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DATE

Thu, Aug. 6, 2026 at 10:00 a.m. ET

CALL PARTICIPANTS

• Senior Vice President of Investor Relations and FP&A - Jeff Holzman
• President and CEO - Kenneth Seitz
• CFO - Mark Thompson

TAKEAWAYS

• Adjusted EBITDA -- $2.43 billion in the second quarter, representing a 2% decline compared to the prior year as higher fertilizer benchmarks were offset by lower volumes and increased sulfur costs.
• Potash Sales Volumes -- 3.9 million tonnes in the second quarter, reflecting record production levels and strong supply chain execution.
• Retail Adjusted EBITDA -- $1.13 billion in the second quarter, representing a 2% decline due to lower crop nutrient sales and higher fuel and fleet expenses.
• Potash Cash Costs -- $55 per tonne in the second quarter, remaining flat year over year because of increased mine automation and cost-control measures.
• Nitrogen Adjusted EBITDA -- $635 million in the second quarter, reflecting a 5% decline due to lower volumes and production outages at Trinidad and New Madrid.
• Natural Gas Costs -- $2.10 per MMBtu in the second quarter, a reduction from $3.31 per MMBtu in the prior year.
• Capital Expenditures Guidance -- Lowered to a range of $1.95 billion to $2.05 billion, representing a $50 million reduction focused on capital efficiency.
• Potash Volume Guidance -- Raised to 14.2 million to 14.8 million tonnes for 2026, driven by record first-half sales and a strong second-half order book.
• Net Earnings -- $1.22 billion in the second quarter, resulting in diluted net earnings of $2.53 per share.
• Proprietary Products Gross Margin -- Increased 10% for crop nutrients in the first half of 2026, reflecting grower prioritization of yield-enhancing solutions.
• Non-Core Divestitures -- Generated approximately $1 billion in gross proceeds since late 2024, including $90 million in non-core asset sales signed since June 2026.
• Mine Automation -- Mined 53% of potash ore tonnes using automation in the first half of 2026, exceeding the company's previous targets.
• Share Repurchases -- Increased to $75 million per month in the third quarter, following an 8% increase in total cash returns to shareholders in the first half.
• Phosphate Adjusted EBITDA -- $23 million in the second quarter, a 75% decrease caused by elevated sulfur input costs that pressured producer margins.
• Global Potash Shipments -- Forecasted at 74 million to 77 million tonnes for 2026, as shipment levels align with projected global consumption.
• North American Retail Volumes -- Declined 10% for phosphate and 7% for nitrogen in the second quarter, reflecting lower corn acreage and deferred purchases.
• Australian Livestock Commissions -- Contributed to retail growth in the first half because of elevated export demand for lamb and beef.
• Potash Net Selling Price -- $267 per tonne in the second quarter, representing an increase from $248 per tonne in the prior year.
• Operating Cash Flow -- $1.63 billion in the first half, representing a 12% increase compared to the prior year.
• Retail Adjusted EBITDA Guidance -- Maintained at $1.75 billion to $1.95 billion, supported by high single-digit growth in proprietary products margins.

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RISKS

• CFO Thompson warned of "elevated sulfur costs, which have placed unsustainable pressure on global phosphate producer margins," resulting in reduced segment performance.
• CEO Seitz noted that "risks to crop production and trade have increased due to geopolitical uncertainty and forecasts indicating El Niño conditions," which may place upward pressure on crop prices.

SUMMARY

Nutrien Ltd. (NTR -0.15%) reported adjusted EBITDA of $3.5 billion for the first half of 2026, representing a 6% increase despite a decline in the second quarter. Management attributed the half-year performance to record potash sales and structural growth in the retail proprietary products business. The company utilized divestiture proceeds of $1 billion to strengthen the balance sheet and accelerate share repurchases. Strategic reviews for the phosphate business and Trinidad nitrogen operations remain in progress with expected conclusions by the end of 2026.

• CEO Seitz reported that the company reached a 53% automation rate for potash ore mining, which surpassed the 2024 Investor Day target.
• CFO Thompson stated that the company increased its share repurchase pace to $75 million per month in the third quarter, noting, "confidence in cash generation for the year."
• Management confirmed receiving numerous nonbinding bids for the phosphate business as part of its ongoing strategic alternatives review.
• CEO Seitz indicated that "global urea fundamentals affirmed in the third quarter" because of trade flow disruptions and production outages.
• CEO Seitz attributed the rise in potash sales to "favorable affordability, healthy demand in all major global markets and stable supply relative to other commodities."
• The company confirmed that 85% of third-quarter nitrogen fertilizer sales volumes are committed, aligning with values set during the summer fill period.
• Nutrien expects to host an Investor Day on Nov. 30 in Toronto to outline future value creation opportunities and growth initiatives.

INDUSTRY GLOSSARY

• ARO/ERL: Accounting terms for asset retirement obligations and accrued environmental costs related to the restoration of production sites.
• Canpotex: An offshore potash export and marketing company owned by major Saskatchewan potash producers.
• ESN: Environmentally Smart Nitrogen, a polymer-coated urea product designed for controlled nutrient release.
• MMBtu: A standard unit of heat energy equivalent to one million British Thermal Units, used for pricing natural gas feedstocks.
• Proprietary Products: In-house brands of crop nutrients and protection chemicals that typically offer higher profit margins than commodity products.
• Provincial Mining Taxes: Taxes paid to the government of Saskatchewan based on potash production and profit levels.
• Summer Fill: A commercial program offering seasonal discounts to encourage fertilizer purchases during periods of lower demand to optimize logistics.

Full Conference Call Transcript

Operator: Greetings, and welcome to Nutrien's 2026 Second Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. And I would now like to turn the conference call over to Jeff Holzman, Senior Vice President of Investor Relations and FP&A. Please go ahead.

Jeff Holzman: Thank you, operator. Good morning, and welcome to Nutrien's Second Quarter 2026 Earnings Call. As we conduct this call, various statements that we make about future expectations, plans and prospects contain forward-looking information. Certain assumptions were applied in making these conclusions and forecasts. Therefore, actual results could differ materially from those contained in our forward-looking information. Additional information about these factors and assumptions is contained in our quarterly report to shareholders as well as our most recent annual report, MD&A and annual information form. I will now turn the call over to Kenneth Seitz, Nutrien's President and CEO; and Mark Thompson, our CFO, for opening comments.

Kenneth Seitz: Good morning, and thank you for joining us today to review our first half performance, progress on our strategic priorities and the outlook for our business. In the first half of 2026, Nutrien delivered record potash sales volumes, strong growth in proprietary products margins and further enhanced the reliability and cost position of our nitrogen assets in a dynamic global operating environment. We raised the bottom end of our 2026 potash sales volumes guidance, lowered our capital expenditures guidance range and increased the pace of share repurchases. Our results demonstrated strong performance against our strategic priorities that are strengthening our business, driving structural growth in free cash flow and increasing cash returns to shareholders.

In potash, we increased production from our low-cost 6-mine network and utilize the capabilities of our extensive global supply chain to meet strong customer demand. In the first half, we mined 53% of ore tonnes using automation, exceeding the top end of our 2024 Investor Day target. This result reflects the strong execution of our automation strategy while also highlighting additional opportunities to further enhance deployment and performance across the network. These investments are delivering wide-ranging benefits beyond improvements in safety and productivity. Increased automation enables us to mine more ore with the assets already in place, helping to optimize capital expenditures and maximize returns on existing investments.

In nitrogen, our low-cost North American assets remain well positioned with advantaged natural gas costs and a continued focus on initiatives that increase upgraded product volumes and margins. Our first half production was consistent with our previous expectations, including a planned turnaround at our Carseland facility that demonstrated operational excellence in action. The turnaround was the largest in the facility's history and included a debottlenecking project that increased the site's annual production capacity. Despite a much larger scope than the last year turnaround 4 years ago, we achieved higher productivity and contractor efficiency through improved planning and execution. The work was completed safely with 0 lost-time injuries ahead of schedule and under budget. Turning to our downstream retail business.

Adjusted EBITDA increased by 4% in the first half of 2026, underpinned by execution of key growth initiatives that enhance our ability to serve growers with a broader set of products and services integrated through our network. Our Proprietary Products business delivered strong growth in the first half, including a 10% increase in proprietary crop nutrients gross margin despite softer fertilizer demand as growers continue to prioritize solutions that enhance productivity. Our performance reflects targeted investments we made to expand capacity and meet increasing customer demand with sales volumes for certain nutritional products increasing nearly tenfold compared to the prior year. Together, these results demonstrate how customer insights, targeted investments and disciplined execution are driving earnings growth.

Over the last 2 years, we have taken purposeful steps to optimize our portfolio following a comprehensive review of each asset's free cash flow contribution and returns on invested capital. Since June 2026, we completed agreements to sell non-core assets for gross proceeds of approximately $90 million. Including these agreements and prior divestments, we have generated approximately $1 billion in gross proceeds since the fourth quarter of 2024. These actions are strengthening our portfolio quality while creating additional flexibility to reduce debt, increase shareholder returns and allocate capital to businesses with superior long-term growth opportunities.

As previously announced, we are reviewing strategic alternatives for our phosphate business and are encouraged to have received numerous nonbinding bids as part of the process. We also continue to review strategic options for our Trinidad nitrogen operations and each component of the Brazilian retail business. We remain on track to solidify the optimal path for these businesses in 2026. Overall, our first half results demonstrate progress on our strategic priorities and disciplined execution to enhance earnings quality and free cash flow per share. Across each of our businesses, we continue to focus on areas within our control, namely operational excellence, cost management and capital efficiency.

While the external environment remains dynamic, we believe Nutrien is well positioned to create long-term value for our shareholders. Now turning to the market outlook. Global agricultural markets are supported by robust grain and oilseed demand. Risks to crop production and trade have increased due to geopolitical uncertainty and forecasts indicating El Niño conditions, which are expected to place upside pressure on crop prices. Potash margins remain constructive due to favorable affordability, healthy demand in all major global markets and stable supply relative to other commodities. We've maintained our forecast for global potash shipments of 74 million to 77 million tonnes in 2026 as projected shipment levels are expected to be consistent with consumption.

Global urea prices declined in the latter half of the second quarter during a seasonal low for demand that was exacerbated this year due to evolving geopolitical developments. Global urea fundamentals affirmed in the third quarter, driven by ongoing trade flow disruptions, production outages, elevated energy prices and increased demand. We expect these factors will continue to shape the outlook for nitrogen markets over the remainder of 2026. In this environment, Nutrien's North American nitrogen assets are well positioned to benefit from secure low-cost feedstock supply and dependable market access. With that overview, I'll now turn it over to Mark to provide more detail on our second quarter financial performance, guidance assumptions and capital allocation priorities.

Mark Thompson: Thanks, Ken. Nutrien delivered adjusted EBITDA of $2.4 billion in the second quarter of 2026, and first half adjusted EBITDA was $3.5 billion, up 6% from the prior year. Cash provided by operating activities rose by 12% in the first half, providing opportunity to further advance our capital allocation priorities. In potash, we generated adjusted EBITDA of $658 million in the second quarter, reflecting higher global benchmarks and strong operational and supply chain execution. Our second quarter and first half potash controllable cash cost of product manufactured was flat compared to the prior year due to cost control measures and the benefits of our automation program that Ken articulated.

We continue to target our controllable cash cost below $60 per tonne on a full year basis for 2026. We raised the bottom end of our 2026 potash sales volumes guidance to 14.2 million to 14.8 million tonnes due to the strength of first half sales and increased visibility on the second half order book. Canpotex is fully committed for third quarter sales volumes, and we had a favorable response to our domestic summer fill program. We anticipate a similar split between offshore and domestic sales volumes in the third quarter compared to the prior year. Our nitrogen operating segment generated adjusted EBITDA of $635 million in the second quarter.

Net selling prices were in line with higher global benchmarks and the timing of order book sales with approximately 35% of total segment volumes sold prior to the onset of the Middle East conflict. Nitrogen sales volumes were down from the prior year, reflecting no production from Trinidad and New Madrid, planned maintenance at Carseland and some deferred customer purchases late in the quarter during a period of increased market volatility. Looking ahead, the majority of our Q3 nitrogen fertilizer sales volumes are now committed and aligned with summer fill values set in late June and early July.

We maintained our 2026 nitrogen sales volume guidance of 9.2 million to 9.7 million tonnes, with planned turnarounds scheduled at our Lima and Redwater nitrogen facilities in the third quarter and higher ammonia operating rates expected in the fourth quarter. In phosphate, adjusted EBITDA declined in the second quarter due to elevated sulfur costs, which have placed unsustainable pressure on global phosphate producer margins. We maintained our 2026 phosphate sales volume guidance, supported by reliability improvements achieved in the first half, while we continue to closely monitor customer demand and sulfur input costs in the second half of the year.

Our downstream retail business delivered adjusted EBITDA of $1.24 billion in the first half, up 4% compared to the prior year. Following a strong start to the application season in the first quarter, North American retail crop nutrient volumes declined in the second quarter, in particular for phosphate and nitrogen. The reduction in commodity fertilizer volumes was offset by strong proprietary products performance. We maintained our full year retail adjusted EBITDA guidance of $1.75 billion to $1.95 billion, with the midpoint of the range underpinned by 3 key items. First, we continue to project high single-digit growth in our proprietary products gross margin in 2026, supported by organic growth in our core retail geographies.

Second, we expect higher crop nutrient margins per tonne to offset a reduction in sales volumes compared to the prior year. We anticipate firming crop prices and an earlier start to the North American fall application season will support nitrogen and potash applications similar to historical average levels with phosphate demand expected to remain below historical levels. Third, we anticipate recent favorable weather to improve winter planting prospects in Australia and continued strength in livestock markets through the second half. As we look toward the remainder of 2026, we expect free cash flow to be supported by constructive fertilizer market fundamentals, strong operational execution, capital discipline as well as ongoing portfolio optimization efforts.

Reflecting this focus on capital efficiency and returns, we have reduced our capital expenditures guidance by $50 million to a range of $1.95 billion to $2.05 billion. We increased share repurchases in the first half of 2026 by 26% compared to the prior year and have stepped up our repurchase pace in the third quarter to approximately $75 million per month. This is consistent with our capital allocation approach of increasing cash returns to shareholders and maintaining a strong balance sheet as we structurally grow free cash flow. I'll now turn it back to Ken for final comments.

Kenneth Seitz: Thanks, Mark. The results we shared today demonstrate the progress towards strengthening the business and positioning Nutrien for long-term growth and resilience. Across Nutrien, our teams continue to identify initiatives to further improve performance, unlock value from existing platforms, efficiently serve our customers and advance future growth. Together, these efforts are expected to structurally increase free cash flow per share and enhance long-term shareholder returns. To that end, we intend on hosting an Investor Day on November 30 in Toronto, where we will outline the next phase of opportunities to create additional value across the business. To close, I'm encouraged by the team's execution in the first half of 2026 and the momentum we continue to build across Nutrien.

With that, we'd be happy to take your questions.

Operator: [Operator Instructions] The first question comes from the line of Chris Parkinson from Wolfe Research.

Christopher Parkinson: Just want to circle around the second half outlook for potash. It seems like demand has been pretty stable across Asia, Southeast Asia, some of your core markets. So I'd love to hear your perspectives there versus your initial January 1 expectations, run through the Americas. And then in terms of your order books, do you feel pretty comfortable where you are now heading into December, especially that Uralkali's taking some maintenance downtime and some other stuff. Would just love to hear the puts -- both the puts and takes, how you're thinking about that.

Kenneth Seitz: Great. Thank you, Chris. Yes, we are certainly constructive on potash for the second half and for the year. We continue to say 74 million to 77 million tonnes of shipments this year. And you will have seen that we raised the bottom end of our own guidance now at 14.2 million to 14.8 million tonnes. And this is, I think, largely owing to favorable affordability, of course, and to your question, healthy demand in all major global markets. We started the year with low inventories that are being replenished. And here we are in the second half, we've had a favorable response to our summer fill program. We're now heavily committed through Q3.

And of course, Canpotex fully committed to Q3 and expecting year-over-year growth in offshore markets. So yes, constructive on the setup, but maybe I'll have -- to your question, Chris, I'll hand it over to Chris Reynolds to just talk about region by region.

Christopher Reynolds: Chris, thanks for the question. And as Ken said, we are feeling good about demand for potash for the balance of the year. As you know, still globally the most affordable nutrient out there, and we're seeing that in our major markets. And so as you suggest, as we go around the world here, North America, we had a good response to our summer fill program. And then subsequent to that, a price increase we took where we've taken some orders against that already and also a fairly slim import lineup as we look out over the next couple of months. Brazil, Q3 is always a little seasonally quiet in Brazil.

But despite that, prices have been holding pretty steady around that $400 mark. And the uptick in ag commodity prices we've witnessed has also helped sentiment down there. We estimate there's still a lot of buying to be done yet in Brazil for the balance of the year, somewhere around 4 million tonnes. And so feeling good about things there. We actually just got back from a trip to China talking to customers there. And although port inventories have grown a little bit year-over-year in China, what we heard from our customers is that in-country channels are reasonably slim.

So when you think about 20 million tonnes of consumption is the expectation there for China and port inventory is around 3 million to 3.3 million tonnes, certainly not overbearing in terms of supply/demand. And the other message we got loud and clear while we were there is that the government and the buyers there are prioritizing security of supply. And they also like the outcome of an early settlement for this 2026 contract. Southeast Asia demand continues to be underpinned by really good palm oil prices, but also a little bit of concern in terms of the potential El Niño impact in that region.

So overall, Chris, feeling good about demand for potash for the balance of the year and the continuing stable market.

Operator: Your next question comes from the line of Ben Isaacson from Scotiabank.

Ben Isaacson: Ken, my question is, can you please talk about Nutrien's road map to expanding potash capability towards 18 million tonnes from somewhere around 15 million today. It seems like you're getting close to your limit of capability. And given that supply is coming to market and given where demand growth is, what is the timing? What is the CapEx? And do you still want to be in a 19% to 20% market share range in 4 or 5 years from now?

Kenneth Seitz: Great. Thank you, Ben, for the question. And the short answer, just to start on the demand side and market share is, yes, 19% to 20% historically has been sort of the market share that we've had globally. And then that's owing to the fact that we've had customers in each of these regions for many decades, and those customers are growing in each of their regions as demand for potash continues to grow, and we grow along with them. We've become a reliable supplier of high-quality volumes around the world for those decades now. And like I say, our customers want to grow with us.

So then when we look to our own network and to your question, we asked the question, well, how we're going to continue to meet demand and 19% to 20% market share. We do have our 6-mine network, low cost. It's very well on the cost curve. Mark just mentioned, we've been successful at keeping cash cost per tonne below $60. Part of that is the mine automation work that we've been doing. But that mining automation work means that the next tonne that we mine is also more efficient than the last. And so as we continue to deploy those automation efforts, we look to where we're going to unlock that next tonne.

And it sort of happens in a way that we move from mine to mine depending on sort of the all-in lowest cost, CapEx, capital charge included, where we get that next tonne from. Today, that has meant Lanigan expansion, but we have options at 5 of those 6 mines to continue to expand production. And again, with mine automation, those options are growing for us. This year, we would say that we have about 15 million tonnes of production capacity. To your question, Ben, we like to think about sort of a year lead time to unlock additional volumes and maintain that 19% to 20% market share.

So lead times are actually relatively short, and it's really getting mining machines in place and belting to the shaft given that our milling capacity and tailings management areas are built. It may require some loadout investment in some of our mines. But again, these are relatively -- and I do say relatively shorter-term investments than something like a greenfield development. In terms of cost, we say that next increment of production, 15 million to 18 million tonnes, is sort of $200 to $300 a tonne. And that would be, as you know, as we're witnessing an order of magnitude lower than a greenfield development.

As we go from 18 million tonnes and beyond, we do experience a bit of a step change in capital. But again, we're talking about $700 or $800 a tonne, again, maybe 1/3 or less of what a greenfield development would be. So suffice it to say, Ben, we have these plans. We have this mapped out. We've done the math. We've talked to our customers. And every year, we just continue to demonstrate that we grow our volumes.

Operator: Your next question comes from the line of Andrew Wong from RBC Capital Markets.

Andrew Wong: I just wanted to ask about the pace on buybacks. The Q2 dollar amount was up pretty meaningfully versus Q1. And then when we look at Q3 to date, the repurchases and we, kind of, average out through the quarter, that puts you on another similar pace in terms of sequential increase. So is this your new regular buyback rate? Or was there something that was driving this increase more temporarily like because of cash flows or how you see the value in your shares?

Kenneth Seitz: Yes. Thanks, Andrew. And we do have, I would say, a pretty disciplined capital allocation structure and framework that we are at as we make these decisions. We talk about it quite a bit with our Board, but I will hand it over to Mark to just provide the color around that framework.

Mark Thompson: Yes. Thanks, Ken. And just before touching on the specific buyback pace, I think it's important to provide some context on the overall capital allocation philosophy because the buybacks are but one component of a broader set of objectives that we have to add value for shareholders. So -- as Ken has said and I've said numerous times, you look back at our 2024 Investor Day. And since that time, we've provided numerous avenues to grow structural free cash flow from the business. We've had the upstream fertilizer sales volume growth we've demonstrated the retail earnings growth and the continued optimization of cost structure and capital expenditure structure, all of which have grown that structural base.

As you heard Ken say this morning, we've now generated since the fourth quarter of 2024, about $1 billion in divestiture proceeds, which has put our balance sheet in a great spot. And as we've mentioned numerous times, the return of capital philosophy is anchored in the idea that at mid-cycle prices, we want to be around 1.5x net debt to EBITDA. And we're getting quite close to those levels today, and we're very comfortable with the balance sheet and feel like we're in a great spot on that front.

So when it comes to being disciplined on capital allocation, -- we now have a very streamlined and targeted set of growth investments in the business where our core strengths exist. We really believe that we can demonstrate strong returns to shareholders by reinvesting in the company in those areas. But that also has allowed us to grow that stable cash base. And as demonstrated, and as you noted, this has allowed us to increase the pace of ratable share repurchase activity. That ratable share repurchase activity is also linked to the ability to grow dividends per share over time without growing dividend expense.

So when you zoom in on math framework and you look at this year specifically, we've gone from starting the year at a pace of around $50 million per month to around $55 million per month and now in the third quarter, $75 million per month. And what I'd say is with the second quarter behind us and the strong execution that we've outlined this morning and demonstrated in our results, there's confidence in cash generation for the year.

I think as we zoom out even further and think about that buyback over time, there's certainly going to be the structural component to the buyback that as we grow free cash flow, the opportunity to increase that ratable buyback grows over time. Inevitably, with our business, there's also a cyclical component to that buyback as we move through cycles where we'll be looking at the balance sheet and looking at where we are in the cycle. But for the remainder of the year, we anticipate that we will remain in and around these levels.

And as we get into 2027, we'll be looking at all the factors that I just talked about and that Ken has outlined as we continue to level set that ratable buyback. But the most important component of this is that shareholders can expect that Nutrien will continue to be a strong returner of capital and the share repurchase mechanism is our preferred avenue to do that.

Operator: Your next question comes from the line of Joel Jackson from BMO Capital Markets.

Joel Jackson: A little preamble to my question, but I've noticed in Q2 for retail, obviously, a quarter for retail, it was the lowest domestic fertilizer volumes like forever since 2013. We all know that Agrium and Nutrien been acquitted in retail since then, volumes are down a lot year-over-year. We all know what happened with commodity prices across Q2. But I was wondering if you could talk about -- and this also led to Nutrien EBITDA -- excuse me, retail EBITDA being down in Q2. Can you talk about exactly what was happening in the domestic retail fertilizer market where -- was there a buyer's holiday because of commodity prices, fertilizer prices?

And what does that set up for the rest of the year in terms of inventories in the market?

Kenneth Seitz: Yes. Thanks, Joel. As the sort of spring unfolded, we were at the start of the year, we're expecting lower fertilizer volumes in our downstream business, albeit maybe not as to the extent that you described. And so what was going on there is we did see phosphate volumes down about 10%. And we can use the words demand destruction. And the reasons for that, we've talked about, obviously, what's going on in the sulfur market and the phosphate business in general as phosphate producers have struggled and shutting in facilities. So -- and we -- heading into the second half of the year, we expect we'll continue to see demand destruction as it relates to phosphate.

Nitrogen volumes were down. You're correct and down about 7% in our downstream business, owing to a few things. Obviously, year-over-year corn acres are down, and that certainly plays a role in nitrogen applications. We did have a larger fall application season in 2025. So we did see some significant volumes go down last fall, and we had a delayed start to the Western Canadian planting season, which also had an impact. And yes, we did see some demand deferral into the second half.

And that's -- you know what happened to urea prices, the run-up and then the sort of seasonal lull as we came out of the season and growers stepping back and watching prices come down and delaying purchases. So yes, that contributed as well, albeit to a lesser extent. And potash was pretty much as expected. We saw 1% growth in potash and that's to probably being the most affordable of 3 crop nutrients once again. Heading into the second half year, I mean, the crop is advancing well, which could lead to an open application season so that we continue to expect good volumes this fall on the year. Could we be down a little bit on volumes?

Yes, but we expect a higher gross margin per ton on crop nutrients again in the second half that will offset those lower volumes. More broadly, for our downstream business for our retail business, if you're talking about a tale of 2 halves, proprietary performed very well in the first half. Crop chemistry as expected, Australia is performing well. We had some higher costs as it relates to fuel. But coming out of the second half, we've maintained our guidance at 1.75 million to 1.95 million tonnes (sic) [ $1.75 billion to $1.95 billion ].

And it's really just owing to the ongoing high single-digit percentage growth in our proprietary product gross margins, structural growth as it relates to proprietary products. Again, I talked about crop nutrients. Crop Protection is performing well. We saw that in Q3 as farmers seek to maintain plant health. And so again, those point to the midpoint of our guidance, those assumptions and again, maintaining that 1.75 to 1.95 (sic) [ $1.75 billion to $1.95 billion ].

Operator: Your next question comes from the line of Vincent Andrews from Morgan Stanley.

Vincent Andrews: Just sticking with retail, there was a call out in the retail section on the coverage about the strong Australian livestock season. I see that shows up in services and other, and it certainly helped the second quarter. Could you just give us a little more detail on that? It's not an area I particularly have a lot of expertise on. And will that carry forward into the balance of the year? And how will it play out?

Kenneth Seitz: Yes. Thanks, Vincent. Yes, livestock markets are very strong, not just in Australia, but yes, certainly in our Australian business, we have got a combination of good weather in Australia and a strong livestock market. Yes, I'll hand it over to Chris Reynolds just to provide some more color.

Christopher Reynolds: Yes. Thanks, Ken. Vincent, thanks for the question. Yes, we were expecting actually livestock prices to come off a little bit in Australia after a pretty good run-up there in 2025. But on the continued strength of export demand for both lamb and beef, we've seen those prices continue. And so where that comes from us is those stock agent commissions. That's the revenue stream we have in Australia in terms of, obviously, a percentage of the price of sheep and cattle mainly that we are instrumental in helping our growers sell in the Australian market.

We also saw the Chinese government put some import restrictions on particularly Australian material but -- and product, but we haven't seen that impact prices yet. So we're on the watch out for that a little bit, but we've been very pleased with the performance of that business year-to-date.

Operator: And your next question comes from the line of Kristen Owen from Oppenheimer.

Kristen Owen: While we're here in retail, let's stick with that. I wanted to ask about your proprietary products growth, up about 3% year-over-year here in the second quarter, but 16% gross margin growth, larger than that if we look on the first half. So 2 questions. First, can you help us unpack the drivers of that gross margin strength there? And then second, we've heard from some others in the space, maybe a bit of timing shift from here in North America from 2Q to 3Q. Any color that you can provide on, like, any timing shifts that you may have seen and again, the drivers of that gross profit growth?

Kenneth Seitz: Yes. Thanks, Kristen. Yes, I know proprietary products, as you say, performing very well. We believe has continued to demonstrate structural growth. in gross margin contribution from proprietary products. We've launched 26 new products this year. And again, seeing strong demand in our core geographies. In the first half, that was, once again, a story of our crop nutritionals in light of volatile fertilizer markets and constructive on the second half as well. I'll hand it over to Chris to give more color on some of the drivers of that growth. But as it relates to timing shifts, really just pointing to nitrogen.

And again, we saw some bit of deferral, I'll say, a bit out of H1 into H2 in our downstream business and with the way the fall is setting up here, we're expecting good applications of N and K in the fall. So that would be sort of the timing shift that I'd point to. But again, Chris, back to you to -- for proprietary products structural yield.

Christopher Reynolds: Yes. Thanks, Ken. And Kristen, thanks for the question. We've been really pleased, obviously, with the performance of our proprietary products range so far this year. And as Ken said, underpinned by the introduction of a number of new products and a terrific response from the market to those new products. Growers are obviously very focused on yield right now, although commodity prices have moved up a little bit, which is helping sentiment. As we walk the fields with our growers, all of that conversation is around how do I increase yield? How do I preserve the yield that I have in this crop.

And so really, that comes back to increasing the efficacy of commodity fertilizers and particularly when a product like fertilizer -- sorry, phosphate -- gets high, it's okay, how can I enhance the efficacy of this phosphate product with some proprietary products. And that's what we're seeing in the marketplace. I think some of that spill from Q2 to Q3. We're seeing that particularly in fungicide demand growth. We've had wet weather through many parts of the Midwest and so growers keen to protect their crop against potential fungal disease, and we're helping them do that. So lots of conversation about yield preservation and how our proprietary products can help them to do that.

Operator: Your next question comes from the line of Edlain Rodriguez from Mizuho.

Edlain Rodriguez: In the global potash shipments outlook of 74 million, 77 million that you have, given the affordability of potash and strong demand, like, what gets us to the low end and what gets us to the high end of that range?

Kenneth Seitz: Great, Edlain. Thank you. Yes, we've got a set of assumptions, as you might expect, on both ends, and I'll hand it over to Mark, just to walk through them.

Mark Thompson: Thanks, Edlain. And I think your question was about both the global supply construct, but I'll also make maybe a few comments about our own range in the context of that. And so as Ken set up in his prepared remarks, and I think Chris has alluded to this morning already, very robust demand for potash really across the world, and that's continued to be underpinned by the availability of supply that we believe does exist at the midpoint of our global shipment guidance range, affordability and stability of prices. And then again, that fact that inventories have not been building disproportionately in any part of the world.

And so it's all the factors that lead to the construct that if these are the factors we see going forward, the potash demand is healthy and it can continue to grow over time. If we look at the upper end of that range, truth be told, we already believe that we're testing global supply chain capability. And at the very top end of that range, we would need to see the effective capacity be available to serve all markets across the world for the remainder of the year. That would be the primary constraint as we get into the top end of the range.

At the bottom end of the range, I think we're looking at some of the factors we've talked about today in terms of how the onset of potential risks related to El Niño and Southeast Asia, looking at how inventories evolve for the rest of the year in global markets and then, of course, supportive weather, allowing potash to reach global markets and go to ground. If we look to our own range, again, our potash production has continued to be very stable and consistent. as we've alluded to this morning.

And at the high end of that range, we would really expect that for us to be there, consistent with our targeted market share that global markets would have to be trending to the top end of that range for us to be reaching the top end of our range. And at the lower end, it's the typical factors that you would look at in terms of any disruptions to supply chain, the availability of good weather in North America for the fall application season and all of those typical factors. So as of today, we feel quite comfortable with the midpoint of our guidance, and that's been evidenced by the bump in the lower end of the range.

Operator: Your next question comes from the line of Jeff Zekauskas from JPMorgan.

Jeffrey Zekauskas: I think in your retail segment for the quarter and for the first half, your SG&A costs are up about 6%. And I realized that last year, they were down. What's causing that level of inflation? And secondly, your seed gross profits were down about $20 million in the quarter. Was that a particular line of seeds or type of seeds that caused that shortfall? Or can you explain what's going on there as well?

Kenneth Seitz: Yes. Thanks for the question, Jeff. And yes, a number of moving parts there on the SG&A front. I'll hand it over to Mark. And Mark, I'll hand over -- yes, it was also on seed, just a particular crop, but I'll hand it over to Mark just talk through what we're seeing on cost in a little more detail.

Mark Thompson: Yes. Thanks, Ken. Jeff, Obviously, as always, there's a number of moving parts. I'd say when we step back and we think about the structural changes that we've made to the cost profile in our retail business, but also more broadly across Nutrien that we believe that we're maintaining those structural cost savings that we've delivered. And so the single biggest factor that's driving the higher retail expense in the first half is something that we talked about post the war on our May call in terms of our guidance assumptions, which was higher expenses coming primarily from retail fuel and fleet costs, the fuel being the biggest of those factors.

And so with the significant increase we've seen in global energy prices and the significant fleet that we have and the importance of fuel execution of the business, put a number of safeguards in place, but of course, we're not immune to those costs. And so as we speak and we look to the second half of the year, we continue to look at the factors that we can control in terms of cost discipline in the retail business, but that's the largest of those factors that I would point to. And then maybe I'll just hand it over to Chris to talk about the seed portion of your question.

Christopher Reynolds: Yes. Thanks, Mark. Jeff, I think what you're referring to would be mainly the impact of lower rice acres. And so fairly significant decrease there that we weren't expecting, but I think that was the main reason for the decrease in seed sales.

Operator: Your next question comes from the line of Matthew DeYoe from Bank of America.

Matthew DeYoe: Not to beat up more on retail, but Nutrient margins saw a nice tick up sequentially, but still running down year-over-year. Just, kind of, wondering if that's mix. I would have just assumed a better margin pull-through given what we saw on the price increases in the market in 2Q. And then on CP, similarly or I guess, pretty strong performance. I'm just wondering where volumetrically that comes in because I would have assumed, given just farmer profits, we might have seen weaker overall sales. I'm assuming that growth is not price.

Kenneth Seitz: Yes. With respect to -- thanks, Matt. With respect to the first part of the question, just on margins, I'll hand it over to Mark. I'll just say on CP, again, the first half played out pretty much exactly as we expected. And as Chris mentioned earlier, for the second half, farmers are out protecting their crop. And so we've seen strong crop protection movement of volumes in the third quarter. And part of the story about maintaining guidance for the year is crop protection playing out as expected. But Mark, do you want to talk about margins?

Mark Thompson: Sure. Thanks, Matt. Not a lot to add to the portions of the comments we've had this morning on guidance. I think when you look at the downstream crop nutrient segment as a whole and you take the comprehensive look at that. I mean, one, as we indicated in our May commentary, we expected that fertilizer sales volumes would be down. Obviously, with the quarter now being behind us and as Ken described, we saw that being a little bit more significant than we expected, particularly on phosphate and nitrogen. As we also said on the May call, we expected crop nutrient margins to be stronger.

That dynamic is something that we continue to expect to occur into the remainder of the year that we expect that year-over-year, we're going to have crop nutrient margins be stronger than what we saw last year, and that will partially offset some of the weakness we saw in volumes in the first half. And then, of course, in the second half, as we've laid out today, expecting phosphate to be down, but nitrogen and potash crop nutrient sales volumes closer to historical average levels.

Operator: Your next question comes from the line of Ariana Milin from CIBC Capital Markets.

Ariana Milin: On nitrogen, do you still see some level of cautiousness among buyers just given continued volatility in the market and related to, like, both the Middle East conflict and Russia and Ukraine? Or was lower prices all that was needed to sort of return to normal? And then on that note, do you expect to see to some degree, a geopolitical risk premium in the nitrogen market over the medium term?

Kenneth Seitz: Yes. Thank you for the question, Ariana. So with respect to the first part of the question, the answer is no. And it's much of what we've been discussing is progressing well. There were some deferrals of the nitrogen deferrals of the first half going to have to be made up for in the second half. Notably, we ran our summer fill programs and had very strong response on nitrogen. And so that certainly gives us confidence. We're 85% committed into the third quarter here. And again, with an open fall application season with nitrogen urea prices having come off, we're constructive on N and K for the fall, as Mark just explained as well.

With respect to the risk premium for ongoing risk premium geopolitics, it's a difficult one to answer. I mean we talk about what's obviously going on in the Middle East with respect to disruption of trade flows and volumes that continue to be sequestered upstream of the Strait of Hormuz, that 1.5 million tonnes a month that's not coming into the market as long as the Strait is closed. And it's really no conclusion, obviously, no conclusion there in terms of volumes being able to flow freely. So let's see how that plays out into the fall.

And then beyond that, we look to potentially longer-term disruption as we consider damage to infrastructure fertilizer production facilities, certainly to natural gas facilities in the region that export LNG to other places that produce nitrogen. So there's a lot going on there. And it plays out today, probably you're seeing $20 natural gas in Europe. And thankfully, our assets continue to sit in geographies that are structurally advantaged as it relates to feedstock. And so it's that combination of things, constructive on the fall and where our asset sits that make us constructive overall on nitrogen.

Operator: Your next question comes from the line of Benjamin Theurer from Barclays.

Rahi Parikh: This is Rahi on for Ben. Sorry to bring it up again, but for potash. I mean you mentioned the strong demand globally. But I guess just more color on what gives you confidence that farmers will not cut potash spend in order to save up for nitrogen. Maybe if you can point to other periods in the past had a similar scenario like higher nitrogen pricing, lower potash, relatively low grain pricing, maybe higher inputs. I know there's been some debate in the industry and whether there will be growth or decline in potash -- global potash shipments this year. So just looking for, kind of, your perspective on that.

Kenneth Seitz: Yes. Thank you, Rahi. What we're seeing in the farmer with our grower customers and with really our wholesale regions around the world is that with demand destruction in phosphate, for example, you look at the share of wallet that farmers deploy toward fertilizer purchases and with the affordability, relative affordability of potash, we're actually seeing strong potash demand as farmers adjust the mix of what they're putting on the ground. And so we are seeing potash on the ground.

And what I can tell you is just the signpost, what we're seeing in the market, and that goes to our successful summer fill program in North America, again, heavily committed here into Q3 and talking about this open application season in the fall and the maintenance of that global shipments range of 74 million to 77 million tonnes and certainly domestic being a part of that. Again, potash volumes were up a little bit in the first half. And then talking about commitment levels at Canpotex and Canpotex is fully committed through Q3 and expecting overall volumes to be up this year compared to last.

And again, that's just on the back of strong demand in just about every region that we supply, and Chris walked through that earlier. So you put it all together, and we see 74 million to 77 million tonnes Mark walk through our assumptions on each end of that range and then the role that we're playing in that 19% to 20% market share and the confidence that we have increasing the bottom end of our guidance range from last quarter.

Operator: Your next question comes from the line of Lucas Beaumont from UBS.

Lucas Beaumont: I just wanted to ask one on phosphate. So, I mean you haven't had to reduce your sort of segment volume outlook there at all. It seems you guys haven't had to curtail production from the cost pressures that are coming on the input cost side. So I just wanted to understand how are you, kind of, managing that compared with the others in the industry? And then just in terms of the strategic alternatives there, given the sort of current market disruption we're seeing this year, do you think you'd sort of be able to get the value you want for that asset this year if you're looking at a sale?

Or would it be better to maybe come back to that in sort of 12 to 24 months once things settle out there?

Kenneth Seitz: Great. Thank you for the question, Lucas. Yes. So with respect to our current operations in our phosphate business, we've spent an extraordinary amount of time and effort over the recent years to diversify our product mix. developing premium products and also focusing on cost reduction. And those efforts have been successful. Today, the operations are running well. They're running safely. It's true that we continue to watch sulfur prices and contribution margins. But today, contribution margins are in the black, and we can, like I say, continue to run those operations. That could change given the volatility in the sulfur market.

But again, today, given the product mix, low cost or focus on cost and of course, the quality of the Aurora asset, we continue to run our operations. With respect to the process, it's a good question with respect to what the volatility uncertainty in the market. As we enter the process, being, of course, conscious of what's going on in the market, -- we assume that strategic -- any prospective strategic buyer would look through the current volatility, knowing that the phosphate market today is completely unsustainable. Something has to change and will change.

And again, that any strategic buyer would look through the current market and understand the quality asset that Aurora is and sort of assessing White Springs and our feed plants. That's exactly what's happened, Lucas, as we've invited interest in those assets. We're encouraged by what we see. We've had a number of responses. We're in the process now of shortlisting and -- and I can tell you, we've had interest in all of the assets, some of the assets, everything in between. We're going to be working through that over the coming months. And again, as we've shared, have some conclusions we expect on our strategic review by the end of this year.

So it's a good question, but we are encouraged by what we're seeing.

Operator: Your next question comes from the line of Steven Hansen from Raymond James.

Steven Hansen: I just wanted to circle back on some of the earlier comments on long-range potash outlook planning. I'm just curious if you're looking at your existing logistical network, how you feel about that in a couple of context, I guess, we've got the major projects planning here in Canada and nation building efforts pushing for additional infrastructure spending on the West Coast. But then you've also got your plans to perhaps move into the Pacific Northwest as well for terminals.

So just thinking about -- I would just like to get some commentary on how you feel about the current status of the network and ultimately, how you feel that network is set up to handle some of this longer-term planning that you're thinking about.

Kenneth Seitz: Yes. Thank you, Steve. And we're very thoughtful about that. If you look at global demand and what's happening to 2.5% average annual growth rates per year, and there's significant runway there given that the world habitually underutilizes potash and what we can do globally with respect to yield, plant health, disease resistance, drug resistance with more potash, like I say, there's a long runway. So we plan for long-term growth. We have the customers and end markets to achieve that. And of course, we have the volumes underground here in Saskatchewan to provide to them. As you say, it's everything in between that we need to be thoughtful about, and we are.

So with respect to the end markets, North America, we say that set of infrastructure is built out more than probably anyone has done in our business right through to our wholesale customers in North America and on to farms. It is true. We continue to scrutinize cost and efficiency among that network, and we do see opportunity to get better there. But we expect the majority of our potash volume growth to take place offshore overseas. And to your question, Steve, how are we thinking about preparing for that today via Canpotex. We have sufficient port capacity to meet near- and medium-term volume growth. We have the rail contracts in place to get to those terminals.

And of course, our load-out facilities, as I mentioned earlier, are sized to meet growth. And over time, when we talk about an incremental step change in capital beyond 18 million tonnes, part of that is the load-out facility to have to build some more load up, but we'll be planful and thoughtful about that with lead times that accommodate the volumes to flow. With respect to terminal infrastructure for the long term, yes, we -- one, we like to have some options. We don't like all volumes going through one location. So we'd like to diversify that. Two, we know that we need more terminal capacity over the long term.

And so yes, that led to our announcement of exploring Longview as an option for us to construct a terminal for that long-term growth. Put that whole picture together, and we don't see impediments to our continued growth in potash production as we serve our customers globally.

Operator: Your next question comes from the line of David Symonds from BNP Paribas.

David Symonds: A couple for me, please. The first one is a bit of a conceptual one. How are you thinking about increasing biofuel mandates around the world in relation to the amount of fertilizer will need in the next sort of 5 years? I saw a UN piece on food security risk yesterday, but it strikes me that with a lot of tension around the oil market, there seems to be a big increase in biofuel mandate. And secondly, your retail business has a lot of agronomists across the U.S. There's a lot of debate about weather conditions in the corn belt, particularly around having had quite a dry July.

Do you have any view on the yield for U.S. corn this year?

Kenneth Seitz: Yes, David, thank you. It's a great question. So I will hand it over to Jason Newton, our Chief Economist, who studies both of the questions quite closely. So Jason.

Jason Newton: Thanks, Ken. David, yes, there's a number of different biofuel mandates that are expanding globally that have been providing support to grain demand and prices already. So if we look at Southeast Asia, and we've mentioned already the strength in palm oil prices and part of that's driven by strong vegetable oil demand, expanding biofuel mandate in Indonesia, which is moving to a B50 mandate there that's expanding domestic demand. And so that's been supportive of palm oil prices and grower economics in that region. In North America, we also see support for biofuels and potential expansion into year-round E15 expansion of renewable diesel production in the U.S. We've seen recent expansion announcements for crushing capacity for soybeans.

And so that's really supportive of demand, and we've seen strong demand for grains and oilseeds tighten those supply-demand balances versus what was expected earlier this year. And as we look over the medium term, with that increased certainty, we expect increased domestic demand in the U.S. to be supportive of grower economics. and acreage. To your second question on weather in the U.S., yes, we've seen across numerous geographies globally, challenges with weather conditions, really hot and dry weather in Europe and dry weather, especially in the Western Corn Belt of the U.S. and consecutive weeks of reduced condition ratings in the U.S., providing potential downside on yields, and we'll watch how that develops going forward.

Of course, we know that nutrient application rates were down as well, and that could provide additional uncertainty with respect to yields given the importance of adequate nutrition in terms of drought resistance and so on. And so as we look toward the fall, the tightening supply-demand balances from that strong demand and reduced yield potential is supporting a more optimistic view of ag economics and supply and demand fundamentals.

Operator: There are no further questions at this time. I will now turn the call back to Jeff Holzman. Please go ahead.

Jeff Holzman: Thank you for joining us today. The Investor Relations team is available if you have follow-up questions. Have a great day.

Operator: Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.