 SHARE CAPITAL

Share Repurchase Programs

Three Months Ended

Twelve Months Ended

December 31

December 31

2022

2021

2022

2021

Number of common shares repurchased for cancellation

14,924,590

13,522,057

53,312,559

15,982,154

Average price per share (US dollars)

77.91

70.64

84.34

69.17

Total cost

1,162

955

4,496

1,105

The original expiry date for the 2022 normal course issuer bid was February 28, 2023, but we acquired the maximum number of common shares allowable on February 7, 2023. As of February 7, 2023, an additional 8,002,792 common shares were repurchased for cancellation at a cost of $625 and an average price per share of $78.07.

On February 15, 2023, our Board of Directors approved a share repurchase program for up to five percent of our outstanding common shares. The 2023 normal course issuer bid, which is subject to the acceptance by the Toronto Stock Exchange, will expire after a one-year period, if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases.

Dividends Declared

On February 15, 2023, our Board of Directors declared a quarterly dividend of $0.53 per share payable on April 13, 2023, to shareholders of record on March 31, 2023. The total estimated dividend to be paid is $265.

NOTE 7 BUSINESS COMBINATIONS

Casa do Adubo S.A. ("Casa do Adubo")

Other Acquisitions

Acquisition date

October 1, 2022

Various

Purchase price, net of cash and cash equivalents acquired, and amounts held in escrow

$231 (preliminary)

On the acquisition date, we acquired 100% of the issued and outstanding Casa do Adubo stock.

$176 (preliminary) (2021 - $88)

Goodwill and expected benefits of acquisitions

$145 (preliminary)

$55 (preliminary) (2021 - $77)

The expected benefits of the acquisitions resulting in goodwill include:

  • synergies from expected reduction in operating costs
  • wider distribution channel for selling products of acquired businesses
  • a larger assembled workforce
  • potential increase in customer base
  • enhanced ability to innovate

Description

An agriculture retailer in Brazil with 39 retail locations and 10 distribution centers. This acquisition is aligned with our disciplined approach to capital allocation and sustainability commitments, as we continue to expand our presence in Brazil.

2022 - 43 Retail locations related to various agricultural services and 1 wholesale warehouse location (2021 - 36 Retail locations)

We have engaged independent valuation experts to assist in determining the fair value of certain assets acquired and liabilities assumed and related deferred income tax impacts. As at December 31, 2022, the total consideration and purchase price allocation for Casa do Adubo and certain other acquisitions are not final as we are continuing to obtain and verify information required to determine the fair value of certain assets acquired and liabilities assumed and the amount of deferred income taxes arising on their recognition, as part of the due diligence process. We expect to finalize the amounts recognized as we obtain the information necessary to complete the analysis within one year from the date of acquisition.

We allocated the following values to the acquired assets and assumed liabilities based upon fair values at their respective acquisition date. The information below represents preliminary fair values.

For certain other acquisitions, we finalized the purchase price with no material change to the fair values disclosed in prior periods. The valuation technique and judgments applied are consistent with those methods presented in Note 30 of the 2021 annual consolidated financial statements.

December 31, 2022

December 31, 2021

Casa do Adubo
(Preliminary)

Other
Acquisitions
(Preliminary)

Other
Acquisitions

Receivables

174

1

11

43

Inventories

107

92

24

Prepaid expenses and other current assets

3

13

?

Property, plant and equipment

24

116

10

Goodwill

145

2

55

77

Intangible assets

95

9

16

Investments

?

2

?

Other non-current assets

6

4

4

Total assets

554

302

174

Short-term debt

14

3

11

11

Payables and accrued charges

159

74

50

Long-term debt, including current portion

91

14

7

Lease liabilities, including current portion

10

3

1

Other non-current liabilities

1

14

17

Total liabilities

275

116

86

Total consideration

279

186

88

Amounts held in escrow

(48)

(10)

?

Total consideration, net of cash and cash equivalents acquired, and amounts held in escrow

231

176

88

1. Includes receivables from customers with gross contractual amounts of $169, of which $3 is considered to be uncollectible.

2. Goodwill was calculated as the excess of the fair value of consideration transferred over the recognized amount of net identifiable assets acquired. The portion of goodwill deductible for income tax purposes will be determined when the purchase allocation is finalized.

3. Outstanding amount on the Casa do Adubo credit facilities assumed as part of the acquisition.

Financial information related to the Casa do Adubo acquisition is as follows:

2022 Proforma (estimated as if acquisitions occurred at the beginning of the year)

Sales

440

Earnings before finance costs and income taxes1

42

1. Net earnings is not available.

Three and Twelve Months Ended

From date of acquisition

December 31, 2022

Sales

130

Earnings before finance costs and income taxes

7



Contact

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


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