All right, good morning to day two of the mining conference, day four for some of us. Our first session this morning with Nutrien is with Nutrien, of course, the largest fertilizer producer, a large retail player as well. Let's welcome Ken Seitz, President and CEO, to the stage. We're going to do a fireside chat, so if you want to submit questions, please do on the app, and we'll weave them in. Ken, why don't you kick off maybe, like, a few minutes, state of the union, what's going on with Nutrien and the markets?
Thanks, Joel. Thanks for the invitation. Good to see you, and thanks, everyone, for joining. You know, Nutrien, we're in the, in the agriculture business, and it continues to be the case that the world demands more food. We sort of talk about that from time to time, but we like to remind that there's still 800 million food-insecure people on the planet, and that every year, farmers, governments, families learn how to do more with the land that they have. They do that by agronomically choosing better practices, and so that's seeds, and germ plasmas, and killing weeds, and killing bugs, and of course, balanced fertilization. We see that.
We see that every year, that as farmers get better, as they become more knowledgeable, as they apply best practices, they frankly use more of what we produce. In among all that, we have, and we really believe and are proud of the fact that we have the highest asset quality to serve those growers as they seek to improve yields. That starts with our downstream business, access to over 500,000 grower accounts, where we're serving those customers, those farmers, every day with all the inputs and services that they need to maximize yield. That downstream business then built out with supply chains, logistics, transportation, unparalleled, I would say, on the planet, to serve those customers, and then wholesale customers in over 50 countries around the world.
Of course, all of that infrastructure backed up by, as you say, Joel, the largest network, highest asset quality, for fertilizer production on the planet. We're proud of those things and find ourselves in a growing market where, again, our volumes continue to grow and our earnings and our retail business continue to grow, and we believe that that's structural. We saw that in 2025 again, where we added 1.3 million tons of fertilizer volumes, structurally grew our retail earnings by $300 million, and pulled another $200 million out of cost.
Entering 2026 and looking at guidance, we believe that there's opportunity again to structurally grow those earnings out of our downstream business, to maintain, improve asset quality, and to grow our fertilizer volumes once again, and we've guided accordingly. You know, I would say that, sitting above all of that work as it relates to margin improvement, as it relates to, pulling out cost and growing, structurally growing earnings and volumes and free cash flow, we're focusing on ongoing capital allocation discipline. You know, that comes in a obviously mindset around the dividend, stable and growing. We returned 30% more cash to shareholders last year, buying back our stock.
With the dividend, we pulled $600 million out of CapEx to date, where, you know, we continue to guide at that $2 -$2.1 billion, and the balance sheet in a place that we're really quite comfortable. The last thing I'll say, Joel, is particular focus at the moment is on the portfolio. When I talk about asset quality of earnings, free cash flow conversion, always looking to upgrade that. As we comb through the portfolio, we see opportunity to upgrade. So we've done some things last year, $900 million in divestiture proceeds, and this year, working through another set of strategic reviews on Brazil, on Trinidad, and on our phosphate business.
I want to talk about portfolio, which you've been very active in talking about things you want to do. Let's maybe start a little high level with our questions here. Thanks for submitting questions. Keep doing it. You know, I've seen. Look, the sentiment for the U.S. farmer right now seems negative. There's lots of negative articles written every week. I feel like I'm reading about whether it's liquidity or balance sheets, whatever. How do you, at Nutrien, view the state of the U.S. farmer, and how does that affect your business and how you plan?
It has been challenged, there's no question. You go to a few parts in the U.S. and the South where weather challenges combined with commodity prices that, you know, coming out of the last few years are obviously quite a bit lower. You know, we were just talking about this yesterday and looking at our retail business and how farmers are thinking about the spring planting season. We're saying 94-96 million acres of corn again. Whether, you know, we're going to see some of the challenges that farmers are having in our business. A couple things. I would say, you know, in terms of challenged accounts with growers, again, you know, we've got our Nutrien Financial business and our downstream business that really is in, you know, across North America, Australia, Brazil.
We're not seeing sort of bad accounts that would be above what would be typical for this point in the cycle. It's usually half a percent to 2%. We'd, like, be at 1.4% today. We're not seeing anything that's majorly alarming. That's one. Two is. Yeah, there was some bad weather in the fall, you're looking at how farmers are gonna put down crop nutrients, and because of the bad weather, weren't able to get onto the land. You're in the spring here, they're gonna catch that up. Indeed, we're expecting and even seeing volumes move now. You know, we ran our Winter Fill Program in our potash business. It was oversubscribed. We're seeing volumes move now that would tell us that farmers are planning to plant the way that they always do.
In the meantime, yeah, you're looking at a little bit of strength in soybean prices, corn prices, that would kind of be at the 10-year average. You know, they're not $6 at the moment, but at the 10-year average. You put it all together, combined with some government assistance, and certainly in the U.S., that $11 billion that the Trump administration announced just prior to the holidays there, and perhaps, you know, some additional dollars coming from Congress this year, and then again, some help from the big, one big beautiful bill.
There's enough there that we believe that farmers are staring into the spring again, looking at their pocketbooks and saying, "I'm gonna plant corn the way that I always do, and I'm going to do the things I need to do to maximize yields in this environment." Has the, you know, sort of the current cycle bottomed out? Let's see. You know, grain stocks-to-use ratio is kind of back at the 10-year average. What we're seeing in heading into the spring here is we're expecting it to be a normal spring.
You talked about governments. There's a lot going on with the U.S. government, obviously, every day. We've seen a lot that sort of are impacting on the periphery what you guys do, right? We see potash and phosphate, they're critical minerals. We see, you know, DOJ, USDA talking about, "Well, let's go look at if there's oligopolistic structures and oligopolistic structures across crop inputs." Sometimes yourself and other peers get named. You know, what do you think about all that? Does it mean anything for you, or you're not sure?
Yeah, it's definitely meaningful, we take that all very seriously. You know, I think what we say is that we exist in a highly competitive world, that's just a fact. You see that in all of the work that we do on cost discipline. You know, we can talk about mine automation and potash, for example, where we're making those investments so that we can stay on the left of the cost curve because we need to compete. We're talking about building a new terminal on the west coast of North America, that is related to costs and the need to compete. This is a highly competitive environment.
Wasn't that long ago, as you know, Joel, that if we're talking about potash, I mean, prices were below that top producer at the end of the cost curve. Those things happen in a commoditized world. We're in a point in the commodity cycle now where we would call it sort of on potash, you know, a little below mid-cycle pricing. Yes, phosphate is certainly above, and nitrogen is somewhere on mid-cycle pricing. These things ebb and flow. We go in when we get asked a question by any government, go in and we say, "Here it is. This is a highly competitive market, a highly competitive world. We need to compete.
These are the things that we do. By the way, making investments to the tune of hundreds of millions of dollars every year to expand those volumes, you know, in a growing market, we make investments to add additional volumes to the market, and we can do that economically because of where we sit on the cost curve. You know, the story for us is you put that all together and you say, I mean, there's nothing in the form of anything untoward here. If, you know, in fact, it's the opposite of that, we're doing everything in our power to compete.
You've really talked about the portfolio and really trying to look at if you can whittle down, you know, the lower performing assets from a returns perspective. You've talked about selling phosphate or restructuring phosphate. You're doing work on that, looking, rethinking Brazilian retail and other Brazilian businesses, what you're gonna do with Trinidad now that you're still in negotiations for a gas contract. Can you talk about progress you made on those initiatives? How do you think the year is gonna play out? What might we hear about first?
Just going one by one, if it's just talking about phosphate, we are doing all of the things that you would expect that we would be doing in the context of a strategic review. As we, the last quarter sort of announced or talked about our plans for strategic review, it was everything from restructured operations. What could restructured operations look like? It's looking at product mix and does this make sense? It's looking at life of mine at these different assets that we have, and asking the question: do we extend those reserves because we can in the region? Do we think about progressing toward decommissioning here, there, or is there a possible sale of these assets at the other end of the continuum and everything in between?
We are pulling together all of the data information that we need to, for the one end of the continuum, and that is a possible sale, you know, information memorandum and data room and pulling together all of the operational data capital, all those things that you need to assemble where somebody could come and have a look and make an educated estimate of whether that can make sense for them or not, or again, on the other end of the continuum, restructured operations. Where are we at? You know, we expect that next quarter, we'll be able to come to the market and start testing. On Trinidad, yeah, continue to. The operation is shut down, continues to be shut down.
We are talking to the Trinidad government, which is in the midst of negotiating with the upstreamers at the moment. Not able to really understand their cost base before they can come talk to us about provision of supplying of natural gas to our plant. Talking about access to the port, which, as we talked about, in 2025, was limited for us, given increased port fees. We're working with the Trinidad government to better understand, is there a package here, port fees, access to port, cost of natural gas, that can make sense for Nutrien? I don't know the answer to that. We're still talking to the Trinidad government about that. In the meantime, we're exploring all of the alternatives for Trinidad.
You know, what we saw last year, though, was that the balance of the network had stepped up. You know, we were operating rates above 90%. We were able to meet all of our customer needs with our network ex-Trinidad. This year, we're staring at natural gas costs that are 50% Henry Hub, 50% AECO. That is a structural advantage in our business that without Trinidad, you know, improves. Those margins improve. We're looking at all this. In the meantime, we're in a buoyant nitrogen market, and a buoyant ammonia market, buoyant urea market. You know, let's see about Trinidad. Again, the priority at the moment is working through some of these challenges with the Trinidad government, which has been a slow process. Finally, you mentioned Brazil, Joel.
Yeah, we've been soul searching, looking at each other at Nutrien. You know, ask the question: How do we best access this exciting agricultural market? We're obviously the biggest supplier of potash into that part of the world, and will continue to be. Looking at, you know, infrastructure, investment, customers, how do we preserve that ability to continue to grow with the Brazilian market? They're gonna add more acres again this year, 2% probably, to the current complement of arable land. We know we're gonna do potash. We know we're gonna do proprietary products, and particularly crop nutrition in that part of the world.
It's this retail question that, as you know, Joel, has been challenged, and at the moment, we're assessing whether how and whether that retail presence is required, necessary for us to achieve our overall objectives in Brazil. You know, we expect to have some conclusions on all of these files this year, 2026.
Okay, lots of questions on potash. Let's talk about that. Like you said, potash prices are sitting around good, below mid-cycle, but too good, maybe Goldilocks. Can you talk about the markets a bit? Like, it looks like prices are a little bit weaker in US-
Yeah.
Pretty strong offshore markets. How would you look at it?
Yeah, I think that's right. I mentioned our Winter Fill Program in the U.S. that was oversubscribed. We were quite pleased with that. When it was done, we went up 20. On a short ton basis, yes, a little bit less than 3, you know, the equivalent of a metric ton at the sort of 370 that it is in Brazil. You know, these markets sort of ebb and flow, depending on what's going on internationally and supply and demand regionally. You know, what I would say is Brazil, as you say, Joel, has been kind of just a bit below mid-cycle. I mentioned $370. It might move up or down $3 a ton it seems, every week, we're in and about that range.
You know, they ended their season with historically low inventories in Brazil, hence, that's some of the strength in pricing is, as the Brazilians seek to rebuild inventory. There's still. It continues to be the case that it's a bit hand-to-mouth in that part of the world. You know, it's why we see some of the increased volatility in Brazil that we might, as we compare to previous years, we're seeing a bit more volatility. It's because when the Brazilians step out of the market, they step out of the market, and when they step in, sort of step in a big way and replenish those inventories. Again, inventories being replenished. We had a historically early contract with the Chinese. You know, that $349 helped to set the floor, as usual, globally.
It just speaks to the low inventories that were sitting at ports and inland at, in China, and the need for the Chinese to come get that contract in place, get those volumes flowing. We know that Chinese domestic production is declining, and it's been that way for years. It continues to decline. We know that the Laotian supply into China has been challenged, geotechnically challenged, production challenges, and you put that all together, and the Chinese continue to look to seaborne imports, continue to look for rail from Russia, and hence, with depleted inventories, the early contract settlement. We expect the Indians to follow here soon. You know, that again, as it relates to inventory and the need to get volume into the country.
Chinese are taking it all at the moment because they have a contract, and the Indians are gonna have to step in and do the same.
Yep.
Market to market, you know, you step back from all that, Joel, and you say, we talked about North American agriculture. You go globally, palm oil continues to be very strong. Coffee, cocoa continues to be very strong. You can go region to region, and we're expecting, again, we're saying 74 -77 million tons. Again, potash volume growth, demand growth, globally again this year. This will be the fourth year in a row, and, of course, we're gonna play our part in increasing our production.
I don't necessarily want to ask you the Jansen question, but the people want to ask.
Uh-huh
The Jansen question.
Yes.
In different permutations. Jansen was always so far off. You know, now it looks like they're gonna have first tons, let's reiterate, it's first tons and maybe by the second half of 2027, maybe become meaningful end of 2028 in potash, or 2029. It's getting here. How does that change the market, your positioning, or do you have to wait until they're on the market and then reassess then?
No, you know, again, you sort of step back and look at the potash industry over the last, I don't know, 15, 20 years, and ask the question: Is it growing? It just continues to grow. It's not linear, but on average, it's kind of that 2.5% average annual growth rates. That has been, on average, extraordinarily consistent. Again, 4 years in a row, we're back to trend level demand, what we would call trend level demand and demand growth, after all the volatility associated with the conflict in Eastern Europe. You look now to the end of the decade, early next, and you say: Well, probably an 80-85 million ton market continues to grow. It's going to need additional tons.
We do, you know, all that demand growth, we stack and where we see the tons coming from, and we have our own lens that we look through for that. We don't just take everyone's, you know, publicly announced, volume growth. We haircut as we see fit, and we factor that into the supply and demand stack, and then what role Nutrien plays in the context of supply, demand, and a balanced market. Through now, end of this decade, early next, we see a balanced market, and we would say we're in a balanced market today, and we see a balanced market through that time period.
I think importantly is, we apply our lens, we do, but, you know, if you look at every 10 years, announced plans, what people expect to do, there's usually about 6 or 7 million tons of supply destruction of some form in that, in that decade-long period, and that is mine floods or, you know, collapses or infrastructure-
We're due for a sinkhole somewhere.
Yeah. Well, I'm not-
It's been a decade.
I wouldn't wish that on anyone.
No.
I'm just saying on average, you know, those are the things that happen. As we apply our lens, but then once we do, everything kind of has to work pretty well in order to meet that growing demand. While we call it a balanced market, there's a version of this future, and probably skewed to that, where, you know, actually it could be even tighter.
If I think about how you model potash forecast, typically, you know, you'll come up with a global shipment number, and then you'll say, well, Nutrien should get 19%-20% market share, something like that. As Jansen comes on the next, you know, couple of years, is it safe to say your projections would be, you know, 19%, 20% becomes, I don't know the number, 18-19 or something like that? Like, is that how you know it? You'd still say 19-20 is yours?
Yeah, we're not changing our plans. I mean, again, you know, you look at, our ability to expand, it's kind of the $200 a ton.
Mm
CapEx, brownfield investments at our current six-mine network. We're not talking about lead times that are measured in the, you know, in the decades, or. We're talking about lead times, and it's mining machines and conveyance. I mean, the shops are built, the mills are built, some infrastructure investments on surface as it relates to loadout capability required. You add that all up, it's $200 a ton. That would be an order of magnitude less than a greenfield site. You can ask the question: In that mix, can Nutrien compete? We can absolutely compete. You know, you look at that cost curve, I mean, there's some production to the right of that cost curve that we'll see. In the meantime, no, Nutrien plans to.
We plan to be in the market the way that we always have been.
I got a question about long-term retail segment growth algorithm. Before doing that, maybe we could talk about, you know, two or three years ago, you gave a 2026 retail guide of getting around $2 billion EBITDA, $1.9 -$2.1 billion. You're going to come in this year now on your latest guidance around $1.85 billion, so maybe $150 million below your kind of expectations. Can you first explain sort of what you were thought of years ago, what ended up happening to be a little bit lower, and maybe we'll talk about going forward?
Yeah, you know, I would say probably the assumptions that we made a few years ago, and we started talking about this at the start of this, Joel, was some assumptions about just a bit better ag environment, compared to the one that we've, you know, maybe just coming through and the challenges, facing, you know, obviously the North American farmer, whether it's corn in the US, or whether it's canola in Canada, and other challenges globally that agriculture has faced with some assumptions about just a bit better ag environment, that how does that translate, then translates into our proprietary products and the uptake of those things. It translates in our ability to continue to organically grow. You know, when we talked about the $1.9 -$2.1 billion last year, and how we're...
Sorry, in 2024, as a target for this year and how we're guiding this year, you know, the delta is probably mostly just the ag environment. You know, I think importantly, if you look at what we have done over that period, I mean, it is growing, and we believe structurally growing earnings by $400 million in that business over that time frame. You look at how we're guiding this year, again, it's growth, earnings growth in our retail business. That's organic growth, it's network optimization. It's continuing to grow our proprietary products that we continue to stack it. We call structural in nature. That we get excited about.
We're planning an investor day again this year and, in the fall, and we'll be talking about exactly that, at our investor day again this year.
If I think about the growth algorithm going forward in retail, let's say, let's ignore tuck-ins for a second. What would you think is kind of the growth algorithm? You may have to talk about whether Brazil's in or out of that, but it's not that big part of the business. If we layer on tuck-ins, how would the growth algorithm change?
Yeah, I mean, you know, I don't like to hardwire sort of tuck-ins as something that's gonna, you know, stack earnings, only because we're very selective about that. It depends on the environment that we're in, and the opportunities that come our way. You know, what I would say, Joel, is one is, again, proprietary network optimization. We continue to see the opportunity to grow probably at the same kind of rate. If you look at the last five years, we can probably project that forward as a similar growth rate. I think importantly is, you know, part of the equation in earnings growth in our retail businesses have been the opportunity to pull out cost, and it's really very significant. That comes in the form of looking at unproductive branches and closing them.
It comes in the form of, you know, just overall SG&A and efficiency and productivity. We've had a particular focus on that in our retail business. We believe there's more there to be done, and it's in the context of, you know, a competitive landscape, changing ag environment, but it's also in the context of just productivity and efficiency. The investments we're making in technology that are gonna improve productivity pull out cost. I think when you put it all together, we can sort of say: we believe in the same kind of growth rates in our retail business that we've seen over the last 5 years, projecting that forward.
The stock's been working quite nicely lately. People are starting to get the story a bit more, hopefully, the last little while. You know, wrapping up the next minute here, what do you think people get wrong on Nutrien that you'd like to, you know, speak about?
You know, I think, I don't know that people are getting it wrong, Joel. I think it's just continuing to talk about what I started with, and that is, we're in a growing market and that has been quite ratable for some period of time. Yeah, it doesn't happen, like I say, linearly, but it has been happening. Among that, we believe we have the highest, quality assets in the business upstream of that acre. That quality is, you know, we can talk about asset quality from a number of prospects, quality of earnings, ability to convert to cash. That quality is growing, and that's by continuing to comb that portfolio and ask the question, you know: Can we improve?
In the meantime, pulling out cost, you know, I think that, when you put that all together, it's a story that says there's an opportunity here with what Nutrien currently has under its roof just to continue to improve. There's an opportunity for Nutrien to continue to grow in a market that's growing. Those two things put together has been, I think, is certainly part of the story.
Thanks, Ken.
Yep. Pleasure, Joel. Thank you.