Q2 2024 Nutrien Ltd Earnings Call

August 8, 2024

Thank you for watching!

Speaker Change: Greetings and welcome to Nutrien's 2024 2nd Quarter Earnings Call.

Operator: At this time, all participants are in a listen-only mode. The question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. I would now like to turn the conference call over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

Speaker Change: At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation.

Speaker Change: As a reminder, this conference is being recorded. I would now like to turn the conference call over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

Jeff Holzman: Thank you, operator. Good morning and welcome to Nutrien's second quarter 2024 earnings call. As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information. Certain assumptions were applied in making these conclusions and forecasts, therefore actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions are contained in our quarterly report to shareholders, as well as our most recent annual report, MD&A, an annual information form. I'll now turn the call over to Ken Seitz, Nutrien's President and CEO, and Pedro Farah, our CFO, for opening comments.

Jeff Holzman: Thank you, operator. Good morning, and welcome to Nutrien's second quarter 2024 earnings call. As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information. Certain assumptions were applied in making these conclusions and forecasts, and actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions is contained in our quarterly report to shareholders, as well as in our most recent annual report, MD&A, an annual information form. I'll now turn the call over to Ken Seitz, Nutrien's President and CEO, and Pedro Farah, our CFO, for opening comments.

Jeff Holzman: Thank you, operator. Good morning and welcome to Nutrien's second quarter 2024 earnings call.

Speaker Change: As we conduct this call, various statements that we make about future expectations, plans, and prospects contain forward-looking information.

Speaker Change: Certain assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward-looking information.

Ken Seitz: Additional information about these factors and assumptions are contained in our quarterly report to shareholders, as well as our most recent annual report, MD&A, and annual information form. I'll now turn the call over to Ken Seitz, Nutrien's President and CEO , and Pedro Farah, our CFO , for opening comments.

Ken Seitz: Good morning. Thank you for joining us today.

Kenneth Seitz: Good morning. Thank you for joining us today.

Ken Seitz: Good morning. Thank you for joining us today.

Ken Seitz: Nutrien just delivered adjusted EBIT of $3.3 billion in the first half of 2024, supported by increased crop input margins, strong global potash demand, and lower operating rate costs. Our upstream fertilizer production assets and downstream retail business in North America and Australia have performed well in 2024, demonstrating our advantages across the ag value chain. The operating environment in Brazil has remained more challenging, and we will discuss today the actions we are taking to stabilize our business in this market.

Kenneth Seitz: Nutrien just delivered adjusted EBIT of $3.3 billion in the first half of 2024, supported by increased crop input margins, strong global potash demand and lower operating rate costs. Our upstream fertilizer production assets and downstream retail business in North America and Australia have performed well in 2024, demonstrating our advantages across the ag value chain. The operating environment in Brazil has remained more challenged and we will discuss today the actions we are taking to stabilize our business in this market.

Speaker Change: Good morning. Thank you for joining us today.

Speaker Change: Nutrien just delivered adjusted EBITDA of $3.3 billion in the first half of 2024, supported by increased crop input margins, strong global potash demand, and lower operating rate costs.

Speaker Change: Our upstream fertilizer production assets and downstream retail business in North America and Australia have performed well in 2024, demonstrating our advantages across the ag value chain.

Speaker Change: The operating environment in Brazil has remained more challenged, and we will discuss today the actions we are taking to stabilize our business in this market.

Ken Seitz: In potash, we generated adjusted EBITDA of $1 billion in the first half of 2024, which was down from the prior year due to lower benchmark prices. We increased potash production across our six mine networks and lowered our controllable cash cost of production to $53 per ton in the first half. The reduction in per ton costs was driven by higher production volumes and supported by the benefits of mine automation investments.

Kenneth Seitz: In potash, we generated adjusted EBITDA of $1 billion in the first half of 2024, which was down from the prior year due to lower benchmark prices. We increased potash production across our six mine network and lowered our controllable cash cost of production to $53 per ton in the first half. The reduction in per ton costs was driven by higher production volumes and supported by the benefits of mine automation investment.

Speaker Change: In Potash, we generated adjusted EBITDA of $1 billion in the first half of 2024, which was down from the prior year due to lower benchmark prices.

Speaker Change: We increased potash production across our six-mine network and lowered our controllable cash cost of production to $53 per ton in the first half.

Speaker Change: The reduction in per ton costs was driven by higher production volumes and supported by the benefits of mine automation investments.

Ken Seitz: We sold record potash volumes in the first half, utilizing the advantages of our global supply chain to respond to increased demand from our customers in North America and offshore markets. In nitrogen, we delivered adjusted EBITDA of $1.1 billion in the first half of 2024, as lower benchmark prices were partially offset by lower natural gas costs. Our North American nitrogen assets remain very well positioned on the global cost curve, and we continue to progress reliability initiatives that contribute to higher operating rates.

Ken Seitz: We sold record potash volumes in the first half, utilizing the advantages of our global supply chain to respond to increased demand from our customers in North America and offshore markets. In nitrogen, we delivered adjusted EBITDA of $1.1 billion in the first half of 2024 as lower benchmark prices were partially offset by lower natural gas costs. Our North American nitrogen assets remain very well positioned on the global cost curve, and we continue to progress reliability initiatives that contributed to higher operating rates. Nitrogen selling prices in the second quarter increased compared to the first quarter of the year, reflecting the advantages of our extensive North American distribution network and the strong execution of our commercial team.

Kenneth Seitz: We sold record potash volumes in the first half, utilizing the advantages of our global supply chain to respond to increased demand from our customers in North America and offshore markets. In nitrogen, we delivered adjusted EBITDA of $1.1 billion in the first half of 2024 as lower benchmark prices were partially offset by lower natural gas costs. Our North American nitrogen assets remain very well positioned on the global cost curve and we continue to progress reliability initiatives that contributed to higher operating rates. Nitrogen selling prices in the second quarter increased compared to the first quarter of the year, reflecting the advantages of our extensive North American distribution network and the strong execution of our commercial team.

Speaker Change: We sold record potash volumes in the first half, utilizing the advantages of our global supply chain to respond to increased demand from our customers in North America and offshore markets.

Speaker Change: In nitrogen, we delivered adjusted EBITDA of $1.1 billion in the first half of 2024 as lower benchmark prices were partially offset by lower natural gas costs.

Speaker Change: our north american nitrogen assets remain very well positioned on the global cost curve and we continue to progress reliability initiatives that contributed to higher operating rates

Ken Seitz: Nitrogen selling prices in the second quarter increased compared to the first quarter of the year, reflecting the advantages of our extensive North American distribution network and the strong execution of our commercial team. Phosphate fertilizer markets remained relatively firm through the first half of 2024, and we benefited from lower raw material input costs. Our phosphate sales volumes were consistent with the prior year as we had extended turnaround activity at our Aurora and White Springs plants in both periods. Retail adjusted EBITDA totaled $1.2 billion in the first half of 2024, up 17% from the prior year, driven by increased gross margin across all major product lines.

Speaker Change: Nitrogen selling prices in the second quarter increased compared to the first quarter of the year, reflecting the advantages of our extensive North American distribution network and the strong execution of our commercial team.

Ken Seitz: Phosphate fertilizer markets remained relatively firm through the first half of 2024, and we benefited from lower raw material input costs. Our phosphate sales volumes were consistent with the prior year as we had extended turnaround activity at our Aurora and White Springs plants in both periods. Retail adjusted EBITDA totaled $1.2 billion in the first half of 2024, up 17% from the prior year, driven by increased gross margin across all major product lines.

Kenneth Seitz: Phosphate fertilizer markets remained relatively firm through the first half of 2024. And we benefited from lower raw material input costs. Our phosphate sales volumes were consistent with the prior year as we had extended turnaround activity at our Aurora and White Springs plants in both periods. Retail adjusted EBITDA totaled $1.2 billion in the first half of 2024, up 17% from the prior year, driven by increased gross margin across all major product lines.

Speaker Change: Phosphate fertilizer markets remained relatively firm through the first half of 2024, and we benefited from lower raw material input costs.

Speaker Change: Our phosphate sales volumes were consistent with the prior year, as we had extended turnaround activity at our Aurora and White Springs plants in both periods.

Speaker Change: Retail adjusted EBITDA totaled $1.2 billion in the first half of 2024, up 17% from the prior year, driven by increased gross margin across all major product lines.

Ken Seitz: Crop Nutrient Sales volumes were similar to the prior year, as planting delays in May offset the benefits of an early start to the application season in the first quarter. Crop Nutrien margins increased by $21 per ton in the first half, supported by the stabilization of fertilizer markets and a lower cost inventory position compared to the prior year. Crop protection margins in North America returned to normalized levels while wet weather in May impacted applications and shifted some demand into the third quarter.

Ken Seitz: Crop Nutrient Sales volumes were similar to the prior year, as planting delays in May offset the benefits of an early start to the application season in the first quarter. Crop nutrient margins increased by $21 per ton in the first half, supported by the stabilization of fertilizer markets and a lower cost inventory position compared to the prior year. Crop protection margins in North America returned to normalized levels while wet weather in May impacted applications and shifted some demand into the third quarter.

Kenneth Seitz: Crop Nutrient Sales volumes were similar to the prior year, as planting delays in May offset the benefits of an early start to the application season in the first quarter. Crop nutrient margins increased by $21 per ton in the first half, supported by the stabilization of fertilizer markets and a lower cost inventory position compared to the prior year. Crop protection margins in North America returned to normalized levels while wet weather in May impacted applications and shifted some demand into the third quarter.

Speaker Change: Crop nutrient sales volumes were similar to the prior year, as planting delays in May offset the benefits of an early start to the application season in the first quarter.

Speaker Change: Crop nutrient margins increased by $21 per ton in the first half, supported by the stabilization of fertilizer markets and a lower cost inventory position compared to the prior year.

Speaker Change: Crop protection margins in North America returned to normalized levels, while wet weather in May impacted applications and shifted some demand into the third quarter.

Ken Seitz: We ended the second quarter with retail crop protection inventory down 17% compared to the prior year. The majority of this reduction occurred in our Latin American operations, where we are focused on tightly managing inventory and working capital levels. Overall, we are pleased with the first half performance of our North American and Australian retail businesses. Excluding the impacts of delayed planting in North America, our results were in line with our previous expectations.

Kenneth Seitz: We ended the second quarter with retail crop protection inventory down 17% compared to the prior year. The majority of this reduction occurred in our Latin American operations, where we are focused on tightly managing inventory and working capital levels. Overall, we are pleased with the first half performance of our North American and Australian retail businesses. Excluding the impacts of delayed planting in North America, our results were in line with our previous expectations. Now turning to Brazil, where we have seen more persistent challenges.

Speaker Change: We ended the second quarter with retail crop protection inventory down 17% compared to the prior year. The majority of this reduction occurred in our Latin American operations, where we are focused on tightly managing inventory and working capital levels.

Speaker Change: Overall, we are pleased with the first half performance of our North American and Australian retail businesses. Excluding the impacts of delayed planting in North America, our results were in line with our previous expectations.

Ken Seitz: Now, turning to Brazil, where we have seen more persistent challenges. As outlined at our Investor Day in June, we are accelerating a margin improvement plan focused on further reducing operating costs and rationalizing our footprint to optimize cash flow. This included the decision to curtail three fertilizer blenders and close 21 selling locations in the second quarter. We continue to evaluate our commercial footprint in Brazil to further extract efficiencies and see opportunities to grow our proprietary products business. During the second quarter, we also incurred a loss on foreign currency derivatives in Brazil.

Ken Seitz: As outlined at our Investor Day in June, we are accelerating a margin improvement plan focused on further reducing operating costs and rationalizing our footprint to optimize cash flow. This includes the decision to curtail three fertilizer blenders and close 21 selling locations in the second quarter. We challenge you to evaluate our commercial footprint in Brazil to further extract efficiencies and see opportunities to grow our proprietary products business. During the second quarter, we also incurred a loss on foreign currency derivatives in Brazil.

Kenneth Seitz: As outlined at our Investor Day in June, we are accelerating a margin improvement plan focused on further reducing operating costs and rationalizing our footprint to optimize cash flow. This included the decision to curtail three fertilizer blenders and close 21 selling locations in the second quarter. We contend to you to evaluate our commercial footprint in Brazil to further extract efficiencies and see opportunities to grow our proprietary products business. During the second quarter, we also incurred a loss on foreign currency derivatives in Brazil.

Speaker Change: Now, turning to Brazil, where we have seen more persistent challenges.

Speaker Change: As outlined at our Investor Day in June , we are accelerating a margin improvement plan focused on further reducing operating costs and rationalizing our footprint to optimize cash flow.

Speaker Change: This included the decision to curtail three fertilizer blenders and close 21 selling locations in the second quarter.

Speaker Change: We contend to you to evaluate our commercial footprint in Brazil to further extract efficiencies and see opportunities to grow our proprietary products business.

Speaker Change: during the second quarter we also incurred a loss on foreign currency deriv derivatives in brazil

Ken Seitz: We have taken actions to remediate this issue and are confident that these actions have addressed the matter going forward. Now, turning to the Market Outlook for the remainder of 2024. Global grain stocks remain historically tight, while favorable growing conditions have created an expectation for record U.S. corn and soybean yields. Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in the third quarter, as growers aim to maintain optimal plant health and yield potential.

Kenneth Seitz: We have taken actions to remediate this issue and are confident that these actions have addressed the matter going forward. Now turning to the Market Outlook for the remainder of 2024. Global grain stocks remain historically tight, while favorable growing conditions have created an expectation for record U.S. corn and soybean yields. Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in the third quarter, as growers aim to maintain optimal plant health and yield potential.

Speaker Change: We have taken actions to remediate this issue and are confident that these actions have addressed the matter going forward.

Speaker Change: now turning to the market outlook for the memainder of two thousand and twenty four

Speaker Change: Global grain stocks remain historically tight, while favorable growing conditions have created an expectation for record U.S. corn and soybean yields.

Speaker Change: Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in the third quarter as growers aim to maintain optimal plant health and yield potential.

Ken Seitz: We anticipate good affordability for potash and nitrogen will support fall application rates this year. Prospective soybean margins in Brazil are currently above 2023 levels, supported by a weaker real. Brazilian soybean area is expected to increase by 1 to 3% in the upcoming planting season, and fertilizer demand is projected at approximately 46 million tons in 2024, in line with historical record levels.

Ken Seitz: We anticipate good affordability for potash and nitrogen will support fall application rates this year. Prospective soybean margins in Brazil are currently above 2023 levels, supported by a weaker rail. Brazilian soybean area is expected to increase by 1 to 3% in the upcoming planting season, and fertilizer demand is projected at approximately 46 million tons in 2024, in line with historical record levels.

Kenneth Seitz: We anticipate good affordability for potash and nitrogen will support fall application rates this year. Prospective soybean margins in Brazil are currently above 2023 levels supported by a weaker rail. Brazilian soybean area is expected to increase by 1 to 3% in the upcoming planting season, and fertilizer demand is projected at approximately 46 million tons in 2024, in line with historical record levels.

Speaker Change: We anticipate good affordability for potash and nitrogen will support fall application rates this year.

Speaker Change: Prospective soybean margins in Brazil are currently above 2023 levels, supported by a weaker real.

Speaker Change: Brazilian soybean area is expected to increase by 1-3% in the upcoming planting season, and fertilizer demand is projected at approximately 46 million tons in 2024, in line with historical record levels.

Ken Seitz: We are seeing strong underlying consumption trends in most major potash markets in 2024 and have raised our full-year global potash shipment forecast to 69 to 72 million tons. Update on our summer field program in North America has been strong, which is supportive of granular grade demand in the third quarter. The settlement of potash contracts with China and India in July is expected to support demand in standard grade markets through the second half.

Kenneth Seitz: We are seeing strong underlying consumption trends in most of major potash markets in 2024 and raise our full year global potash shipment forecast to 69 to 72 million tons. Update on our summer field program in North America has been strong, which is supportive of granular grade demand in the third quarter. The settlement of potash contracts with China and India in July is expected to support demand in standard grade markets through the second half.

Speaker Change: We are seeing strong underlying consumption trends in most major potash markets in 2024 and raised our full-year global potash shipment forecast to 69 to 72 million tons.

Speaker Change: Uptake on our summer fill program in North America has been strong, which is supportive of granular grade demand in the third quarter.

Speaker Change: thesettlement of potash contracts with china and india in july is expected to support men in standard grade markets through the second half

Ken Seitz: Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions, including the extension of Chinese urea export restrictions into the second half of 2024. US nitrogen inventories were estimated to be below average levels entering the second half.

Ken Seitz: Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions, including the extension of Chinese urea export restrictions into the second half of 2024. U.S. nitrogen inventories were estimated to be below average levels entering the second half.

Kenneth Seitz: Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions, including the extension of Chinese urea export restrictions into the second half of 2024. US nitrogen inventories were estimated to be below average levels entering the second half.

Speaker Change: Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions, including the extension of Chinese urea export restrictions into the second half of 2024.

Speaker Change: U.S. nitrogen inventories were estimated to be below average levels entering the second half and we have seen strong customer engagement on our summer fill programs in the third quarter.

Pedro Farah: And we have seen strong customer engagement on our summer fill programs in the third quarter. I will now turn it over to Pedro to provide more details on our full year 2024 guidance assumptions.

Pedro: I will now turn it over to Pedro to provide more details on our full year 2024 guidance assumptions.

Pedro Farah: As Ken highlighted, we raised our outlook for global potash demand in 2024 and increased our annual potash sales volume guidance to 13.2 to 13.8 million tons. Our sales volume range factors in the in the potential for a relative short duration Canadian rail strike in the second half of 2024. We expect strong North American bondage shipments in the third quarter, and we are planning typical annual maintenance turnarounds, with the majority occurring this year in the fourth quarter.

Pedro Farah: As Ken highlighted, we raised our outlook for global potash demand in 2024 and increased our annual potash sales volume guidance to 13.2 to 13.8 million tons. Our sales volume range factors in the potential for a relatively short-duration Canadian rail strike in the second half of 2024. We expect strong North American bondage shipments in the third quarter, and we are planning typical annual maintenance turnarounds, with the majority occurring this year in the fourth quarter.

Pedro: good morning the sskcan highlight it we raise our outlook for global put ash demand in two thousandand twenty four increased power annual pash sales volume guidance to thirteen point two to thirteen point eight million tons

Speaker Change: Our sales volume range factors in the potential for a relative short duration Canadian rail strike in the second half of 2024.

Speaker Change: We expect strong North American bondage shipments in the third quarter, and we are planning typical annual maintenance turnarounds, with the majority occurring this year in the fourth quarter.

Pedro Farah: In nitrogen, we narrowed our annual sales volume guidance range to 10.7 to 11.1 million tons. We expect higher year-over-year volumes in both the third and fourth quarters, supported by lower planned turnaround activity in the second half. Our phosphate sales volume guidance range was lowered to 2.5 to 2.6 million tons, reflecting the impact of extended turnaround activity and delayed mine equipment moves. The primary driver is the expectation for a more moderate recovery in Brazilian retail earnings. These investments support our 2026 target to increase fertilizer sales volume by 2 to 3 million tons compared to 2023 levels, while improving the efficiency of our operation. And I'll turn it back to Ken.

Pedro Farah: In nitrogen, we narrowed our annual sales volume guidance range to 10.7 to 11.1 million tons. We expect higher year-over-year volumes in both the third and fourth quarters, supported by lower planned turnaround activity in the second half. Our phosphate sales volume guidance range was lowered to 2.5 to 2.6 million tons, reflecting the impact of extended turnaround activity and delayed mine equipment moves. For retail, full year adjusted EBITDA guidance was lowered to $1.5 to $1.7 billion.

Pedro: in nitrogen we narrowed our annual sales volume guidance range to ten point seven to eleven point one million tons

Pedro: we expect higher year -over-year volumes in both the third and fourth quarters supported by lower plan turnaround activity in the second half

Pedro: Our phosphate sales volume guidance range was lowered to 2.5 to 2.6 million tons, reflecting the impact of extended turnaround activity and delayed mine equipment moves.

Pedro: For retail, full year adjusted EBITDA guidance was lowered to $1.5 to $1.7 billion.

Pedro Farah: The primary driver is the expectation for more moderately recovering Brazilian retail earnings, as well as the impact of delayed planting in North America in the second quarter. We have taken a number of strategic actions in Brazil, including the containment of lenders that will result in lower near-term earnings potential but will optimize cash flow. Capital expenditures were down 27% in the first half of 2024.

Pedro Farah: The primary driver is the expectation for more moderate recovering Brazilian retail curtains, as well as the impact of delayed planting in North America in the second quarter. We have taken a number of strategic actions in Brazil, including the containment of lenders that will result in lower near-term earnings potential, but will optimize cash flow. Capital expenditures were down 27% in the first half of 2024.

Speaker Change: The primary driver is the expectation for more moderate recovery in Brazilian retail earnings, as well as the impact of delayed planting in North America in the second quarter.

Speaker Change: We have taken a number of strategic actions in Brazil, including the containment of lenders that will result in lower near-term earnings potential, but will optimize cash flow.

Kenneth Seitz: And we maintain a full year capex guidance of $2.2 to $2.3 billion. As mentioned at our investor day in June, our capital priorities are focused on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio and drive network optimization. We are targeting a more than 10% annual growth rate in proprietary products gross margin, which is expected to be a significant contributor to our 2026 retail adjusted EBITDA target of 1.9 to 2.1 billion.

Speaker Change: Capital expenditures were down 27% in the first half of 2024 and we maintain a full year capex guidance of $2.2 to $2.3 billion.

Pedro Farah: And we maintain a full-year capex guidance of $2.2 to $2.3 billion. As mentioned at our investor day in June, our capital priorities are focused on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio and drive network optimization. We are targeting a more than 10% annual growth rate in proprietary products gross margin, which is expected to be a significant contributor to our 2026 retail adjusted EBITDA target of 1.9 to 2.1 digits.

Speaker Change: As mentioned at our Investor Day in June , our capital priorities are focused on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen.

Speaker Change: The focus in retail is to further expand our proprietary products portfolio and drive network optimization.

Speaker Change: We are targeting a more than 10% annual growth rate in proprietary products gross margin, which is expected to be a significant contributor to our 2026 retail adjusted EBITDA target of $1.9 to $2.1 billion.

Kenneth Seitz: The majority of planned investment capital in our fertilized operations are related to mine automation projects in Potash and the completion of low-cost brownfield expansions in nitrogen. These investments support our 2026 target to increase fertilizer sales volume by two to three million tons compared to 2023 levels, while improving the efficiency of our operations. And I'll turn it back to Ken. Thanks, Pedro.

Pedro Farah: The majority of planned investment capital in our fertilized operations is related to mine automation projects in Ponash and the completion of low-cost brownfield expansions in nitrogen. These investments support our 2026 target to increase fertilizer sales volume by 2 to 3 million tons compared to 2023 levels, while improving the efficiency of our operation. And I'll turn it back to Ken. Thanks, Pedro.

Speaker Change: the majority of plan investment captain in our fertilli operations are related to min ultomation projects in paash and the completion of low cost brown feud expansions in nitrogen

Speaker Change: these investments support our two thousand andtwenty see target to increase fertlightof sales volume by two to three million tons compared to two thousand and twenty three levels while improving the efficiency of our operations and now turningit back to c

Kenneth Seitz: Our results in the first half of 2024 highlighted the advantages of our world-class upstream production assets and downstream retail business in North America and Australia. We delivered record potash sales volumes, lowered our operating costs, and improved retail margins.

Ken Seitz: Our results in the first half of 2024 highlighted the advantages of our world-class upstream production assets and downstream retail business in North America and Australia. We delivered record potash sales volumes, lowered our operating costs, and improved retail margins.

Speaker Change: thanks fra

Speaker Change: Our results in the first half of 2024 highlighted the advantages of our world-class upstream production assets and downstream retail business in North America and Australia.

Speaker Change: We delivered record pot-ass sales volumes, lowered our operating costs, and improved retail margins.

Ken Seitz: We continue to take actions to enhance the quality of our earnings and cash flow with a focus on improving our ability to serve growers in our core markets, maintain the low cost position and reliability of our assets, and position the company for growth. Finally, I would like to say a few words about the CFO transition that we announced yesterday. Mark Thompson will be moving into the CFO role on August 26th. Mark has been with the company for 13 years and has held numerous executive and senior leadership positions, currently serving as our chief commercial officer.

Kenneth Seitz: We continue to take actions to enhance the quality of our earnings and cash flow with a focus on improving our ability to serve growers in our core markets, maintain the low cost position and reliability of our assets, and position the company for growth. Finally, I would like to say a few words about the CFO transition that we announced yesterday. Mark Thompson will be moving into the CFO role on August 26th. Mark has been with the company for 13 years and has held numerous executive and senior leadership positions, currently serving as our chief commercial officer.

Speaker Change: we continue to take actions to enhance the quality of our earnings and cash flow with a focus on improving our ability to serve growers in our core markets maintain the low-cost position and reliability of our assets and position the company for growth

Kenneth Seitz: He brings a strong track record of execution, proven financial and strategic acumen, and in-depth knowledge of our business, that will support the advancement of our strategic priorities and drive a focused approach to capital allocation. On behalf of the Nutrien team, I would also like to thank Pedro for his service and commitment to Nutrien over the last five years. To support the transition, Pedro will move into an advisory role until the end of the year. We will now be happy to take your questions.

Ken Seitz: He brings a strong track record of execution, proven financial and strategic acumen, and in-depth knowledge of our business that will support the advancement of our strategic priorities and drive a focused approach to capital allocation. On behalf of the Nutrien team, I would also like to thank Pedro for his service and commitment to Nutrien over the last five years. To support the transition, Pedro will move into an advisory role until the end of the year. We will now be happy to take your questions.

Speaker Change: Finally, I would like to say a few words about the CFO transition that we announced yesterday.

Mark Thompson: mark thompson will be moving into the c fo role on august twenty six

Mark Thompson: mark has been with the company for thirteen years and is held numerous executive and senior leadership positions currently serving as our chief commercial officer

Mark Thompson: he brings a strong track record of execution pro proven financial and strategic acument and in-depth knowledge of our business that will support the advancement of our strategic priorities and drive a focused approach to capital alloitcation

Speaker Change: On behalf of the Nutrien team, I would also like to thank Pedro for his service and commitment to Nutrien over the last five years. To support the transition, Pedro will move into an advisory role until the end of the year. We will now be happy to take your questions.

Ken Seitz: We will now be happy to take your questions.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any, Your first question comes from the line of Chris Parkinson from Wolf Research. Your line is now open.

Operator: Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number 2. If you are using a speakerphone, please lift the handset before pressing any. Your first question comes from Chris Parkinson from Wolf Research. Your line is now open.

Speaker Change: thank you ladies and gentlemen we will now begin the question and answer session should you have a question ple press are followed by the number one on your touch stone phone you will he prompt that your hnesshas been raised

Operator: You will hear a prompt that your hand has been raised.

Speaker Change: Should you wish to decline from the polling process, please press star followed by the number 2.

Speaker Change: If you are using a speakerphone, please lift the handset before pressing any keys.

Chris Parkinson: your first question comes from the line of chris parkinson from wolf research your line is now open

Chris Parkinson: Great, thank you so much. You know, just given the performance in retail and kind of the puts and takes over the last, you know, season or two, could you potentially speak to, you know, what you're seeing in end market grower demands in both of your major geographies, or I should say three perhaps, you know, what you're hearing from growers, where your inventory levels are, just anything that we could help compartmentalize where we stand today versus, you know, normalized, perhaps more of a normalized setup for 25 and 26. Thank you.

Christopher Parkinson: Great, thank you so much. You know, given the performance in retail and kind of the puts and takes over the last season or two, could you potentially speak to what you're seeing in end market grower demands in both of your major geographies, or I should say three, perhaps? You know, what you're hearing from growers, where your inventory levels are, just anything that we could help compartmentalize where we stand today versus, you know, a normalized, perhaps more of a normalized setup for 25 and 26. Thank you.

Chris Parkinson: Great, thank you so much.

Chris Parkinson: You know, just given the performance in retail and kind of the puts and takes over the last, you know, season or two, could you potentially speak to, you know, what you're seeing in end market grower demands in both of your major geographies, or I should say three, perhaps?

Speaker Change: What you're hearing from growers, where your inventory levels are, just anything that we could help compartmentalize where we stand today versus, you know, normalized, perhaps more of a normalized setup for 25 and 26. Thank you.

Ken Seitz: Yeah, great. Thanks for the question, Chris.

Kenneth Seitz: Yeah, great. Thanks for the question, Chris.

Speaker Change: Thanks for the question Chris, and yeah, obviously with some softening, ag commodity prices

Chris Parkinson: we've seen that impact grower sentiment that's true

Speaker Change: at the same time if we look at what

Speaker Change: cost of input has done

Jeff Holzman: that grow philip affordability is still there and all the incentives exist for growers to maximize yields and but certainly jeff can talk about what you's seeing on the ground in key regions like north american australia

Jeff Tarsi: And yeah, obviously, with some softening, ag commodity prices, we've seen that impact grower sentiment. That's true. At the same time, if we look at what your cost of inputs has done, that grower affordability is still there, and all the incentives exist for growers to maximize yields. But certainly, Jeff can talk about what he's seeing on the ground in key regions like North America and Australia. Yeah, thanks, Chris. And good

Jeff Tarsi: Yeah, thanks, Chris. And a good question. And obviously, we would, you know, growers love to see commodity prices higher. If I look at our business, you know, we had, I think, a very strong print in the second quarter. And more importantly, we had very strong margins across all three shelves of our business, crop protection, seed, and fertilizer. And, you know, if I look at it from a grower standpoint, and if I look at what USDA is projecting from a crop yield standpoint, I can tell you that I haven't seen growers pull back on giving their crops the inputs they need to maximize yields.

Jeff Tarsi: Yeah, thanks, Chris. And good question. And obviously, we would, you know, growers love to see commodity prices higher. If I look at our business, you know, we had, I think, a very strong print the second quarter. And more importantly, we had very strong margins across all three shelves of our business, crop protection, seed, and fertilizer. And, you know, if I look at it from a grower standpoint, and if I look at what USDA is projecting from crop yield standpoint, I can tell you that I haven't seen growers pull back on giving their crops the inputs they need to maximize yields.

Jeff Tarsi: And yeah, obviously, with some softening in ag commodity prices, we've seen that impact grower sentiment. That's true. At the same time, if we look at what your cost of inputs has done, grower affordability is still there, and all the incentives exist for growers to maximize yields. But certainly, Jeff can talk about what he's seeing on the ground in key regions like North America and Australia. Yeah, thanks, Chris. And a good question.

Jeff Holzman: yes thanks chris and good question and obviously we've growwers loveseek commodity prices higher if i look at our business

Speaker Change: You know, we had, I think, a very strong print the second quarter.

Speaker Change: and more importantly we had very strong margins across all three sales of our business cro protection se

Speaker Change: and fertilizer and you know if I look at it from a grower standpoint and if I look at what USDA is projecting from crop yield standpoint I can tell you that I haven't seen growers pull back on giving their crops the inputs they need to maximize yields.

Jeff Tarsi: Going forward, we think that from an inventory standpoint, we're in a really good position right now. And we had a real strong focus on getting our inventory down as low as we possibly could. Through the first half, we brought our inventory down roughly $700 million. A large part of that is in the crop protection shelf. And we had a very clear focus on doing that.

Speaker Change: We think that from an inventory standpoint, we're in a really good position right now. And we had a real strong focus on getting our inventory down as low as we possibly could.

Jeff Tarsi: Going forward, we think that from an inventory standpoint, we're in a really good position right now, and we have a really strong focus on getting our inventory down as low as we possibly can. Through the first half, we brought our inventory down roughly $700 million. A large part of that is on the crop protection shelf. And we had a very clear focus on doing that. And probably more impressive is that we've been able to bring our inventory down in each of the geographies.

Speaker Change: Through the first half, we brought our inventory down roughly $700 million.

Speaker Change: A large part of that is in the crop protection shelf, and we have a very clear focus on doing that.

Jeff Tarsi: And probably more impressive is we've been able to bring our inventory down in each of the geographies. And probably more importantly, we brought it down just under $250 million in our Brazil business. And so, again, if I look going forward, if we pull the yields off that are projected, there's going to be an awful lot of nutrient removal from the soil. And if we get an open fall, I would expect that, you know, we would see strong demand for MP&K as we go into the fall season.

Jeff Tarsi: And probably more importantly, we brought it down to just under $250 million in our Brazil business. And so, again, if I look going forward, if we pull the yields off that are projected, there's going to be an awful lot of nutrient removal from the soil. And if we get an open fall, I would expect that, you know, we would see strong demand for MP&K as we go into the fall season. But again, that's going to be weather dependent. But again, it's a really solid print across the first half. We've seen margins return to what we consider to be historical levels. Some of our shelves may be a bit above historical averages.

Speaker Change: I think more impressive is we've been able to bring our inventory down in each of the geographies, and probably more importantly we've brought it down just under $250 million.

Speaker Change: in our Brazil business. And so.

Speaker Change: Again, if I look going forward, if we pull the yields off that are projected, there's going to be an awful lot of nutrient removal.

Speaker Change: from the soil and we get an open fall, I would expect that, you know, we would see strong demand for MP&K as we go into the fall season. Again, that's going to be weather dependent. But

Jeff Tarsi: Again, that's going to be weather dependent. But again, it's a really solid print across the first half. We've seen margins return to what we consider to be historical margins. Some of our shelves may be a bit above historical margins.

Speaker Change: Again, it's a really solid print across the first half. We've seen margins return to what we consider to be historical margins. Some of our shifts may be a bit above historical margins.

Andrew Wong: Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open.

Andrew Wong: Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open. Hey, good morning. Thanks for taking the time to join us today.

Andrew Wong: Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open. Hey, good morning. Thanks for taking my questions.

Speaker Change: Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open.

Ken Seitz: Hey, good morning. Thanks for taking my questions. On the potash segment, you know, at the moment, you've got six operating potash mines, and they're operating at about an 80-100% operating rate. Could it make sense to maybe curtail production or shut down one of the higher cost mines like you had done previously at Banskoy and consolidate production so it's a little bit more efficient around fewer mines, which could potentially save on costs?

Unknown Attendee: Yeah, thanks, Chris. And a good question.

Andrew Wong: Hey, good morning. Thanks for taking my questions.

Speaker Change: On the potash segment, you know, at the moment, you've got six operating potash mines. They're operating at about an 80-85% operating rate.

Speaker Change: Could it make sense to maybe curtail production or shut down one of the higher cost mines, like you had done previously at Banskoi, and consolidate production so it's a little bit more efficient around fewer mines, which could potentially save on costs?

Ken Seitz: Thank you, Andrew, for the question. And I can assure you that we've looked at that very closely over the years. And, you know, one of the benefits of having six minds and the flexibility and production is the ability to respond to our customers because Unknown Attendee, Stephen Byrne, Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee, Stephen Byrne, Unknown Attendee, Unknown Attendee, Stephen Byrne, Unknown Attendee, Unknown Attendee, Stephen Good morning. I had a few questions about the unauthorized execution of the derivative.

Kenneth Seitz: Thank you, Andrew, for the question. And I can assure you that we've looked at that very closely over the years. And, you know, one of the one of the benefits of having six minds and the flexibility and production is the ability to respond to our customers because Unknown Attendee, Stephen Byrne, Unknown Attendee, Unknown Attendee, Unknown Attendee, [inaudible] Unknown Attendee, Unknown Attendee, Unknown Attendee, Unknown Attendee, Your next question comes from the line of Jacob Bout from CIBC. Your line is now open. Good morning. I had a few questions about the unauthorized execution of that derivative.

Speaker Change: thank you and for the question and kind of sure you that we've looked at that very closely over the years and you know one of the one of the benefits of having six mins and the flexibility and production is the ability to respond to our customers because

Speaker Change: even this year where we've seen delayed contracts in india in china which is course standard grgreatade products we have the ability

Speaker Change: to produce additional granular and serve granular markets while we are watching in a delays and the strander grade markets and so that flexibility among that six m network allows us to as i say the needs of our customers

Speaker Change: Curtailing one mind definitely limits that flexibility because we have some minds that produce more standard grade and some minds that produce more granular products. So I would say in this environment, again, where we've seen shifting trade flows.

Speaker Change: We've seen additional volume coming out of Russia and Belarus.

Speaker Change: and we've seen a mix a balance shifting between granular and standard grade markets that flexibility is actually a big advantage for us and it's advbage that is playing out certainly as we speak in one that

Speaker Change: We want to preserve because it does create value for shareholders.

Jacob Bout: Good. Thank you, Jacob.

Jacob Bout: Your next question comes from the line of Jacob Bout from CIBC. Your line is now open.

Speaker Change: Your next question comes from the line of Jacob Bout from CIBC. Your line is now open.

Jacob Bout: Good morning.

Jacob Bout: how few questions about the unauthorized execution about derivatives contract that resulted in that large charge just want to understand youknow

Jacob Bout: What was the situation that led up to that?

Speaker Change: Unknown Speaker Is it kind of normal course to have such a large exposure? Is this only a Brazil issue? And then maybe just comment on, you know, your use of derivatives as a risk management strategy.

Ken Seitz: So to answer your specific question, was this in the normal course? The answer is no. You know, what led up to it was Obviously, we're doing a lot of work in Brazil and some organizational changes that led to challenges with segregation of duties and some of the checks and balances, governance, and controls that we have in place. We identified that quickly. We dealt with it quickly, and we have remediated the issue, only affecting Brazil.

Kenneth Seitz: So to answer your specific question, was this in the normal course? The answer is no. You know, what led up to it was Obviously, we're doing a lot of work in Brazil and some organizational changes that led to challenges on segregation of duties and some of the checks and balances, governance and controls that we have in place. We identified that quickly. We dealt with it quickly. And we have remediated the issue, only contained to Brazil.

Speaker Change: good thank you jacob so to answer your a specific question was this in the normal course the answers but you know what led up to it was

Speaker Change: Obviously we're doing a lot of work in Brazil and some organizational changes that

Speaker Change: That led to challenges on segregation of duties and in some of the checks and balances governance and controls that we have in place We identified that quickly. We dealt with it quickly and we have remediated the issue. It's certainly only

Kenneth Seitz: And we've had our auditors have a look at all of this and certainly on a path to remediation. You know, with respect to how we use instruments to hedge, I'll pass that over to Pedro to provide some more explanation. Thank you, Jacob.

Speaker Change: Only contained to Brazil, and we've had our auditors have a look at all of this and certainly on a path to remediation

Ken Seitz: And we've had our auditors have a look at all of this, and we are certainly on a path to remediation. You know, with respect to how we use instruments to hedge, I'll pass that over to Pedro to provide some more explanation. Thank you, Jacob.

Pedro: With respect to how we use instruments to hedge, I'll pass that over to Pedro to provide some more explanation.

Pedro Farah: Thank you, Jacob. What we use is a typical, you know, combination of forwards and options. So there's nothing too exotic there to basically cover positions that we have short in dollars for that position. But, as mentioned by Ken, I think the issues were more actions that we're taking outside of the normal policy. And those were quickly identified and rectified, and we have all the controls being put in place now that we are quite confident will totally remediate the situation for the future.

Pedro Farah: Thank you, Jacob. What we use is a typical, you know, combination of forwards and options. So there's nothing too exotic there to basically cover positions that we have short in dollars for that position. But as mentioned by Ken, I think the issues were more actions that we're taking outside of the normal policy. And those were quickly identified, rectified, and we have all the controls being put in place now that we are quite confident will be totally remediating the situation for the future.

Pedro: thank you jacob what we use is a typical combination of forward and options so there's nothing

Pedro: to exotic there to ically cover positions that we have short and dollars for that position but that's mentioned by

By: By can I think the issues were more actions that were taking outside of the normal policy.

Speaker Change: and those who are quickly atidentified rectified and we have all the controls being putin place now that we are quite confident will be to remediating the situation for the future

Joel Jackson: Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open.

jolo jackson: your next question comes from the line of jolo jackson from bimmo capital markets your line is now open

Kenneth Seitz: Ken and team, you know, you had your Investor Day in June, it was less than it was fewer than two months ago. And I think the focus of that event really seen how you're going to grow retail the next couple of years, you know, from about 1.75 billion this year, pick up maybe a quarter of a billion dollars of EBITDA over the next couple of years. With your update now you're guiding down retail, you know, 150 million lower.

Ken Seitz: Ken and team, you know, you had your investor day in June; it was less than it was fewer than two months ago. And I think the focus of that event really seeing how you're going to grow retail the next couple of years, you know, from about 1.75 billion this year to pick up maybe a quarter of a billion dollars, even though the next couple of years, with your update now, you're guiding down retail, you know, 150 million lower.

Speaker Change: Morning, I'm Ken and team.

Speaker Change: You know, you had your Investor Day in June , it was less than, it was fewer than two months ago.

Jolo Jackson: And I think the focus of that event really seeing how you're going to grow retail the next couple of years, you know, from about $1.75 billion this year, pick up maybe a quarter of a billion dollars, even down the next couple of years. With your update now, you're guiding down retail, you know, $150 million lower.

Ken Seitz: And what strikes me is, how do you reconcile your review lesson two months ago, this is a big growth engine for Nutrien, but now you're guiding down retail, you're making that challenge harder. Do you still stick to those targets? What's changed? Do you need to review everything? What do you think? Yeah, thanks.

Kenneth Seitz: And what strikes me is how do you reconcile your view less than two months ago, this is a big growth engine for Nutrien. But now you're guiding down retail, you're making that challenge harder, do you still stick to those targets? What's changed? Do you need to review everything? What do you think? Yeah, thanks.

Speaker Change: And what strikes me is how do you reconcile your review lesson two months ago, this is the big growth engine for Nutrien, but now you're guiding down retail, you're making that challenge harder. Do you still stick to those targets? What's changed? Do you need to review everything? What do you think?

Kenneth Seitz: Yeah, thanks for the question, Joel. And we absolutely still believe in those targets and are, in fact, progressing toward those targets. When we talk about our North American and Australian business, organic growth, or what we can do on proprietary products and network optimization, and some of the investments we're making in our digital platform. If we look at the margin improvements in the first half of 2024, we're very encouraged by the path that we're on in North America and Australia. When we talk about guiding down at the moment, we essentially have two challenges. One is what we talked about in Brazil.

Ken Seitz: Yeah, thanks for the question, Joel. And we absolutely still believe in those targets and are, in fact, progressing toward those targets. When we talk about our North American and Australian business, organic growth is what we can do on proprietary products and network optimization and some of the investments we're making in our digital platform. If we look at the margin improvements in the first half of 2024, we're very encouraged by the path that we're on in North America and Australia. When we talk about guiding down at the moment, we essentially have two challenges. One is what we talked about in Brazil.

Speaker Change: yeah thanks for the question joel and we absolutely still believe in those targets and in fact progressing toward those targets when we talk about north american and australian business organic growth

Speaker Change: are what we can do on proprietary products and network optimization and some of the investments we're making in our digital platform. If we look at the margin improvements in the first half of 2024, we're very encouraged by the path that we're on in North America and Australia.

Kenneth Seitz: And, you know, as it relates to Brazil, we can talk more about the challenges that we've seen in terms of taking longer for that market to stabilize. You know, we were looking for inventories to clear out through 2024. And so we could emerge into 2025 in a better position.

Speaker Change: When we talk about guiding down at the moment, we essentially have two challenges. One is what we talk about in Brazil and, you know, as it relates to Brazil, we can talk more about...

Ken Seitz: And you know, as it relates to Brazil, we can talk more about the challenges that we've seen in terms of taking longer for that market to stabilize. You know, we were looking for inventories to clear through 2024, and so we can emerge into 2025 in a better position.

Ken Seitz: That said, we've seen some changes in grower buying patterns where there's been a shift to generic crop protection products and even straight commodity fertilizers, which is having the effect of taking longer for in-country inventories to clear through the system. We've also seen some unfavorable weather conditions. And we're also dealing with this change in buyer behavior where it's just-in-time purchasing on the farm. And that obviously creates challenges through the supply chain and so on. We do have a plan in Brazil, and it is a plan where we're going to, you know, as we speak, improve margins. We've talked about closing 21 locations.

Speaker Change: The challenges that we've seen in terms of taking longer for that market to stabilize.

Speaker Change: We were looking for inventories to clear out through 2024 and so we could emerge in 2025 in a better position. That said, we've seen some changes with grower buying patterns where there's been a shift to generic crop protection products.

Kenneth Seitz: That said, we've seen some changes with grower buying patterns where there's been a shift to generic crop protection products, and even straight commodity fertilizers, which is having the effect of taking longer for in-country inventories to clear through the system. We've also seen some unfavorable weather conditions. And we're also dealing with a change in buyer behavior where it's just in time purchasing on the farm. And that obviously creates challenges through the supply chain and so on.

Speaker Change: and even straight commodity fertilizers which is having in the effect of taking a longer for

Speaker Change: in-country inventories to clear through the system. We've also seen some unfavorable weather conditions and and we're also dealing with this a change in buyer behavior where it's just in time purchasing.

Kenneth Seitz: We do have a plan in Brazil, and it is a plan where we're going to, as we speak, improving margins. We've talked about closing 21 locations. We've talked about curtailing three blenders, cost reduction initiatives, and certainly working down our inventories. And that's happening as we speak. You know, when we step back, we believe in our presence in Brazilian agriculture, and we believe in that market is, it's just taking time to stabilize.

Speaker Change: on the farm and that obviously creates challenges through the supply chain and so on.

Ken Seitz: We do have a plan in Brazil, and it is a plan where we're going to, as we speak, improving margins, we've talked about closing 21 locations, we've talked about curtailing 3 blenders, cost reduction initiatives, and certainly working down our inventories, and that's happening as we speak.

Ken Seitz: We've talked about curtailing three blenders, cost reduction initiatives, and certainly working down our inventories, and that's happening as we speak. You know, when we step back, we believe in our presence in Brazilian agriculture, and we believe in that market. It's just taking time to stabilize. So again, when we talk about the challenges and the guide down in our retail EBITDA, Brazil plays a huge role in that, and we are on a path to a better day in Brazil.

Ken Seitz: You know, when we step back, we believe in our presence in Brazilian agriculture and we believe in that market.

Kenneth Seitz: So, so again, when we talk about the challenges, and the guide down in, in our retail EBITDA, Brazil plays a huge role in that, and we are on a path to, to a better day in Brazil. The other one is, you know, we're always dealing with weather in agriculture. And it is true that we had a wet spring in May in North America, that we didn't see all the product go to ground that we would normally have seen.

Speaker Change: it's just taking time to stabilize so so again when we talk about the challenges and the guidedown in in our retail ebitda brazil plays a huge role in that and we are on a tough

Ben Theurer: The other one is, you know, we're always dealing with weather in agriculture, and it is true that we had a wet spring in May in North America, so we didn't see all the product go to ground that we would normally have seen. We're heading into the fall application season here. This crop in North America is going to pull a lot of crop nutrition out of the ground. We had a very strong summer fill program, and so as we head into the fall, we're looking to, you know, weather when they're pending a strong fall application season. So it's all to say, Joel, that we absolutely believe in what we talked about on investor day. We're dealing with some near-term challenges here that we have a plan for.

Ken Seitz: to a better day in Brazil. The other one is, you know, we're always dealing with weather in agriculture, and it is true that we had a wet spring in May in North America.

Speaker Change: that we didn't see all the product go to ground that we would normally have seen. We're heading into the fall application season here. This crop in North America is going to pull a lot of crop nutrition out of the ground.

Kenneth Seitz: We're heading into the fall application season here, this, this crop in North America is going to pull a lot of crop nutrition out of the ground. We had a very strong summer fill program. And so that as we head into the fall, we're looking to, you know, weather when they're pending a strong fall application season. So it's all to say, Joel, that we absolutely believe in what we talked about in investor day, we're dealing with some, some near term challenges here that we have a plan for. Your next question comes from the line of Ben Theurer from Barclays. Your line is now open. Yeah, good morning, and thanks for

Speaker Change: We had a very strong summer fill program and so that as we head into the fall we're looking to you know whether when they're pending a strong fall application season so it's all to say Joel that we absolutely believe in what we talked about in investor day we're dealing with some

Ken Seitz: some near-term challenges here that we have a plan for.

Ken Seitz: Your next question comes from the line of Ben Theurer from Barclays. Your line is now open.

Ben Theurer: Your next question comes from the line of Ben Theurer from Barclays. Your line is now open.

Ben Theurer: Yeah, good morning, and thanks for taking my question. Just two real quick ones. One, as you look into the upgrade of your PADES volumes globally, but then at the same time, your internal guidance is a little more muted. Could you quantify what your expectation is as to potential disruption with that rail strike that you've mentioned?

ben put: your next question comes from the line of ben put from bary your line is now open

Speaker Change: Good morning and thanks for taking my question. Just two real quick ones. So one, as you look into the upgrade of your potash volumes globally, but then at the same time,

Speaker Change: your internal guidance raises is a little more muted could you quantify what your expectation is as to potential disruption the railstrike that you've mentioned

Ben Theurer: Yes, thanks, Ben. And you know, when we guide on potash volumes, we have considered the potential for a short rail strike. But yeah, there's a lot of moving parts there. So I'll pass it over to Mark Thompson. Yeah, thanks, Ken. Good morning.

Ken Seitz: Yes, thanks, Ben. And you know, when we guide on potash volumes, we have considered the potential for a short rail strike. But yeah, there's a lot of moving parts there. So I'll pass it over to Mark Thompson. Thanks, Ken. Good morning.

Mark Thompson: Yes, thanks Ben. And you know, when we guide on potash volumes, we have considered the potential for a short rail strike. But yeah, there's a lot of moving parts there. So I'll pass it over to Mark Thompson.

Mark Thompson: So yeah, first and foremost, obviously, we're concerned about the potential for the rail strike, as Pedro mentioned in his comments, given the impact that this would have not only on Nutrien, but on our customers and the broader economy. And given the dependence, particularly of our offshore potash exports through Campitex on Canadian rail on a consistent basis, really any work stoppage would have some impact on the business. So with the uncertainty surrounding the situation in recent months, you know, we've done a few things that are within our control, charge up our domestic distribution network, and Campatex has also worked to take proactive steps to support customers and charge up their network to the degree that that's possible.

Mark Thompson: So yeah, first and foremost, obviously, we're concerned about the potential for the rail strike, as Pedro mentioned in his comments, given the impact that this would have not only on Nutrien but on our customers and the broader economy. And given the dependence, particularly of our offshore potash exports through Campitex, on Canadian rail on a consistent basis, really any work stoppage would have some impact on the business. So with the uncertainty surrounding the situation in recent months, you know, we've done a few things that are within our control, such as charged up our domestic distribution network, and Campatex has also worked to take proactive steps to support customers and charge up their network to the degree that that's possible.

Mark Thompson: Yeah, thanks, Kent. Good morning, Ben.

Mark Thompson: Yeah, thanks Kent. Good morning, Ben.

Ben: thef thanks can't good morning ben so you have first and foremost obviously we're concerned about the potential for the real strikeest proll mention is comments given the impact that this would have not only on nutrient but

Speaker Change: on our customers and the broader economy and given the dependence particularly of our offshore pod ash exports through Kempitex on Canadian RAIL on a consistent basis really any Lancet work stop would have some impact on the business.

Speaker Change: So with the uncertainty surrounding the situation in recent months, you know, we've done a few things that are within our control. Charge up our domestic distribution network and Campatex has also worked to take proactive steps to support customers and charge up their network to the degree that that's possible.

Mark Thompson: Just on your question on guidance, look, I think there's some unknowns here, given this is relatively unprecedented, but, you know, in our guidance, we've embedded, we'll say a few days to a maximum of a week of potential impact from a rail strike. And if we were to see that type of eventuality, we would expect that we would be trending towards the lower end of our potash sales volume guidance. Now, in the event that we move through this situation, and we don't see a logistics interruption, that would see a situation where we'd be trending more towards the midpoint, or potentially even the upper end of our potash sales volume guidance, all else equal. So, when you take that into account, and you look at us raising our full year global shipment estimate by about a million tons, I think that probably helps. , , , , , , , ,

Mark Thompson: Just on your question on guidance, look, I think there are some unknowns here given this is relatively unprecedented, but, you know, in our guidance, we've embedded a few days to a maximum of a week of potential impact from a rail strike. And if we were to see that type of eventuality, we would expect that we would be trending towards the lower end of our potash sales volume guidance. Now, in the event that we move through this situation and we don't see a logistics interruption, that would see a situation where we'd be trending more towards the midpoint or potentially even the upper end of our potash sales volume guidance, all else equal. So, when you take that into account, and you look at us raising our full year global shipment estimate by about a million tons, I think that probably helps. ,,,,,,,

Ken Seitz: Just on your question on guidance, look I think there's some unknowns here given this is relatively unprecedented but

Speaker Change: You know, in our guidance, we've embedded, we'll say a few days to a maximum of a week of potential impact from a rail strike. And if we were to see that type of eventuality, we would expect that we would be trending towards the lower end of our potash sales volume guidance.

Speaker Change: Now, in the event that we move through this situation and we don't see a logistics interruption, that would be a situation where we'd be trending more towards the midpoint or potentially even the upper end of our Potash Sales Volume Guidance.

Ken Seitz: All else equal. So when you take that into account, and you look at us raising our full year global shipment estimate by about a million tons, I think that probably helps

Speaker Change: square square up the the plugon you know a typical market share for us in that one nineteen to nineteen and a half percent range that we've talked about historically

Vincent Andrews: Your next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open.

Speaker Change: Your next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open.

Vincent Andrews: Thank you. Good morning, everyone.

Speaker Change: thank you morningeveryone i'm wondering if you could talk a bit more about brazil and maybe crop chemicals in particular you know your suppliers or someofyour suppliers

Speaker Change: have reported, they've obviously been speaking about the challenges down there as well. It seems like there's price competition being led by generics, but maybe broader than that. And I'm just wondering, you know, are you seeing, you know, are your inventory positions there in terms of your cost? Are they...

Speaker Change: Are they where they need to be? Are you getting concessions from the suppliers? Or is there more work to be done there? And, you know, how much is Crop Chem?

Speaker Change: of the $150 million dollar reduction in EBITDA for the year, how much of that is associated with Crop Chem to the extent you can estimate?

Unknown Attendee: And obviously, we would, you know, growers love to see commodity prices higher. If I look at our business, you know, we had, I think, a very strong print in the second quarter. And more importantly, we had very strong margins across all three shelves of our business, crop protection, seed, and fertilizer. And, you know, if I look at it from a grower standpoint, and if I look at what USDA is projecting from a crop yield standpoint, I can tell you that I haven't seen growers pull back on giving their crops the inputs they need to maximize yields. Hey, good morning. Thanks for taking my questions.

Speaker Change: yeah no thanks ments and i think you gotidentify that and both of the of the challenges and crop protection of the moment and certainly as you say this which to generic crop protection among some farmers is certainly having an impact ' pass it over to jeff t seed provide more detail

Vincent Andrews: I'm wondering if you could talk a bit more about Brazil and maybe crop chemicals in particular, you know, your suppliers or some of your suppliers have reported, they've obviously been speaking about the challenges down there as well. It seems like there's price competition being led by generics, but maybe broader than that. And I'm just wondering, you know, are you seeing, you know, are your inventory positions there in terms of your cost? Are they where they need to be?

Ken Seitz: Are you getting concessions from the suppliers, or is there more work to be done there? And, you know, how much of the $150 million reduction in EBITDA for the year is crop chem? How much of that is associated with crop chem to the extent that you can estimate?

Ken Seitz: I'm wondering if you could talk a bit more about Brazil and maybe crop chemicals in particular. Your suppliers or some of your suppliers have reported that they've obviously been speaking about the challenges down there as well. It seems like there's price competition being led by generics, but maybe broader than that. And I'm just wondering, you know, are you seeing your inventory positions there in terms of your cost? Are they where they need to be?

Jeff Tarsi: Yeah, no thanks, Vincent. And I think you identified it as one of the challenges and crop protection at the moment. And certainly, as you say, this switch to generic crop protection among some farmers is certainly having an impact, but I'll pass it over to Jeff Tarsi to provide more detail.

Unknown Attendee: Yeah, Vincent, thanks. And look, I don't think that anyone's exempt from the market pressures that we've seen in Brazil over the last 18 to 24 months.

Unknown Attendee: and that pressure has been particularly intense around the crop kiln sector, really starting in the back half of last year, and what we have seen, and I think it was mentioned a little bit earlier, is

Speaker Change: is that we're seeing more entrants on the generic side of the market and we're seeing growers as they're squeezed financially as well looking for lower cost options.

Speaker Change: particularly particularly around generic cheummistryet

Vincent Andrews: Are you getting concessions from the suppliers or is there more work to be done there? And, you know, how much is crop chem of the, you know, $150 million reduction in EBITDA for the year? How much of that is associated with crop chem to the extent you can estimate?

Speaker Change: from that standpoint and i think we'll continue to see that for a bit you mentioned you know what portion of our business is from a crop tam basis wherere we're basically a third to third to third there from a crop k fertilizer and see

Speaker Change: From an inventory standpoint, we've brought our inventory down quarter over quarter, roughly about $250 million.

Speaker Change: and a large portion of that, 250 million for Brazil, and a large portion of that.

Speaker Change: is in the crop chem sector, so I like where we've got ourselves positioned.

Speaker Change: From a Kroc-Chem standpoint, and you know, again, we continue to see margin pressure there, and while we've done a good job of getting our inventory down, what's important as we go forward

Speaker Change: is that the rest of the retail industry get their crop killed in that same position that we want to see some alleviations on margins. As Ken mentioned a bit earlier, we're just super focused right now on margin improvement across all three shelves of our business.

Speaker Change: cash generation and again manine our inventories down just as tight as we can possibly get them

Speaker Change: Your next question comes from the line of Ben Isaacson from Scotiabank. Your line is now open.

Speaker Change: Thank you very much and good morning everyone. So back to Brazil, can you mention that you have a plan in place for operational improvements in the near term, but maybe a bit of a longer term question?

Speaker Change: You guys have taken roughly $800 million of write-downs in the region over the past year or so and another $200 million of this FX issue.

Speaker Change: So a billion dollars of challenges against a business that generates somewhere between $80 and $100 million in EBITDA, is that right? So what are we playing for here and what's still at risk and has that run rate changed given that you're making some pivots in the region? Thank you.

Jeff Tarsi: Yeah, no, thanks, Vincent. And I think you identified a lot of the challenges in crop protection at the moment. And certainly, as you say, the switch to generic crop protection among some farmers is certainly having an impact. But I'll pass it over to Jeff Tarsi to provide more detail. Yeah, Vincent, thanks and

Jeff Tarsi: Yeah, Vincent, thanks. And look, I don't think that anyone's exempt from the market pressures that we've seen in Brazil over the last 18 to 24 months, and that pressure has been particularly intense around the crop kiln sector, really starting back half of last year and what we have seen, I think it was mentioned a little bit earlier, is is that we're seeing more entrants on the generic side of the market, and we're seeing growers as they're squeezed financially as well, looking for lower cost options, particularly around generic chemistry from that standpoint.

Jeff Tarsi: So, Yeah, Vincent, thanks, and...

Jeff Tarsi: Yeah, Vincent, thanks. And look, I don't think that anyone's exempt from the market pressures that we've seen in Brazil over the last 18 to 24 months, and that pressure has been particularly intense around the crop kiln sector really starting back half of last year and what we have seen I think it was mentioned a little bit earlier is is that we're seeing more entrance on the generic side of the market, and we're seeing growers as they're squeezed financially as well, looking for lower cost options, particularly around generic chemistry from that standpoint.

Speaker Change: yes thanks and thanks for the question that yes we do obviously doing a complete commercial review of our business in

Speaker Change: brazil were' so a small percent of the market less than two percent of the market in brazil and we've been through just an period of extraordinary volatility since really the conflict in eastern europe

Jeff Tarsi: And I think we'll continue to see that for a bit. You mentioned, you know, what portion of our business is from a crop chem basis, and we're basically a third, a third, a third there from a crop chem, fertilizer and seed standpoint. From an inventory standpoint, as I mentioned earlier, we brought our inventory down quarter over quarter, roughly about $250 million, and a large portion of that, and 250 million for Brazil, and a large portion of that is in the crop chem sector.

Jeff Tarsi: And I think we'll continue to see that for a bit. You mentioned what portion of our business is on a crop chem basis, and we're basically a third, a third, a third there from a crop chem, fertilizer, and seed standpoint. From an inventory standpoint, as I mentioned earlier, we brought our inventory down quarter over quarter, roughly about $250 million, and a large portion of that, and $250 million for Brazil, a large portion of that is in the crop chem sector.

Jeff Tarsi: So I like where we've got ourselves positioned from a crop chem standpoint. And, you know, again, we continue to see margin pressure there. And while we've done a good job of getting our inventory down, what's important as we go forward is that the rest of the retail industry gets their crop chem in that same position that we want to see some alleviation on margins. As Ken mentioned a bit earlier, we're just super focused right now on margin improvement across all three shifts of our business, cash generation, and again managing our inventories down just as tight as we can possibly get

Speaker Change: And we're at a time in the market that's challenged for all the reasons that we've talked about today and, of course, Brazilian agriculture and Brazilian retail won't be challenged forever because that region, it continues to grow in terms of...

Jeff Tarsi: So I like where we've got ourselves positioned from a crop chem standpoint. And, you know, again, we continue to see margin pressure there. And while we've done a good job of getting our inventory down, what's important as we go forward, is that the rest of the retail industry get their crop chem in that same position that we want to see some alleviations on margins. As Ken mentioned a bit earlier, we're just super focused right now on margin improvement across all three shifts of our business, cash generation and again managing our inventories down just as tight as we can possibly get.

Speaker Change: agriculture and and farmers continue to look for maximizing yields and therefore appropriate crop input so the market is

Speaker Change: going to come around. We know that. It's a matter of time for us as Nutrien.

Speaker Change: Yeah, we have been assessing how it is that we continue to gain access to Brazilian agriculture as one of the largest potash suppliers into the country. As we look at proprietary products and the opportunity to grow that business.

Pedro Farah: And for the balance of it, yes, a strategic review on what makes sense for us going forward to your point, Ben.

Ken Seitz: Thank you very much and good morning, everyone. So, back to Brazil. Ken, you mentioned that you have a plan in place for operational improvements in the near term, but maybe a bit of a longer term question. You guys have taken roughly $800 million of write-downs in the region over the past year or so, and then another $200 million of this FX issue. So $1 billion in challenges against a business that generates somewhere between $80 and $100 million in EBITDA. Is that right? So what are we playing for here and what's still at risk? And how's that run rate changed given that you're making some pivots in the region? Thank you. Yeah, thanks.

Unknown Attendee: Ken and team, you know, you had your investor day in June; it was less than it was fewer than two months ago. And I think the focus of that event was really seeing how you're going to grow retail the next couple of years, from about 1.75 billion this year to pick up maybe a quarter of a billion dollars of EBITDA over the next couple of years. With your update now, you're driving down retail, you know, by 150 million lower.

Ben Isaacson: Your next question comes from the line of Ben Isaacson from Scotiabank. Your line is now open.

Speaker Change: Your next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is now open.

Ben Isaacson: Thank you very much and good morning, everyone. So back to Brazil, can you mention that you have a plan in place for operational improvements in the near term, but maybe a bit of a longer term question. You guys have taken roughly $800 million of write downs in the region over the past year or so and another $200 million of this FX issue. So a billion dollars of challenges against a business that generates somewhere between $80 and $100 million in EBITDA, is that right? So what are we playing for here and what's still at risk and has that run rate changed given that you're making some pivots in the region? Thank you. Yeah, thanks.

Ken Seitz: Yeah, thanks. And thanks for the question, Ben.

Speaker Change: Thanks very much. You lowered your retail guide by about $150 million. How much of the lowering came from the weather in the U.S. and how much came from South American operations?

Kenneth Seitz: Yeah, thanks. And thanks for the question, Ben.

Ken Seitz: Yeah, we're obviously doing a complete commercial review of our business in Brazil. We're still a small percent of the market, less than 2% of the market in Brazil. And we've been through just a period of extraordinary volatility, ever since, really, the conflict in Eastern Europe. And we're in a time in the market that's challenged for all the reasons that we've talked about today. And, of course, Brazilian agriculture and Brazilian retail won't be challenged forever because that region continues to grow in terms of, and farmers continue to look for maximizing yields and therefore appropriate crop input.

Unknown Attendee: Thanks Jeff, and certainly the majority of that change was related to everything that we've talked about with respect to Brazil. The impact of wet May in North America contributed to about a third of that adjustment.

Kenneth Seitz: Yeah, we, you know, obviously doing a complete commercial review of, of our business in Brazil, we're still a small percent of the market less than 2% of the market in Brazil. And we've been through just in a period of extraordinary volatility, ever since really the conflict in Eastern Europe. And we're in a time in the market that's challenged for all the reasons that we've talked about today. And, of course, Brazilian agriculture and Brazilian retail won't be challenged forever because that region continues to grow in terms of, Agriculture and farmers continue to look for maximizing yields and therefore appropriate crop input.

Ken Seitz: So the market is going to come around. We know that it's a matter of time for us as Nutrien. Yeah, we have been assessing how it is that we continue to gain access to Brazilian agriculture as one of the largest potash suppliers into the country. As we look at proprietary products and the opportunity to grow that business in Brazil, and for the balance of it, yes, a strategic review on what makes sense for us going forward. Your next question comes from the line of Jeff Zekauskas.

Speaker Change: Your next question comes from the line of Joshua Spector from UBS. Your line is now open.

Jeff Zekauskas: Your next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is now open. Thanks very much.

Speaker Change: thank you this is a little pent on the josh i'd sortsure to followall up on the pathway for retail towards the two thousand and twenty six targets

Speaker Change: I mean, you're sort of pointing to about $1.6 billion in AVID job this year.

Speaker Change: And then bridging that to the $2 billion. I mean, over the last five years, retail has only kind of grown either direction.

Speaker Change: amid-single digit kind of right

Speaker Change: To hit the $2 billion, you're going to need to get up to kind of 12% a year in the next two years. So could you please just kind of walk us through the buckets of the growth algorithm and how you see yourself getting to be able to deliver on that? Thanks.

Ken Seitz: Yeah, thanks, Jeff. And certainly, the majority of that change was related to everything that we've talked about. With respect to Brazil, you know, the impact of wet May in North America contributed to about a third of that adjustment.

Kenneth Seitz: So the market is going to come around, we know that. It's a matter of time for us as Nutrien. We have been assessing how it is that we continue to gain access to Brazilian agriculture as one of the largest potash suppliers into the country. As we look at proprietary products and the opportunity to grow that business in Brazil and for the balance of it, yes, a strategic review on what makes sense for us going forward to your point. Your next question comes from the line of Jeff Zekauskas.

Josh: Yeah, thanks, Josh.

Unknown Attendee: Sorry, that's Lucas. We certainly have that bridge and the path from here to there and I'll pass it over to Jeff to provide that.

Lucas Beaumont: Thank you. This is Lucas Beaumont for Josh.

Kenneth Seitz: Yeah, thanks, Jeff. And certainly, the majority of that change was related to everything that we've talked about. With respect to Brazil, you know, the the impact of wet May in North America, it contributed to about a third of that of that adjustment.

Joshua Spector: Your next question comes from the line of Joshua Spector from UBS. Your line is now open.

Jeff Zekauskas: Your next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is now open. Thanks very much.

Speaker Change: Yes, Ken laid out Josh a little bit earlier, you know, we, you know, we laid out our investor strategy 19221 and we continue to see a path to that number as I look at it, I see three different buckets that

Lucas Beaumont: I just wanted to follow up on the pathway for retail towards the 2026 targets. I mean, you're sort of pointing to about $1.6 billion in EBITDA this year and then bridging that to $2 billion. I mean, over the last five years, retail has only kind of grown EBITDA at a mid-single-digit rate. To hit the $2 billion, you're going to need to get up to kind of 12% a year the next two years. So could you please just kind of walk us through the buckets of the growth algorithm and how you see yourself getting to be able to deliver on that? Thanks.

Joshua Spector: Your next question comes from the line of Joshua Spector from UBS. Your line is now open.

Ken Seitz: We certainly have that bridge on the path from here to there, and I'll pass it over to Jeff to provide that. Yes, he had laid out Josh a little bit earlier.

Lucas Beaumont: Thank you. This is Lucas Beaumont for Josh.

Lucas Beaumont: I just wanted to follow up on the pathway for retail towards the 2026 targets. I mean, you're sort of pointing to about $1.6 billion in EBITDA this year, and then bridging that to the $2 billion. I mean, over the last five years, retail has only kind of grown EBITDA a mid-single-digit kind of rate. To hit the $2 billion, you're going to need to get up to kind of 12% a year the next two years. So could you please just kind of walk us through the buckets of the growth algorithm and how you see yourself getting to be able to deliver on that?

Speaker Change: We need to achieve on the deliver that one nine to two one number one is starts with the you know continued momentum and growing our proprietary products business Particularly and we emphasize our plant nutrition and biologicals

Jeff Tarsi: We certainly have that bridge and the path from here to there, and I'll pass it over to Jeff to provide that. Yes, Ken laid out Josh a little bit earlier.

Speaker Change: we've been growing that business at pace greater than ten percent a year and we believe we can continue that trajectory

Speaker Change: to further penetration in our core retail markets.

Speaker Change: What's also important is, as well as our growth in our international and wholesale channels and working with our commercial teams there,

Speaker Change: So that's going to play a significant part in it.

Speaker Change: but also we want to have steady and stable growth in our base operations

Speaker Change: in north america and australia consistent what we delivered over the last five years and that's going toude network optimization which we're working on really hard right now

Speaker Change: It's going to include organic growth within those base businesses and then...

Speaker Change: some tuck-ins going forward. And then last but not least, and we talked a lot about this this morning is our Brazil business and that seeing that market stabilize so to that effect. So those are the three buckets that we see and we still think that we're on a path to achieving that.

Jeff Tarsi: Yes, Ken laid out, Josh, a little bit earlier, you know, we, you know, we laid out our investor strategy 19221, and we continue to see a path to that number. As I look at it, I see three different buckets that we need to achieve on to deliver that 19221.

Jeff Tarsi: Yes, Ken laid out, Josh, a little bit earlier, you know, we, you know, we laid out our investor strategy 192.1 and we continue to see a path to that number. As I look at it, I see three different buckets that we need to achieve on to deliver that 192.1.

Speaker Change: Your next question comes from the line of Steven Byrne from Bank of America. Your line is now open.

Jeff Tarsi: Number one, it starts with the, you know, continued momentum and growth of our proprietary products business, particularly when we emphasize our plant nutrition and biologicals. We've been growing that business at a pace greater than 10% a year. And we believe we can continue that trajectory to further penetration in our core retail markets. And what's also important is our growth in our international and wholesale channels and working with our commercial teams there.

Jeff Tarsi: Number one, it starts with the, you know, continued momentum and growing our proprietary products business, particularly when we emphasize our plant nutrition and biologicals. We've been growing that business at a pace greater than 10% a year. And we believe we can continue that trajectory to further penetration in our core retail markets. And what's also important is as well as our growth in our international and wholesale channels and working with our commercial teams there.

Speaker Change: Yes, thanks. Pardon me.

Unknown Attendee: Jeff, in response to your comments just now about growing proprietary 10% per year, it looks like...

Speaker Change: your proprietary seed, chemical and nutrients as a percent of the platform slipped in the first half of the year. Is there anything that you can call out that drove that? And as you look into a year where

Unknown Attendee: Yeah, no, thanks, Vincent. And I think you identified a lot of the challenges in crop protection at the moment. And certainly, as you say, the switch to generic crop protection among some farmers is certainly having an impact. But I'll pass it over to Jeff Tarsi to provide more detail.

Speaker Change: Unknown Speaker You know, grower margins are looking tight. Does that does that favor a shift to your proprietary products? Or does do you see risks that they seek out more generics?

Jeff Tarsi: So that's going to play a significant part in it. But also, you know, we want to have steady and stable growth in our base operations in North America and Australia, you know, consistent with what we delivered over the last five years. And that's going to include network optimization, which we're working on really hard right now. It's, it's going to include organic growth within those base businesses, and then some tuck ins going forward.

Jeff Tarsi: Yeah, thanks, Steve, and I...

Jeff Tarsi: first of all i do think that when we get into these in these timarketing conditions if favors it not not only just around the not only around a properprotection shelf i think

Jeff Tarsi: It favors us a bit on our proprietary seed business and

Jeff Tarsi: and again on our biolog closing proper nutrians and how we feed to crop as we go alone through the season with that standpoint and again we've seen we've seen excellent growth again this year in our plant nutrition and bio stimulate space

Jeff Tarsi: And then last but not least, and we talked a lot about this this morning is our Brazil business and that seeing that market stabilize. So to that effect, so those are the three buckets that we see, and we still think that we're on a path to achieving that.

Steven Byrne: Your next question comes from the line of Steven Byrne from Bank of America. Your line is now open. Yes, thanks.

Jeff Tarsi: Jeff, in response to your comments just now about growing proprietary 10% per year, it looks like your your proprietary seed chemical and nutrients as a percent of the platform slipped in the first half the year. Is there anything that you can call out that that drove that?

Jeff Tarsi: i'm particularly pleased around one of our products tmar

Jeff Tarsi: And as you look into a year where you know, grower margins are looking tight. Does that does that favor a shift to your proprietary products? Or does do you see risks that they seek out more generic?

Jeff Tarsi: whichwe had about a three hundred percent increase in usage last year we're up another seventy-five percent this year so we continue to be encouraged by that sector and then

Jeff Tarsi: Yeah, thanks, Steve. And I, first of all, I do think that when we get into these in these tighter marketing conditions, it favors it not not only just around the not only around the crop protection shelf, but I think it favors it a bit on our proprietary seed business. And, and again, on our biologicals and crop nutritions and and how we feed the crop as we go along through the season with that standpoint.

Jeff Tarsi: It doesn't get mentioned a lot, but our adjuvant sales year-to-date are up 7%, Steve.

Jeff Tarsi: agants make up five percent of our cp protection space particular tribute thirteen percent of our margins and so it tells us that our people are very focused and our grow ers a very conscious own continuing to used to products to give them

Jeff Tarsi: the best chance of efficacy when you mentioned that that as a percent it looked like our proprietary business was less you have to factor in last year that that would a lookedop that would have looked larger

Jeff Tarsi: started out large due to what we saw reset in the fertilizer market last year in the first quarter. So, that would have thrown those percentages out.

Jeff Tarsi: And again, we've seen we've seen excellent growth again this year in our plant nutrition and biostimulant space. You know, I'm particularly pleased around one of our products, Terramar, which we had about a 300% increase in usage last year, we're up another 75% this year. So we continue to be encouraged by that sector. And then it doesn't get mentioned a lot.

Jeff Tarsi: Our business, our proprietary products business continues to be a very bright spot for us and again we've got a lot of plans for big growth in that space going forward.

Jeff Tarsi: Yeah, thanks.

Aron Ceccarelli: But our business, our proprietary products business continues to be a very bright, bright spot for us. And, and again, we've got we've got a lot of plans for big growth in that space going forward. Your next question comes from the line of Aron Ceccarelli from Berenberg. Your line is now open. Hello, hi, good morning. Thanks for taking my question.

Speaker Change: Your next question comes from the line of Aaron Cesarelli from Berenberg. Your line is now open.

Jeff Tarsi: But you know, our adjuvant sales year to date are up 7%, Steve. And, you know, adjuvants make up 5% of our crop protection space, but they contribute 13% of our margins. And so this tells us that our people are very focused and our growers are very conscious on on continuing to use the products to give them the best chance of efficacy. When you mentioned that, that as a percent, it looked like our proprietary business was less, you have to factor in last year that that would have that would have looked larger due to what we saw as the reset in the fertilizer market last year in the first in the first quarter. And so that would have thrown those percentages out.

Speaker Change: Hello, hi, good morning. Thanks for taking my question. I would like to ask a question about Potash and the supply side. After the renegotiation of the contracts, clearly it seems like both India and China are coming back. I would like to understand on the supply side what you guys see from Laos and how should we think about capacity addition from these guys for the remainder of the year. Thank you.

Jeff Tarsi: And so that's going to play a significant part in it. But also, you know, we want to have steady and stable growth in our base operations in North America and Australia, consistent with what we delivered over the last five years. And that's going to include network optimization, which we're working on really hard right now. It's also going to include organic growth within those base businesses and then some tuck-ins going forward.

Jeff Tarsi: Yeah, thanks Aaron. Yeah, you know, we, uh, we looked at 2024 and

Jeff Tarsi: On the demand side, what we've seen has been quite strong this year that led us to increase, our view, 69 to 72 million tons of shipments through the year, with just about every market

Speaker Change: increasing demand on the supply side that there you know we look at a balanced market and that does involve Laos and it does involve supplies out of Russia and Belarus but I'll pass it over to Mark to talk about those numbers

Steven Byrne: Your next question comes from the line of Steven Byrne from Bank of America. Your line is now open.

Operator: Your next question comes from the line of Jeff Zekauskas from JP Morgan. Your line is now open.

Aron Ceccarelli: Your next question comes from the line of Aron Ceccarelli from Berenberg. Your line is now open.

Jeff Tarsi: And then last but not least, and we talked a lot about this this morning, is our Brazil business and seeing that market stabilize. So to that effect, those are the three buckets that we see, and we still think that we're on a path to achieving them.

Kenneth Seitz: Yeah, thanks, Aaron. Yeah, you know, we, we looked at 2024. And on the demand side, what we've seen has been quite strong this year that led us to increase our view 69 to 72 million tons of shipments for the year. What's just about every market. Increasing demand on the supply side. We look at a balanced market and that does involve Laos and it does involve supplies out of Russia and Belarus, but I'll pass it over to Mark to talk about those numbers. Yeah, thanks, Ken. Good morning, Aaron.

Jeff Tarsi: Thanks, Ken. Good morning, Aron. So maybe just to kind of summarize how we're looking at the quad-ash market as a whole, I think starting on the demand side of the equation, obviously a very strong demand profile in the first half of 2024,

Speaker Change: across granular markets we've seen a demand recovery in southeastasia and that's been combined with the continuation of strong domestic consumption of potash in china

Jeff Tarsi: As we've said before, this has all been supported by solid affordability and really what we see is agronomic need to replenish potash levels globally after a few years of under application in key markets. So, with the offshore contracts now in place, we do expect a global price floor to be established and

Mark Thompson: Yeah, thanks, Ken. Good morning, Aaron.

Mark Thompson: So maybe just to, you know, kind of summarize how we're looking at the potash market as a whole. I think starting on the demand side of the equation, obviously, a very strong demand profile in the first half of 2024. Across granular markets, we've seen a demand recovery in Southeast Asia. And that's been combined with the continuation of strong domestic consumption of potash in China. As we've said before, this has all been supported by solid affordability.

Speaker Change: Standard demand remains strong through the second half of the year. You know, we've mentioned already that we ups our global shipments estimate by a million tons on both ends of the range and this is largely owing to stronger than expected shipments into China.

Mark Thompson: And really, what we see is agronomic need to replenish potash levels globally after a few years of underapplication in key markets. So with the offshore contracts now in place, we do expect a global price floor to be established and standard demand remains strong through the second half of the year. You know, we've mentioned already that we upped our global shipments estimate by a million tons on both ends of the range. And this is largely owing to stronger than expected shipments into China.

Mark Thompson: So to come back to your question on the supply side of the equation, on the supply side, I'd say for us, really, as expected, in terms of where the incremental supply has come from to serve this growth in demand this year, it's really the FSU, incremental supply from Canada, and then Laos. And, and really, we've seen the pace of shipments from the FSU in the first half, generally in line with the levels we saw in the second half of last year, Russian supply is effectively back to 2021 levels.

Jeff Tarsi: So to come back to your question on the supply side of the equation, on the supply side I'd say for us

Speaker Change: Really as expected, in terms of where the incremental supply has come from to serve this growth and demand this year, it's really the FSU incremental supply from Canada and then Laos.

Jeff Zekauskas: And really, we've seen the pace of shipments from the FSU in the first half.

Mark Thompson: And similarly, with Laos, we've seen shipments in the first half, generally in line with the second half of last year. And I think stepping back more broadly on Laos, you know, as we've continued to read in publications and are aware, and I think that Laotian producers have announced themselves continue to experience challenges with production. You know, we understand there's been continued water inflow issues that have hindered the achievement of production levels that were previously targeted.

Speaker Change: Generally in line with the levels we saw in the second half of last year, Russian supply is effectively back to 2021 levels.

Speaker Change: and similarly with Laos we've seen shipments in the first half

Speaker Change: generally in line with the second half of last year. I think stepping back more broadly on Laos.

Jeff Zekauskas: As we've continued to read in publications and are aware, and I think that Laotian producers have announced themselves, continue to experience challenges with production.

Jeff Zekauskas: You know, we understand there's been continued water inflow issues that have...

Mark Thompson: And as we look out over the medium term, you know, say the next two to three years, we do expect that we will see some incremental supply from Laos, you know, potentially a million tons in our S&D. However, disclosures out of Laos have also, you know, taken larger expansions off the table from the previously targeted timeframe. So I think when we step back from all that, as Ken said, we continue to see a relatively balanced market in 2024 with supply and demand.

Jeff Zekauskas: hindered the achiement of production levels that were previously targeted

Jeff Zekauskas: And as we look out over the medium term, you know, say the next two to three years.

Jeff Tarsi: We do expect that we will see some incremental supply from Laos.

Speaker Change: you know potentially a million tons in our S&D. However, disclosures out of Laos have also, you know, taken larger expansions off the table from the previously targeted timeframe. So.

Jeff Tarsi: Yeah, I think when we step back from all that, as Ken said, we continue to see a relatively balanced market in 2024 with supply and demand.

Mark Thompson: And I think, actually, as we look out to the next couple of years into 2025 and 2026, we expect to see global demand continue to grow, but there is less incremental supply available over that period. So we expect we could see some tightening and firming in the market over that time horizon.

Speaker Change: And I think actually as we look out to the next couple of years into 2025 and 2026, we expect to see global demand continue to grow, but there is less incremental supply available over that period. So we expect we could see some tightening and firming in the market over that time horizon.

Lukas Bauman: Thank you. This is Lukas Bauman on behalf of Josh.

Adam Samuelson: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Adam Samuelson: Yes, thank you. Good morning everyone.

Speaker Change: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Jeff Tarsi: Yes, thanks. Jeff, in response to your comments just now about growing proprietary 10% per year, it looks like your proprietary seed chemical and nutrients as a percent of the platform slipped in the first half of the year. Is there anything that you can call out that drove that? And as you look into a year where, you know, grower margins are looking tight? Does that favor a shift to your proprietary products? Or do you see risks that they will seek out more generics?

Lukas Bauman: Yes, thank you. Good morning, everyone. Maybe just continuing on that line of questioning, Mark, just with...

Unknown Attendee: I just wanted to follow up on the pathway for retail towards the 2026 targets. I mean, you're sort of pointing to about $1.6 billion in EBITDA this year and then bridging that to $2 billion. I mean, over the last five years, retail has only kind of grown EBITDA at a mid-single-digit kind of rate. To hit the $2 billion, you're going to need to get up to kind of 12% a year the next two years. So could you please just kind of walk us through the buckets of the growth algorithm and how you see yourself getting to be able to deliver on that? Thanks.

Adam Samuelson: Maybe just continuing on that line of questioning, Mark, just with You're taking the range on global shipments up a million tons. I mean, you guys talk about 20% or so market share, so that's 200,000 tons. It's what you lowered, increase certainly the low end of the range. Why wouldn't, is it just the rail strike that would take you away from increasing the high end? Is it just the inventories coming out of the first half and known turnarounds in the fourth quarter?

Unknown Attendee: Jeff, in response to your comments just now about growing proprietary 10% per year, it looks like, you know, grower margins are looking tight. Does that favor a shift to your proprietary products, or do you see risks that they seek out more generics?

Speaker Change: You're taking the range on global shipments up a million tons, I mean you guys talk about 20% or so market share, so that's 200,000 tons, it's what you lowered. Increase certainly the low end of the range. Why wouldn't, is it just the rail strike that would take you away from increasing the high end? Is it just the inventories coming out of the first half and known turnarounds in the fourth quarter?

Operator: Your next question comes from the line of Aron Ceccarelli from Berenberg. Your line is now open.

Ken Seitz: Yeah, thanks, Aaron. Yeah, we looked at 2024. And on the demand side, what we've seen has been quite strong this year, which led us to increase our view 69 to 72 million tons of shipments for the year. Which is just about every market.

Adam Samuelson: And I guess, how should we think about the uptake on summer fill in North America and what you're seeing from a North American affordability demand for corn and soybean growers where certain new crop prices don't point to a lot of profitability for the grower over the next 12 months?

Speaker Change: And I guess, how should we think about the uptake on summer fill in North America and what you're seeing from a North American affordability demand for corn and soybean growers where certain new crop prices don't point to a lot of profitability for the grower over the next 12 months?

Kenneth Seitz: Yeah, great, Adam. Yeah, quickly pass over to Mark here. But I think you've actually identified Many of the moving parts within our guidance range and, you know, if we look today without a rail strike, certainly we expect to see strong volumes and you see that reflected in our own production volumes in the first half. You see that reflected in our cash cost of production, $53 per tonne. And if without some challenges on rail, the year is, from a volume perspective, shaping up to be a very good one, maybe one of the best, and then yeah Mark can certainly talk about uh additional color on on guidance range and and rail and then also yes very strong uptake on our summer fill but over to you Mark yeah thanks Ken good morning Adam so yeah again

Mark: Great, Adam. Yeah, I'll quickly pass over to Mark here.

Speaker Change: Many of the moving parts within our guidance range and you know if you look today without a rail strike certainly we expect to see strong volumes and you see that reflected.

Speaker Change: in our own our own production volumes in the first half you see that reflected in our cash costuse of production fifty three dollars perton and if without some challenges on rail

Ken Seitz: The year is, from a volume perspective, shaping up to be a very good one, maybe one of the best.

Ken Seitz: and then yeah Mark can certainly talk about additional color on on guidance range and rail

Jeff Tarsi: Yeah, thanks, Steve. And I first of all, I do think that when we get into these tighter marketing conditions, it favors it not only around the not only around the crop protection shelf, but I think it favors it a bit on our proprietary seed business. And, again, on our biologicals and crop nutrition and how we feed the crop as we go along through the season from that standpoint.

Jeff Tarsi: And again, we've seen excellent growth again this year in our plant nutrition and biostimulant space. You know, I'm particularly pleased about one of our products, Terramar, which we had about a 300% increase in usage last year; we're up another 75% this year. So we continue to be encouraged by that sector. And then it doesn't get mentioned a lot.

Jeff Tarsi: But you know, our adjuvant sales year to date are up 7%, Steve. And, you know, adjuvants make up 5% of our crop protection space, but they contribute 13% of our margins. And so this tells us that our people are very focused, and our growers are very conscious of continuing to use the products to give them the best chance of efficacy. When you mentioned that, as a percent, it looked like our proprietary business was less, you have to factor in last year that that would have looked larger due to what we saw as the reset in the fertilizer market last year in the first quarter. And so that would have thrown those percentages out.

Mark Thompson: Yeah, thanks, Ken. Good morning, Adam.

Mark: And then also, yes, very strong uptick on our summer, Phil, but over to you, Mark. Yeah, thanks, Ken. Good morning, Adam. So, yeah, again, I think you and Ken both summarized it well. I think if you were to look at what we've said in terms of

Mark Thompson: So yeah, again, I think you and Ken both summarized it well. I think if you were to look at what we've said in terms of rail strike earlier in the call, you know, in absence of that, you'd see our typical market share targets be right in line with what our guidance is implying relative to our global shipment guidance. And so obviously, we continue to watch that situation closely. We're hopeful that there's a resolution there that doesn't impact the business. But ultimately, from a commercial perspective, really nothing has changed with respect to our marketing strategy or in our typical market share.

Speaker Change: il strike earlier in the call you know an absence that 'd seer typical market sharetargets be read in line with what our guidance implying relative to ourglobal shipment guidance and so obviously we continue to watch that situation closely

Speaker Change: We're hopeful that there's a resolution there that doesn't impact the business, but ultimately from a commercial perspective, really nothing has changed with respect to our marketing strategy or our typical market share.

Mark Thompson: You know, I think in North America, as you pointed out, and has been said earlier in the call, we are seeing some softness in commodity prices. But you know, I think potash affordability is really in a strong place. We had an opportunity a couple of weeks ago to meet with all of our major customers in North America.

Speaker Change: I think in North America, as you pointed out and has been said earlier in the call, we are seeing some softness in commodity prices, but I think potash affordability is...

Mark Thompson: You know, I would say across the nutrient complex sentiment is certainly the most positive on potash, you know, in terms of that affordability, driving a strong bent towards consumption in the second half of the year. If you look at our summer fill program, you know, we came through the spring season, notwithstanding some of the weather challenges with extremely depleted inventories across the channel in North America. Certainly, we saw that with all of our customers, we saw that within our nutrient ag solutions business.

Speaker Change: really in a strong place. We had an opportunity a couple of weeks ago to meet with all of our major customers in North America. You know, I would say across the nutrient complex sentiment is certainly the most positive on potash, you know, in terms of that affordability.

Speaker Change: driving a strong bent towards consumption in the second half of the year. If you look at our summer fill program, you know, we came through the spring season, notwithstanding some of the weather challenges, with extremely depleted inventories across the channel in North America.

Mark Thompson: And that set us up very well for a very strong summer fill program. So at this point, you know, we're effectively sold out through the third quarter and effectively shipping into the first portion of October to deliver on that fill program. So I think the response we've seen on potash has been very good. We're not concerned on the consumption side of the equation in North America.

Ken Seitz: Certainly we saw that with all of our customers, we saw that within our nutrient ag solutions business.

Ken Seitz: And that set us up very well for a very strong summer fill program. So at this point...

Speaker Change: effectively sold out through the third quarter and effectively shipping into the first portion of october to deliver on not spillle program so

Mark Thompson: And I'd say really, that channel behavior is certainly normal.

Speaker Change: Yeah, I think the response we've seen on potash has been very good. We're not concerned on the consumption side of the equation in North America, and I'd say really that channel behavior is certainly normal.

Richard Garchitorena: Your next question comes from the line of Richard Garchitorena from Wells Fargo. Your line is now open.

Aron Ceccarelli: But our business, our proprietary product business, continues to be a very bright, bright spot for us. And, and again, we've got a lot of plans for big growth in that space going forward. Your next question comes from the line of Aron Ceccarelli from Berenberg. Your line is now open. Hello, hi, good morning. Thanks for taking my question.

Speaker Change: Your next question comes from the line of Richard Garchitorena from Wells Fargo. Your line is now open.

Richard Garchitorena: If I could ask on capital allocation, so you've got a strong balance sheet, fairly low leverage, strong free cash flow this quarter. You've cut your CapEx needs for this year by 400 to 500 million versus last year. And you've also guided obviously, on the investor data, significant production growth to 2026, which we would assume is supported by ongoing demand growth. So my question is, you know, we have all these factors in play.

Speaker Change: Great. Good morning, everyone. If I could ask on capital allocation. So you've got a strong balance sheet.

Speaker Change: little leverage and strong free cash bon in this quarter you've cleut your capex

Speaker Change: Needs for this year. Bye.

Speaker Change: 400 to 500 million versus last year. And you've also guided obviously on the investor data, significant production growth to 2026.

Speaker Change: Unknown Speaker Which we would assume is supported by ongoing demand growth. So my question is, you know, we have all these factors in play. Your stock price has been fairly weak. What would we need to see for you to step up?

Richard Garchitorena: Your stock price has been fairly weak. You know, what would we need to see for you to step up return of capital in the form of buybacks? And how should we see that play out potentially over the next 6 to 12 months?

Speaker Change: Return of Capital, Reform of Buybacks, and how should we see that play out potentially over the next 6 to 12 months.

Ken Seitz: Yeah, thanks, Aaron. Yeah, you know, we look at 2024. And on the demand side, what we've seen has been quite strong this year, which led us to increase our view of 69 to 72 million tons of shipments for the year. What's just about every market increasing demand on the supply side. We look at a balanced market, and that does involve Laos, and it does involve supplies out of Russia and Belarus, but I'll pass it over to Mark to talk about those numbers. Yeah, thanks, Ken. Good morning, Aaron.

Kenneth Seitz: Yeah, thanks, Rich. Yeah, I think you identified some of the

Kenneth Seitz: I think you identified some of the numbers there, CapEx program $2.2 to $2.3 billion, which includes about $500 million and that's split between what we've talked about in retail proprietary and network optimization and then the other half goes into our upstream business looking at nitrogen, brownfield investments, de-bottlenecking and mine automation and potash. So we have a very targeted and I would say exciting program, on the investing side that along with sustaining CapEx adds up to that 2.2 to 2.3.

Aron Ceccarelli: yeahthanks rich

Ken Seitz: Yeah, thanks, Ken. Good morning, Aaron.

Speaker Change: I think you identified some of the numbers there, CapEx program 2.2 to 2.3 billion, which

Speaker Change: Includes about $500 million and that's split between what we've talked about in retail proprietary and network optimization and then the other half goes into our upstream business looking at nitrogen, brownfield investments, de-bottlenecking and mine automation.

Speaker Change: Potash. So we have a very targeted and I would say exciting program.

Ken Seitz: on the investing side that that along with sustaining CapEx adds up to that 2.2 to 2.3

Kenneth Seitz: Unknown Attendee, Stephen Byrne, Jeffrey Tarsi, Aron Ceccarelli, Jeff Holzman, Ben Isaacson, And as we watch the year unfold, and as we head into the fall here, and into 2025, as you say, as we look at incremental cash above those levels, certainly we will look at buying back our shares, among other opportunities, which could include ongoing retail tuck-in opportunities in North America and Australia, and maintaining the flexibility for those when they come up. But also, as you say, share repurchase.

Speaker Change: As you say, we've got about $450 million in leases and then about $1 billion for the dividends. So that all adds up to about $3.7 billion.

Mark Thompson: So maybe just to, you know, kind of summarize how we're looking at the potash market as a whole. I think starting on the demand side of the equation, obviously, a very strong demand profile in the first half of 2024. Across granular markets, we've seen demand recovery in Southeast Asia, and that has been combined with the continuation of strong domestic consumption of potash in China. As we've said before, this has all been supported by solid affordability.

Ken Seitz: And as we watch the year unfold, and as we head into the fall here,

Ken Seitz: And into 2025, as you say, as we look at incremental cash

Speaker Change: Those levels certainly we will look at buying back our shares among other opportunities which could include ongoing retail tuck-in opportunities in North America and Australia

Speaker Change: and maintaining the flexibility for those when they come up but also as you say share repurchases.

Edlain Rodriguez: Your next question comes from the line of Edlain Rodriguez from Mizuho. Your line is now open.

Mark Thompson: And really, what we see is an agronomic need to replenish potash levels globally after a few years of under application in key markets. So with the offshore contracts now in place, we do expect a global price floor to be established, and standard demand remains strong through the second half of the year. You know, we've mentioned already that we upped our global shipments estimate by a million tons on both ends of the range.

Speaker Change: Your next question comes from the line of Edlain Rodriguez from Mizuho. Your line is now open.

Edlain Rodriguez: Thank you. Good morning.

Mark Thompson: And this is largely owing to stronger than expected shipments into China. So to come back to your question on the supply side of the equation, on the supply side, I'd say for us, really, as expected, in terms of where the incremental supply has come from to serve this growth in demand this year, it's really the FSU, incremental supply from Canada, and then Laos. And really, we've seen the pace of shipments from the FSU in the first half generally in line with the levels we saw in the second half of last year; Russian supply is effectively back to 2021 levels.

Ken Seitz: it

Aron Ceccarelli: Thank you. Good morning.

Speaker Change: And forgive me if that question was asked before. On phosphate...

Speaker Change: you seem to have some concerns about affordability given

Speaker Change: The persistence of the hive twice is there.

Speaker Change: but yesterday like the biggest player in the space then seem to have any concern about the hyvices they think they can last for a long time in the disconnect between fed in pol pricis that the an issue that

Edlain Rodriguez: And forgive me if that question was asked before. On phosphate, you seem to have some concerns about affordability, given the persistence of the high prices there. But yesterday, like the biggest player in the space, didn't seem to have any concern about the high prices. They think they can last for a long time. And the disconnect between phosphate and product prices shouldn't be an issue. But what makes you concerned about the high prices of phosphate and how detrimental it could be to demand and affordability going forward?

Aron Ceccarelli: What makes you concerned about the high prices of prostate and how detrimental it could be to demand and affordability going forward?

Kenneth Seitz: Yeah, thanks for the question, Edlain. You know, we just talked about affordability and margins as it relates to potash and our summer fill program. It is a bit different situation in phosphate with some of the tightness in the phosphate market. And what we can tell you is what we're seeing talking to farmers through our downstream channeling. So I'll start with Jeff to maybe provide some of that color and then maybe over to Mark to talk a little bit about the fundamentals.

Mark Thompson: And similarly, with Laos, we've seen shipments in the first half, generally in line with the second half of last year. And I think stepping back more broadly on Laos, you know, as we continue to read in publications and are aware, and I think that Laotian producers have announced that they continue to experience challenges with production. You know, we understand there have been continued water inflow issues that have hindered the achievement of production levels that were previously targeted.

Ken Seitz: Yeah, thanks for the question Edlain.

Mark Thompson: And as we look out over the medium term, you know, say the next two to three years, we do expect that we will see some incremental supply from Laos, potentially a million tons in our S&D. However, disclosures out of Laos have also taken larger expansions off the table from the previously targeted timeframe. So, yeah, I think when we step back from all that, as Ken said, we will continue to see a relatively balanced market in 2024 with supply and demand.

Speaker Change: yeah you know we just talked about affordability and margins as relates to pash and andyou know summer fill program it is a different situation in phosphate with some of the tightanness in thephosphate market and what we can tell you is what we're seeing talking to farmers through our downstream channelling so i'll start with

Mark Thompson: And I think actually, as we look out to the next couple of years into 2025 and 2026, we expect to see global demand continue to grow, but there will be less incremental supply available over that period. So, we could see some tightening and firming in the market over that time horizon.

Adam Samuelson: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Jeff Tarsi: Yeah, and as I stated earlier, you know, when I look at the fall and second half of the year, obviously, fall fertilizer activity and application be weather dependent. We've had three good years in a row, and I'm banking on a fourth year here.

Speaker Change: with jeff to maybe provide some of that color and then maybe over to mark to talk a little bit about the fundamentals

Speaker Change: Yeah, and as I stated earlier, you know, when I look at the fall and the second half of the year, obviously, fall fertilizer activity and application will be weather-dependent. We've had three good years in a row, and I'm banking on a fourth year here. If I look at the three nutrients, and Mark talked about this earlier, you know, potash

Jeff Tarsi: If I look at the three nutrients, and Mark talked about this earlier, you know, potash appearing probably very in line from an affordability standpoint. The phosphate side of it is a bit more of the question mark. And I think that growers were probably expecting that that price would come more in line with some of the other nutrients. So if I think there's a if there's a weakness out there in the fall, from an application standpoint, I think that you know, we're seeing early on that that could be in the phosphate market. I don't want to really project it what I think that could be for the fall. But we do see some softness in that side of it.

Speaker Change: Very in line and from an affordability standpoint the the phosphate side of it is a bit more of the question mark And I think that growers were probably expecting

Speaker Change: that that price would come more in line with some of the other nutrients. So if I think there's a if there's a weakness out there in the fall from an application standpoint, I think that, you know, we're seeing early on that could be in the phosphate market. I don't want to really

Speaker Change: Projected what I think that could be for the fall but we do see some softness in that side of it. We see growers asking a lot of questions from an affordability standpoint.

Ken Seitz: Yeah, thanks, Ken. Good morning, Aaron.

Ken Seitz: Maybe just continuing on that line of questioning, Mark, just with You're taking the range on global shipments up a million tons. I mean, you guys talk about 20% or so market share. So that's 200,000 tons. It's what you lower. Increase certainly the low end of the range. Why wouldn't it just be the rail strike that would take you away from increasing the high end? Just the inventory is coming out of the first half and known turn around in the fourth quarter.

Unknown Attendee: You're taking the range on global shipments up a million tons. I mean, you guys talk about 20% or so market share, so that's 200,000 tons.

Mark Thompson: Sure. Thanks, Jeff. Good morning, Edlain.

Operator: Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open.

Jeff Tarsi: We see growers asking a lot of questions from an affordability standpoint. Mark, I might kick it over to you. Sure. Thanks, Jeff. Good morning, Atlanta.

Mark: mark i kick it over you

Mark Thompson: Yeah, I think I'll just reiterate almost exactly what Jeff said from a different perspective, which is, you know, when we've been talking to our customers, you know, across the retail channel, particularly in North America, it's true that global supply demand is very tight currently for phosphate. So that has led to good participation in fill programs, because phosphate is needed. You know, at the same time, as Jeff pointed out, we've got a pretty large price disparity between potash and phosphate currently in the market.

Adam Samuelson: Sure. Thanks, Jeff.

Speaker Change: good warning at lane i think i'll just reiterate almost attack to it to have set from a different perspective which is

Ken Seitz: And I guess how should we think about the uptake of summer fill in North America and what you're seeing from North America and affordability? And for corn and soybean growers, where certain new crop prices don't point to a lot of profitability for the grower over the next 12 months.

Unknown Attendee: It's what you lowered; increase certainly the low end of the range. Why wouldn't you? Is it just the rail strike that would take you away from increasing the high end? Is it just the inventories coming out of the first half and known turnarounds in the fourth quarter? And, I guess, how should we think about the uptake on summer fill in North America and what you're seeing from North American affordability demand for corn and soybean growers where certain new crop prices don't point to a lot of profitability for the grower over the next 12 months?

Ken Seitz: Great, Adam. Yeah, I'll quickly pass over to Mark here, but I think you've actually identified many of the moving parts within our guidance range, and if you look today without a rail strike, certainly we expected to see strong volumes, and you see that reflected in our own production volumes in the first half. You see that reflected in our cash cost of production, $53 per ton. And if without some challenges on rail and the years, it's, from a volume perspective, shaping up to be a very good one.

Unknown Attendee: If I could ask you about capital allocation, so you've got a strong balance sheet.

Unknown Attendee: You know, and we've been talking to our our customers, you know, across the retail channel, particularly in North America, it's true that global supply demand is very tight currently for phosphate, so that has led to good participation.

Ken Seitz: Maybe you want to look at the past, and then yeah Mark can certainly talk about uh additional color on on guidance range and rail and then also yes very strong uptake on our summer fill but over to you Mark. Yeah thanks Ken. Good morning Adam so yeah again I think you and Ken both summarized it well I think if you were to look at what we've said in terms of a rail strike earlier in the call you know in absence that you'd see our uh typical market share targets be right in line with what our guidance is implying relative to our global shipment guidance and so obviously we continue to watch that situation closely we're hopeful that there's a resolution there that doesn't impact the business but ultimately from a commercial perspective really nothing has changed with respect to our marketing strategy or you know our typical market share you know I think in North America as you pointed out and has been said earlier in the call we are seeing some softness in commodity prices but you know I think potash affordability is really in a strong place we had an opportunity a couple weeks ago to meet with all of our major customers in North America you know I would say across the nutrient complex sentiment is certainly the most positive on potash you know in terms of that affordability driving a strong bent towards consumption in the second half of the year if you look at our summer fill program you know we came through the spring season notwithstanding some of the weather challenges with uh extremely depleted inventories across the channel in North America certainly we saw that with all of our customers we saw that within our nutrient ag solutions business and that set us up very well for a very strong summer fill program so at this point you know we're effectively sold out through the third quarter and effectively shipping into the first portion of October to deliver on that fill program so I think the response we've seen on potash has been very good we're not concerned on the consumption side of the equation in North America and I'd say really that channel behavior is certainly normal.

Jeff Tarsi: very in line and from an affordability standpoint the the phosphate side of it is is a bit more of the question mark and I think that growers were probably expecting uh that that price would come more in line with some of the other nutrients so if I think there's a if there's a weakness out there in the fall from an application standpoint I think that you know we're seeing early on that that could be in the phosphate market I I don't want to really project it what I think that could be uh for the fall but we do see some softness in that side of it we see growers asking a lot of questions from an affordability standpoint. Mark, I might kick it over to you. Sure uh thanks Jeff uh good morning Edlain.

Jeff Tarsi: Sure. Thanks, Jeff. Good morning, Edlain.

Richard Garchitorena: Your next question comes from the line of Richard Garchitorena from Wells Fargo. Your line is now open, and you're going to get your first question.

Jeff Tarsi: Yeah, I think I'll just reiterate almost exactly what Jeff said from a different perspective, which is, you know, when we've been talking to our customers across the retail channel, particularly in North America, it's true that global supply demand is very tight currently for phosphate. So that has led to good participation in fill programs because phosphate is needed. You know, at the same time, as Jeff pointed out, we've got a pretty large price disparity between potash and phosphate currently in the market.

Jeff Tarsi: And Bell programs because phosphate's needed.

Ken Seitz: If I could ask about capital allocation, so you've got a strong balance sheet, fairly low leverage, and strong free cash flow this quarter. You've cut your CapEx needs for this year by 400 to 500 million versus last year. And you've also guided, obviously, on the investor data, significant production growth to 2026, which we would assume is supported by ongoing demand growth. So my question is, you know, we have all these factors in play.

Jeff Tarsi: So certainly, in those discussions with our customers, similar to Jeff's discussion with his team and growers, there are concerns about affordability and concerns about, you know, potential demand destruction in portions of the phosphate market as we get into later in the fall season. Now, when you look at our phosphate business, in particular, you know, obviously, we've got a very diversified phosphate business across both ag and industrial markets. We don't see an impact from that from a volume standpoint for us because we are positioned a little bit differently. But certainly for our customers and down at the grower level in nutrient ag solutions, it's something we're going to continue to watch very closely.

Mark Thompson: So certainly in those discussions with our customers, similar to Jeff's discussion with his team and growers, there are concerns about affordability and concerns about, you know, potential demand destruction in portions of the phosphate market as we get into later in the fall season. Now, when you look at our phosphate business in particular, you know, obviously, we've got a very diversified phosphate business across both ag and industrial markets. We don't see an impact from that from a volume standpoint for us, because we are positioned a little bit differently. But certainly for our customers and down at the grower level in nutrient ag solutions, it's something we're going to continue to watch very closely.

Jeff Tarsi: You know, at the same time, as Jeff pointed out, we've got a pretty large price disparity between potash and phosphate currently in the market. So certainly in those discussions with our customers, similar to Jeff's discussion with his team and growers, there are concerns about affordability and concerns about, you know, potential demand destruction in portions of the phosphate market as we get into later in the fall season.

Jeff Tarsi: Now when you look at our phosphate business in particular, you know, obviously we've got a very diversified phosphate business across both ag and industrial markets.

Jeff Tarsi: We don't see an impact from that from a volume standpoint for us because we are positioned a little bit differently, but certainly for our customers and down at the grower level in Nutrien Ag Solutions, it's something we're going to continue to watch very closely.

Operator: There are no further questions at this time. I will now turn the call back to Jeff Holzman. Please continue.

Jeff Tarsi: There are no further questions at this time. I will now turn the call back to Jeff Holzman. Please continue.

Jeff Holzman: Hey, thank you for joining us today. The Investor Relations team is available if you have follow up questions. Have a great day.

Ken Seitz: Your stock price has been fairly weak. You know, what would we need to see for you to step up the return of capital in the form of buybacks? And how should we see that play out potentially over the next 6 to 12 months? Yeah, thanks.

Unknown Attendee: Hey, thank you for joining us today. The Investor Relations team is available if you have follow-up questions. Have a great day.

Ken Seitz: Yeah, thanks, Rich. Yeah, I think you identified some of the numbers there, you know, the CapEx program 2.2 to 2.3 billion, which includes about 500 million. And that's split between what we've talked about in retail, proprietary, and network optimization. And then the other half goes into our upstream business looking at nitrogen, brownfield investments, de-bottlenecking, mine automation, and potash. So we have a very targeted and, I would say, exciting program on the investing side that, along with sustaining CapEx, adds up to that 2.2 to 2.3.

Ken Seitz: As you say, we've got about $450 million in leases and then about $1 billion for the dividends. So that all adds up to about $3.7 billion. And as we watch the year unfold, and as we head into the fall here and into 2025, as you say, as we look at incremental cash above those levels, certainly we will look at buying back our shares, among other opportunities, which could include ongoing retail token opportunities in North America and Australia and maintaining the flexibility for those when they come up. But also, as you say, share repurchase.

Unknown Attendee: Hey, thank you for joining us today. The Investor Relations team is available if you have follow-up questions. Have a great day.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Edlain Rodriguez: Thank you, good morning. And forgive me if that question has been asked before.

Edlain Rodriguez: Your next question comes from the line of Edlain Rodriguez from Mizuho. Your line is now open.

Ken Seitz: On phosphate, you seem to have some concerns about affordability given the persistence of the high prices there, but yesterday, like the biggest player in the space, didn't seem to have any concern about the high prices. They think they can last for a long time, and the disconnect between phosphate and product prices shouldn't be an issue. What makes you concerned about the high prices of phosphate and how detrimental it could be to demand and affordability going forward?

Jeff Tarsi: Yeah, thanks for the question, Edlain. You know, we just talked about affordability and margins as it relates to potash and our summer fill program. It is a bit different situation in phosphate with some of the tightness in the phosphate market. And what we can tell you is what we're seeing talking to farmers through our downstream channeling. So I'll start with Jeff to maybe provide some of that color and then maybe turn it over to Mark to talk a little bit about the fundamentals.

Jeff Tarsi: Yeah, and as I stated earlier, you know, when I look at the fall and the second half of the year, obviously, fall fertilizer activity and application are weather dependent. We've had three good years in a row, and I'm banking on a fourth year here.

Jeff Tarsi: If I look at the three nutrients, and Mark talked about this earlier, you know, potash appears to be Perry and Lyon from an affordability standpoint. The phosphate side of it is a bit more of a question mark. And I think that growers were probably expecting that that price would come more in line with some of the other nutrients. So if I think there's a weakness out there in the fall from an application standpoint, I think that, you know, we're seeing early on that that could be in the phosphate market. I don't want to really project what I think that could be for the fall, but we do see some softness in that side of it.

Jeff Tarsi: We see growers asking a lot of questions from an affordability standpoint. Mark, I might kick it over to you. Sure. Thanks Jeff. Good morning, Atlanta.

Mark Thompson: Sure. Thanks, Jeff. Good morning, Edlain.

Speaker Change: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Mark Thompson: Yeah, I think I'll just reiterate almost exactly what Jeff said from a different perspective, which is, you know, when we've been talking to our customers across the retail channel, particularly in North America, it's true that global supply demand is very tight currently for phosphate. So that has led to good participation in fill programs because phosphate is needed. You know, at the same time, as Jeff pointed out, we've got a pretty large price disparity between potash and phosphate currently in the market.

Mark Thompson: So certainly, in those discussions with our customers, similar to Jeff's discussion with his team and growers, there are concerns about affordability and concerns about, you know, potential demand destruction in portions of the phosphate market as we get into later in the fall season. Now, when you look at our phosphate business, in particular, you know, obviously, we've got a very diversified phosphate business across both ag and industrial markets. We don't see an impact from that from a volume standpoint for us because we are positioned a little bit differently. But certainly for our customers and down at the grower level in nutrient ag solutions, it's something we're going to continue to watch very closely.

Operator: There are no further questions at this time. I will now turn the call back to Jeff Holzman. Please continue.

Jeff Holzman: Hey, thank you for joining us today. The Investor Relations team is available if you have follow-up questions.

Operator: Have a great day. Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Operator: ...

Operator: KLAXON, you might all be sleeping, and don't forget to turn on your device trusty earbud. Call me Jaxson, your cook requests

Aron Ceccarelli: Your next question comes from the line of Aron Ceccarelli from Berenberg. Your line is now open.

Adam Samuelson: Yes, thank you. Good morning, everyone.

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