Q2 2025 Nutrien Ltd Earnings Call

2025 second quarter earnings call 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 call is being recorded. I would now like to turn the conference, call over to Jeff Holtzman senior vice president of investor relations and FBA.

Thank you, operator. Good morning and welcome to nutrient second quarter 2025 earnings call.

As we conduct this call, various statements that we make about future expectations plans and Prospects contain forward-looking information. Certain assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained. In our forward-looking information additional information about these factors. And assumptions is contained. In our quarterly report to shareholders as well as our most recent annual report mdna and annual information form. I will now turn the call over to Ken sites nutrients. President, and CEO and Mark Thompson, our CFO for opening comments.

Good morning. Thank you for joining us today. As we review our performance in the first half of 2025,

Progress on our strategic priorities and the outlook for our business.

Our first-half results featured record auto sales volumes and nitrogen, operating rates, lower expenses, reduced capital expenditures, and increased returns of cash to our shareholders.

We raise our 2025 full year guidance for petasse sales volumes, while maintaining all other operational, guidance ranges,

At our investor Day, in June 2024, we communicated a pathway to structural improve our earnings and free cash flow through strategic initiatives across the portfolio.

We also shared key operational, and financial targets to measure our progress.

our results through the first half of 2025, demonstrated significant progress, towards achieving these goals,

Starting with our Upstream operating segments. We increased fertilizer sales volumes by more than 400,000 tons, compared to the same period last year and realized higher net selling prices.

These results highlight the capabilities of our world-class operations, extensive distribution Network and strong customer relationships that were built over many decades.

We continue to prioritize Investments, that further strengthen our ability to cost-effectively supply the growing needs of our customers.

In pot ash, this includes advancing. Mine automation projects, that enhance, efficiency, flexibility, and most importantly, safety benefits at our site's.

In the first half of 2025, we mined over 40% of our pot ash or using automation.

This is within our 40 to 50% target range for 2026.

Our nitrogen operations performed exceptionally. Well, in the first half achieving a 98% ammonia utilization rate.

The focus on reliability projects at our nitrogen sites has yielded clear and favorable results.

Further Brownfield. The bottlenecking efforts are now complete at our Redwater. And guisar plants that will add 150,000 tons of annual production capacity.

Within our Downstream retail segment, well-defined growth opportunities, continue to be progressed.

Along with network optimization initiatives, that resulted in a 6% reduction, in expenses, in the first half.

As previously communicated, we are ahead of schedule on our companywide, 200 million cost savings Target and expect to achieve this goal in 2025.

Capital expenditures in the first half of 2025 were 18% below the prior year, as we optimized Capital to sustain safe and reliable operations.

And progress, a set of targeted growth projects.

we allocated to 786 million to dividends and share repurchases in the first half, representing a 49% increase from the prior year

to put this all together, nutrient generated higher earnings, and cash from operations, driven by supportive. Fertilizer Market fundamentals and execution of our strategic priorities.

We lowered costs and capital expenditures through efforts to simplify and focus our business and we significantly increase the distribution of cash to shareholders.

We believe these actions build upon the strength of our world-class asset base and position the company for strong performance into the future.

Now, turning to the Market Outlook.

Across nearly all products.

Paudash prices, increased at a steady Pace. Since the beginning of the year, driven by Trend demand growth. That is testing Global operating and supply chain capabilities.

The settlement of potash contracts with India and China and favorable economics for key crops grown in Southeast. Asia is expected to support demand in standard grade markets in the second half of 2025.

We had a solid update on our podcast summer field program in North America and anticipate stable demand in Brazil.

As a result, we have raised our 2025 full year Global product, shipment forecast to 73 to 75 million tons.

Beyond 2025, we see a constructive outlook for the potash market.

We expect a de demand growth in line, with historical Trend levels and limited new capacity additions in the near term.

Recent industry. Announcements further highlight that building new capacity requires significant time and capital and often comes with risk of delays

Global nitrogen, markets are being supported by supply side, challenges and strong. Seasonal demand from markets such as India.

Nitrogen prices in the US have been further supported by low domestic inventories and trade flow shifts which we anticipate continuing in the second half of 2025.

Phosphate markets, remain tight, due to limited Supply, including Chinese export restrictions.

We expect Global shipments in 2025, will be constrained by Supply availability, and a weaker grower, affordability for phosphate. Fertilizer, could impact demand.

We continue to closely monitor supply and demand developments for egg Commodities and farmer sentiment in our key markets.

Crop input demand in North America was strong in July as Farmers focused on maintaining optimal plant health and yield potential.

Based on current projected crop yields. We expect large nutrient removal. Will support the need to replenish nutrients in the soil.

Brazilian soybean acreage is expected to increase by 1% to 3% in 2025.

Driven by strong International soybean demand.

Growers in Brazil have been more active purchasing crop inputs. In advance of the upcoming spring, planting season, compared to the prior 2 years.

Overall, we continue to see a solid backdrop for our business in the second half of 2025 and are well, positioned to serve our customers.

We operate to the most extensive network of assets across the egg value chain and will continue to focus on factors, under our control to optimize free, cash flow under any market conditions.

I will now turn it over to Mark to review our results. Fully your guidance and capital allocation priorities in more detail.

Thanks Ken. This is Ken described our second quarter and first half results. Highlight strong pace of progress towards our investor date targets.

Nutrient delivered adjusted. Evita of 2.5 billion dollars in the second quarter up 11% from the prior year. While cash provided by operating activities, Rose by 40%

And pot ash, we generated adjusted ebit of 630 million in the second quarter. Well, above the prior year, due to record sales volumes and higher offshore, net selling prices.

our North American net selling price was down from the same quarter in 2024 but up $36 per ton from the first quarter of 2025 as we benefited from price increases following our Winterfell program,

Our first half controllable cash cost of product manufactured was higher than the prior year, due to lower planned, Pash, production and increased turnaround costs.

However, we continue to track favorably against our goal of maintaining a controllable cash cost that is at or below $60 per ton.

We raised our full year Pas, sales, volume guidance, to 13.9 to 14.5 million tons, due to the strength of first half sales and increased visibility on the second half order book.

Capex is fully committed for third quarter sales volumes and has a significant order book in place for the fourth quarter.

We had a favorable response to our domestic Summerfield program and anticipate a similar split between offshore and domestic sales volumes in the third quarter compared to the prior year.

Million dollars in the second quarter up from last year due to higher net selling prices and sales volumes.

Our nitrogen plus operated very well. Achieving a 98% ammonia operating rate in both the quarter and the first half

We have maintenance scheduled at our Redwater and Border, nitrogen sites starting in the third quarter that will reduce our planned second half ammonia operating rates to around 85%.

Overall, we anticipate higher year-over-year operating rates on a full year basis and have maintained our nitrogen sales volumes guidance. At 10.7 to 11.2 million tons,

In phosphate, we generated adjusted ebita of 92 million in the second quarter.

With higher net selling prices offset by lower sales volumes and higher sulfur input costs.

We completed 2 successful turnarounds in the second quarter and have operated at higher rates since the completion of this plan maintenance positioning, our phosphate business to deliver increased sales volumes and lower operating costs in the second half of the year.

Our Downstream retail business. Delivered adjusted ibaa of 1.15 billion dollars in the second quarter up 2% from the prior year.

We saw strong, crop input demand in the US Corn Belt, consistent with our previous View that a slower start to field activity in March would be made up in the second quarter.

This strength was partially offset by unfavorable crop protection product. Mix shifts dry weather in Australia and wet weather in the southern us that impacted planted Acres.

A loss of rice and cotton acres in the South was a primary contributor to the reduction in our proprietary seed sales in the second quarter.

We've maintained our full year, retail adjusted IBA Doug guidance of 1.65 to 1.85 billion dollars.

With the midpoint of the range underpinned by 4 key items. First, as Ken mentioned, we saw strong North American crop input demand in July and anticipate higher crop, nutritional and crop protection purchases in the third quarter compared to the prior year.

Second we assume an open fall season in North America and project fertilizer volumes up approximately 5% compared to last year which had a shortened application window due to wet weather.

Third timely Reigns have improved winter. Crop planting prospects in Australia and the outlook for crop input demand, looks more favorable for the second half of the year.

And finally our margin Improvement plan in Brazil remains on track and we expect to generate increased year-over-year earnings through Network optimization initiatives.

To summarize we delivered higher earnings and cash flow in the first half of the year and we see clear momentum for growth on a full year basis supported by higher Upstream, fertilizer sales, volumes, net selling prices and downstream retail earnings.

In terms of capital allocation, our priorities remain consistent.

We're focused on initiatives that support the achievement of our 2026 performance targets. Optimizing investments in working capital and continuing to review non-core assets on our balance sheet.

All of which we expect will enhance sources of cash flow over time.

From a uses of cash perspective, we've committed capital to sustain safe and reliable operations and towards a narrow set of growth opportunities that have a strong fit with our strategy. Our expected returns are in excess of our hurdle rates and have a relatively low degree of execution risk.

We have a long track record of providing a stable and growing dividend and intent, on enhancing the return of capital to shareholders through more, rateable share BuyBacks through the cycle.

We remain disciplined in our approach to maintain a strong balance sheet and prioritize Capital towards opportunities that we expect will deliver long-term growth in free cash flow per share.

I'll now turn it back to Ken.

Thanks Mark.

We have a constructive outlook for our business as Global fertilizer Market fundamentals. Have tightened in 2025 supported by strong, demand persistent, Supply, disruptions and project. Delays

We demonstrated strong, operational performance, and execution on our strategic priorities in the first half of the year.

Structurally, improving nutrients earnings and free cash.

We continue to strengthen our highly competitive asset, base across the value chain, and remain committed to, to disciplined Capital allocation, to maximize long-term value, for our shareholders.

We would now be happy to take your questions.

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question please? Press star. Followed by the number 1 on your touchtone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process? Please press star followed by the number 2, if you are using a speaker-phone, please lift the handset before pressing any keys.

The first question comes from Chris Parkinson. From Wolfe research, please go ahead.

Thank you so much. Um you know, in the beginning of the year, there's a little bit of a debate on pot, ash Supply being offline and you know the the market and price appreciation be more more of a supply driven market and towards the end of the first half. It became more evident that it was a more of a demand driven Market. Um but you know it seems investors are still on edge given you know some belief that you know, half 1 half supplies is going to be improved and basically curb upside to prices or even lead to declines, you know? Can you just give us your updated thoughts on those specific Dynamics, especially out of the FSU. And then it kind of how that sets up, uh, for the 2026 Market. Thank you so much.

Yeah, thanks Chris.

Yeah. So you know talking specifically about pot ash if we you know looking globally we're seeing very strong demand, we saw a return to Trend level demand, last year, coming out of 22 and 23 and that's certainly the case. This year where we've raised our um our expectations for the market to 73 to 75 million times. So that would

Be, you know, the strongest man that we've seen in the market and, you know, we are also have confidence that that pot ash is going to ground because we don't see inventories elevated really in any market around the world and actually, in, in several cases, we see inventories below average levels part of that has to do with the fact that pot ash is still relatively affordable. It's a, you know, the most affordable product nutrient

And as you say with that strong demand, it is testing the ability of the market to supply both in terms of Mind production, but also the supply chain as well. And so at the intersection of that very strong demand and, um, and what we're seeing on the supply side of the equation, which and you asked about FSU times and we don't see any material change in FSU times coming to to the pot ash Market, um, at the intersection of those things, we see the strengthening that we've seen in the pot, ash price, and we think we're in a, in a good spot as it relates to the pot ash price in here. And then now, you know, we've had our summer Phil program which uh we had strong, uptake, we're fully committed in North America through Q3 and are now placing tons in Q4 at our up twenty dollars. Similarly, in offshore markets um fully committed through campaigns through Q3 and heavily committed now into Q4. So again, that, you know,

Very strong signposts that for 2025 um, you know, our 73 to 75 million tons and our raised guidance, um, you know, that we have we're constructive on those things. It is true that, um, we're looking at North America now for the balance of the year and obviously with a very large corn crop, um, that we're seeing in the US and, and certainly, a large crop, in Brazil. We've seen some pressure on on egg commodity prices and farmer grower margins at the same time here, into the third quarter, we have seen strong field activity. We've seen good engagement, strong demand. And again that's the evidence by our commitment levels in North America on pod, ash and and certainly we're seeing some strength into the fall and nitrogen as well. So,

But your question was on pod, ash put it all together with Chris, we're we're constructive on 2025 and then your question about handing it to 2026 again. Given we're inventory levels are at where we don't see all invaded inventory levels that uh, with with being affordable.

Um, Growers are going to be looking to replace the, you know, large amount of crop nutrients that are going to be pulled out of the soil with this big crop.

Your next question comes from Andrew Wong from RBC Capital markets. Please go ahead.

Hey, good morning. Thanks for taking my question. Uh, maybe just touching a little bit on what you just touched on at the end of your answer on affordability. Like but what's your sense on Farmer sentiment and health today? Just given some of the recent softness there and how does that? Um, change in fertilizer, affordability impact, purchasing, and maybe more specific to just the dynamic between nitrogen phosphate and pot ash, because the prices for all 3 of moved in different directions, which we had an early scenes for a very, very long time. Um, so how does that impact farmer decisions on what fertilizers to apply? Thank you.

Yeah, thanks Andrew. Yeah and certainly, as I mentioned, we are seeing some pressure on that commodity prices, corn soybeans and and on grower margins for the first half for the year. Things kind of played out the way we'd expected in in the Corn Belt in the western US and Canada, and Brazil was really the southern us where it was wet and and Australia, where it was dry where, um, we saw some pressure and, you know, we're feeling some of that now into the second quarter that said, again, we're seeing strong uptake, uh, in the third quarter and a lot and field activity and and in Australia

While it was a slow start given a dry uh you know, beginning of the planting season for their winter crop. They've gotten some rain in July here which now we've seen increased activity behind it over to Jeff.

To talk a little bit more about that and then maybe Chris, if you want to talk about those Dynamics between NP and K, you know, that sort of affordability discussion.

Yeah, thanks Ken. And, uh,

As, as you mentioned earlier, I mean we can send you to see very strongly engagement from our Growers. Uh, as we go into the third quarter, uh, you know, if if I look at the areas that were not affected uh by weather in the first half of the year, then we would see Mo. Most of those regions have performed basically in line with what we thought we mentioned the Corn Belt, uh our Western us business Canada and Brazil from that from that standpoint.

Want to mention the Corn Belt specifically we saw our County up about 9% for the first half of the year and as I looked going into the third quarter you know we seek again we see Growers investing dollars to protect their yields right now and when you get in a low price environment and Growers are going to really push for for yields in that type of environment. And we see that happening right now from the plant Health standpoint. And, and from a nutritional standpoint,

Yeah, thanks Jeff. Um, and Andrew is anything about the domestic market and that that balance between, NPK, as Ken mentioned, we there is a big crop growing out there. That's going to pull a lot of nutrients out of the ground. Our Midstream customers are telling us, they need to prepare for, what they believe is going to be a good fall application season. This crop is developing, well, we do believe that subject whether there will be an open window there for Growers to to get out and apply, fertilizer in the fall, especially in the Midwest. And as Ken said, paudash Remains the most affordable nutrient. So what our customers are telling us is they're preparing for for a good fall across NPK as you noticed, uh, yeah, these these nutrients have moved in different directions, a little bit in terms of pricing so we'll be watching how that's balanced.

Uh, in the fall. But overall, we're, we're getting ready and our customers are getting ready for a good fall application, period.

Your next question comes from Joel Jackson from BMO Capital markets. Please go ahead.

Hi, if I could just harp on the retail demand or fall. Demand question North America.

A little bit more. Like, I know that the biggest determinant, I think, I know that the biggest determinant of a fall season is just how big the, how good the weather is the Open Season comments. You said I know that. Okay, so are your comments just really about that? That it looks like the weather's going to be good and that's the largest determinant of a fall season, not necessarily affordability. That's my first question.

again, the second question is just, um,

Uh, as you think about, uh, Brazil and retail, um,

You know um how confident are you that you'll be able to shift next year, you know, to getting back to our 50s 60s, 70 800 million dollar EBA run rate versus maybe Break Even this year and what are the drivers to get their things.

Good. Well, thank you, Joel. Um, and you know, I think you've actually, uh, articulated that well that heading into the fall here.

Given the signposts that we're seeing and that we've talked about as it relates to good engagement, so far in Q3 and certainly, we saw that in July um and the crop that's coming off. That's going to, you know, pull out of again. Fertilizer soil nutrient side of the ground.

And and the discussions that we're having with our customers and we're inventory. Levels are at

That given an open application season. Yes. We uh, we expect to have a, a decent fall but that's dependent on on whether exactly as you said,

We're expecting, fertilizer volumes to be up 5% from last year. You may recall that we had a compressed application season last year. And so, um, you know, where the crop is at today and some some being harvested as we speak, things are pointing to an open, an open fall and that's good for, uh, seeing volumes go to ground.

Is our Brazil Improvement plan is on track. Um, we've talked about the decisions that we've made as it relates to shuttering of of plans, we've reduced headcount, there are focus on collections, our focus on Inventory management and um, and shuttering of blenders. All of those things now contributing for us to get to a sort of Break, Even somewhat, even, perhaps positive, even though level here in 2025 and we expect that Trend to continue into 2026 where, you know, obviously the market needs to continue to cooperate but uh that we expect that we'll be in the positive next year.

The next question comes from Ben isacson from Scotia Bank. Please go ahead.

Thank you very much and good morning. Um, if we move past fall demand, and start thinking about 2026, If corn and soy prices, hold at about 4 and 10 dollars respectively, uh, over the next little while. What are the risks to each of your segments, um, uh, if if farmer economics, stay where they are in the Americas, um, how much downside do you think we have in, which divisions? And the reason why I'm asking is you talked about potash being affordable, um, but on the other hand, some would argue that pot is typically a lower ranked uh a crop input. So I'm just trying to triangulate that thank you.

Yeah, thank you for the question Ben and yeah, it's true. We're um I'm already starting to think about 2026 and you know Growers will get this crop off and they'll be looking to get ready for next year and another, another big crop and we'll see you know, we're

Corn and soybean prices are at it. But if we go Commodities and commodity again, we see ongoing strength and pot, ash demand and the way it's been growing. As, as I said earlier on Trend, heading it and into 2026, we believe that to be true as well, and it's just step change in demand in places like like China, southeast Asia with 4,200 Ringgit palm oil prices in a, um, um, mandated pulmonary, uh, clean seal Mandate of 40% moving from 35, you know, very strong demand in Southeast, Asia. We look at Brazil where last year, they consumed 47 million. Tons of fertilizer this year, it'll be 48 million, tons of fertilizer. Um, and and so, we can go market to market and, of course, North America again. We see a lot of crop nutrients coming out of the soil. So on the demand side of the equation, uh, we see strength and then, on the supply side, you know, I won't call it challenge, but we have seen projects

Delays and we have seen the ability of the market to meet these demand levels and and intersection, you know, we see where prices are at and prices are strong prices. Are a good place right now because as I said earlier, it's affordable, but at the same time,

You know, we we like to see volumes moving to our customers at these levels and and so we see that carrying into 2026 on nitrogen. We've seen again strong demand and the Indians having difficulty procuring yuria while at the same time, Chinese limiting, your exports and and certainly not getting back to sort of historic average levels out of that part of the world which has meant strength in Euro markets combined with some Supply disruptions certainly out of the Middle East and that would be true for ammonia where we um again we see a bit of seasonal weakness at the moment but given some challenges Supply challenges that are Russia in the Middle East and and some of the new projects that are Russia and the Gulf Coast. There's been supply issues there as well and we'll see about European gas pricing as Compared to North America, where the Delta is still 8 or 9 dollars.

And again, you know, we we head into 2026 and we expect that those Dynamics will persist. You know, I I think we can talk about phosphate and yes phosphate prices are elevated. We're watching for and, you know, a grower reaction to higher prices here into the fall and how that translates into 2026 again, strong demand over phosphate and supply side issues. So you can go

Nutrient to nutrient and heading on to 2025 and 2026. We'll see, you know how the international Growers feeling. We'll see what happens here in North America. But overall, uh, Ben, we feel constructive,

Your next question comes from Vincent. Andrews. From Morgan Stanley. Please go ahead.

Thank you. And uh, good morning. Everyone wondering if you could talk a little bit about your own expectations for your pot, ash production going into next year. It sounds like you're anticipating another year of of shipment growth for the industry and um, you know, the commentary for a while now has been that, you know, you're, you're looking to take your traditional market share. So, um, what what incremental capacity would you would you look to add into next year?

Yeah, thanks Vincent. And you know, this year, you, you, you've seen our guidance range, which we've up, so just over 14 million tons at the midpoint. And we would say that, we look at the way we've built out, um, not just our mind production but now our supply chains and ability to get to customers that, you know, we have 15 million tons of installed capacity, although not obviously Staffing to those levels. Um, um, because the lead time for Staffing is such that we can watch the market and as it evolves, you know, bring on operators to continue to liberate tons. That will be the same philosophy for next year where you can expect that as the market grows. And we've talked about this too and a half percent average annual growth rates on Trend, which is where we are today, that we will grow with the market and maintain market. Share, we will bring on those operators and we will, uh, we'll produce those things, you know, again, we have the flexibility with our 6-month Network. We've made those investments in our supply chain, to get to our

customers, uh, that gives us, you know, the flexibility to expand times into this growing Market.

Your next question comes from Steve Hansen from Raymond James. Please go ahead.

Oh yes, good morning. Thanks for the time. Uh, just a broader question about the portfolio. You know, how, how do you feel about the portfolio from an optimization standpoint? Today, you've gone through a process of investing a few non-core items here in the South not not, not just recently, you know, is there more to do there on that front, in terms of like, further optimizing or streamlining? The core versus non-core, you know, how do you view that as an opportunity or is it even a priority say, thanks,

Yeah, thanks for the question Steve and you know I will say we're probably never done and looking at the portfolio and understanding how to optimize you know a free cash flow per share and and and return on those assets. Uh absolutely true that we have uh done quite a bit of work on that front already. Whether it's uh, the process that we're in and pro for till right now, the best thing of our shares and sign up for it, which we've talked about um we've actually gotten some rid of some smaller immaterial assets. Uh, some in Italy, we've sold the blender in Brazil. I just provide those as examples of us just continuing to, to, um, really be rigorous across the portfolio and sits on insisting on performance and not in a position to today, to talk about, you know, further um, portfolio changes and and how we're going to manage that. But what I can say is, yes, we're absolutely looking at opportunity.

Unities to continue to upgrade that portfolio in the name of free cash flow per share and a return on those assets.

Appreciate the time.

Thank you. Your next question comes from Jeff zakus from JP Morgan. Please go ahead.

Uh, thanks very much.

Um,

Your, your gross profits per ton and North America. And crop nutrients is

you know, it's it's kind of flat even though

You know, the different Commodities have performed pretty well and in general in your retail segment, you seem to be doing a good job of cutting sgna costs, but not so much making progress on the gross margin. Um, is that just whether or you satisfied with your general performance, what what are the Dynamics around gross profits and

just tunate levels.

Yeah, thank you for the question Jeff. And yeah, there's a number of moving Parts. There we are.

Uh, pleased with our progress. Certainly on the cost side of the equation and you know, there's more to do there. Uh we know that and and we expect carrying out through the balance of the year. That will be part of the story is ongoing focus and reductions in cost but maybe I'll hand it over to Jeff to talk more about some margins on on fertilizers and and what we're seeing through the balance of the year.

Brings a lower margin profile. Uh, on those tons, I think we're down we we strategically plan to be down about 200,000 tons through the half, and that's basically what we're all from that standpoint and we are in a, uh, you know, as we talked about several times a day when a competitive environment. So I'm pleased with where we are today from a margin perspective. I think as we get an opportunity to get more of our nutritionals uh into our mix. Which again, we've seen a very strong start uh, in July, I think we'll see that margin per turn uh pick up a bit. And then on the seed side, our margin rates on seed are in in line with our expectations as well. That was more of a volume story but we're continuously working to try to get our margins up. Uh, you know, we we talk about the second half of the year and we talk about controlling our controllers and uh 1 aspect of that is, is working to continue to expand our margins across all of our crop input sectors.

Your next question comes from Kristen Owen from Oppenheimer. Please go ahead.

Hi, good morning, thank you for the question. Um someone of a a double click or follow up on on that prior 1. Um speaking specifically to this, this Eva do bridge for the first half of the year you've noted, uh, the more favorable environment in July. I'm just wondering if there's anything here in this bridge, whether it's crop protection products, or maybe, um, even on the expenses that that shifts around in the back house,

Half of the Year, anything that turns from a bad guy to a good guy, just how to think about that bridge for the, for the back half. Thank you.

I certainly at the higher level, it's it's the things we've talked about, but I'll hand it over to Jeff for that double click.

Yep, for the second half of the year, and I think I mentioned it just a minute ago, controlling our controllables will be at the top of our list. We also think that we have an opportunity to convert more acres on our fertilizer nutritionals, which, uh,

Which, which we really liked a lot. We like a portfolio, uh, as it relates to that a heavy heavy focus on the expense side of things, I think through the first half, we were able to take 6% out. We we going to we we expect to continue uh, with that effort in the in the second half of the year. And again, Ken mentioned Australia. We've got some, uh, you know, we we had a very tough half from a weather perspective there. Uh, we see improvements there. We think that's going to bring us some opportunities on the proprietary side of the business as well as we go into second half of the year.

Your next question comes from edlane, Rodriguez of mizuho Securities. Please go ahead.

Uh, thank you, uh, good morning everyone. I mean, just quick question on products, uh, again. So I mean I think comment I have heard somebody say like what is wrong with products know. As you know it's surprisingly like the most affordable nutrient you know lagging behind both phosphate and uh and nitrogen but seriously, do you prefer being in that position? Or do you want to close the price gap between products and the other nutrients and related to that? I think, like last week we saw a small decline in product prices, in Brazil. I mean, that's like the first drop in almost a year. Does that mean anything to you? Or you just think it's just a blip.

Yeah, and then thank you for the question. So, you know, I we again, we're constructive on the potash market and uh, we, we like when products is Affordable for Growers and when it is we see, you know, record, potassium, demand and consumption. That's what's playing out today. Um, and and again that meeting the supply side of the equation that intersection clears the market and what has been kind of 10 year, average historic, level pot, ash prices, those are healthy prices for us. And again, we're constructible on that. So, you know, heading into the fall here. And we've talked about North America. But but globally, you know, whether it's southeast Asia and and palm plantations or whether it's step. Change in China, what we're seeing

Uh I certainly appreciate the question, but no, we are constructive on where the pot ash Market is today.

Your next question comes from Ariana. Milin of CIBC Capital markets. Please go ahead.

Good morning and thank you for taking my question, with relatively better pricing for ammonia over upgraded. Nitrogen products in North America. Do you see the potential for a shift to Greater ammonia? Use as a source of nitrogen in the fall?

Yeah, thanks for the question area. That's just know, but Chris. Do you want to just explain that a bit? Yeah, no, good morning Arana. Thanks for the question. You know, the um, as we look at that fall, it'll be dependent on how Growers are thinking about, what they're going to plant next year. And if they're going to put ammonia down on the floor, that would mean a commitment to to planting corn. So uh, we'll we'll wait and see. I mean, uh, sometimes these Growers make this decision, we're on the on the combined and, uh, and what they're thinking about for next year, but we don't see a material shift in terms of the nitrogen product going down this fall. We think that will be at about average levels. I would say that we are seeing a low inventory levels of of uan right now. And uh, we are thinking that this is going to be some strength in that price as we look towards the fall season.

Your next question comes from Matthew Deo of Bank of America, please go ahead.

This earlier. But, um,

Seed sales, obviously pretty weak through 1 H and Retail. And and maybe that's just cotton in the South or whatever. But

as you think about,

Or can you provide a little Clarity on on on price volumes there and then you know, as we set up uh for next year assuming uh a more, you know, if it is the South right of whether it's more Cooperative, do we get a, you see, you expect to get that volume back, pretty pretty.

Pretty well, I guess. I don't know. I'll leave it there.

Yeah, no Matt. Thanks for the question. I think you've said it. Um we did see some crop mix shifts in that part of the world but Jeff. Do you want to just dive into that a little bit? You have fun, you can. Yeah, the the C revenue is

100%, uh, around 2 factors. First. We saw significant prevent plant in our southern region.

Our southern region is our largest share of seed in, uh, in North America. And uh, so when you have something like prevent plant, it can have a dramatic effect on the seed Revenue, so those Acres actually did not get planted. Uh, I would expect a 100% of that to return next year. Uh, you know, that forecasting that we would

Spring, not unlike what we had uh, this last year which was in that area was 1 of the wettest Springs in the last 150 years. Uh, we also saw crop mix, uh, changes and that's primarily around cotton. And uh these are some of the economics around cotton and across the South. We saw a lot of cotton Acres if you're in Texas a lot of cotton Acres convert it to a sorghum or Milo and which is a much less significant from a revenue perspective. We'll have to see year-over-year. What cotton commodity pricing does, uh, I would anticipate in Texas. We would see some of those Acres returned but it's, it's, it's, it's, it's way too early to predict that right now,

Your next question comes from David Simmons of BNP paraba, please go ahead.

Hi. Good afternoon yeah have a good just come back on Jeff's. Question if I look at the average selling price in the crop nutrient segment of retail

It's up 2% year on year whilst into the third quarter. The postage Nola Benchmark. For example, is up 20% plus year on. Yeah. So is there a catch up pricing benefit in in the second half for retail?

So we do see some opportunities in the back half of the year, you know, we talked about it, if we get an open, if we get an open fall, then uh, we see an opportunity to move about 5% more volume in the end of that market. And uh, we hope we can do it, uh, as well by expanding some margins.

Your next question comes from Lucas Bowmont of UBS Financial. Please go ahead.

Uh, thank you, good morning. Um, just going back to pot, ash, I mean, you've mentioned that you see have seen sort of some challenges and the market meeting the demand level this year from a supply perspective. So I think just looking to 2026. If we get another year of normal demand growth, where do you kind of see the supply coming from?

And if you think the Market's going to struggle to meet that and you want to kind of maybe Flex up and take more than your 20% share. Uh when would you kind of need to push the button on those? Uh, Staffing. Decisions you mentioned, thanks.

Yeah, thanks for the question, Lucas.

And yeah. So you know it continues to be the case that uh we've seen those FSU tons come back into the market. We've seen some um, Newtons coming out of lows, although the rate of growth out of those that part of the world has slowed. Um and we've seen as we mentioned earlier project delays and certainly are going to impact next year and Beyond and so

You know, strong demand meeting uh, Supply. We'd kind of call the Market in balance at the moment or close to being in balance and heading into next year. We've have a few other producers that can probably on the margins expand production a bit and certainly we would be 1 of those as well Lucas. And so, you know, I would say with with what we're intending for next year, which, you know, as I, as I mentioned earlier, is, is a strategy to maintain market share grow with the market. As it grows meet, the needs of our customers, who are growing at that rate as well, uh, and, and bringing on people to produce according to you, that that's our plan. And again, we expect to be in a strong Market next year, given the demand fundamentals. And the fact that, um, that Supply is right around that demand level will be right around that demand level. And certainly as project delays uh, you know, continue to persist

Your next question comes from Ben Thor of Barkley's. Please go ahead.

Good morning and uh, thank you very much for taking my question. I wanted to uh, follow up real quick on uh, on Capital allocation as as we look into it. So you had a, a, a significant Improvement in terms of free cash flow generation. Uh, where is this a year ago? But at the same time, it feels like there's a little bit of a Slowdown on the on the share repurchase program. So just want to understand like how you think about these purchases um in in in regards to like just dividends uh versus Investments. Um and uh and

Share repurchases. Thank you.

Yeah, and thank you for the question been. No, no slow down on share repurchases. We've been buying at about the sort of 45 million per month level and I think for the balance a year, that's that's a good way to think about it. As we as the year, has unfolded for us. And and certainly, as we continue to be quite constructive on how its unfolding and it was always with respect to sort of the broader philosophy around Capital, allocation dividends share repurchases, I'll hand it over to Mark to provide more details.

Yeah, thanks Ken. Uh, good morning. Been maybe just stepping back a bit and reiterate a couple of, uh, comments about Ken. And I have made this morning. I think, first and foremost, uh, continue to focus on generating, increasing structural sources of cash for the business. So, uh, we continue to see strong operational performance and that was evident here in the first half for us. So growing underlying earnings across the entire business in line with our, uh, investor day targets. And we feel like we're making good progress on that, you know, as Ken has ALS mentioned. And, uh, I have as well continuing to look at, uh, a really rigorous approach to working capital optimization and shedding assets in the portfolio, that uh, don't generate the types of returns that we want. And so, over time, we think all of those things will grow cash more specifically to your question on Capital, allocation. Our priorities are consistent and they haven't really changed. So again, if you look at our uh capex profile of the year uh 2 to 2.1 billion with uh 4 to 500 million of

that uh focused on a very narrow set of growth priorities that we continue to execute against and more specifically with respect to return of capital as Ken said that the philosophies around share repurchases, uh, really over the past year has been

Per month. Run rate is something that we see as being sustainable and balanced uh through the remainder of the year.

You mentioned the dividend uh with respect to the dividend uh the philosophy is also not changed their. We uh, we like the absolute level of the dividend uh, from a cash outlay standpoint. And we believe that as we continue to repurchase the stock of the company, we'll be able to grow uh dividends per share over time just as we have this year and amongst all of that. Uh, we believe we can continue to strengthen the balance sheet. So it continues to be just a disciplined uh, focused and balanced approach on Capital, allocation.

Your next question comes from Richard Garcia Taurina of Wells Fargo. Please go ahead.

Great, thank you. Uh maybe just wanted to touch on the uh cost progress. You've made um mostly almost 200 million in cost savings. Uh, expected this year. Uh should we expect, you know, additional buckets? Uh do you do you see further upside potential in that in that Target and and how are you thinking about additional cost Savings in 26? Thanks.

Thank you for the question, Richard. Yes, we had set ourselves. Uh, 2 hundred million dollar cost reduction Target by 2026 and it was really targeting sgna and how you know, thus far we would say. We're going to certainly achieve that in 2025. So ahead of a schedule.

And how about half of that coming out of our retail business and half of it coming out of our corporate SG&A? Is there more to be done? The answer to that is also yes. And maybe I'll hand it over to Mark just to provide a little more color.

Sure thanks Ken. Uh, good morning. So as Ken said, uh, we're beginning to see those, uh, expense rationalization activities, really show through in our results as we showed in our, uh, earnings presentation. If you look, uh, for staff over first half, you can see, uh, over 100 million are, uh, just over 100 million in expense, uh, down versus last year in the first half. And so, yeah. I think there's tangible evidence that the efforts that we've made are showing through. And as Ken said, that's really been focused about 50% in the retail business, across the rationalization activities. We've undertaken in Brazil, uh, closures of underperforming locations in North. America Regional consolidation of, uh, storefronts and optimization in Australia, and in our, uh, corporate functions, just continuing to be disciplined about simplifying in focusing, the organization, and that's resulted in sgna Opportunities. So, as we continue to move forward, as Ken said, uh, you know, we're quite bullish. There's going to be more opportunities uh, for us as we continue to explore opportunities. And uh,

Have more to say on that in the future.

There are no further questions at this time. I will now turn the call back to Jeff Holtzman for closing remarks. Please go ahead.

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

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation and you may now disconnect