Citing higher realized prices and a strong performance from its Nutrien Ag Solutions retail segment, Nutrien Ltd. reported record net earnings of $1.4 billion ($2.49 diluted net earnings per share) and adjusted EBITDA of $2.6 billion in the first quarter of 2022, up from $133 million ($0.22 diluted net earnings per share) and $806 million, respectively, in last year’s first quarter.
“Global agriculture and crop input markets are being impacted by a number of unprecedented supply disruptions that have contributed to higher commodity prices and escalated concerns for global food security,” said Ken Seitz, Nutrien’s Interim President and CEO. “The situation emphasizes the need for long-term solutions that support a sustainable increase in global crop production.”
Nutrien Ag Solutions delivered record first-quarter adjusted EBITDA of $240 million, with retail sales and gross margin both increasing by 30 percent over last year. Sales volumes decreased due to a pull forward of sales into the fourth quarter of 2021 and delayed spring field activity in North America, partially offset by strong demand in South America and Australia.
Nitrogen adjusted EBITDA increased to $995 million, Nutrien reported, with higher net realized selling prices more than offsetting higher natural gas costs and lower sales volumes due to unplanned production outages, along with the delayed North American planting season. Cost of goods sold increased primarily due to higher natural gas costs and higher raw material costs.
Nutrien said global nitrogen supplies have tightened due to reduced availability from Russia, as well as the Chinese government restrictions on urea exports. Russian natural gas supply uncertainty has also contributed to very high and volatile natural gas prices in Europe, the company said, which has led to reduced nitrogen operating rates in the region. Nutrien said it expects Henry Hub natural gas prices to average $5.50-$6.50 per MMBtu in 2022, well below import pricing levels in Europe and Asia.
Potash adjusted EBITDA increased to $1.4 billion in the quarter due to higher net realized selling prices, which more than offset a small reduction in total sales volumes and higher royalties and provincial mining taxes. The company said its North American sales volumes decreased due to a delayed start to the planting season, but offshore volumes increased due to strong global demand. Cost of goods sold increased in the quarter primarily due to higher royalties resulting from increased selling prices.
Phosphate adjusted EBITDA increased to $239 million, more than double last year’s first quarter, due to higher net realized selling prices, which more than offset higher raw material costs and lower sales volumes due to the wet spring planting season. Industrial and feed net selling prices increased to a lesser extent than fertilizer prices, Nutrien said, due to a lag in price realizations relative to spot prices. Cost of goods sold increased primarily due to significantly higher sulfur and ammonia input costs.
Nutrien said it is raising its full-year 2022 adjusted EBITDA guidanceand full-year 2022 adjusted net earnings per share guidance, primarily due to the expectation of higher realized selling prices, increased potash sales volumes, and higher Retail crop nutrients and crop protection products gross margins.
Nutrien has raised potash sales volume guidance to 14.5-15.1 million mt in 2022. The company’s nitrogen sales volume guidance was reduced to 10.7-11.1 million mt in 2022, reflecting the impact of unplanned plant outages that occurred during the first quarter of 2022.
The company is also weighing further increases to potash production as sanctions continue to limit shipments from Russia and Belarus, Seitz said on a May 3 earnings call. In March, Nutrien said it planned to increase potash production capability to roughly 15 million mt in 2020, up nearly 1 million mt from previous expectations, with the majority of the additional volume anticipated in the second half (GM March 18, p. 1).
“We expect to generate higher earnings and cash flows in 2022, which provides an opportunity to accelerate our strategic initiatives that we believe will advance sustainable agriculture practices and create long-term value for all our stakeholders,” Seitz said. “This includes the potential to expand our low-cost fertilizer production capability, enhance our leading global distribution network and proprietary products business, and return additional cash to our shareholders.”
Nutrien reported that it repurchased approximately 9 million shares year-to-date as of April 29, 2022, under its normal course issuer bids, for a total of approximately $740 million.
| Retail (millions) | 1Q-22 | 1Q-21 |
| Adjusted EBITDA | 240 | 109 |
| Gross Margin | 845 | 652 |
| Total Sales | 3,861 | 2,972 |
| Cost of Goods Sold | 3,016 | 2,320 |
| Potash (millions) | 1Q-22 | 1Q-21 |
| Adjusted EBITDA | 1,406 | 380 |
| Gross Margin | 1,545 | 320 |
| Net Sales | 1,850 | 611 |
| Cost of Goods Sold | 305 | 291 |
| Nitrogen (millions) | 1Q-22 | 1Q-21 |
| Adjusted EBITDA | 995 | 300 |
| Gross Margin | 860 | 150 |
| Net Sales | 1,462 | 573 |
| Cost of Goods Sold | 640 | 440 |
| Phosphate (millions) | 1Q-22 | 1Q-21 |
| Adjusted EBITDA | 239 | 97 |
| Gross Margin | 207 | 66 |
| Net Sales | 563 | 344 |
| Cost of Goods Sold | 360 | 282 |