Q1 2025 Nutrien Ltd Earnings Call
And those contained in our forward looking information.
Information about these factors and assumptions is contained in our quarterly report to shareholders as well as our most recent annual report MD&A and annual information form.
Speaker Change: I'll now turn the call over to Ken Seitz nutrients, President and CEO and Mark Thompson, our CFO for opening comments.
Speaker Change: Good morning, Thank you for joining us today as we review, our Q1 performance strategic priorities and the outlook for our business.
Speaker Change: History. Its first quarter results were supported by the execution of operational efficiency and cost savings initiatives. We maintained our 2025 full year guidance ranges as operating performance and capital allocation priorities are consistent with previous expectations.
Speaker Change: In recent months geopolitical events and trade disruptions have created volatility in global financial markets.
Speaker Change: To this point these issues have not impacted the outlook for our business for.
Speaker Change: Fertilizer market fundamentals have strengthened supported by strong global demand and tight supplies.
Speaker Change: Canadian fertilizer products that are critical for crop production and food security continued to move across the border tariff free and.
Speaker Change: And our downstream retail network is well positioned on fertilizer and crop protection suppliers to meet demand for the current growing season.
Speaker Change: U S farmers intend to increase corn acres by approximately 5% in 2025, which is positive for crop input demand.
Speaker Change: We're seeing strong fertilizer application rates this spring and our U S retail fertilizer sales volumes were up 8% in April compared to the same period in 2024.
Speaker Change: As we plan for the remainder of the year, we will continue to position our supply chain to efficiently serve our grower customers in a dynamic market environment.
Speaker Change: Yeah.
Speaker Change: Now turning to potash global supply and demand fundamentals have strengthened significantly.
Speaker Change: Spot market prices have increased by 10% to 20% since the beginning of 2025.
Speaker Change: We have maintained our annual global potash shipment forecast in a range of <unk> 71 to 75 million tonnes with the current level of demand testing existing global operating and supply chain capabilities.
Speaker Change: Canpotex is fully committed for the second quarter due to strong demand in all major offshore spot markets.
Speaker Change: In China, a step change in potash consumption in recent years combined with lower imports to begin 2025 has led to an estimated $1 1 million ton reduction in its strategic reserve.
Speaker Change: We anticipate favorable consumption trends and lower inventories will support strong import requirements in the second half of the year.
Speaker Change: Global urea and nitrogen solutions markets have also strengthened considerably in 2025 due to seasonal demand and supply restrictions.
Speaker Change: In the U S. The combination of higher corn acres unlimited in nitrogen applications. This past fall is supporting demand, while trade flow shifts and constrained logistics have impacted supplies.
Speaker Change: Neutrolin is well positioned to optimize product mix from our low cost nitrogen network to meet demand. This spring.
Speaker Change: Beyond the fundamentals our focus is to enhance our core business across the energy value chain and progress towards our 2026 performance targets, which provide a pathway for driving structural improvements to our earnings and free cash flow.
Speaker Change: In our upstream business, we are leveraging our world class asset base to bring on incremental low cost fertilizer volumes as demand grows.
Speaker Change: This includes initiatives that enhance the safety reliability and low cost position of our assets.
Speaker Change: Investments in our midstream distribution network will continue to be a priority to ensure we can efficiently serve our customers and support our growth objectives over the long term.
Speaker Change: Trade disruptions in recent years have further highlighted the importance of our leading global supply chain.
Speaker Change: And our downstream retail business, we have well defined growth opportunities, including expansion of our proprietary products business execution of network optimization projects and tuck in acquisitions.
Speaker Change: In the first quarter, we completed two acquisitions in the U S, adding high quality assets with a strong strategic fit within our retail network.
Speaker Change: Through actions to simplify our business and focus on core assets in markets. We have made meaningful progress on our cost savings and capital expenditure targets.
Speaker Change: We remain on track to achieve our $200 million target for consolidated annual cost savings in 2025, one year earlier than the original goal.
Speaker Change: To further optimize the capital this year with planned extended expenditures down more than $500 million compared to 2023 levels.
Speaker Change: In addition, the divestiture of noncore assets has provided us with incremental cash flow.
Speaker Change: In the first quarter, we divested our remaining position in Cytosorb, which was a passive equity ownership stake.
Speaker Change: Total proceeds from the divestiture during the fourth quarter of last year in the first quarter of 2025 amounted to $223 million.
Speaker Change: These actions further support nutrients ability to deploy capital towards high conviction priorities.
Speaker Change: That improved earnings and free cash flow per share through the cycle.
Speaker Change: I will now turn it over to Mark to review, our Q1 results 2025 guidance and provide additional details on our capital allocation priorities.
Mark Thompson: Thanks, Ken as Ken described our operating performance has progressed in line with our previous expectations.
Mark Thompson: In the first quarter, which is typically a seasonally slower period for our downstream retail business nutrient delivered adjusted EBITDA of $852 million.
Mark Thompson: Retail adjusted EBITDA totaled $46 million this weather related delays reduced crop input sales in the U S and Australia.
Mark Thompson: <unk> expenses were down 5% compared to the prior year as we progressed cost savings initiatives.
Mark Thompson: Brazil, we are demonstrating greater stability in our business performance supported by the execution of our margin improvement plans.
Mark Thompson: We've maintained our full year retail adjusted EBITDA guidance range of $1 65 to $1 $85 billion.
Mark Thompson: Given the pace of field activity through early May we expect the slower start to applications in the first quarter will be made up in the second quarter.
Mark Thompson: At the midpoint of our annual range, we anticipate year over year growth your crop nutrient sales volumes increased proprietary products' gross margin and continued recovery in Brazil.
Mark Thompson: Firstly offset by a return to historical average crop protection product margins.
Mark Thompson: In potash, we delivered adjusted EBITDA of $446 million in the first quarter down from the prior year due to lower net selling prices.
Mark Thompson: Our realized potash price in North America reflected the reset and values for the winter fill program.
Mark Thompson: While the improvement in our offshore selling price was driven by higher international benchmark values and lower logistics costs.
Mark Thompson: Our North American reference price increased three times following the completion of our winter fill program, which we expect will support higher domestic selling prices in the second quarter.
Mark Thompson: We utilized our extensive midstream distribution network to deliver $3 4 million tonnes of potash in the quarter.
Mark Thompson: Similar to the record level sold in the same period of 2024.
Mark Thompson: We expect annual potash sales volumes of 13, 6% to $14 4 million tonnes in line with our historical average share of global shipments.
Mark Thompson: Our nitrogen operating segment generated adjusted EBITDA of $408 million in the first quarter down from the prior year due to higher natural gas costs and lower equity earnings from our investment in <unk>.
Mark Thompson: <unk> prices for urea and other upgraded nitrogen products have strengthened since the beginning of the year.
Mark Thompson: While ammonia values have declined from historically strong levels in the fourth quarter of 2024.
Mark Thompson: Our ammonia operating rates increased to 98% in the first quarter supported by reduced maintenance downtime and improve reliability at our sites.
Mark Thompson: We expect annual nitrogen sales volumes in the range of $10 seven to 11 2 million tons with higher quarterly volumes for the remainder of 2025 compared to the prior year.
Mark Thompson: Given the recent volatility in global natural gas markets. We now project Henry hub natural gas prices to average between $3 25, and $4 per M. D to you in 2025.
Mark Thompson: Our western Canadian nitrogen plants continue to benefit from low gas costs due to a wider price spread to Henry hub compared to historical average levels.
Mark Thompson: Phosphate, we generated adjusted EBITDA of $61 million in the first quarter.
Mark Thompson: Down from the prior year, primarily due to the impact of lower production volumes and higher input costs.
Mark Thompson: We continue to expect lower production levels in the first half of 2025 compared to last year and improved operating rates in the second half following the completion of planned turnaround activity.
Mark Thompson: Our capital allocation priorities also remain consistent.
Mark Thompson: We are focused on initiatives that support the achievement of our 2026 performance targets optimizing investments in working capital and continuing to review noncore assets on our balance sheet all of which we expect will enhance sources of cash flow over time.
Speaker Change: From our uses of cash perspective, we've committed $2 to $2 1 billion in capital to sustain safe and reliable operations and to progress a set of targeted growth investments that are aligned to the priorities that Ken previously described.
Speaker Change: This includes investments in our proprietary products business retail network optimization nitrogen debottleneck projects and potash mine automation.
Speaker Change: February we indicated that additional free cash flow in 2025 would be allocated to a narrow set of incremental growth opportunities and to share repurchases priorities that we expect will increase free cash flow per share.
Speaker Change: We have deployed capital on both fronts in 2025, completing two U S retail acquisitions in the first quarter and repurchasing $3 6 million shares for a total of $188 million as of May six.
Speaker Change: We intend on continuing to repurchase shares on a ratable basis under our renewed and CIP program. That's authorized until the end of February 2026.
Kent: Now I'll turn it back to Kent.
Kent: Thanks Mark.
Kent: To summarize we have a constructive outlook for our business as global fertilizer market fundamentals have tightened in 2025.
Kent: Supported by growing demand and tight suppliers.
Kent: We continue to monitor potential risks related to trade disruptions and have built a resilient business that is well positioned to respond under any scenario.
Kent: We are taking a disciplined and intentional approach to capital allocation prioritizing high value investment opportunities divesting noncore assets and returning cash to shareholders.
Kent: We have demonstrated progress in each of these areas in 2025, and we will continue to focus on actions within our control that we believe maximize long term value for our shareholders.
Kent: We would now be happy to take your questions.
Kent: 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 one on your Touchtone phone you will hear from that your hand has been raised should you wish to withdraw. Your question. Please press star followed by the number two if you are using a speaker phone. Please lift the handset before pressing.
Kent: In any case the.
Speaker Change: First question comes from Joel Jackson from BMO capital markets. Please go ahead.
Joel Jackson: Hi, good morning, everyone.
Speaker Change: So you don't give guidance for EBITDA, you gave just for retail and.
Speaker Change: And I don't want to give me Guy who I wanted to if youre not going to what I want to ask you is that if I look at it versus three months ago. What you have for your commodity price deck and don't even tell us that but would you agree and if you mark to market your earnings.
Speaker Change: You would expect that you are looking at higher outlook now than you would've thought three months ago, because all the commodity prices have moved to good use spring like could you talk about that that the outlook is improving or not where you should be earning more than maybe what you would've thought three months ago, and youre not going to tell us what those numbers are and that's fine. Thanks.
Speaker Change: Oh good.
Speaker Change: Good morning to all thank you for the question. The short answer is yes, we agree.
Speaker Change: With your assessment of now versus three months ago.
Speaker Change: It's related to a number of things that it does go back to what we're seeing.
Speaker Change: Across what we do the strength of demand across our fertilizer products. So we can talk about potash where we.
Speaker Change: Issued our view of 71 to 75 million tons.
Speaker Change: Demand is here and what we're what we're seeing we believe it's the intersection of the market the ability to supply that so it'd be the supply stack and logistics constraints. So that as a result, we are seeing strengthening.
Speaker Change: Our price in every market that we serve I mean, even in our own domestic volumes, we increased the price three times start winter fill program to your point that's within the last three months.
Speaker Change: Sure, we're 90% committed through Q2 in our domestic volumes are fully committed.
Speaker Change: Canpotex through Q2 so.
Speaker Change: We could talk about what's happening in Korea, and UAS, where we've seen the supply disruptions and strong demand.
Speaker Change: With our retail business as we've talked about.
Speaker Change: It's a story of a house as opposed to quarters and where we are.
Speaker Change: With some weather delays in the first quarter, we're now above 50% planted and we can hand, it over to Jeff Carter C. Things are going strong with the planting season now and we're seeing significant volume go to ground. So we're very encouraged by what we're seeing at the moment.
Speaker Change: Again, our goal is just to say that we agree with you.
Speaker Change: Certainly constructive on the balance of the year.
Andrew Wong: Your next question comes from Andrew Wong from RBC Capital markets. Please go ahead.
Andrew Wong: Hey, good morning, Thanks for taking my questions.
Andrew Wong: So maybe can you provide an update on Brazil retail like are we on track to see that business get back to breakeven and just going forward.
Andrew Wong: Now that you've spent some time on the turnaround in Brazil.
Andrew Wong: That looks like for new train as you kind of get into like let's say 2026 and beyond.
Andrew Wong: Yes, Thanks, Andrew So again the short answer is yes, we are on track.
Speaker Change: The macro level, the Brazilian farmer had a strong soybean crop in and soybean prices strengthened.
Speaker Change: Of course, they're watching their search media corn crop grow at the moment, but all indications are that it'll be a strong corn crop as well so the Brazilian farmers that a bit better place and of course, you combine that with what we've been doing with our own business and we've talked about I think what we've talked about a head count reduction would talk about closure.
Speaker Change: Productive locations, how we're focusing on collections, how we're focusing on proprietary products in that whole plan to bring us back to a cash neutral position. This year, which is absolutely on track Jeff do you want to say a few words about that and I'll just reiterate some.
Speaker Change: Some of the Communist Jumeii macro standpoint, the board came out very strong soybean yields there well, which soybean harvest they got off to a good start with second crop corn.
Speaker Change: That's progressing nicely not a lot of weather scares there.
Speaker Change: At market, we have seen as we saw last year.
Speaker Change: Can you see pressure in the crop protection market they.
Speaker Change: Big influence of generics.
Speaker Change: In that in that market as well and our focus with our business can be to stay really focused very intently on our controllable expense management.
Speaker Change: A heavy heavy focus on margin.
Speaker Change: We've been very focused on bringing our inventory down and we've been successful at that and then again a lot of attention to our receivables.
Speaker Change: We expect to deliver a notable improvement over last year, we're starting to see those benefits start to show up.
Speaker Change: From a margin standpoint, and from an expansion standpoint, as well and we plan to carry that momentum forward through the remainder of the year.
Speaker Change: <unk> you mentioned that.
Speaker Change: We've idled our blending facilities.
Speaker Change: We've taken at our assets that were giving us return from them, whether we're talking about locations or experience centers and we reduced our headcount by about 400. So we've done a lot of work there over the last 12 to 18 months and we're starting to see the results of that thanks, Joe and Andrew as we look into 2026, I think you can expect more of it.
Speaker Change: To say, it but it'll be watching the market evolution of.
Speaker Change: Yeah.
Speaker Change: The Brazil, Brazilian farmer and at the same time us continuing to execute on our or improvement plan.
Speaker Change: Fair to say, we're watching crop chemistry quite closely if there is one.
Speaker Change: Theres one shelf of ours that has caught up yet is chemistry.
Speaker Change: We'll be looking at the 2026, you see that but we're still seeing competition from generics and that's certainly stressing prices in that part of the world. Yeah. Kian I failed to mention I don't I don't want to leave us out, but we still see a lot of opportunity on the proprietary product side.
Speaker Change: About this especially with that plant nutritionals and biological products and as well on a proprietary receipts that business, we're very focused in those two areas.
Speaker Change: Your next question comes from Vincent Andrews from Morgan Stanley. Please go ahead.
Vincent Andrews: Alright, Thank you could.
Vincent Andrews: Could you talk a little bit about just sort of how youre seeing the first half shape up in wholesale and I'm just trying to think through you said about 90% of the book is filled domestically can you give us a sense of sort of how much the sequential price improvement you'll see it's obviously been a rising price environment. So just trying to understand how much of that you might have captured.
Vincent Andrews: And <unk>.
Vincent Andrews: Yes, Thanks Vincent.
Speaker Change: Again, I would say that the first half in terms of our upstream businesses.
Speaker Change: Were constructive and we could start with potash, where again with such strong global demand. We can go from market to market, where again, we're in China, we're seeing very strong consumption quite low inventory levels are India with it's a flat subsidy, but one that at today's prices would encourage probably $4 million.
Speaker Change: Tons of demand in that part of the world in the U S. We talked about what we're seeing in the planting season here certainly in the second quarter things are going quite strong domestically.
Speaker Change: We can talk about what we're seeing in Indonesia, and Malaysia, albeit 4000 ring it.
Speaker Change: Our per ton palm oil prices come off a bit but still at a level that encourage us strong demand that we're seeing that.
Speaker Change: We had about a $360 pricing in southeast Asia at the moment for standard grade product.
Speaker Change: So again in Brazil of course, where we just talked to you last year 47 million tons of crop nutrient demand and we're expecting something similar this year. So we can go on the demand side market to market and it certainly gives us that confidence in the 71 to 75 million tons and again, if you look at what's happening on the supply side of the equation and the market's ability to deliver where believe we.
Speaker Change: Believe those two are meeting ended their meeting.
Speaker Change: With a result of strengthening prices in just about every market that we serve.
Speaker Change: With you over to work to nitrogen products were here in the planting season.
Speaker Change: Really strong urea UA and prices ammonia, some softening with new supply coming on we're all watching China as it relates to export volumes, but at the moment in the planting season, we're seeing quite a bit of a strike.
Speaker Change: So again market to market and we can talk about phosphate phosphates phosphate prices are particularly strong market to market wholesale business ups, our upstream business, we're constructive on the first half and frankly into the balance of the year.
Speaker Change: Your next question comes from Richard <unk> from Wells Fargo. Please go ahead.
Richard <unk>: Great. Thanks for taking my question.
Speaker Change: Just wondering on the nitrogen segment. It looks like you had higher costs as a headwind in the quarter. Just wondering how much of this was related to Trinidad.
Richard <unk>: Was this across all your facilities, obviously higher natural gas price and.
Richard <unk>: With America as well and then also just maybe on tariffs I guess, how are you thinking about handling that if there are going to be some tariffs on boats.
Richard <unk>: Coming into the country from other regions, that's a trend that thank you.
Richard <unk>: Yeah. So.
Speaker Change: Two questions there one on cost what I'm tariffs of Nib I'll hand, it over to Mark to talk about.
Speaker Change: We're seeing the first quarter first half for a cost center nitrogen network in the neighborhood of Chris just talk a little bit about I guess, 10% tariffs on some of the other regions who produce nitrogen.
Speaker Change: Thanks, Jen good morning, Rich on your first question on nitrogen costs Q1's pretty straightforward answer.
Speaker Change: Obviously, when we came into the year, we had expected to see Henry hub prices in the range of $3 25 to $3.50 to begin the year and natural gas prices.
Speaker Change: The year higher than we anticipated and more volatile fashion than we anticipated. So the majority of the cost that you're referring to are in the order that would've been driven by higher gas prices in North America that said, we've seen gas prices ease off somewhat while there is still volatility in the market wide.
Speaker Change: Our range for the remainder of the year to be $3.25 to $4 as we move through the winter, we've seen gas prices eased a little bit.
Speaker Change: Albeit still volatile going forward.
Speaker Change: Just point out that obviously, we continue to benefit from from wider than historical spread with our plants up in Alberta and continue to expect to reap the benefits of that through the remainder of the year, so with that I'll pass it over to Chris.
Chris: Yeah. Thanks, Bob Good morning, as it relates to tariffs.
Chris: Some of the price increase was saying whether it be <unk> baby from the imposition of tariffs from most countries that had the 10% imposed on them, but generally the story is much more about demand and as you heard from from Ken in these opening remarks about the impact of planning 95 million acres of corn, a little bit of catch up nitrogen Apple.
Chris: Occasion that was missed in the fall and Thats the real factor, that's driving the prices, particularly of us, but those two products.
Ben Isaacson: Your next question comes from Ben Isaacson of Scotia Bank. Please go ahead.
Ben Isaacson: Thank you very much and good morning.
Ben Isaacson: You gave global potash shipment guidance of 71 to 75 million tons 75, being strong demand 71 being weak supply.
Speaker Change: Don't have weak supply and so my question is with prices now starting to move to.
Speaker Change: Two and through mid cycle, you've talked about Canpotex being sold out in Q2, your canpotex peer yesterday nudged up the volume a little bit in potash. How can we think about nutrient responding to prices is it too early or our price is too low for nutrient to start increasing volume when can we expect you to.
Speaker Change: To respond to higher prices. Thank you.
Speaker Change: Yes, Thank you Ben and know where prices are not to blow, but we're encouraged by again by what we're seeing in all of the markets that we serve but it is early in the year and we are in the middle of the planting season here in North America, and we have a guidance range that we've put out and we've maintained that.
Speaker Change: <unk> right now could we find ourselves as the year unfolds in an environment, where we're somewhere between the midpoint and the top end of that guidance range, we could.
Speaker Change: And as you know we certainly have.
Speaker Change: The ability to do without with R. R. Six months, our flexible network, our ability to surge capacity when we need to in an environment, that's calling for our times. So we're talking to our customers every day about their needs their demand.
Speaker Change: And again, where we are.
Speaker Change: Structure of on what we see for the balance of the year.
Speaker Change: Your next question comes from Chris Parkinson of Wolfe Research. Please go ahead.
Chris Parkinson: Great. My question kind of struggled to prior questions, but in the beginning of the year on the potash side.
Chris Parkinson: The presumption that the market would benefit from Belo, Russia, and Russian curtailments, perhaps a little bit.
Chris Parkinson: China, Chile, and then obviously, there's been a bit of a debate.
Chris Parkinson: But all in all it looks like supply has actually been quite healthy out of that this year, especially the Belarus versus prior expectations, Russia, perhaps a little bit less so but that it further indicate that this is a demand driven environment. So if we take that into consideration.
Chris Parkinson: Whether or not you correct as part of the.
Chris Parkinson: How should we think about the sustainability of higher prices because I think previously people were thinking hey, you could get a little bump up. It would then we're just gonna give everything back in the second half and I think it's looking increasingly less so so can you just help us can compartmentalize your way of thinking and how that plays into your strategy for the balance of the year. Thank you so much.
Chris Parkinson: Yeah, Chris Thank you for the question.
Chris Parkinson: Again I go back to the way demand is materializing this year and you know that.
Chris Parkinson: The global grower and the affordability of crop nutrition as they try to maximize yields and that's happening in North America as we speak Chris mentioned 95 million acres of corn, which is again constructive for crop nutrition going to ground, but we can go market to market and we're seeing.
Chris Parkinson: <unk> really record level demand in there that gives us confidence in that 71 to 75 million tons, we've talked about the constraints on the top end of our guidance rates global shipments as being a supply constraint.
Chris Parkinson: Even without the curtailments, perhaps that were announced in places like Russia, and Belarus maintenance downtime, which.
Chris Parkinson: We may yet see yes, we've had seen some volume reductions out of Chile at the margin and perhaps not all of the incremental tons that were announced coming out of the low. So there have been so display supply disruptions, but what we believe we're seeing is again this intersection where global demand is beating the market.
Chris Parkinson: <unk> ability to supply and ship and as a result, we have seen again strengthening.
Speaker Change: Yeah and prices respond market that we serve China and India contracts, obviously havent been settled so that when we look over the balance of the year and.
Speaker Change: How we're thinking about the remainder of 2025 and again, that's where we say we're quite constructive.
Speaker Change: Your next question comes from Steve Byrne from Bank of America. Please go ahead.
Steve Byrne: Yes. Thank you I have a couple of retail questions.
Steve Byrne: First the two bolt ons, where do you think EBITDA contribution could be post synergies.
Steve Byrne: And the other one beam.
Steve Byrne: Prior to <unk> brands.
Speaker Change: With Loveland and Donna grow are you are you are you gaining share in those brands would you say versus.
Speaker Change: Other other brands out there and then lastly, any update on the launch of <unk>.
Speaker Change: Infinity product.
Absolutely Steve. Thank you for the questions I'll hand, it over to Mark to talk about.
Mark Thompson: Your first question as it relates to the acquisitions and then over to.
Speaker Change: To Jeff to talk about diet wrote or OPI brands. So certainly we can we have a we can talk about what's happening with infinity.
Jeff Carter: Yes, Thanks, Ken Good morning, Steve So, Steve maybe just to take a step back.
Jeff Carter: Continued to say that over the past couple of years, we've been cautious in our deployment of capital and ensuring that where we're putting capital to usage.
Jeff Carter: Highest return opportunities to continue to grow free cash flow per share than we had expected, but as we entered 2025, we would begin to see our U S retail tuck in acquisitions come back into focus given the moderation in earnings profile and multiples and so we've made good on that by beginning some of that activity again, and we continue to be thoughtful and prudent in how we do that.
Jeff Carter: These two acquisitions were relatively modest in size, we deployed just over $10 million in capital on these two acquisitions, but as always when we complete these they're located in a very strategic area of the U S. The larger of the two was a was a distributor called Welch and.
Jeff Carter: It's a very nice fit with our network of business, we know very well and we continue to see a profile of its traditional for us we see the ability to take a turn or two of synergies from proprietary products expense management, and just bringing our procurement advantages to bear so as we said earlier in the call is removed.
Jeff Carter: Through the year that incremental dollar is really going to be allocated among tuck in acquisitions to the extent, that's the prudent place to deploy capital and share repurchases and we will continue to evaluate those opportunities. So I'll pass it over to Jeff on your other questions, Yes, good morning, Steve and I'll.
Jeff Carter: Yes, a couple of questions you asked around proprietary and.
Jeff Carter: Started off a little bit as it relates to as you know we got off to a delayed start in the first quarter of this year now I'll remind you we don't remember last year, when phenomenon, which door whether stay at Ford and in the first quarter compared to a we didn't get the weather the last two weeks of March.
Jeff Carter: In the in the campaign ran right now, but from a seed standpoint, our revenue and our mortgage up in the first quarter and Steve that's predominantly because of the shift we've seen from soybeans to corn, particularly in the south where.
Jeff Carter: We're up about 25% hold acreage corn acreage in the south and now perhaps the whole U S. That's not a material number but it is certainly going to contribute to the 5 million acre growth. We're projecting for the year are we doing very well with our corn varieties with data growth and so this has given us.
Jeff Carter: So a good opportunity to expand that as well we continue to be really excited about our about our.
Jeff Carter: Prior to your business as a whole we've got a we forecasted about an 8% increase eight 9% increase in gross margins this year across that portfolio of products and we think with the increased corn acres and and our attention to our <unk> Nutritionals and bio stimulant product. We think are going to have a really good.
Jeff Carter: Campaign this year.
I might also add that we've added 12 new products.
Jeff Carter: For this year, we plan to introduce.
Jeff Carter: As many as 20, new products going into 2026 are from that standpoint, and then you asked about infinity.
Jeff Carter: Specifically, we're having a nice amongst the product we're right in the.
Jeff Carter: Right in the throes of it put to ground right now and I'm just design interests. As you are to see what our results look like as we get our nitrogen application to put down as you notice nitrogen enhanced but too. So yeah. We feel we're excited about our opportunities and our proprietary products.
Jeff Carter: Product portfolio, we're expecting a lot of growth out of that segment over the next two years.
Speaker Change: Your next question comes from Edlin Rodriguez of Mizuho. Please go ahead.
Edlin Rodriguez: Thank you and good morning, everyone.
Edlin Rodriguez: Can analysts from Marc This is a question I've asked before and someone was intriguing to get your insight there and also put you on the Odyssey.
Edlin Rodriguez: Potash and phosphate, but when you look at the fundamentals over the next six months or the next 12 months, which one do you think is a better position and please you can see you like both for your children understand do you happen to choose one over there.
Edlin Rodriguez:
Edlin Rodriguez: We like both but no. Thank.
Edlin Rodriguez: Thank you for the question.
Edlin Rodriguez: Obviously, we've seen.
Edlin Rodriguez: Strong phosphate fundamentals and that's strong demand and limited supply and we expect that that will continue over the course of this year. So.
Edlin Rodriguez: We sit in the historically high phosphate prices that they get and we don't see any reason why.
Edlin Rodriguez: Would see softening over the course of 2025.
Edlin Rodriguez: Potash is a story of a.
Edlin Rodriguez: The fundamentals coming together.
Edlin Rodriguez: It started the year.
Edlin Rodriguez: It makes us a constructive on perhaps firming through.
Edlin Rodriguez: The balance of 2025, I mean, we've seen 20% increases in potash prices started the year again, we've increased our own domestic price three times and so.
Edlin Rodriguez: As suppliers are certainly buyers in China, and India are starting to think about formulating price ideas.
Edlin Rodriguez: Again, we're constructive so it's just to say that phosphate we think it will stay strong and potash is becoming stronger.
Speaker Change: Your next question comes from Samir Patel from CIBC capital markets. Please go ahead.
Samir Patel: Hi, good morning.
Samir Patel: Could you speak to the M&A pipeline for retail.
Samir Patel: In terms of the scale of opportunities Youre seeing.
Samir Patel: Vendor price expectations and just given your latest tuck ins do you think you can hit the $2 billion objective for 2026 with the existing platform.
Samir Patel: Yeah, no. Thanks Samir yeah.
Samir Patel: Certainly as we think about our 2026 target.
Samir Patel: I believe we're on track there and we.
Samir Patel: Don't think about a couple of acquisitions that we did it started this year as a necessity to get within that range, we're thinking more about frozen dairy products.
Samir Patel: Cost savings initiatives, many of which we have already achieved and we've talked about that in a year ahead at our 200 billion dollar SG&A savings, we think about network optimization, and we think about the potential for tuck ins and so that gets us gives us confidence in getting into the bottom end.
Samir Patel: One nine to $2 1 billion dollar EBITDA range for by 2026 for our downstream business you know with some cooperation from weather.
Samir Patel: And commodity prices, so you could find yourself well within that range, but maybe I'll hand, it over to.
Jeff Carter: So Jeff to talk about the.
Jeff Carter: The opportunities that we're seeing in the pipeline and.
Jeff Carter: Maybe mark can talk a little bit about how we're thinking about price expectations.
Jeff Carter: Yeah.
Jeff Carter: We're in that period of the year, where we've been slow and they took the upside I think we're starting into the spring planting season in North America, and so but I do expect to see the opportunities increase we get through the season, especially as we get to the back half of the year, we want to be very opportunistic when it comes to Turkey.
Jeff Carter: And so.
Jeff Carter: In my mind, I've kind of got sweet spot.
Jeff Carter: What what good took again should look like for us, we particularly like to grow in the corn belt.
Jeff Carter: If we can find the right opportunities there.
Jeff Carter: I might also mention that we were seeing the pipeline pick up a bit in Australia as well, we bet that a good history of doing tuck ins in that market, but I think you asked the question round valuation as well, we're going to be very disciplined when it comes to the valuation of the Turkey and said it in my opinion I think we've seen volume come down.
Jeff Carter: No.
Jeff Carter: Over the last 18 months and so we'll be very disciplined and prudent as we go.
Jeff Carter: Looking at these opportunities just as the two we just we just closed just prior to the spring season or yeah. Thanks, Jeff I can't I don't have a lot that I think I mean, we're just you know to your to your question specifically on valuation I would say to Jeff's point, we've seen valuations come back in line with where we are comfortable historically.
Jeff Carter: As an example, we continue to see a high quality acquisitions in that small to medium size range, that's sort of a six to seven times EBITDA on a pre synergy basis and as I mentioned in a prior response, we continue to see the levers to be able to take one to two turns of EBITDA on those acquisitions.
Jeff Carter: The synergy opportunities that we have and to Jeff's point.
Speaker Change: To be quite selective and theres no pre determined are necessary amount of capital that needs to be deployed to tuck in acquisitions as Curt said, it's really where does that dollar most prudent it's going to generate shareholder returns and maximize.
Speaker Change: Free cash flow per share growth. So we'll continue to evaluate these as we move through the second half of the year opposite the other activities and opportunities we have for capital.
Speaker Change: Your next question comes from Duffy Fischer from Goldman Sachs. Please go ahead.
Duffy Fischer: Yes. Good morning, guys a question around crop protection and retail so we've had a number of the producers already come out with their earnings and you know it seems like pricing has been weak or kind of across the board.
Duffy Fischer: Within your business, how difficult as pricing band is that part of the down Bar chart there from slide six.
Duffy Fischer: Is that something structural do you think or is that just a hangover from the oversupply that we had the last couple of years and then just the third part of that would be a number of the generics to come into the U S start in China are you seeing the tariffs have an impact on those generics, where maybe that would be beneficial to you that the <unk>.
Duffy Fischer: <unk> zero, we're going to have to pay a high tariffs and maybe price them out of the market.
Duffy Fischer: Yeah.
Duffy Fischer: Sure.
Duffy Fischer: Oh go ahead please.
Duffy Fischer: Yeah.
Duffy Fischer: Uh huh.
Duffy Fischer: Bob's question there.
Duffy Fischer: Right.
Duffy Fischer: Obviously revenue resolved.
Duffy Fischer: Dictated about weather both in the in North America, and Australia, as well, which would drive us there and if I look at it from a margin perspective in the in the first quarter. We were off some low margin, but we had planned to be awful margin, we anticipated that we would see more pressure.
Duffy Fischer: And this crop protection market and I think that's twofold some of it some of it is.
Duffy Fischer: Hangover from inventory that was in the channel probably the bigger part of it is that you just mentioned a minute ago is generic pressure, we did see more generics come into this market, especially in North America, I mentioned, Brazil earlier, but we are starting to see that you know 12 to 18 months ago I do think that you know.
Duffy Fischer: And look I have no answer when the tariffs and how long they might be around but we're going to start to see pricing move up on the generics and we're already starting to see that.
Duffy Fischer: From the generic suppliers today are in that same time that'll affect affect the multinationals.
Duffy Fischer: Well from that standpoint, and so that that could slow some of the flow of generics, particularly into this into this north American.
Mark Thompson: Mark, but growers have been a bit more selective this year been a little bit more pricey old products as they go into but that's to be expected.
Mark Thompson: We plan for that going into the year, we have to me, we have great offset to that and that's not proprietary products that we offer in that in that generic space.
Mark Thompson: We were in a very good position coming into this year and that we had already secured our inventory and headed oversold, we're not tariff affected oh the.
Mark Thompson: 40 of that volume and we've got very good offering in those markets, where they won't go a bit more to the generic side of it.
Mark Thompson: I don't know if you heard anything at all.
Mark Thompson: Jeff.
Mark Thompson: To say that.
Mark Thompson: We have assumed a 4% reduction arches for crop protection. This year. So we talk about our guidance range of one six to one five there are some assumptions about everything you just described.
Mark Thompson: Exactly yeah.
Speaker Change: Your next question comes from Jeff Zekauskas of Jpmorgan. Please go ahead.
Jeff Zekauskas: Thanks very much.
Speaker Change: In crop protection your proprietary products.
Jeff Zekauskas: Quarter, we're down about 30%.
Jeff Zekauskas: <unk> gross profits were down about 35.
Jeff Zekauskas: But for your non proprietary crop protection, maybe things went down about 10%.
Jeff Zekauskas: Why is it different.
Jeff Zekauskas: Secondly, what's the state of the Indian and Chinese potash negotiations.
And third in your nitrogen business can you talk about how much nitrogen gets exported.
Jeff Zekauskas: Nitrogen and.
Jeff Zekauskas: In retail.
Jeff Zekauskas: Can you talk about how much goes into the United States, and whether thats being penalised in any way by tariffs.
Jeff Zekauskas: Thank you.
Speaker Change: Great. Thanks, Jeff So I'll hand, it over to Jeff tertiary to talk about.
Jeff Zekauskas: Terry.
Jeff Zekauskas: Literally crop protection proprietary products.
Speaker Change: Then over to Chris to talk about China, and India, and then nitrogen products.
Mark Thompson: To Mark to talk a little bit of a tariff so over to you Chet.
Speaker Change: Only.
Speaker Change: Crop protection side of it as it relates to prior period versus non proprietary and margin.
Speaker Change: That's strictly a timing and it makes.
Speaker Change: Predicting that we're in right now.
Speaker Change: Kim mentioned earlier, we've seen them very.
Speaker Change: Robust dark table at night.
Speaker Change: In our marketplace and that includes the crop protection market as well.
Speaker Change: In the first quarter, because the weather delays that we saw our custom application was down substantially in any products, whether we move them through whether they're a branded product or non branded product when we're able to put up their own reach we have different market structure for those products as well and and it's.
Speaker Change: Also affected by some of the higher the high margin API product experts in surfactants and such so when you've got a reduced reduction in volume it kind of offsets that whole market structure as it relates to that we would expect to see that level itself out. It would go into the second quarter and we're seeing evidence of that now I will pass.
Chris Parkinson: The question over to Chris the second part, yes, thanks, Dave.
Chris Parkinson: Good morning, Jeff. Thanks for the question regarding China, and India kept ticks up started that engagements on those two contracts, but really they've done against the backdrop that you've heard during the call of some very very strong market fundamentals, but perhaps more encouragingly no fundamental buildup of inventories anywhere in the world.
Speaker Change: So as Ken alluded to there's some southeast Asia pricing right now that are the folks who are looking to as an indicator and.
Chris Parkinson: So we're encouraged by by all of those all of those market fundamentals, but really.
Chris Parkinson: As you go around the world, whether it's North America, what we're seeing in Brazil, South East Asia.
Chris Parkinson: So steady and sustainable price increases on the back of that good demand some concerns about the production side and some very constructive commodity prices.
Speaker Change: Was that a micro hand, it over to you.
Speaker Change: Yeah. Thanks, Chris Good morning, Jeff. So just on your third question I think the short answers on a direct basis or our retail must not be directly impacted by tariffs.
Speaker Change: Tariffs on nitrogen products coming into North America.
Speaker Change: Obviously as you know one of the benefits of our downstream retail business as the supply chain and procurement capabilities that we've set up and so whether that's.
Speaker Change: The integration and the synergies, we're able to drive with our upstream business in terms of domestic nitrogen supply or the ability to source and procure nitrogen from other domestic producers were very well positioned for the spring season today and not seeing a direct impact from tariffs more generally as both Ken and Chris has spoken to on the call.
Speaker Change: We're seeing North America in a position where it's come into the spring on a net short basis for products like <unk> and urea and we can see the supply demand squeeze having an impact on prices. So to the extent that that continues we're going to see strength in the market, but we're continuing to operate we're very well positioned for the spring.
Speaker Change: Your next question comes from Steve Hansen of Raymond James. Please go ahead.
Speaker Change: Yeah.
Steve Hansen: Yes, good morning, guys. Thanks for the time.
Steve Hansen: You deserve some credit I think for hitting the synergy targets early.
Steve Hansen: Successful divestitures, thus far is it too early to put another targets on the map for us to think about in terms of cost synergies.
Steve Hansen: And just secondarily what else do you view as sort of a priority review in terms of the noncore. Thanks.
Speaker Change: Yes, Thank you Steve.
Steve Hansen: Yeah with respect to what we've achieved to date.
Speaker Change: We talked about our $200 million target.
Speaker Change: Yeah, and it being sort of a year ahead on that target.
Speaker Change: To your point actually confidence as we look closer at this confidence you better confidence to do more.
Speaker Change: Talking about specific numbers, we'll have more to talk about but at this stage. We're assessing that we're going after some of that but like I say, we are we do have confidence that our ability to do more.
Speaker Change: Encouraged by certainly encouraged by progress to date.
Speaker Change: With respect to our review of non core assets.
Speaker Change: Yes, that's something that we're looking very closely at the moment, we've talked about how we're viewing our Latin American shows retail assets it.
Speaker Change: Looking for the market to cooperate with us a bit as we think about divestiture it, albeit not material for us we've talked about the process that we're in as it relates to appropriate tail and you know just going through that process at the moment.
Speaker Change: We've talked about.
The divestiture of Arden side of FERC chairs, which was a passive equity state that there's really not strategic for us in the $223 billion of proceeds that we realized in Q4 of last year at the start of this year.
Speaker Change: Yes, there are some other things that we're looking at at the moment that would meet that definition of non core we're looking at that at the moment then yes, we will have more to talk about as it relates to.
Speaker Change: Again looking at additional divestiture opportunities.
Speaker Change: Your next question comes from Ben Theurer of Barclays. Please go ahead.
Yes. Thank you very much for taking my question wanted to go back real quick you had some of that in the prepared remarks, but on phosphate volume purely you had some unplanned outages.
Speaker Change: Impacted your volumes, but at the same time, we've seen a very strong price.
Speaker Change: Overall in phosphate I was just wondering as it relates to achieving your guidance. After that software started volume in one Q. How confident are you that there is going to be enough demand on the phosphate side just given the prices are you seeing any signs of potential demand destruction because at these prices and how should we think about.
Speaker Change: The potential outcome low end versus high end of the guidance for the volume side and phosphate. Thank you.
Speaker Change: Yeah. Thanks Best of the question No No challenge, we don't think all of the demand side of this equation that we still see strong demand and frankly, that's what's translating to the stronger price environment as it relates to our own production, yes, we had some production challenges.
Speaker Change: The first half of the year here weather related and some other production challenges, while we're taking turnarounds at both our White Springs at Aurora sites here in May June and.
Speaker Change: A greater reliability of rates as a result in the second half. So it really is a bit of a story of two halves for our phosphate business, but.
Speaker Change: You put those two has together it does give us confidence that we'll be within that.
Speaker Change: Our guidance range and <unk> maintained our guidance range.
Speaker Change: Okay.
Speaker Change: Your next question comes from Lucas Beaumont of UBS. Please go ahead.
Lucas Beaumont: Hi, Good morning, I, just wanted to go back to the core.
Speaker Change: Crop, Tim kind of tariff exposure in retail. So I was just wondering could you size for us out of the four $5 billion to $5 billion you have there in cost of sales.
Speaker Change: Crop Ken pace.
Speaker Change: How would you size I guess the exposure to tariffs going forward be it.
Speaker Change: For me to purchases of finished goods intermediate products.
Speaker Change: Assuming that the tariffs remain in place.
Speaker Change: Understand that this year, you've got inventories thats, probably not going to impact 25.
Speaker Change: I mean, you have to go through another cycle I guess, how would you size the impact and then just lastly.
Speaker Change: Theres nutrient import.
Speaker Change: <unk> finished formulations and how large is that four year period doing that thanks.
Speaker Change: Yes.
Thank you Lucas for the question, Yeah, you're right that we have purchased it.
Speaker Change: Cover ourselves.
Speaker Change: For the most part for this year, but.
Speaker Change: It's also the case that we're watching the trade dispute between China and the U S quite closely.
Speaker Change: Crop protection is it's obviously a big part of that story now a number of those products have been accepted.
Speaker Change: When we look at the exception list and so.
Speaker Change: For those that are accepted obviously.
Speaker Change: We're encouraged by that but there are products that haven't been so maybe I'll hand, it over to Jeff just talk a little bit more about that.
Yeah, so, especially if we're talking in the range of our proprietary products and as you would know.
Speaker Change: Proprietary seed piece out of that.
Speaker Change: 98% of those products would be.
Speaker Change: Uh huh.
Speaker Change: So their generic product.
Speaker Change: We do multi source those products in many instances, we still were so active ingredients from from our multinationals and we also sourced directly out of China, and India, where well from that standpoint, and I think you asked the question.
Speaker Change: Do we do we so we're speediest goods versus active ingredients and yes, we do both.
Speaker Change: Oh that end of it. So obviously, we're spending a lot of time right now as we focus will start back just follow obviously on building our inventories back up for the 26 year and we will focus very heavily on you know.
Speaker Change: What puts us what pushout brokers in the best position going forward.
Speaker Change: One that we.
Speaker Change: We're expecting.
Speaker Change: We're expecting price increases on branded products anywhere from five to seven 5% and I think on the generic side of the business. I think you could you could probably start with that higher number and it move up Kim mentioned that there are a lot of ingredients that are accepted.
Speaker Change: That exhibit still gonna come with base, 10% and it's a complicated matter because you use these products made up sometimes with 10 to 15 different components.
Speaker Change: And not all of those components are coming out of one of these particular area. So.
Speaker Change: Spending a lot of time right now.
Speaker Change: And a lot of time in the next 60 days from a diligent standpoint, we're going to assume right now all of a sudden we got peers. If we work through store positioning ourself going forward.
Speaker Change: But I think long story short is we're going to see price increases we don't I think you might've been mentioned earlier, we don't see this being material to our earnings for the 25 year.
Speaker Change: And where we're experiencing some of these pricing plans to pass those price increases.
Speaker Change: Through direct customer.
David Simons: Your next question comes from David Simons of Pnp. Please go ahead.
Speaker Change: But.
Speaker Change: Oh, Yeah, just just one more follow up on the phosphates business. Please.
Speaker Change: Talked about sofa cost hampering the earnings in that business, but if I look at headline prices I would've thought that would've been pass through.
Speaker Change: So it is it.
Speaker Change: Is there some kind of a timing issue helped by your strip margins in Q1 in Memphis sulfur costs were.
Speaker Change: A factor and how will that evolve into Q2.
Speaker Change: Yeah. Thank you for the question, David Yeah, I would say that.
Speaker Change: The phosphate price at the moment is more a story about supply and demand fundamentals and whats happening on both sides of that equation as opposed to the.
Speaker Change: The ability to pass through cost increases in <unk>.
Speaker Change: Sulfur is part of the story, but and like others, we're experiencing inflationary pressures on other things as well so the idea of a pass through versus just the supply demand fundamentals that we're seeing certainly a story of the ladder, but maybe I'll hand, it over to Jason Newton, our chief economist just to talk a little bit.
Speaker Change: What we're seeing in the sulfur market and yes, some of the impact of experience there.
Speaker Change: Hey, good morning, David Gosh, Ken mentioned, we're seeing a sulfur market fundamentals tightening where she knows tightened this first half of the year and campus sulfur prices from the second quarter.
Speaker Change: For $217 a tonne so a pretty significant increase.
Speaker Change: Over quarter and definitely an increase from where we saw a sulfur prices in 2024, which were historically discounted relative to market prices are actually low from a marginal cost of the network cost perspective or producers.
Speaker Change: Which meant that they were a flooring project work or predict project inventory rather than exporting so I've tightened supply and coming into 2025 and see strong demand in China, a strong man from base metal perspective in southeast Asia, and so the combination of reduced export supply and higher demand.
Speaker Change: Export prices.
Speaker Change: We expect that that will start to change as we look towards the second half of the year and offer prices have remained pretty stable, but supplies are increasing and the level of demand.
Speaker Change: Decreasing so we expect more normal relationship with phosphate pricing.
Speaker Change: Huh.
Jeff Hoffman: I will now turn the call back to Jeff Hoffman for closing remarks.
Speaker Change: Yeah.
Speaker Change: Thank you for joining us today Investor Relations team is available.
Speaker Change: All of our questions have a great day.
Speaker Change: Thank you ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect.
Speaker Change: [noise] [music].