Nutrien reports strong Q1 performance, highlights retail margins

In its first quarter 2021 investor call, Nutrien credited focused capital allocation and superior operational performance for drivers in the business’s success. The company reported strong performance in its retail, potash and nitrogen businesses. 

Specific to its retail division, Nutrien Ag Solutions, in the first quarter of 2021:

• delivered a record $109 million in adjusted EBITDA 

• strong business performance and supportive market conditions across virtually all product categories and key regions 

• sales increased 12% and due to strong sales performance gross margin percentage was 22% in the first quarter of 2021 compared to 20% in the first quarter of 2020 

• higher gross margin on proprietary products and the benefits of supply chain improvements and strategic procurement. 

• retail adjusted EBITDA per US selling location surpassed $1.1 million 

• digital platform sales doubled compared to the first quarter of 2020, and accounted for nearly 20 percent of North American sales.

• rolling fourth quarter retail adjusted EBITDA to sales exceeded 10% and was more than 11% in the US. 

• retail also improved its cash operating coverage ratio and lowered its adjusted average working capital by nearly $800 million compared to the first quarter of 2020. 

Mayo Schmidt, the newly appointed CEO and president of Nutrien, shared the company has a positive outlook for the second quarter and through Nutrien Ag Solutions, the company has a first-hand account for how growers have a high interest in maximizing yield in the current commodities markets. 

“Retail is experiencing excelling demand for products and services,” he says. “We agree with the multi-year strength expected in the crop market.”

As one example, in the U.S., crop nutrient volumes were up 10% in the quarter, year over year. 

He shared those insights during the first quarter review call where he also thanked Chuck Magro for his decade of service to the company.

When discussing the future direction of Nutrien, Schmidt says, “I had a front row seat in developing and working with the team as chairman of board with the aspect of driving the industry performance across all business lines.” 

He added, “we are putting a fresh set of eyes on our leadership with operational excellence.”

Jeff Tarsi, Nutrien SVP of Retail North America, says the company’s first quarter results are because farmers are responding to the solutions being provided to them. 

“Our customers see value—our results speak volumes,” Tarsi says.

He shares these five areas for growth in the retail business: 

    Seed: the company has a “5 in 5” initiative to grow 1 share point in the seed business every year for the next five years. 

    Crop nutrition: “Growers are swinging for the fences, and after a big fall in 2020, rates are up for N, P and K,” Tarsi says. “And we have an opportunity around every facet of nutritionals, including our proprietary business.”

    Crop protection: With the industry-wide supply chain tightness, Tarsi says Nutrien’s scale and logistical network investments have paid off by positioning them ahead of many with product placement. 

    Digital ag platforms: While he says the platform continues to evolve, he notes strong adoption - up to 41% of revenue in Canada went through the digital portal in 2020. And as noted in the company’s first quarter results, year over year the company has doubled overall revenues being sold through the portal—now at 20%. 

    Financing offers: “I see the finance component as an equal contributing offer to our growers,” he says. 

Tarsi says the above helps continue to pave the company’s path as the “retailer of the future.” He says it’s been the company’s investment into its business that has positioned it well to continue to grow with customers. 

“Our customers have become larger and more efficient,” he says. “And the retailer that doesn’t keep up is going the wrong way on the race track. And it just so happens in a year like this year with pressures in the supply chain, it’ll pay bigger dividends.”