Investor Presentation. BMO Capital Markets 13 th Annual Farm to Market Conference May 2018

Transcription

1 Investor Presentation BMO Capital Markets 13 th Annual Farm to Market Conference May 2018

2 Forward Looking Statements 2 Certain statements and other information included in this presentation 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 presentation, other than those relating to historical information or current conditions, are forward-looking statements, including, but not limited to: Nutrien's 2018 annual and first half guidance, including expectations regarding our diluted earnings per share and EBITDA (both consolidated and by segment); expectations regarding net proceeds to be realized from the on-going sale of equity interests; capital spending expectations for 2018; expectations regarding performance of our business segments in 2018; our market outlook for 2018, including potash, nitrogen and phosphate outlook and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes; expectations regarding completion of previously announced expansion projects (including timing and volumes of production associated therewith) and acquisitions and divestitures; and the expected synergies associated with the merger of Agrium and PotashCorp, including timing thereof. 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 Nutrien believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The additional key assumptions that have been made include, among other things, assumptions with respect to Nutrien's ability to successfully integrate and realize the anticipated benefits of its already completed (including the merger of Agrium and PotashCorp) and future acquisitions, and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Nutrien, including with respect to prices, margins, demand, supply, product availability, supplier agreements, availability and cost of labor and interest, exchange and effective tax rates; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2018 and in the future (including as outlined under Market Outlook ); the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and divestitures and negotiate acceptable terms; ability to maintain investment grade rating and achieve our performance targets; assumptions in respect of our ability to sell equity positions, including the ability to find suitable buyers at expected prices and successfully complete such transactions in a timely manner; the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects approach. 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; the failure to successfully integrate and realize the expected synergies associated with the merger of Agrium and PotashCorp, including within the expected timeframe; 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, 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 security risks related to our systems; the inability to find suitable buyers for our equity positions and counterparty and transaction risk associated therewith; regional natural gas supply restrictions; counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at our Egyptian and Argentinian facilities; any significant impairment of the carrying value 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; and other risk factors detailed from time to time in Agrium, PotashCorp and Nutrien reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the United States, including those disclosed in Nutrien s business acquisition report dated February 20, 2018, related to the merger of Agrium and PotashCorp. The purpose of our expected diluted earnings per share, consolidated EBITDA and EBITDA by segment guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes. Non-IFRS Financial Measures Advisory We consider net (loss) earnings from continuing operations before finance costs, income tax (recovery) expense and depreciation and amortization("ebitda") and adjusted net earnings per share and adjusted EBITDA, all of which are non-ifrs financial measures, to provide useful information to both management and investors in measuring our financial performance and financial condition. Refer to the disclosure under the heading Non-IFRS Financial Measures and Reconciliations included in our press release dated May 7, 2018 announcing our first quarter 2018 results, as filed on SEDAR at and EDGAR at under our corporate profile, for a reconciliation of these non-ifrs measures to the most directly comparable measures calculated in accordance with IFRS and for a further discussion of how these measures are calculated and their usefulness to users including management. Non-IFRS financial measures are not recognized measures under IFRS and our method of calculation may not be comparable to that of other companies. These non-ifrs financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. The purpose of our expected diluted earnings per share, consolidated EBITDA and EBITDA guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes. 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 U.S. federal securities laws or applicable Canadian securities legislation. May 15, 2018

3 Nutrien Announces Sales of SQM A Shareholdings 3 Definitive Agreement with Tianqi for A Shares of $65/sh Subject to Customary Closing Conditions & Regulatory Approval Nutrien Retains Ownership of B Shares and Expects to Divest in Due Course Expect to Close Sale in 2018 Nutrien expects to receive ~$4.1 billion in gross proceeds from the sale of the A shares Represents an approximate 15% premium on shares Expect to divest NTR s remaining 20.2 million B shares in due course current market price ~$58/sh This agreement marks another key integration milestone for Nutrien, at an excellent valuation. With growing free cash flow, combined with the significant proceeds from this sale, this will further enhance our balance sheet and liquidity, and places us in a strong position to execute on our capital allocation priorities. FOOTNOTES

4 Presentation Outline Nutrien Overview and Vision 2 Fundamentals and Outlook 3 4 Strategy and Opportunities Capital Allocation

5 Our Vision is to be the Leading Global Agribusiness Company 5 1 Leading ag platform provides earnings stability & multiple avenues for growth (geographic, product and technology) 2 $500 million in run rate synergies expected to be achieved by the end of 2019; $150 million run rate achieved as at March 31, Significant free cash flow and strong balance sheet provides opportunity for meaningful shareholder returns and growth 4 Significant potential upside to a recovery in crop nutrient markets; $25/mt increase in fertilizer prices expected to generate ~$650M in additional EBITDA

6 Nutrien Has a Unique Global Footprint and Well Positioned Assets 6 North American Integrated Footprint South America Australia LEGEND: RETAIL POTASH NITROGEN PHOSPHATE ESN GRANULATION LOVELAND PRODUCTS AND AFFILIATED FACILITIES AGRICHEM INVESTMENTS AND JV S OFFICES >26Mmt Combined sales tonnes of potash, nitrogen, phosphate & sulfate 1 ~1,600 Retail locations in 7 countries $500M Expected annual synergies by end of 2019 $1.60 Annual dividend per share 2 5% NCIB in place through February 2019 NOTE: European distribution and our ownership stakes in Sinofert and the MOPCO nitrogen facility are not included on these maps. 1 Excluding sales tonnes from Conda and North Bend 2 Based on Nutrien quarterly dividend declared February 20, Future dividends subject to board discretion.

7 Diversified Portfolio Provides Stability and Multiple Avenues for Growth Adjusted Combined EBITDA Split 1,2 Summary Financial Performance USD billions (unless otherwise noted) 2017 Adjusted Combined Retail ~35% ~33% Potash Revenue $18.2 EBITDA 1 $2.9 Free Cash Flow 3 $1.3 Phosphate and Sulfate ~7% ~25% Nitrogen ~20% increase in 2018 annual EBITDA guidance versus combined 2017 Sustaining Capital $1.0 Free Cash Flow Conversion 4 Annual Dividend per Share 5 66% (2017) ~70% (2018F) $ Adjusted EBITDA is calculated as net (loss) earnings from continuing operations before finance costs, income tax (recovery) expense and depreciation and amortization, Merger and related costs, and impairment losses 2 Reflects adjusted combined EBITDA, which is derived from historical financial information of PotashCorp and Agrium and do not include the effects of a) intersegment eliminations, b) the equity earnings and operating results of completed or anticipated divestitures in connection with the merger, or c) the impairment charge related to Phosphate, and merger-related costs. Determination of Adjusted Combined EBITDA required allocation of historical amounts on a basis consistent with how Nutrien will report financial information in the future. This information does not purport to project the future operating results of Nutrien, and is not necessarily indicative of what Nutrien s results of operations would have been had the merger been completed on January 1, Cash provided by operating activities from continuing operations excluding the impact of net changes in non-cash working capital less sustaining capital expenditures. 4 Calculated as (EBITDA less sustaining capital)/ EBITDA. 2018F based on mid-point of guidance as of May 7, Based on Nutrien quarterly dividend declared February 20, Future dividends subject to board discretion.

8 Fundamentals and Outlook INVESTOR PRESENTATION

9 Supportive U.S. Grower Economics 9 U.S. Cash Grower Margins 1 US$/Acre Corn Soybeans Wheat Cotton Prospective 2018 cash margins for major crops have improved over the past quarter Source: USDA, Green Markets, CME Group, Nutrien /18 margins are based on spot cash crop prices and estimated average fertilizer costs; 2018/19 margins are based on new crop 2018 futures prices less estimated basis and estimated spot retail fertilizer prices May 16, 2018

10 Relatively Tight Potash Supply & Demand 10 Global Potash S&D Million Tonnes KCl Global Utilization Rate 1 Percent Demand 3.0%/yr Demand 2.8%/yr Operational Capability 100% 95% Demand 3.0%/yr * Demand 2.8%/yr* % 40 85% 30 80% % 0 70% Expect demand growth and capacity closures to offset capacity additions; operating rates expected to be at or above historical average Source: CRU, Fertecon, IFA, Nutrien 1 Based on estimated operational capability * Demand growth based on 20 year CAGR 2002 to 2022

11 Tightening Global Nitrogen Supply & Demand 11 Global Nitrogen S&D Million Tonnes Nitrogen Global Utilization Rate 1 Percent 180 Demand Operational Capability % 95% 90% 85% 80% 75% 70% Demand 2.0%/yr* Forecast improvement in nitrogen capacity utilization expected over the medium-term Source: CRU, Nutrien 1 Based on estimated operational capability. Adjusted for idled capacity in China and Eastern Europe. * Demand growth based on 20 year CAGR 2002 to 2022

12 Retail: Long Term Growth of Margins and Earnings 12 Retail EBITDA Margin Percent Retail EBITDA Millions 11.0% 10.0% EBITDA Retail EBITDA Margin $ B $1,400 $1, % 9.3% 9.5% $1, % 8.3% 8.3% 8.6% 8.5% $ % 7.5% $769 $951 $986 $1,119 $1,033 $1,091 $1,145 $600 $ % $ % F $0 Consistent growth in EBITDA margins achieved through Operational Excellence initiatives including proprietary product growth and footprint optimization Source: Nutrien

13 Strategy and Opportunities INVESTOR PRESENTATION

14 Progress on Strategic Priorities 14 Integration / Synergies $150 million synergy run-rate achieved as at March 31, On track for expected $250 million run-rate by the end of 2018 and $500 million by the end of 2019 Completed the divestment of ICL, announced buyer and purchase price for SQM A shares and progressing on APC Advanced production and distribution optimization plans across all business segments Capital Allocation Declared quarterly dividend (27 percent increase) and payout target of 40-60% of free cash flow after sustaining capital NCIB initiated and one-third complete. $500 million shares repurchased as of May 7, 2018 Acquired 29 retail locations with estimated revenues of approx. $280 million Acquired Agrichem Brazil, a leading specialty nutrition and plant health company Launched an Integrated Digital Platform for growers May 16, 2018

15 Significant Value Creation from Merger Synergies 15 Run-Rate Synergies US$ Millions Achieved run-rate synergy as at March 31, 2018 Balance of synergy target $125 $500 $100 $93 $32 $125 $76 $24 + $350 $150 $83 $42 $98 $52 Distribution/ Optimization Production Optimization ++ $150 Procurement SG&A 2019 Target EOY Highly confident in the full realization of synergies by the end of 2019 Source: Nutrien May 16, 2018

16 Launched Nutrien Ag Solutions Digital Platform 16 One integrated portal streamlining access to all of Retail s digital services and solutions Increase ease of use, save time for both grower and agronomist Acquire new grower customers Offering leading-edge crop planning capabilities and precision ag tools Increase customer retention Increase services offerings Allows growers to plan, order and receive product on one omni-channel Future functionality under development; partnering with others to extend reach Designed to augment our industry-leading distribution network, agronomic advice and services May 16, 2018

17 Capital Allocation INVESTOR PRESENTATION

18 Multiple Levers to Generate Strong Free Cash Flow 18 Within Nutrien s Control Capture Identified Synergies Equity Investment Sales Stable and Growing Retail Base $500M/year 1 ~$4-5B estimate net of tax Expect $50-$140M of EBITDA / Yr External Factors: Leverage to Upside Fertilizer prices are more than $100/mt lower than mid-cycle (8 year avg prices) If fertilizer prices rise $25/mt = ~$650M EBITDA If fertilizer prices rise $100/mt = ~$2.6B EBITDA Value Adding Growth Enhance Shareholder Returns Enhance Balance Sheet Capital Priorities Increase share in existing markets (N.A & Australia) Focus on growing in Brazil Expand proprietary business; digital ag Announced 5% NCIB Potential to further increase dividend (40-60% of FCF) Maintain investment grade credit rating 1 Full $500M per year expected to be achieved by the end of 2019.

19 Significant Upside Potential for Free Cash Flow per Share 19 Nutrien EBITDA & FCF Sensitivity to Nutrient Price Increases US$ Billions Incremental EBITDA 2018E Sustaining Capex $10 $11B EBITDA 8 $6.5 $7.0B EBITDA Proceeds of ~4.5B expected from equity stake sales $3.6 $4.0B EBITDA >$3 FCF/sh (4) >$7.50 FCF/sh (4) >$12 FCF/sh (4) 0 (1) (2) (3) 2018E 2018E + Full 8 yr Avg. Nutrient Replacement Cost Nutrient Prices Potential mid-cycle free cash flow per share provides tremendous near & longterm opportunity for shareholders 1 Assumes synergies of $500MM per year by end of Assumes 2018 sales volumes at Average of 8-Year ( ) prices for: US Cornbelt MOP ($437/mt), Tampa DAP ($482/mt), and NOLA urea ($361/mt) 3 Replacement cost nutrient prices assumed are: US Cornbelt MOP ($605/mt), Tampa DAP ($540/mt), and NOLA Urea ($480/mt) 4 Free Cash Flow defined as: Cash flow from continuing operations before net changes in non-cash working capital less sustaining capital. Assumes 643M shares.

20 Nutrien Provides Unique Investment Opportunity in the Agriculture Sector 20 Leading position in both retail/distribution (stable & growing earnings base) and crop nutrient production Clear line of sight on expected $500M in annual operating synergies; $150 million run rate achieved as at March 31, 2018 Significant free cash flow expected to provide opportunity for meaningful shareholder returns Unmatched upside to a recovery in crop nutrient markets - $25/mt improvement in nutrient prices expected to generate ~$650M in EBITDA

21 Thank you! For further information please visit Nutrien s website at: Follow Nutrien on: twitter.com/nutrienltd facebook.com/nutrienltd linkedin.com/company/nutrien INVESTOR PRESENTATION