Pleasure to have Ken Seitz up here with me, CEO of Nutrien. He had a long career as CEO of Canpotex, so he knows a bit about potash. Prior to that, he had a long career in the mining industry. It's great to have him up here. I saw Jeff Tarsi here, head of retail, so we got him as well. Jeff Holzman, I saw him somewhere as well. We got the Nutrien gang. We toured your Geismar plant yesterday, a big nitrogen plant in Louisiana. A lot of activity going on that area. We also toured a fertilizer terminal of Yara's, and the plant operator at the Yara terminal said their customers were really low on product. Here we are, you know, arguably at the beginning of the application season, at least in the Deep South. Yep. -where you're coming from, where it's -1 0 centigrade. Certainly in the Deep South, application season is starting, and the fact that the retail channel was low on inventory, at least that's what Yara said. I'd like to hear your view on just high level, what has happened in the last year with respect to fertilizer supply? Then next step is why is the distribution channel low on inventory today? Right. Good morning, great to see you, Steve. I mean, I think we would start by saying that if we look across ag commodities, maybe this is obvious, look across ag commodities really, in every corner of the planet, we believe that grower economics continue to be really quite strong and arguably stronger given what we've seen happen with crop nutrient pricing over the last several months. Heading into the spring planting season, certainly in the Northern Hemisphere, you know, we would say that growers are compelled to lay down the appropriate crop nutrients. This is an environment where we have absolutely, and we can talk about that, seen sort of violent swings in inventories and sort of extreme volatility in the face of unprecedented supply events. What we would say is heading into the spring planting season, those supply events, that the supply side of the equation continues to be undeniably challenged. Again, this is owing to in large part, obviously, to what we see happening in Eastern Europe. We can talk market to market, but again, in the Northern Hemisphere, we look at the channel and we say that, on average, inventory levels would be sort of at or below historical averages. To your point, Steve, you know, here in the North American channel, we can certainly talk about our work with the growers through Mr. Tarsi's organization there, our retail business, and what we're seeing on the ground, with our own inventory levels, of course, and what we're seeing through the channel. to the point that you're making, we would see those inventory levels perhaps a little bit below average. you know, what we're also seeing, I would say, is that with crop nutrient prices softening, and certainly nitrogen is a good example of that, we see growers exercising a bit of leverage here at the moment, while buying continues to be really quite cautious. staying out of the market until they absolutely have to, and then re-engaging, obviously, when they get out on the ground, which is happening in the Southern U.S., get out on the land and start planting crops and obviously laying down nutrients. again, you know, we're expecting if we have a wide open spring application season, we're expecting a strong spring application season here in North America and across the Northern Hemisphere. What we'll need to see is likely very significant volumes moving through the channel. That's what we anticipate for this planting season here and in the Northern Hemisphere. Again, you go to the supply side of the equation, whether it's nitrogen and the fact that, you know, 30% of those plants in Europe continue to be shut down, you know, still facing some challenge to natural gas pricing, feedstock pricing, or whether it's Chinese urea export restrictions and Russian ammonia export restrictions, or certainly over into potash, the persistence of challenges with exports out of Russia and Belarus. Again, we can talk more about that. Nutrien, you can say again, in an environment where we expect a rebound in crop nutrient demand, that the supply side of the equation continues to be challenged. You highlighted the U.S. kind of retail channel inventories likely to be below normal. How would you characterize them in other parts of the world? Was this phenomenon of delaying and deferring purchases global or was that a U.S. phenomenon? It was. I mean, again, what we've seen is as crop nutrient pricing has softened over the past several months, that unless growers and distributors need to step into the market and engage, that they won't try and catch that falling knife and create the inflection point, rather stay out of the market. I think Brazil is a great example where, you know, in the face of real supply concerns for potash in the first half of 2022, the Brazilians imported 40% more potash than the prior year. Again, just wanting to get ready for their big planting season in our fall. That by the end of the year, we saw those imports fall off, so that for the total year, imports were down 8% in Brazil. What we saw was this run-up in the inventories and therefore, potash prices that peaked at about $1,200 a ton. With those inventories built, the growers stepping out of the market and obviously getting into their planting season and just drawing down inventories and not re-engaging until they absolutely have to. Getting through their big planting season, entering into 2023 in their second corn crop planting, which they're about three weeks into as we speak, we expected that the Brazilians would reengage in this first quarter. Indeed, that's exactly what's happened, is that having to step into the market now, we've had good engagement in Brazil, and as a result, you've seen potash prices stabilize at just over $500 a ton. That's Brazil. We can go to India, we can go to China and say that inventories are down in those parts of the world. Southeast Asia are being drawn down. We expect them to engage strongly in Q2, Q3. Yeah, market to market, we would say that as prices soften, inventory is coming down. Eventually, of course, we know every spring in the northern hemisphere, farmers get out on the line, plant the crop. Indeed, we believe that's gonna happen again in 2023, we're doing it in an environment where, again, we've seen inventories drawn down. The other thing I'll say is, just in terms of crop nutrients in the soil, coming off a few years of strong yield, which by definition uses up nutrients in the soil. We're one of the largest soil sampling networks and labs in North America, where if we were to characterize, you know, nutrients in the soil today, certainly, for potash, we would say that potash needs to be replenished. For your farmer customers through retail, and so you got, say, 20% or more of the U.S. farmers as your customer, do you think their application rates this spring will be normal? Could any of it be above normal? It could be. Yes. you know, Jeff keeps pointing to the fact that we're moving a lot of our own proprietary germplasms into the market, and that's pretty special technology. But it's a big investment, and you're not going to make that investment in seed without surrounding that seed with appropriate fertilizer, especially when affordability is where it's at today. The grower balance sheet is as healthy as it's ever been, and grower and economics are as good as they've ever been. We are absolutely expecting a strong season in terms of application rates because everything is lining up for exactly that. What about the rest of the year? Do you see this as being a little more of a normal year as opposed to 2022 was extraordinarily abnormal? I don't know that I can use the word normal to try and forecast 2022. Again, we just continue to experience these unprecedented supply side events, which led to all of the inventory buildup and volatility, all the pricing volatility in 2022. Heading into 2023, I mean, we just had a chat earlier in one of our meetings to say, I mean, as Nutrien, we'd love to have sort of more normalized, more normal outcomes for the balance of the year, both in terms of grower economics and certainly in terms of our own, you know, pricing and margins. The reality is that there's still a lot of uncertainty on the supply side of the equation, whether it's, again, what everything we've talked about in nitrogen or potash, that, you know, again, big season and with good weather in the northern hemisphere, lots of crop nutrient demand. You know, we've been talking about the supply chain, certainly in North America, where if there is a rush on those volumes, you know, bunging up the supply chain and whether we can actually flow those kind of volumes through the channel again in the face of unprecedented supply disruptions. I'd love to sit here, Steve, and tell you that you know, it should normalize, it should, I think should flatten out and look like previous years. I can't say that just given some of these unprecedented supply challenges. Do I hear you saying there might be some challenges in actually meeting demand this spring? Yeah. I mean, that is, I think that's something that more and more we're thinking about here. We know, again, that a lot of volume needs to move through the channel. Geographically, where do you think that's the most-? Well, I think, you know, here in North America, here in the U.S., I think that's true. Again, given what we're seeing in our retail business, given the conversations we're having with growers, given the fact that buying has been cautious. Mm-hmm ... and that, you know, when this all starts to move and people engage with the market, farmers engage, you know, there's a lot of volume that needs to flow through. I think that, you know, that is something we're mindful of. You know, I would say that for us, for Nutrien and Nutrien Ag Solutions, you know, obviously we've made an enormous investment in our own supply chain, warehousing right through the channel. I don't think we've ever disappointed a customer. We see that as one of our big strengths in this environment, is the ability to move massive volumes through the channels and get it to our customers. Would you say the fertilizer inventory levels within your retail, 1,000 stores, is higher than your competitor retailers? You know, if we look at, and we do a lot of work on this, sort of studying obviously our own and understanding where we're at ourselves and how we've layered in volumes and prepared for the spring versus understanding from, you know, third-party consultants and whatever else we're seeing in the channel, that we would say inventory levels, I'd put it on average, would be at or below, little below historical average levels heading into this planting season. You can move your wholesale material into your retail channel. Are you better positioned than others? Yeah. I mean, I think you can make the argument that, having the largest crop nutrient production network in the world, that, I keep saying the Nutrien customer, which is, you know, obviously Nutrien Ag Solutions. We're supplying to multiple customers on this continent that the Nutrien customer should be the happiest customer. All right. Let's drill into potash here, the level of supply disruption, you know, even by your own estimates for 2023, a 70-million-ton market could be short 10 million tons. Right. Something in that range. How is that, I guess, one, not reversing back to normal faster, and two, what do you think the impact of that is on global crop production? Mm-hmm. Yeah. You know, just looking at 2022 as a starting point, as you say, Steve, in an unconstrained market where you didn't have these supply constraints, we would expect global shipments to be, exactly as you say, 70 million tons, which we've seen, of course. We also know that potash demand is growing year over year, 2.5% average annual growth rates, and that's just owing to all the things we talk about, you know, growing population, decreasing rate of arable land expansion, therefore a need to improve yields and event demand for high quality food, and on and on and on. We have seen consistently over the last 20 years, potash demand growth at those levels. Like I say, we expect that to continue. 70 million ton unconstrained, yet shipments in 2022 were around 61 million tons, shorted by about, like I say, 9 million tons or thereabouts in an unconstrained environment. 2023 you would make the same argument, of course, that unconstrained shipments would be in that 70 million-71 million ton range. Yet we're saying that we believe shipments will be 63 million -67 million tons. In other words, a supply constrained market. Why is that? Why is it a supply constrained market? Well, it's really Russia and Belarus. What we saw in 2022 was Russian volumes down 28%. You know, when we look at all the import-export data, when the dust cleared at the end of 2022, in down 28%. Similarly, Belarus down 52%. Heading into 2023 now, we see really no reason for that to change, in that we believe the Russians and the Belarusians have exhausted and had all of the economic incentives to exhaust every outlet that existed. For 2023, with this terrible conflict in Eastern Europe continuing, we think Belarusian volume is down 40%-60% and Russian volumes 15%-30%, which helps to define those goalposts that we set on global shipments of 63 million-67 million tons. Yes, a supply constrained market and a market that should be shipping and consuming 70 million tons. What does that mean for yields? You know, I think it's fair to say that if you deplete soil of potassium on a multi-year basis, and again, we're looking at our own soil sampling data. I think Jeff will tell you that we've got about 8 million data points at the moment that we're looking at in terms of soil samples in North America. We are seeing potassium being depleted. We know, of course, like I say, that if you do that on a multi-year basis, it's going to affect yield. Any more data on that 8 million samples? Like, what fraction you would characterize as insufficient or below optimal, I guess would be a better way. You know, I would just put it as across on average, you know, across those 8 million soil samples, on average, we are seeing depletion of potassium in the soil. Yeah, below average levels, so. How would you compare the three primary nutrients in your outlook for 2023? Would you rank any one of them likely to tighten faster than the others? Yeah. I just, I think it's that's a tough one to answer again, Steve. Just given, you know, you look at what's happening with urea at the moment, and again, cautious buying and, you know, the price softening actually quite dramatically, but on very thinly traded volumes. You, you know, small volumes, thinly traded, not much liquidity and big drops in price. You know, with the cautious buying, again, heading into the planting season, we expect a lot of nitrogen to move through the system. You know, we do expect a certain further, you know, and now a rebound and strengthening in nitrogen pricing. You know, all these supply side challenges and uncertainties, what does that mean for volatility? What does that mean for tightness recovery in the nitrogen market? I think that, you know, that needs to play out over 2023. We can talk about potash similarly. We can talk about phosphate similarly. I would find it difficult to, you know, sort of talk about one crop nutrient as being more challenged than the other. There's just so many moving parts here among each of them that it remains to be seen. Therefore, as Nutrien, what we're doing is we're planning our production footprint and 2023 targets to be flexible, you know, and set out some base production targets that we believe the market's gonna need, but giving ourselves optionality to produce further and supply further into the market if the market evolves that way in the face of all this uncertainty. Potash is a great example where, you know, we've guided 13.8 million- 14.6 million tons. A lot of that dictated by, you know, the ends of those ranges dictated by the timing of a China-India settlement. That also we're preserving the ability to sell 50 million tons into the market this year. Again, you know, we've shown time and time again as Nutrien that preserving that flexibility, and surging tons into the market for our customers when it's needed is a serious value-creating opportunity. We're planning our movements in 2023 in a similar way. The additional potash production is when, not if. Yeah, we believe that's absolutely the case. Again, you look at the backdrop, and you see through all of the noise in the market at the moment, you say, one, the potash market is growing, and we believe that to be true. Two, grower economics in the here and the now, in the moment, and frankly, given where grain stocks-to-use ratio is at 25 year low, that we think it's multiple cropping cycles to replenish those inventories. We believe strong grower economics today, but that that's possible that that sustains through multiple cropping cycles to replenish inventories. Growing demand, strong grower economics today and perhaps into the medium term, with, again, an undeniably challenged supply side of the equation. Yes, I would say for Nutrien and for what we're planning to do here, that we intend to increase volume. We've then made investments to debottleneck our nitrogen sites. We expect to add a half a million tons by 2025. We're obviously talking about, and I know, Steve, you went to visit our clean ammonia investment, which would further expand our footprint by 1.2 million tons. In potash, again, at 15 million tons of capacity this year, but growing that first to 18 million tons, and we've said by now roughly 2026. An ability to expand 18 million-23 million tons of additional brownfield investments, which would be very competitive from a CapEx perspective. The Geismar plant we toured yesterday, there was a fair amount of earth-moving equipment in this- Yep. -area there where the blue ammonia plant might be built. Clearly there was a lot of activity going on over there. This half a million ton that you're talking about, that's debottlenecking? Is that downstream capacity expansion, or is this also, you know, ammonia expansion? Yeah, it's both. Yeah, we're making those investments across multiple sites. Again, you know, we would say that 500,000 tons, we use the word nitrogen, but it's across different products. Yes, you know, there are earth movers at Geismar, as you saw. We're just working through the CapEx refinement process at the moment, getting confidence around what that capital number will be. We were expecting around a $2 billion investment for that clean ammonia facility. We're running the economics and rerunning them at the moment. The way we're characterizing that investment is just looking at the returns associated with deploying that production into merchant ammonia markets. In other words, not relying on a premium from some of these new end markets like clean energy or hydrogen economy or marine fuel, but also there's the 45Q tax credit which augments those economics. That the remaining piece, Steve, is just gaining confidence around the capital side. Until that greenfield plant comes on stream, there's a couple of others that are also greenfield plants, these are multi-year projects. We had Meili Kim in here this morning, he's kinda concerned that there's just not a whole lot of additional nitrogen capacity coming on in the next few years. Until you get these new plants. Yeah. that are multi-year projects, do you have the ability to debottleneck more than this 500,000 ton? I mean, 200 million ton global urea, 500,000 tons doesn't move the needle much. It doesn't, and I would say that, there's limited opportunity at with the existing footprint to make those additional investments and, you know, so eventually you start talking about new plant, and albeit on our existing sites because we have the workforce, we have the capabilities and obviously know-how, producing ammonia, producing nitrogen, and running those plants. You know, as it relates to the investment in Geismar and that clean ammonia facility, I mean, that's a, that's a great example where, you know, we have access to tidewater for these, you know, as these new end markets evolve. We're talking about, what the evolution of clean ammonia looks like for us and for the world, and it's gonna take some time. Maybe by the end of the decade, maybe 20 million tons of demand, but by the end of the next decade, maybe 160 million tons. We do expect it to grow. And therefore, Geismar perfectly situated for export capability to some of these new end markets. In the meantime, you know, obviously access to merchant ammonia markets, access to the Denbury pipeline, which you would've talked about when you were. Mm-hmm. at Geismar. For carbon sequestration, have the talent and the workforce there and the capability, you know, to capture and sequester over 90% of the process emissions, process carbon off that plant. Really as close to green ammonia as you can come with a clean ammonia plant. With respect to where that ammonia from that plant is likely to end up four or five years from now, do you have a gut feel on whether this is gonna be going into existing ag or industrial end markets, or do you think this is likely to go into new, you know, clean fuel markets? Yeah. I think it'll probably be a bit of both. Again, you know, we're preserving our capability and running the economics on merchant ammonia markets. We have written an MOU with Mitsubishi for potential for a 40% offtake off that plant. Of course, the interest there with Mitsubishi is take that ammonia back to Japan and co-fire it with in their coal plants. We have a project underway with a company called EXMAR looking at developing a ship engine that burns clean ammonia because the IMO, International Maritime Organization, has their own decarbonization target, 70% by 2050, I believe it is. They need to do something. Then there's the evolution of the hydrogen economy as well with clean ammonia as a hydrogen carrier, a safe hydrogen carrier. Yeah, we think that those opportunities will exist for Nutrien as well and will help to inform, you know, maybe the next investment that we make in an ammonia expansion into the future. Even if half of that incremental blue ammonia, If even if half of that went into, you know, new markets, the incremental supply into ag markets might not flood the market. Yeah. I bring this up because it. Yeah. It is a concern. Right ... about whether, you know, we got a slug of new ammonia coming in four or five years, is that a risk? I think, you know, we just have to watch the evolution of obviously the ag markets. You know, that too is growing, 1.5% average annual growth rate. We expect nitrogen demand on the planet to be 167 million tons by 2026. You know, even looking at ag markets, and as you said earlier, Steve, without meaningful investment in new plant on the ag side, we do see tightening in front of us. There's also the evolution of these new end markets. You know, economics, supply and demand will take over, and the economics will dictate, you know, whether it's justified to continue to build, you know, expand clean ammonia capacity in the name of, yes, agricultural supply, but also some of these new end markets. Jumping to retail, do you see continued opportunity to bolt on new retail facilities in the U.S.? I've had some channel contacts in that network that you've acquired, and it's annoyingly a loss of a contact for me. presumably. You can talk to us anytime. Presumably you have more of that coming. Yeah. I mean, what we would say is that over the last few years here in North America, we've seen some of the acquisition economics a bit challenged. Valuations have been high. You've seen us do a few things, but for us, it's always about quality over quantity. Just finding those niche opportunities that meet our hurdle rates. Of course, you know, I would say without, you know, getting, you know, being too arrogant about it, we have lots of experience with tuck-ins in North America and integrating them into our business. We're really quite good at that. So we're just really very selective on the opportunities. Brazil's a little bit different. I mean, that's a highly fragmented market. We're 2.5% of the market, yet the fourth largest retailer in the country. We do have runway to grow there. Last year, you know, total acquisitions, we did 21 acquisitions, spending $400 million. Three of those were in Brazil, one of them was meaningful in moving the needle on market share. We do have a strong opportunity pipeline in Brazil. We do see opportunities for further consolidation, further expansion, further gaining of market share in Brazil by acquisition. You know, we can't talk about Brazil without organic growth as well, where every time we do one of these acquisitions, we bring in our proprietary products. We look at the growers and accounts that are available for us to go after in the region. We're growing in Brazil as well. We had a target of meeting $100 million worth of EBITDA in 2023 in Brazil. We set that out for ourselves, we'll surpass that this year. I think it's also evidence of, you know, the very strong team that we built there in Brazil, and certainly gives us confidence to do more into the future in a market where we all know ag, you can't be in the ag business really kind of without being in Brazil, given the growth potential in that country. Anybody wanna ask a question to Ken? Up here. Which? Okay. Go ahead, Will. Ken, I would say that the market doesn't believe the sustainability of the $9 billion-$10 billion of EBITDA- Mm ... that you're gonna generate this year, just in terms of your overall multiple. What would you say your kind of mid-cycle or through cycle economics kind of baseline EBITDA would be off which you could build growth from volume expansion and spikes in pricing? Yeah. You know, we believe that, post this conflict in Eastern Europe, we continue to have conviction around the fact that there's been this structural shift in energy markets, in fertilizer markets, and in agricultural markets. As we've looked at on the pricing side, again, whether it's energy, ag or fertilizer, that there has been this, as I say, a structural shift. That's one thing that's helping to obviously inform our view of what we would call a new mid-cycle earnings. In addition to that, on the wholesale side of our business, we just talked about the fact that into that market, we're expanding our volumes, and we expect to do that. Not only has there been a structural shift on the pricing side, we expect to be putting more volumes into that environment. Finally, you look over at Nutrien Ag Solutions, where we have been experiencing really significant growth over the last several years, actually funded by our integrated model, funded by the margin success we've been experiencing in our wholesale business. Albeit we're gonna experience a bit of a reset in our retail business this year, about $350 million, and that's just the margins that we've been enjoying in crop protection and certainly on the fertilizer crop nutrient side of the business, resetting to sort of more normalized levels. We'll, you know, EBITDA up $2 billion this year and growing from that, proprietary products, supply chain, digital, growing from that. When we put it all together, we say that the new mid-cycle for us is about $9 billion. Again, it's just putting together each of those pieces, growing volumes, structural shift, on the pricing side and what we see in front of us on our Nutrien Ag Solutions. Finally, I'll say, we do believe there's additional opportunity in our integrated model. We've just established a new commercial arm of the organization, headed up a new chief commercial officer, where we look at through the value, through the supply chain, go to market with our retail business and optimization through that supply chain of working capital, asset utilization, inventories. There's additional opportunity there for us. Again, you know, it probably gets quite granular quite quickly, but you go across all of that, and that's where we say about $9 billion. Sal? Yeah, I have a couple of questions. The first one following up on Will and what's the market thinking. One thing that has come up is that, you know, you have that 63+ million forecast for shipments for potash and, you know, it's supply constraint. At the same time, when we look at our model nine months ago, you know, the idea was that you could sell almost 16 million tons this year. You're choosing to pull roughly 1.5 million -2 million tons from the market. Isn't there is that an evidence that demand is also an issue? Because you could have actually plugged in some of the supply constraint. Yeah, there's a number of moving parts there, as usual. You know, if I point to 2022, again, I would point to the fact that the first two months of the year, there was no conflict on the planet. The world enjoyed sort of normal shipments of potash into markets like Brazil. I would point to, and again, if we're using Brazil as the example, the opportunity to bring as much into the country as possible prior to sort of sanctions being evolved and kicking in and everything that happened there. That was that 40% increase in shipments into Brazil, which with inventory build-up in Brazil, and we can talk about the late spring in 2022 and here in North America that led to higher carryover volumes over into the fall of 2022. You know, I would characterize that more as inventory build-up and inventory drawdown. As Nutrien, you know, we plan our movements accordingly. It's not just putting potash into the market beyond what our customers are asking for. We meet the needs of our customers, and we're very mindful about that. Heading into 2023 now, again, when we talk about our own volumes, we're guiding 13.8 million-14.6 million tons. I take the point, you know, why not more in a supply-constrained environment? The reality is here we are, it's the end of February, and we're looking to a settlement in India and China. That, you know, the effect there is really kind of twofold. One, standard grade product starts flowing into those markets once those contracts are executed, and that will go fast and furious. You know, Panamax is heading over to China off the coast of Canada, you know, and pretty significantly. Then also in this environment where there's this much volatility and perhaps buyers are looking a little bit cautious, that the India and China contracts will likely help to establish what people view as a floor. A bit of a floor. Okay, now I see the certainty I see some price discovery. I'm gonna step in the market and buy." The longer those contracts delay, it shifts our ability to produce and ship into our customers just sort of out of the calendar year. It doesn't fit perfectly January 1st to December 31st. When we talk about 13.8 million-14.6 million tons, it's kinda dictated by the timing of those settlements, which then causes the rest of these volumes to move as a catalyst in a more meaningful way, shifts it out of the calendar year, but again, preserving sales capacity of 15 million tons. We are out of time. Please join me in thanking Ken for this presentation. Thank you. That was good.