Exhibit 99.3
NUTRIEN LTD.
INTERIM FINANCIAL STATEMENTS AND NOTES
AS AT AND FOR THE THREE MONTHS ENDED
MARCH 31, 2021
Unaudited | In millions of US dollars except as otherwise noted |
Condensed Consolidated Financial Statements
Condensed Consolidated Statements of Earnings (Loss)
Three Months Ended March 31 | ||||||||||||||||||||
Note | 2021 | 2020 | ||||||||||||||||||
Note 1 | ||||||||||||||||||||
SALES | 2 | 4,658 | 4,198 | |||||||||||||||||
Freight, transportation and distribution | 211 | 212 | ||||||||||||||||||
Cost of goods sold | 3,291 | 3,101 | ||||||||||||||||||
GROSS MARGIN | 1,156 | 885 | ||||||||||||||||||
Selling expenses | 673 | 642 | ||||||||||||||||||
General and administrative expenses | 103 | 104 | ||||||||||||||||||
Provincial mining taxes | 58 | 57 | ||||||||||||||||||
Share-based compensation expense (recovery) | 3 | 23 | (32 | ) | ||||||||||||||||
Other expenses | 4 | 21 | 32 | |||||||||||||||||
EARNINGS BEFORE FINANCE COSTS AND INCOME TAXES | 278 | 82 | ||||||||||||||||||
Finance costs | 120 | 133 | ||||||||||||||||||
EARNINGS (LOSS) BEFORE INCOME TAXES | 158 | (51 | ) | |||||||||||||||||
Income tax expense (recovery) | 5 | 25 | (16 | ) | ||||||||||||||||
NET EARNINGS (LOSS) | 133 | (35 | ) | |||||||||||||||||
Attributable to | ||||||||||||||||||||
Equity holders of Nutrien | 127 | (35 | ) | |||||||||||||||||
Non-controlling interest | 6 | - | ||||||||||||||||||
NET EARNINGS (LOSS) | 133 | (35 | ) | |||||||||||||||||
NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO EQUITY HOLDERS OF NUTRIEN (“EPS”) |
| |||||||||||||||||||
Basic | 0.22 | (0.06) | ||||||||||||||||||
Diluted | 0.22 | (0.06) | ||||||||||||||||||
Weighted average shares outstanding for basic EPS | 569,658,000 | 571,168,000 | ||||||||||||||||||
Weighted average shares outstanding for diluted EPS | 570,901,000 | 571,168,000 |
Condensed Consolidated Statements of Comprehensive Income (Loss)
Three Months Ended March 31 | ||||||||||||||
(Net of related income taxes) | 2021 | 2020 | ||||||||||||
NET EARNINGS (LOSS) | 133 | (35 | ) | |||||||||||
Other comprehensive income (loss) | ||||||||||||||
Items that will not be reclassified to net earnings (loss): | ||||||||||||||
Net actuarial gain on defined benefit plans | - | 3 | ||||||||||||
Net fair value gain (loss) on investments | 48 | (19 | ) | |||||||||||
Items that have been or may be subsequently reclassified to | ||||||||||||||
Loss on currency translation of foreign operations | (30 | ) | (315 | ) | ||||||||||
Other | 6 | (27 | ) | |||||||||||
OTHER COMPREHENSIVE INCOME (LOSS) | 24 | (358 | ) | |||||||||||
COMPREHENSIVE INCOME (LOSS) | 157 | (393 | ) | |||||||||||
Attributable to | ||||||||||||||
Equity holders of Nutrien | 151 | (393 | ) | |||||||||||
Non-controlling interest | 6 | - | ||||||||||||
COMPREHENSIVE INCOME (LOSS) | 157 | (393 | ) | |||||||||||
(See Notes to the Condensed Consolidated Financial Statements) |
|
21
Unaudited | In millions of US dollars except as otherwise noted |
Condensed Consolidated Statements of Cash Flows
| Three Months Ended March 31 | | ||||||||||||||||||||||
Note | 2021 | 2020 | ||||||||||||||||||||||
OPERATING ACTIVITIES | ||||||||||||||||||||||||
Net earnings (loss) | 133 | (35 | ) | |||||||||||||||||||||
Adjustments for: | ||||||||||||||||||||||||
Depreciation and amortization | 480 | 473 | ||||||||||||||||||||||
Share-based compensation expense (recovery) | 23 | (32 | ) | |||||||||||||||||||||
Impairment of assets | 4 | - | ||||||||||||||||||||||
Provision for (recovery of) deferred income tax | 10 | (22 | ) | |||||||||||||||||||||
Other long-term assets, liabilities and miscellaneous | (10 | ) | (40 | ) | ||||||||||||||||||||
Cash from operations before working capital changes | 640 | 344 | ||||||||||||||||||||||
Changes in non-cash operating working capital: | ||||||||||||||||||||||||
Receivables | (392 | ) | (323 | ) | ||||||||||||||||||||
Inventories | (1,785 | ) | (1,428 | ) | ||||||||||||||||||||
Prepaid expenses and other current assets | 688 | 766 | ||||||||||||||||||||||
Payables and accrued charges | 697 | 115 | ||||||||||||||||||||||
CASH USED IN OPERATING ACTIVITIES | (152 | ) | (526 | ) | ||||||||||||||||||||
INVESTING ACTIVITIES | ||||||||||||||||||||||||
Additions to property, plant and equipment | (325 | ) | (363 | ) | ||||||||||||||||||||
Additions to intangible assets | (33 | ) | (32 | ) | ||||||||||||||||||||
Business acquisitions, net of cash acquired | (21 | ) | (57 | ) | ||||||||||||||||||||
Other | (9 | ) | 7 | |||||||||||||||||||||
CASH USED IN INVESTING ACTIVITIES | (388 | ) | (445 | ) | ||||||||||||||||||||
FINANCING ACTIVITIES | ||||||||||||||||||||||||
Proceeds from short-term debt, net | 101 | 4,494 | ||||||||||||||||||||||
Proceeds from long-term debt | - | 6 | ||||||||||||||||||||||
Repayment of long-term debt | - | (501 | ) | |||||||||||||||||||||
Repayment of principal portion of lease liabilities | (78 | ) | (64 | ) | ||||||||||||||||||||
Dividends paid to Nutrien’s shareholders | 7 | (255 | ) | (256 | ) | |||||||||||||||||||
Repurchase of common shares | 7 | (1 | ) | (160 | ) | |||||||||||||||||||
Issuance of common shares | 42 | - | ||||||||||||||||||||||
CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES | (191 | ) | 3,519 | |||||||||||||||||||||
EFFECT OF EXCHANGE RATE CHANGES ON CASH AND | (11 | ) | (37 | ) | ||||||||||||||||||||
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS | (742 | ) | 2,511 | |||||||||||||||||||||
CASH AND CASH EQUIVALENTS – BEGINNING OF PERIOD | 1,454 | 671 | ||||||||||||||||||||||
CASH AND CASH EQUIVALENTS – END OF PERIOD | 712 | 3,182 | ||||||||||||||||||||||
Cash and cash equivalents comprised of: | ||||||||||||||||||||||||
Cash | 601 | 389 | ||||||||||||||||||||||
Short-term investments | 111 | 2,793 | ||||||||||||||||||||||
712 | 3,182 | |||||||||||||||||||||||
SUPPLEMENTAL CASH FLOWS INFORMATION | ||||||||||||||||||||||||
Interest paid | 76 | 96 | ||||||||||||||||||||||
Income taxes paid | 39 | 35 | ||||||||||||||||||||||
Total cash outflow for leases | 97 | 92 | ||||||||||||||||||||||
(See Notes to the Condensed Consolidated Financial Statements) |
|
22
Unaudited | In millions of US dollars except as otherwise noted |
Condensed Consolidated Statements of Changes in Shareholders’ Equity
Accumulated Other Comprehensive (Loss) Income (“AOCI”) | ||||||||||||||||||||||||||||||||||||||||||||||||
Number of Common Shares | Share Capital | Contributed Surplus | Net Fair Value (Loss) Gain on Investments | Net Actuarial Gain on Defined Benefit Plans 1 | Loss on Currency Translation of Foreign Operations | Other | Total AOCI | Retained Earnings | Equity of Nutrien | Non- Controlling Interest (Note 1) | Total Equity | |||||||||||||||||||||||||||||||||||||
BALANCE – DECEMBER 31, 2019 | 572,942,809 | 15,771 | 248 | (29 | ) | - | (204 | ) | (18 | ) | (251 | ) | 7,101 | 22,869 | 38 | 22,907 | ||||||||||||||||||||||||||||||||
Net loss | - | - | - | - | - | - | - | - | (35 | ) | (35 | ) | - | (35 | ) | |||||||||||||||||||||||||||||||||
Other comprehensive (loss) income | - | - | - | (19 | ) | 3 | (315 | ) | (27 | ) | (358 | ) | - | (358 | ) | - | (358 | ) | ||||||||||||||||||||||||||||||
Shares repurchased (Note 7) | (3,832,580 | ) | (105 | ) | (55 | ) | - | - | - | - | - | - | (160 | ) | - | (160 | ) | |||||||||||||||||||||||||||||||
Dividends declared | - | - | - | - | - | - | - | - | (254 | ) | (254 | ) | - | (254 | ) | |||||||||||||||||||||||||||||||||
Effect of share-based compensation including | 35,706 | 1 | 4 | - | - | - | - | - | - | 5 | - | 5 | ||||||||||||||||||||||||||||||||||||
Transfer of net loss on cash flow hedges | - | - | - | - | - | - | 5 | 5 | - | 5 | - | 5 | ||||||||||||||||||||||||||||||||||||
Transfer of net actuarial gain on defined benefit plans | - | - | - | - | (3 | ) | - | - | (3 | ) | 3 | - | - | - | ||||||||||||||||||||||||||||||||||
BALANCE – MARCH 31, 2020 | 569,145,935 | 15,667 | 197 | (48 | ) | - | (519 | ) | (40 | ) | (607 | ) | 6,815 | 22,072 | 38 | 22,110 | ||||||||||||||||||||||||||||||||
BALANCE – DECEMBER 31, 2020 | 569,260,406 | 15,673 | 205 | (36 | ) | - | (62 | ) | (21 | ) | (119 | ) | 6,606 | 22,365 | 38 | 22,403 | ||||||||||||||||||||||||||||||||
Net earnings | - | - | - | - | - | - | - | - | 127 | 127 | 6 | 133 | ||||||||||||||||||||||||||||||||||||
Other comprehensive income (loss) | - | - | - | 48 | - | (30 | ) | 6 | 24 | - | 24 | - | 24 | |||||||||||||||||||||||||||||||||||
Shares repurchased (Note 7) | (14,978 | ) | (1 | ) | - | - | - | - | - | - | - | (1 | ) | - | (1 | ) | ||||||||||||||||||||||||||||||||
Dividends declared | - | - | - | - | - | - | - | - | (262 | ) | (262 | ) | - | (262 | ) | |||||||||||||||||||||||||||||||||
Dividends of non-controlling interest | - | - | - | - | - | - | - | - | - | - | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||
Non-controlling interest transactions | - | - | - | - | - | - | - | - | - | - | (1 | ) | (1 | ) | ||||||||||||||||||||||||||||||||||
Effect of share-based compensation including issuance of common shares | 965,744 | 50 | (3 | ) | - | - | - | - | - | - | 47 | - | 47 | |||||||||||||||||||||||||||||||||||
Transfer of net gain on cash flow hedges | - | - | - | - | - | - | (3 | ) | (3 | ) | - | (3 | ) | - | (3 | ) | ||||||||||||||||||||||||||||||||
BALANCE – MARCH 31, 2021 | 570,211,172 | 15,722 | 202 | 12 | - | (92 | ) | (18 | ) | (98 | ) | 6,471 | 22,297 | 42 | 22,339 |
1 Any amounts incurred during a period were transferred to retained earnings at each period-end. Therefore, no balance exists at the beginning or end of period.
(See Notes to the Condensed Consolidated Financial Statements)
23
Unaudited | In millions of US dollars except as otherwise noted |
Condensed Consolidated Balance Sheets
March 31 | December 31 | |||||||||||||||||||
As at | Note | 2021 | 2020 | 2020 | ||||||||||||||||
Note 1 | Note 1 | |||||||||||||||||||
ASSETS | ||||||||||||||||||||
Current assets | ||||||||||||||||||||
Cash and cash equivalents | 712 | 3,182 | 1,454 | |||||||||||||||||
Receivables | 4,230 | 3,837 | 3,581 | |||||||||||||||||
Inventories | 6,714 | 6,290 | 4,930 | |||||||||||||||||
Prepaid expenses and other current assets | 819 | 716 | 1,505 | |||||||||||||||||
12,475 | 14,025 | 11,470 | ||||||||||||||||||
Non-current assets | ||||||||||||||||||||
Property, plant and equipment | 19,451 | 20,209 | 19,660 | |||||||||||||||||
Goodwill | 12,199 | 11,893 | 12,198 | |||||||||||||||||
Other intangible assets | 2,460 | 2,379 | 2,388 | |||||||||||||||||
Investments | 630 | 810 | 562 | |||||||||||||||||
Other assets | 678 | 552 | 914 | |||||||||||||||||
TOTAL ASSETS | 47,893 | 49,868 | 47,192 | |||||||||||||||||
LIABILITIES | ||||||||||||||||||||
Current liabilities | ||||||||||||||||||||
Short-term debt | 252 | 5,498 | 159 | |||||||||||||||||
Current portion of long-term debt | 14 | - | 14 | |||||||||||||||||
Current portion of lease liabilities | 260 | 221 | 249 | |||||||||||||||||
Payables and accrued charges | 8,742 | 7,362 | 8,058 | |||||||||||||||||
9,268 | 13,081 | 8,480 | ||||||||||||||||||
Non-current liabilities | ||||||||||||||||||||
Long-term debt | 10,040 | 8,544 | 10,047 | |||||||||||||||||
Lease liabilities | 876 | 848 | 891 | |||||||||||||||||
Deferred income tax liabilities | 5 | 3,168 | 3,130 | 3,149 | ||||||||||||||||
Pension and other post-retirement benefit liabilities | 456 | 426 | 454 | |||||||||||||||||
Asset retirement obligations and accrued environmental costs | 1,610 | 1,620 | 1,597 | |||||||||||||||||
Other non-current liabilities | 136 | 109 | 171 | |||||||||||||||||
TOTAL LIABILITIES | 25,554 | 27,758 | 24,789 | |||||||||||||||||
SHAREHOLDERS’ EQUITY | ||||||||||||||||||||
Share capital | 7 | 15,722 | 15,667 | 15,673 | ||||||||||||||||
Contributed surplus | 202 | 197 | 205 | |||||||||||||||||
Accumulated other comprehensive loss | (98 | ) | (607 | ) | (119 | ) | ||||||||||||||
Retained earnings | 6,471 | 6,815 | 6,606 | |||||||||||||||||
Equity holders of Nutrien | 22,297 | 22,072 | 22,365 | |||||||||||||||||
Non-controlling interest | 42 | 38 | 38 | |||||||||||||||||
TOTAL SHAREHOLDERS’ EQUITY | 22,339 | 22,110 | 22,403 | |||||||||||||||||
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY | 47,893 | 49,868 | 47,192 |
(See Notes to the Condensed Consolidated Financial Statements)
24
Unaudited | In millions of US dollars except as otherwise noted |
Notes to the Condensed Consolidated Financial Statements
As at and for the Three Months Ended March 31, 2021
NOTE 1 BASIS OF PRESENTATION
Nutrien Ltd. (collectively with its subsidiaries, known as “Nutrien”, “we”, “us”, “our” or “the Company”) is the world’s largest provider of crop inputs and services. Nutrien plays a critical role in helping growers around the globe increase food production in a sustainable manner.
These unaudited interim condensed consolidated financial statements (“interim financial statements”) are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board and have been prepared in accordance with International Accounting Standard 34, “Interim Financial Reporting”. The accounting policies and methods of computation used in preparing these interim financial statements are consistent with those used in the preparation of our 2020 annual consolidated financial statements. These interim financial statements include the accounts of Nutrien and its subsidiaries; however, they do not include all disclosures normally provided in annual consolidated financial statements and should be read in conjunction with our 2020 annual consolidated financial statements. In April 2021, the IFRS Interpretations Committee published a final agenda decision clarifying how to recognize certain configuration and customization expenditures related to cloud computing. We are currently evaluating the impact of this agenda decision; however, we do not anticipate it will have a material impact on our financial statements. We expect to implement the change in 2021.
Certain immaterial 2020 figures have been reclassified in the condensed consolidated statements of earnings (loss), condensed
consolidated statements of changes in shareholders’ equity, condensed consolidated balance sheets and segment information.
In management’s opinion, the interim financial statements include all adjustments necessary to fairly present such information in all material respects. Interim results are not necessarily indicative of the results expected for any other interim period or the fiscal year.
We prepare our interim financial statements in accordance with IFRS, which requires us to make judgments, assumptions and estimates in applying accounting policies. We have assessed our accounting estimates and other matters that require the use of forecasted financial information for the impacts arising from the novel coronavirus (“COVID-19”) pandemic. The future assessment of these estimates, including expectations about the severity, duration and scope of the pandemic, could differ materially in future reporting periods. As a result of the COVID-19 pandemic, we incurred directly attributable and incremental COVID-19 related expenses in other expenses (Note 4).
These interim financial statements were authorized by the audit committee of the Board of Directors for issue on May 3, 2021.
NOTE 2 SEGMENT INFORMATION
The Company has four reportable operating segments: Nutrien Ag Solutions (“Retail”), Potash, Nitrogen and Phosphate. The Retail segment distributes crop nutrients, crop protection products, seed and merchandise, and it provides services directly to growers through a network of farm centers in North America, South America and Australia. The Potash, Nitrogen and Phosphate segments are differentiated by the chemical nutrient contained in the products that each produce.
25
Unaudited | In millions of US dollars except as otherwise noted |
Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||
Retail | Potash | Nitrogen | Phosphate | Corporate and Others | Eliminations | Consolidated | ||||||||||||||||||||||
Sales – third party | 2,960 | 631 | 695 | 372 | - | - | 4,658 | |||||||||||||||||||||
– intersegment | 12 | 90 | 160 | 72 | - | (334 | ) | - | ||||||||||||||||||||
Sales – total | 2,972 | 721 | 855 | 444 | - | (334 | ) | 4,658 | ||||||||||||||||||||
Freight, transportation and distribution | - | 110 | 95 | 59 | - | (53 | ) | 211 | ||||||||||||||||||||
Net sales | 2,972 | 611 | 760 | 385 | - | (281 | ) | 4,447 | ||||||||||||||||||||
Cost of goods sold | 2,320 | 291 | 610 | 319 | - | (249 | ) | 3,291 | ||||||||||||||||||||
Gross margin | 652 | 320 | 150 | 66 | - | (32 | ) | 1,156 | ||||||||||||||||||||
Selling expenses | 667 | 3 | 7 | 2 | (6 | ) | - | 673 | ||||||||||||||||||||
General and administrative expenses | 39 | 2 | 2 | 2 | 58 | - | 103 | |||||||||||||||||||||
Provincial mining taxes | - | 58 | - | - | - | - | 58 | |||||||||||||||||||||
Share-based compensation expense | - | - | - | - | 23 | - | 23 | |||||||||||||||||||||
Other expenses (income) | 15 | 1 | (26 | ) | 3 | 28 | - | 21 | ||||||||||||||||||||
(Loss) earnings before finance costs and income taxes | (69 | ) | 256 | 167 | 59 | (103 | ) | (32 | ) | 278 | ||||||||||||||||||
Depreciation and amortization | 177 | 124 | 129 | 38 | 12 | - | 480 | |||||||||||||||||||||
EBITDA | 108 | 380 | 296 | 97 | (91 | ) | (32 | ) | 758 | |||||||||||||||||||
Integration and restructuring related costs | 1 | - | - | - | 9 | - | 10 | |||||||||||||||||||||
Share-based compensation expense | - | - | - | - | 23 | - | 23 | |||||||||||||||||||||
Impairment of assets | - | - | 4 | - | - | - | 4 | |||||||||||||||||||||
COVID-19 related expenses | - | - | - | - | 9 | - | 9 | |||||||||||||||||||||
Foreign exchange loss, net of related derivatives | - | - | - | - | 2 | - | 2 | |||||||||||||||||||||
Adjusted EBITDA | 109 | 380 | 300 | 97 | (48 | ) | (32 | ) | 806 | |||||||||||||||||||
Assets – at March 31, 2021 | 21,624 | 11,817 | 10,240 | 1,391 | 3,257 | (436 | ) | 47,893 | ||||||||||||||||||||
Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||
Retail | Potash | Nitrogen | Phosphate | Corporate and Others | Eliminations | Consolidated | ||||||||||||||||||||||
Sales – third party | 2,652 | 547 | 646 | 326 | 27 | - | 4,198 | |||||||||||||||||||||
– intersegment | 9 | 64 | 132 | 57 | - | (262 | ) | - | ||||||||||||||||||||
Sales – total | 2,661 | 611 | 778 | 383 | 27 | (262 | ) | 4,198 | ||||||||||||||||||||
Freight, transportation and distribution | - | 94 | 100 | 70 | - | (52 | ) | 212 | ||||||||||||||||||||
Net sales | 2,661 | 517 | 678 | 313 | 27 | (210 | ) | 3,986 | ||||||||||||||||||||
Cost of goods sold | 2,120 | 265 | 581 | 320 | 25 | (210 | ) | 3,101 | ||||||||||||||||||||
Gross margin | 541 | 252 | 97 | (7 | ) | 2 | - | 885 | ||||||||||||||||||||
Selling expenses | 635 | 3 | 7 | 2 | (5 | ) | - | 642 | ||||||||||||||||||||
General and administrative expenses | 38 | 2 | 2 | 2 | 60 | - | 104 | |||||||||||||||||||||
Provincial mining taxes | - | 57 | - | - | - | - | 57 | |||||||||||||||||||||
Share-based compensation recovery | - | - | - | - | (32 | ) | - | (32 | ) | |||||||||||||||||||
Other expenses | 16 | 1 | 2 | 6 | 7 | - | 32 | |||||||||||||||||||||
(Loss) earnings before finance costs and income taxes | (148 | ) | 189 | 86 | (17 | ) | (28 | ) | - | 82 | ||||||||||||||||||
Depreciation and amortization | 155 | 96 | 150 | 63 | 9 | - | 473 | |||||||||||||||||||||
EBITDA | 7 | 285 | 236 | 46 | (19 | ) | - | 555 | ||||||||||||||||||||
Integration and restructuring related costs | - | - | - | - | 10 | - | 10 | |||||||||||||||||||||
Share-based compensation recovery | - | - | - | - | (32 | ) | - | (32 | ) | |||||||||||||||||||
COVID-19 related expenses | - | - | - | - | 2 | - | 2 | |||||||||||||||||||||
Foreign exchange gain, net of related derivatives | - | - | - | - | (27 | ) | - | (27 | ) | |||||||||||||||||||
Adjusted EBITDA | 7 | 285 | 236 | 46 | (66 | ) | - | 508 | ||||||||||||||||||||
Assets – at December 31, 2020 ¹ | 20,526 | 11,707 | 10,077 | 1,388 | 3,917 | (423 | ) | 47,192 |
1 In 2021, certain assets related to transportation, distribution and logistics were reclassified under Corporate and Others as these are centrally managed. Depreciation expense related to these assets remains allocated to the rest of the segments based on usage.
26
Unaudited | In millions of US dollars except as otherwise noted |
Presented below is revenue from contracts with customers disaggregated by product line or geographic location for each reportable segment.
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Retail sales by product line | ||||||||
Crop nutrients | 1,016 | 785 | ||||||
Crop protection products | 1,085 | 1,010 | ||||||
Seed | 463 | 394 | ||||||
Merchandise | 230 | 216 | ||||||
Nutrien Financial | 25 | 16 | ||||||
Services and other | 173 | 255 | ||||||
Nutrien Financial elimination 1 | (20 | ) | (15 | ) | ||||
2,972 | 2,661 | |||||||
Potash sales by geography | ||||||||
Manufactured product | ||||||||
North America | 442 | 319 | ||||||
Offshore 2 | 279 | 292 | ||||||
721 | 611 | |||||||
Nitrogen sales by product line | ||||||||
Manufactured product | ||||||||
Ammonia | 188 | 156 | ||||||
Urea | 274 | 262 | ||||||
Solutions, nitrates and sulfates | 197 | 196 | ||||||
Other nitrogen and purchased products | 196 | 164 | ||||||
855 | 778 | |||||||
Phosphate sales by product line | ||||||||
Manufactured product | ||||||||
Fertilizer | 272 | 221 | ||||||
Industrial and feed | 126 | 120 | ||||||
Other phosphate and purchased products | 46 | 42 | ||||||
444 | 383 |
1 Represents elimination for the interest and service fees charged by Nutrien Financial to Retail branches.
2 Relates to Canpotex Limited (“Canpotex”) (Note 9).
NOTE 3 SHARE-BASED COMPENSATION
The following table summarizes the awards granted under our existing share-based compensation plans described in Note 5 of our 2020 annual consolidated financial statements:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Stock options: | ||||||||
Granted (number of units) | 1,518,490 | 2,293,802 | ||||||
Weighted average grant date fair value (US dollars) | 11.77 | 7.18 | ||||||
Cash-settled share-based awards granted (number of units) | 1,198,148 | 1,278,324 |
27
Unaudited | In millions of US dollars except as otherwise noted |
NOTE 4 OTHER (INCOME) EXPENSES
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Integration and restructuring related costs | 10 | 10 | ||||||
Foreign exchange loss (gain), net of related derivatives | 2 | (31 | ) | |||||
Earnings of equity-accounted investees | (20 | ) | (10 | ) | ||||
Bad debt expense | 2 | 6 | ||||||
COVID-19 related expenses | 9 | 2 | ||||||
Impairment of assets | 4 | - | ||||||
Other expenses | 14 | 55 | ||||||
21 | 32 |
NOTE 5 INCOME TAXES
A separate estimated average annual effective income tax rate was determined for each taxing jurisdiction and applied individually to the interim period pre-tax earnings for each jurisdiction.
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Income tax expense (recovery) | 25 | (16 | ) | |||||
Actual effective tax rate on earnings/loss (%) | 16 | 37 | ||||||
Actual effective tax rate including discrete items (%) | 16 | 32 | ||||||
Discrete tax adjustments that impacted the tax rate | - | 2 |
Income tax balances within the condensed consolidated balance sheets were comprised of the following:
Income Tax Assets and Liabilities | Balance Sheet Location | As at March 31, 2021 | As at December 31, 2020 | |||||||
Income tax assets | ||||||||||
Current | Receivables | 373 | 83 | |||||||
Non-current | Other assets | 89 | 305 | |||||||
Deferred income tax assets | Other assets | 249 | 242 | |||||||
Total income tax assets | 711 | 630 | ||||||||
Income tax liabilities | ||||||||||
Current | Payables and accrued charges | 79 | 48 | |||||||
Non-current | Other non-current liabilities | 42 | 40 | |||||||
Deferred income tax liabilities | Deferred income tax liabilities | 3,168 | 3,149 | |||||||
Total income tax liabilities | 3,289 | 3,237 |
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Unaudited | In millions of US dollars except as otherwise noted |
NOTE 6 FINANCIAL INSTRUMENTS
Fair Value
Estimated fair values for financial instruments are designed to approximate amounts for which the instruments could be exchanged in a current arm’s-length transaction between knowledgeable, willing parties. The valuation policies and procedures for financial reporting purposes are determined by our finance department. There have been no changes to our valuation methods presented in Note 10 of the 2020 annual consolidated financial statements and those valuation methods have been applied in these interim financial statements.
The following table presents our fair value hierarchy for financial instruments carried at fair value on a recurring basis or measured at amortized cost:
March 31, 2021 | December 31, 2020 | |||||||||||||||||||||||||||
Financial assets (liabilities) measured at | Carrying Amount | Level 1 1 | Level 2 1 | Level 3 | Carrying Amount | Level 1 1 | Level 2 1 | |||||||||||||||||||||
Fair value on a recurring basis | ||||||||||||||||||||||||||||
Cash and cash equivalents | 712 | - | 712 | - | 1,454 | - | 1,454 | |||||||||||||||||||||
Derivative instrument assets | 41 | - | 41 | - | 45 | - | 45 | |||||||||||||||||||||
Other current financial assets | 166 | 24 | 142 | - | 161 | 24 | 137 | |||||||||||||||||||||
Investments at FVTOCI 3 | 211 | 201 | - | 10 | 153 | 153 | - | |||||||||||||||||||||
Derivative instrument liabilities | (43 | ) | - | (43 | ) | - | (48 | ) | - | (48 | ) | |||||||||||||||||
Amortized cost | ||||||||||||||||||||||||||||
Current portion of long-term debt | ||||||||||||||||||||||||||||
Fixed and floating rate debt | (14 | ) | - | (14 | ) | - | (14 | ) | - | (14 | ) | |||||||||||||||||
Long-term debt | ||||||||||||||||||||||||||||
Notes and debentures | (9,991 | ) | (7,994 | ) | (3,177 | ) | - | (9,994 | ) | (3,801 | ) | (7,955 | ) | |||||||||||||||
Fixed and floating rate debt | (49 | ) | - | (49 | ) | - | (53 | ) | - | (53 | ) |
1 During the periods ended March 31, 2021 and December 31, 2020, there were no transfers between Level 1 and Level 2 for financial instruments measured at fair value on a recurring basis.
2 Marketable securities consist of equity and fixed income securities. We determine the fair value of equity securities based on the bid price of identical instruments in active markets. We value fixed income securities using quoted prices of instruments with similar terms and credit risk.
3 Investments at fair value through other comprehensive income (“FVTOCI”) is primarily comprised of shares in Sinofert Holdings Ltd.
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Unaudited | In millions of US dollars except as otherwise noted |
NOTE 7 SHARE CAPITAL
Share repurchase programs
Commencement Date | Expiry | Maximum Shares for Repurchase | Maximum Shares for Repurchase (%) | Number of Shares Repurchased | ||||||||||||||||
2019 Normal Course Issuer Bid | February 27, 2019 | February 26, 2020 | 42,164,420 | 7 | 33,256,668 | |||||||||||||||
2020 Normal Course Issuer Bid | February 27, 2020 | February 26, 2021 | 28,572,458 | 5 | 710,100 | |||||||||||||||
2021 Normal Course Issuer Bid 1 | March 1, 2021 | February 28, 2022 | 28,468,448 | 5 | 14,978 | |||||||||||||||
1 The 2021 normal course issuer will expire earlier than the date above if we acquire the maximum number of common shares allowable or otherwise decide not to make any further repurchases. |
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Purchases under the normal course issuer bids were, or may be, made through open market purchases at market prices as well as by other means permitted by applicable securities regulatory authorities, including private agreements.
The following table summarizes our share repurchase activities during the period:
Three Months Ended March 31 | ||||||||
2021 | 2020 | |||||||
Number of common shares repurchased for cancellation | 14,978 | 3,832,580 | ||||||
Average price per share (US dollars) | 52.93 | 41.96 | ||||||
Total cost | 1 | 160 |
Dividends declared
We declared a dividend per share of $0.46 (2020 – $0.45) during the three months ended March 31, 2021, payable on April 15, 2021 to shareholders of record on March 31, 2021.
Anti-dilutive shares
As we recorded a net loss for the three months ended March 31, 2020, all stock options had an anti-dilutive effect. If we had net earnings, the diluted weighted average shares calculation would have included 66,806 stock options for the three months ended March 31, 2020.
NOTE 8 SEASONALITY
Seasonality in our business results from increased demand for products during planting season. Crop input sales are generally higher in spring and fall application seasons. Crop input inventories are normally accumulated leading up to each application season. The results of this seasonality have a corresponding effect on receivables from customers and rebates receivables, inventories, prepaid expenses and other current assets and trade payables. Our short-term debt also fluctuates during the year to meet working capital needs. Our cash collections generally occur after the application season is complete, while customer prepayments made to us are typically concentrated in December and January and inventory prepayments paid to our vendors are typically concentrated in the period from November to January. Feed and industrial sales are more evenly distributed throughout the year.
NOTE 9 RELATED PARTY TRANSACTIONS
We sell potash outside Canada and the United States exclusively through Canpotex. Canpotex sells potash to buyers in export markets pursuant to term and spot contracts at agreed upon prices. Our revenue is recognized at the amount received from Canpotex representing proceeds from their sale of potash, less net costs of Canpotex. Sales to Canpotex are shown in Note 2.
As at | March 31, 2021 | December 31, 2020 | ||||||
Receivables from Canpotex | 161 | 122 |
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