Nutrien Reports Fourth Quarter and Full-Year 2022 Results

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 share ¹ was $2.02 and adjusted EBITDA ¹ 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 EBITDA ¹ 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 capital ¹ (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 ratio ¹ 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 guidance ¹ 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.

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.

Consolidated Results

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")

• 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 ratio ¹ 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.

Potash

• 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

Nitrogen

• 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

• 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

• 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

• 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)

• 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