Agrium (AGU) Tops Q4 EPS by 17c; Issues FY15 Outlook

Agrium (NYSE: AGU) reported Q4 EPS of $0.77, $0.17 better than the analyst estimate of $0.60. Revenue for the quarter came in at $2.71 billion versus the consensus estimate of $2.96 billion.

Agrium announced today its 2015 annual guidance of $7.00 to $8.50 earnings per share.

"Agrium has implemented annual guidance as part of our ongoing commitment to enhance the level of disclosure and transparency across our business, as the size and stability of our earnings and free cash flow continue to grow," said Chuck Magro, Agrium's President and CEO.

Prospective 2015 grower cash margins have moved back to historical average levels from the lows experienced in the fall of 2014. We expect the improvement to support normal levels of crop input demand in 2015. Despite some dampening of the crop input market and slightly lower corn acreage, we expect growers will continue to seek out important genetic seed offerings and utilize crop nutrients and crop protection products to ensure they maintain crop yield potential and remain competitive. Under our current North American acreage projections, we expect nutrient demand in North America to be slightly lower than in the preceding fertilizer year, but we anticipate strong spring demand as a result of relatively low fall applications.

Based on these and other assumptions, we expect Retail EBITDA to be $1.15-billion to $1.25-billion, and Retail nutrient sales volumes to be 9.7 to 10.2 million tonnes in 2015.

Based on our expected increase in utilization rate for our nitrogen assets, we anticipate nitrogen production to total 3.6 to 3.8 million tonnes in 2015. Natural gas prices declined sharply in late 2014, and Agrium has been actively hedging our gas requirements for 2015 since then. Our earnings per share guidance assumes NYMEX gas prices will be between $2.50 and $4.00 per MMBtu in 2015.

Agrium's expectation for potash production in 2015 includes incremental production from the expansion project at our Vanscoy mine, for which the tie-in was completed in the fourth quarter of 2014. We expect to produce between 1.9 and 2.2 million tonnes of potash in 2015.

Finance costs are expected to be in the range of $215-million to $235-million in 2015, up from 2014 levels. The increase is due to the cessation of capitalized interest on the Vanscoy potash expansion as construction is completed. Agrium's annual effective tax rate is expected to be approximately 27 to 28 percent, which is a return to a more normal level, following a number of adjustments that lowered the effective tax rate in 2014.

Total capital expenditures are expected to be in the range of $1.2-billion to $1.3-billion, of which approximately $500-million to $550-million is expected to be sustaining capital expenditures. This is a reduction from $2.0-billion of total capital expenditure in 2014, as we complete our Wholesale capacity expansion projects in 2015.

Based on the above factors, Agrium expects to achieve annual earnings of $7.00 to $8.50 per share in 2015. These forecasts and additional measures are summarized in the table below.

                                                                            

                                                                            

Agrium is providing the following guidance for the fiscal year 2015         

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                                                               Annual 

                                                          Low          High 

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EPS                                                      $7.00         $8.50

Guidance assumptions:                                                       

Wholesale:                                                                  

  Production tonnes:                                                        

  Nitrogen                                         3.6 million   3.8 million

  Potash                                           1.9 million   2.2 million

Retail:                                                                     

  EBITDA                                         $1.15-billion $1.25-billion

  Crop nutrient sales tonnes                       9.7 million  10.2 million

Other:                                                                      

  Finance costs                                   $215-million  $235-million

  Tax rate                                                 27%           28%

  Sustaining capital expenditures                 $500-million  $550-million

  Total capital expenditures                      $1.2-billion  $1.3-billion

  Canada/US foreign exchange rate                         1.12          1.25

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Guidance excludes the impact of discontinued operations, share based payments expense (recovery), gains or losses on foreign exchange and non-qualifying commodity hedges and non-recurring items. Volumetric and earnings estimates assume normal seasonal growing and harvest patterns in the geographies where Agrium operates.

For earnings history and earnings-related data on Agrium (AGU) click here.

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