All posts by mickeybarb@charter.net

Nutrien Reports Strong 4Q; Expects Momentum to Continue

Canada, Earnings, News, Nitrogen, Phosphate, Potash

Nutrien Ltd., Saskatoon, reported positive results for the fourth quarter, posting net earnings of $316 million ($0.55 per diluted share) versus a year-ago loss of $48 million ($0.08 per share). It also topped analyst expectations of $93 million for the quarter, according to the Bloomberg Consensus, the average estimate of major analysts. Adjusted EBITDA was up 16 percent, to $768 million from $664 million. Sales were $4.05 billion, up from the year-ago $3.5 billion.

Despite the positive fourth quarter, full-year net income was down 54 percent at $459 million from $992 million, though again, Nutrien beat analyst estimates of $227 million. Adjusted EBITDA was off 9 percent, to $3.67 billion from the year-ago $4 billion. Sales were up at $20.91 billion from $20.1 billion,

“Nutrien reported excellent results across our entire business,” said Chuck Magro, Nutrien President and CEO. “Our Retail Ag Solutions business delivered a record fourth quarter, and we also reported higher potash and nitrogen sales volumes and lower production costs. Agriculture fundamentals began to improve in late 2020 and we are starting to see the benefit to our business from this cyclical recovery.”

The company announced a dividend increase and new share buyback program. The Board of Directors approved an increase in the quarterly dividend to $0.46 per share, the third dividend increase in three years, with an annualized payout at $1.84 per share. The board also approved the purchase of up to five percent of Nutrien’s outstanding common shares over a one-year period through a normal course issuer bid (NCIB).

Nutrien said global potash demand surpassed expectations in late 2020, and it now estimates world potash shipments reached record levels at approximately 68 million mt. Citing demand momentum supported by favorable crop economics, high potash affordability, and limited inventory build in major markets, the company forecasts 2021 global potash shipments of 68-70 million mt.

The company issued 2021 adjusted net earnings guidance of $2.05-$2.75 per share and 2021 adjusted EBITDA guidance of $4.0-$4.5 billion. Other guidance includes:

  Low High
Retail Adjusted EBITDA (billions) 1.5 1.6
Potash Adjusted EBITDA (billions) 1.4 1.6
Nitrogen Adjusted EBITDA (billions) 1.1 1.3
Phosphate Adjusted EBITDA (millions) 250 350
Potash sales volumes (millions) 12.5 13
Nitrogen sales volumes (millions) 10.9 11.4
Retail (millions) 4Q-20 4Q-10 2020 2109
EBITDA 297 231 1,430 1,231
Gross Margin 885 756 3,736 3,301
Total Sales 2,618 2,191 14,785 13,282
CN Sales 1,108 907 5,200 4,989
CN (Vol.) (000 mt) 2,685 2,117 12,732 11,048
Avg ($/mt) 413 428 408 452
Margin per mt 88 88 89 93
Potash (millions) 4Q-20 4Q-10 2020 2109
EBITDA 219 149 1,167 1,593
Gross Margin 145 139 963 1,501
Total Sales 450 350 2,146 2,603
Sales Vol. (000 mt) 2,654 1,885 12,824 11,521
Avg ($/mt) 170 186 167 226
Nitrogen (millions) 4Q-20 4Q-10 2020 2109
EBITDA 512 259 1,299 1,239
Gross Margin 112 107 475 700
Total Sales 555 500 2,222 2,381
Sales Vol. (000 mt) 2,845 2,362 10,966 10,270
Avg ($/mt) 195 212 203 232
Phosphate (millions) 4Q-20 4Q-10 2020 2109
EBITDA 63 54 (537) 194
Gross Margin 16 6 36 (5)
Total Sales 280 260 1,075 1,216
Sales Vol. (000 mt) 648 647 2,781 2,889
Avg ($/mt) 433 403 387 421

Mosaic Net Income Surges, Beats Analyst Projections; 4Q Potash Volumes Up 80 Percent

Earnings, News, Phosphate, Potash, Specialty, Tampa

The Mosaic Co., Tampa, reported fourth-quarter and full-year net income that soared past year-ago losses and recent analyst projections. Fourth-quarter net earnings attributable to the company were $827.9 million ($2.17 per diluted share) on net sales of $2.46 billion, up from the year-ago loss of $921 million ($2.43 per share) and $2.08 billion, respectively. The Bloomberg Consensus, the average estimate by major analysts, was for net income of only $68 million. Adjusted EBITDA for the quarter was $508 million.

Full-year net earnings were $666.1 million ($1.75 per share) on net sales of $8.7 billion, up from the year-ago loss of $1.07 billion ($2.78 per share) and $8.91 billion. Analysts had expected a loss of $91 million. Adjusted EBITDA for the year was $1.56 billion.

Mosaic did note that fourth-quarter and full-year results included $580 million in discrete tax benefits, which included the reversal of a tax valuation reserve established with the acquisition of Vale Fertilizantes. Mosaic said it also recognized a loss on equity investments of $94 million, including a $97 million loss for the company’s share of the MWSPC joint venture in Saudi Arabia, as a result of less than full operating rates and challenging global phosphate market conditions in the first-half.

“Our actions to optimize our portfolio of assets and invest in efficiencies, along with our reduced inventories and the expected strong global fertilizer demand in 2021, position the company well for 2021,” said President and CEO Joc O’Rourke. “However, in the U.S. market, those strong trends depend in part on the outcome of a pending trade case whose outcome is uncertain.”

However, the company said phosphate demand is strong globally and producer and channel inventories remain well below normal ahead of the North American application season. The company believes strong Chinese domestic demand and industry restructuring will limit supplies available for export. Mosaic expects to realize a $40-$50/mt improvement in average realized prices in the first quarter over the fourth quarter, and expects global supply and demand to remain tight through the year.

Mosaic potash fourth-quarter potash volumes soared 80 percent, to 2.7 million mt from the year-ago 1.5 percent. The company believes strong demand will continue through 2021. It expects to realize a $20-$25/mt improvement in average realized prices in the first quarter versus the fourth quarter and benefit throughout 2021 from improving global pricing.

For the year, Mosaic said it realized over 10 percent growth in sales volumes in both the Potash and Mosaic Fertilizantes segments, and delivered record sales of MicroEssentials, selling 3.1 million mt in 2020 versus 2.7 million mt in 2019.

Phosphate gross margin per mt pulled into the black for both the quarter and year, after being in the minus column in 2019.

Potash 4Q-20 4Q-19 2020 2019
Sales Volume (million mt) 2.7 1.5 9.4 7.8
MOP Selling Price $/mt 176 224 181 237
Gross Margin per $/mt 45 61 50 79
Sales ($) 599 M 395 M 2.0 B 2.1 B
Phosphates 4Q-20 4Q-19 2020 2019
Sales Volume (million mt) 2.3 2.0 8.5 8.2
DAP Selling Price $/mt 363 266 310 325
Gross Margin per $/mt 73 (52) 15 (10)
Sales ($) 990 M 698 M 3.1 B 3.2 B
Mosaic Fertilizantes 4Q-20 4Q-19 2020 2019
Sales Volume (million mt) 2.3 2.2 10.6 9.2
Brazil MAP Selling Price $/mt 384 365 333 402
Avg Finished Selling $/mt (Destination) 352 394 NA NA
Gross Margin per $/mt 32 32 40 31
Sales ($) 823 M 864 M 3.5 B 3.8 B

The Andersons Plant Nutrient Business Reports Best Year Since 2014

Earnings, Eastern Cornbelt, News, Specialty

The Andersons, Maumee, Ohio, reported that its Plant Nutrient business completed the best year since 2014 on strong demand, with the company saying full-year results nearly doubled those of 2019.

Fertilizer full-year pretax income was $16 million on revenues of $663 million, up from 2019’s $9.2 million and $646.7 million. Adjusted EBITDA was $47.2 million, up from $42.3 million.

However, fourth-quarter fertilizer pretax income was $3.2 million on revenues of $155.5 million, versus the year-ago $4.6 million and $138.2 million, respectively. Adjusted EBITDA was $10.8 million, down from $11.5 million.

The company said fertilizer tons sold during the quarter were up across all major product lines, but especially in Ag Supply Chain. Margin per ton declined moderately, most notably in Engineered Granules.

“I am very excited about the recent strong, demand-driven rally in grain and fertilizer markets and what it means for U.S. agriculture and The Andersons,” said President and CEO Pat Bowe. “We have already participated in multi-year highs in grain elevation margins, and have benefited from strong export demand. Fertilizer demand was strong throughout the fourth quarter. With more planted corn acres in the forecast, it looks like strong fertilizer demand will continue.”

Company-wide, fourth-quarter net income attributable to The Andersons more than doubled to $16 million ($0.48 per share) on sales of $2.54 billion from the year-ago $6.6 million ($0.19 per share) and $1.89 billion, respectively. Adjusted EBITDA was $85 million, up from $84.5 million.

Full-year net income was $7.7 million ($0.23 per diluted share) on sales of $8.21 billion, down from the year-ago $18.3 million ($0.55 per share) and $8.17 billion, respectively. Adjusted EBITDA was $225.7 million, down from $253.6 million.

CF 4Q Earnings Up 58 Percent, Off for Year; 90-92 M Acres of Corn Projected

Ammonia, Ammonium Nitrate, Earnings, Eastern Cornbelt, News, UAN, Urea

CF Industries Holdings Inc., Deerfield, Ill., reported improved net income attributable to the company for the fourth-quarter, though it fell short for the full-year ending Dec. 31, 2020. However, it beat analyst estimates for both periods.

Fourth-quarter net income was $87 million ($0.40 per diluted share) on net sales of $1.1 billion, up from the year-ago $55 million ($0.25 per share) and $1.05 billion, respectively. The Bloomberg Consensus, the average estimate from major analysts, was $25 million. Adjusted EBITDA was up, at $338 million from $325 million.

Full-year net income was down, at $317 million ($1.47 per share) on net sales of $4.1 billion from the year-ago $493 million ($2.23 per share) and $4.6 billion, respectively. However, full-year results exceeded analyst projections of $247 million. Adjusted EBITDA was down at $1.35 billion from $1.61 billion.

“Our team’s outstanding execution in 2020 produced multiple records for safety, production, and sales volume, and delivered strong results in a challenging environment,” said Tony Will, CF President and CEO. “Nitrogen industry dynamics entering 2021 are the most favorable we’ve seen in nearly a decade, as rising grain values and higher global energy prices are driving significant price appreciation for nitrogen products. We expect that these conditions will provide a very positive backdrop for the year.

Sales volumes for full-year 2020 were 20.3 million st, up from 2019’s 19.5 million st due to greater supply availability from higher starting inventories and higher production compared to the prior year. CF expects sales volumes to return to a range of 19-19.5 million st in 2021 due to lower year-end inventory than the year before and lower expected production due to a higher number of planned maintenance activities than in 2020.

CF reported record annual gross ammonia production in 2020 at 10.4 million st, with record quarterly production of 2.7 million st.

CF reported improved gross margins in the fourth quarter for its Ammonia and Urea segments, and declines in UAN, AN, and Other. UAN was the only one in the negative column, at a minus $2 million.

CF’s full year 2020 average cost of natural gas reflected cost of sales was $2.24/mmBtu compared to the year-ago $2.74.mmBtu.

CF said the global nitrogen pricing outlook for 2021 is significantly more positive compared to 2020, underpinned by higher commodity crop futures prices and substantially higher energy prices in Asia and Europe.

The company projects approximately 90-92 million planted corn acres in the United States in 2021. Demand for nitrogen should also be supported by higher canola plantings in Canada. CF expects industrial demand for nitrogen to increase as COVID-19 declines due to vaccinations.

Global nitrogen requirements are expected to remain robust throughout the year, driven by continued strong demand for urea imports from India and Brazil. It expects Indian imports to be above the five-year average of 6.5-7.0 million mt, with Brazil to need 6.5 million mt, matching 2020.

In other news, CF’s wholly owned subsidiary, CF Industries Inc., has elected to redeem in full the entire outstanding $250 million principal amount of its 3.400 percent Senior Secured Notes due December 2021 on March 20, 2021, in accordance with the optional redemption provisions provided in the indenture governing the 2021 Notes. Based on market interest rates on Feb. 12, 2021, CF estimates that the total amount for the redemption of the 2021 Notes will be approximately $258 million, including accrued interest.

Production (000 st) 4Q-20 4Q-19 2020 2019
Ammonia        2,732 2,682 10,353 10,246
Gran Urea 1,361 1,105 5,001 4,941
UAN 32 1,798 1,958 6,677 6,768
AN 583 543 2,115 2,128
Ammonia 4Q-20 4Q-19 2020 2019
Net Sales ($/M) 298 266 1,020 1,113
Gross Margin ($/M) 57 42 170 235
Sales Volume (000 st) 1,092 968 3,767 3,516
Avg Realized Prices ($/st) 273 275 271 317
Gross Margin ($/st) 52 43 45 67
Granular Urea 4Q-20 4Q-19 2020 2019
Net Sales ($/M) 333 239 1,248 1,342
Gross Margin ($/M) 98 64 401 481
Sales Volume (000 st) 1,346 969 5,148 4,849
Avg Realized Prices ($/st) 247 247 242 277
Gross Margin ($/st) 73 66 78 99
UAN 4Q-20 4Q-19 2020 2019
Net Sales ($/M) 272 336 1,063 1,270
Gross Margin ($/M) (2) 77 114 289
Sales Volume (000 st) 1,888 1,927 6,843 6,807
Avg Realized Prices ($/st) 144 174 155 187
Gross Margin ($/st) (1) 40 17 42
AN 4Q-20 4Q-19 2020 2019
Net Sales ($/M) 112 117 455 506
Gross Margin ($/M) 12 26 65 107
Sales Volume (000 st) 545 519 2,216 2,109
Avg Realized Prices ($/st) 206 225 205 240
Gross Margin ($/st) 22 50 29 51
Other 4Q-20 4Q-19 2020 2019
Net Sales ($/M) 87 91 338 359
Gross Margin ($/M) 15 18 51 62
Sales Volume (000 st) 608 600 2,322 2,257
Avg Realized Prices ($/st) 143 152 146 159
Gross Margin ($/st) 25 30 22 27

LSB Pryor Plant Offline; Natural Gas Prices, Curtailment Cited

News, News Briefs, Nitrogen

LSB Industries Inc., Oklahoma City, announced on Feb. 16 that on Feb. 12 it temporarily took its Pryor, Okla., nitrogen facility out of service as a result of the recent surge in natural gas prices that has taken place in the region due to extremely cold temperatures. Also related to the cold weather, the operator of the pipeline that supplies natural gas to the Pryor facility is experiencing significant weather-related gas supply impacts and, as a result, has curtailed gas distribution to commercial customers. LSB said it will restart production at Pryor as soon as natural gas prices and availability normalize.

LSB does not expect a material impact to its first-quarter 2021 financial results due to Pryor’s temporary shutdown. However, the company said the longer natural gas prices persist at the current elevated levels and/or gas availability remains constrained, the more significant the potential impact to the company’s financial results.

Central Garden Completes Green Garden Acquisition

News, News Briefs, Specialty

Central Garden & Pet Co., Walnut Creek, Calif., said on Feb. 16 that it closed the previously announced acquisition of Green Garden Products (GM Jan. 1, p. 1), formerly known as Plantation Products, from private-equity firm Freeman Spogli & Co. Green Garden, headquartered in Norton, Mass., is a leading provider of vegetable, herb and flower seed packets, seed starters, and plant nutrients in North America, shipping over 250 million seed packets annually.

“By adding Green Garden’s leading brands for vegetable, herb and flower seed, and seed starter packages, we are entering an important adjacent category in the garden segment,” Tim Cofer, Central Garden CEO. “With Green Garden now being an official part of the Central team, we look forward to growing their business, leveraging our strong merchandising, brand building, and digital capabilities.”

Under the terms of the merger agreement, the company paid a total of $532 million, subject to certain post-closing adjustments. The acquisition was financed through cash on hand and borrowings under the company’s credit facility.

Kropz Exits Ghana Phosphate Stake

Africa, News, News Briefs, Phosphate

Kropz SA (Pty), Century City, South Africa, said on Feb. 16 it had decided to divest its interests in Aflao, the phosphate project located in Ghana. It is selling its shareholding in First Gear Exploration Ltd., a 50 percent and one share owned subsidiary of Kropz, to Consortium Minerals Ltd. As a result, Kropz said it will no longer have any further interest in Aflao.

Consortium is a subsidiary of Russell Brooks Ltd., which held a 15 percent stake in First Gear prior to the purchase. Total consideration was US$327,529.

Kropz said the disposal allows the company to focus on its strategy of developing the Elandsfontein phosphate project in South Africa and progressing the Hinda phosphate project in the Republic of Congo.

Brenntag Adopts New Legal Form

Germany, News, News Briefs

Chemical distributor Brenntag, Essen, Germany, said on Feb. 1 it has completed the process of changing from German Aktiengesellschaft (stock corporation) to a European company (Societas Europaea, SE), and is now doing business as Brenntag SE. The conversion, which was announced by the management and supervisory boards in the autumn of 2019 and approved by shareholders at the ordinary general meeting on June 10, 2020, came into force when entered into the commercial register on Feb. 1, 2021.

Brenntag SE will keep its headquarters in Essen and continue under the dual management of the management and supervisory boards as before. The conversion will not affect the responsibilities or composition of either board. The company said the SE is an internationally recognized legal form that is viewed positively on the capital market.

“Almost 17,500 people from more than 100 countries work for Brenntag, around 90 percent of them outside Germany,” said Christian Kohlpaintner, Brenntag SE Chairman. He said the change of form underlines Brenntag’s global orientation and identity as an international concern.

Martin Delays Release Due to Weather

News, News Briefs, Texas

Martin Midstream Partners LP (MMLP), Kilgore, Texas, said on Feb. 16 its earnings release and conference calls scheduled for Feb. 17 and 18, respectively, will be delayed due to impacts of the severe winter storm. The company will announce fourth-quarter and full-year 2020 financial results, along with 2021 guidance, after close of market on Monday, Feb. 22, 2021, and will host a conference call the following day.

Tractor Supply Buys Orscheln Farm and Home

News, News Briefs, Specialty

Major rural lifestyle retailer Tractor Supply Co., Brentwood, Tenn., said on Feb. 17 it has entered into an agreement to acquire Orscheln Farm and Home, Moberly, Mo., in an all-cash transaction for approximately $297 million, net of acquired estimated future tax benefits of $23 million.

Orscheln Farm and Home operates 167 stores located in 11 states: Missouri, Kansas, Nebraska, Iowa, Indiana, Oklahoma, Arkansas, Texas, Kentucky, Illinois, and Ohio. The acquisition is conditioned on the receipt of regulatory approval and satisfactory completion of customary closing conditions.

“This is an exciting step for Tractor Supply as we expand our footprint in the Midwest with the high-quality assets of Orscheln Farm and Home,” said Hal Lawton, Tractor Supply President and CEO. “We have always had great respect for Barry Orscheln and the team at Orscheln Farm and Home for the strong connection they have with customers in the communities they serve, along with their industry knowledge and capabilities.

“With our shared values and passion for the Out Here lifestyle, we are honored to welcome Orscheln Farm and Home to the Tractor Supply family. We look forward to bringing together our highly complementary cultures and teams to realize the long-term value and benefits that we expect this acquisition to deliver,”  Lawton continued.

“For more than 60 years, my family, our Orscheln Farm and Home employees, and I have been committed to serving the needs of rural communities across the Midwest,” said Barry Orscheln, Orscheln Farm and Home Chairman and CEO. “I am very proud of all that we have accomplished over this time. I am confident that with Tractor Supply our stores will be well-positioned to continue Orscheln’s tradition of taking care of our customers and communities for the next phase of growth.”

Tractor Supply’s preliminary estimates indicate the acquisition will be immediately accretive to earnings per share upon closing. The earnings accretion is anticipated to grow over time as planned synergies are achieved. Tractor Supply intends to fund the acquisition through existing cash on hand.

As of Dec. 26, 2020, Tractor Supply operated 1,923 stores in 49 states and an e-commerce website. It also owns and operates Petsense, a small-box pet specialty supply retailer, with 182 stores in 25 states.