Agrium reports strong fourth quarter results
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CALGARY, ALBERTA -- (Marketwired) -- 02/09/16 -- ALL AMOUNTS ARE STATED IN U.S.$
Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today 2015 fourth quarter net earnings from continuing operations of $200-million ($1.45 diluted earnings per share), compared to $70-million ($0.46 diluted earnings per share) in the fourth quarter of 2014. The increased net earnings were driven by strong performance from our Wholesale business unit, which achieved reduced cost of production and higher overall sales volumes for all three nutrients. Retail's fourth quarter earnings were also higher than last year, despite the wet weather in the U.S. during the fall application season. On an annual basis, 2015 net earnings from continuing operations were $988-millon ($6.98 diluted earnings per share) compared to $798-millon ($5.51 diluted earnings per share) in 2014.
Highlights:
-- Fourth quarter adjusted net earnings of $209-million or $1.52 per share
(see page 2 for adjusted net earnings reconciliation)(1), the second
highest fourth quarter results on record.
-- Our results include an $18-million restructuring expense ($0.10 per
share) associated with the portfolio review and cost reduction measures
undertaken, which was not included in the adjusted net earnings
reconciliation on page 2.
-- Wholesale's fourth quarter Adjusted EBITDA(2) of $372-million
demonstrates improved nitrogen and potash production performance,
delivering higher sales volumes and significantly lower production
costs.
-- The Canpotex proving run for the Vanscoy expansion was highly
successful. We demonstrated our nameplate capacity within a year of
mechanical completion, which increased our allocation to 10.3 percent of
total Canpotex shipments starting in 2016.
-- Retail EBITDA(2) was higher than the same quarter last year as a result
of strong year-end rebates for crop protection products and seed as well
as lower operating expenses as a result of cost reduction initiatives
implemented in 2015.
-- On an annual basis, Retail U.S. normalized comparable store sales was up
2 percent versus a 2 percent decline in 2014.
-- On an annual basis, 2015 free cash flow(3) increased to $1.2-billion, or
$8.59 per share, compared to $841-million, or $5.85 per share in 2014.
-- Agrium has announced a 2016 annual guidance range of $5.50 to $7.00
diluted earnings per share (see page 3 for further details).
"Agrium achieved a strong finish to 2015, despite lower nutrient prices and challenging commodity markets. A key differentiator for the company was our integrated strategy, which helped provide stability in our earnings. We also benefited from the proactive steps we took to further strengthen the company over the past year, including a renewed focus on execution and controlling our controllables. These benefits flowed through to our bottom line, helped us to generate $8.59 of free cash flow per share and drive increased returns to shareholders, while still investing in future earnings growth," commented Chuck Magro, Agrium's President and CEO.
(1) Quarter effective tax rate of 20 percent used for adjusted net earnings and per share calculations. These are non-IFRS measures which represent net earnings adjusted for certain income (expenses) that are considered to be non-operational in nature. We believe these measures provide meaningful comparison to the earnings of other companies by eliminating share-based payments expense (recovery), gains (losses) on foreign exchange and related gains (losses) on non-qualifying derivative hedges and significant non-operating, non-recurring items. These should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS and may not be directly comparable to similar measures presented by other companies.
(2) EBITDA is earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization while Adjusted EBITDA is EBITDA before finance costs, income taxes, depreciation and amortization of joint ventures. These are non-IFRS measures. Refer to section "Non-IFRS Measures".
(3) This is a non-IFRS measure. Refer to section "Non-IFRS Measures".
"Nutrient prices have been under pressure globally but we are optimistic we will see a strong spring application season across North America. We remain focused on Operational Excellence and our growth strategy, controlling what we can in order to reduce our cost position, while continuing to optimize and grow our more stable Retail operations," added Mr. Magro.
ADJUSTED NET EARNINGS RECONCILIATION
----------------------------------------------------------------------------
Three months ended Twelve months ended
December 31, 2015 December 31, 2015
----------------------------------------------------------------------------
(millions of U.S. Net Net
dollars, except earnings Per earnings Per
per share Expense impact share Expense impact share
amounts) (income) (post-tax) (a) (income) (post-tax) (a)
----------------------------------------------------------------------------
200 1.45 988 6.98
----------------------------------------------------------------------------
Adjustments:
----------------------------------------------------------------------------
Share-based
payments 15 12 0.09 51 37 0.26
----------------------------------------------------------------------------
Foreign exchange
(gains) loss
net of related
non-qualifying
derivatives (5) (4) (0.03) 8 6 0.04
----------------------------------------------------------------------------
Gain on sale of
assets (17) (14) (0.10) (55) (40) (0.28)
----------------------------------------------------------------------------
Goodwill
impairment 19 15 0.11 19 14 0.10
----------------------------------------------------------------------------
Tax rate
adjustment (b) - - - 21 21 0.15
----------------------------------------------------------------------------
Adjusted net
earnings (c) 209 1.52 1,026 7.25
----------------------------------------------------------------------------
(a) Represents diluted per share information attributable to equity holders
of Agrium
(b) Tax rate adjustment mainly relates to the increase in current and
deferred taxes due to an increase in the Alberta
corporate income tax rate effective July 1, 2015.
(c) Quarter and annual effective tax rates of 20 percent and 27.6 percent
used for adjusted net earnings and per
share calculations
MARKET OUTLOOK
The macroeconomic environment has continued to be challenging for commodities, resulting in many commodities trading at multi-year lows in early 2016. While agricultural commodities are driven by unique supply and demand fundamentals, prices have not escaped the general negative sentiment toward commodities. In addition to this, the prices of most crops have been pressured by another year of high global crop yields in 2015, allowing the global inventories of many major grains and oilseeds to increase. Furthermore, the strength in the U.S. dollar relative to most other global currencies has increased the competitiveness of non-U.S. growers, which has led to lower than expected U.S. grain and oilseed exports and added pressure on prices.
Despite the weak macroeconomic environment, we expect growers within North America and other major agricultural markets will plant historically high crop acreage again in 2016, supporting robust crop input demand. In the U.S., growers are expected to increase overall crop acreage, including a one to three million acre increase in corn area, as significant crop acreage was lost in 2015 due to excess moisture in parts of the U.S. Corn Belt. Outside of the U.S., the weakness in domestic currencies has led to relatively attractive domestic crop prices, which is expected to support planted acreage. Analysts project that North American corn, soybean, cotton and canola acreage could increase in 2016 if weather cooperates, which is supportive of overall seed demand, but like 2015, growers may be more discerning in trait selection to optimize for yield depending on field locations. Crop protection prices are expected to be relatively stable and we expect that lower year-over-year cash rents and significantly lower fuel and crop nutrient prices will provide support for North American crop input expenditures in 2016.
Crop nutrient prices have declined over the past few months, driven by a combination of supply and demand factors. The fall application season in the U.S. was expected to be supported by the relatively early end of the harvest season; however the same warm weather that supported a rapid harvest delayed fall ammonia applications because soil temperatures were too high. Following the warm start, the ability of growers to apply nutrients was constrained by persistent wet weather. November 2015 was the wettest November in the U.S. since 1985 and December 2015 was the wettest December on record in addition to being the warmest. The combination of wet and warm weather meant that application equipment could not get into the field to apply crop nutrients, resulting in below-expected fall applications. The lower than expected fall applications left crop nutrient inventories at higher than expected levels throughout the supply chain and pressured prices of all crop nutrients. The combination of expected increase in U.S. corn acreage and the poor fall application season is anticipated to result in strong U.S. crop nutrient demand in the first half of 2016. Based on expected crop acreage, North American crop nutrient demand is expected to increase by 1 to 3 percent in 2015/2016, but phosphate and potash demand may fall below that range as volumes lost due to the poor fall season may not be fully made up in the first half of 2016.
Global urea prices have declined significantly below the cost of production of the high-cost Chinese producers. Even so, Chinese urea production has remained surprisingly strong. While Chinese urea production has not declined as much as expected, Chinese urea exports declined by 26 percent year-over-year in the second half of 2015. Chinese urea costs have declined due to lower coal prices and the weakened yuan, but costs have not declined as much as urea prices. As a result of the continued price weakness and increased non-Chinese urea supplies, Chinese urea exports are projected to decline from 2015 levels to between 12.5 and 13.5 million tonnes in 2016. We expect that the combination of poor Chinese urea profitability and strong North American demand will support urea prices entering the spring season. Chinese phosphate supplies have also pressured that market. Chinese diammonium phosphate and monoammonium phosphate exports reached a record 10.6 million tonnes in 2015 and are expected to remain relatively flat in 2016. On the demand side, the Brazilian market for crop nutrients continued to fall short of expectations in late 2015 as credit constraints and the weak value of the Brazilian real pressured demand for all nutrients. Given that these challenges remain, we expect 2016 Brazilian import demand for all products to remain relatively flat to 2015. The below-average Indian monsoon and weak rupee value pressured demand for phosphate and potash in late 2015, while 2015 urea imports set a record, all of which has led to building inventories and the belief that Indian import demand will be relatively low to start 2016.
Global potash markets have been under pressure recently due to a combination of factors, including the sizeable shift in global currencies, a build-up of global inventories due to strong shipments earlier in the year, Indian demand impacted by the below average monsoon and buyers delaying purchases due to the current price uncertainty. We anticipate solid potash demand in global markets in 2016, with global shipments expected to come in between 58 to 60 million tonnes in 2016, relative to the 58.5 million tonnes shipped in 2015.
We expect macroeconomic challenges in combination with current crop prices to be a risk in 2016. However, the arrival of the Northern Hemisphere's spring application season over the next couple of months is expected to result in improved demand, particularly in light of the poor fall season in the U.S. and the fact declining crop nutrient prices have caused buyers around the world to sit back and wait for stability. We also expect there will be a supply response across all three major nutrients in reaction to current price levels - some of which we have seen already in the form of production cuts and closures.
2016 ANNUAL GUIDANCE
Based on our Market Outlook, Agrium expects to achieve annual diluted earnings per share of $5.50 to $7.00 in 2016. We have maintained a range encompassing approximately $300-million of EBITDA variability to reflect the risk and opportunity associated with crop nutrient prices and demand for crop inputs. We are assuming normal spring and fall application seasons, recognizing there is always a risk that inclement weather could affect the timing and duration of each season. Our earnings per share guidance assumes some recovery from current nitrogen prices during the key application seasons.
Based on these and other assumptions regarding crop nutrient prices and demand for crop nutrients set out under the heading "Market Outlook", we expect Retail EBITDA to be $1.075-billion to $1.175-billion, and Retail nutrient sales volumes to be 9.8 to 10.2 million tonnes in 2016.
Based on our expected increase in utilization rate for our nitrogen assets, we anticipate nitrogen production to total 3.5 to 3.7 million tonnes. Agrium has continued its active hedging program for our gas requirements in 2016 as we expect natural gas prices to remain at levels consistent with 2015. Our earnings per share guidance assumes NYMEX gas prices will be between $2.05 and $2.85 per MMBtu in 2016.
Agrium's expectation for potash production in 2016 includes incremental production from the completed expansion at our Vanscoy mine. We expect to produce between 2.4 and 2.6 million tonnes of potash in 2016.
Total capital expenditures are expected to be in the range of $800-million to $900-million, of which approximately $500-million to $550-million is expected to be sustaining capital expenditures. Our investing capital program planned for 2016 includes the completion of our Borger brownfield urea expansion.
Agrium's annual effective tax rate for 2016 is expected to be 27 to 28 percent, consistent with 2015.
This guidance and updated additional measures and related assumptions are summarized in the following table. Guidance excludes the impact of share-based payments expense (recovery), gains (losses) on foreign exchange and related non-qualifying derivative hedges and significant non-operating, non-recurring items.
2016 ANNUAL GUIDANCE RANGE AND ASSUMPTIONS
----------------------------------------------------------------------------
Annual
Low High
----------------------------------------------------------------------------
Diluted EPS (in U.S. dollars) $5.50 $7.00
----------------------------------------------------------------------------
Guidance assumptions:
----------------------------------------------------------------------------
Wholesale:
----------------------------------------------------------------------------
Production tonnes:
----------------------------------------------------------------------------
Nitrogen (millions) 3.5 3.7
----------------------------------------------------------------------------
Potash (millions) 2.4 2.6
----------------------------------------------------------------------------
Retail:
----------------------------------------------------------------------------
EBITDA (millions of U.S. dollars) $1,075 $1,175
----------------------------------------------------------------------------
Crop nutrient sales tonnes (millions) 9.8 10.2
----------------------------------------------------------------------------
Other:
----------------------------------------------------------------------------
Tax rate 28% 27%
----------------------------------------------------------------------------
Sustaining capital expenditures (millions of U.S
dollars) $500 $550
----------------------------------------------------------------------------
Total capital expenditures (millions of U.S.
dollars) $800 $900
----------------------------------------------------------------------------
Canada/U.S. foreign exchange rate $1.37 $1.42
----------------------------------------------------------------------------
NYMEX gas price ($/MMBtu) $2.85 $2.05
----------------------------------------------------------------------------
February 9, 2016
All comparisons of results for the fourth quarter of 2015 (three months ended December 31, 2015) and for the twelve months ended December 31, 2015 are against results for the fourth quarter of 2014 (three months ended December 31, 2014) and twelve months ended December 31, 2014. All dollar amounts refer to United States ("U.S.") dollars except where otherwise stated. This news release should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2014 Annual Report, available at www.agrium.com.
The financial measures EBITDA, Adjusted EBITDA, free cash flow, and cash cost of product manufactured used in this news release are not prescribed by, and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Our method of calculation may not be directly comparable to that of other companies. We consider these non-IFRS financial measures to provide useful information to both management and investors in measuring our financial performance and financial condition. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Please refer to the section entitled "Non-IFRS Financial Measures" for further details, including a reconciliation of such measures to their most directly comparable measure calculated in accordance with IFRS.
The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit Committee, comprised exclusively of independent directors. The Audit Committee reviews, and prior to publication, approves this disclosure, pursuant to the authority delegated to it by the Board of Directors. In respect of Forward-Looking Statements, please refer to the section entitled "Forward-Looking Statements".
2015 Fourth Quarter Operating Results
CONSOLIDATED NET EARNINGS
Financial Overview
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars, except
per share amounts and where noted) 2015 2014 Change % Change
----------------------------------------------------------------------------
Sales 2,407 2,705 (298) (11)
----------------------------------------------------------------------------
Gross profit 900 732 168 23
----------------------------------------------------------------------------
Expenses 576 625 (49) (8)
----------------------------------------------------------------------------
Earnings before finance costs and
income taxes (EBIT) 324 107 217 203
----------------------------------------------------------------------------
Net earnings from continuing
operations 200 70 130 186
----------------------------------------------------------------------------
Net loss from discontinued
operations - (19) 19 (100)
----------------------------------------------------------------------------
Net earnings 200 51 149 292
----------------------------------------------------------------------------
Diluted earnings per share from
continuing operations 1.45 0.46 0.99 215
----------------------------------------------------------------------------
Diluted loss per share from
discontinued operations - (0.13) 0.13 (100)
----------------------------------------------------------------------------
Diluted earnings per share 1.45 0.33 1.12 339
----------------------------------------------------------------------------
Effective tax rate (%) 20 (4) N/A N/A
----------------------------------------------------------------------------
Sales and Gross Profit
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars) 2015 2014 Change
----------------------------------------------------------------------------
Sales
----------------------------------------------------------------------------
Retail 1,765 2,057 (292)
----------------------------------------------------------------------------
Wholesale 888 897 (9)
----------------------------------------------------------------------------
Other (246) (249) 3
----------------------------------------------------------------------------
2,407 2,705 (298)
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Gross profit
----------------------------------------------------------------------------
Retail 599 614 (15)
----------------------------------------------------------------------------
Wholesale 320 130 190
----------------------------------------------------------------------------
Other (19) (12) (7)
----------------------------------------------------------------------------
900 732 168
----------------------------------------------------------------------------
-- Improved utilization rates in our nitrogen and potash segments led to an
increase in product available for sale and higher overall Wholesale
sales volumes. Realized selling prices, on the other hand, decreased as
a result of weaker market conditions. Reduced sales of product purchased
for resale contributed to the decrease in sales as Agrium exited non-
core, low return portions of this business.
-- Wholesale's gross profit significantly increased due to manufacturing
cost efficiencies associated with higher production volumes, reduced
overall fixed costs and lower natural gas input costs for the fourth
quarter compared to the same periods last year.
-- Retail's sales and gross profit decreased for the fourth quarter
compared to the same period last year primarily due to unfavorable
weather conditions and the closure of one of our livestock export
businesses in Australia. A decrease in gross profit was partially offset
by higher rebates received in the fourth quarter of 2015.
Expenses
-- General and administrative expenses decreased by $4-million (5 percent)
for the fourth quarter compared to the same period last year as a result
of reduced payroll and office expenses related to our ongoing
Operational Excellence program.
-- Our share-based payments expense was lower by $10-million due primarily
to a slight decrease in our share price in the fourth quarter of 2015
compared to a share price increase in the fourth quarter of 2014.
Other expenses breakdown
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars) 2015 2014
----------------------------------------------------------------------------
(Gain) loss on foreign exchange and
related derivatives and commodity
derivatives not designated as hedges (5) 31
----------------------------------------------------------------------------
Interest income (16) (22)
----------------------------------------------------------------------------
Gain on sale of assets (17) -
----------------------------------------------------------------------------
Goodwill impairment 19 -
----------------------------------------------------------------------------
Environmental remediation and asset
retirement obligations 1 3
----------------------------------------------------------------------------
Bad debt expense (recovery) 4 (11)
----------------------------------------------------------------------------
Potash profit and capital tax 3 1
----------------------------------------------------------------------------
Other 38 7
----------------------------------------------------------------------------
27 9
----------------------------------------------------------------------------
In the fourth quarter of 2015, other expenses increased by $18-million due to the following:
-- Costs of $18-million were incurred in the implementation of our
Operational Excellence initiatives in the current quarter relating
primarily to severance and closure costs.
-- We recorded a goodwill impairment of $19-million for our Wholesale
Europe operations.
-- We recognized a $17-million gain from the sale of our West Sacramento
nitrogen upgrade facility.
-- We had losses of $15-million on natural gas derivatives in the fourth
quarter of 2014, which we recorded directly to other expenses. 2015 did
not have comparable results, as effective January 1, 2015, we began to
designate all of our natural gas derivatives as qualifying hedges for
accounting purposes. Related gains or losses are now recorded as part of
cost of product sold when we sell the related product, while unrealized
gains or losses are recorded in equity.
-- Bad debt recovery of $11-million was recorded in the fourth quarter of
2014.
Depreciation and Amortization
----------------------------------------------------------------------------
Three months ended December 31,
----------------------------------------------------------------------------
(millions of U.S.
dollars) 2015
----------------------------------------------------------------------------
Cost of General
product and
sold Selling administrative Total
----------------------------------------------------------------------------
Retail 1 64 1 66
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen 18 18
----------------------------------------------------------------------------
Potash 28 28
----------------------------------------------------------------------------
Phosphate 14 14
----------------------------------------------------------------------------
Other (a) 4 1 5
----------------------------------------------------------------------------
64 - 1 65
----------------------------------------------------------------------------
Other - - 4 4
----------------------------------------------------------------------------
Total 65 64 6 135
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Three months ended December 31,
----------------------------------------------------------------------------
(millions of U.S.
dollars) 2014
----------------------------------------------------------------------------
Cost of General
product and
sold Selling administrative Total
----------------------------------------------------------------------------
Retail 1 75 1 77
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen 21 21
----------------------------------------------------------------------------
Potash 15 15
----------------------------------------------------------------------------
Phosphate 14 14
----------------------------------------------------------------------------
Other (a) 5 3 8
----------------------------------------------------------------------------
55 - 3 58
----------------------------------------------------------------------------
Other - - 3 3
----------------------------------------------------------------------------
Total 56 75 7 138
----------------------------------------------------------------------------
(a)Includes product purchased for resale, ammonium sulfate, Environmentally
Smart Nitrogen� (ESN) and other products
Effective Tax Rate
-- The effective tax rate on continuing operations of 20 percent for the
fourth quarter was higher than the tax rate of (4) percent for the
comparative quarter in 2014 due to the recognition of previously
unrecognized tax assets in the fourth quarter of 2014. Excluding the
recognition of the one-time previously unrecognized tax assets, the
effective tax rate would have been 19 percent.
BUSINESS SEGMENT PERFORMANCE
Retail
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars, except where
noted) 2015 2014 Change
----------------------------------------------------------------------------
Sales 1,765 2,057 (292)
----------------------------------------------------------------------------
Cost of product sold 1,166 1,443 (277)
----------------------------------------------------------------------------
Gross profit 599 614 (15)
----------------------------------------------------------------------------
EBITDA 199 181 18
----------------------------------------------------------------------------
Selling expense as a percentage of sales
(%) 26 25 1
----------------------------------------------------------------------------
-- Retail sales and gross profit during the quarter were lower than the
same period last year due to lower crop input prices and wet weather
across the U.S. impacting the fall application season.
-- Total Retail selling expenses decreased by 10 percent compared to the
prior year due to lower depreciation and amortization, the impact of
currency valuations in our international businesses and cost reduction
measures taken across the business in 2015.
-- Total EBITDA increased 10 percent over the fourth quarter of 2014
primarily due to lower selling expenses, strong margins for crop
protection products and improved seed results. Regionally, all key
geographies performed well. Canada and the U.S. both showed higher
fourth quarter EBITDA figures. Australian EBITDA was down slightly
compared to the prior year; however, EBIT in Australia increased
compared to the prior quarter due to a reduction in depreciation and
amortization. Our U.S. Retail business also reported an annual 2 percent
increase in normalized comparable store sales versus a decrease of 2
percent in 2014.
----------------------------------------------------------------------------
Three months ended December 31,
Gross profit
Sales Gross profit (%)
-------------------- -------------------- -------------
(millions of U.S.
dollars, except
where noted) 2015 2014 Change 2015 2014 Change 2015 2014
----------------------------------------------------------------------------
Crop nutrients 843 972 (129) 154 156 (2) 18 16
----------------------------------------------------------------------------
Crop protection
products 541 552 (11) 268 260 8 50 47
----------------------------------------------------------------------------
Seed 75 91 (16) 54 50 4 72 55
----------------------------------------------------------------------------
Merchandise 156 211 (55) 27 30 (3) 17 14
----------------------------------------------------------------------------
Services and other 150 231 (81) 96 118 (22) 64 51
----------------------------------------------------------------------------
Crop nutrients
-- Total crop nutrient sales were 13 percent lower compared to the same
period last year due to weaker global pricing and lower application
volumes due to weather challenges. However, crop nutrient margins per
tonne improved, which offset the lower volumes and resulted in only a 1
percent decline in gross profit.
-- Total crop nutrient volumes were 6 percent lower this quarter across our
Retail operations compared to the same period last year. Volumes were
lower in the U.S. due to excess rain in the fall application window,
while in Canada and Australia, growers were conservative given the
uncertainty over nutrient and agricultural markets.
-- Total crop nutrient margins increased slightly on a per tonne basis and
gross profit as a percentage of sales rose from 16 percent in the fourth
quarter of 2014 to 18 percent this quarter reflecting a focus on
inventory management.
Crop protection products
-- Total crop protection sales were down 2 percent this quarter, as
slightly higher sales in North America were offset by lower sales in our
International operations. U.S. sales were driven by a strong herbicide
application season, while Canadian growers purchased higher volumes
ahead of the weakening Canadian dollar. In Australia, sales were lower
due to the weakening of the Australian dollar against the U.S. dollar;
in local currency, Australian sales were higher in the current quarter.
-- Crop protection margins as a percentage of sales increased 3 percent,
primarily due to year-end rebate reconciliation and a higher margin
product mix in the current quarter.
-- Proprietary product sales as a percentage of total sales increased 2
percent compared to the same period in the prior year.
Seed
-- Seed sales were down 18 percent this quarter compared to the same period
last year, primarily due to the significant reduction in planted wheat
acres in the U.S. due to wet weather and lower wheat prices.
-- Despite lower sales, seed margins increased 8 percent compared to the
prior year due to strong supplier rebates and seed sales mix.
Merchandise
-- Merchandise sales decreased compared to the same period last year as a
result of lower fuel pricing and demand in Canada and lower animal
health and fencing product sales in Australia due to dry conditions.
-- Gross profit as a percentage of sales increased 3 percent this quarter,
primarily due to a reduction in the lower-margin Canadian fuel business
compared to the prior year.
Services and other
-- Sales for services and other was down 35 percent this quarter, due
mainly to the closure of one of our livestock export businesses in
Australia. Application and other services were down in North America,
due to the wet conditions in the U.S. during the fall application
season.
Wholesale
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars, except where
noted) 2015 2014 Change
----------------------------------------------------------------------------
Sales 888 897 (9)
----------------------------------------------------------------------------
Sales volumes (tonnes 000's) 2,292 1,999 293
----------------------------------------------------------------------------
Cost of product sold 568 767 (199)
----------------------------------------------------------------------------
Gross profit 320 130 190
----------------------------------------------------------------------------
Adjusted EBITDA 372 150 222
----------------------------------------------------------------------------
Expenses 33 46 (13)
----------------------------------------------------------------------------
-- Wholesale successfully completed its Canpotex proving run for the
Vanscoy potash expansion at the end of the fourth quarter, resulting in
our annual Canpotex allocation increasing to 10.3 percent in 2016 from
7.3 percent in 2015. Higher operating production rates at our nitrogen
facilities also supported increased sales volumes this quarter. Total
sales were slightly lower this quarter due to lower global nutrient
prices and our decision to sell non-core, lower-return purchase for
resale facilities in 2015 related to our asset portfolio review.
-- Adjusted EBITDA increased by $222-million this quarter, and more than
doubled compared to the same quarter last year. The increase was
primarily due to lower production costs per tonne and higher utilization
rates from our potash and nitrogen operations.
Wholesale product information
----------------------------------------------------------------------------
Three months ended December 31,
Nitrogen Potash Phosphate
----------------- -------------------- -----------------
2015 2014 Change 2015 2014 Change 2015 2014 Change
----------------------------------------------------------------------------
Gross profit (U.S.
dollar millions) 186 113 73 63 (50) 113 37 37 -
----------------------------------------------------------------------------
Sales volumes
(tonnes 000's) 912 879 33 656 19 637 325 305 20
----------------------------------------------------------------------------
Selling price
($/tonne) 403 459 (56) 267 482 (215) 610 656 (46)
----------------------------------------------------------------------------
Cost of product sold
($/tonne) 199 331 (132) 171 2,992 (2,821) 495 534 (39)
----------------------------------------------------------------------------
Gross margin
($/tonne) 204 128 76 96 (2,510) 2,606 115 122 (7)
----------------------------------------------------------------------------
Nitrogen
-- Nitrogen gross profit increased by 65 percent over the same period last
year as a result of higher sales volumes and significantly lower cost of
production.
-- Sales volumes increased by 4 percent over the same period last year,
driven by stronger urea and ammonia sales volumes. The increase was due
to strong demand in our core markets and higher on-stream time at our
production facilities, creating additional product availability compared
to the same period last year. Sales volumes were partly impacted by a
narrow window for ammonia application in the U.S. and lower nitrogen
solution sales volumes due to the closure and subsequent sale of our
West Sacramento upgrading facility in 2015.
-- Cost of product sold per tonne was 40 percent lower than the same period
last year. Operational improvements and higher on-stream time compared
to the same period last year decreased fixed costs per tonne, while
lower natural gas costs reduced variable costs. The weaker Canadian
dollar also reduced operating costs at our Canadian plants.
-- Nitrogen margins were $204 per tonne, a $76 per tonne increase over the
same period last year, despite a 12 percent reduction in average selling
prices.
Natural gas prices: North American indices and North American Agrium prices
----------------------------------------------------------------------------
Three months ended December
31,
(U.S. dollars per MMBtu) 2015 2014
----------------------------------------------------------------------------
Overall gas cost excluding realized derivative
impact $2.15 $3.47
----------------------------------------------------------------------------
Realized derivative impact $0.31 $0.15
----------------------------------------------------------------------------
Overall gas cost $2.46 $3.62
----------------------------------------------------------------------------
Average NYMEX $2.28 $3.94
----------------------------------------------------------------------------
Average AECO $2.00 $3.17
----------------------------------------------------------------------------
As of January 1, 2015, we have designated all of our natural gas derivatives as accounting hedges(1), with realized gains and losses now recorded to cost of product sold (which also includes transportation and administration costs).
(1) In the prior year, unrealized and realized gains and losses on derivatives not designated as hedges were included in other expenses.
Potash
-- Potash gross profit this quarter was $113-million higher than the same
period last year. The significant increase was due to higher production
volumes and lower costs this quarter after the completion of the Vanscoy
expansion project as compared to the significant outage in the fourth
quarter of 2014 in order to tie-in the expansion, which resulted in a
negative gross profit of $50-million.
-- Sales volumes were 637,000 tonnes higher compared to the same period in
the prior year. Production volumes this quarter were 691,000 tonnes and
the Canpotex proving run was completed successfully before the end of
2015. We expect Agrium's new Canpotex allotment will be 10.3 percent of
Canpotex's total annual international shipments.
-- Realized selling prices were lower than the same period last year due to
slow spot market demand in both domestic and international markets.
-- Cost of product sold was reduced as a result of cost efficiencies
associated with the ramp-up of the Vanscoy expansion compared to the
outage last year for the final tie-in of the expansion project. The
significant weakening of the Canadian dollar also reduced production
costs reported in U.S. dollars. As a result, cash cost of product
manufactured continues to improve and was $64 per tonne this quarter
compared to $89 per tonne in the third quarter of 2015.
Phosphate
-- Sales volumes were slightly higher than last year, while reduced selling
prices were largely offset by lower cost of production. As a result,
phosphate margin per tonne was only 6 percent lower than the same
quarter last year.
-- Phosphate gross profit was unchanged from the prior year.
Wholesale Other
Wholesale Other: gross profit breakdown
----------------------------------------------------------------------------
Three months ended December 31,
(millions of U.S. dollars) 2015 2014 Change
----------------------------------------------------------------------------
Ammonium sulfate 16 14 2
----------------------------------------------------------------------------
ESN 15 13 2
----------------------------------------------------------------------------
Product purchased for resale 1 3 (2)
----------------------------------------------------------------------------
Other 2 - 2
----------------------------------------------------------------------------
34 30 4
----------------------------------------------------------------------------
-- Gross profit for Wholesale's Other product category increased this
quarter primarily due to higher ammonium sulfate sales volumes and
higher ESN margins resulting from lower cost of product sold. This was
partly offset by lower ESN realized selling prices.
Expenses
-- Expenses in the current quarter were $13-million lower than the same
period last year as a result of lower selling and general administrative
expenses and a $17-million gain on sale of the West Sacramento upgrading
facility. Partially offsetting this is a $19-million goodwill impairment
in our European purchase for resale business resulting from ongoing
portfolio review in 2015.
Other
EBITDA for our Other non-operating business unit for the fourth quarter of 2015 had a net expense of $92-million, compared to a net expense of $78-million for the fourth quarter of 2014. The variance was due to the following:
-- $7-million higher gross profit elimination expense as a result of higher
inter-segment inventory held at the end of the fourth quarter of 2015
-- Increase of $12-million in other expenses of our Other business unit
primarily due to costs incurred in implementing our Operational
Excellence initiatives including severance and closure costs
-- $10-million lower share-based payments expenses due primarily to a
slight decrease in our share price in the fourth quarter of 2015
compared to a share price increase in the same period last year
NORMAL COURSE ISSUER BID
In January 2015, the Toronto Stock Exchange (TSX) accepted Agrium's notice of intention to make a normal course issuer bid (NCIB) whereby Agrium may purchase up to 7,185,866 common shares on the TSX and New York Stock Exchange from January 26, 2015 to January 25, 2016. In 2015, we purchased for cancellation 5,574,331 shares at an average share price of $100.25 for total consideration of $559-million. No shares were repurchased in 2016 to the date of expiry.
OUTSTANDING SHARE DATA
Agrium had 138,169,000 outstanding shares at January 31, 2016.
SELECTED QUARTERLY INFORMATION ---------------------------------------------------------------------------- (millions of U.S. dollars, 2015 2015 2015 2015 2014 2014 2014 2014 except per share amounts) Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1 ---------------------------------------------------------------------------- Sales 2,407 2,524 6,992 2,872 2,705 2,920 7,338 3,079 ---------------------------------------------------------------------------- Gross profit 900 696 1,708 584 732 665 1,599 556 ---------------------------------------------------------------------------- Net earnings from continuing operations 200 99 675 14 70 91 625 12 ---------------------------------------------------------------------------- Net loss from discontinued operations - - - - (19) (41) (9) (9) ---------------------------------------------------------------------------- Net earnings 200 99 675 14 51 50 616 3 ---------------------------------------------------------------------------- Earnings per share from continuing operations attributable to equity holders of Agrium: ---------------------------------------------------------------------------- Basic and diluted 1.45 0.72 4.71 0.08 0.46 0.63 4.34 0.08 ---------------------------------------------------------------------------- Loss per share from discontinued operations attributable to equity holders of Agrium: ---------------------------------------------------------------------------- Basic and diluted - - - - (0.13) (0.28) (0.06) (0.06) ---------------------------------------------------------------------------- Earnings per share attributable to equity holders of Agrium: ---------------------------------------------------------------------------- Basic and diluted 1.45 0.72 4.71 0.08 0.33 0.35 4.28 0.02 ----------------------------------------------------------------------------
The agricultural products business is seasonal. Consequently, year-over-year comparisons are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections from accounts receivables generally occur after the application season is complete, and our customer prepayments are concentrated in December and January.
NON-IFRS FINANCIAL MEASURES
Certain financial measures in this news release are not prescribed by IFRS. We consider these financial measures discussed herein to provide useful information to both management and investors in measuring our financial performance and financial condition.
IFRS requires that we provide and include subtotals and other financial measures in our Consolidated Financial Statements. Such measures become IFRS measures by virtue of being included in the Consolidated Financial Statements. Other measures that are not specifically defined under IFRS and may not be comparable are non-IFRS measures. These non-IFRS measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS.
The following table outlines our non-IFRS financial measures, their definitions and why management uses each measure.
----------------------------------------------------------------------------
Why We Use the Measure
Non-IFRS financial Definition and Why it is Useful to
measures Investors
----------------------------------------------------------------------------
EBITDA Earnings (loss) from EBITDA is frequently used
continuing operations by investors and analysts
before finance costs, for valuation purposes
income taxes, when multiplied by a
depreciation and factor to estimate the
amortization enterprise value of a
company. EBITDA is also a
component in the
determination of annual
incentive compensation
for certain management
employees, and in
calculation of certain of
our debt covenants.
----------------------------------------------------------------------------
Adjusted EBITDA EBITDA before finance Useful in evaluating our
costs, income taxes, business performance by
depreciation and including our
amortization of joint proportionate share of
ventures joint ventures in
operating results
----------------------------------------------------------------------------
Cash cost of product All fixed and variable Enables investors to
manufactured (COPM) costs are accumulated in better understand the
cost of product performance of our
manufactured excluding manufacturing operations
depreciation and compared to other crop
amortization expense and nutrient producers.
direct freight.
--------------------------------------------------
When COPM costs are divided by the production
tonnes for the period, the result is actual COPM
per tonne, which is compared to the standard COPM
per tonne - a calculation of fixed and variable
costs for a standard or typical period of
production. The standard COPM per tonne is
multiplied by the production tonnes for the
period, and the resulting dollar amount is
transferred to inventory. Any remaining costs are
recorded directly to cost of product sold as
production volume or cost efficiency variances.
Direct freight is a transportation cost to move
the product from an Agrium location to the point
of sale.
There is no directly comparable IFRS measure for
cash cost of product manufactured.
----------------------------------------------------------------------------
Free cash flow Cash provided by Used to assess the
operating activities quality of our earnings,
excluding the impact of as it measures our
net changes in non-cash ability to generate cash
working capital less from our businesses to
sustaining capital repay debt, fund business
expenditures. In 2015, acquisitions, repurchase
we revised our our shares and pay
definition of free cash dividends. Starting 2015,
flow to simplify the free cash flow is also a
calculation and improve component in determining
the effectiveness of the annual incentive
metric for management compensation for certain
and other users. We have management employees and
restated our 2014 in calculating the value
comparative information. of Performance Share
Units awarded as part of
management compensation
grants.
----------------------------------------------------------------------------
RECONCILIATIONS OF NON-IFRS FINANCIAL MEASURES
Adjusted EBITDA and EBITDA to EBIT
Three months ended
December 31, 2015
--------------------------------------------------
(millions of U.S. dollars) Retail Wholesale Other Consolidated
----------------------------------------------------------------------------
Adjusted EBITDA 199 372 (92) 479
----------------------------------------------------------------------------
Equity accounted joint
ventures:
Finance costs and income
taxes - 13 - 13
----------------------------------------------------------------------------
Depreciation and
amortization - 7 - 7
----------------------------------------------------------------------------
EBITDA 199 352 (92) 459
----------------------------------------------------------------------------
Depreciation and
amortization 66 65 4 135
----------------------------------------------------------------------------
EBIT 133 287 (96) 324
----------------------------------------------------------------------------
Three months ended
December 31, 2014
--------------------------------------------------
(millions of U.S. dollars) Retail Wholesale Other Consolidated
----------------------------------------------------------------------------
Adjusted EBITDA 181 150 (78) 253
----------------------------------------------------------------------------
Equity accounted joint
ventures:
Finance costs and income
taxes - 4 - 4
----------------------------------------------------------------------------
Depreciation and
amortization - 4 - 4
----------------------------------------------------------------------------
EBITDA 181 142 (78) 245
----------------------------------------------------------------------------
Depreciation and
amortization 77 58 3 138
----------------------------------------------------------------------------
EBIT 104 84 (81) 107
----------------------------------------------------------------------------
Free cash flow
----------------------------------------------------------------------------
Twelve months ended
December 31,
(millions of U.S. dollars) 2015 2014
----------------------------------------------------------------------------
Cash provided by operating activities 1,663 1,312
----------------------------------------------------------------------------
Net changes in non-cash working capital 93 95
----------------------------------------------------------------------------
Sustaining capital expenditures (541) (566)
----------------------------------------------------------------------------
Free cash flow 1,215 841
----------------------------------------------------------------------------
Forward-Looking Statements
Certain statements and other information included in this news release constitute "forward-looking information" and/or "financial outlook" within the meaning of applicable Canadian securities legislation or constitute "forward-looking statements" within the meaning of applicable U.S. securities legislation (collectively, the "forward-looking statements"). All statements in this news release other than those relating to historical information or current conditions are forward-looking statements, including, but not limited to, statements as to management's expectations with respect to: 2016 annual guidance, including expectations regarding our nitrogen and potash production volumes; capital spending expectations for 2016; expectations regarding 2016 production volumes at our Vanscoy potash facility; and our market outlook for the 2016, including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements. The purpose of the outlook provided herein is to assist readers in understanding our expected and targeted financial and operating results, and this information may not be appropriate for other purposes.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this news release. Although Agrium believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The additional key assumptions that have been made include, among other things, assumptions with respect to Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Agrium, including with respect to prices, margins, product availability and supplier agreements; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2016 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and negotiate acceptable terms; our ability to maintain our investment grade rating and achieve our performance targets; and our receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects' approach. Also refer to the discussion under the heading "Key Assumptions and Risks in Respect of Forward-Looking Statements" in our 2014 annual MD&A and under the heading "Market Outlook" in our third quarter 2015 MD&A, with respect to further material assumptions associated with our forward-looking statements.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our major products may vary from what we currently anticipate; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof, and political risks, including civil unrest, actions by armed groups or conflict, regional natural gas supply restrictions, as well as counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at the Egyptian Misr Fertilizers Production Company S.A.E. nitrogen facility expansion in Egypt; the risk of additional capital expenditure cost escalation or delays in respect of our Borger nitrogen expansion project and the ramp-up of production following the tie-in of our Vanscoy potash expansion project; and other risk factors detailed from time to time in Agrium reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the U.S. including those disclosed under the heading "Risk Factors" in our Annual Information Form for the year ended December 31, 2014 and under the headings "Enterprise Risk Management" and "Key Assumptions and Risks in respect of Forward-Looking Statements" in our 2014 annual MD&A.
The purpose of our expected diluted earnings per share guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this press release as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.
OTHER
Agrium Inc. is a major producer and distributor of agricultural products and services in North America, South America, Australia and Egypt through its agricultural retail-distribution and wholesale nutrient businesses. Agrium supplies growers with key products and services such as crop nutrients, crop protection, seed, and agronomic and application services, thereby helping to meet the ever growing global demand for food and fiber. Agrium produces nitrogen, potash and phosphate fertilizers, with a combined wholesale nutrient capacity of over ten million tonnes and with competitive advantages across all product lines. Agrium retail-distribution has an unmatched network of over 1,400 facilities and approximately 3,800 crop consultants. We partner with over half a million grower customers globally to help them increase their yields and returns on more than 50 different crops. With a focus on sustainability, the company strives to improve the communities in which it operates through safety, education, environmental improvement and new technologies such as the development of precision agriculture and controlled release nutrient products. Agrium is focused on driving operational excellence across our businesses, pursuing value-enhancing growth opportunities and returning capital to shareholders. For more information visit: www.agrium.com.
A WEBSITE SIMULCAST of the 2015 4th Quarter Conference Call will be available in a listen-only mode beginning Tuesday, February 9th, 2016 at 9:30 a.m. MST (11:30 a.m. ET). Please visit the following website: www.agrium.com.
Consolidated Statements of Operations
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------------------------------------------------------------
(millions of U.S. dollars, unless
otherwise stated) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Sales 2,407 2,705 14,795 16,042
----------------------------------------------------------------------------
Cost of product sold 1,507 1,973 10,907 12,490
----------------------------------------------------------------------------
Gross profit 900 732 3,888 3,552
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 465 515 1,921 2,048
----------------------------------------------------------------------------
General and administrative 74 78 268 299
----------------------------------------------------------------------------
Share-based payments 15 25 51 50
----------------------------------------------------------------------------
(Earnings) loss from associates
and joint ventures (5) (2) 4 (23)
----------------------------------------------------------------------------
Other expenses 27 9 28 18
----------------------------------------------------------------------------
Earnings before finance costs and
income taxes 324 107 1,616 1,160
----------------------------------------------------------------------------
Finance costs related to long-term
debt 53 19 181 62
----------------------------------------------------------------------------
Other finance costs 20 21 71 70
----------------------------------------------------------------------------
Earnings before income taxes 251 67 1,364 1,028
----------------------------------------------------------------------------
Income taxes 51 (3) 376 230
----------------------------------------------------------------------------
Net earnings from continuing
operations 200 70 988 798
----------------------------------------------------------------------------
Net loss from discontinued
operations - (19) - (78)
----------------------------------------------------------------------------
Net earnings 200 51 988 720
----------------------------------------------------------------------------
Attributable to
----------------------------------------------------------------------------
Equity holders of Agrium 201 47 988 714
----------------------------------------------------------------------------
Non-controlling interest (1) 4 - 6
----------------------------------------------------------------------------
Net earnings 200 51 988 720
----------------------------------------------------------------------------
Earnings per share attributable to
equity holders of Agrium
----------------------------------------------------------------------------
Basic and diluted earnings per
share from continuing operations 1.45 0.46 6.98 5.51
----------------------------------------------------------------------------
Basic and diluted loss per share
from discontinued operations - (0.13) - (0.54)
----------------------------------------------------------------------------
Basic and diluted earnings per
share 1.45 0.33 6.98 4.97
----------------------------------------------------------------------------
Weighted average number of shares
outstanding for basic and diluted
earnings per share 138 144 142 144
----------------------------------------------------------------------------
See accompanying notes.
Consolidated Statements of Comprehensive Income
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------------------------------------------------------------
(millions of U.S. dollars) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Net earnings 200 51 988 720
----------------------------------------------------------------------------
Other comprehensive loss
----------------------------------------------------------------------------
Items that are or may be
reclassified to earnings
----------------------------------------------------------------------------
Cash flow hedges
----------------------------------------------------------------------------
Effective portion of changes
in fair value (15) (29) (45) (36)
----------------------------------------------------------------------------
Deferred income taxes on
changes in fair value 4 7 12 9
----------------------------------------------------------------------------
Share of comprehensive income
(loss) of associates and joint
ventures 1 (2) (6) (4)
----------------------------------------------------------------------------
Foreign currency translation
----------------------------------------------------------------------------
Losses (85) (142) (617) (341)
----------------------------------------------------------------------------
Reclassifications to earnings 7 - 8 -
----------------------------------------------------------------------------
(88) (166) (648) (372)
----------------------------------------------------------------------------
Items that will never be
reclassified to earnings
----------------------------------------------------------------------------
Post-employment benefits
----------------------------------------------------------------------------
Actuarial gains (losses) 14 (11) 14 (31)
----------------------------------------------------------------------------
Deferred income taxes (5) 3 (4) 9
----------------------------------------------------------------------------
9 (8) 10 (22)
----------------------------------------------------------------------------
Other comprehensive loss (79) (174) (638) (394)
----------------------------------------------------------------------------
Comprehensive income (loss) 121 (123) 350 326
----------------------------------------------------------------------------
Attributable to
----------------------------------------------------------------------------
Equity holders of Agrium 124 (127) 350 320
----------------------------------------------------------------------------
Non-controlling interest (3) 4 - 6
----------------------------------------------------------------------------
Comprehensive income (loss) 121 (123) 350 326
----------------------------------------------------------------------------
See accompanying notes.
Consolidated Balance Sheets
(Unaudited)
December 31,
----------------------------------------------------------------------------
(millions of U.S. dollars) 2015 2014
----------------------------------------------------------------------------
Assets
----------------------------------------------------------------------------
Current assets
----------------------------------------------------------------------------
Cash and cash equivalents 515 848
----------------------------------------------------------------------------
Accounts receivable 2,053 2,075
----------------------------------------------------------------------------
Income taxes receivable 4 138
----------------------------------------------------------------------------
Inventories 3,314 3,505
----------------------------------------------------------------------------
Prepaid expenses and deposits 688 710
----------------------------------------------------------------------------
Other current assets 144 122
----------------------------------------------------------------------------
6,718 7,398
----------------------------------------------------------------------------
Property, plant and equipment 6,333 6,272
----------------------------------------------------------------------------
Intangibles 632 695
----------------------------------------------------------------------------
Goodwill 1,980 2,014
----------------------------------------------------------------------------
Investments in associates and joint ventures 607 576
----------------------------------------------------------------------------
Other assets 54 78
----------------------------------------------------------------------------
Deferred income tax assets 53 75
----------------------------------------------------------------------------
16,377 17,108
----------------------------------------------------------------------------
Liabilities and shareholders' equity
----------------------------------------------------------------------------
Current liabilities
----------------------------------------------------------------------------
Short-term debt 835 1,527
----------------------------------------------------------------------------
Accounts payable 3,919 4,197
----------------------------------------------------------------------------
Income taxes payable 82 5
----------------------------------------------------------------------------
Current portion of long-term debt 8 11
----------------------------------------------------------------------------
Current portion of other provisions 85 113
----------------------------------------------------------------------------
4,929 5,853
----------------------------------------------------------------------------
Long-term debt 4,513 3,559
----------------------------------------------------------------------------
Post-employment benefits 124 151
----------------------------------------------------------------------------
Other provisions 336 367
----------------------------------------------------------------------------
Other liabilities 85 69
----------------------------------------------------------------------------
Deferred income tax liabilities 383 422
----------------------------------------------------------------------------
10,370 10,421
----------------------------------------------------------------------------
Shareholders' equity
----------------------------------------------------------------------------
Share capital 1,757 1,821
----------------------------------------------------------------------------
Retained earnings 5,533 5,502
----------------------------------------------------------------------------
Accumulated other comprehensive loss (1,287) (643)
----------------------------------------------------------------------------
Equity holders of Agrium 6,003 6,680
----------------------------------------------------------------------------
Non-controlling interest 4 7
----------------------------------------------------------------------------
Total equity 6,007 6,687
----------------------------------------------------------------------------
16,377 17,108
----------------------------------------------------------------------------
See accompanying notes.
Consolidated Statements of Cash Flows
(Unaudited)
Three months ended Twelve months ended
December 31, December 31,
----------------------------------------------------------------------------
(millions of U.S. dollars) 2015 2014 2015 2014
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Operating
----------------------------------------------------------------------------
Net earnings from continuing
operations 200 70 988 798
----------------------------------------------------------------------------
Adjustments for
----------------------------------------------------------------------------
Depreciation and amortization 135 138 480 550
----------------------------------------------------------------------------
(Earnings) loss from associates
and joint ventures (5) (2) 4 (23)
----------------------------------------------------------------------------
Share-based payments 15 25 51 50
----------------------------------------------------------------------------
Unrealized (gain) loss on
derivative financial
instruments (28) 14 (21) (32)
----------------------------------------------------------------------------
Unrealized foreign exchange
(gain) loss (12) 8 (35) 56
----------------------------------------------------------------------------
Interest income (16) (22) (68) (83)
----------------------------------------------------------------------------
Finance costs 73 40 252 132
----------------------------------------------------------------------------
Income taxes 51 (3) 376 230
----------------------------------------------------------------------------
Other 2 5 (20) 20
----------------------------------------------------------------------------
Interest received 16 23 70 85
----------------------------------------------------------------------------
Interest paid (51) (37) (212) (105)
----------------------------------------------------------------------------
Income taxes paid (30) (37) (111) (320)
----------------------------------------------------------------------------
Dividends from associates and
joint ventures - 1 2 49
----------------------------------------------------------------------------
Net changes in non-cash working
capital 743 757 (93) (95)
----------------------------------------------------------------------------
Cash provided by operating
activities 1,093 980 1,663 1,312
----------------------------------------------------------------------------
Investing
----------------------------------------------------------------------------
Business acquisitions, net of cash
acquired (42) (32) (127) (179)
----------------------------------------------------------------------------
Proceeds from sale of discontinued
operations - - - 94
----------------------------------------------------------------------------
Capital expenditures (278) (504) (1,188) (2,021)
----------------------------------------------------------------------------
Capitalized borrowing costs (8) (28) (45) (111)
----------------------------------------------------------------------------
Purchase of investments (18) (19) (128) (116)
----------------------------------------------------------------------------
Proceeds from sale of investments 18 55 83 123
----------------------------------------------------------------------------
Proceeds from sale of property,
plant and equipment 27 - 104 -
----------------------------------------------------------------------------
Other (11) (5) (4) (20)
----------------------------------------------------------------------------
Net changes in non-cash working
capital (9) 42 (198) 162
----------------------------------------------------------------------------
Cash used in investing activities (321) (491) (1,503) (2,068)
----------------------------------------------------------------------------
Financing
----------------------------------------------------------------------------
Short-term debt (932) (281) (514) 845
----------------------------------------------------------------------------
Long-term debt issued - 500 1,000 512
----------------------------------------------------------------------------
Transaction costs on long-term
debt - (8) (14) (8)
----------------------------------------------------------------------------
Repayment of long-term debt (2) (19) (19) (64)
----------------------------------------------------------------------------
Dividends paid (123) (107) (468) (430)
----------------------------------------------------------------------------
Shares issued - - 1 1
----------------------------------------------------------------------------
Shares repurchased - - (559) -
----------------------------------------------------------------------------
Cash (used in) provided by financing
activities (1,057) 85 (573) 856
----------------------------------------------------------------------------
Effect of exchange rate changes on
cash and cash equivalents 47 2 80 (35)
----------------------------------------------------------------------------
(Decrease) increase in cash and cash
equivalents from
continuing operations (238) 576 (333) 65
----------------------------------------------------------------------------
Cash and cash equivalents used in
discontinued operations - (2) - (18)
----------------------------------------------------------------------------
Cash and cash equivalents -
beginning of period 753 274 848 801
----------------------------------------------------------------------------
Cash and cash equivalents - end of
period 515 848 515 848
----------------------------------------------------------------------------
See accompanying notes.
Consolidated Statements of Shareholders' Equity
(Unaudited)
(millions of Millions
U.S. dollars, of
except per common Share Retained
share data) shares capital earnings
----------------------------------------------------------------------------
December 31,
2013 144 1,820 5,253
----------------------------------------------------------------------------
Net earnings - - 714
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits - - (22)
----------------------------------------------------------------------------
Other - - -
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax - - 692
----------------------------------------------------------------------------
Dividends - - (435)
----------------------------------------------------------------------------
Non-controlling
interest
transactions - - -
----------------------------------------------------------------------------
Share-based
payment
transactions - 1 -
----------------------------------------------------------------------------
Impact of
adopting IFRS 9
at January 1,
2014 - - (8)
----------------------------------------------------------------------------
December 31,
2014 144 1,821 5,502
----------------------------------------------------------------------------
Net earnings - - 988
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits - - 10
----------------------------------------------------------------------------
Other - - -
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax - - 998
----------------------------------------------------------------------------
Dividends - - (478)
----------------------------------------------------------------------------
Non-controlling
interest
transactions - - -
----------------------------------------------------------------------------
Shares
repurchased (6) (70) (489)
----------------------------------------------------------------------------
Share-based
payment
transactions - 6 -
----------------------------------------------------------------------------
Reclassification
of cash flow
hedges, net of
tax - - -
----------------------------------------------------------------------------
December 31,
2015 138 1,757 5,533
----------------------------------------------------------------------------
Other comprehensive income (loss)
------------------------------------------------------------
(millions of Comprehensive Available
U.S. dollars, Cash loss of for sale Foreign
except per flow associates and financial currency
share data) hedges joint ventures instruments translation Total
----------------------------------------------------------------------------
December 31,
2013 - (7) (8) (264) (279)
----------------------------------------------------------------------------
Net earnings - - - - -
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits - - - - -
----------------------------------------------------------------------------
Other (27) (4) - (341) (372)
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax (27) (4) - (341) (372)
----------------------------------------------------------------------------
Dividends - - - - -
----------------------------------------------------------------------------
Non-controlling
interest
transactions - - - - -
----------------------------------------------------------------------------
Share-based
payment
transactions - - - - -
----------------------------------------------------------------------------
Impact of
adopting IFRS 9
at January 1,
2014 - - 8 - 8
----------------------------------------------------------------------------
December 31,
2014 (27) (11) - (605) (643)
----------------------------------------------------------------------------
Net earnings - - - - -
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits - - - - -
----------------------------------------------------------------------------
Other (33) (6) - (609) (648)
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax (33) (6) - (609) (648)
----------------------------------------------------------------------------
Dividends - - - - -
----------------------------------------------------------------------------
Non-controlling
interest
transactions - - - - -
----------------------------------------------------------------------------
Shares
repurchased - - - - -
----------------------------------------------------------------------------
Share-based
payment
transactions - - - - -
----------------------------------------------------------------------------
Reclassification
of cash flow
hedges, net of
tax 4 - - - 4
----------------------------------------------------------------------------
December 31,
2015 (56) (17) - (1,214)(1,287)
----------------------------------------------------------------------------
(millions of
U.S. dollars, Equity Non-
except per holders of controlling Total
share data) Agrium interest equity
----------------------------------------------------------------------------
December 31,
2013 6,794 2 6,796
----------------------------------------------------------------------------
Net earnings 714 6 720
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits (22) - (22)
----------------------------------------------------------------------------
Other (372) - (372)
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax 320 6 326
----------------------------------------------------------------------------
Dividends (435) - (435)
----------------------------------------------------------------------------
Non-controlling
interest
transactions - (1) (1)
----------------------------------------------------------------------------
Share-based
payment
transactions 1 - 1
----------------------------------------------------------------------------
Impact of
adopting IFRS 9
at January 1,
2014 - - -
----------------------------------------------------------------------------
December 31,
2014 6,680 7 6,687
----------------------------------------------------------------------------
Net earnings 988 - 988
----------------------------------------------------------------------------
Other
comprehensive
income (loss),
net of tax
----------------------------------------------------------------------------
Post-employment
benefits 10 - 10
----------------------------------------------------------------------------
Other (648) - (648)
----------------------------------------------------------------------------
Comprehensive
income (loss),
net of tax 350 - 350
----------------------------------------------------------------------------
Dividends (478) - (478)
----------------------------------------------------------------------------
Non-controlling
interest
transactions - (3) (3)
----------------------------------------------------------------------------
Shares
repurchased (559) - (559)
----------------------------------------------------------------------------
Share-based
payment
transactions 6 - 6
----------------------------------------------------------------------------
Reclassification
of cash flow
hedges, net of
tax 4 - 4
----------------------------------------------------------------------------
December 31,
2015 6,003 4 6,007
----------------------------------------------------------------------------
See accompanying notes.
Summarized Notes to the Consolidated Financial Statements
For the twelve months ended December 31, 2015
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
1. Corporate Management
Corporate information
Agrium Inc. ("Agrium") is incorporated under the laws of Canada with common shares listed under the symbol "AGU" on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Our Corporate head office is located at 13131 Lake Fraser Drive S.E., Calgary, Canada. We conduct our operations globally from our Wholesale head office in Calgary and our Retail head office in Loveland, Colorado, United States. In these financial statements, "we", "us", "our" and "Agrium" mean Agrium Inc., its subsidiaries and joint arrangements.
Agrium operates two business units:
-- Retail: Distributes crop nutrients, crop protection products, seed,
merchandise and services directly to growers through a network of farm
centers in two geographical segments:
-- North America: including the United States and Canada
-- International: including Australia and South America
-- Wholesale: Operates in North and South America and Europe producing,
marketing and distributing crop nutrients and industrial products
through the following businesses:
-- Nitrogen: Manufacturing in Alberta, Texas and Argentina
-- Potash: Mining and processing in Saskatchewan
-- Phosphate: Mining and production facilities in Alberta and Idaho
-- Other: Purchasing and reselling crop nutrient products from other
suppliers to customers in the Americas and Europe, and producing
blended crop nutrients and Environmentally Smart Nitrogen (ESNr)
polymer-coated nitrogen crop nutrients.
Additional information on our operating segments is included in note 2.
Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.
Basis of preparation
These unaudited consolidated interim financial statements ("interim financial statements") were approved for issuance by the Audit Committee on February 8, 2016. These interim financial statements do not include all information and disclosures normally provided in annual or quarterly financial statements. Accordingly, they should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board, contained in our 2014 Annual Report, available at www.agrium.com. The accounting policies applied in these interim financial statements are the same as those applied in our audited annual financial statements, with the exception of the accounting changes described in note 9 to our interim financial statements for the three months ended March 31, 2015.
2.Operating Segments
Segment information
by business unit Three months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Retail Wholesale Other (a) Total
----------------------------------------------------------------------------
Sales - external 1,758 649 - 2,407
----------------------------------------------------------------------------
- inter-segment 7 239 (246) -
----------------------------------------------------------------------------
Total sales 1,765 888 (246) 2,407
----------------------------------------------------------------------------
Cost of product sold 1,166 568 (227) 1,507
----------------------------------------------------------------------------
Gross profit 599 320 (19) 900
----------------------------------------------------------------------------
Gross profit (%) 34 36 37
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 462 7 (4) 465
----------------------------------------------------------------------------
General and
administrative 29 12 33 74
----------------------------------------------------------------------------
Share-based
payments - - 15 15
----------------------------------------------------------------------------
(Earnings) loss
from associates
and joint
ventures (2) (2) (1) (5)
----------------------------------------------------------------------------
Other (income)
expenses (23) 16 34 27
----------------------------------------------------------------------------
Earnings (loss)
before finance
costs and income
taxes 133 287 (96) 324
----------------------------------------------------------------------------
Finance costs - - 73 73
----------------------------------------------------------------------------
Earnings (loss)
before income taxes 133 287 (169) 251
----------------------------------------------------------------------------
Depreciation and
amortization 66 65 4 135
----------------------------------------------------------------------------
Finance costs - - 73 73
----------------------------------------------------------------------------
EBITDA (b) 199 352 (92) 459
----------------------------------------------------------------------------
Share of joint
ventures
----------------------------------------------------------------------------
Finance costs and
income taxes - 13 - 13
----------------------------------------------------------------------------
Depreciation and
amortization - 7 - 7
----------------------------------------------------------------------------
Adjusted EBITDA 199 372 (92) 479
----------------------------------------------------------------------------
Segment information
by business unit Three months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Retail Wholesale Other (a) Total
----------------------------------------------------------------------------
Sales - external 2,054 651 - 2,705
----------------------------------------------------------------------------
- inter-segment 3 246 (249) -
----------------------------------------------------------------------------
Total sales 2,057 897 (249) 2,705
----------------------------------------------------------------------------
Cost of product sold 1,443 767 (237) 1,973
----------------------------------------------------------------------------
Gross profit 614 130 (12) 732
----------------------------------------------------------------------------
Gross profit (%) 30 14 27
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 514 10 (9) 515
----------------------------------------------------------------------------
General and
administrative 30 15 33 78
----------------------------------------------------------------------------
Share-based
payments - - 25 25
----------------------------------------------------------------------------
(Earnings) loss
from associates
and joint
ventures 1 (1) (2) (2)
----------------------------------------------------------------------------
Other (income)
expenses (35) 22 22 9
----------------------------------------------------------------------------
Earnings (loss)
before finance
costs and income
taxes 104 84 (81) 107
----------------------------------------------------------------------------
Finance costs - - 40 40
----------------------------------------------------------------------------
Earnings (loss)
before income taxes 104 84 (121) 67
----------------------------------------------------------------------------
Depreciation and
amortization 77 58 3 138
----------------------------------------------------------------------------
Finance costs - - 40 40
----------------------------------------------------------------------------
EBITDA (b) 181 142 (78) 245
----------------------------------------------------------------------------
Share of joint
ventures
----------------------------------------------------------------------------
Finance costs and
income taxes - 4 - 4
----------------------------------------------------------------------------
Depreciation and
amortization - 4 - 4
----------------------------------------------------------------------------
Adjusted EBITDA 181 150 (78) 253
----------------------------------------------------------------------------
(a) Includes inter-segment eliminations.
(b) EBITDA is earnings (loss) from continuing operations before finance costs, income taxes, depreciation and amortization.
Segment information
by business unit Twelve months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Retail Wholesale Other (a) Total
----------------------------------------------------------------------------
Sales - external 12,168 2,627 - 14,795
----------------------------------------------------------------------------
- inter-segment 31 975 (1,006) -
----------------------------------------------------------------------------
Total sales 12,199 3,602 (1,006) 14,795
--------------------------------------------------------
Cost of product sold 9,471 2,421 (985) 10,907
----------------------------------------------------------------------------
Gross profit 2,728 1,181 (21) 3,888
----------------------------------------------------------------------------
Gross profit (%) 22 33 26
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 1,902 36 (17) 1,921
----------------------------------------------------------------------------
General and
administrative 112 39 117 268
----------------------------------------------------------------------------
Share-based
payments - - 51 51
----------------------------------------------------------------------------
(Earnings) loss
from associates
and joint
ventures (5) 10 (1) 4
----------------------------------------------------------------------------
Other (income)
expenses (60) 23 65 28
----------------------------------------------------------------------------
Earnings (loss)
before finance
costs and income
taxes 779 1,073 (236) 1,616
----------------------------------------------------------------------------
Finance costs - - 252 252
----------------------------------------------------------------------------
Earnings (loss)
before income taxes 779 1,073 (488) 1,364
----------------------------------------------------------------------------
Depreciation and
amortization 254 211 15 480
----------------------------------------------------------------------------
Finance costs - - 252 252
----------------------------------------------------------------------------
EBITDA 1,033 1,284 (221) 2,096
----------------------------------------------------------------------------
Share of joint
ventures
----------------------------------------------------------------------------
Finance costs and
income taxes - 19 - 19
----------------------------------------------------------------------------
Depreciation and
amortization - 19 - 19
----------------------------------------------------------------------------
Adjusted EBITDA 1,033 1,322 (221) 2,134
----------------------------------------------------------------------------
Segment information
by business unit Twelve months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Retail Wholesale Other (a) Total
----------------------------------------------------------------------------
Sales - external 12,967 3,075 - 16,042
----------------------------------------------------------------------------
- inter-segment 14 898 (912) -
----------------------------------------------------------------------------
Total sales 12,981 3,973 (912) 16,042
--------------------------------------------------------
Cost of product sold 10,089 3,318 (917) 12,490
----------------------------------------------------------------------------
Gross profit 2,892 655 5 3,552
----------------------------------------------------------------------------
Gross profit (%) 22 16 22
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 2,023 44 (19) 2,048
----------------------------------------------------------------------------
General and
administrative 124 48 127 299
----------------------------------------------------------------------------
Share-based
payments - - 50 50
----------------------------------------------------------------------------
(Earnings) loss
from associates
and joint
ventures (6) (18) 1 (23)
----------------------------------------------------------------------------
Other (income)
expenses (63) 28 53 18
----------------------------------------------------------------------------
Earnings (loss)
before finance
costs and income
taxes 814 553 (207) 1,160
----------------------------------------------------------------------------
Finance costs - - 132 132
----------------------------------------------------------------------------
Earnings (loss)
before income taxes 814 553 (339) 1,028
----------------------------------------------------------------------------
Depreciation and
amortization 305 230 15 550
----------------------------------------------------------------------------
Finance costs - - 132 132
----------------------------------------------------------------------------
EBITDA 1,119 783 (192) 1,710
----------------------------------------------------------------------------
Share of joint
ventures
----------------------------------------------------------------------------
Finance costs and
income taxes - 24 - 24
----------------------------------------------------------------------------
Depreciation and
amortization - 14 - 14
----------------------------------------------------------------------------
Adjusted EBITDA 1,119 821 (192) 1,748
----------------------------------------------------------------------------
Segment
information -
Retail Three months ended December 31,
----------------------------------------------------------------------------
2015 2014
---------------------------------------------- -----------------------------
North North
America International Retail America International Retail
---------------------------------------------- -----------------------------
Sales - external 1,333 425 1,758 1,482 572 2,054
---------------------------------------------- -----------------------------
- inter-segment 7 - 7 3 - 3
---------------------------------------------- -----------------------------
Total sales 1,340 425 1,765 1,485 572 2,057
---------------------------------------------- -----------------------------
Cost of product
sold 853 313 1,166 1,008 435 1,443
---------------------------------------------- -----------------------------
Gross profit 487 112 599 477 137 614
---------------------------------------------- -----------------------------
Expenses
---------------------------------------------- -----------------------------
Selling 375 87 462 397 117 514
---------------------------------------------- -----------------------------
General and
administrative 22 7 29 20 10 30
---------------------------------------------- -----------------------------
(Earnings) loss
from
associates and
joint ventures (1) (1) (2) 1 - 1
---------------------------------------------- -----------------------------
Other income (17) (6) (23) (32) (3) (35)
---------------------------------------------- -----------------------------
Earnings before
income taxes 108 25 133 91 13 104
---------------------------------------------- -----------------------------
Depreciation
and
amortization 61 5 66 54 23 77
---------------------------------------------- -----------------------------
EBITDA 169 30 199 145 36 181
---------------------------------------------- -----------------------------
Adjusted EBITDA 169 30 199 145 36 181
---------------------------------------------- -----------------------------
Segment
information -
Retail Twelve months ended December 31,
----------------------------------------------------------------------------
2015 2014
---------------------------------------------- -----------------------------
North North
America International Retail America International Retail
---------------------------------------------- -----------------------------
Sales- external 10,093 2,075 12,168 10,449 2,518 12,967
---------------------------------------------- -----------------------------
- inter-segment 31 - 31 14 - 14
---------------------------------------------- -----------------------------
Total sales 10,124 2,075 12,199 10,463 2,518 12,981
---------------------------------------------- -----------------------------
Cost of product
sold 7,826 1,645 9,471 8,080 2,009 10,089
---------------------------------------------- -----------------------------
Gross profit 2,298 430 2,728 2,383 509 2,892
---------------------------------------------- -----------------------------
Expenses
---------------------------------------------- -----------------------------
Selling 1,571 331 1,902 1,622 401 2,023
---------------------------------------------- -----------------------------
General and
administrative 79 33 112 80 44 124
---------------------------------------------- -----------------------------
Earnings from
associates and
joint ventures (3) (2) (5) (3) (3) (6)
---------------------------------------------- -----------------------------
Other income (35) (25) (60) (39) (24) (63)
---------------------------------------------- -----------------------------
Earnings before
income taxes 686 93 779 723 91 814
---------------------------------------------- -----------------------------
Depreciation and
amortization 229 25 254 257 48 305
---------------------------------------------- -----------------------------
EBITDA 915 118 1,033 980 139 1,119
---------------------------------------------- -----------------------------
Adjusted EBITDA 915 118 1,033 980 139 1,119
---------------------------------------------- -----------------------------
Segment information -
Wholesale Three months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Wholesale
Nitrogen Potash Phosphate Other (a) Wholesale
----------------------------------------------------------------------------
Sales - external 270 137 127 115 649
----------------------------------------------------------------------------
- inter-segment 97 38 72 32 239
----------------------------------------------------------------------------
Total sales 367 175 199 147 888
----------------------------------------------------------------------------
Cost of product sold 181 112 162 113 568
----------------------------------------------------------------------------
Gross profit 186 63 37 34 320
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 3 1 1 2 7
----------------------------------------------------------------------------
General and
administrative 5 2 1 4 12
----------------------------------------------------------------------------
Earnings from associates
and joint ventures - - - (2) (2)
----------------------------------------------------------------------------
Other (income) expenses (12) 7 1 20 16
----------------------------------------------------------------------------
Earnings (loss) before
income taxes 190 53 34 10 287
----------------------------------------------------------------------------
Depreciation and
amortization 18 28 14 5 65
----------------------------------------------------------------------------
EBITDA 208 81 48 15 352
----------------------------------------------------------------------------
Share of joint ventures
----------------------------------------------------------------------------
Finance costs and income
taxes 13 - - - 13
----------------------------------------------------------------------------
Depreciation and
amortization 7 - - - 7
----------------------------------------------------------------------------
Adjusted EBITDA 228 81 48 15 372
----------------------------------------------------------------------------
Segment information -
Wholesale Three months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Wholesale
Nitrogen Potash Phosphate Other (a) Wholesale
----------------------------------------------------------------------------
Sales - external 311 7 135 198 651
----------------------------------------------------------------------------
- inter-segment 93 2 65 86 246
----------------------------------------------------------------------------
Total sales 404 9 200 284 897
----------------------------------------------------------------------------
Cost of product sold 291 59 163 254 767
----------------------------------------------------------------------------
Gross profit 113 (50) 37 30 130
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 5 - 2 3 10
----------------------------------------------------------------------------
General and
administrative 4 3 3 5 15
----------------------------------------------------------------------------
Earnings from associates
and joint ventures - - - (1) (1)
----------------------------------------------------------------------------
Other (income) expenses 3 11 4 4 22
----------------------------------------------------------------------------
Earnings (loss) before
income taxes 101 (64) 28 19 84
----------------------------------------------------------------------------
Depreciation and
amortization 21 15 14 8 58
----------------------------------------------------------------------------
EBITDA 122 (49) 42 27 142
----------------------------------------------------------------------------
Share of joint ventures
----------------------------------------------------------------------------
Finance costs and income
taxes 5 - - (1) 4
----------------------------------------------------------------------------
Depreciation and
amortization 4 - - - 4
----------------------------------------------------------------------------
Adjusted EBITDA 131 (49) 42 26 150
----------------------------------------------------------------------------
(a) Includes product purchased for resale, ammonium sulfate, ESN and other products.
Segment information -
Wholesale Twelve months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Wholesale
Nitrogen Potash Phosphate Other (a) Wholesale
----------------------------------------------------------------------------
Sales - external 1,129 364 471 663 2,627
----------------------------------------------------------------------------
- inter-segment 401 151 270 153 975
----------------------------------------------------------------------------
Total sales 1,530 515 741 816 3,602
----------------------------------------------------------------------------
Cost of product sold 801 335 599 686 2,421
----------------------------------------------------------------------------
Gross profit 729 180 142 130 1,181
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 15 5 4 12 36
----------------------------------------------------------------------------
General and
administrative 15 7 5 12 39
----------------------------------------------------------------------------
Loss (earnings)
from associates
and joint ventures - - - 10 10
----------------------------------------------------------------------------
Other expenses
(income) - 25 17 (19) 23
----------------------------------------------------------------------------
Earnings before income
taxes 699 143 116 115 1,073
----------------------------------------------------------------------------
Depreciation and
amortization 72 71 51 17 211
----------------------------------------------------------------------------
EBITDA 771 214 167 132 1,284
----------------------------------------------------------------------------
Share of joint ventures
----------------------------------------------------------------------------
Finance costs and
income taxes 19 - - - 19
----------------------------------------------------------------------------
Depreciation and
amortization 19 - - - 19
----------------------------------------------------------------------------
Adjusted EBITDA 809 214 167 132 1,322
----------------------------------------------------------------------------
Segment information -
Wholesale Twelve months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Wholesale
Nitrogen Potash Phosphate Other (a) Wholesale
----------------------------------------------------------------------------
Sales - external 1,124 274 456 1,221 3,075
----------------------------------------------------------------------------
- inter-segment 358 117 245 178 898
----------------------------------------------------------------------------
Total sales 1,482 391 701 1,399 3,973
----------------------------------------------------------------------------
Cost of product sold 1,101 321 625 1,271 3,318
----------------------------------------------------------------------------
Gross profit 381 70 76 128 655
----------------------------------------------------------------------------
Expenses
----------------------------------------------------------------------------
Selling 16 6 7 15 44
----------------------------------------------------------------------------
General and
administrative 13 10 10 15 48
----------------------------------------------------------------------------
Loss (earnings)
from associates
and joint ventures - - - (18) (18)
----------------------------------------------------------------------------
Other expenses
(income) (15) 26 14 3 28
----------------------------------------------------------------------------
Earnings before income
taxes 367 28 45 113 553
----------------------------------------------------------------------------
Depreciation and
amortization 86 65 52 27 230
----------------------------------------------------------------------------
EBITDA 453 93 97 140 783
----------------------------------------------------------------------------
Share of joint ventures
----------------------------------------------------------------------------
Finance costs and
income taxes 24 - - - 24
----------------------------------------------------------------------------
Depreciation and
amortization 14 - - - 14
----------------------------------------------------------------------------
Adjusted EBITDA 491 93 97 140 821
----------------------------------------------------------------------------
(a) Includes product purchased for resale, ammonium sulfate, ESN and other products.
Gross profit by product
line Three months ended December 31,
----------------------------------------------------------------------------
2015 2014
--------------------------------------------------- ------------------------
Cost of Cost of
product Gross product Gross
Sales sold profit Sales sold profit
--------------------------------------------------- ------------------------
Retail
--------------------------------------------------- ------------------------
Crop nutrients 843 689 154 972 816 156
--------------------------------------------------- ------------------------
Crop protection products 541 273 268 552 292 260
--------------------------------------------------- ------------------------
Seed 75 21 54 91 41 50
--------------------------------------------------- ------------------------
Merchandise 156 129 27 211 181 30
--------------------------------------------------- ------------------------
Services and other 150 54 96 231 113 118
--------------------------------------------------- ------------------------
1,765 1,166 599 2,057 1,443 614
--------------------------------------------------- ------------------------
Wholesale
--------------------------------------------------- ------------------------
Nitrogen 367 181 186 404 291 113
--------------------------------------------------- ------------------------
Potash 175 112 63 9 59 (50)
--------------------------------------------------- ------------------------
Phosphate 199 162 37 200 163 37
--------------------------------------------------- ------------------------
Product purchased for
resale 53 52 1 177 174 3
--------------------------------------------------- ------------------------
Ammonium sulfate, ESN and
other 94 61 33 107 80 27
--------------------------------------------------- ------------------------
888 568 320 897 767 130
--------------------------------------------------- ------------------------
Other inter-segment
eliminations (246) (227) (19) (249) (237) (12)
--------------------------------------------------- ------------------------
Total 2,407 1,507 900 2,705 1,973 732
--------------------------------------------------- ------------------------
Wholesale share of joint
ventures
--------------------------------------------------- ------------------------
Nitrogen 71 59 12 48 40 8
--------------------------------------------------- ------------------------
Product purchased for
resale - - - 40 37 3
--------------------------------------------------- ------------------------
71 59 12 88 77 11
--------------------------------------------------- ------------------------
Total Wholesale including
proportionate share in
joint ventures 959 627 332 985 844 141
--------------------------------------------------- ------------------------
Gross profit by product
line Twelve months ended December 31,
----------------------------------------------------------------------------
2015 2014
--------------------------------------------------- ------------------------
Cost of Cost of
product Gross product Gross
Sales sold profit Sales sold profit
--------------------------------------------------- ------------------------
Retail
--------------------------------------------------- ------------------------
Crop nutrients 4,944 4,097 847 5,222 4,291 931
--------------------------------------------------- ------------------------
Crop protection products 4,543 3,476 1,067 4,613 3,559 1,054
--------------------------------------------------- ------------------------
Seed 1,425 1,141 284 1,481 1,162 319
--------------------------------------------------- ------------------------
Merchandise 638 539 99 871 757 114
--------------------------------------------------- ------------------------
Services and other 649 218 431 794 320 474
--------------------------------------------------- ------------------------
12,199 9,471 2,728 12,981 10,089 2,892
--------------------------------------------------- ------------------------
Wholesale
--------------------------------------------------- ------------------------
Nitrogen 1,530 801 729 1,482 1,101 381
--------------------------------------------------- ------------------------
Potash 515 335 180 391 321 70
--------------------------------------------------- ------------------------
Phosphate 741 599 142 701 625 76
--------------------------------------------------- ------------------------
Product purchased for
resale 398 387 11 921 896 25
--------------------------------------------------- ------------------------
Ammonium sulfate, ESN and
other 418 299 119 478 375 103
--------------------------------------------------- ------------------------
3,602 2,421 1,181 3,973 3,318 655
--------------------------------------------------- ------------------------
Other inter-segment
eliminations (1,006) (985) (21) (912) (917) 5
--------------------------------------------------- ------------------------
Total 14,795 10,907 3,888 16,042 12,490 3,552
--------------------------------------------------- ------------------------
Wholesale share of joint
ventures
--------------------------------------------------- ------------------------
Nitrogen 194 178 16 197 149 48
--------------------------------------------------- ------------------------
Product purchased for
resale 38 37 1 102 93 9
--------------------------------------------------- ------------------------
232 215 17 299 242 57
--------------------------------------------------- ------------------------
Total Wholesale including
proportionate share in
joint ventures 3,834 2,636 1,198 4,272 3,560 712
--------------------------------------------------- ------------------------
Selected volumes and per tonne
information Three months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Cost of
Sales Selling product
tonnes price sold Margin
(000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Retail
----------------------------------------------------------------------------
Crop nutrients
----------------------------------------------------------------------------
North America 1,375 513 416 97
----------------------------------------------------------------------------
International 327 424 364 60
----------------------------------------------------------------------------
Total crop nutrients 1,702 496 406 90
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
Ammonia 374 499
----------------------------------------------------------------------------
Urea 386 356
----------------------------------------------------------------------------
Other 152 283
----------------------------------------------------------------------------
Total nitrogen 912 403 199 204
----------------------------------------------------------------------------
Potash
----------------------------------------------------------------------------
North America 503 281
----------------------------------------------------------------------------
International 153 220
----------------------------------------------------------------------------
Total potash (a) 656 267 171 96
----------------------------------------------------------------------------
Phosphate 325 610 495 115
----------------------------------------------------------------------------
Product purchased for resale 148 362 356 6
----------------------------------------------------------------------------
Ammonium sulfate 96 293 125 168
----------------------------------------------------------------------------
ESN and other 155
----------------------------------------------------------------------------
Total Wholesale 2,292 387 248 139
----------------------------------------------------------------------------
Wholesale share of joint
ventures
----------------------------------------------------------------------------
Nitrogen 198 359 295 64
----------------------------------------------------------------------------
Product purchased for resale - - - -
----------------------------------------------------------------------------
198 359 295 64
----------------------------------------------------------------------------
Total Wholesale including
proportionate share in joint
ventures 2,490 385 251 134
----------------------------------------------------------------------------
Selected volumes and per tonne
information Three months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Cost of
Sales Selling product
tonnes price sold Margin
(000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Retail
----------------------------------------------------------------------------
Crop nutrients
----------------------------------------------------------------------------
North America 1,436 556 465 91
----------------------------------------------------------------------------
International 367 475 406 69
----------------------------------------------------------------------------
Total crop nutrients 1,803 539 452 87
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
Ammonia 333 565
----------------------------------------------------------------------------
Urea 342 431
----------------------------------------------------------------------------
Other 204 331
----------------------------------------------------------------------------
Total nitrogen 879 459 331 128
----------------------------------------------------------------------------
Potash
----------------------------------------------------------------------------
North America 19 375
----------------------------------------------------------------------------
International - -
----------------------------------------------------------------------------
Total potash (a) 19 482 2,992 (2,510)
----------------------------------------------------------------------------
Phosphate 305 656 534 122
----------------------------------------------------------------------------
Product purchased for resale 547 326 321 5
----------------------------------------------------------------------------
Ammonium sulfate 84 327 165 162
----------------------------------------------------------------------------
ESN and other 165
----------------------------------------------------------------------------
Total Wholesale 1,999 449 384 65
----------------------------------------------------------------------------
Wholesale share of joint
ventures
----------------------------------------------------------------------------
Nitrogen 103 463 384 79
----------------------------------------------------------------------------
Product purchased for resale 62 650 605 45
----------------------------------------------------------------------------
165 533 467 66
----------------------------------------------------------------------------
Total Wholesale including
proportionate share in joint
ventures 2,164 455 390 65
----------------------------------------------------------------------------
(a) Potash results for the three months ended December 31, 2014 were impacted by the extended turnaround at our Vanscoy facility to complete the planned tie-in of the expansion project. This resulted in limited volumes for sale.
Selected volumes and per tonne
information Twelve months ended December 31,
----------------------------------------------------------------------------
2015
----------------------------------------------------------------------------
Cost of
Sales Selling product
tonnes price sold Margin
(000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Retail
----------------------------------------------------------------------------
Crop nutrients
----------------------------------------------------------------------------
North America 7,731 537 436 101
----------------------------------------------------------------------------
International 1,843 431 393 38
----------------------------------------------------------------------------
Total crop nutrients 9,574 516 427 89
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
Ammonia 1,209 530
----------------------------------------------------------------------------
Urea 1,583 395
----------------------------------------------------------------------------
Other 864 305
----------------------------------------------------------------------------
Total nitrogen 3,656 418 219 199
----------------------------------------------------------------------------
Potash
----------------------------------------------------------------------------
North America 1,133 330
----------------------------------------------------------------------------
International 601 235
----------------------------------------------------------------------------
Total potash (a) 1,734 297 193 104
----------------------------------------------------------------------------
Phosphate 1,166 635 513 122
----------------------------------------------------------------------------
Product purchased for resale 1,089 366 356 10
----------------------------------------------------------------------------
Ammonium sulfate 336 330 140 190
----------------------------------------------------------------------------
ESN and other 656
----------------------------------------------------------------------------
Total Wholesale 8,637 417 280 137
----------------------------------------------------------------------------
Wholesale share of joint
ventures
----------------------------------------------------------------------------
Nitrogen 506 384 352 32
----------------------------------------------------------------------------
Product purchased for resale 117 321 309 12
----------------------------------------------------------------------------
623 372 343 29
----------------------------------------------------------------------------
Total Wholesale including
proportionate share in joint
ventures 9,260 414 285 129
----------------------------------------------------------------------------
Selected volumes and per tonne
information Twelve months ended December 31,
----------------------------------------------------------------------------
2014
----------------------------------------------------------------------------
Cost of
Sales Selling product
tonnes price sold Margin
(000's) ($/tonne) ($/tonne) ($/tonne)
----------------------------------------------------------------------------
Retail
----------------------------------------------------------------------------
Crop nutrients
----------------------------------------------------------------------------
North America 7,782 549 441 108
----------------------------------------------------------------------------
International 1,937 492 445 47
----------------------------------------------------------------------------
Total crop nutrients 9,719 537 441 96
----------------------------------------------------------------------------
Wholesale
----------------------------------------------------------------------------
Nitrogen
----------------------------------------------------------------------------
North America
----------------------------------------------------------------------------
Ammonia 1,042 553
----------------------------------------------------------------------------
Urea 1,287 443
----------------------------------------------------------------------------
Other 983 341
----------------------------------------------------------------------------
Total nitrogen 3,312 447 332 115
----------------------------------------------------------------------------
Potash
----------------------------------------------------------------------------
North America 821 359
----------------------------------------------------------------------------
International 443 217
----------------------------------------------------------------------------
Total potash (a) 1,264 309 253 56
----------------------------------------------------------------------------
Phosphate 1,142 614 548 66
----------------------------------------------------------------------------
Product purchased for resale 2,490 370 360 10
----------------------------------------------------------------------------
Ammonium sulfate 349 332 175 157
----------------------------------------------------------------------------
ESN and other 714
----------------------------------------------------------------------------
Total Wholesale 9,271 429 358 71
----------------------------------------------------------------------------
Wholesale share of joint
ventures
----------------------------------------------------------------------------
Nitrogen 454 433 328 105
----------------------------------------------------------------------------
Product purchased for resale 287 356 324 32
----------------------------------------------------------------------------
741 403 326 77
----------------------------------------------------------------------------
Total Wholesale including
proportionate share in joint
ventures 10,012 427 356 71
----------------------------------------------------------------------------
(a) Potash results for the twelve months ended December 31, 2014 were impacted by the extended turnaround at our Vanscoy facility to complete the planned tie-in of the expansion project. This resulted in limited volumes for sale.
Contacts: Investor/Media Relations: Richard Downey Vice President, Investor & Corporate Relations (403) 225-7357 Todd Coakwell Director, Investor Relations (403) 225-7437 Louis Brown Analyst, Investor Relations (403) 225-7761 Contact us at: www.agrium.com
Source: Agrium Inc.
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