Q2 2024 Nutrien Ltd Earnings Call

Greetings and welcome to Nutrien's 2024 Second Quarter Earnings Call.

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

At this time, all participants are in a listen-only mode. A 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.

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

Speaker Change: 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.

Ken Seitz: 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.

Speaker Change: 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.

Speaker Change: 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.

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.

Ken Seitz: 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 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 investments.

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.

Ken Seitz: 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.

Ken Seitz: 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 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.

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.

Ken Seitz: 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.

Ken Seitz: our north american nitrogen assets are main 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.

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.

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

Ken Seitz: 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.

Ken Seitz: 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 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.

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.

Ken Seitz: 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.

Ken Seitz: 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.

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.

Ken Seitz: 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 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.

Ken Seitz: Now, turning to Brazil, where we have seen more persistent challenges.

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.

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

Ken Seitz: we continue to you to evaluate our commercial footprint and result of further extract efficiencies and see opportunities to grow our proprietary products business

Ken Seitz: During the second quarter, we also incurred a loss on foreign currency 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, 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.

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

Ken Seitz: Now, turning to the market outlook for the remainder of 2024.

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

Ken Seitz: Despite lower crop prices, demand for crop inputs in North America is expected to remain strong in Q3, 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 1-3% in the upcoming planting season, and fertilizer demand is projected at approximately 46 million tonnes 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.

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

Speaker Change: brazilianence soyviian area is expected to increase by one to three percent on the upcoming planting season and fertilizer demand is projected at approximately forty six million tons in two thousand and twenty four 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. Uptake on our summer fill 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 69-72 million tonnes.

Speaker Change: updtake on our summer fill program in north america has been strong which is suppor of a granular greatade demand in the third quarter

Speaker Change: The settlement of potash contracts with China and India in July is expected to support demand 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.

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: us nitrogen inventories were estimated to be below average levels entering the second half and we have seen strong customer engagement on our summerfield 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 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. 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.

Operator: Carter, Earnings Call. At this time, all participants are now listening on the mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Pedro: 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.

Jeff Holzman: I would now like to turn the conference call over to Jeff Holzman, Vice President of Investor Relations. Please go ahead. Thank you, operator.

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 medium 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.

Jeff Holzman: 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 containing our forward-looking information.

Speaker Change: In nitrogen, we narrowed our annual sales volume guidance range to 10.7 to 11.1 million tons.

Speaker Change: We expect higher year-over-year volumes in both the third and fourth quarters, supported by lower planned turnaround activity in the second half.

Jeff Holzman: Additional information about these factors and assumptions are contained in our quarterly report to shareholders, as well as our most recent annual report MDNA and annual information form.

Speaker Change: 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.

Ken Sites: I will now turn the call over to Ken Sites, Nutrien's President and CEO and Pedro Farah for CFO for opening comments. Good morning. Thank you for joining us today. Nutrien just delivered a justed ebit of $3.3 billion in the first half of 2024, supported by increased crop input margins, strong global pot-ass demand and lower operating rates 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.

Speaker Change: 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.

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.

Pedro Farah: 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. 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.

Ken Sites: 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. In pot-ass, we generated a justed ebit of $1 billion in the first half of 2024, which was down from the prior year due to lower benchmark prices. We increased pot-ass production across our six-mined network and lowered our controllable cash cost of production to $53 per ton in the first half.

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 expano proprietary products portfolio and drive network optimization

Ken Sites: The reduction in per ton costs was driven by higher production volumes and supported by the benefits of mine automation investments. We sold record pot-ass 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 a justed ebit of $1.1 billion in the first half of 2024, as lower benchmark prices were partially offset by lower natural gas costs.

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 digit.

Pedro Farah: The majority of planned investment capital in our fertilized operations is 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.

Speaker Change: The majority of planned investment capital in our fertilized operations are related to mine automation projects in Ponash and the completion of low-cost brownfield expansions in nitrogen.

Ken Seitz: 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 operations. And I'll turn it back to Ken.

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

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.

Ken Seitz: Thanks, Pedro.

Ken Seitz: our results in the first half of two thousand and twenty four highlighted at the advantages of our world-class upstream production assets and downstream retail business in north american in australia

Ken Seitz: We delivered record potash 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 26. 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.

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.

Ken Sites: 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. Crop Nutrien 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: Finally, I would like to say a few words about the CFO transition that we announced yesterday.

Speaker Change: Mark Thompson will be moving into the CFO role on August 26th.

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

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.

Ken Sites: 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. 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 on Australian retail businesses, excluding the impacts of delayed planting in the North America results were in line with our previous expectations.

Speaker Change: 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.

Speaker Change: on behalf of the nutrient team i would also like to thank pedro for a service and commitment to nutrient over the last five years to support the transition pagre will move into an advisory role until the end of the year 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 displayed. If you are using a speakerphone, please lift the handset before pressing any button. Your first question comes from the line of Chris Parkinson from Wolf Research. Your line is now open.

Speaker Change: that

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 hear a prpt that your han has been raised

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

Ken Sites: Now, attorney 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. We have taken actions to remediate this issue and are confident that these actions have addressed the matter going forward.

Speaker Change: if you're using a speaker phone please lift thedanset before pressing any keys

Speaker Change: 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 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, 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 Thank you.

Chris Parkinson: Great, thank you so much.

Chris Parkinson: Given the performance in retail and 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?

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

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

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

Ken Sites: Now, attorney to the market outlook for the remainder of 2024. Global grain stocks remain historically tight, well 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 third quarter as growers aim to maintain optimal plant health and yield potential. We anticipate good affordability for pot action nitrogen will support fall application rates this year.

Speaker Change: We've seen that impact grower sentiment, that's true. At the same time, if we look at what the cost of inputs has done...

Jeff Holzman: 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.

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 the cost of inputs has done, grower affordability is still there, and all the incentives exist for growers to maximize yields. And 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 Tarsi: 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 going forward.

Jeff Tarsi: Yeah, thanks, Chris. And a good question.

Jeff Holzman: 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,

Jeff Holzman: You know, we had, I think, a very strong print in the second quarter.

Ken Sites: Perspective 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. We are seeing strong underlying consumption trends in most major pot-ash markets in 2024 and raise our full year global pot-ash shipment forecast to 69 to 72 million tons.

Speaker Change: And, more importantly, we had very strong margins across all three shelves of our business, Crop Protection C.

Jeff Holzman: 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: We think that from an inventory standpoint, we're in a really good position right now. We 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 dollars. A large part of that is in 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, and, probably more importantly, we brought it down just under 250 million dollars in our Brazil business.

Speaker Change: going forward we think that from an inventory standpoint we're in 'rein a really good position right now we've and we had a real strong focus on get invenattoryy down as low as we possibly could

Ken Sites: Uptake 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 bondage contracts with China and India in July is expected to support demand in standard grade markets through the second half. Global nitrogen markets are being supported by steady demand and continued supply challenges in key producing regions, including the extension of Chinese Ureac export restrictions into the second half of 2024. 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 field programs in the third quarter.

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

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

Jeff Holzman: 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.

Jeff Tarsi: 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. 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 levels.

Jeff Holzman: in our Brazil business. And so.

Jeff Holzman: 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 soul. And if we get an open file, I would expect that, you know, we would see strong demand for MP&K.

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

Jeff Holzman: As we go into the fall season, 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 shifts may be a bit above historical margins.

Pedro Farah: Good morning. The skin highlighted, we raise our outlook for global bondage demand in 2024, increased our annual bondage sales volume guidance to 13.2 to 13.8 million tons. Our sales volume range factors 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 turn-arounds with the majority occurring this year in the fourth quarter.

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.

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.

Speaker Change: he morning things are taking my questions

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

Pedro Farah: In nitrogen, we narrow 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 quarter supported by lower planned turn-around activity in the second half. Our full state sales volume guidance range was lower to 2.5 to 2.6 million tons, reflecting the impact of extended turn-around activity and delayed mine equipment moves. For retail, a full year adjust to even a guidance was lowered to 1.5 to 1.7 billion.

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 Bansoy, 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 in production is the ability to respond to our customers because, even this year, when we've seen delayed contracts in India and China, which are, of course, standard grade products, we have the ability to produce additional granular and serve granular markets while we are watching delays in those standard grade markets.

Speaker Change: Thank you, Andrew, for the question.

Speaker Change: I can assure you that we've looked at that very closely over the years and one of the benefits of having six mines and the flexibility in production is the ability to respond to our customers.

Pedro Farah: 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. We have taken a number of strategic actions in Brazil, including the containment of landers 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, and we maintain a full year capex guidance of 2.2 to 2.3 billion.

Speaker Change: even this year where we've seen delayed contracts in india in china

Speaker Change: which are of course standard grade products, we have the ability

Speaker Change: to produce additional granular and serve granular markets while we are watching a delays and the strander grade markets and so that flexibility among that six m network

Ken Seitz: And so that flexibility among that six mine network allows us to, as I say, meet the needs of our customers. Curtailing one mine definitely limits that flexibility because we have some mines that produce more standard grade and some mines that produce more granular products. So I would say in this environment, again, where we've seen shifting trade flows, we've seen additional volume coming out of Russia and Belarus, and we've seen a mix, a balance shifting between granular and standard grade markets, that flexibility is actually a big advantage for us.

Speaker Change: allows us to, as I say, meet 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.

Pedro Farah: As mentioned at our invested day in June, our capital priority is a focus on initiatives that drive organic growth in retail and operational improvements in bond ash and nitrogen. The focus in retail is to further expand our proprietary products portfolio and drive network optimization. We are targeting more than 10% annual growth rate in proprietary products growth margin, which is expected to be a significant contributor to our 2026 retail adjust to even a target of 1.9 to 2.1 billion.

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 an advantage that is playing out certainly as we speak and one that...

Ken Seitz: And it's an advantage that is playing out certainly as we speak, and one that we want to preserve because it does create value for shareholders. 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: we want to preserve because it does create value for shareholders.

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

Ken Seitz: Good. Thank you, Jacob.

Speaker Change: your next question comes from the line of jacob ballot from cibc your lineis now open

Pedro Farah: The majority of plant investment capital in our fertilized operations are related to mine automation projects in Port Ash, and the completion of low cost-prone fuel expansions in nitrogen. These investments support our 2020 C target to increase fertilizer sales volume by two to three million tons compared to 2023 levels while improving the efficiency of our operations.

jacob ballot: Good morning.

jacob ballot: how a few questions about the unauthorized execution of the derivatves contract that resulted in that large charge just want to understand you know

jacob ballot: What was the situation that led up to that?

jacob ballot: You know, was it, 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, as a risk management strategy.

Ken Sites: And I'll turn it back to camp. Thanks, Pedro. 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.

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 were 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.

Speaker Change: Good. Thank you, Jacob. So to answer your specific question, was this in the normal course? The answer is no. You know, what led up to it was...

Ken Sites: We delivered record-pawd our sales volumes, lowered our operating costs and improved retail margins. 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.

jacob ballot: obviously we're doing a lot work in brazil and some organizational changes that

jacob ballot: That led to challenges on segregation of duties and some of the checks and balances, governance, and controls that we have in place.

jacob ballot: We identified that quickly. We dealt with it quickly and we have remediated the issue.

Ken Sites: 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 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. 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.

Ken Seitz: It's certainly only... only contained in Brazil. 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.

jacob ballot: only contained to Brazil and we've had our auditors have a look at all of this and certainly on a path to remediation.

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 were taken 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, um, Jacob, uh, what we use is a typical, you know, combination of forwards and options, so there's nothing...

Pedro: to exotic there to bas ically cover positions that we have shorten dollars for that position but ass mentioned by

Ken Sites: On behalf of the nutrient team, I would also like to thank Pedro for his service and commitment to nutrient over the last five years. To support the transition, Pedro will move into an advisory role until the end of the year.

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

Jeff Holzman: We will now be happy to take your questions. Thank you.

Speaker Change: 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.

Operator: Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone 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 two. If you are using a speaker phone, please lift the handset before pressing any keys.

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

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

Ken Seitz: Morning, Ken and team. You know, you had your investor day in June; it was less than, it was less 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, 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.

Joel Jackson: morning kenand team you know you had your investordayin junewho's less few than two months ago and i think the focus about event really seen how you'regoing to grow retail the next couple of years know from about one point seven five billion this year it could be the arter billion dollars of ebitda the next couple of years

Christopher Parkinson: Your first question comes from the line of Chris Parkinson from Wolf Research. Your line is now open. Great. Thank you so much.

Ken Sites: Just given the performance and 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, grow demand 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, normalize perhaps more of a normalized setup for 25 and 26.

Speaker Change: With your update now, you're guiding down retail, you know, $150 million lower.

Ken Seitz: And what strikes me is how you reconcile your view less than two months ago that 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 view less than two months ago this is a big growth engine for nutrient but now you're guiding down retail you're making that challenge harderdo you still sixx those targets what's changed you need to review everything what do you think

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, what we can do with 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.

Ken Sites: Thank you. Yeah, great. Thanks for the question, Chris. And yeah, obviously with some softening egg commodity prices, we've seen that impact growers sentiment. That's true. At the same time with if we look at what you know, cost of inputs has done that grow or fill affordability is still there and all the incentives exist for growers to maximize yields and but certainly Jeff can talk about what he's seeing on the ground in key regions like North American Australia.

Pedro: Yes, 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,

Pedro: 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 in North American Australia.

Ken Seitz: One is what we talked about in Brazil, and 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. We were looking for inventories to clear out through 2024, so we could emerge in 2025 in a better position. 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.

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

Ken Sites: Yeah, thanks Chris, and a good question, and obviously we would, you know, growers from lovesick, commodity prices higher. If I look at our business, you know, we had a, I think of 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, sea, and fertilizer. And, you know, if I look at it from a grower standpoint, and if I look at what USD, the SDA 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 going forward.

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

Pedro: We are looking for inventories to clear out through 2024.

Pedro: And so we could emerge into 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.

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

Ken Sites: We, we think that from an inventory standpoint, we're in a, we're in a really good position right now. We, 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. The large part of that is in the crop protection shift. And we had very clear focus on doing that. And probably more impressive is we've been able to bring our inventory down in each of the geographies.

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

Ken Seitz: 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. We do have a plan in Brazil, and it is a plan where we're going to be, as we speak, improving margins. We talked about closing 21 locations.

Pedro: We do have a plan in Brazil and it is a plan where we're going to be, as we speak, improving margins, we've talked about closing 21 locations, we've talked about

Ken Sites: And, and probably more importantly, we brought it down just just under $250 million in our in our Brazil business. And so, again, if I live going, if I live going forward, if we, if we pull the yields off that are projected, there's going to be an awful lot of nutrient removal. From the soil, and we get an open fall, I would expect that, you know, we would see strong demand for MP and K as we go into the fall season.

Pedro: curtaailing three 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.

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

Pedro: It's just taking time to stabilize.

Pedro: so again when we talk about the challenges and the guidedown in our retail ebita brazil plays a huge roll in that and we are on a path

Ken Seitz: 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.

Ken Sites: Again, that's going to be weather dependent, but again, it's a, 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 ships may be a bit above historical margins.

Pedro: to to a better day in brazil the other one is we're always dealing with weather in agriculture and it is true that we had a wet spring in may in north america

Pedro: that we didn't see all the product go to ground that we would normally have seen we're heading into the fall applications cies here this crop and north america is going to pull a lot of proper nutrition under the ground

Andrew Wong: Your next question comes from the line of Andrew Wang from RBC capital markets. Your line is now open. Hey, good morning, thank you for taking my questions. So on the product segment, you know, the moment you've got six operating products mines. They're operating at about an 80% operating rate.

Pedro: We had a very strong summer fill program and so that as we head into the fall, we're looking to, you know, 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: 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. Your next question comes from the line of Ben Theurer from Barclays. Your line is now open.

Pedro: Some near-term challenges here that we have a plan for.

Ken Sites: Could it make sense to maybe curtail production or shut down one of the higher cost mines like you had done previously advanced oil and consolidate production. So it's a little bit more efficient around fewer mines. Which could potentially save on costs. Thank you, Andrew for the question and 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 mines and the flexibility and production is the ability to respond to our customers because.

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

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

Ben Theurer: you good morning and thanks for taking my question just two real quick one so one as you look into the upgrade of your potishge volilumes globally but then at the same time

Ray: Your internal guidance, Ray, is a little more muted. Could you quantify what your expectation is as to potential disruption with the rail strike that you've mentioned?

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.

Ken Sites: Yeah, even this year where we've seen delayed contracts in India and China, which is our core standard grade products. We have the ability to produce additional granular and serve granular markets while we are watching delays and those standard grade markets. And so that flexibility among that six mine network allows us to, as I said, meet the needs of our customers. You know, curtailing one mine definitely limits that flexibility because we have some mines that produce more standard grade and some mines that produce more granular products.

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, 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: the f thanks can't good morning b so you have first and foremost obviously 're concerned about the potential for the ra strikeest proll mentioned is comments given the impact that this would have not only on nutrient but

Mark Thompson: 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.

Ken Sites: So I would say in this environment, again, where we've seen shifting trade flows. We've seen additional volume coming out of Russian Belarus. And we've seen a mix of balance shifting between granular and standard grade markets. That flexibility is actually a big advantage for us and an advantage that is playing out certainly as we speak and one that we want to preserve because it does create value for shareholders.

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.

Mark Thompson: charge up our domestic distribution network and kpeitx it also worked to take proactive steps to support customers and in turns up their network to agree that that's possible

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. Thank you.

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

Jacob Bout: You're next question. Comes from the line of Jacob Bout from CIBC. Your line is not open.

Speaker Change: 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.

Pedro Farah: Good morning. How do few questions about the unauthorized execution of that derivative's contract that resulted in that large charge? Just was it kind of normal course stuff, such a large exposure? Is this only a brazilian issue? And then maybe just comment on, you know, your use of derivatives as a risk management strategy. Good, thank you, Jacob. So to answer your specific question, was this in the normal course the answer is right?

Mark Thompson: 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.

Pedro: 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 plugon you know a typical market sharef for us in that nineteen to nineteen and half percentrange that we've talked about historically

Pedro Farah: 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 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 contained to Brazil and we've had our auditors have a look at all of this and certainly on the path through remediation.

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.

Vincent Andrews: Thank you. Good morning, everyone. 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.

Speaker Change: have reported they've obviously been speaking about the challenges down there as well it seems like there's price competition

Vincent Andrews: 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, what are your inventory positions there in terms of your cost? Are they are they are where they need to be?

Speaker Change: being led by Generics, but maybe broader than that. And I'm just wondering, are you seeing, are your inventory positions there in terms of your cost?

Pedro Farah: 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, 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 end dollars for that position. But as mentioned by by Ken, I think the issues were more actions that were 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.

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

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

Ken Seitz: 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: Yeah, no thanks Vincent, and I think you identified a lot of the...

Jeff Tarsi: 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.

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 in the second half of last year.

Jeff Tarsi: Yeah, Benson, 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.

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

Jeff Tarsi: And what we have seen, I think it was mentioned a little bit earlier, 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. And I think we'll continue to see that for a bit.

Joel Jackson: Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open. Morning, I'm Ken and team. You know, you had your investor day in June, whose lesson was fewer than two months ago. And I think the focus of that event really is seeing how you're going to grow retail the next couple of years, you know, from about 1.75 billion this year. I think it'd be a quarter of a billion dollars of EBITDA over the next couple of years.

Joel Jackson: With your update now, you're guiding down retail, you know, 150 million lower. And what strikes me is, how do you reconcile your review lesson two months ago? This is a big growth engine for nutrient. 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?

Jeff Tarsi: 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: you mentioned 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.

Jeff Tarsi: You mentioned 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. So I like where we've got ourselves positioned from a crop chem standpoint.

Jeff Tarsi: From an inventory standpoint, as I mentioned earlier,

Jeff Tarsi: We've brought our inventory down quarter over quarter, roughly about $250 million.

Ken Sites: Yes, 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 in North America and Australia.

Jeff Tarsi: And a large portion of that, 250 million for Brazil, and a large portion of that.

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

Jeff Tarsi: And 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 the same position that we want to see some alleviation of 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 them.

Jeff Tarsi: from a cropkim standpoint and you know again we continue to see margin pressure there and while we've done a good job of get e inattoryy down what's important as we go forward

Jeff Tarsi: is that the risk to retail industry get their crop k in that same position that we want to see some alleviations on margins of his ke mentioned a bit earlier we're just superfocused right now margin improvement across all three shelves of our business

Ken Sites: 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 the challenges that we've seen in terms of taking longer for that market to stabilize. You know, we were looking to, for inventories, to clear out through 2024. And so we could emerge into 2025 in a better position. That said, we've seen some changes with growing 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.

Jeff Tarsi: And again, managing our inventories down just as tight as we can possibly get them.

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

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

Ken Seitz: 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, and...

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?

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.

Ken Sites: 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. We do have a plan in Brazil, and it is a plan where we're going to, you know, as we speak, improving margins. We've talked about closing 21 locations. We've talked about curtailing three blinders, cost reduction initiatives, and certainly working down our inventories.

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.

Ken Sites: 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. So, so again, when we talk about the challenges and the guide down in in our retail, even 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.

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

Speaker Change: Thanks for the question, Ben. We are obviously doing a complete commercial review of our business in

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 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.

Speaker Change: 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 .

Jeff Tarsi: 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 continues to grow in terms of...

Ken Sites: And it is true that we had a wet spring in man North America 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 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 is we headed 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 near term challenges here that we have a plan for.

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

Ken Seitz: So the market is going to come around, we know that. It's just 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 in 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.

Jeff Tarsi: going to come around we know that 's it's a matter of time for us as nutri

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.

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

Benjamin Theurer: Your next question comes from the line of Ben Peter from Barclays.

Mark Thompson: Your line is now open. Yeah. Good morning. And thanks for taking my question. Just two real quick ones. So one, as you look into the upgrade of your your potage volumes globally, but then at the same time, your internal guidance raises is a little more muted. Could you quantify what your your expectation is as to potential disruption? Well, that rail strike that you've mentioned? Yes. Thanks Ben. And you know, when we guide on potage volumes, we have considered the potential for a short rail strike. But yeah, there's a lot of moving parts there.

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

Jeff Zekauskas: 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?

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.

Speaker Change: Thanks, Jeff, and certainly the majority of that change was related to everything that we've talked about.

Speaker Change: With respect to Brazil, the impact of wet May in North America, it contributed to about a third of that adjustment.

Vincent Andrews: So I'll pass over to Mark Thompson. Yeah, thanks again. Good morning, Ben. So yeah, first and foremost, obviously, we're concerned about potential for the rail strike as Pedro mentioned in his comments, given the impact that this would have not only on nutrients, but on our customers and the broader economy. And given the dependence, particularly of our offshore potage exports through campus on Canadian rail on a consistent basis. Really, any work stop this would have some impact on the business.

Vincent Andrews: 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 the tax is also work to take proactive steps to support customers and charge up their network to the degree that that's possible. 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 will say a few days to a maximum of a week of potential impact from a rail strike.

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

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

Lucas Beaumont: Thank you, this is Lucas Beaumont on behalf of Josh. 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 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.

Speaker Change: Thank you, this is Lucas Beaumont to Josh. I just wanted to follow up on the pathway for retail towards the 2026 targets.

Lucas Beaumont: I mean, you're sort of pointing to about $1.6 billion in AVID jobs 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.

Speaker Change: a mid-single digit kind of rightite hit thetwo bill youre going to to get up to twelve cent the next two years so could you ppose just kind of walk us through the buckets of the growth algorithm you how you see yourself getting to the others to do deliver on that thank

Jeff Tarsi: We certainly have that bridge on 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.

Josh: Yeah, thanks, Josh.

Speaker Change: We certainly have that bridge in the path from here to there and I'll pass it over to Jeff to provide that.

Vincent Andrews: And if we were to see that type of eventuality, we would expect that we would be trending towards the lower end of our potage 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, you know, we'd be trending more towards the midpoint or potentially in the upper end of our potage sales volume guidance, all else equal.

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 to deliver that 192.1.

Jeff: Yes, Ken laid out, Josh, a little bit earlier, you know, we, you know, we laid out our investor strategy, one nine to two one, and we continue to see a path to that number. As I look at it, I see three different buckets that

Speaker Change: We need to achieve on to deliver that one nine to two one. 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.

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, as well as our growth in our international and wholesale channels and working with our commercial teams there.

Vincent Andrews: So when you take that into account and you look at us raising our full year global shipment estimate by about a million tons. And I think that probably helps square square up the plug on, you know, a typical market share for us in that 19 to 19 and a half percent range that we've talked about his story.

Jeff Tarsi: We've been growing that business at a pace greater than 10% a year, and we believe we can continue that trajectory through further penetration in our core retail markets.

Jeff Tarsi: What's also important is as well as our growth in our international and wholesale channels and working with our commercial teams there.

Vincent Andrews: Your next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open. Thank you. Good morning, everyone. 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.

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, 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 going to include organic growth within those base businesses and then 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 seeing that market stabilize to that effect. So those are the three buckets that we see, and we still think that we're on a path to achieving them.

Jeff Tarsi: And so that's going to play a significant part in it.

Vincent Andrews: And I'm just wondering, you know, are you seeing, you know, your inventory position is there in terms of your cost? Are they, are they, 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 cam of the, you know, $150 million reduction in EBITDA for the year? How much of that is associated with crop cam to the extent you can estimate?

Jeff Tarsi: Yeah, no, thanks Vincent. And I think you identified a little bit of the challenges and 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 Tarsie to provide more detail. Yeah, Vincent, thanks. And, 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.

Jeff Tarsi: 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.

Jeff Tarsi: it's it's going to include organic growth within those base businesses and then some tuckys going forward and then last but not least and we talked a lot about this this morning is our brazil business in that seeing that market stabilized to that effect so those are three buckets that we seek and we still think that we're on a path

Jeff Tarsi: to achieving that.

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

stephen burn: your next question comes from the lineof stephen burn from bankof america your line is now open

Jeff Tarsi: Yes, thanks. Yes, 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 seek out more generics?

stephen burn: Thank you.

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

stephen burn: 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

Jeff Tarsi: And that pressure has been particularly intense around the crop cam 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, particularly around generic chemistry from that standpoint. And I think we'll continue to see that for a bit, you mentioned, you know, what, what portion of our business is from a crop cam basis, we're, we're basically a third or third or third there from the crop cam fertilizer and see standpoint from an inventory standpoint.

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

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 just 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.

Speaker Change: Yeah, thanks, Steve, and I...

Speaker Change: First of all, I do think that when we get into these, in these tighter marketing conditions, it favors it not only just around the, not only around the crop protection shelf, but I think it

Speaker Change: It favors us a bit on our proprietary seed business and

Speaker Change: And again...

Speaker Change: on our biological closing proper nutritionsans and how we feat to crop as we go along through the season with that standpoint and again we've seen we've seen excellent growth again this year in our plant nutrition in bio stimulate space

Jeff Tarsi: As I mentioned earlier, we brought our inventory down a quarter over quarter, roughly about 250 million dollars and a large portion of that and 250 million for Brazil and a large portion of that is in the crop cam sector. So I like where we've got ourselves positioned from a crop cam 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.

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 with 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, 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.

Speaker Change: I'm particularly pleased around one of our products, Terimar.

Speaker Change: we had about 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: As we go forward, is that the rest of the retail industry get their crop cam 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 inventory down just as tight as we can possibly get them.

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

Jeff Tarsi: 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, that would have looked larger due to what we saw as the reset in the fertilizer market last year in the first quarter.

Speaker Change: 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 continuing to use the products to give them...

Steve: The best chance of efficacy when you mention 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.

Ken Sites: Your next question comes from the line of Ben ice accent from Scotia back. Your line is now open. 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. And you guys have taken roughly 800 million dollars of write down in the region over the past year or so and another 200 million of this FX issue.

Steve: 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.

Steve: 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.

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

Jeff Tarsi: And so, that would have thrown those percentages out, but our business, our proprietary products 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.

Ken Sites: So a billion dollars of challenges against the business that generate somewhere between 80 and 100 million and he dies out right. And so what are we playing for here and what's still at risk and and has that one rate changed given that you're making some pivots in the region. Thank you. Yeah, thanks. Thanks for the question, Ben. 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.

erarron iscessar: your next question comes from the line of erarron iscessar from barrenburg your line is now open

erarron iscessar: 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 contract, 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.

Ken Seitz: Yeah, thanks, Aaron. Yeah, you know, 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. Increasing demand on the supply side. We look at a balanced market, and that does involve Laos, and it does involve supplies from Russia and Belarus, but I'll pass it over to Mark to talk about those numbers. Yeah, thanks, Ken. Good morning, Aaron.

Speaker Change: Yeah, thanks, Aaron. Yeah, you know, we, we looked at 2024. And on the demand side, what we've seen has been

Ken Sites: 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. So the market is going to come around.

Speaker Change: quite strong this year that led us to increase our view sixty nine to seventy two million tons of shipments for the year what's just about every market

erarron iscessar: 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.

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, and really, what we see is an agronomic need to replenish potash levels globally after a few years of under-application in key markets.

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

Mark Thompson: 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,

Ken Sites: 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.

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

Speaker Change: 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.

Mark Thompson: So with the offshore contracts now in place, we do expect a global price floor to be established and standard demand to remain 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. 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.

Mark Thompson: 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.

Mark Thompson: With the offshore contracts now in place, we do expect a global price floor to be established.

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

Speaker Change: 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.

Ken Sites: You lowered your retail guide by about 150 million. How much of the lowering came from the weather in the US and how much came from South American operations? Yeah, 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 what may in North America and contributed to about a third of that adjustment.

Speaker Change: 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 in demand this year, it's really the FSU incremental supply from Canada and then Laos.

Mark Thompson: 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.

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

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.

Joshua Spector: Your next question comes from the line of Joshua Specter from UBS. Your line is now open. Thank you. This is Lucas Paman on the Josh. I just wanted to follow up on the pathway for retail towards the 2026 targets. I mean, you're sort of pointing to about a 1.6 billion in EBITDA this year and then bridging that to the $2 billion. I mean, over the last five years, retail's only kind of grown EBITDA are mid single digit kind of right to hit the $2 billion. I mean, you're going to need to get up to kind of 12% of you in the next two years.

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, as we've continued to read in publications and are aware, and I think that Laotian producers have announced that they continue to experience challenges with production. 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 second half of last year i think stepping back more broadly on ms

Speaker Change: as we' continue to read in publications and are aware and i think that lshould producers have announced themselves continue to experience challenges with production

Jeff Tarsi: 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 do the weather on that. Thanks. Yeah, thanks Josh. Sorry, we certainly have that bridge in the path from here to there and I'll pass it over to Jeff to provide that. Yes, he and laid out Josh a little bit earlier. You know, we laid out our investor strategy.

Mark Thompson: And as we look out over the medium term, 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: You know we understand there's been continued water inflow issues that have

Speaker Change: hindered the achievement of production levels that were previously targeted.

Speaker Change: And as we look out over the medium term, you know, say the next two to three years,

Speaker Change: We do expect that we will see some incremental supply from Laos.

Speaker Change: However, disclosures out of Laos have also taken larger expansions off the table from the previously targeted timeframe. When we step back from all that, as Ken said, we continue to see a relatively balanced market.

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.

Ken Seitz: in 2024 with supply and demand.

Ken Seitz: 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.

Jeff Tarsi: One nine to two one and we continued to see a path to that number is as I look at it, I see three different buckets that we need to achieve over deliver that one nine to two one. Number one is 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 of pace greater than 10% a year and we believe we can continue that trajectory.

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

Ken Seitz: 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.

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

Jeff Tarsi: They've 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. And so that's going to play a significant part of 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 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.

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 lower. I certainly would increase 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?

Adam Samuelson: 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, and I guess how

Adam Samuelson: And I guess what we should 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.

Jeff Tarsi: It's it's going to include organic growth within those base businesses and then some tokens 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 stabilized some to that effect. So those are three buckets that we see and we still think that we're on a path to achieving that.

Speaker Change: Should we think about the uptake on summer fill in North America and what you're seeing from a North American affordability demand for 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

Adam Samuelson: Great, Adam. Yeah, I'll quickly pass over to Mark here, but I think you've actually identified it.

Mark Thompson: Great, Adam. Yeah, I'll quickly pass over to Mark here. I think you've actually identified

Ken Seitz: 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 in our own production volumes in the first half. And you see that reflected in our cash cost of production, $53 per ton. And 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 additional color on guidance range and rail. And also, yes, a very strong uptick on our summer fill, but over to you, Mark. Yeah, thanks, Ken. Good morning, Adam.

Mark Thompson: Many of the moving parts within our guidance range and you know if you look today without a rail strike.

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

Mark Thompson: 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 without some challenges on rail.

Jeff Tarsi: Your line is not open. Yes, thanks. Yes, in response to your comments just now about growing proprietary 10% per year, it looks like your proprietary seed chemical and nutrients. I mean, as a percent of the platform slipped in the first half of the year, is there anything that you can call out that that grows that? And as you look into a year where you know, grow or margins are looking tight, does that, does that favor a shift to your proprietary products or does, do you see risk that they seek out more generics?

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

Mark Thompson: Mark can certainly talk about additional color on guidance range and rail.

Mark Thompson: 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 said in terms of a rail strike earlier in the call, 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, you know, our typical market share.

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

Mark Thompson: Yeah, thanks, Stephen. And I, first of all, I do think that when we get into these, in these tighter marketing conditions, if 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 nutrients and, and how we feed the crop as we go along through the season with that standpoint.

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 as 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. You know, we had an opportunity a couple of weeks ago to meet with all of our major customers in North America. I would say across the nutrient complex, sentiment is certainly the most positive on potash, in terms of that affordability driving a strong bent toward consumption in the second half of the year.

Speaker Change: i think in north america as he 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: And again, we've seen, we've seen. And excellent growth again this year, you know, I plant nutrition and bio stimulus space, you know, I'm, I'm particularly pleased around one of our products, teramar, we, we had about 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, but, you know, our agents sales year to date are up 7% steam.

Speaker Change: reallyree in a strong place hadanoortun a couple weks go tomeet with all of major customers in north america you know i would say across the nutrient complex sentiment is ncertainly 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 and North America.

Mark Thompson: 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, 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.

Mark Thompson: And, you know, our agents 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 looked 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.

Speaker Change: Certainly we saw that with all of our customers, we saw that within our Nutrien Ag Solutions business.

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

Speaker Change: We're effectively sold out through the third quarter and effectively shipping into the first portion of October to deliver on that fill program.

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, but I'd say really that channel behavior is certainly normal.

Mark Thompson: And I'd really say 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.

Mark Thompson: And so that would have thrown those percentages out, but our business, our proprietary product 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.

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

Ken Seitz: If I could ask you 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, based 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.

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

Richard Garchitorena: Fairly little leverage, a strong free cash flow this quarter. You've cut your CapEx.

Aaron: Your next question comes from the line of Aaron from Baronberg. Your line is now open. Hello. Hi. Good morning. Thanks for taking my question. I would like to ask a question about portage on the supply side. After the renegotiation of the contracts clearly, it seems like both in the China coming back. I would like to understand on the supply side what you guys see from from Laos and how should we think about, you know, capacity addition from these guys for the remainder of the year. Thank you.

Speaker Change: 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.

Speaker Change: 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. You know, what would we need to see for you to step up?

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 six to 12 months? Yeah, thanks.

Speaker Change: Return of capital in the form of buybacks, and how should we see that play out potentially over the next 6 to 12 months?

Mark Thompson: 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 that led us to increase our view 69 to 72 million times the shipments for the year. What's just about every market increasing demand on the supply side. You know, we look at a balanced market and that does involve lots and it does involve supplies at a Russian Belarus, but I'll pass it over to Mark to talk about those numbers. Yeah, thanks, Ken. Good morning, Aaron.

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

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

Speaker Change: Includes about $500M 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.

Mark Thompson: So maybe just to, you know, 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 on the first half of 2024 cross granular markets. We've seen a demand recovery in Southeast Asia and that's been combined with the continuation of strong domestic consumption of pot ash in China. As we've said before, this has all been supported by solid affordability and really what we see is agronomic need to replenish pot ash levels globally after a few years of under application and key markets.

Speaker Change: 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 dividend. 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 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 dividend. So that all adds up to about $3.7 billion.

Speaker Change: And as we watch the year unfold and as we head into the fall here, you know, and into 2025, as you say, as we look at incremental cash above

Speaker Change: 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.

Mark Thompson: 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 shipment estimate by a million tons on both ends. 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 equations on the supply side, I'd say for us really as expected in terms of where the incremental supply has come from service growth and demand this year.

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.

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. And forgive me if that question has been asked before.

Edlain Rodriguez: Thank you. Good morning.

Edlain Rodriguez: And forgive me if that question was asked before, on phosphate.

Mark Thompson: 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. And similarly with Laos, we've seen shipments in the first half, generally in line with the second half of last year.

Edlain Rodriguez: you seem to have some concerns about affordability gi the persistence of the hy pricesis there

Speaker Change: but yesterday like the biggest player in the space then seem to have any concern about the hywiic es they think they can last for a long time in the disconnect between fid in pol prices should that be an issue that

Mark Thompson: I think stepping back more broadly on Laos. You know, as we continue to read in publications and are aware and I think that allows and 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. 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.

Speaker Change: What makes you concerned about the high prices of phosphate and how detrimental it could be to demand and affordability going forward?

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?

Ken Seitz: Yeah, thanks for the question, Edlain. Yeah, 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 when talking to farmers through our downstream channel. And 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.

Speaker Change: yeah thanks for the question and link

Speaker Change: We just talked about affordability and margins as it relates to potash.

Speaker Change: you know summer fil program it is a different situation in phosphate with some of the tightness in the phosph market and what we can tell you is what we're seeing talking to farmers through our downstream channeling so i'll start with

Mark Thompson: You know, potentially a million tons in our S&D. However, discolored as 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 of that, as Ken said, we continue to see a relatively balanced market in 2024 with supply and demand. 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 price.

Speaker Change: with jeff to maybe provide some of that color and maybe 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 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: Yeah, and as I stated earlier, you know, when I look at fall and the second half of the year, obviously fall fertilizer

Speaker Change: activity and application 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 is appearing probably

Jeff Tarsi: If I look at the three nutrients, and Mark talked about this earlier, you know, potash appears to be probably very in line and 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.

Mark Thompson: Very in line from an affordability standpoint.

Mark Thompson: The phosphate side of it is a bit more of the question mark, and I think that growers were probably expecting

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

Speaker Change: that that price would come more in line with some of the other nutrients so if i think there's if there's a weakness out there in the fall from an application standpoint i think that we're seeing early one dethatct could be in the phosphate market i don't want really

Mark Thompson: Good morning, everyone. Maybe just continuing on that line of questioning, Mark. Mark, 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, increased certainly below under the range. Why wouldn't it just the rail strike that would take you away from increasing the high end? Is it just the inventory is coming out of the first half and known turn around in the fourth quarter?

Jeff Tarsi: 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. We see growers asking a lot of questions from an affordability standpoint.

Speaker Change: projected what i think that could be for the follow but we do see some softness in that side of it we see growers asking a lot of questions from an affordability standpoint

Mark Thompson: Mark, I might kick it over to you. Sure. Thanks, Jeff. Good morning.

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

Speaker Change: mar am i kicken over you

Speaker Change: Sure. Thanks, Jeff.

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's 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.

Speaker Change: Good morning, Elaine. 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.

Mark Thompson: 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? Great, Adam. Yeah, quickly pass over to Mark here, but I think you've actually identified as many of the moving parts within our guidance range.

Speaker Change: infill programs because phosphate is needed.

Jeff: not the sametime 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 toadjeff discussion with his team and growers there are concerns about affordability and concerns about you know potential demand destruction in orortions of the phospate market as we get in later in the fall season

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.

Mark Thompson: 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 without some challenges on rail and the year is sheep 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 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, Kim.

Speaker Change: Now, when you look at our phosphate business in particular, 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 of Nutrien Ag Solutions, it's something we're going to continue to watch very closely.

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

Jeff: 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.

Mark Thompson: 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 rail strike earlier in the call, you know, an absence that you'd see our typical market share targets be right in line with what our guidance is employing 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.

Jeff Holzman: 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. Thank you for your participation. You may now disconnect.

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

Mark Thompson: But ultimately from a commercial perspective, really nothing has changed with respect to our marketing strategy or 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 and 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.

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.

Mark Thompson: We saw that within our nutrient eggs solutions business. And that set us up very well for a very strong summer fill program. So at this point, you know, 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, but 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. Great, good morning, everyone.

Ken Sites: If I ask, go on capital allocation. So you've got a strong balance sheet, fairly little leverage, a strong free cash flow in this quarter. I mean, you've caught your capex needs for this year by four hundred to five hundred nine versus last year. And you've also guided 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. Your stock price has been fairly weak.

Ken Sites: You know, what would we need to see for you to step up return of capital reform of buybacks? And how should we see that play out potentially in the next six or 12 months? Yeah, thanks, Rich. I think you identified some of the numbers there, you know, a capex program, 2.2, 2.3 billion, which includes about 500 million. And that's split between what we've talked about. And retail proprietary network optimization. And then the other half goes into our upstream business, looking at nitrogen, brownfield investments, deep bottle lacking and my automation and in product.

Ken Sites: So we have a very targeted and I would say exciting program on the investing side that, that along with sustaining capex adds up to that 2.2 to 2.3. As you say, we've got about 450 million and leases and then about a billion dollars for the dividend. So that all adds up to about 3.7 billion. And as we watched the year unfold and as we head into the fall here, you know, and into 2025, as you say, as we look at incremental cash above those levels.

Ken Sites: So certainly we will look at buying back our shares among other opportunities, which could include ongoing retail, tucking opportunities in North America and Australia. 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 up at Lane Rodriguez from New Zuhu. Your line is now open. Thank you.

Jeff Tarsi: Good morning. And forgive me. The 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, they didn't seem to have any concern about the high prices. They think they can last for a long time between the disconnect between phosphate and product prices, shouldn't be an issue. Like what makes you concerned about like the high prices of phosphate and how detrimental it could be to the men and affordability going forward?

Jeff Tarsi: Yeah, thanks for the question, Edlin. You know, we just talked about affordability and margins as it relates to potash and summer film 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 with Jeff to maybe provide some of that color and then maybe 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, the 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, pot ash is appearing. Before 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.

Jeff Tarsi: 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. We see growers asking a lot of questions from an affordability standpoint.

Jeff Tarsi: Mark, I might kick it over to you. Sure. Thanks Jeff. Good morning and Lane. 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 North America. It's true that global supply demand is very tight currently for phosphate. So that has led to good participation in bill programs because boss space needed.

Jeff Tarsi: You know, at the same time as Jeff pointed out, we've got a pretty large price disparity between pot ash 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. Now, when you look at our phosphate business in particular, you obviously 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 and the train egg solutions. It's something we're going to continue to watch very closely.

Operator: There are no further questions that this time.

Jeff Holzman: I will now turn the call back to Jeff Holzman. Please continue.

Operator: Hey, thank you for joining us today. The investor relations team is available. If you have follow up questions, have a great day. Thank you.

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