Nutrien Ltd. Price & Performance (NTR)

Good morning. Thank you for joining us today. As review our q one performance strategic priorities, and the outlook for our business. Nutrien's first quarter results were supported by the execution of operational efficiency and cost savings initiatives. We maintained our twenty twenty five full year guidance ranges as operating performance and capital allocation priorities are consistent with previous expectations. In recent months, geopolitical events and trade disruptions have created volatility in global financial markets. However, to this point, these issues have not impacted the outlook for our business. Fertilizer market fundamentals have strengthened supported by strong global demand and tight supplies. Canadian fertilizer products that are critical for crop production and food security continue to move across the border tariff free. And our downstream retail network is well positioned on fertilizer and crop protection supplies to meet demand for the current growing season. US farmers intend to increase corn acres by 5% in 2025, which is positive for crop input demand. We're seeing strong fertilizer application rates this spring, and our US retail fertilizer sales volumes were up 8% in April, compared to the same period in 2024. 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.

Now turning to potash. Global supply and demand fundamentals have strengthened significantly. As spot market prices have increased by 10 to 20% since the beginning of twenty twenty five. We have maintained our annual global potash shipment forecast in a range of 71 to 75,000,000 tonnes. With the current level of demand testing existing global operating and supply chain capabilities. Capitex is fully committed for the second quarter due to strong demand in all major offshore spot markets. In China, a step change potash consumption in recent years combined with lower imports to begin 2025 has led to an estimated 1,100,000 ton reduction in its strategic reserve. We anticipate favorable consumption trends and lower inventories will support strong import requirements in the second half of the year. Global urea and nitrogen solutions markets have also strengthened considerably in 2025. Due to seasonal demand and supply restrictions. In The US, the combination of higher corn acres and limited nitrogen applications this past fall is supporting demand. While trade flow shifts and constrained logistics have impacted supplies. Nutrien is well positioned to optimize product mix from our low cost nitrogen network to meet demand this spring. Beyond the fundamentals, our focus is to enhance our core business across the ag value chain, and progress towards our 2026 performance targets.

We provide a pathway for driving structural improvements to our earnings and free cash flow. In our upstream business, we are leveraging our world class asset to bring on incremental low cost fertilizer volumes as demand grows. This includes initiatives that enhance the safety reliability, and low cost position of our assets. 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. Trade disruptions in recent years have further highlighted the importance of our leading global supply chain. In 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. In the first quarter, we completed two acquisitions in The US, adding high quality assets with a strong strategic fit within our retail network. Through actions to simplify our business and focus on core assets and markets have made meaningful progress on our cost savings and capital expenditure targets. We remain on track to achieve our $200,000,000 target for consolidated annual cost savings in 2025, one year earlier than the original goal. We have further optimized capital this year with planned extended expenditures down more than 500,000,000 compared to 2023 levels.

In addition, the divestiture of noncore assets has provided us with incremental cash flow. In the first quarter, we divested our remaining position in Seinafer, which was a passive equity ownership stake. Total proceeds from the divestiture during the fourth quarter of last and the first quarter of twenty twenty five amounted to 223,000,000. These actions further support Nutrien's ability to deploy capital towards high conviction priorities, that improve earnings and free cash flow per share through the cycle. I will now turn it over to Mark to review our q one results 2025 guidance and provide additional details on our capital allocation priorities. Thanks, Ken. As Ken described, our operating performance has progressed in line with our previous expectations. In the first quarter, which is typically a seasonally slower period for our downstream retail business, Nutrien delivered adjusted EBITDA of $852,000,000 Retail adjusted EBITDA totaled $46,000,000 as weather related delays reduced crop input sales in The US and Australia. Retail expenses were down 5% compared to the prior year as we progressed cost savings initiatives. In Brazil, we are demonstrating greater stability in our business performance supported by the execution of our margin improvement plans. We've maintained our full year retail adjusted EBITDA guidance range of $1,650,000,000 to $1,850,000,000 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.

At the midpoint of our annual range, we anticipate year over year growth in crop nutrient sales volumes increased proprietary products gross margin, and continued recovery in Brazil, partially offset by a return to historical average crop protection product margins.

In potash, we delivered adjusted EBITDA of $446,000,000 in the first quarter. Down from the prior year to lower net selling prices. Our realized potash price in North America reflected the reset in values for the winter fill program. While the improvement in our offshore selling price was driven by higher international benchmark values and lower logistics costs. 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. We utilized our extensive midstream distribution network to deliver 3,400,000 tonnes of potash in the quarter, similar to the record levels sold in the same period of 2024. We expect annual potash sales volumes of thirteen point six fourteen point four million tonnes in line with our historical average share of global shipments. Our nitrogen operating segment generated adjusted EBITDA of CAD408 million in the first quarter down from the prior year due to higher natural gas costs and lower equity earnings from our investment in Pro Fertil. Benchmark prices for urea and other upgraded nitrogen products have strengthened since the beginning of the year, while ammonia values have declined from historically strong levels in the fourth quarter of twenty twenty four.

Our ammonia operating rate increased to 98% in the first quarter, supported by reduced maintenance downtime and improved reliability at our sites. We expect annual nitrogen sales volumes in the range of 10.7 to 11,200,000 tonnes with higher quarterly volumes for the remainder of 2025 compared to the prior year. 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 MMBtu in 2025. 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. Phosphate, generated adjusted EBITDA of $61,000,000 in the first quarter, down from the prior year primarily due to the impact of lower production volumes in higher input costs. We continue to expect lower production levels in the first half of twenty twenty five compared to last year and improved operating rates in the second half following the completion of planned turnaround activity. Our capital allocation priorities also remain consistent. We are 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 2 to 2,100,000,000.0 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. This includes investments in our proprietary products business, retail network optimization, nitrogen to bottleneck projects and potash mine automation. In 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. We've deployed capital on both fronts in 2025, completing two U. S. Retail acquisitions in the first quarter and repurchasing 3,600,000.0 shares for a total of $188,000,000 as of May 6. We intend on continuing to repurchase shares on a ratable basis under our renewed NCIB program that's authorized until the February 2026. I'll now turn it back to Ken.

Thanks, Mark.

To summarize, we have a constructive outlook for our business as global fertilizer markets fundamentals have tightened in 2025. Supported by growing demand and tight supplies. 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. We are taking a disciplined and intentional approach to capital allocation prioritizing high value investment opportunities, divesting non core assets, and returning cash to shareholders. We have demonstrated progress in each of these areas in 2025, and we'll continue to focus on actions within our control that we believe maximize long term value for our shareholders. We would now be happy to take your questions. Thank you, ladies and gentlemen. We will now begin the question and answer tone phone. You will hear a prompt 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 speakerphone, please lift the handset before pressing any keys. The first question comes from Joel Jackson from BMO Capital Markets. Please go ahead.

Hi. Good morning, everyone.

So you don't give guidance, you know, for EBITDA. You give it just for retail. And I don't wanna give you guidance. I want you to. You're not going to. What I wanna ask you is If I look at versus three months ago, what you had for your commodity price deck, don't even tell us that.

But would you agree that if you mark to market your earnings, you know, you would expect that you are looking at higher outlook this now you would have thought three months ago because all the commodity price have moved, to good US spring, Like, could you talk about that that the outlook is is improving or not? To where you should be earning more than maybe what you would have thought three months ago and you're not gonna tell us what those numbers are, that's fine. Thanks.

Yep.

Good morning to all. Yeah. Thank you for the question. The short answer is yes. We agree. With your assessment of now versus three months ago. And, yes, it's related to a number of things. And it it does go back to what we're seeing across what we do, the strength of demand across fertilizer products. And we can talk about potash where we issued, you know, our view of 71 to 75,000,000 tonnes of of demand this year. And what what we're seeing, we believe, is the intersection of the market, the ability to supply that. So it'd be the supply stack and logistics, And so that, as a result, we are seeing strengthening of price in every market that we serve. I mean, even in our own domestic volumes, we have increased the price three times since our winter fill program. To your point, that's within the last three months. Joel. We're 90% committed through q two in our domestic volumes and fully committed with Campotex through q two. So know, we and and we could talk about what's happening in urea and UAN, or we've seen supply disruptions and strong demand. You know, with our retail business, we've talked about It's a story of of halves as opposed to quarters, and where we, with some weather delays in the first quarter, now about 50% planted, and, you know, we can hand it over to Jeff Tarsi.

Things are going strong with the planting season. That one, we're seeing significant volume go to ground. So we're very encouraged by what we're seeing at the moment. So again, Joel, it's just to say that we agree with you, and it's certainly constructive on the balance of the year.

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

Hey, good morning. Thanks for taking my questions. So maybe can you just provide an update on Brazil retail? Like are we on track to see that business get back to breakeven? And just going forward, now that you spent some time on the turnaround in Brazil, what is that look like for Nutrien, as you kinda get into, like, let's say, 2026 and beyond?

Yep. Thanks, Andrew. So again, the short answer is yes. We are on track. I mean, at the macro level, Brazilian farmer had a strong soybean crop, and and soybean prices strengthened. Of course, they're they're watching their Saffinia corn crop grow at the moment, but all indications are that it'll be a strong corn crop as well. So Brazilian farmers in 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 idling lenders. We've talked about, headcount reduction. We've talked about closure of unproductive locations, how we're focusing on collections, how we're focusing on proprietary products. And that whole plan bring us back to a cash neutral position this year, which is absolutely on track. Jeff, do you wanna say a few words about that? Yeah. I can. I'll just reiterate again some of the comments that you made, you know, from a macro standpoint. Roars, came off very strong soybean yields there, which soybean harvest. They got off to a good start with second crop corn, and that's progressing nicely. Not a lot of weather scares there, in that market. Have seen as we saw last year, we continue to see pressure in that crop protection market, big influence of generics.

In that in that market as well. And our focus with our business, as as Ken just stated, we're really focused very intently on our controllables, expense management, a heavy, heavy focus on margins, 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. We we expect to deliver a a notable improvement over last year. We're starting to see those benefits start to show up from a margin standpoint, and from an expense standpoint as well. And we plan to carry that momentum forward through the through the remainder of the year. Ken's mentioned that, you know, we've we've idled our lending facilities, and we we we've taken out our assets that weren't giving us return from a 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 twelve to eighteen months, and we're starting to see the results of that. Thanks, Jeff.

Andrew, as we look into 2026, think you're gonna expect more of the same. It'll be watching the market and evolution of you know, the the health of the Brazilian farmer and at the same time, us continuing to execute on our our improvement plan. I I think, Jeff, fair to say we're watching crop chemistry quite closely. If there's one if there's one shelf of ours that has caught up yet is on chemistry. And and we'll be looking to twenty twenty six to see that. But we're still seeing competition from generics, and that's that's certainly stressing prices in that part of the world.

Yeah. Ken, I failed to mention. I don't I don't wanna leave this out, but we we still see a lot of opportunity on the proprietary product side. Of our business, especially with our plant nutritionals and biological products. And as well on the proprietary seed side of the business. So we're very focused in those two areas.

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

Sorry. Thank you. Could you talk a little bit about just sort of how you're 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 sequential price improvement you'll see? It's obviously been a rise price environment. So just trying to understand how much that you might have captured in 2Q?

Yeah. Thanks, Vincent. You know, again, I would say that the first half in terms of our upstream businesses, were constructive. And we can start with potash where again, with such strong global demand, we can go from market to market where, again, when China, we're seeing very strong consumption. Quite low inventory levels, India with it's a flat subsidy, but one that at today's prices, would encourage probably 4,000,000 tons of demand in that part of the world. In The US, we talked about what we're seeing in the planting season here. Certainly in the second quarter, things are going quite strong, domestically. We can talk about what we're seeing in Indonesia and Malaysia. I'll be at 4,000 ringgit per ton. Pall Mall prices come off a bit, but still at a level that encourages strong demand. And we're seeing that. We're probably at about a $360 price in in Southeast Asia at the moment. For a standard grade product. So again, in in Brazil, of course, where we just talked, you know, last year, 47,000,000 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 75,000,000 tonnes. And, again, you look at what's happening on the supply side of the equation and and the market's ability to deliver, we're believed we believe those two are meeting, and they're meeting and with the results of of strengthening prices in just about every market that we serve. You know, when you go over to nitrogen products, where, here in the plantation season, we've had we've had really strong urea UAN prices. Ammonia sun softening with new supply coming on. We're all watching China as it relates to export volumes, but at the moment and in the planting season, we're seeing quite a bit of strength. So, again, market to market, and we can talk about phosphate, phosphate prices, particularly strong. Market to market wholesale business ups our upstream business were constructive on the first half and, frankly, into the balance of the year.

Your next question comes from Richard Gartigerena from Wells Fargo. Please go ahead.

Great. Thanks for taking my question. 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 Was this across all your facilities, obviously, higher Nutrien Gas Price? And North America as well? And then also just being on tariffs, I guess, how are you thinking about handling that if there are going to be some tariffs on Nutrien coming into the country from other regions. Let's just try that Thank you.

Yeah. So, two questions. There. One on, costs, one on tariffs. I'm gonna hand it over to Mark to talk about you know, what we're seeing first quarter first half for cost in our nitrogen network. And then maybe Chris just to talk a little bit about this, I guess, it's 10% flat tariffs on some of the other regions who produce nitrogen.

Thanks, Ken. Good morning, Rich. On your first question on nitrogen costs, Q1 is pretty straightforward answer. Obviously, when we came into the year, we had expected to see Henry Hub price in a range of $3.25 to $3.50. To begin the year, and and natural gas prices began the year higher than we anticipated in in more volatile fashion than we anticipated. So the majority of the cost that you're referring to in the quarter would have been driven by higher gas prices in North America. You know, that said, we've seen, gas prices ease off somewhat. While there is still volatility in the market, we've widened out 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 ease a little bit. Albeit, you know, still volatile going forward. We'll just point out that, obviously, we continue to benefit from a a 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. Yeah. Thanks, Bob. Good morning, Rick. As it relates to tariffs, some of the price increase we've seen, whether it be urea or UAN, maybe from the imposition of tariffs from most countries that have the 10% imposed on them.

But generally, the story is much more about demand. And as you heard from from Ken in his opening remarks about the impact of planting 95,000,000 acres of corn, a little bit of catch up nitrogen application that was missed in the fall, And that's the real factor that's driving the prices, particularly of those of those two products.

Your next question comes from Ben Isaacson of Scotiabank. Please go ahead.

Go ahead. Thank you very much and good morning. You gave global potash shipment guidance of 71,000,000 to 75,000,000 tonnes. 75 being strong demand, 71 being weak supply. Now you don't have weak supply. And so my question is, with prices now starting to move to and through mid cycle, You talked about Campotex being sold out in Q2. Your Campotex peer yesterday nudged up their volume a little bit.

In potash. How should we think about Nutrien responding to prices? Is it too early? Or are prices too low for Nutrien to start increasing volume When should we expect you to respond to higher prices? Thank you.

Yeah. Thank you, Ben. And, no, we're prices are not too low. 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. We've maintained that guidance range. 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. As you know, we certainly have the ability to do that with our six minds, our flexible network, our ability to search capacity, when we need to in an environment that's calling for the our time. So we're talking to our customers every day about their needs, their demand, And, again, we're we're constructive on what we see for the balance of the year.

Your next question comes from Chris Parkinson of Wolfe Research. Please go ahead.

Great. My question kind of straddles, two prior questions. But in the beginning of the year on the potash side, you know, there's this presumption that the market would benefit from Belarusian, Russian curtailments, perhaps a little bit you know, out of China, you know, decent amount out of Chile, and then obviously, Laos has been a bit of a debate.

But all in all, it looks like supply has actually been quite healthy out of the FSU, especially at Belarus versus prior expectations. Russia, perhaps, a little bit less so. But that further indicates that this is a demand driven environment. So if we take that into consideration, then whether or not you sound correct as part of this, you know, how should we think about the sustainability of higher prices? Because I think previously, were thinking you could get a little bump up, but we're then we're just gonna give everything back in the second half. And I think that's looking increasingly less so So can you just help us con compartmentalize, you know, your way of thinking and how that plays in your strategy for the balance of the year? Thank you so much.

Yeah, Chris. Thank you for the question. You know, again, I go back to the way demand is materializing this year. And you know, the the global grower and the affordability of crop nutrition as they try and maximize yields. And that's happening in North America as we speak. Chris mentioned 95,000,000 acres of corn, is, again, constructive for crop nutrition going ground, but we can go market to market. And we're seeing really, really record level demand. And then that gives us a confidence in that 71 to 75,000,000 tons. We've talked about the constraints on the top end of our guidance range, global shipments, as being a supply constraint.

And even without the curtailments, perhaps, that were announced in places like Russia and Belarus, you know, maintenance downtime, which, you know, we may yet see. Yes. We've had seen some, volume reduction out of Chile, at the margin and and perhaps not all of the incremental tons that were announced coming out of the law. So there have been some display supply disruptions. But what we believe we're seeing is, again, this intersection where global demand is beating the market's ability to supply and ship. As a result, we have seen, again, strengthening in in prices in the spot market that we we serve. You know, China and India contracts obviously haven't been settled. So that we look over the balance of the year and how we're thinking about the remainder of 2025. And, again, that's where we say we're quite constructive.

Your next question comes from Steve Byrne from Bank of America. Please go ahead.

Thank you. I have a couple retail questions. First, the two bolt ons, what do you think EBITDA contribution could be? Post synergies? Another one being your proprietary, brands, with Loveland and Dyna Gro, are you are you are you gaining share in those brands? Would you say versus, other other brands out there? And then lastly, any update on the launch of, that Infinity product?

Absolutely, Steve. Thank you for the questions. I'll hand it over to Mark to talk about your first question as it relates to the acquisitions and then over to to Jeff to talk about Dyna Gro and our LPI brands. And, certainly, we can we have we can talk about what's happening with Infinity.

Yeah. Thanks, Ken. Good morning, Steve. So, Steve, maybe just to take a step back, you know, we've continued to say that over the past couple of years, you know, we've been cautious in the deployment of capital. Ensuring that where we're putting capital to use is the highest return opportunities to continue to grow free cash flow per share, and we had expected as we entered 2025, we would begin to see 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 and prudent in how we do that. These two acquisitions were relatively modest in size. We deployed just over 10,000,000 in capital. On these two acquisitions, but as always, when we complete these, they're located in a very strategic area of The US. The larger of the two was distributor called Welch. And it's a very nice fit with our network of business we know very well. And we continue to see a profile that's 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, as we move through the year, that incremental dollar is really gonna be allocated among tuck in acquisitions to the extent that's the prudent place to deploy capital and share repurchases and we'll continue to evaluate those opportunities. So I'll pass it over to Jeff. On your other questions.

Yeah. Good morning. Steve, and I've, get, I think, a couple questions you asked around proprietary and started off a little bit as it relates. As you know, we got off to a delayed start. In the first quarter this year. And I'll I'll remind if if we don't remember last year was a phenomenal start from a weather standpoint and in the first quarter compared to a, we we didn't get to weather the last two weeks of March. In in the, in the campaign we're in right now. But from a seed standpoint, our revenue and our margins up in the first quarter and Steve, that's predominantly because the shift we've seen from soybeans to corn, particularly in the South. We're, we're up, about 25% on acreage, corn in the South. And now across the whole US, that that's not a a material number, but it's certainly gonna contribute to that 5,000,000 acre growth we're projecting for the year. We do very well with our corn varieties with Dyna Gro, and so this is given us a a good opportunity to expand that. As well. We continue to be really excited about our about our proprietary business as a whole.

We've got a, we forecasted about an 8% increase, 8% to 9% increase in gross margins this year across that portfolio of of products. And we think with the increased corn acres and and our attention to our full year nutritionals and biostimulant products, we think we're gonna have a really good campaign this year. I might also add that we we've added 12 new products, for this year, and we plan to introduce many as 20 new products going into 2026. From that standpoint. Now you asked about Infinity, specifically. We're having a nice launch to that product. We're right in the right in the throes of getting it put to ground right now.

And, I'm just as anxious as you are to see what our results gonna look like as we get our night applications put down. As you know, this is nitrogen enhancement too. So, yeah, we feel we're we're we're excited about our opportunities in our proprietary, products portfolio. We're expecting a lot of growth out of that segment over the next two years.

Your next question comes from Edlain Rodriguez of Mizuho. Please go ahead.

Thank you. Good morning, everyone. When Ken and also Mark, this is a question I've asked before. And always intriguing to get your insight there and also put you on the hard seat. Potash or phosphate? Like, when you look at the fundamentals over the next six months or the next twelve months, which one you think is better positioned? And please, you can't say you like both of your children the same. You have to choose one of them.

We like both. But no. I'd like thank you for the question. And, you know, obviously, we've seen quite 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 we've seen historically high phosphate price that they get, and we we don't see any reason why we would see softening over the course of 2020. Five. Yeah. Potash is a story of know, the fundamentals coming to get the start of the year. That that makes us, constructive on on perhaps firming throughout. The balance of 2025? I mean, we've seen 20% increases in potash prices since start of the year. Again, we've increased our own domestic price three times, and so as as suppliers are and certainly, buyers in China and India are starting to think about and formulating price ideas. Again, were constructive. So it's it's just to say that phosphate, think, will stay strong. And potash is becoming stronger.

Your next question comes from Hamir Patel from CIBC Capital Markets. Please go ahead.

Hi. Good morning.

Could you speak to the M and A pipeline for retail in terms of the scale of opportunities you're seeing vendor price expectations, And just given your latest tuck ins, do you think you can hit the $2,000,000,000 objective for 2026 with the existing platform? Yeah. No. Thanks, Samir. Yeah. You know, as certainly, as we think about our 2026 target, we believe we're on track there. And we don't think about the couple acquisitions that we did at the start of this year as a necessity to get within that range. We think more about growth proprietary products, about cost savings initiatives, many of which we have already achieved, and we've talked about that in you know, being a year ahead in our $200,000,000,000 SG and A savings. We think about network optimization and we think about, yes, but the potential for tuck ins. And and it certainly gets us gives us confidence in getting the bottom end of our 1.9 to $2,100,000,000 EBITDA range for by 2026 for our downstream business. You know, with some cooperation from, weather and and and commodity prices. So you can find yourself well within that range. But maybe I'll hand it over to to to Jeff to talk about you know, the opportunities that we're seeing in the pipeline and and maybe Mark can talk a little bit about how we're thinking about price expectations.

Yeah. We're, we're we're in that period of the year where we'd be slow on the tuck in side of things. People start into their spring planting season in North America. And so but I do expect to see the opportunities increase as we get through the season, especially as we get to the back half of the year. You know, we wanna be very opportunistic when it comes to tuck ins. You know, in my mind, I've kinda got sweet spot of of what what the tuck ins look like for us. We particularly like to grow in the Corn Belt. If we could find the right opportunities there, I might also mention that we you know, we're seeing the pipeline pick up a bit in Australia as well. We've got we've got a good history of doing tuck ins in that market. But I think you asked a question around valuation as well. We're gonna be very disciplined, valuation of these tuck ins. And, in in my opinion, I think we seen value come down some, over the last eighteen months. So we'll be very disciplined and prudent as we look at these opportunities just as the two we just we just closed.

Just just prior to the spring season. [indiscernible] Yeah. Thanks, Jeff. I don't have a lot to add. I think, Amir, just, you know, to your, to your questions specifically on valuation. I'd say to Jeff's point, we've seen valuations come back in line with where we're comfortable historically. As an example, we continue to see high quality acquisitions in that small to medium sized range. At sort of a six to seven times EBITDA on a pre synergy basis. And as I mentioned, in a prior response, continue to see the levers to be able to take one to two turns of EBITDA out of those acquisitions. With the synergy opportunities that we have. And to Jeff's point, we continue to be quite selective, and there's no predetermined or necessary amount of capital that needs to be deployed to tuck in acquisitions. As Kent said, it's really where is that dollar most prudent. Gonna generate shareholder returns and maximize 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.

Your next question comes from Duffy Fischer from Goldman Sachs. Please go ahead.

Yes. Good morning, guys. Question around crop protection and retail. We've had a number of the producers already come out with their earnings and it seems like pricing has been weaker kind of across the board. So within your business, how difficult is pricing been? Is that part of the down bar chart there from Slide six? Is that something structural, do you think? Or is that just a hangover from the oversupply that we had the last couple of years? Then just the third part of that would be a number of the generics that 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 importers there are going to have to pay a high tariff and maybe price them out of the market? [indiscernible] No. Go ahead, Jeff, please.

Yeah.

No. I I think, and I I think I wrote down both both parts of your question there. If I look if I look at crop protection for the first quarter, obviously, revenue was all 500%. Dictated by weather both in the in North America. And Australia as well, which can drive us there. And if I look at it from a margin perspective in the in the first quarter, we we were off some on margin, but we had planned to be off on margin.

We we anticipated that we would see more pressure, in this crop protection market. And I think that's twofold. Some of it some of it is you know, a a hangover from inventory, that was in the channel. Probably the bigger part of it is, as you just mentioned a minute ago, was is generic pressure. We did see more generics come into this market, especially in North America. I mentioned Brazil earlier, but we had started to see that, you know, twelve to eighteen months ago. I do think that you know? And look. I have no answer on the tariffs and how long they might be around. But we're gonna start to see pricing move up on the generic and we're already starting to see that. From the generic suppliers today. And at the same time, that affect affect the multinationals as well from that standpoint. And so that that could slow some of the flow of generics particularly into this into this North American, market. But, you know, growers have been a bit more selective, this year, been a little bit more pricey, on products as they go into but but that's to be expected. And and, we plan for that going into the year.

We we have a to me, we have a great offset to that, and that's our proprietary products that we offer. In that, in that generic space. We were in a very good position coming into this year and that we had already secured our inventory and headed over, so we're not tariff affected. On the majority of that volume. We've got very good offering in those markets where they wanna go a bit more to the generic side of it.

Ken, I don't know if you had anything. No. I had thank you, Jeff. Yeah. Just just to say that, you know, we have assumed a 4% reduction in margins, for crop protection this year. So then we talk about our guidance range 1.6 to 1.85. There are some assumptions about everything you just described.

To exam.

Yep.

Your next question comes from Jeff Zekauskas of JPMorgan. Please go ahead.

Thanks very much. In crop protection, your proprietary products in the quarter were down about 30%. And your gross profits were down about thirty five. But for your nonproprietary, crop protection, maybe things were down about 10%. Why the difference? 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 nitrogen in in retail? Can you can you talk about how much goes into The United States? And whether that's being penalized in any way by tariffs?

Thank you.

Great. Thanks, Jeff. So I'll I'll hand it over to Jeff Tarcy to talk about proprietary and particularly crop protection proprietary products and over to Chris to talk about China and India, and then nitrogen products and then to Mark to talk a little bit about tariffs. So over to you, Chet.

Yeah. On the prop protection side of it as it relates to proprietary versus nonproprietary and margin, And that that that's strictly a timing and and mix. Predicament we're in right now. As Ken mentioned earlier, we've seen a very robust start to April and May. In our marketplace, and that includes crop protection market as well. In in the first quarter, because of the weather delays that we saw our custom application was down substantial. And any products, whether we move them through, whether they're a a branded product or non branded product. When we're able to put them through our own reach, we have different market structure. For those products as well. And and it's also affected by some of the high the high margin LPI products, adipose and surfactants and such. So if you gotta reduce reduction in volume, it it kinda offsets that whole mark and structures or relates to that. We we would expect to see that, level itself out as we go into second quarter, and we'd see an evidence of that now. I'll pass the question over to Chris in the second part.

Yeah. Thanks, Steph. And, good morning, Jeff. Thanks for the question. Regarding China and India, Capitex have started that engagement on on those two contracts with really being done against the backdrop 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. And so as Ken alluded to, there's some Southeast Asia pricing right now that, that folks are looking to as an indicator and so we're encouraged by by all of those all of those market fundamentals, but really as you go around the world, whether it's North America, what we're seeing in Brazil, Southeast Asia, all steady and sustainable price increases on the back of that good demand some concerns about the production side, and some very constructive commodity prices. With that, Ahmaq, I'll hand it over to you.

Yeah. Thanks, Chris. Good morning, Jeff. So just on your third question, I think the the short answer is on a direct basis. No. Our our retail business is not being directly impacted by tariffs on nitrogen products coming into North America. Obviously, as you know, of the benefits of our downstream retail business is the supply chain, the capabilities that we've set up. And so the integration and the synergies we're able to drive our upstream business in terms of domestic nitrogen supply. Or the ability to source and procure nitrogen from other domestic producers, We're very well positioned for the spring season today and not seeing a direct impact from tariffs. More generally, as both Ken and Chris spoken to on the call, we are seeing North America in a position it's come into the spring on a net short basis for products like UAN and urea. We can see the supply demand squeeze having an impact on prices. So to the extent that that continues, we're gonna see strength in the market, but we're continuing to operate. We're very well positioned for the spring.

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

Yeah. Good morning, guys. Thanks for the time. You deserve some credit, I think, for hitting the synergy target early, and some successful divestitures thus far. Is it too early to put another target on the map for us think about in terms of cost synergies? And just secondarily, what else do you view as sort of a priority to review in terms of being non core? Thanks. Yeah.

Thank you, Steve. Yeah. With respect to what we've achieved to date, and we talked about our hundred million dollar target, and being sort of a year ahead on that target. And to your point, actually, as we look closer at this confidence to do better than that confidence. It's to do more terms of talking about specific numbers, we'll have more to talk about. But at this stage, we're we're assessing that. We're going after some of that. But like I say, we, we do have confidence in our ability do more, and we're encouraged by certainly encouraged by progress today. With respect to our, you know, the review of non core assets, yeah, we that's something that we're looking very closely at. At the moment. We've talked about how we're viewing our Latin American South retail assets and, you know, looking for the market to cooperate with us bit as we, think about divestiture. Albeit not material for us. We talked about the process that we're in as it relates to profragil. And, you know, just going through that process at the moment. We've we've talked about the divestiture of our side of our chairs, which was a passive equity stake that is really not strategic for us. $223,000,000 proceeds that we realized q four of last year and the start of this year.

And, yes, there are some other things we're looking at at the moment that would meet that definition of non core. We're looking at that at the moment, and, yeah, we'll have more to talk about as it relates to you know, again, looking at additional divestiture opportunities. Your next question comes from Ben Thurr of Barclays. Barclays. Please go ahead.

Yes. Thank you very much for taking my question. Want to go back real quick, and had some of that in the prepared remarks. But on phosphate volume, clearly, you had some unplanned outages. That impacted your volumes. But at the same time, we've seen a very strong price, overall in phosphate. I was just wondering as it relates to achieving your guidance after that softer start in volume in 1Q, how confident are you that there is going to be enough demand on the phosphate side just given the prices are? Are you seeing any signs of potential demand destruction because of these prices?

And how should we think about the potential outcome low end versus high end of the guidance? For the volume side in phosphate?

Thank you.

Yeah. Thanks, Ben, for the question. You know, no no challenge, we think, on the demand. [indiscernible] equation that we still see strong demand. And frankly, that's what's translating to the strong price environment As it relates to our own production, yes, we had some production challenges in know, the first half of the year here, weather related, and some other production challenges as well. We're taking turnarounds at both our white Springs and Aurora sites here, May, June, and expecting greater reliability 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 when you put those two halves together, it does give us confidence that we'll be within that guidance range and, hence, having maintained our guidance range.

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

Hi. Good morning. Yeah. I just wanted to go back to the CropChem kind of tariff exposure in retail. So was just wondering, could you size for us out of the 4 and a half to 5,000,000,000 you have there in cost of sales, on the CropChem piece, How would you size, I guess, the exposure tariffs going forward? It for me to purchases of finished goods, intermediate products, assuming that the tariffs remain in place, mean, I understand that this year you've got inventory, so it's probably not gonna impact twenty five. I mean, assuming you have to go through another cycle, I guess, how would you size the impact? And then just lastly, does Nutrien import finished formulations and how large is that? For you if you're doing that?

Thanks.

Well, that's thank you, Lucas, for the question. Yeah, you're right that we have purchased cover ourselves know, for the most part for this year. But yeah, it's also the case that we're watching the trade dispute between China and The US quite closely. [indiscernible] crop protection is obviously a big part of that story. Now a number of those products have been exempted. When we look at the exemption list. And so you know, for those that are accepted, obviously, we're encouraged by that. But there aren't our products that haven't been. So maybe I'll hand it over to Jeff to talk a little bit more about that.

Yeah. So especially if if we're talking in a range of our proprietary products and as you would know, in the proprietary CP side of that, 98% of those products would would be, outside patent life. So they're generic products. You know, we do multisource. Those products. In many instances, we source those active ingredients from from our multinationals. And we also source directly out of China and India as well. From that standpoint. And I think you asked a question, you know, do we do we source finished goods versus active ingredients? And and, yes, we do both on that end of it. So, obviously, we're spending a lot of time right now as we focus. We'll start back this fall. Obviously, on building our inventories back up for the twenty sixth year. And we'll focus very heavily on know, what puts us what puts our growers in the best position going forward. On that. You know, we're we're expecting, we're we're expecting price increases on branded products. Anywhere from five to seven and a half percent And I think on the generic side of the business, I think you could you could probably start with that higher number and and move up.

Ken mentioned that there there are a lot of ingredients that are exempted That exempted still gonna come with with the base 10%. And it's a complicated matter because you you these products are made up sometimes with 10 to 15 different components. And not all of those components are coming out of one of these particular areas. So we're we're spending a lot of time right now We'll spend a lot of time the next sixty days from a diligence standpoint. We're gonna assume know, right now, we'll assume we got tariffs if we work through historic position ourselves going forward on that. But I think the long story short is we're gonna see price increases. We don't, I think this might have been mentioned earlier, We don't see this being material to our earnings for the twenty five year. And where we're experiencing some of these price increase know, our plans to pass those price increases through to our customer.

Your next question comes from David Simons of P and P. Please go ahead.

Go ahead.

Yes. Just one more follow-up on the phosphates business, please.

You talked about sulfur costs hampering the earnings in that business. But if I look at headline prices, I would have thought that would have been passed through So is there is there some kind of timing issue that held back your strip margins in Q1 and meant that sulfur costs were a factor? And how would that evolve into Q2? Thank you.

Yeah. Thank you for the question. David. Yeah. I I would say that the phosphate price at the moment is more a story about supply and demand fundamentals and what's happening on both sides of that equation as opposed to you know, the ability to pass through, cost increases. And you know, sulfur is part of the story. We but, like others, we're 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 is is certainly a story of the latter But maybe, hand it over to Jason Newton, our chief of economist, just to talk a little bit about what we're seeing in the sulfur market. And, yes, some of the impact that we've experienced there.

Hey. Good morning, David. Yeah. As Ken Ken mentioned, we're we're seeing sulfur market fundamentals tightening. We're seeing those tighten in the first half. The year, and Canvas Alter prices in the second quarter, $270 a ton. So a pretty, significant, increase quarter over quarter and and definitely an increase from where we saw sulfur prices. In 2024, which were historically discounted relative to profit prices. [indiscernible] low from a a marginal pause at export cost perspective for producers. Which meant that they were pouring product at block or putting product in inventory rather than exporting. So I've tightened the supply.

And coming into 2025, we've seen strong demand from China. Strong demand from base metal perspective in in Southeast Asia. And so the combination of of reduced export supply and higher demand to support prices We expect that that will start to change as we look toward the second half of the year, and offer prices have remained pretty stable, but supplies are are increasing, and and the level of demand is decreasing. So we expect more normal relationship with phosphate and pricing as we move into the second half. I will now turn the call back Jeff Holzman for closing remarks.

Thank you for joining us today. The Investor Relations team is available. If you have 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.