Nutrien 2022 Annual and Sustainability Reports Highlights and Analysis

Overview

On the whole, Nutrien’s business was huge in 2022.

Nutrien generated generated $7.6 billion of net earnings, a 142% increase over 2021 and record adjusted EBITDA of $12.1 billion, a 71% increase over 2021, for the full year of 2022 off of just under $37.8 billion in total revenue ($10 billion above 2021).

These numbers even shattered their 2022 earnings forecast of $10.6 billion in adjusted EBITDA and $6 billion net earnings:

What is notable given their massive financial increases, in large part thanks to fertilizer, their stock price has dropped 23% since this time last year:

On a macro level it’s interesting to see where they have allocated capital:

The growth on ROIC has been significant. An increase in revenue growth does not always increase the intrinsic value of a business. Growth only increases business value if a company's ROIC is greater than its weighted average cost of capital (WACC). Nutrien has more than 5x’d their ROIC over the last 2 years.

Nutrien’s EBITDA disproportionately comes from their fertilizer businesses, with potash being the largest, then nitrogen and finally the retail business:

Unsurprisingly, they are expecting lower numbers into 2023:

As a final macro note, it’s fascinating to see how they have broken out the impact of commodity price fluctuations on their earnings:

Retail

Nutrien Ag Solutions delivered a record adjusted EBITDA of $2.3 billion for the full year of 2022 on $21.3 billion in revenue, 20% year over year growth.

The biggest growth in retail, as alluded to earlier, came from the crop nutrient (fertilizer) business.

Just check out the average price per ton increase in fertilizer in North America for examle of $916 in 2022 and $556 in 2021:

Nutrien’s revenue mix by product category breaks out as follows as a percentage of their business:

• 47% crop nutrition

• 33% crop protection

• 10% seed

• 10% other

The gross margin make up looks different though:

• 37% crop protection

• 34% crop nutrition

• 8% seed

• 21% other

This illustrates not only the lower margin dynamics of fertilizer, but just how important services, like Nutrien Financial and applications are to their business.

We can see that the US market is still where a significant portion of EBITDA growth is coming from in their retail business: