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Operator: Good morning, ladies and gentlemen and welcome to the Nutrien 2022 Q4 Earnings Conference Call. This call is being recorded on February 16, 2023 at 10 a.m. Eastern time. I would now like to turn the conference over to Jeff Holzman, Vice President of Investor Relations. Please go ahead.

Jeff Holzman: Thank you, operator. Good morning and welcome to Nutrien’s fourth quarter 2022 conference 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. Additional information about these factors and assumptions are contained in our quarterly report to shareholders as well as our most recent annual report, MD&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 Farah, our CFO, for opening comments before we take your questions.

Ken Seitz: Good morning and thank you for joining us as we recap our full year results and discuss the outlook for our business going forward. 2022 was an unprecedented year on many fronts. Geopolitical events, most notably the war between Russia and Ukraine contributed to significant supply disruptions across agriculture, energy and fertilizer markets. The supply shocks were most pronounced for global fertilizer markets leading to higher prices, increased volatility and major shifts in buying patterns throughout the year. Nutrien delivered record earnings and cash flow in this environment due to the advantages of our world-class production, distribution and retail network. We invested $2.9 billion to sustain our assets and grow our business, while returning $5.6 billion in capital to our shareholders through share repurchases and dividends.

We progressed our sustainability priorities, and most importantly, continued to achieve industry leading safety performance across our business. Nutrien Ag Solutions had another very strong year generating adjusted EBITDA of $2.3 billion. This result was driven by higher sales and gross margins across nearly all product categories and regions where we operate. The growth and relative earnings stability provided by our retail business is an advantage that differentiates Nutrien from our fertilizer peers. We completed 21 retail acquisitions in our core geographies, with a focus on expanding our network in Brazil. This region is one of the fastest growing agricultural markets in the world and we see further opportunity to expand our network and provide whole acreage solutions to Brazilian growers.

We made significant progress on our sustainable agriculture initiatives that are a key component of meeting the 2030 commitments in our Feeding the Future plan. We tripled the acreage enrolled in our carbon pilot program compared to 2021 and are seeing excellent engagement from growers and strategic partners across the agriculture value chain. Turning to potash, we generated adjusted EBITDA of nearly $6 billion in 2022 highlighting the importance of having low cost operations that are backed by a reliable supply chain. In the first half, we sold record offshore volumes in response to increased demand from our customers and achieved higher realized selling prices. As we anticipated, potash volumes in the fourth quarter were down from the prior year as buyers in North America and Brazil limited purchases and drew down inventory.

We adjusted our production plans accordingly and pulled forward in some maintenance activities during this downtime, preserving the flexibility to quickly ramp up production when stronger demand reemerges. Our nitrogen earnings were supported by higher global benchmark prices and the advantaged cost position of our assets. Nitrogen sales volumes in the fourth quarter were impacted by lower production volumes and cautious buying from both fertilizer and industrial customers. The majority of the production losses were related to Trinidad gas curtailments and extreme cold weather events that caused outages at our North American plants. We completed emissions abatement projects at 3 nitrogen sites that represent a major step towards meeting our goal to reduce CO2 equivalent emissions by 1 million tons by the end of 2023.

In phosphate, we delivered higher earnings due to increased selling prices, in particular, for our high value feed and industrial products which more than offset a reduction in sales volumes. The structural shifts in the market over the past year highlighted the importance of being nimble and adaptable in an uncertain global environment. We will take the learnings from 2022 as we advance our plans for 2023 and beyond. Now, turning to the outlook. The global grain stocks to use ratio is at its lowest point in more than 25 years and we expect it will take multiple cropping cycles to restore stocks to more adequate levels. Crop commodity prices are trading well above historical average levels and we anticipate increased planted acreage and crop input demand in North America and Brazil.

In potash, sanctions on Belarus and restrictions on Russia have been in place for above 1 year. And over that time, the volume of potash exported has not materially improved. Belarus supply in particular remains constrained with shipments in recent months reported to be down more than 50% from the prior year. This illustrates the importance of having reliable access to tidewater ports and the challenges associated with reworking distribution channels were for a bulk commodity like potash. Further, we continue to believe projects that were under development in Russia and Belarus will be delayed. These expansions comprised about 60% of the projected supply entering the market over the next 5 years outside of our own increases. We are forecasting the global potash shipments between 63 million to 67 million tons in 2023, which is still well below our unconstrained demand estimate of approximately 70 million tons.

In North America, we believe retail potash inventories are down 15% to 20% compared to the prior year, following a healthy fall application season and limited restocking. This estimate is based on the view of Nutrien Ag Solutions inventories and our assessment of broader retail channel inventories. We had a good response to our winter fill program that was released in January, although we are still seeing some level of buyer caution. We expect an additional wave of buying to meet demand for the spring season and this plays to the strength of Nutrien’s leading production and distribution network in North America. Brazil has been the most active potash market to begin the year and prices have stabilized following the significant destocking that occurred in the second half of 2022.

We forecast a strong rebound in Brazilian imports in 2023 and more normal seasonal buying patterns, with demand increasing in the second and third quarters. Global nitrogen prices have softened due to the sharp drop in European gas prices and buyer deferrals. We anticipate North American nitrogen prices will firm as we approach the spring season due to higher corn acreage and the impact of increased U.S offshore exports in the second half of 2022. We believe there is a significant amount of nitrogen that will need to be delivered over the next few months to meet demand for spring application in the Northern Hemisphere. I will now turn it over to Pedro to review our guidance assumptions and capital allocation plans for 2023.

Pedro Farah: Thanks, Ken and good morning. Based on market conditions that Ken just highlighted, we expect to deliver historically strong earnings across each of our business segments in 2023. Starting with Nutrien Ag Solutions, we anticipate a recovery in fertilizer sales volumes and a reset in per ton margins similar to average values achieved in 2021. We are seeing strong prices for most crop protection products and forecast margin percentages in line with historical average levels. The midpoint of our 2023 retail adjusted EBITDA guidance range represents a 10% annual growth rate since 2018, reflecting the strength of ag fundamentals and strong execution of our strategic growth initiatives. Our potash sales volumes guidance of 13.8 million to 14.6 million tons assume increased demand in our key markets of North America and Brazil and continued global supply restrictions.

We have maintained the flexibility to increase sales volumes to around 50 million tons in 2023 if we see stronger engagement in the market. As demonstrated in the past, there is tremendous economic value in having the capacity to meet surges in demand and Nutrien has an unmatched ability to deliver when this occurs. Our nitrogen guidance reflects the recent decline in benchmark prices and assumes some strengthening prior to the spring season. We expect higher nitrogen sales volumes in 2023 due to strong demand in increased operating rates at our North American plants. We are forecasting Trinidad gas curtailments of approximately 20% similar to the impact in the second half of 2022. Cash from operating activities is projected at $5.5 billion to $6.5 billion in 2023.

Our conversion ratio this year is impacted by timing of cash tax payments related to our record earnings in 2022. Without this impact, our conversion ratio will be estimated at around 75%, which is more in line with our run-rate expectation. This is the basis we will make capital allocation decisions through the cycle and can utilize the strength of our balance sheet if necessary to normalize timing related fluctuations in cash flow. We remain confident in the long-term outlook for the business and plan to invest approximately $3 billion to sustain our assets and advance high return strategic growth initiatives in 2023. In retail, our focus is to strengthen our network in Brazil in POS, expand our proprietary product offerings and enhance our digital capabilities.

This is very consistent with our retail investment priorities in the past. In potash, we continue to progress the ramp up of our existing low-cost potash capacity, but have adjusted the timing to optimize capital expenditures in line with the pace of projected demand recovery in 2023. We will maintain a flexible approach and now expect to reach 18 million tons of annual operating capability in 2026. We have the advantage of bringing on this capacity in increments at a very low capital cost per ton and continue to believe there is significant value in having flexibility to increase production when the market needs it. Our nitrogen investments are focused on concluding in-flight, low-cost brownfield expansions, decarbonization projects and advancing front-end engineering work for our proposed Geismar clean ammonia plant.

We intend on making a final investment decision on this project in the second half of the year. Finally, on our plans for returning capital to shareholders. We completed our 10% in CIB in early February and have purchased more than 150 million shares since the beginning of 2018, reducing our number of shares outstanding by approximately 23%. Over this period, we have also demonstrated the ability and commitment to provide a competitive, stable and growing dividend through the highs and lows of this cycle. Moving forward, we intend on factoring in the changes to the share count as a part of the decision criteria for future per share dividend growth. Yesterday, our Board of Directors approved a 10% increase in our quarterly dividend and authorized a new 5% share repurchase program that provides optionality for additional share repurchases in 2023.

I will now pass it back to Ken.

Ken Seitz: Thanks, Pedro. I would just make a few final comments. The outlook for our business remains strong. Global grain and oilseed inventories are tight, structural supply issues persist and demand for crop inputs is expected to increase in 2023. We will remain disciplined in our capital allocation approach as we position the company to serve the needs of our customers while delivering long-term value for our shareholders. Finally, I would like to thank our nearly 25,000 global employees for their hard work, dedication and focus on safety over the past year. It is through your efforts that we delivered record results in 2022 and position the company for success in the years ahead. We would now be happy to take your questions.

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Operator: Thank you. Your first question comes from Andrew Wong with RBC Capital Markets. Please go ahead.

Andrew Wong: Hi, good morning. So actually, I wanted to ask a bit about the potash strategy here and just how maybe market conditions affect both your shorter term kind of production decisions and the longer term ramp-up path? Like what kind of signal do you need for demand and pricing before raising production and ramping up capacity? And do you kind of tend to wait for some of these signals to show up first or do you maybe increase production as you might expect some of these signals to show up? I am just kind of wondering if you can elaborate a little bit more on that? Thanks.

Ken Seitz: Good morning, Andrew and thank you for the question. So yes, obviously, through 2022, we saw movement in inventory and some of the reactions to the supply side challenges related to ongoing sanctions against Belarus and of course, this conflict in Eastern Europe, which has created export challenges out of Russia. And so as we looked at the impacts not only in the near-term of some of those supply disruptions, but also as we mentioned, the impact on new projects that are under development, 60% of the new production coming into the market we believe is delayed. We believe that those sort of underlying supply challenges will persist. And we believe that they will persist into the certainly near term and into the medium term as well.

On the other side of the equation with these very strong ag fundamentals, we believe that we are heading into a strong spring application season in North America. But then also not all demand fits into the calendar year. And again, with some of these movements on inventory, we are just looking at the needs of our customers. And as we said throughout 2022, we will look at those needs, we will look at our €“ the evolution of those fundamentals and we will pace our investments in that ramp up accordingly. So again, looking at 2022 and the movements there 2023, strong demand. But then pacing out those investments, we thought it prudent to take some of our offer, pace the ramp-up of potash production and meet the needs of our customers. So that’s what we are doing.

These investments are spread across dozens of projects at 4 mine sites. So we do have that flexibility. We do have that optionality. And of course, we will be watching the signals in the market and from our customers. Also, just finally say that in terms of being nimble, we can execute against these capital programs and we do not have long lead time items here where we really need those signposts to be showing up years in advance. In fact, we can watch the signposts in the more near-term and again execute against our capital plans and ramp up potash production.

Operator: Your next question comes from Jacob Bout with CIBC. Please go ahead.

Jacob Bout: Good morning. A question is just on this cautiousness that you have seen in the first quarter and the risk there could be a snapback in fertilizer markets in the U.S. spring season. We get into supply chain issues in overheated markets?

Ken Seitz: Yes, good morning Jacob. Yes, that is exactly what we are seeing at the moment. You can point to nitrogen, where we typically have a seasonal low this time of the year. And we see that in potash as well, but recognizing of course that when farmers get out on the field, there is going to need to be a significant amount of volume that needs to move through the channel. So at the moment, yes, we see cautious buy. The reality is that the fundamentals have improved for the pharma, because the backdrop on the ag fundamental side is strong and of course fertilizer prices have come off, so that affordability has improved. But I’ll hand it over to Mark Thompson, our Chief Commercial Officer, to provide some more color.

Mark Thompson: Sure. Hi, good morning Jacob. I’ll maybe make a few comments and then perhaps have Jeff talk about the inventory positioning and network at the retail level as well. From a producer standpoint, I think what you pointed out is absolutely correct we have seen caution in the channel. It’s a little bit different on potash and nitrogen. I think from a potash standpoint, the inventory destocking process we expected to see in North America, particularly and Brazil through the end of Q4, really did take place. From a North America standpoint, we saw inventories as we assess them at the customer level down in that range of 15% to 20%. And I think Jeff and the Nutrien Ag Solutions team to could corroborate that trend. Our winter fill program that was put out early in 2023 had a good response.

We filled about 70% of the program, which would be modestly below historical levels. And I think that reflects the overall caution that you’re talking about. Of course, Jeff will be able to talk about the expectation. We do see strong grower demand coming €“ but really, there is this cautious approach because of price volatility that’s delayed some of that purchasing and assuming that we do see strong fundamentals emerge. We will put a strain on the supply chain. I think this is an area in potash in particular, where Nutrien is exceptionally advantaged. Our terminal network and distribution assets as it relates to potash are really unparalleled in the North American market. So we are set up very well to deliver when that spring demand breaks.

I think the same would be true from a nitrogen standpoint. In nitrogen, the channel is probably about average purchases relative to historical levels. But again, we have seen some grower caution. Our network is positioned to meet that demand. We’ve got a good portion of the second quarter order book that we’ve intentionally have uncommitted at this point to sell into what we expect to be firm or fundamental. So notwithstanding the caution you’ve talked about, we think we are very well positioned. But I’ll pass it to Jeff to maybe comment on the retail level position.

Jeff Tarsi: Yes. And I would obviously agree with comments both by Ken and Mark. If I look at our inventory levels today in our Ag Solutions business, we’re sitting a bit below where we would historically be on inventories, and we have to go through it by product, particularly with potash. But I always go back and when I look at the fundamentals and what I think what’s going to be demand driven I’ll go back first to prepay in the fourth quarter. We had very strong prepay from our customer base in the fourth quarter. If I look at our seed book to date, our seed book is very strong as well. So what I’m absolutely convinced of is we’re going to plan a big crop globally around these commodities. We also have the ability to look €“ we do extensive solar testing.

And so we’ve got an ability to look in and see what the solar fertility levels look like. If I look at a product like potash, I see about 40% of those tests that say we’re below some standard of where we need to be in order to maximize yield. So to say all of that, Jacob, it probably gets back to where he started this thing is that we anticipate a lot of buying for the spring. And you’re right, we could have some supply chain constraints and product doesn’t start moving. And from my perspective within our retail organization, I feel strongly because we’ve invested very heavily in our supply chain. But growers just been a little bit slower in a lower cost environment to come in and commit particularly as it relates to nutritional.

Operator: Your next question comes from Joshua Spector with UBS. Please go ahead.

Lucas Beaumont: Good morning. This is Lucas Beaumont for Josh. So just focusing on potash deal. So could you just let us know, how much of your first quarter order book is locked in currently? And what price is it sort of locked in at the moment? And are you expecting any sequential move up in pricing from where it is now kind of baked into your guidance? Thanks.

Ken Seitz: Yes. Good morning. And I’ll just say that just echo what Mark shared about our fill program where in North America, we were 70% subscribed and feel good about our position here in the first quarter. Offshore Canpotex is well committed into the first quarter. We won’t comment on prices. We don’t comment on prices. But we’re guiding this year to 13.8 million to 14.6 million tons for the year. We do believe it’s a supply-constrained market so that we’re saying shipments of 63 million to 67 million tons again this year. And so that €“ depending on how the year unfolds and certainly depending on the timing of India and China contracts, again, we’re preserving capacity, sales capacity of 15 million tons. Again, depending on the timing of some of these settlements.

Operator: Your next question comes from Joel Jackson with BMO Capital Markets. Please go ahead.

Joel Jackson: Hi, good morning, everyone. I was interested in your comments on retail expecting similar margins in €˜23 as you did a couple of years ago, and it’s about $350 million contraction in retail earnings in 2023. So can you talk about €“ when I think about $350 million lower earnings in €˜23, how does that shake out for commodity prices versus volume versus other things when I guess, partially offset by some of the M&A you’ve already done? And then how do you get retail margins that are in line with the last couple of years in a lower commodity price environment where you’re not getting inventory gains?

Ken Seitz: Yes. Good morning, Joel. Thanks for that. Yes, so we have been growing our retail business, both organically and inorganically. And so that’s certainly reflected in our view of 2023. But as you say, we’re also expecting a bit of a reset as it relates to nutritionals as it relates to fertilizer and those fertilizer margins, but also as it relates to crop chemistry. But I’ll hand it over to Jeff Tarsi to provide more color.

Jeff Tarsi: Yes, Joel. So most of our rise up last year in retail was in €“ basically in the North American market. And as Pedro talked about in his commentary, we expect to reset on margins in our North American. So, almost all of our resettled come in our North American market. It will basically fall in two buckets, it will fall in the crop chemistry bucket and the fertilizer bucket. And basically, what we’re doing is we’re going back and anchoring ourselves to €˜21. And if I look at both of those two categories, like on a margin per ton basis for fertilizer, we’re going to be slightly above where we were in €˜21 for our projections for €˜23. And our crop chemistry gross margins are going to be basically in line with where we were in €˜21.

So obviously, as you talked about earlier, we caught some appreciation in both those two categories over €“ really over the last 18 months, and we don’t expect to see that same appreciation in €˜23. As Ken talked about, with things that we do, we’re constantly trying to grow our share by proprietary business. And last year, we had an exceptional proprietary year. Our revenue was up over $400 million. Our gross margins were up just under $175 million. And so €“ and new product launches contributed about $10 million of EBITDA. What I’m excited about when we look into €˜23 and again, the ability to expand our margins past historical is, we will be launching six new plant nutrition products in Australia. We’ll be launching six new crop protection products in the U.S. and seven new products in Brazil.

So we’re going to continue to emphasize our proprietary products. And look, our margins are going to still be, in my opinion, very attractive from a Nutrien standpoint and from a crop protection standpoint, again, when you look at it on a historical basis. We expanded our margins last year in plant nutrition substantially, and we look to continue that growth in €˜23 as well. So we have a lot of levers that we can pull as it relates to that.

Operator: Your next question comes from Ben Isaacson with Scotiabank. Please go ahead.

Ben Isaacson: Thank you very much. And good morning. My question is about global potash demand. We had 70 million tons in €˜21, about 60 million tons in €˜22, and you’re calling for about a rebound about halfway. And the question is, why aren’t we getting back to 70 million tons? From what it sounds like channel inventories and/or soil inventories are either average or below normal farmer affordability for potash has improved, not just because potash prices are lower, but because nitrogen and phosphate prices are lower as well. We had light demand last year. We had a drought last year. You talk about caution and deferral, that’s more of a timing issue. So why are we not getting back to the full 70 million tons? And if it’s just because it’s supply constrained, then why are you going down from the 50 million tons you talked about in November to roughly 14 million tons now? Thank you.

Ken Seitz: Yes. Those are great observations, Ben. Thank you. So we would agree with you that if we look at the unconstrained demand that we would see on the planet, given this very strong backdrop that we see with the Ag fundamentals and certainly, the way farmer affordability has improved with the softening of price, that on an unconstrained basis, we would be at 70 million tons. But we do believe, given these pretty extreme supply side challenges that shipments this year would be in the 63 million to 67 million ton range. But the reality is that, that doesn’t €“ this doesn’t all fit perfectly within the calendar year. So that if we look at 2023 and we look at inventory levels around some of these major markets, certainly, we’ve seen destocking in North America and Brazil, but we are watching inventory levels in China, which would be about 2.3 million tons today, so certainly, getting below historical averages and in India, for example, where for all intense inventory levels are low.

But yet at the same time, still haven’t seen here we are into the middle of February, we haven’t seen a contract. And so as that contract is delayed, we look at 62 million, 67 million tons, 70 million tons unconstrained, it just doesn’t fit within the calendar year. And hence, we’re working hard now to plan our volumes to meet the needs of our customers here in 2023, but of course, looking into 2024 now as well.

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

Steve Byrne: Yes. Thank you. So Jeff Tarsi, you mentioned an increase in soil testing and 40% of them were below adequate levels in potash. My question for you is, for those growers that are looking at data like that, are they likely to return to maybe a normal application rate? Could they potentially go higher than where they were in 2021? And would you expect a similar situation in other parts of the world, maybe tap into your channel down in Brazil and in Australia? Are you seeing this trend of below-normal potash levels in soil in other regions as well?

Jeff Tarsi: Yes, Steve, good question. And obviously, I have a lot more visibility into those results in North America as opposed to Brazil because as you would know, we own one of the largest soil analytic lamps in North America, weapon analytical. So we have a lot of data that we can pile through to look at that. And we provided interestingly enough, we provided that data for each of our divisions and even down to the county level, where we can simulate this data. I think if I look back to the fall, Steve, we actually had a very strong fall application of both NPK in North America. And I was quite satisfied with the rate growers we’re using. And I do agree, as these products become more economical. Look, we had a lot of product banked in the show over the last couple of years.

You got the last three falls have all three been record falls in North America. And so I think as the product becomes more affordable, I would expect to see some rates increase across these products. I was doing some math today. And these growers are spending upward to $150 an acre on their hybrid corn varieties. And these varieties are very temperamental with the NPK levels. And so I don’t think growers are going to risk any yield from that standpoint. As we get into Brazil, you talked about Brazil. And as you know, those solds are not able to bank Nutrien like we can across the corn belt there. So it’s more but just in time market. Ken and I and Pedro were just in Brazil last week, and we had a chance to visit with some growers as well as our people as well.

And the Safrinha season looks strong. It’s a little bit slower, but it’s slower because weather €“ as it’s related to weather. So again, the economics and the fundamentals are strong there. I think the growers will give the crop all the juice it needs to maximize out on yields.

Operator: Your next question comes from Adam Samuelson with Goldman Sachs. Please go ahead.

Adam Samuelson: Yes. Thanks, good morning, everyone. So a question on potash demand and really outside of North America and really thinking in the different parts of Asia and the view you have on channel inventories in the key importing regions of Southeast Asia, in China, in India that would inform kind of importer behavior that seems to be kind of mirroring the kind of slowness intensiveness that you’re seeing or have seen in the U.S. and Brazil? And then a second question, if I may, just on the growth investments that you alluded to for the year. There was a discussion on the retail side about digital. I was hoping if you could just elaborate on what that actually encompasses especially where that would seem to be a capital expense as opposed to an operating expense? Thank you.

Ken Seitz: Yes. Adam, thank you for the question. So we can certainly do the market-by-market discussion about inventories. And yes, destocking again in Brazil, U.S., and we can talk about India, China and Southeast Asia. I’ll hand it over to Mark Thompson to provide some color there. And then we can go to the digital question where €“ yes, we are seeing substantive growth on digital as it relates to putting dollars through that platform and certainly the type of investments we’re making there. But Mark, over to you.

Mark Thompson: Yes. Thanks, Ken. Good morning, Adam. So maybe just to cover a bit of ground that Ken and I have talked about already. Again, I think from Brazil and a North America standpoint, the destocking process throughout Q4 did take place I think largely as we had anticipated in November. We’ve talked about North America estimating down 15% to 20% in the channel relative to the end of 2021 at the end of 2022. From a Brazil standpoint, we estimate that Brazil would have ended flat to slightly up after a historic surge in first half imports and an equally historic drop in second half imports into Brazil. So we estimate Brazil probably ended between 1.8 million to 1.9 million tons at the end of 2022 in inventories relative to about 1.7 million tons and we’ve done some deep dive studies on that market to corroborate that number and obviously have seen really good engagement to start the year in Brazil and some stabilization as well.

To your question on India, China, Southeast Asia, other markets, maybe we can just do a little bit of around the world. I think from an India standpoint, again, India ended the year at historically tight inventory levels. And as a result, we expect they’re going to be the first to settle relative to China from a contract standpoint. Their inventory levels were about 130,000 metric tons per port, which would be about flat to 2021. So again, we view the impetus as being strong for India to settle a contract in the relatively near-term. From a Chinese perspective, we estimate that China would have ended with just over 2.5 million tons at the end of 2022. That would have been up modestly from the prior year, but again, below average levels. And we also estimate that those inventories have been drawn down to some degree.

We now estimate there are about 2.3 million tons. I think importantly, in all this from a Chinese perspective, their strategic reserves were drawn down by about 1 million tons in 2022. We have the view that those would need to be rebuilt throughout 2023. And I think important to the inventory equation in China is also production. And we view that Chinese production levels in 2022 at around 7 million tons are likely not repeatable. So we expect that number to drop as well in 2023. So again, I think a good backdrop from an inventory standpoint in China. And then just to round things out in Southeast Asia, our view would be currently that Malaysian inventories are relatively balanced and in a good spot. And Indonesia is very close. We see Indonesia probably coming into balance here over the next couple of weeks, in fact, and we expect very good engagement from both of these markets as we get into Q2.

So of course, the catalyst for this will be continued movement of product and liquidity in Brazil, which we’ve seen, but also the settlement of contracts, which will provide price discovery for these international markets to begin to pull. So as Ken said, all of these things don’t fit perfectly into a calendar year, but we do believe that once we see contract settlement and this engagement reemerge, that we are going to hit a very strong run rate for global potash demand. So I’ll just pass on question on digital capital expenditures.

Jeff Tarsi: Yes. Thanks. And we do continue to invest in our digital platform. And we think that our digital platform is essential to the total platform that we run in our Ag Solutions business. And if I look at our focus today, which is centered around becoming the most customer focused, being able to provide the most customer-focused sustainable solutions to our growers. And digital is going to play an absolute central part in the decision-making process. And this requires a lot of data generation, and it requires a lot of data mining. And look, for instance, if I look at our seed shift and the growth projections that we have around seed, a lot of that growth, an amiable part of growing our share in that seed business is going to be able €“ is around mining data, collecting data and being able to provide that data back to our growers in a really timely fashion.

Also, we just finished €“ I have just finished a tour around our complete Ag Solutions business basically since the second week of January and nowhere have we been and not any farmer group have we talked to that the discussion has not been around sustainability and sustainable solutions going forward in agriculture. And I can tell you that you are not going to have a sustainability platform without a digital platform. You have got to have it, be able to collect your data. You have got to have it to be able to validate that data as well on a crop basis. So, we do feel very strongly about this, and we are very committed to it. And very committed to it being a central part of our platform.

Operator: Your next question comes from Christopher Parkinson with Mizuho. Please go ahead.

Christopher Parkinson: Very helpful chart on Page 25 in terms of your expectations for production across the various geographies. Could you set on a little bit more on how this flows into your high and the low end of your potash guidance in terms of €“ if demand starts trending towards the high end of your, let’s say, global range? Is that €“ are those tons mostly going to be coming I assume presumably from Canpotex? And what would kind of be your baseline expectation for the growth in North America once inventories normalize between you and the other North American producers? Just any general framework on how that flows into the high end the low end to the potash guidance would be very helpful? Thank you so much.

Ken Seitz: Yes. Thank you for the question. Yes. We have €“ the big supply challenges are the ones we talk about, and that’s putting a range here on what we believe could happen in 2023 out of Russia and certainly out of Belarus with the nimble, flexible supply being our own. But I will hand it over to Jason Newton to provide more detail.

Jason Newton: Thanks. Good morning Chris. Yes. As we look at the range that we have for potash shipments globally, the top end of that range, in particular, is restricted by the level of potash production globally. And so that’s really what caps that out. And if we look at the range we have for shipments from Belarus and Russia, that respectively expected to be down 40%, 60% and 15% to 30% versus 2021 levels. And so that really constrains the top end of the shipment range. And similarly, as we look throughout that range, given that wide level of uncertainty in shipments from that Russia and Belarus, there is a number of scenarios that can develop within that range that leads to the potential for higher production from Nutrien as a swing producer within that level.

So, it really continues to be supply-constrained environment in 2022, notwithstanding the slow start to the year, which also limits the production. And as we look forward, and we show in the slide deck as well, the range of shipments going forward, we don’t see a potential midpoint of that range of shipments going back to trend levels until 2025. And if we look back over the last 20 years, there hasn’t been a period of more than two consecutive years where shipments have fallen below trend levels. And so if supply becomes available, we would expect hedge up demand…

Operator: Your next question comes from Jeff Zekauskas with JPMorgan. Please go ahead.

Jeff Zekauskas: Thanks very much. You commented on soil testing for potash in the United States. Did you also look at soil testing for phosphate that is phosphate under applied? And in the first quarter of 2023, have you hedged your gas in the United States and in Canada, or is it more free flowing and you can get the benefits of the gas decreases?

Ken Seitz: So, with respect to soil sampling and phosphate levels in the soil, short answer is, yes, we do look at that. And I will hand it over to Jeff Tarsi to provide that color and then to talk about hedging for gas, I will hand it over to Pedro.

Jeff Tarsi: Yes. We look €“ when we are doing the soil testing, we are not only testing for NP&K. we are testing for micronutrients as well in the soil. So, they are very, very comprehensive testing. We do see a trend that’s similar to the potash. The potash kind of stuck out to me a bit. Phosphate reduction wasn’t quite as much as we saw across those states, but still we saw a significant amount that we are under some desirable level there. But again, we are doing this testing, and we are writing scientific prescriptions for the crop and the variety and the hybrid and such. And so obviously, we can take these tests and do a lot with as far as building our solutions out going forward. And this is not something new. We have been doing this testing for a number of years. But we have seen the testing increase over the last 3 years or 4 years because growers more kin, our agronomist more kin again to making science-based decisions on what we are delivering.

Pedro Farah: Maybe Jeff, this is Pedro. I am going to comment a little bit on the hedging. From a financial standpoint, our best travel to talk about the commercial standpoint too, because we are essentially both financially and commercially hedged in terms of gas. But from a financial standpoint, we have been €“ now our hedges have been somewhat immaterial, I would say, less than 10% ebb and flowing through that. We see greater opportunities to hedge at this point from a financial standpoint since we are reaching some levels kind of low levels here. So, we are looking more closely into that at this point in time, but they have not been that material up until now. So, I will pass it on to Trevor, because a good portion of our production is hedged, but commercially so.

Trevor Williams: Yes. Thanks for the question. In a high level, we are in the range of about 20%, that’s naturally hedged with some of the industrial contracts that we have, both in North America and obviously in Trinidad. But as Pedro alluded, with some of the seasonably low prices that we are seeing right now, both in Canada and U.S., we are evaluating opportunities to hedge and/or lock in some of that position here going into the remainder of 2023.

Operator: Your next question comes from Michael Tupholme with TD Securities. Please go ahead.

Michael Tupholme: Thank you. Ken, I know you said you don’t intend to comment too much on pricing. But when we look at the 2023 guidance you provided, are you able to talk at all about what you have assumed in terms of realized pricing for both potash and nitrogen at the high end versus the low end of the guidance ranges you provided?

Ken Seitz: Yes. Thanks Michael. Yes, I can speak in general terms to say that we are sort of looking at potash pricing where it is today. So, you can point to, for example, sort of 500 to 520 in Brazil. And thinking about that as a bit of a benchmark and sort of flat pricing, let’s say, throughout 2023 from those levels. Obviously, with all the dynamics we just talked about, we could see volatility around some of those numbers, but that would be our assumption today. And as it relates to nitrogen, we do expect firming in price from the levels that we are seeing today, and it’s for all the reasons that we talked about.

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

Will Tang: Hi guys. This is Will Tang on for Vincent. Thanks for taking my question. So, you have guided 2023 down across all your major business segments with the exception of phosphate at the midpoint. I am wondering if you could help me bridge between 2022 and 2023, what’s driving the relative strength there, especially as it looks like the underlying commodity fertilizer prices are going to be down on a year-over-year basis?

Ken Seitz: Yes. Well, I think what I would say, Will, is just what we have talked about on this call, and that is that the big impact has been we have seen just the softening in commodity prices from peak 2022 levels. And so if we are comparing across our business, our crop nutrient business, potash, nitrogen, I mean that’s the story is on netbacks. So, if we are talking about margins in retail, it’s really the reset on crop nutrients and crop chemistry. It is offset by higher volumes across €“ on the NPK side, it is offset by higher volumes. But again, we have this netback effect. And then finally, I will just say, again, we do have this timing thing going on where not everything fits within the calendar year.

Operator: Your next question comes from Steve Hansen with Raymond James. Please go ahead.

Steve Hansen: Yes. Good morning. Thank you for the time. A question for perhaps Ken and Mark, I was just hoping you could speak to the opportunity for continued synergy extraction from the integrated business model that really does define Nutrien now. We obviously saw an intense focus on synergies in the early years post-merger. Just curious on whether you could comment on if there is another round of synergies to come or whether that’s more of a secondary focus at this point? Thanks.

Ken Seitz: Steve, thank you for the question. And yes, we certainly do see opportunity. In fact, we created the structure in 2022 to establish a commercial unit within Nutrien that Mark Thompson, our Chief Commercial Officer, is heading up. And yes, and that is we are seeing opportunity there, and that’s evolving. But I will hand it over to Jeff and to Mark to talk about exactly some of those opportunities we are seeing. And as you say, Steve, what the synergies might be.

Jeff Tarsi: Yes. I will make a few comments and then I will turn it over to Mark. But Mark and I have worked very close together over the last several months. And from a retail perspective, I mean the two buckets that I look in are, number one, logistics. And what can we do to take some costs out from a logistical side of it. In a lot of cases, upside of the organization and using some of the same carriers at different rates. And so how do we get more efficient, and from that standpoint, how do we touch product less than we do today. And then overlaying a footprint of our assets together from a terminal and storage standpoint and how do we better utilize those assets. And I can’t think of anybody better than Mark to dig through those opportunities with myself and that’s what we plan on doing going forward. And Mark, I will let you get in a little bit more granular into some of that.

Mark Thompson: Sure. Thanks Jeff and good morning Steve. Thanks for the question. Yes, I wholeheartedly agree with everything that Jeff said. I mean we both believe, and I think the executive team believes there is more opportunity in integrated model to continue to extract value for shareholders and really develop competitive advantages for the company. And so I see those as Jeff said, falling into a few different categories. I think three primarily. I think the first is really on optimizing the procurement sourcing relationship and sales relationship within the company. And as the retail network continues to grow globally throughout Nutrien as we continue to expand volumes in our production business, it does open up new opportunities to look at how we sell and procure within the company to optimize value throughout cycles.

I think a great example of that is in the fourth quarter that we just saw in a historically volatile period. Now, I am looking at our supply chain holistically and being able to forward place product is something that the Nutrien Ag Solutions and Nutrien team worked on to ensure that we are maximizing channel margin for the company. I think the second category that Jeff mentioned explained very well is around network optimization, TD&L, vendor management and all these areas that we can really optimize the way product is moving around the network and look at storage and distribution across the Nutrien enterprise. And then I think lastly, a real opportunity around specialty products growth. And I think Jeff has talked this morning on the call about really the evolution in thinking at the grower level and the need for specialty nutrition and more sustainable products.

We have got great products inside of Nutrien like ESN and MAP MST and really continuing to work together on a network basis to put those products in our customers’ hands. So, this is something that’s ongoing over time, and I think we can continue to add value to the company as we move forward.

Operator: Your next question comes from P.J. Juvekar with Citi. Please go ahead.

Unidentified Analyst: Hi. This is Patrick Clingan on for P.J. Good morning. What are your expectations for seed prices this season? And then for your Dyna-Gro seeds, what’s the market share currently? And any expectation to grow market share this year? Thank you.

Ken Seitz: Yes. Thank you for the question. We are certainly constructive on seed and I will hand it over to Jeff to talk about that.

Jeff Tarsi: Yes. I would say that overall in the year we just finished in €˜22, we had about a 30 basis point increase in market share across our total seed portfolio. If I look at the seed price for €˜23, we have seen somewhere between €“ let’s say, depending on the crop somewhere between a 6% to 10% increase in seed prices year-over-year and being reflective that in the €˜22 season, most seed companies chose not to have any price increase at all. So we were expecting an increase for €˜23 and again, somewhere between that 6% to 10% standpoint. Look, Dyna-Gro continues to be an integral part of our seed strategy and we continue to work to strengthen our portfolio either through proprietary breeding or through our strategic relationships we have with our suppliers.

We have had some major successes this past year, particularly with rice, which is our Dyna-Gro 263 line, that’s a proprietary germplasm brand within our business. And we have had a lot of success there. We continue to have success with our proven canola brand. And you mentioned Dyna-Gro, we would think our share increases would be in line with what we saw across our broad portfolio with it.

Operator: Your next question comes from Richard Garchitorena with Wells Fargo. Please go ahead.

Richard Garchitorena: Good morning. Thanks for taking my questions. Just quickly on the potash strategy, I just wanted to touch on the decision to delay the ramp-up to 18 million tons, potentially by 2026. Is your ramp-up €“ is it based on the assumption that we get unconstrained demand of 70 million tons at some point? And then as a follow-up so if we see things continuing to remain constrained in the 63 million to 67 million tons, can you continue to defer the ramp up, I guess? Is there any issues related to that in terms of equipment orders or site preparation that type of thing? Thanks.

Ken Seitz: Yes. Thank you for the question, Richard. And I will start and then I’ll hand it over to Chris Reynolds just to talk about optionality that we have as it relates to the ramp up. It’s just to say that and just echoing Jason Newton’s comments earlier. We believe that we are going to be in supply-constrained environment here for a few years. And what’s the reason for that? Well, we do see demand growing. I mean for all the reasons we have talked about, the fundamentals are strong, but we back cast over the last 20 years, price demand has been growing at over 2.5% CAGRs. And so in an environment where demand continues to grow, unconstrained demand continues to grow, but yet we have these supply side challenges, we will be in a supply-constrained market.

And hence our view of meeting the needs of our customers ramping up potash production, but I’ll hand it over to Chris Reynolds just to talk about, again, some of the optionality that we have as it relates to the nimbleness of our ramp up capital program.

Chris Reynolds: Yes good morning Richard. Thanks for the question. So as you mentioned and as we mentioned last year when we first announced this ramp that we had already built in numerous off-ramps that we could trigger if market conditions changed a little bit from our assumptions. And so this plan to ramp up 18 million tons involves dozens of projects, mainly across 4 of our potash sites and equipment that’s mainly related to our underground operations, so mining machines and conveyor belts. And so yes, we €“ these are not €“ as Ken mentioned in his opening remarks, these are not long lead time items. And again if things were to change materially in terms of timing, we could delay the purchasing of some of this equipment.

But again the longer term outlook that we have and the need that we believe the global market is going to have for 18 million tons for Nutrien is still intact and we are really just delivering on what we had already explained when we first announced the ramp.

Operator: There are no further questions at this time. Please proceed.

Ken Seitz: Thank you, operator and thanks everyone for joining us today. The Investor Relations team is available for any follow-up calls. Have a great day.

Operator: Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.