NYSE:NTR Nutrien Q4 2023 Earnings Report $56.64 +0.17 (+0.29%) Closing price 03:59 PM EasternExtended Trading$54.88 -1.76 (-3.11%) As of 07:57 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings HistoryForecast Nutrien EPS ResultsActual EPS$0.37Consensus EPS $0.72Beat/MissMissed by -$0.35One Year Ago EPS$2.02Nutrien Revenue ResultsActual Revenue$5.66 billionExpected Revenue$5.36 billionBeat/MissBeat by +$300.79 millionYoY Revenue Growth-24.80%Nutrien Announcement DetailsQuarterQ4 2023Date2/21/2024TimeAfter Market ClosesConference Call DateThursday, February 22, 2024Conference Call Time10:00AM ETUpcoming EarningsNutrien's Q1 2025 earnings is scheduled for Wednesday, May 7, 2025, with a conference call scheduled on Thursday, May 8, 2025 at 10:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckAnnual Report (40-F)Annual ReportEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Nutrien Q4 2023 Earnings Call TranscriptProvided by QuartrFebruary 22, 2024 ShareLink copied to clipboard.There are 19 speakers on the call. Operator00:00:00Greetings, and welcome to Nutrien's 2023 4th Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow after 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, Vice President of Investor Relations. Operator00:00:21Please go ahead. Speaker 100:00:23Thank you, operator. Good morning, and welcome to Nutrien's 4th quarter 2023 earnings call. As we conduct this call, various statements that we make about future expectations, plans and prospects contain forward looking information. Certain material assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward looking information. Speaker 100:00:47Additional information about these factors and assumptions Operator00:00:51are Speaker 100:00:51contained in our quarterly report to shareholders as well as our most recent annual report, MD and A and annual information form filed with Canadian and U. S. Securities Commissions. I will now turn the call over to Ken Seitz, President and CEO and Pedro Farrer, our CFO, for opening comments before we take your questions. Speaker 200:01:12Good morning. Thank you for joining us today as we recap our 2023 results and provide an outlook for the business and our strategic priorities for the year ahead. Nutrien delivered adjusted EBITDA of $6,100,000,000 in 2023. We generated $5,100,000,000 in cash from operations, supported by the countercyclical release of working capital in retail. In response to changing market conditions, we took several actions during the year to enhance free cash flow, including a reduction in planned capital and operating expenditures of approximately $400,000,000 We maintained a balanced approach to capital allocation, investing to sustain and grow our assets, and returning a total of $2,100,000,000 to shareholders through dividends and share buybacks. Speaker 200:02:01As the year progressed, we saw increased market stability and strong fertilizer demand in North America, supported by improved grower affordability and extended fall application season and low channel inventories. Demand in key offshore markets also increased in the second half. However, the level of market stabilization varied by product and geography. Prab Nutrien sales volumes for our global retail business increased by 10% in 2023 as growers work to replenish nutrients in the soil. Due to the strength of grower demand in all regions, we ended the year with retail fertilizer inventories down 10% compared to the prior year. Speaker 200:02:44Crop Protection sales volumes and margins in North America returned to normalized levels in the later part of the year, and we continued to be opportunistic in our approach to restocking inventories. In Brazil, we significantly reduced our crop protection inventories in the 4th quarter, but margins remained challenged due to the persistence of higher inventory in the channel. For the full year, Nutrien Ag Solutions delivered adjusted EBITDA of $1,500,000,000 down from the record prior year and well below the level we would view as normalized earnings. We've tightly managed inventory and advanced a number initiatives that position our retail business for growth in 2024 and beyond. One of the areas of growth is our proprietary products portfolio. Speaker 200:03:34In 2023, these high value products contributed gross margin of $1,000,000,000 including increased sales and margins from our proprietary plant nutritional and bio stimulant product lines. Gross margin for our crop nutritional products has grown at an annual rate of 15% over the last 5 years, and we plan to continue to invest in our supply capabilities through differentiated product offerings and expanded manufacturing capacity. We completed a number of tuck in acquisitions in 2023 and will pursue targeted opportunities in our core markets going forward. As it relates to Brazil, the long term prospects for agriculture are positive, and it remains an important crop input market for Nutrien. In the near term, our focus will continue to be on the integration of recent acquisitions and optimizing our cost structure in this market. Speaker 200:04:31In potash, we delivered adjusted EBITDA of $2,400,000,000 in 2023, down from the prior year's record due to lower realized prices. North American sales volumes increased significantly in the second half of the year, supported by low channel inventories and a strong fall application season. We utilized our network flexibility to increase granular potash production and position products across our distribution channel in anticipation of higher seasonal demand and prices in North America. Our offshore potash sales volumes also increased in the second half of twenty twenty three, driven by stronger demand in Brazil and China, while net realized prices were impacted by lower global benchmarks and higher logistics costs associated with outages at Canpotex's export terminals. Our potash controllable cash cost of $58 per ton was flat year over year, demonstrating our focus on maintaining a low cost position. Speaker 200:05:32We advanced mine automation products that enhance productivity and safety, increasing our annual potash ore tons cut using autonomous mining technology by 40% in 2023. Turning to nitrogen, we generated 1,900,000,000 dollars in adjusted EBITDA in 2023 as lower benchmark prices more than offset lower natural gas costs compared to the prior year. We completed major maintenance turnarounds at our Geismar and Borger plants in the second half and initiated actions at our Trinidad facility that are expected to support higher operating rates going forward. We completed our Phase 1 GHB abatement program in 2023, which will be a key contributor to reducing greenhouse gas emissions. This included a carbon capture project at Redwater that increased our low carbon ammonia production capability to 1,200,000 tons. Speaker 200:06:31In phosphate, we delivered full year adjusted EBITDA of $470,000,000 and focused on operational efficiency and product mix opportunities that enhance margins and cash flow. We completed maintenance turnarounds at our Aurora and White Spring plants that enabled higher operating rates in the second half and are expected to support increased volumes in 2024. To summarize, following a period of unprecedented market volatility, we are encouraged by the increased market stability and recovery in demand that occurred in the second half of twenty twenty three. During this time, we focused on initiatives that strengthened our core business, maintained the low cost position and reliability of our assets, and positioned the company for growth in the years ahead. Now turning to the outlook for 2024. Speaker 200:07:26Global grain stocks to use ratios remain historically low as tightening supplies of wheat and rice have offset increased corn production in the U. S. And Brazil. Crop prices have declined from historically elevated levels in 2022, but lower input prices have resulted in improved demand. In North America, we witnessed the strength of fertilizer demand during the fall season, and it has carried through to healthy grower prepay commitments and a strong seed order book for spring planting in 2024. Speaker 200:07:58In Brazil, there is some uncertainty over safrinha corn plantings in 2024. However, soybean acreage is projected to expand and we anticipate seasonal strength in fertilizer imports during the 2nd and third quarters. For potash, we expect the global demand will continue to recover towards trend levels in 2024, with shipments projected between 68,000,000 to 71,000,000 tons. In North America, we are seeing strong potash demand ahead of the spring application season as channel inventories were tight to start the year. We expect increased potash demand in Southeast Asia driven by lower inventory levels and favorable economics for palm oil and rice. Speaker 200:08:43China's potash consumption was estimated at a record of approximately 17,000,000 tons in 2023, supported by strong affordability and is a part of a long term strategy to increase domestic food production. In 2024, we expect lower potash imports in China compared to the record in 2023, but for consumption to remain historically strong. Global nitrogen markets continued to be impacted by regional supply constraints, changes in natural gas prices and seasonal buying patterns. These impacts have been evident to the Q1 as ammonia prices have seasonally weakened, while global urea values have strengthened in response to increased demand ahead of the spring season. The U. Speaker 200:09:29S. Nitrogen market is currently tight and net import volumes were down significantly through the first half of the fertilizer year. North American natural gas prices remained very competitive compared to Europe and Asia, and we are well positioned to supply our customers this spring. I will now turn it over to Pedro to provide more detail on our guidance assumptions and capital allocation plans for 2024. Speaker 300:09:58Thanks, Ken. As disclosed in our earnings release, we have revised our guidance practice in 2024 to focus on providing forward looking estimates that we believe are of value to our shareholders and are less impacted by changes in fertilizer commodity prices. We continue to provide guidance for retail adjusted EBITDA, fertilizer sales volumes, key financial modeling, variables and pricing sensitivities. We have also provided adjusted EBITDA scenarios for our fertilizer business in our earnings presentation posted on our website. For retail, our full year adjusted EBITDA guidance is $1,650,000,000 to 1,850,000,000 The midpoint of this range represents an increase of approximately $300,000,000 compared to last year, driven by increased gross margins in all major product lines. Speaker 300:10:53We expect crop nutrient gross margins will be supported by higher sales volumes and per ton margins, in particular compared to the compressed levels in the first half of the prior year. Further underpinning this growth is the continued the continued expansion of our proprietary nutritional and bio stimulant product lines. In Brazil, we expect increased crop input sales volumes in 2020 4 and an improvement in crop protection margins in the second half of the year. Our annual potash sales volumes guidance of 13 to 13.8 tons assumes demand growth in offshore markets and a return to more normal operations at Canpotex ports in 2024. In North America, based on strong participation in our winter fuel program, we expect higher first quarter sales volumes compared to the prior year and a typical pricing reset compared to the Q4 of 2023. Speaker 300:11:52Mine automation and other efficiency related initiatives are expected to keep our potash controllable cash cost of production similar to last year. Nitrogen sales volumes are projected to increase by approximately 500,000 tons at the midpoint of our guidance range, supported by higher operating rates at our U. S. And Trinidad plants. We assume Henry Hub natural gas prices will average around 2.5 per MMBtu and our Alberta nitrogen plants will benefit from the typical discount to Henry Hub. Speaker 300:12:30Total planned capital expenditures of $2,200,000,000 to $2,300,000,000 is down approximately $400,000,000 compared to 2023. This includes approximately $500,000,000 of investing capital on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio, drive retail network optimization and enhance our digital capabilities. In addition, we will continue to be opportunistic on tuck in acquisitions in our core markets. The majority of the planned investment capital in our operations is focused on mine automation projects in potash and low cost brownfield expansions in nitrogen. Speaker 300:13:20We continue to target a stable and growing dividend. With the increase approved by our Board of Directors yesterday, Nutrien's dividend per share has increased by 35% since the beginning of 2018. Similar to the past, we will evaluate the potential for additional shareholder distributions as the year progresses. I'll now turn it back to Tim. Speaker 200:13:43Thanks, Pedro. As we look ahead to 2024, we expect increased crop input market stability and demand, providing the opportunity for Nutrien to deliver higher fertilizer sales volumes and growth in retail earnings. We will continue to prioritize strategic initiatives that enhance our ability to serve growers in our core markets, maintain the low cost position and reliability of our assets and position the company for growth. We are hosting an Investor Day in New York on June 12, where we will provide more details on the strategic priorities across our integrated business, so watch for more details on this event over the next few weeks. We would now be happy to take your questions. Operator00:14:28Thank Your first question comes from the line of Steve Hansen from Raymond James. Your line is now open. Speaker 400:14:56Yes. Good morning, guys. Thanks for the time. I was hoping you could dig into your outlook on the Southeast Asian demand profile for potash in particular. It's been one of the weaker price points in the market for the past year or so, but you've described some good economics supporting demand. Speaker 400:15:11I'm just trying to get a sense whether you've got good visibility into that, whether you've seen order flow or what kind of sort of outlook you have there that gives you that confidence? Speaker 200:15:20Yes. Good morning, Steve. And indeed, when we say 68,000,000 to 71,000,000 tons for 2024, Southeast Asia is certainly a part of that story. And it's owing to a few things. 1, inventory levels are low in Southeast Asia entering the year. Speaker 200:15:36And 2, looking at about a ringgit ringgit per ton price for palm oil, that makes the economics of palm oil given where crop input prices have gone, that looks favorable. So low inventories and improved economics in Southeast Asia makes that 68,000,000 to 71,000,000 tons. We think that, as I say, Southeast Asia is going to play a meaningful role in that. I'll hand it over to Mark and maybe Mark can just talk to some specifics around numbers. Speaker 500:16:10Yes. Hey, Steve. Good morning. So just to reiterate a few of the things that Ken mentioned. I think in Southeast Asia, actually, we've had 2 years in a row of consumption and shipments that would be less than normal. Speaker 500:16:23So we've got inventories that need to be restocked. And I think throughout the process of 2023, we saw high cost inventories get work down and are coming into 2024 in a much better position. As Ken mentioned, there are attractive economics in Southeast Asia for palm oil. Rice is a part of that picture as well. That's playing a role that we think will lead to a positive rebound in demand there. Speaker 500:16:48And if you look at our global picture in terms of where we expect demand growth to come from in 2024, Southeast Asia is actually the biggest single contributor to that. At the midpoint, we've got Southeast Asia up by about 2,000,000 tons from a shipment standpoint and are optimistic based on what we've seen moving through the Q4 of 2023. And so far in Q1, we understand there's been solid movement and good shipments into Southeast Asia. So overall, as Ken said, we're positive and constructive on what we expect to see from Southeast Asia this year for Operator00:17:25potash. Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open. Speaker 600:17:36Good morning. Let's talk about free cash flow and the buyback and capital allocation. Can you talk about do you see free cash flow being similar in 2024 of 2023? You re upped your authorization in the month, although you didn't really do a lot of the buyback under the prior authorization. You had a lot of buybacks in Q1 under the prior prior authorization. Speaker 600:17:59So I'm trying to get a sense of do you think that your buyback on 2024 will be similar to 23 in terms Operator00:18:07of total Speaker 600:18:07numbers, even understanding that it was heavy Q1 early Q1 'twenty three under the prior authorization. And where that plays out authorization, really maxing out as Speaker 700:18:19much as you can do Speaker 600:18:19for buyback versus other things like maybe doing some more opportunistic M and A in the U. S. Or Brazil for retail, for example? Speaker 200:18:28Good morning, Joel. And yes, thank you for the question. So with respect to 2024 free cash flow, obviously, as we've talked about, we've made some changes to our capital program and we've brought down some of those investing dollars and getting highly focused on the things that we talk about like proprietary products in retail, like network optimization, like our digital investments. And yes, we will absolutely continue to look at opportunistic tuck ins in North America and Australia. We have a history of those things and the economics for those things continue to prove out. Speaker 200:19:06So we'll always look at those, focusing on mine automation and reliability projects and finishing off some of the debottlenecking and brownfield investments That's our focus from a capital point of view. As it relates to the year, there's a number of moving parts on we saw the working capital give back in the Q4 of last year. We're expecting from a cash conversion point of view to go back to more sort of normalized levels of about 70%. So, you put that all together and it says, well, let's see now how the year unfolds. We've just come out a period of unprecedented volatility and markets are stabilizing, we're rich in potash returning to sort of trend level demand. Speaker 200:19:48These are all good signposts. But as it relates to the opportunity for continued distribution through share buybacks, we're always going to look at that. That's why we renewed the NCIB and but it's a matter of watching how the year unfolds now. Operator00:20:09Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open. Speaker 800:20:16Yes. Thank you. Good morning, everyone. I was hoping to maybe ask about the nitrogen business and your own outlook for improved production and reliability in 2024. 1 of your North American peers has alluded to weather issues impacting production in January because of weather. Speaker 800:20:40Did you face any similar issues? And help us think about, Speaker 200:20:45given the capital invested Speaker 800:20:48in recent years to increase the capacity that hasn't really come through in terms of production and sales volumes, why we should have confidence that this year you're going to start to see the benefits of those actions, especially where you just took an impairment on the Trinidad business? Speaker 200:21:08No, that's great. Thank you, Adam. And yes, we have made a number of investments across the network to improve reliability. And certainly for the absolute majority of our plants, we're really happy with the way they're running. We continue to assume that we're going to be curtailed on gas in Trinidad. Speaker 200:21:27That's part of the story for 2024. But the things that we can control, we do have a number of in flight projects that give us confidence on improving reliability. And I'll hand it over to Trevor Williams, our Head of Nitrogen and Wodspace to talk about that. Speaker 900:21:41All right. Thanks, Ken, and thanks for the question, Adam. And I'll take you back to our Q3 earnings call. And we communicated that we're taking several kind of proactive steps to address some of the reliability challenges that we had at a couple of our facilities. Just to bring it back, these actions included pulling forward a couple of major turnarounds at our facilities, as well as returning to operation in one of our previously idle facilities or sites in Trinidad, which really allows for greater overall operational flexibility, as well as having the ability to more effectively manage through the impact of some of the gas curtailments and things that we've seen in Trinidad. Speaker 900:22:23And finally, with respect to the in the Trinidad area is also provide a little bit more flexibility in terms of being able to provide some increased capacity utilization as we execute turnarounds on the island. Now, while these outages did take a little bit longer than expected to complete, I'm really happy to be able to share that since returning to the plants back to operation, they've been running extremely well. Finally, I just want to comment or kind of highlight a couple of other things that across our North American fleet, obviously excluding where we did the pull forward turnaround in Borger. The remainder of our assets in North America ran at 100% capacity utilization across the quarter. And it is really the result of the investments that we've put in terms of reliability in those sites, as well as completing some debottlenecks. Speaker 900:23:15We did some brownfield debottlenecks specifically at our Geismar facility. That facility is now running at full capacity at those debottleneck rates. And then finally, really the work that the team has done really focusing on how do we continue to run our assets efficiently and effectively. Now as a result of that, and Ken alluded to it, that really is giving us the confidence as we move into 2024. And as you'll see from our guidance range, we've added almost 500,000 tons into our production forecast as we move into 2024. Operator00:23:49Your next question comes from the line of Ben Isaacson from Scotiabank. Your line is now open. Speaker 1000:23:55Thank you very much and good morning everyone. When we look at the retail, how should we think about crop protection? Is that a threat or an opportunity? Can you run through how the challenges have evolved? Is it region specific, as you mentioned, in South America? Speaker 1000:24:13Is it structural or cyclical that can be cured with inventory destocking? Should we think about it being more volatile going forward? Just trying to understand how you see the CP business. Thanks. Speaker 200:24:25Yes. Good morning, Ben. Thank you for the question. So we certainly see crop protection as an opportunity. And I would say the challenges at the moment are really quite regional as it relates to Brazil. Speaker 200:24:36But I'll hand it over to Jeff Tarsi to provide some color. Yes, Ben, hey, thank you for Speaker 1100:24:41the question. And when I look at the Crop Protection business, if I look and Ken mentioned in his commentary, we saw a lot of pressure in the 4th quarter as retailers in Brazil continue to liquidate their inventory there. We feel like we're in a really good position on our inventory going into 'twenty four. And I think we've talked about it quite a bit that we expect to see significant improvement in the back half of the year in the crop protection market in Brazil. If I look at North America, I'm actually quite pleased with where we ended the year from a crop protection margin standpoint. Speaker 1100:25:16We were just under 25% and that's historically in line with where we are generally on property protection margins and the same for Australia. So I see you asked a question, how do we see it going into 2024? I see it as an opportunity, particularly from a Brazilian standpoint that we should see a lot of recovery there from a margin standpoint. And in North America, look, we're in really good position from an inventory standpoint. If I look at it year over year, our inventories were down about $400,000,000 on the Crop Protection segment. Speaker 1100:25:53So this gives us a really nice leverage with our suppliers. We were very opportunistic in the Q4 on our purchases on property protection, which sets us up really well going into 2024. Operator00:26:10Your next question comes from the line of Jacob Bout from CIBC. Your line is now open. Speaker 300:26:16Good morning. Speaker 1200:26:19In the past, you talked about mid cycle EBITDA of kind of $7,000,000,000 to $7,500,000,000 I think you're referring to be able to achieve that by 2027. A couple of questions here. Maybe just talk through what pricing looks like today versus what your mid cycle expectations are? And do you think that this is still attainable by 2027? Just talk through what your expectation on potash volumes would have to Speaker 700:26:48be for that to happen? Speaker 200:26:51Yes. Thank you, Jacob, for the question. So, yes, we do think it's achievable. It's really going to a few things. We talk about returning or advancing this year toward more normalized or normal margins within retail this year. Speaker 200:27:08We have our guidance range, but we would call that in the mid cycle more close to $1,900,000,000 to $2,100,000,000 coming out of our retail business. And that's also owing to the organic growth that we cite, in proprietary, our network optimization, work digital, and it gives us confidence in that range. We also talk about the investments that we've made in potash, so that we have the ability to add 1,000,000 or 2,000,000 tons compared to 2023 levels that are going to that gives us the confidence in this growing market to deploy those tons. And then we also talk about the things that Trevor Williams just cited and ongoing investments in debottlenecking and brownfields that allow us to add 1,000,000 to 1000000 and a half tons of nitrogen. So from a volume perspective, yes, prices I'll hand it over to Mark to talk about pricing, but what we would see in the mid cycle is certainly pricing a bit above where we see prices today. Speaker 200:28:07But Mark, over to you. Speaker 500:28:08Yes. Thanks, Ken. Good morning, Jacob. So, yes, I think Ken covered the retail portion of that and the path to mid cycle EBITDA and retail's role in that and the volumes really well. So, just on price, in that scenario, on an approximate basis, to feed that $7,000,000,000 to $7,500,000,000 of EBITDA, we would call potash in that scenario about $400 per tonne, both globally and within North America. Speaker 500:28:33Within North America, quite close to that number today, but internationally, obviously, we're well below that. And so we do have a gap there. But with the fundamentals improving that Ken talked about and the time horizon in front of us as demand improves, we certainly see a path there. From a urea standpoint, our assumption is also about $400 a short tonne. And so again, we're not that far away from that today. Speaker 500:28:57And as we look at in season pricing and the strength that we expect in urea this year, we do see positive fundamentals. And from an ammonia standpoint, looking at the Tampa benchmark, it's about $500 a tonne. And again, this year, we expect to see constructive outlook for ammonia, some in year volatility, but all of those prices we continue to believe are quite reasonable. And when you go back to our assumptions for why that's the case, it's the factors that we've seen change fundamentally the last few years in terms of inflationary impacts, changes in trade flows, changes in energy prices, all of those things feeding into a structurally higher fertilizer price deck over time. Operator00:29:41Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open. Speaker 1300:29:49Hey, good morning. Thanks for taking my questions. So just first on the potash markets, they seem to have had what seems like a bit of a slow start, but affordability looks good and both European and some Mosaic calls for higher year over year demand growth. So I guess my question is like what catalysts are we looking for to kind of get the market moving a little bit more here? And what's your outlook on prices? Speaker 1300:30:13And then just secondly on potash production like Mosaic, they announced a curtailment at Calonne, would that be something that Nutrien considers as well just given your outlook versus your operating capacity? Thanks. Speaker 200:30:26Thanks, Andrew. And I'll hand it over to Mark here to maybe go market by market. And what we're seeing sort of on the ground certainly as we head into the planting season in the Northern Hemisphere and then balance the world. But in the U. S, we've talked about the very strong qualification season and strong prepays heading into the spring planting season. Speaker 200:30:50Actually, Jeff and I are talking about strong seed sales as well. And so things are pointing to a strong year in North America once again. Brazil, while it's been some weather challenges there, we think we're probably experiencing some seasonal softness in pricing and Q2, Q3, we expect that prices there could be some firming in that part of the world. For Australia, the farmer is in good shape at the moment. We would say that yields and price for the last few years have been strong, albeit now some risk associated with El Nino. Speaker 200:31:30So for the markets where our retail business, as we see, we see pretty strong on the ground fundamentals and we are anticipating normal application rates. Maybe for the rest of our distribution and market to market, I'll hand it over to Mark. Speaker 500:31:45Sure. Thanks, Ken. Good morning, Andrew. So, yes, I think as Ken said, we're entering 2024 with potash showing greater price stability, attractive pricing levels for growers and really the need to rebuild inventories and soil potassium levels after the last 2 years in a number of key markets. And I think an important factor here is that in 2023, we would estimate that consumption in aggregate for potash across the world was actually higher than shipments. Speaker 500:32:14So that resulted in an aggregate drawdown in inventories in our view. So these factors are supportive of our expectation for shipment growth to that range of 68,000,000 to 71,000,000 tons in 2024 that we've talked about. So when we actually look across most global markets today, we do see a general trend of potash inventories being in a balanced to tight position. The exceptions to that would be Brazil and China, which both are estimated to build some inventory on a year over year basis. But that was on the back of extremely strong consumption and record imports in both of those markets in 2023. Speaker 500:32:49So those are the dynamics that are shaping our view of 2024 demand and we see the strongest growth potential in 2024 in those markets where inventories are historically tight or where below needs applications have left soils more depleted. Those markets, maybe just to dive into it in a little more detail, that we would expect to grow, which we've provided in our outlook presentation, would be Southeast Asia, Europe, India and Latin America outside of Brazil. And really, as we've talked about earlier in the call today, Southeast Asia is the largest of those and Europe is a meaningful contributor to that as well. So I think just to reiterate, kind of touch on a few key markets. Southeast Asia, we see about 2,000,000 tons of demand growth at the midpoint. Speaker 500:33:36That actually wouldn't get us back to historical trend levels. And after the last 2 years of under applications, we see that being reasonable. And again, for the reasons we talked about, supportive in country economics on palm oil in Southeast Asian countries and rice, the impact of El Nino being less severe than originally feared and depleted inventories in that market. So we think there's a good setup there. Europe, I mentioned, is another market where we see growth. Speaker 500:34:04At our midpoint, we would have about 1,000,000 tonnes of growth in potash shipments into Europe in 2024, which again would represent a strong year over year improvement, but not a full recovery back to trend levels. And for many of the reasons that we just talked about in Southeast Asia, application rates there have been low for the past 2 years due to the volatility in prices and actually challenges for supply into the region. So it does appear that we're poised for a rebound in Europe and supportive weather looks like it could set up to an earlier start to spring application in that market. Maybe just to turn to Brazil and China. And these are the 2 markets that really surprised to the upside. Speaker 500:34:47In the second half of twenty twenty three, we saw record imports into both of those markets last year. And it's important to note that in both cases, consumption was estimated to be extremely strong, which was the primary driver behind the large growth in shipments in those markets in 2023. If we look at Brazil, we estimate that inventories entered the year about 700,000 tons higher than they entered 2023. As Ken touched on, some poor growing conditions and adverse weather impacted demand and sentiment to start the year. But in recent weeks, we understand that inquiries and buying interest in the country have increased and the expectation is that buyers will be positioning as we move into Q2 and prepare for the next major planting activity in Q3. Speaker 500:35:33And that market is supported by attractive prices distributors and growers. We would expect shipments to be roughly similar to 2023 in 2024, but we do expect that consumption is going to increase assuming supportive weather. In China, Operator00:35:54imports are anticipated to have Speaker 500:35:54reached a record in 2023. We saw extremely strong demand emerge in the second half of twenty twenty three. And I think again important is that we would estimate the majority of that increase on a year over year basis went to the ground. Domestic consumption was estimated to be at record levels. And we do believe that Chinese inventories were up by about 750,000 tons to start the year. Speaker 500:36:16But to put that in context, we would look at imports being up by 3,700,000 tons. So again, consumption was very strong and we believe there continues to be a strong policy incentive and economics incentive supporting potash demand in China. Given the comfortable inventory levels that we see in that market and the trade flow shifts we've observed over the past 12 to 18 months, we would expect limited engagement in the near term on a new contract. And the midpoint of our shipment and volume guidance doesn't assume an imminent settlement in China. So overall, we would say that Chinese shipments we expect at our midpoint would decline by about 2,000,000 tonnes in 2024, but we do expect consumption to be strong in that region. Speaker 500:37:00And then lastly, just around things out in North America. North America, like some of the other markets we've talked about, entered 2024 with historically low inventories, following very strong demand in both the spring and the fall of 2023 where that product went primarily to the ground. And this set us up for what was a very positive response to our fill program in the Q1 of 2024 here. And we've been very, very pleased with what we saw. And as a result, we would expect, as Ken mentioned in his opening remarks, to see stronger domestic shipments in Q1 of 2024 versus Q1 of 2023. Speaker 500:37:38So with the values of potash relative to nitrogen and phosphate at attractive levels combined with solid expectations for U. S. Acreage, we see North America as a constructive backdrop and shipments relatively similar to 2023 2024. So we step back from each of these markets. And overall, we see a setup for demand to grow again in 2024 and a backdrop of more normalized and balanced supply, which should incentivize further recovery and growth in global consumption. Speaker 200:38:07Great. Thanks, Mark. And with respect to your second question then, Andrew, on curtailments, we have sized our network for 2024 to meet our range our guidance range. In other words, our expectation of the needs of our customers. And we'll always meet the needs of our customers. Speaker 200:38:28We'll always look at where we plan to land within that range depending on how the year unfolds and everything that Mark just described. And we have obviously well established channels all over the world. We're in touch with those customers every day. And so, yes, we will set up our network, our 6 mines in a flexible way to meet the needs of our customers. And that's based on reliance on the needs of the grade splits as well, whether it's standard grade markets, as Mark just described, and what's going on in China or whether it's granular markets in places like Brazil and North America. Speaker 200:39:03So we've got the flexibility to shift back and forth between those 2 as our customers call for volume, but again, we'll always seek to meet the needs of our customers. Operator00:39:16Your next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open. Speaker 500:39:23Thank you and good morning everyone. Wondering if we can just speak Speaker 400:39:25a little bit more on the potash supply as well as the potash price outlook. Obviously, all your points are well taken on the demand and shipping side of the equation, but we continue to see potash prices drifting lower in most markets. So what do you think causes the price to start flattening out? And is there an opportunity for prices to actually increase in 2024 or should we be anticipating this just to be a year of strong volumes, but prices continuing to leak lower? Speaker 200:39:58Yes. Thanks, Vincent. And yes, we do see potential for firming of potash prices and a lot of it has to do with we estimate that the marginal cost production for potash is up about $50 and there's inflationary pressures for potash producers, but there's also just increased challenges with logistics. And of course, you know what they are, whether it's rail in through Russia and the North China, we're now with some of the challenges shipping through the Red Sea. That's all adding cost. Speaker 200:40:30And so, again, we look at the cost curve and so we said that last ton to produce that last ton could be up by about $50 We're also in some markets experiencing some just some seasonal weakness. So you combine the seasonal weakness with the notion that it's just more expensive these days to move potash around to produce and move potash around. And yes, we do think that there is potential opportunity for some strengthening here in 2024. Obviously, demand returning this year to trend levels or on trend levels, 68,000,000 to 71,000,000 tons. And as we look at how that's going to get supplied, it's really owing to 3 parts of the world. Speaker 200:41:19It's FSU production, which those volumes are for the most part back in the market, and we expect some incremental volumes from FSU coming back in 2024. We expect some additional tons coming out of Laos, which we've assumed is going to be in the market in 2024 as well. And then there's Canadian production, our own production, which we think is going to make up some of the difference as well. So, it's really those 3 producing regions are going to play the role in meeting demand, increasing demand here in 2024. Overall, for all those reasons, we call it a relatively balanced and stable market. Operator00:42:03Your next question comes from the line of Richard Garchituraianna from Wells Fargo. Your line is now open. Speaker 1400:42:10Thanks and good morning. My question is on the CapEx reduction. So this year, you're going to be spending roughly $400,000,000 to $500,000,000 less than 2023. Looks like the bulk of that is going to be cut from the investment for growth CapEx. So just wondering, what has changed this year versus last year? Speaker 1400:42:32Is it a function of your budget scheduling for the expansion plans for the mid cycle scenarios? Or are you tweaking the budget down just to conserve cash? And also just going forward, is $2,200,000,000 to $2,300,000,000 a good level to think about going forward in a normalized environment? Thank you. Speaker 200:42:56Great. Thanks, Richard. So, a lot of it has to do with just ongoing and increasing focus on our iConviction opportunities. We've made investments in our wholesale business that provide us with flexibility and capacity now to meet the needs of customers and to continue to grow. And we feel good about that. Speaker 200:43:18And we continue to target those high conviction opportunities in retail, proprietary, network optimization, digital and of course again always looking at talking opportunities. I'll maybe hand it over to Pedro just provide some more color on how we think about CapEx levels going forward. Speaker 300:43:37Yes, I think and good morning, Richard. I think what we are looking of course, we kind of mentioned before there were a few investments in sustained capital that were related to end of life and we were continuing those for a couple of years, but we think those already kind of baked in into this year and we continue with the strategies that Ken just mentioned in terms of primarily in retail. We one of the uses of our CapEx in the past as well has been the expansion of network in Brazil. We decided to put that on pause as we integrate the past acquisitions that we had made, as well as the further maturing of all the acquisitions we have made in the U. S. Speaker 300:44:27Here. So, we think that this level of CapEx not only provides us the opportunity to sustain all of our assets and deal with some of the end of life situations we have mentioned before, but also gives us the opportunity to invest in the critical areas, particularly in the proprietary products in the future. Operator00:44:55Your next question comes from the line of Steve Byrne from Bank of America. Your line is now open. Speaker 1500:45:02Yes, thanks. I'd like to get back to Jeff Tarsi's comment about gross margins in Crop Chems nearly 25 percent. Your revenues of Crop Chems are almost $7,000,000,000 I mean that's nearly a Corteva business. And I'm just curious with respect to those margins, what fraction of your crop chemical sales are your proprietary brand? And within that, is there a portion of it that you're starting to get your own registrations where you can import the active ingredients and really have a nice margin on it. Speaker 1500:45:50Just curious on your outlook for that gross margin in the coming years. Speaker 200:45:55Yes. No, thank you, Steve. And I'll hand it over to Jeff Tarsi. But we are pretty pleased with the role that proprietary plays in those margins and that's been growing for us. But overall, for 2024, as we think about that 25% and the split then between proprietary and our branded products, yes, Jeff Tursey can certainly provide more color on that. Speaker 200:46:29Yes, Steve, good morning. And as Speaker 1100:46:32you know, our proprietary business has always been a very strong part of our retail business environment. And from a crop protection standpoint, we run somewhere between 30% to 35% from a proprietary line of products versus our branded product line. And we haven't seen that. I mean, we kind of kept that pretty much in line. If you would look if you look back in 2023 and of course, a lot of those products as you would know, a lot of those products in our proprietary Loveland products line would be products that are all patent or post patent. Speaker 1100:47:10And so if you look in 2023, we would have seen a lot of pressure actually in that side of the business, especially around products like glyphosate, glufosinate, paraquat and clepidem. We expect to see a really nice recovery in that area coming back in 2024. And you're right, we do have a very large crop protection, but we still think that we have we think that we have a room for growth in that crop protection line. You've heard Ken and you've heard Pedro mentioned the importance of our proprietary product business for us. And as a matter of fact, in our 20 24 budget, we've got about 17% increase in gross margin projected for 20 24. Speaker 1100:47:54And some of that have come into crop protection side of the business. Probably more importantly is what we plan to do in our crop nutrition and our bio stimulant sector of that business as well. Whereas Ken said, we've had double digit growth. So I think crop nutrition were up 10% last year and our bio stimulant business was up over 20% last year. So yes, crop protection is very important for us. Speaker 1100:48:20It's also very important from a standpoint that it's a carrier for our adjuvants and surfactants, which are high margin products for us. And we saw just under a 10% increase in that segment of our business last year as well. From a registration standpoint, we've got some registrations in our portfolio. I don't know that we've got a strategy right now, greatly increasing those registrations Operator00:48:48going forward. Speaker 1100:48:49As you know, we work very closely with the multinationals and from a life cycle standpoint, as some of those products start to come out patent, then we've got an opportunity to bring those products into our proprietary portfolio. Operator00:49:07Your next question comes from the line of Jeff Zekauskas from JPMorgan. Your line is now open. Speaker 500:49:15Thanks very much. Speaker 1600:49:17When logistics costs for shipping potash rise, who's penalized by that? That is net, do your profits decrease because you're responsible for their shipping costs? Speaker 200:49:38Or do you split it Speaker 1600:49:39with your customers? Or if you had to quantify what the effects were, what would they be? And secondly, are you hedged in natural gas prices for the Q1 and for later in the year or no? Speaker 200:50:02Yes. Thanks, Jeff. So as it relates to logistics costs, I'll hand it over to Jason Newton. But we really think about our business in terms of the cost curve and we think about that on a delivered cost basis and in commodity space that we're in. So, yes, as you would look at the supply and demand fundamentals and we've talked a lot about that. Speaker 200:50:24But ultimately, you can look at the floor that marginal ton, well, that ton includes we think about that on a delivered basis, what's happening with logistics cost. But Jason, over to you to provide more color. Speaker 1700:50:45Yes, thanks. Good morning, Jeff. Yes, when we're looking at logistics costs, I'd say there's short and medium term implications of that and both from a supply and demand and pricing perspective to Ken's point on the cost curve. So in a market like we're in today where we're pressing down and certainly in the Asian markets and in Brazil to prices that are near the cost base floor, any increase in the cost of freight from marginal regions is going to support the cost floor and ultimately provide support to floor prices. The other impact that you can see, especially as freight rates increase and as we're seeing today with the issues in the Red Sea, you see differentials change and so it impacts trade flows and we know when fertilizer trade flows are disrupted, that tends to tighten supply demand balances. Speaker 1700:51:43So as we're looking at the flows east west from the Baltic into Southeast Asia, for example, we know those costs have increased. And especially from Belarus, the cost reduction and inland logistics relative to pre sanction levels are significantly higher and we're pressing down toward those costs landed into Southeast Asia today. Speaker 200:52:06Thank you, Jason. Yes, with respect to our hedge position on gas, it continues to be the case that we enjoy our cost advantage When you look at the delta between European gas pricing, which albeit has come off significantly from previous highs and today we put it sort of $8 to $9 But back here in North America, dollars 2 to $2.50 we're paying for natural gas. So again that advantage cost position given our geography. But in terms of our hedge position, we're laying the hedge at the moment, but I'll turn it over to Pedro. Speaker 300:52:40Yes. Thanks, Jeff. We what we do with the hedging, we tend to be very more contractual in the hedging. So we are looking into kind of a basically format some of our contracts with hedges for the remaining of the year, but we have some firm commitments and taking advantage of the existing low prices in the market. But we're not adopting multiyear hedge kind of a position on that point. Speaker 300:53:17So those are more contractually related for the balance of the year. Operator00:53:26Your next question comes from the line of Edlain Rodriguez from Mizuho. Your line is now open. Speaker 1800:53:33Good morning. Thank you everyone. I mean just a quick one on corn prices. Again, below $5 is that a concern for the industry in terms of whether farmers will be willing to pay higher fertilizer prices? I mean, I understand that that corn price is higher than historical norms, but I also understand it's a psychological number for farmers. Speaker 1800:53:57Like how do you think this plays out if corn prices stay at those levels? Speaker 200:54:06No. Thank you, Edlain, for the question. And we're obviously watching corn prices very closely, but I'll hand it over to Jeff Tarski to provide some color on your question. Speaker 1100:54:15Yes, Elaine, thanks for the question. And look, while crop prices have declined on the same side of the sheet, input price have declined as well, especially as it relates to corn. When I look at it, number 1, if you look in the North American market, the U. S. Market, most of our corn in the Midwest is on a rotational basis. Speaker 1100:54:39That's a corn followed by soybeans and those growers don't break out of those rotations. Secondly is they're planning the best germplasm and this germplasm takes a lot of horsepower to produce the type yields that it's able to produce. And so when growers commit, if I look at our seed bookings today, as Ken mentioned earlier, they're very healthy. And growers still want to plant the best genetics, the best trait packages. They're not going to put that seed in the ground and not give it to horsepower and nutrient it needs to produce a full yield, because when you get in these situations like we're in right now with lower prices on it, then without a doubt yield now becomes king. Speaker 1100:55:22You have to produce yield in order to make it work. And I think it's pretty reflective as well as we went into our fall, our fall fertilizer application was up 15%, very heavy fall. That's very strong indication of grower sentiment and what they're thinking. And our prepay was very strong as well and a lot of that prepay went toward purchasing fertilizer for 2024. So I think once the seeds in the ground, growers are going to be committed to given it all the inputs it needs because again, it's going to be really key to produce high yield in this type of environment. Speaker 1100:56:01Operator, we have time for one more question. Operator00:56:05Thank you. Your last question comes from the line of Aaron Ciccarelli from Berenberg. Your line is now open. Speaker 700:56:12Hello. Hi, team. Thanks for taking my question. I would like to ask you, if you can be a little bit more specific on supply on potash. I was looking at your Q3 press release and you were mentioning that Belarus you were expecting to be down approximately 4,000,000 tons compared to 2021 and Russia to be down approximately 2,000,000 tons to 20 21 for 2023. Speaker 700:56:36What do you expect for 2024? Do you expect discounted to be back now to the level of 2021 or actually even above 2021? And do you where do you see these countries directing volumes these days? Thank you. Speaker 200:56:53Thank you, Aaron. And yes, so a couple of questions there on tons returning to the market and where they're going. We do not see in 20 24 volumes out of the FSU returning to 2021 levels fully, but certainly for the most part. But I'll hand it over to Jason Newton to walk through that. Sure. Speaker 200:57:13Good morning, Aaron. Yes, T, I guess just Speaker 1700:57:16to start and where we ended up in 2023, we think shipments in 2023 estimated between 67,68,000,000 tons, so above the high end of our previous range. And that was facilitated by higher than expected shipments from both Russia and Belarus, both still down. So Russia down close to 2,000,000 tons in 2023 compared to 2021 levels and Belarus still down in the range of 3,000,000 tons versus 2021. For the region as a whole, we'd expect somewhere in the range of 1,500,000 tons of additional production in 2024 versus 2023. So for both Russia and Belarus, not back to 2021 levels, but again, we've seen relatively stable shipments from those regions since late 2023. Operator00:58:20There are no further questions at this time. I will now turn the call back to Jeff Holtzman for closing remarks. Speaker 100:58:27Thank you for joining us today. The Investor Relations team is available if anyone has follow-up questions. Have a great day. Operator00:58:35Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallNutrien Q4 202300:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsSlide DeckAnnual report(40-F)Annual report Nutrien Earnings HeadlinesNutrien Ltd. Reports First Quarter 2025 Results, Maintains Positive OutlookMay 7 at 6:16 PM | tipranks.comNutrien Declares Quarterly Dividend of US$0.545 per ShareMay 7 at 5:43 PM | financialpost.comGold Hits New Highs as Global Markets SpiralWhen Trump took office in 2017, gold was just $1,100 an ounce. By the time he left, it had soared to $1,839. Now… as new tariffs take effect, gold is breaking records again. You've hopefully already seen this in action… but gold is surpassing $3,000 per ounce for the first time EVER.May 7, 2025 | Premier Gold Co (Ad)Nutrien Declares Quarterly Dividend of US$0.545 per ShareMay 7 at 5:43 PM | financialpost.comNutrien Declares Quarterly Dividend of US$0.545 per ShareMay 7 at 5:18 PM | businesswire.comNutrien Reports First Quarter 2025 ResultsMay 7 at 5:05 PM | businesswire.comSee More Nutrien Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Nutrien? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Nutrien and other key companies, straight to your email. Email Address About NutrienNutrien (NYSE:NTR) provides crop inputs and services. The company operates through four segments: Retail, Potash, Nitrogen, and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seeds, and merchandise products. The Potash segment provides granular and standard potash products. The Nitrogen segment offers ammonia, urea, environmentally smart nitrogen, nitrogen solutions, nitrates, and sulfates. The Phosphate segment provides solid fertilizer, liquid fertilizer, and industrial and feed products. In addition, it provides services directly to growers through a network of farm centers in North America, South America, and Australia. 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There are 19 speakers on the call. Operator00:00:00Greetings, and welcome to Nutrien's 2023 4th Quarter Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow after 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, Vice President of Investor Relations. Operator00:00:21Please go ahead. Speaker 100:00:23Thank you, operator. Good morning, and welcome to Nutrien's 4th quarter 2023 earnings call. As we conduct this call, various statements that we make about future expectations, plans and prospects contain forward looking information. Certain material assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward looking information. Speaker 100:00:47Additional information about these factors and assumptions Operator00:00:51are Speaker 100:00:51contained in our quarterly report to shareholders as well as our most recent annual report, MD and A and annual information form filed with Canadian and U. S. Securities Commissions. I will now turn the call over to Ken Seitz, President and CEO and Pedro Farrer, our CFO, for opening comments before we take your questions. Speaker 200:01:12Good morning. Thank you for joining us today as we recap our 2023 results and provide an outlook for the business and our strategic priorities for the year ahead. Nutrien delivered adjusted EBITDA of $6,100,000,000 in 2023. We generated $5,100,000,000 in cash from operations, supported by the countercyclical release of working capital in retail. In response to changing market conditions, we took several actions during the year to enhance free cash flow, including a reduction in planned capital and operating expenditures of approximately $400,000,000 We maintained a balanced approach to capital allocation, investing to sustain and grow our assets, and returning a total of $2,100,000,000 to shareholders through dividends and share buybacks. Speaker 200:02:01As the year progressed, we saw increased market stability and strong fertilizer demand in North America, supported by improved grower affordability and extended fall application season and low channel inventories. Demand in key offshore markets also increased in the second half. However, the level of market stabilization varied by product and geography. Prab Nutrien sales volumes for our global retail business increased by 10% in 2023 as growers work to replenish nutrients in the soil. Due to the strength of grower demand in all regions, we ended the year with retail fertilizer inventories down 10% compared to the prior year. Speaker 200:02:44Crop Protection sales volumes and margins in North America returned to normalized levels in the later part of the year, and we continued to be opportunistic in our approach to restocking inventories. In Brazil, we significantly reduced our crop protection inventories in the 4th quarter, but margins remained challenged due to the persistence of higher inventory in the channel. For the full year, Nutrien Ag Solutions delivered adjusted EBITDA of $1,500,000,000 down from the record prior year and well below the level we would view as normalized earnings. We've tightly managed inventory and advanced a number initiatives that position our retail business for growth in 2024 and beyond. One of the areas of growth is our proprietary products portfolio. Speaker 200:03:34In 2023, these high value products contributed gross margin of $1,000,000,000 including increased sales and margins from our proprietary plant nutritional and bio stimulant product lines. Gross margin for our crop nutritional products has grown at an annual rate of 15% over the last 5 years, and we plan to continue to invest in our supply capabilities through differentiated product offerings and expanded manufacturing capacity. We completed a number of tuck in acquisitions in 2023 and will pursue targeted opportunities in our core markets going forward. As it relates to Brazil, the long term prospects for agriculture are positive, and it remains an important crop input market for Nutrien. In the near term, our focus will continue to be on the integration of recent acquisitions and optimizing our cost structure in this market. Speaker 200:04:31In potash, we delivered adjusted EBITDA of $2,400,000,000 in 2023, down from the prior year's record due to lower realized prices. North American sales volumes increased significantly in the second half of the year, supported by low channel inventories and a strong fall application season. We utilized our network flexibility to increase granular potash production and position products across our distribution channel in anticipation of higher seasonal demand and prices in North America. Our offshore potash sales volumes also increased in the second half of twenty twenty three, driven by stronger demand in Brazil and China, while net realized prices were impacted by lower global benchmarks and higher logistics costs associated with outages at Canpotex's export terminals. Our potash controllable cash cost of $58 per ton was flat year over year, demonstrating our focus on maintaining a low cost position. Speaker 200:05:32We advanced mine automation products that enhance productivity and safety, increasing our annual potash ore tons cut using autonomous mining technology by 40% in 2023. Turning to nitrogen, we generated 1,900,000,000 dollars in adjusted EBITDA in 2023 as lower benchmark prices more than offset lower natural gas costs compared to the prior year. We completed major maintenance turnarounds at our Geismar and Borger plants in the second half and initiated actions at our Trinidad facility that are expected to support higher operating rates going forward. We completed our Phase 1 GHB abatement program in 2023, which will be a key contributor to reducing greenhouse gas emissions. This included a carbon capture project at Redwater that increased our low carbon ammonia production capability to 1,200,000 tons. Speaker 200:06:31In phosphate, we delivered full year adjusted EBITDA of $470,000,000 and focused on operational efficiency and product mix opportunities that enhance margins and cash flow. We completed maintenance turnarounds at our Aurora and White Spring plants that enabled higher operating rates in the second half and are expected to support increased volumes in 2024. To summarize, following a period of unprecedented market volatility, we are encouraged by the increased market stability and recovery in demand that occurred in the second half of twenty twenty three. During this time, we focused on initiatives that strengthened our core business, maintained the low cost position and reliability of our assets, and positioned the company for growth in the years ahead. Now turning to the outlook for 2024. Speaker 200:07:26Global grain stocks to use ratios remain historically low as tightening supplies of wheat and rice have offset increased corn production in the U. S. And Brazil. Crop prices have declined from historically elevated levels in 2022, but lower input prices have resulted in improved demand. In North America, we witnessed the strength of fertilizer demand during the fall season, and it has carried through to healthy grower prepay commitments and a strong seed order book for spring planting in 2024. Speaker 200:07:58In Brazil, there is some uncertainty over safrinha corn plantings in 2024. However, soybean acreage is projected to expand and we anticipate seasonal strength in fertilizer imports during the 2nd and third quarters. For potash, we expect the global demand will continue to recover towards trend levels in 2024, with shipments projected between 68,000,000 to 71,000,000 tons. In North America, we are seeing strong potash demand ahead of the spring application season as channel inventories were tight to start the year. We expect increased potash demand in Southeast Asia driven by lower inventory levels and favorable economics for palm oil and rice. Speaker 200:08:43China's potash consumption was estimated at a record of approximately 17,000,000 tons in 2023, supported by strong affordability and is a part of a long term strategy to increase domestic food production. In 2024, we expect lower potash imports in China compared to the record in 2023, but for consumption to remain historically strong. Global nitrogen markets continued to be impacted by regional supply constraints, changes in natural gas prices and seasonal buying patterns. These impacts have been evident to the Q1 as ammonia prices have seasonally weakened, while global urea values have strengthened in response to increased demand ahead of the spring season. The U. Speaker 200:09:29S. Nitrogen market is currently tight and net import volumes were down significantly through the first half of the fertilizer year. North American natural gas prices remained very competitive compared to Europe and Asia, and we are well positioned to supply our customers this spring. I will now turn it over to Pedro to provide more detail on our guidance assumptions and capital allocation plans for 2024. Speaker 300:09:58Thanks, Ken. As disclosed in our earnings release, we have revised our guidance practice in 2024 to focus on providing forward looking estimates that we believe are of value to our shareholders and are less impacted by changes in fertilizer commodity prices. We continue to provide guidance for retail adjusted EBITDA, fertilizer sales volumes, key financial modeling, variables and pricing sensitivities. We have also provided adjusted EBITDA scenarios for our fertilizer business in our earnings presentation posted on our website. For retail, our full year adjusted EBITDA guidance is $1,650,000,000 to 1,850,000,000 The midpoint of this range represents an increase of approximately $300,000,000 compared to last year, driven by increased gross margins in all major product lines. Speaker 300:10:53We expect crop nutrient gross margins will be supported by higher sales volumes and per ton margins, in particular compared to the compressed levels in the first half of the prior year. Further underpinning this growth is the continued the continued expansion of our proprietary nutritional and bio stimulant product lines. In Brazil, we expect increased crop input sales volumes in 2020 4 and an improvement in crop protection margins in the second half of the year. Our annual potash sales volumes guidance of 13 to 13.8 tons assumes demand growth in offshore markets and a return to more normal operations at Canpotex ports in 2024. In North America, based on strong participation in our winter fuel program, we expect higher first quarter sales volumes compared to the prior year and a typical pricing reset compared to the Q4 of 2023. Speaker 300:11:52Mine automation and other efficiency related initiatives are expected to keep our potash controllable cash cost of production similar to last year. Nitrogen sales volumes are projected to increase by approximately 500,000 tons at the midpoint of our guidance range, supported by higher operating rates at our U. S. And Trinidad plants. We assume Henry Hub natural gas prices will average around 2.5 per MMBtu and our Alberta nitrogen plants will benefit from the typical discount to Henry Hub. Speaker 300:12:30Total planned capital expenditures of $2,200,000,000 to $2,300,000,000 is down approximately $400,000,000 compared to 2023. This includes approximately $500,000,000 of investing capital on initiatives that drive organic growth in retail and operational improvements in potash and nitrogen. The focus in retail is to further expand our proprietary products portfolio, drive retail network optimization and enhance our digital capabilities. In addition, we will continue to be opportunistic on tuck in acquisitions in our core markets. The majority of the planned investment capital in our operations is focused on mine automation projects in potash and low cost brownfield expansions in nitrogen. Speaker 300:13:20We continue to target a stable and growing dividend. With the increase approved by our Board of Directors yesterday, Nutrien's dividend per share has increased by 35% since the beginning of 2018. Similar to the past, we will evaluate the potential for additional shareholder distributions as the year progresses. I'll now turn it back to Tim. Speaker 200:13:43Thanks, Pedro. As we look ahead to 2024, we expect increased crop input market stability and demand, providing the opportunity for Nutrien to deliver higher fertilizer sales volumes and growth in retail earnings. We will continue to prioritize strategic initiatives that enhance our ability to serve growers in our core markets, maintain the low cost position and reliability of our assets and position the company for growth. We are hosting an Investor Day in New York on June 12, where we will provide more details on the strategic priorities across our integrated business, so watch for more details on this event over the next few weeks. We would now be happy to take your questions. Operator00:14:28Thank Your first question comes from the line of Steve Hansen from Raymond James. Your line is now open. Speaker 400:14:56Yes. Good morning, guys. Thanks for the time. I was hoping you could dig into your outlook on the Southeast Asian demand profile for potash in particular. It's been one of the weaker price points in the market for the past year or so, but you've described some good economics supporting demand. Speaker 400:15:11I'm just trying to get a sense whether you've got good visibility into that, whether you've seen order flow or what kind of sort of outlook you have there that gives you that confidence? Speaker 200:15:20Yes. Good morning, Steve. And indeed, when we say 68,000,000 to 71,000,000 tons for 2024, Southeast Asia is certainly a part of that story. And it's owing to a few things. 1, inventory levels are low in Southeast Asia entering the year. Speaker 200:15:36And 2, looking at about a ringgit ringgit per ton price for palm oil, that makes the economics of palm oil given where crop input prices have gone, that looks favorable. So low inventories and improved economics in Southeast Asia makes that 68,000,000 to 71,000,000 tons. We think that, as I say, Southeast Asia is going to play a meaningful role in that. I'll hand it over to Mark and maybe Mark can just talk to some specifics around numbers. Speaker 500:16:10Yes. Hey, Steve. Good morning. So just to reiterate a few of the things that Ken mentioned. I think in Southeast Asia, actually, we've had 2 years in a row of consumption and shipments that would be less than normal. Speaker 500:16:23So we've got inventories that need to be restocked. And I think throughout the process of 2023, we saw high cost inventories get work down and are coming into 2024 in a much better position. As Ken mentioned, there are attractive economics in Southeast Asia for palm oil. Rice is a part of that picture as well. That's playing a role that we think will lead to a positive rebound in demand there. Speaker 500:16:48And if you look at our global picture in terms of where we expect demand growth to come from in 2024, Southeast Asia is actually the biggest single contributor to that. At the midpoint, we've got Southeast Asia up by about 2,000,000 tons from a shipment standpoint and are optimistic based on what we've seen moving through the Q4 of 2023. And so far in Q1, we understand there's been solid movement and good shipments into Southeast Asia. So overall, as Ken said, we're positive and constructive on what we expect to see from Southeast Asia this year for Operator00:17:25potash. Your next question comes from the line of Joel Jackson from BMO Capital Markets. Your line is now open. Speaker 600:17:36Good morning. Let's talk about free cash flow and the buyback and capital allocation. Can you talk about do you see free cash flow being similar in 2024 of 2023? You re upped your authorization in the month, although you didn't really do a lot of the buyback under the prior authorization. You had a lot of buybacks in Q1 under the prior prior authorization. Speaker 600:17:59So I'm trying to get a sense of do you think that your buyback on 2024 will be similar to 23 in terms Operator00:18:07of total Speaker 600:18:07numbers, even understanding that it was heavy Q1 early Q1 'twenty three under the prior authorization. And where that plays out authorization, really maxing out as Speaker 700:18:19much as you can do Speaker 600:18:19for buyback versus other things like maybe doing some more opportunistic M and A in the U. S. Or Brazil for retail, for example? Speaker 200:18:28Good morning, Joel. And yes, thank you for the question. So with respect to 2024 free cash flow, obviously, as we've talked about, we've made some changes to our capital program and we've brought down some of those investing dollars and getting highly focused on the things that we talk about like proprietary products in retail, like network optimization, like our digital investments. And yes, we will absolutely continue to look at opportunistic tuck ins in North America and Australia. We have a history of those things and the economics for those things continue to prove out. Speaker 200:19:06So we'll always look at those, focusing on mine automation and reliability projects and finishing off some of the debottlenecking and brownfield investments That's our focus from a capital point of view. As it relates to the year, there's a number of moving parts on we saw the working capital give back in the Q4 of last year. We're expecting from a cash conversion point of view to go back to more sort of normalized levels of about 70%. So, you put that all together and it says, well, let's see now how the year unfolds. We've just come out a period of unprecedented volatility and markets are stabilizing, we're rich in potash returning to sort of trend level demand. Speaker 200:19:48These are all good signposts. But as it relates to the opportunity for continued distribution through share buybacks, we're always going to look at that. That's why we renewed the NCIB and but it's a matter of watching how the year unfolds now. Operator00:20:09Your next question comes from the line of Adam Samuelson from Goldman Sachs. Your line is now open. Speaker 800:20:16Yes. Thank you. Good morning, everyone. I was hoping to maybe ask about the nitrogen business and your own outlook for improved production and reliability in 2024. 1 of your North American peers has alluded to weather issues impacting production in January because of weather. Speaker 800:20:40Did you face any similar issues? And help us think about, Speaker 200:20:45given the capital invested Speaker 800:20:48in recent years to increase the capacity that hasn't really come through in terms of production and sales volumes, why we should have confidence that this year you're going to start to see the benefits of those actions, especially where you just took an impairment on the Trinidad business? Speaker 200:21:08No, that's great. Thank you, Adam. And yes, we have made a number of investments across the network to improve reliability. And certainly for the absolute majority of our plants, we're really happy with the way they're running. We continue to assume that we're going to be curtailed on gas in Trinidad. Speaker 200:21:27That's part of the story for 2024. But the things that we can control, we do have a number of in flight projects that give us confidence on improving reliability. And I'll hand it over to Trevor Williams, our Head of Nitrogen and Wodspace to talk about that. Speaker 900:21:41All right. Thanks, Ken, and thanks for the question, Adam. And I'll take you back to our Q3 earnings call. And we communicated that we're taking several kind of proactive steps to address some of the reliability challenges that we had at a couple of our facilities. Just to bring it back, these actions included pulling forward a couple of major turnarounds at our facilities, as well as returning to operation in one of our previously idle facilities or sites in Trinidad, which really allows for greater overall operational flexibility, as well as having the ability to more effectively manage through the impact of some of the gas curtailments and things that we've seen in Trinidad. Speaker 900:22:23And finally, with respect to the in the Trinidad area is also provide a little bit more flexibility in terms of being able to provide some increased capacity utilization as we execute turnarounds on the island. Now, while these outages did take a little bit longer than expected to complete, I'm really happy to be able to share that since returning to the plants back to operation, they've been running extremely well. Finally, I just want to comment or kind of highlight a couple of other things that across our North American fleet, obviously excluding where we did the pull forward turnaround in Borger. The remainder of our assets in North America ran at 100% capacity utilization across the quarter. And it is really the result of the investments that we've put in terms of reliability in those sites, as well as completing some debottlenecks. Speaker 900:23:15We did some brownfield debottlenecks specifically at our Geismar facility. That facility is now running at full capacity at those debottleneck rates. And then finally, really the work that the team has done really focusing on how do we continue to run our assets efficiently and effectively. Now as a result of that, and Ken alluded to it, that really is giving us the confidence as we move into 2024. And as you'll see from our guidance range, we've added almost 500,000 tons into our production forecast as we move into 2024. Operator00:23:49Your next question comes from the line of Ben Isaacson from Scotiabank. Your line is now open. Speaker 1000:23:55Thank you very much and good morning everyone. When we look at the retail, how should we think about crop protection? Is that a threat or an opportunity? Can you run through how the challenges have evolved? Is it region specific, as you mentioned, in South America? Speaker 1000:24:13Is it structural or cyclical that can be cured with inventory destocking? Should we think about it being more volatile going forward? Just trying to understand how you see the CP business. Thanks. Speaker 200:24:25Yes. Good morning, Ben. Thank you for the question. So we certainly see crop protection as an opportunity. And I would say the challenges at the moment are really quite regional as it relates to Brazil. Speaker 200:24:36But I'll hand it over to Jeff Tarsi to provide some color. Yes, Ben, hey, thank you for Speaker 1100:24:41the question. And when I look at the Crop Protection business, if I look and Ken mentioned in his commentary, we saw a lot of pressure in the 4th quarter as retailers in Brazil continue to liquidate their inventory there. We feel like we're in a really good position on our inventory going into 'twenty four. And I think we've talked about it quite a bit that we expect to see significant improvement in the back half of the year in the crop protection market in Brazil. If I look at North America, I'm actually quite pleased with where we ended the year from a crop protection margin standpoint. Speaker 1100:25:16We were just under 25% and that's historically in line with where we are generally on property protection margins and the same for Australia. So I see you asked a question, how do we see it going into 2024? I see it as an opportunity, particularly from a Brazilian standpoint that we should see a lot of recovery there from a margin standpoint. And in North America, look, we're in really good position from an inventory standpoint. If I look at it year over year, our inventories were down about $400,000,000 on the Crop Protection segment. Speaker 1100:25:53So this gives us a really nice leverage with our suppliers. We were very opportunistic in the Q4 on our purchases on property protection, which sets us up really well going into 2024. Operator00:26:10Your next question comes from the line of Jacob Bout from CIBC. Your line is now open. Speaker 300:26:16Good morning. Speaker 1200:26:19In the past, you talked about mid cycle EBITDA of kind of $7,000,000,000 to $7,500,000,000 I think you're referring to be able to achieve that by 2027. A couple of questions here. Maybe just talk through what pricing looks like today versus what your mid cycle expectations are? And do you think that this is still attainable by 2027? Just talk through what your expectation on potash volumes would have to Speaker 700:26:48be for that to happen? Speaker 200:26:51Yes. Thank you, Jacob, for the question. So, yes, we do think it's achievable. It's really going to a few things. We talk about returning or advancing this year toward more normalized or normal margins within retail this year. Speaker 200:27:08We have our guidance range, but we would call that in the mid cycle more close to $1,900,000,000 to $2,100,000,000 coming out of our retail business. And that's also owing to the organic growth that we cite, in proprietary, our network optimization, work digital, and it gives us confidence in that range. We also talk about the investments that we've made in potash, so that we have the ability to add 1,000,000 or 2,000,000 tons compared to 2023 levels that are going to that gives us the confidence in this growing market to deploy those tons. And then we also talk about the things that Trevor Williams just cited and ongoing investments in debottlenecking and brownfields that allow us to add 1,000,000 to 1000000 and a half tons of nitrogen. So from a volume perspective, yes, prices I'll hand it over to Mark to talk about pricing, but what we would see in the mid cycle is certainly pricing a bit above where we see prices today. Speaker 200:28:07But Mark, over to you. Speaker 500:28:08Yes. Thanks, Ken. Good morning, Jacob. So, yes, I think Ken covered the retail portion of that and the path to mid cycle EBITDA and retail's role in that and the volumes really well. So, just on price, in that scenario, on an approximate basis, to feed that $7,000,000,000 to $7,500,000,000 of EBITDA, we would call potash in that scenario about $400 per tonne, both globally and within North America. Speaker 500:28:33Within North America, quite close to that number today, but internationally, obviously, we're well below that. And so we do have a gap there. But with the fundamentals improving that Ken talked about and the time horizon in front of us as demand improves, we certainly see a path there. From a urea standpoint, our assumption is also about $400 a short tonne. And so again, we're not that far away from that today. Speaker 500:28:57And as we look at in season pricing and the strength that we expect in urea this year, we do see positive fundamentals. And from an ammonia standpoint, looking at the Tampa benchmark, it's about $500 a tonne. And again, this year, we expect to see constructive outlook for ammonia, some in year volatility, but all of those prices we continue to believe are quite reasonable. And when you go back to our assumptions for why that's the case, it's the factors that we've seen change fundamentally the last few years in terms of inflationary impacts, changes in trade flows, changes in energy prices, all of those things feeding into a structurally higher fertilizer price deck over time. Operator00:29:41Your next question comes from the line of Andrew Wong from RBC Capital Markets. Your line is now open. Speaker 1300:29:49Hey, good morning. Thanks for taking my questions. So just first on the potash markets, they seem to have had what seems like a bit of a slow start, but affordability looks good and both European and some Mosaic calls for higher year over year demand growth. So I guess my question is like what catalysts are we looking for to kind of get the market moving a little bit more here? And what's your outlook on prices? Speaker 1300:30:13And then just secondly on potash production like Mosaic, they announced a curtailment at Calonne, would that be something that Nutrien considers as well just given your outlook versus your operating capacity? Thanks. Speaker 200:30:26Thanks, Andrew. And I'll hand it over to Mark here to maybe go market by market. And what we're seeing sort of on the ground certainly as we head into the planting season in the Northern Hemisphere and then balance the world. But in the U. S, we've talked about the very strong qualification season and strong prepays heading into the spring planting season. Speaker 200:30:50Actually, Jeff and I are talking about strong seed sales as well. And so things are pointing to a strong year in North America once again. Brazil, while it's been some weather challenges there, we think we're probably experiencing some seasonal softness in pricing and Q2, Q3, we expect that prices there could be some firming in that part of the world. For Australia, the farmer is in good shape at the moment. We would say that yields and price for the last few years have been strong, albeit now some risk associated with El Nino. Speaker 200:31:30So for the markets where our retail business, as we see, we see pretty strong on the ground fundamentals and we are anticipating normal application rates. Maybe for the rest of our distribution and market to market, I'll hand it over to Mark. Speaker 500:31:45Sure. Thanks, Ken. Good morning, Andrew. So, yes, I think as Ken said, we're entering 2024 with potash showing greater price stability, attractive pricing levels for growers and really the need to rebuild inventories and soil potassium levels after the last 2 years in a number of key markets. And I think an important factor here is that in 2023, we would estimate that consumption in aggregate for potash across the world was actually higher than shipments. Speaker 500:32:14So that resulted in an aggregate drawdown in inventories in our view. So these factors are supportive of our expectation for shipment growth to that range of 68,000,000 to 71,000,000 tons in 2024 that we've talked about. So when we actually look across most global markets today, we do see a general trend of potash inventories being in a balanced to tight position. The exceptions to that would be Brazil and China, which both are estimated to build some inventory on a year over year basis. But that was on the back of extremely strong consumption and record imports in both of those markets in 2023. Speaker 500:32:49So those are the dynamics that are shaping our view of 2024 demand and we see the strongest growth potential in 2024 in those markets where inventories are historically tight or where below needs applications have left soils more depleted. Those markets, maybe just to dive into it in a little more detail, that we would expect to grow, which we've provided in our outlook presentation, would be Southeast Asia, Europe, India and Latin America outside of Brazil. And really, as we've talked about earlier in the call today, Southeast Asia is the largest of those and Europe is a meaningful contributor to that as well. So I think just to reiterate, kind of touch on a few key markets. Southeast Asia, we see about 2,000,000 tons of demand growth at the midpoint. Speaker 500:33:36That actually wouldn't get us back to historical trend levels. And after the last 2 years of under applications, we see that being reasonable. And again, for the reasons we talked about, supportive in country economics on palm oil in Southeast Asian countries and rice, the impact of El Nino being less severe than originally feared and depleted inventories in that market. So we think there's a good setup there. Europe, I mentioned, is another market where we see growth. Speaker 500:34:04At our midpoint, we would have about 1,000,000 tonnes of growth in potash shipments into Europe in 2024, which again would represent a strong year over year improvement, but not a full recovery back to trend levels. And for many of the reasons that we just talked about in Southeast Asia, application rates there have been low for the past 2 years due to the volatility in prices and actually challenges for supply into the region. So it does appear that we're poised for a rebound in Europe and supportive weather looks like it could set up to an earlier start to spring application in that market. Maybe just to turn to Brazil and China. And these are the 2 markets that really surprised to the upside. Speaker 500:34:47In the second half of twenty twenty three, we saw record imports into both of those markets last year. And it's important to note that in both cases, consumption was estimated to be extremely strong, which was the primary driver behind the large growth in shipments in those markets in 2023. If we look at Brazil, we estimate that inventories entered the year about 700,000 tons higher than they entered 2023. As Ken touched on, some poor growing conditions and adverse weather impacted demand and sentiment to start the year. But in recent weeks, we understand that inquiries and buying interest in the country have increased and the expectation is that buyers will be positioning as we move into Q2 and prepare for the next major planting activity in Q3. Speaker 500:35:33And that market is supported by attractive prices distributors and growers. We would expect shipments to be roughly similar to 2023 in 2024, but we do expect that consumption is going to increase assuming supportive weather. In China, Operator00:35:54imports are anticipated to have Speaker 500:35:54reached a record in 2023. We saw extremely strong demand emerge in the second half of twenty twenty three. And I think again important is that we would estimate the majority of that increase on a year over year basis went to the ground. Domestic consumption was estimated to be at record levels. And we do believe that Chinese inventories were up by about 750,000 tons to start the year. Speaker 500:36:16But to put that in context, we would look at imports being up by 3,700,000 tons. So again, consumption was very strong and we believe there continues to be a strong policy incentive and economics incentive supporting potash demand in China. Given the comfortable inventory levels that we see in that market and the trade flow shifts we've observed over the past 12 to 18 months, we would expect limited engagement in the near term on a new contract. And the midpoint of our shipment and volume guidance doesn't assume an imminent settlement in China. So overall, we would say that Chinese shipments we expect at our midpoint would decline by about 2,000,000 tonnes in 2024, but we do expect consumption to be strong in that region. Speaker 500:37:00And then lastly, just around things out in North America. North America, like some of the other markets we've talked about, entered 2024 with historically low inventories, following very strong demand in both the spring and the fall of 2023 where that product went primarily to the ground. And this set us up for what was a very positive response to our fill program in the Q1 of 2024 here. And we've been very, very pleased with what we saw. And as a result, we would expect, as Ken mentioned in his opening remarks, to see stronger domestic shipments in Q1 of 2024 versus Q1 of 2023. Speaker 500:37:38So with the values of potash relative to nitrogen and phosphate at attractive levels combined with solid expectations for U. S. Acreage, we see North America as a constructive backdrop and shipments relatively similar to 2023 2024. So we step back from each of these markets. And overall, we see a setup for demand to grow again in 2024 and a backdrop of more normalized and balanced supply, which should incentivize further recovery and growth in global consumption. Speaker 200:38:07Great. Thanks, Mark. And with respect to your second question then, Andrew, on curtailments, we have sized our network for 2024 to meet our range our guidance range. In other words, our expectation of the needs of our customers. And we'll always meet the needs of our customers. Speaker 200:38:28We'll always look at where we plan to land within that range depending on how the year unfolds and everything that Mark just described. And we have obviously well established channels all over the world. We're in touch with those customers every day. And so, yes, we will set up our network, our 6 mines in a flexible way to meet the needs of our customers. And that's based on reliance on the needs of the grade splits as well, whether it's standard grade markets, as Mark just described, and what's going on in China or whether it's granular markets in places like Brazil and North America. Speaker 200:39:03So we've got the flexibility to shift back and forth between those 2 as our customers call for volume, but again, we'll always seek to meet the needs of our customers. Operator00:39:16Your next question comes from the line of Vincent Andrews from Morgan Stanley. Your line is now open. Speaker 500:39:23Thank you and good morning everyone. Wondering if we can just speak Speaker 400:39:25a little bit more on the potash supply as well as the potash price outlook. Obviously, all your points are well taken on the demand and shipping side of the equation, but we continue to see potash prices drifting lower in most markets. So what do you think causes the price to start flattening out? And is there an opportunity for prices to actually increase in 2024 or should we be anticipating this just to be a year of strong volumes, but prices continuing to leak lower? Speaker 200:39:58Yes. Thanks, Vincent. And yes, we do see potential for firming of potash prices and a lot of it has to do with we estimate that the marginal cost production for potash is up about $50 and there's inflationary pressures for potash producers, but there's also just increased challenges with logistics. And of course, you know what they are, whether it's rail in through Russia and the North China, we're now with some of the challenges shipping through the Red Sea. That's all adding cost. Speaker 200:40:30And so, again, we look at the cost curve and so we said that last ton to produce that last ton could be up by about $50 We're also in some markets experiencing some just some seasonal weakness. So you combine the seasonal weakness with the notion that it's just more expensive these days to move potash around to produce and move potash around. And yes, we do think that there is potential opportunity for some strengthening here in 2024. Obviously, demand returning this year to trend levels or on trend levels, 68,000,000 to 71,000,000 tons. And as we look at how that's going to get supplied, it's really owing to 3 parts of the world. Speaker 200:41:19It's FSU production, which those volumes are for the most part back in the market, and we expect some incremental volumes from FSU coming back in 2024. We expect some additional tons coming out of Laos, which we've assumed is going to be in the market in 2024 as well. And then there's Canadian production, our own production, which we think is going to make up some of the difference as well. So, it's really those 3 producing regions are going to play the role in meeting demand, increasing demand here in 2024. Overall, for all those reasons, we call it a relatively balanced and stable market. Operator00:42:03Your next question comes from the line of Richard Garchituraianna from Wells Fargo. Your line is now open. Speaker 1400:42:10Thanks and good morning. My question is on the CapEx reduction. So this year, you're going to be spending roughly $400,000,000 to $500,000,000 less than 2023. Looks like the bulk of that is going to be cut from the investment for growth CapEx. So just wondering, what has changed this year versus last year? Speaker 1400:42:32Is it a function of your budget scheduling for the expansion plans for the mid cycle scenarios? Or are you tweaking the budget down just to conserve cash? And also just going forward, is $2,200,000,000 to $2,300,000,000 a good level to think about going forward in a normalized environment? Thank you. Speaker 200:42:56Great. Thanks, Richard. So, a lot of it has to do with just ongoing and increasing focus on our iConviction opportunities. We've made investments in our wholesale business that provide us with flexibility and capacity now to meet the needs of customers and to continue to grow. And we feel good about that. Speaker 200:43:18And we continue to target those high conviction opportunities in retail, proprietary, network optimization, digital and of course again always looking at talking opportunities. I'll maybe hand it over to Pedro just provide some more color on how we think about CapEx levels going forward. Speaker 300:43:37Yes, I think and good morning, Richard. I think what we are looking of course, we kind of mentioned before there were a few investments in sustained capital that were related to end of life and we were continuing those for a couple of years, but we think those already kind of baked in into this year and we continue with the strategies that Ken just mentioned in terms of primarily in retail. We one of the uses of our CapEx in the past as well has been the expansion of network in Brazil. We decided to put that on pause as we integrate the past acquisitions that we had made, as well as the further maturing of all the acquisitions we have made in the U. S. Speaker 300:44:27Here. So, we think that this level of CapEx not only provides us the opportunity to sustain all of our assets and deal with some of the end of life situations we have mentioned before, but also gives us the opportunity to invest in the critical areas, particularly in the proprietary products in the future. Operator00:44:55Your next question comes from the line of Steve Byrne from Bank of America. Your line is now open. Speaker 1500:45:02Yes, thanks. I'd like to get back to Jeff Tarsi's comment about gross margins in Crop Chems nearly 25 percent. Your revenues of Crop Chems are almost $7,000,000,000 I mean that's nearly a Corteva business. And I'm just curious with respect to those margins, what fraction of your crop chemical sales are your proprietary brand? And within that, is there a portion of it that you're starting to get your own registrations where you can import the active ingredients and really have a nice margin on it. Speaker 1500:45:50Just curious on your outlook for that gross margin in the coming years. Speaker 200:45:55Yes. No, thank you, Steve. And I'll hand it over to Jeff Tarsi. But we are pretty pleased with the role that proprietary plays in those margins and that's been growing for us. But overall, for 2024, as we think about that 25% and the split then between proprietary and our branded products, yes, Jeff Tursey can certainly provide more color on that. Speaker 200:46:29Yes, Steve, good morning. And as Speaker 1100:46:32you know, our proprietary business has always been a very strong part of our retail business environment. And from a crop protection standpoint, we run somewhere between 30% to 35% from a proprietary line of products versus our branded product line. And we haven't seen that. I mean, we kind of kept that pretty much in line. If you would look if you look back in 2023 and of course, a lot of those products as you would know, a lot of those products in our proprietary Loveland products line would be products that are all patent or post patent. Speaker 1100:47:10And so if you look in 2023, we would have seen a lot of pressure actually in that side of the business, especially around products like glyphosate, glufosinate, paraquat and clepidem. We expect to see a really nice recovery in that area coming back in 2024. And you're right, we do have a very large crop protection, but we still think that we have we think that we have a room for growth in that crop protection line. You've heard Ken and you've heard Pedro mentioned the importance of our proprietary product business for us. And as a matter of fact, in our 20 24 budget, we've got about 17% increase in gross margin projected for 20 24. Speaker 1100:47:54And some of that have come into crop protection side of the business. Probably more importantly is what we plan to do in our crop nutrition and our bio stimulant sector of that business as well. Whereas Ken said, we've had double digit growth. So I think crop nutrition were up 10% last year and our bio stimulant business was up over 20% last year. So yes, crop protection is very important for us. Speaker 1100:48:20It's also very important from a standpoint that it's a carrier for our adjuvants and surfactants, which are high margin products for us. And we saw just under a 10% increase in that segment of our business last year as well. From a registration standpoint, we've got some registrations in our portfolio. I don't know that we've got a strategy right now, greatly increasing those registrations Operator00:48:48going forward. Speaker 1100:48:49As you know, we work very closely with the multinationals and from a life cycle standpoint, as some of those products start to come out patent, then we've got an opportunity to bring those products into our proprietary portfolio. Operator00:49:07Your next question comes from the line of Jeff Zekauskas from JPMorgan. Your line is now open. Speaker 500:49:15Thanks very much. Speaker 1600:49:17When logistics costs for shipping potash rise, who's penalized by that? That is net, do your profits decrease because you're responsible for their shipping costs? Speaker 200:49:38Or do you split it Speaker 1600:49:39with your customers? Or if you had to quantify what the effects were, what would they be? And secondly, are you hedged in natural gas prices for the Q1 and for later in the year or no? Speaker 200:50:02Yes. Thanks, Jeff. So as it relates to logistics costs, I'll hand it over to Jason Newton. But we really think about our business in terms of the cost curve and we think about that on a delivered cost basis and in commodity space that we're in. So, yes, as you would look at the supply and demand fundamentals and we've talked a lot about that. Speaker 200:50:24But ultimately, you can look at the floor that marginal ton, well, that ton includes we think about that on a delivered basis, what's happening with logistics cost. But Jason, over to you to provide more color. Speaker 1700:50:45Yes, thanks. Good morning, Jeff. Yes, when we're looking at logistics costs, I'd say there's short and medium term implications of that and both from a supply and demand and pricing perspective to Ken's point on the cost curve. So in a market like we're in today where we're pressing down and certainly in the Asian markets and in Brazil to prices that are near the cost base floor, any increase in the cost of freight from marginal regions is going to support the cost floor and ultimately provide support to floor prices. The other impact that you can see, especially as freight rates increase and as we're seeing today with the issues in the Red Sea, you see differentials change and so it impacts trade flows and we know when fertilizer trade flows are disrupted, that tends to tighten supply demand balances. Speaker 1700:51:43So as we're looking at the flows east west from the Baltic into Southeast Asia, for example, we know those costs have increased. And especially from Belarus, the cost reduction and inland logistics relative to pre sanction levels are significantly higher and we're pressing down toward those costs landed into Southeast Asia today. Speaker 200:52:06Thank you, Jason. Yes, with respect to our hedge position on gas, it continues to be the case that we enjoy our cost advantage When you look at the delta between European gas pricing, which albeit has come off significantly from previous highs and today we put it sort of $8 to $9 But back here in North America, dollars 2 to $2.50 we're paying for natural gas. So again that advantage cost position given our geography. But in terms of our hedge position, we're laying the hedge at the moment, but I'll turn it over to Pedro. Speaker 300:52:40Yes. Thanks, Jeff. We what we do with the hedging, we tend to be very more contractual in the hedging. So we are looking into kind of a basically format some of our contracts with hedges for the remaining of the year, but we have some firm commitments and taking advantage of the existing low prices in the market. But we're not adopting multiyear hedge kind of a position on that point. Speaker 300:53:17So those are more contractually related for the balance of the year. Operator00:53:26Your next question comes from the line of Edlain Rodriguez from Mizuho. Your line is now open. Speaker 1800:53:33Good morning. Thank you everyone. I mean just a quick one on corn prices. Again, below $5 is that a concern for the industry in terms of whether farmers will be willing to pay higher fertilizer prices? I mean, I understand that that corn price is higher than historical norms, but I also understand it's a psychological number for farmers. Speaker 1800:53:57Like how do you think this plays out if corn prices stay at those levels? Speaker 200:54:06No. Thank you, Edlain, for the question. And we're obviously watching corn prices very closely, but I'll hand it over to Jeff Tarski to provide some color on your question. Speaker 1100:54:15Yes, Elaine, thanks for the question. And look, while crop prices have declined on the same side of the sheet, input price have declined as well, especially as it relates to corn. When I look at it, number 1, if you look in the North American market, the U. S. Market, most of our corn in the Midwest is on a rotational basis. Speaker 1100:54:39That's a corn followed by soybeans and those growers don't break out of those rotations. Secondly is they're planning the best germplasm and this germplasm takes a lot of horsepower to produce the type yields that it's able to produce. And so when growers commit, if I look at our seed bookings today, as Ken mentioned earlier, they're very healthy. And growers still want to plant the best genetics, the best trait packages. They're not going to put that seed in the ground and not give it to horsepower and nutrient it needs to produce a full yield, because when you get in these situations like we're in right now with lower prices on it, then without a doubt yield now becomes king. Speaker 1100:55:22You have to produce yield in order to make it work. And I think it's pretty reflective as well as we went into our fall, our fall fertilizer application was up 15%, very heavy fall. That's very strong indication of grower sentiment and what they're thinking. And our prepay was very strong as well and a lot of that prepay went toward purchasing fertilizer for 2024. So I think once the seeds in the ground, growers are going to be committed to given it all the inputs it needs because again, it's going to be really key to produce high yield in this type of environment. Speaker 1100:56:01Operator, we have time for one more question. Operator00:56:05Thank you. Your last question comes from the line of Aaron Ciccarelli from Berenberg. Your line is now open. Speaker 700:56:12Hello. Hi, team. Thanks for taking my question. I would like to ask you, if you can be a little bit more specific on supply on potash. I was looking at your Q3 press release and you were mentioning that Belarus you were expecting to be down approximately 4,000,000 tons compared to 2021 and Russia to be down approximately 2,000,000 tons to 20 21 for 2023. Speaker 700:56:36What do you expect for 2024? Do you expect discounted to be back now to the level of 2021 or actually even above 2021? And do you where do you see these countries directing volumes these days? Thank you. Speaker 200:56:53Thank you, Aaron. And yes, so a couple of questions there on tons returning to the market and where they're going. We do not see in 20 24 volumes out of the FSU returning to 2021 levels fully, but certainly for the most part. But I'll hand it over to Jason Newton to walk through that. Sure. Speaker 200:57:13Good morning, Aaron. Yes, T, I guess just Speaker 1700:57:16to start and where we ended up in 2023, we think shipments in 2023 estimated between 67,68,000,000 tons, so above the high end of our previous range. And that was facilitated by higher than expected shipments from both Russia and Belarus, both still down. So Russia down close to 2,000,000 tons in 2023 compared to 2021 levels and Belarus still down in the range of 3,000,000 tons versus 2021. For the region as a whole, we'd expect somewhere in the range of 1,500,000 tons of additional production in 2024 versus 2023. So for both Russia and Belarus, not back to 2021 levels, but again, we've seen relatively stable shipments from those regions since late 2023. Operator00:58:20There are no further questions at this time. I will now turn the call back to Jeff Holtzman for closing remarks. Speaker 100:58:27Thank you for joining us today. The Investor Relations team is available if anyone has follow-up questions. Have a great day. Operator00:58:35Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.Read morePowered by