Nutrien Ltd. (NTR) Earnings Call Transcript & Summary

Greetings, and welcome to Nutrien's 2025 First Quarter Earnings Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference call over to Jeff Holzman, VP of Investor Relations.

Thank you, operator. Good morning, and welcome to Nutrien's First Quarter 2025 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 Ken Seitz, Nutrien's President and CEO; and Mark Thompson, our CFO, for opening comments.

Good morning. Thank you for joining us today as we review our Q1 performance, strategic priorities and the outlook for our business. Nutrien's first quarter results were supported by the execution of operational efficiency and cost savings initiatives. We maintained our 2025 full year guidance ranges as operating performance and capital allocation priorities are consistent with previous expectations. In recent months, geopolitical events and trade disruptions have created volatility in global financial markets. However, to this point, these issues have not impacted the outlook for our business. Fertilizer market fundamentals have strengthened, supported by strong global demand and tight supplies. Canadian fertilizer products that are critical for crop production and food security continue to move across the border tariff-free. And our downstream retail network is well positioned on fertilizer and crop protection supplies to meet demand for the current growing season. U.S. farmers intend to increase corn acres by approximately 5% in 2025, which is positive for crop input demand. We're seeing strong fertilizer application rates this spring and our U.S. retail fertilizer sales volumes were up 8% in April compared to the same period in 2024. As we plan for the remainder of the year, we will continue to position our supply chain to efficiently serve our grower customers in a dynamic market environment. Now turning to Potash. Global supply and demand fundamentals have strengthened significantly as spot market prices have increased by 10% to 20% since the beginning of 2025. We have maintained our annual global potash shipment forecast in the range of 71 million to 75 million tonnes with the current level of demand testing existing global operating and supply chain capabilities. Canpotex is fully committed for the second quarter due to strong demand in all major offshore spot markets. In China, a step change in potash consumption in recent years, combined with lower imports to begin 2025, has led to an estimated 1.1 million tonne reduction in its strategic reserve. We anticipate favorable consumption trends and lower inventories will support strong import requirements in the second half of the year. Global urea and Nitrogen solutions markets have also strengthened considerably in 2025 due to seasonal demand and supply restrictions. In the U.S., the combination of higher corn acres and limited nitrogen applications this past fall is supporting demand, while trade flow shifts and constrained logistics have impacted supplies. Nutrien is well positioned to optimize product mix from our low-cost nitrogen network to meet demand this spring. Beyond the fundamentals, our focus is to enhance our core business across the ag value chain and progress towards our 2026 performance targets, which provide a pathway for driving structural improvements to our earnings and free cash flow. In our upstream business, we are leveraging our world-class asset base to bring on incremental low-cost fertilizer volumes as demand grows. This includes initiatives that enhance the safety, reliability and low-cost position of our assets. Investments in our midstream distribution network will continue to be a priority to ensure we can efficiently serve our customers and support our growth objectives over the long-term. Trade disruptions in recent years have further highlighted the importance of our leading global supply chain. In our downstream retail business, we have well-defined growth opportunities. including the expansion of our proprietary products business, execution of network optimization projects and tuck-in acquisitions. In the first quarter, we completed 2 acquisitions in the U.S., adding high-quality assets with a strong strategic fit within our retail network. Through actions to simplify our business and focus on core assets and markets, we have made meaningful progress on our cost savings and capital expenditure targets. We remain on track to achieve our $200 million target for consolidated annual cost savings in 2025, 1 year earlier than the original goal. We have further optimized capital this year with planned extended -- expenditures down more than $500 million compared to 2023 levels. In addition, the divestiture of non-core assets has provided us with incremental cash flow. In the first quarter, we divested our remaining position in Sinofert, which was a passive equity ownership stake. Total proceeds from the divestiture during the fourth quarter of last year and the first quarter of 2025 amounted to $223 million. These actions further support Nutrien's ability to deploy capital towards high conviction priorities that improve earnings and free cash flow per share through the cycle. I will now turn it over to Mark to review our Q1 results, 2025 guidance and provide additional details on our capital allocation priorities.

Thanks, Ken. As Ken described, our operating performance has progressed in-line with our previous expectations. In the first quarter, which is typically a seasonally slower period for our downstream retail business, Nutrien delivered adjusted EBITDA of $852 million. Retail adjusted EBITDA totaled $46 million as weather-related delays reduced crop input sales in the U.S. and Australia. Retail expenses were down 5% compared to the prior year as we progressed cost savings initiatives. In Brazil, we are demonstrating greater stability in our business performance, supported by the execution of our margin improvement plans. We maintained our full year retail adjusted EBITDA guidance range of $1.65 billion to $1.85 billion. Given the pace of field activity through early May, we expect the slower start applications in the first quarter will be made up in the second quarter. At the midpoint of our annual range, we anticipate year-over-year growth in crop Nutrien sales volumes, increased proprietary products gross margin and continued recovery in Brazil partially offset by a return to historical average crop protection product margins. In potash, we delivered adjusted EBITDA of $446 million in the first quarter, down from the prior year due to lower net selling prices. Our realized potash price in North America reflected the reset in values for the winter fill program while the improvement in our offshore selling price was driven by higher international benchmark values and lower logistics costs. Our North American reference price increased 3x following the completion of our winter fill program which we expect will support higher domestic selling prices in the second quarter. We utilized our extensive midstream distribution network to deliver 3.4 million tonnes of potash in the quarter, similar to the record levels sold in the same period of 2024. We expect annual potash sales volumes of 13.6 million to 14.4 million tonnes, in-line with our historical average share of global shipments. Our nitrogen operating segment generated adjusted EBITDA of $408 million in the first quarter, down from the prior year due to higher natural gas costs and lower equity earnings from our investment in Profertil. Benchmark prices for urea and other upgraded nitrogen products have strengthened since the beginning of the year, while ammonia values have declined from historically strong levels in the fourth quarter of 2024. Our ammonia operating rate increased to 98% in the first quarter, supported by reduced maintenance downtime and improved reliability at our sites. We expect annual nitrogen sales volumes in the range of 10.7 million to 11.2 million tonnes with higher quarterly volumes for the remainder of 2025 compared to the prior year. Given the recent volatility in global natural gas markets, we now project Henry Hub Natural Gas prices to average between $3.25 and $4 per MMBtu in 2025. Our Western Canadian nitrogen plants continue to benefit from low gas costs due to a wider price spread to Henry Hub compared to historical average levels. In phosphate, we generated adjusted EBITDA of $61 million in the first quarter, down from the prior year, primarily due to the impact of lower production volumes and higher input costs. We continue to expect lower production levels in the first half of 2025 compared to last year and improved operating rates in the second half following the completion of planned turnaround activity. Our capital allocation priorities also remain consistent. We are focused on initiatives that support the achievement of our 2026 performance targets, optimizing investments in working capital and continuing to review non-core assets on our balance sheet, all of which we expect will enhance sources of cash flow over time. From a uses of cash perspective, we've committed $2 billion to $2.1 billion in capital to sustain safe and reliable operations and to progress a set of targeted growth investments that are aligned to the priorities that Ken previously described. This includes investments in our proprietary products business, retail network optimization, nitrogen debottleneck projects and potash mine automation. In February, we indicated that additional free cash flow in 2025 would be allocated to a narrow set of incremental growth opportunities and to share repurchases. Priorities that we expect will increase free cash flow per share. We've deployed capital on both fronts in 2025, completing 2 U.S. retail acquisitions in the first quarter, and repurchasing 3.6 million shares for a total of $188 million as of May 6. We intend on continuing to repurchase shares on a ratable basis under our renewed NCIB Program that's authorized until the end of February 2026. I'll now turn it back to Ken.

Thanks, Mark. To summarize, we have a constructive outlook for our business as global fertilizer market fundamentals have tightened in 2025, supported by growing demand and tight supplies. We continue to monitor potential risks related to trade disruptions and have built a resilient business that is well positioned to respond under any scenario. We are taking a disciplined and intentional approach to capital allocation, prioritizing high-value investment opportunities, divesting non-core assets and returning cash to shareholders. We have demonstrated progress in each of these areas in 2025 and we'll continue to focus on actions within our control that we believe maximizes long-term value for our shareholders. We would now be happy to take your questions.

[Operator Instructions] The first question comes from Joel Jackson from BMO Capital Markets.

So you don't give guidance for EBITDA, you give it just for retail. And I don't want you to give me guidance if I wanted to, you're not going to. What I want to ask you is that, if I look at versus 3 months ago, what you had for your commodity price deck and don't even tell us that. But would you agree that if you mark-to-market your earnings, you would expect that you are looking at higher outlook now than you would have thought 3 months ago because all the commodity prices have moved to good U.S. spring. Like could you talk about that, that the outlook is improving or not, where you should be earning more than maybe what you would have thought 3 months ago? And you're not going to tell us what those numbers are and that's fine.

Yes, thank you for the question. The short answer is, yes. We agree with your assessment now versus 3 months ago. And, yes, it's related to a number of things. And it does go back to what we're seeing across what we do, the strength of demand across fertilizer products. And we can talk about potash, where we issued in our view of 71 million to 75 million tonnes of demand this year. And what we're seeing, we believe, is the intersection of the market, the ability to supply that. So there is supply stack and logistics constraints. And so that as a result, we are seeing strengthening of price in every market that we serve. I mean, even in our own domestic volumes, we have increased the price 3 times since our winter fill program. To your point, that's within the last 3 months, Joel. We're 90% committed through Q2 in our domestic volumes and fully committed with Canpotex through Q2. And we could talk about what's happening in urea and UAN, where we've seen supply disruptions and strong demand. With our retail business, we've talked about, it's a story of halves as opposed to quarters and where we -- with some weather delays in the first quarter, we're now about 50% planted in, and we can hand it over to Jeff Tarsi, things are going strong with the planting season now, and we're seeing significant volume go to ground. So we're very encouraged by what we're seeing at the moment. So again, Joel, it's just to say that we agree with you and certainly constructive on the balance of the year.

Your next question comes from Andrew Wong from RBC Capital Markets.

So maybe can you just provide an update on Brazil retail? Like are we on track to see that business get back to breakeven? And just going forward, now that you've spent some time on the turnaround in Brazil, what does that look like for Nutrien as you kind of get into, like, let's say, 2026 and beyond?

Yes. Thanks, Andrew. So again, the short answer is yes. We are on track. I mean at the macro level, Brazilian farmer had a strong soybean crop and soybean prices strengthened. Of course, they're watching their safrinha corn crop grow at the moment, but all indications are that it will be a strong corn crop as well. So Brazilian farmer is in a bit better place. And of course, you combine that with what we've been doing with our own business. We talked about idling blenders. We've talked about headcount reduction. We talked about closure of unproductive locations, how we're focusing on collections, how we're focusing on proprietary products and that whole plan to bring us back to a cash neutral position this year, which is absolutely on track. Jeff, do you want to say a few words about that?

Yes, Ken. I'll just reiterate, again, some of the comments that you made from a macro standpoint. Growers came off very strong, soybean yields there with soybean harvest. They got off to a good start with the second crop corn, and that's progressing nicely, not a lot of weather scare is there in that market. We have seen -- as we saw last year, we continue to see pressure in the crop protection market, a big influence of generics in that market as well. And our focus with our business, as Ken just stated, we're really focused very intently on our controllables expense management, a heavy, heavy focus on margins. We've been very focused on bringing our inventory down and we've been successful at that. And then again, a lot of attention to our receivables book. We expect to deliver a notable improvement over last year. We're starting to see those benefits start to show up from a margin standpoint and from an expense standpoint as well, and we plan to carry that momentum forward through the remainder of the year. Ken just mentioned that we've idled our blending facilities, and we've taken out our assets that weren't giving us a return from whether we talk about locations or experienced centers, and we reduced our headcount by about 400. So we've done a lot of work there over the last 12 to 18 months, and we're starting to see the results of that. Thanks, Jeff.

And Andrew, as we look into 2026, I think you're going to expect more of the same. It will be watching the market evolution of the health of the Brazilian farmer and at the same time, us continuing to execute on our improvement plan. And I think, Jeff, fair to say, we're watching crop chemistry quite closely. If there's one shelf of ours that has caught up is on chemistry and we'll be looking to 2026 to see that improve. We're still seeing competition from generics and that's certainly stressing prices in that part of the world.

Yes. And Ken, I've failed to mention, I don't want to leave this out, but we still see a lot of opportunity on the proprietary products side of our business, especially with our plant nutritional and biological products as well on the proprietary seed side of the business and we're very focused in those 2 areas.

Your next question comes from Vincent Andrews from Morgan Stanley.

Could you talk a little bit about just sort of how you're seeing the first half shape up in wholesale? And I'm just trying to think through, you said about 90% of the book is filled domestically. Can you give us a sense of sort of how much sequential price improvement you'll see? It's obviously been a rising price environment. So just trying to understand how much that you might have captured in 2Q.

Yes. Thanks, Vincent. Again, I would say that the first half in terms of upstream business is we're constructive, and we can start with potash where again, with such strong global demand, we can go from market-to-market, where again in China, we're seeing very strong consumption, quite-low inventory levels. India with -- it's a flat subsidy, the one that, at today's prices, would encourage probably 4 million tonnes of demand in that part of the world. In the U.S., we talked about what we're seeing in the planting season here. And certainly in the second quarter, things have gone quite strong domestically. We can talk about what we're seeing in Indonesia and Malaysia, albeit MYR 4,000 per tonne. Palm oil prices come off a bit, but still at a level that encourages strong demand, and we're seeing that. We're probably at about $360 pricing in Southeast Asia at the moment for a standard-grade product. So again, in Brazil, of course, where we're just talking last year, 47 million tonnes of crop Nutrien demand, and we're expecting something similar this year. So we can go on the demand side, market to market and it certainly gives us that confidence in the 71 million to 75 million tonnes. And again, if you look at what's happening on the supply side of the equation and the market's ability to deliver. We believe those two are meeting and they're meeting with the result of strengthening prices in just about every market that we serve. We can move over to nitrogen products, where here in the planting season, we've had really strong urea and UAN prices. Ammonia, some softening with new supply coming on. We're all watching China as it relates to export volumes. But at the moment in the planting season, we're seeing quite a bit of strength. So again, market-to-market and we can talk about phosphate prices, particularly strong. Market-to-market wholesale business, our upstream business, we're constructive on the first half and frankly, into the balance of the year.

Your next question comes from Richard Garchitorena from Wells Fargo.

Great. Just wondering on the Nitrogen segment, it looks like you had higher costs as a headwind in the quarter. Just wondering how much of this was related to Trinidad. Was this across all your facilities, obviously, higher natural gas price in North America as well. And then also just maybe on tariffs, I guess, how are you thinking about handling that if there are going to be some tariffs on material coming into the country from other regions, such as Trinidad?

Yes. So two questions there, one on costs, one on tariffs, maybe I'll hand it over to Mark to talk about what we're seeing in the first quarter, first half for cost in our nitrogen network and then maybe Chris just talk a little bit about this, I guess, it's 10% flat tariffs on some of the other regions who produce nitrogen.

Thanks, Ken. Rich, on your first question on nitrogen cost in Q1, a pretty straightforward answer. Obviously, when we came into the year, we had expected to see Henry Hub prices in a range of $3.25 to $3.50 to begin the year and natural gas prices began the year higher than we anticipated in a more volatile fashion than we anticipated. So the majority of the cost you're referring to in the quarter would have been driven by higher gas prices in North America. That said, we've seen gas prices ease-off somewhat. While there is still volatility in the market, we've widened our range for the remainder of the year to be $3.25 to $4. As we've moved through the winter, we've seen gas prices ease a little bit, albeit still volatile going forward. I would just point out that, obviously, we continue to benefit from a wider than historical spread with our plants up in Alberta and continue to expect to reap the benefits of that through the remainder of the year. So with that, I'll pass it over to Chris.

Yes. Thanks, Mark. As it relates to tariffs, some of the price increase we've seen, whether it be the urea or UAN maybe from the imposition of tariffs from those countries that have the 10% imposed to them. But generally, the story is much more about demand. And as you heard from Ken in his opening remarks about the impact of planning 95 million acres of corn, a little bit of catch-up, nitrogen application that was missed in the fall. And that's the real factor that's driving the price, particularly of those 2 products.

Your next question comes from Ben Isaacson of Scotiabank.

You gave global potash shipment guidance of 71 million to 75 million tonnes, 75 million being strong demand, 71 million being weak supply. Now you don't have weak supply. And so my question is, with prices now starting to move to and through mid-cycle, you talked about Canpotex being sold out in Q2. Your Canpotex peer yesterday nudged up their volume a little bit in potash. How could we think about Nutrien responding to prices? Is it too early? Or are prices too low for nutrient to start increasing volume. When should we expect you to respond to higher prices?

Yes. Thank you, Ben. And no, we're -- prices are not too low. We're encouraged by -- again, by what we're seeing in all of the markets that we serve, but it is early in the year. And we are in the middle of the planting season here in North America. And we have a guidance range that we have put out. We maintained that guidance range. Now, could we find ourselves as the year unfolds in an environment where we're somewhere between the midpoint and the top end of that guidance, which we could. And as you know, we certainly have the ability to do that with our 6 mines, our flexible network, our ability to surge capacity when we need to in an environment that's calling for hard times. So we're talking to our customers every day about their needs, their demand. And again, we're constructive on what we see for the balance of the year.

Your next question comes from Chris Parkinson of Wolfe Research.

Great. My question kind of straddles 2 prior questions. In the beginning of the year on the potash side, there's this presumption that the market would benefit from Belarusian, Russian curtailments, perhaps a little bit out of China, decent amount out of Chile and then obviously, Louth has been a bit of a debate. But all in all, it looks like supply has actually been quite healthy out of the FSU, especially Belarus versus prior expectations. Russia perhaps a little bit less so, but that further indicates that this is a demand-driven environment. So if we take that into consideration and whether or not you think I'm correct as part of this, how should we think about the sustainability of higher prices? Because I think previously, people were thinking, Hey, you could get a little bump up, and then we're just going to give everything back in the second half. And I think it's looking increasingly less so. So can you just help us compartmentalize your way of thinking and how that plays in your strategy for the balance of the year?

Yes, Chris, thank you for the question. Again, I go back to the way demand is materializing this year and the global grower and the affordability of crop nutrition as they try and maximize yields. And that's happening in North America as we speak. Chris mentioned, 95 million acres of corn, which is, again, constructive for crop nutrition going to ground, but we can go market-to-market. And we're seeing really, really record level of demand. And then that gives us confidence in that 71 million to 75 million tonnes. We've talked about the constraint on the top end of our guidance range, global shipments as being a supply constraint. And even without the curtailments, perhaps that were announced in places like Russia and Belarus, maintenance downtime, which we may see, yes, we've seen some volume reductions out of Chile at the margin and perhaps not all of the incremental tonnes that were announced coming out of Belarus. So there have been some supply disruptions. But what we believe we're seeing is, again, this intersection where global demand is meeting the market's ability to supply and ship. And as a result, we have seen, again, strengthening in prices in every spot market that we serve. China and India contracts, obviously, haven't been settled. So that we look over the balance of the year and how we're thinking about the remainder of 2025. And again, that's where we say we're quite constructive.

Your next question comes from Steve Byrne from Bank of America.

Yes. I have a couple of Retail questions. First, the 2 bolt-ons, what do you think EBITDA contribution could be post synergies? Another one being your proprietary brands with Loveland and Dyna-Gro. Are you gaining share in those brands would you say versus other brands out there? And then lastly, any update on the launch of that N-FINITY product?

Absolutely, Steve. Thank you for the questions. I'll hand it over to Mark to talk about your first question as it relates to the acquisition. And then over to Jeff to talk about Dyna-Gro and our LPI brands. So certainly, we can -- we have -- we can talk about what's happening with N-FINITY.

Yes. Thanks, Ken. So Steve, maybe just to take a step back. We've continued to say that over the past couple of years, we have been cautious in the deployment of capital and ensuring that where we're putting capital to use is the highest return opportunities to continue to grow free cash flow per share, and we had expected that as we entered 2025, we would begin to see U.S. retail tuck-in acquisitions come back into focus given the moderation in earnings profile and multiples. And so we made good on that by beginning some of that activity again and we continue to be thoughtful and prudent in how we do that. These 2 acquisitions were relatively modest in size. We deployed just over $10 million in capital on these 2 acquisitions. But as always, when we complete these, they're located in a very strategic area of the U.S., the larger of the 2 was a distributor called Welch. And it's a very nice fit with our network of the business we know very well, and we continue to see a profile that's traditional for us. We see the ability to take a turn or 2 of synergies from proprietary products, expense management and just bringing our procurement advantages to bear. So as we said earlier in the call, as we move through the year, that incremental dollar is really going to be allocated among tuck-in acquisitions to the extent that's the prudent place to deploy capital and share repurchases, and we'll continue to evaluate those opportunities. So I'll pass it over to Jeff on your other questions.

Yes. I'll get I think a couple of questions you asked around proprietary and started off a little bit as it relates, as you know, we got off to a delayed start in the first quarter this year. And I'll remind if we don't remember, last year was a phenomenal start from a weather standpoint in the first quarter compared to a -- we didn't get to weather the last 2 weeks of March in the campaign we're in right now. But from a seed standpoint, our revenue and our margin is up in the first quarter, and Steve, that's predominantly because of the shift we've seen from soybeans to corn, particularly in the South, where we're up about 25% on acreage -- corn acreage in the South and now across the whole U.S., that's not a material number, but it's certainly going to contribute to that 5 million acre growth we're projecting for the year. We do very well with our corn varieties with Dyna-Gro. And so this has given us a good opportunity to expand that as well. We continue to be really excited about our proprietary business as a whole. We've got a -- we forecasted about an 8% increase -- 8% to 9% increase in gross margins this year across that portfolio of products. And we think with the increased corn acres and our attention to our full year nutritionals and biostimulant products, we think we're going to have a really good campaign this year. I might also add that we've had 12 new products for this year. And we plan to introduce as many as 20 new products going into 2026 from that standpoint. You asked about N-FINITY specifically. We're having a nice launch to that product. We're right in the throes of getting put to ground right now. And I'm just as anxious as you are to see what our results are going to look like as we get our nitrogen applications put down. As you know, this is nitrogen enhancement, too. So yes, we feel -- we're excited about our opportunities and our proprietary product's portfolio. We're expecting a lot of growth out of that segment over the next 2 years.

Your next question comes from Edlain Rodriguez of Mizuho.

Ken and also, Mark, this is a question I've asked before, and it's always intriguing to get your insight there and also put you on the hot seat, potash or phosphate? But when you look at the fundamentals over the next 6 months or the next 12 months, which one you think is better positioned? And please, you can't say you like both of your children the same, you have to choose one of them.

We like both. But no, Edlain, thank you for the question. Obviously, we've seen quite strong phosphate fundamentals and that's strong demand and limited supply. And we expect that, that will continue over the course of this year. So we've seen historically high phosphate prices. And again, we don't see any reason why we would see softening over the course of 2025. Potash is a story of the fundamentals coming to, again, the start of the year that makes us constructive on perhaps firming through the balance of 2025. We've seen 20% increases in potash prices since the start of the year. Again, we've increased our own domestic price 3 times. And so as suppliers are -- and certainly buyers in China and India are starting to think about and formulating price ideas, again, we're constructive. So it's just to say that phosphate, we think will stay strong and potash is becoming stronger.

Your next question comes from Hamir Patel from CIBC Capital Markets.

Could you speak to the M&A pipeline for retail in terms of the scale of opportunities you're seeing,, vendor price expectations? And just given your latest tuck-ins, do you think you can hit the $2 billion objective for 2026 with the existing platform?

Yes. Thanks, Hamir. Yes, certainly, as we think about our 2026 target, we believe we're on track there. And we don't think about these couple of acquisitions that we did at the start of this year as a necessity you get within that range. We think more about growth in proprietary products, about cost savings initiatives, many of which we have already achieved, and we've talked about that being a year ahead in our $200 billion SG&A savings. We think about network optimization and you think about, yes, but the potential for tuck-ins. And certainly gives us confidence in getting into the bottom end of our $1.9 billion to $2.1 billion EBITDA range by 2026 for our downstream business. With some cooperation from weather and commodity prices, certainly you can find yourself well within that range. But maybe I'll hand it over to Jeff to talk about the opportunities that we're seeing in the pipeline. And maybe Mark can talk a little bit about how we're thinking about price expectations.

Yes. We're in that period of the year where we've been slow on the tuck-in side of things, people are starting in their spring planting season in North America. And so -- but I do expect to see the opportunities increase as we get through the season, especially as we get to the back half of the year. We want to be very opportunistic when it comes to tuck-ins. In my mind, I've kind of got the sweet spot of what good tuck-ins look like for us. We particularly like to grow in the corn belt if we can find the right opportunities there. I might also mention that we're seeing the pipeline pick up a bit in Australia as well. We've had a good history of doing tuck-ins in that market. But I think you asked a question around valuation as well. We're going to be very disciplined when it comes to the valuation of these tuck-ins. And in my opinion, I think we've seen the value come down some over the last 18 months. And so we'll be very disciplined and prudent as we look at these opportunities, just as the 2 we just closed just prior to the spring season. Mark?

Yes. Thanks, Jeff. Again, I don't have a lot to add. I think, Hamir, just to your question specifically on valuation, I'd say to Jeff's point, we've seen valuations come back in-line with where we're comfortable historically. As an example, we continue to see high-quality acquisitions in that small to medium-sized range at sort of a 6 to 7x EBITDA on a pre-synergy basis. And as I mentioned in a prior response, we continue to see the levers to be able to take 1 to 2 turns of EBITDA out of those acquisitions with the synergy opportunities that we have. And to Jeff's point, we continue to be quite selective. And there's no predetermined or necessary amount of capital that needs to be deployed to tuck-in acquisitions, as Ken said, it's really where is that dollar most prudent. It's going to generate shareholder returns and maximize free cash flow per share growth. So we'll continue to evaluate these as we move through the second half of the year, opposite the other activities and opportunities we have for capital.

Your next question comes from Duffy Fischer from Goldman Sachs.

Question around crop protection and retail. So we've had a number of the producers already come out with their earnings, and it seems like pricing has been weaker kind of across the board. So within your business, how difficult has pricing been? Is that part of the down bar chart there from Slide 6? Is that something structural do you think? Or is that just a hangover from the oversupply that we had the last couple of years? And then just the third part of that would be a number of the generics that come into the U.S. start in China. Are you seeing the tariffs have an impact on those generics where maybe that will be beneficial to you that the importers there are going to have to pay a high tariff and maybe price them out of the market?

Yes. I'm not sure.

Go ahead, Jeff, please.

Yes. No, and I think I wrote down both parts of your question there. If I look at crop protection for the first quarter and obviously, revenue was off that 100% dictated by the weather, both in North America and Australia as well, which can drive us there. And if I look at it from a margin perspective in the first quarter, we were off some on margin, but we had planned to be off on margin. We anticipated that we would see more pressure in this crop protection market. And I think that's twofold. Some of it is a hangover from inventory that was in the channel. Probably the bigger part of it is, as you just mentioned a minute ago, is generic pressure. We did see more generics come into this market, especially in North America. I mentioned Brazil earlier, but we had started to see that 12 to 18 months ago. I do think that -- and look, I have no answer on the tariffs and how long they might be around, but we're going to start to see pricing move up on the generics, and we're already starting to see that from the generic suppliers today. And at the same time, that will affect the multinationals as well from that standpoint. And so that could slow some of the flow of generics, particularly into this North American market. But growers have been a bit more selective this year, and a little bit more pricey on products as they go in, but that's to be expected. And we plan for that going into the year. We have a -- to me, we have a great offset to that, and that's our proprietary products that we offer in that generic space. We were in a very good position coming into this year and that we had already secured our inventory and head it over. So we're not tariff affected on the majority of that volume, and we've got a very good offering in those markets where they want to go a bit more to the generic side of it. Ken, I don't know if you had anything.

Thank you, Jeff. Just to say that we have assumed a 4% reduction in margins for crop protection this year. So we talked about our guidance range of 1.6 to 1.85. There are some assumptions about everything you just described.

Your next question comes from Jeff Zekauskas of JPMorgan.

In Crop Protection, your proprietary products in the quarter were down about 30%, and your gross profits were down about 35%. But for your non-proprietary crop protection, maybe things were down about 10%. Why the difference? Secondly, what's the state of the Indian and Chinese potash negotiations? And third, in your nitrogen business, can you talk about how much nitrogen gets exported, nitrogen in retail? Can you talk about how much goes into the United States? And whether that's being penalized in any way by tariffs.

Great. Thanks, Jeff. So I'll hand it over to Jeff Tarsi to talk about proprietary and particularly crop protection proprietary products. And over to Chris to talk about China and India and then nitrogen products. And to Mark to talk a little bit about tariffs. So over to you, Jeff.

Yes. On the crop protection side of it as it relates to proprietary versus non-proprietary and margin, that's strictly a timing and mix predicament we're in right now. As Ken mentioned earlier, we've seen a very robust start to April and May in our marketplace, and that includes the crop protection market as well. In the first quarter, because of the weather delays that we saw, our custom application was down substantial. And any products, whether we move them through, whether they're a branded product or non-branded product, when we're able to put them through our own rigs, we have a different margin structure for those products as well. And it's also affected by some of the high-margin LPI products, adjuvants and surfactants and such. So when you got to reduce reduction in volume, it kind of offsets that whole margin structure as it relates to that. We would expect to see that level itself out as we go into the second quarter, and we've see an evidence of that now. I'll pass the question over to Chris for the second part.

Yes. Jeff, thanks for the question. Regarding China and India, Canpotex has started that engagement on those 2 contracts. But really being done against the backdrop that you've heard during the call of some very, very strong market fundamentals, but perhaps more encouragingly, no fundamental buildup of inventories anywhere in the world. And so as Ken alluded to, there's some Southeast Asia pricing right now that folks are looking to as an indicator. And so we're encouraged by all of those market fundamentals, but really, as you go around the world, whether it's North America, what we're seeing in Brazil, Southeast Asia, all steady and sustainable price increases off the back of that good demand, some concerns about the production side and some very constructive commodity process. With that, Mark, I'll hand it over to you.

Yes. Thanks, Chris. So just on your third question, I think the short answer is on a direct basis, no, our retail is not being directly impacted by tariffs on nitrogen products coming into North America. Obviously, as you know, one of the benefits of our downstream and retail businesses, the supply chain, the procurement capabilities that we've set up. And so whether that's the integration and the synergies we've been able to drive with our upstream business in terms of domestic nitrogen supply or the ability to source and procure nitrogen from other domestic producers, we're very well positioned for the spring season today and not seeing a direct impact from tariffs. More generally, as both Ken and Chris have spoken to on the call, we are seeing North America in a position where it's come into the spring on a net short basis for products like UAN and urea, and we can see the supply-demand squeeze having an impact on prices. So to the extent that, that continues, we're going to see strength in the market, but we're continuing to operate. We're very well positioned for the spring.

Your next question comes from Steve Hansen of Raymond James.

You deserve some credit, I think, for hitting the synergy targets early and some successful divestitures thus far. Is it too early to put another target on the map for us to think about in terms of cost synergies? And just secondarily, what else do you view as sort of a priority to review in terms of being non-core?

Yes. Thank you, Steve. Yes, with respect to what we've achieved to date, we talked about our $200 million target and being sort of a year ahead on that target. And to your point, actually confidence as we look closer that there's confidence to do better than that confidence is to do more. In terms of talking about specific numbers, we'll have more to talk about. But at this stage, we're assessing that. We're going after some of that. But like I say, we do have confidence in our ability to do more, and we're encouraged by -- certainly encouraged by progress to date. With respect to the review of non-core assets, yes, that's something that we're looking very closely at the moment. We've talked about how we're viewing our Latin American South retail assets and looking for the market to cooperate with us a bit as we think about divestiture, albeit not material for us. We've talked about the process that we're in as it relates to Profertil and just going through that process at the moment. We've talked about the divestiture of our Sinofert shares, which was passive equity stake that is really not strategic for us in the $223 million proceeds that we realized in Q4 of last year at the start of this year. And yes, there are some other things that we're looking at, at the moment that would meet that definition of non-core. We're looking at that at the moment. And yes, we'll have more to talk about as it relates to, again, looking at additional divestiture opportunities.

Your next question comes from Ben Theurer of Barclays.

I want to go back real quick, and you had some of that in the prepared remarks. But on phosphate volume, clearly, you had some unplanned outages that impacted your volumes. But at the same time, we've seen a very strong price overall in phosphate. So I was just wondering as it relates to achieving your guidance after that softer start in volume in 1Q, how confident are you that there is going to be enough demand on the phosphate side, just given the prices are? Are you seeing any signs of potential demand destruction because of these prices? And how should we think about the potential outcome, low end versus high end of the guidance for the volume side in phosphate?

Yes. Thanks, Ben, for the question. No challenge, we don't think on the demand side of the equation that we still see strong demand. And frankly, that's what's translating to the strong price environment. As it relates to our own production, yes, we had some production challenges in the first half of the year here, weather-related and some other production challenges as well. We're taking turnarounds at both our White Springs and Aurora sites here in May, June and expecting greater reliability rates as a result in the second half. So it really is a bit of a story of 2 halves for our phosphate business. But when you put those 2 halves together, it does give us confidence that we'll be within that guidance range and hence having maintained our guidance range.

Your next question comes from Lucas Beaumont from UBS.

I just want to go back to the crop chem kind of tariff exposure in retail. So I was just wondering, could you size for us out of the $4.5 billion to $5 billion you have there in cost of sales on the crop chem piece, how would you size, I guess, the exposure to tariffs going forward, be it from either purchases of finished goods, intermediate products, assuming that the tariffs remain in place. I mean, I understand that this year, you've got inventory, so it's probably not going to impact '25. But I mean, assuming you have to go through another cycle, I guess, how would you size the impact? And then just lastly, does Nutrien import finished formulations? And how large is that for you if you're doing that?

Thank you, Lucas, for the question. And yes, you're right that we have purchased, covered ourselves for the most part for this year. But yes, it's also the case that we're watching the trade dispute between China and the U.S. quite closely because crop protection is obviously a big part of that story. Now a number of those products have been exempted when we look at the exemption list. And so for those that are exempted, obviously, we're encouraged by that, but there are products that haven't been. So maybe I'll hand it over to Jeff to talk a little bit more about that.

Yes. So especially if we're talking in the range of our proprietary products, as you would know, on the proprietary CP side of that, 98% of those products would be asset in pipe. So they're generic products. We do multi-source those products. In many instances, we source those active ingredients from our multinationals. And we also source directly out of China and India as well from that standpoint. And I think you asked a question, do we source finished goods versus active ingredients? And yes, we do both on that end of it. So obviously, we're spending a lot of time right now as we focus. We'll start back this fall, obviously, on building our inventories back up for the '26 year. And we'll focus very heavily on what puts us, what puts our growers in the best position going forward on that. We're expecting price increases on branded products anywhere from 5% to 7.5%. And I think on the generic side of the business, I think you could probably start with that higher number and move up. Ken mentioned that there are a lot of ingredients that are exempted. That exempted is still going to come with the base 10%. And it's a complicated matter because these products are made up sometimes with 10 to 15 different components. And not all those components are coming out of one of these particular areas. So we're spending a lot of time right now. We'll spend a lot of time in the next 60 days from a diligence standpoint. We're going to assume -- right now, we assume we got tariffs as we work through start positioning ourselves going forward on that. But I think the long story short is we're going to see price increases. We don't -- I think as Mark mentioned earlier, we don't see this being material to our earnings for the '25 year. And where we're experiencing some of these price increases, our plan is to pass those price increases through to our customer.

Your next question comes from David Symonds of BNP.

Just one more follow-up on the phosphates business, please. You talked about sulfur costs hampering the earnings in that business. But if I look at headline prices, I would have thought that would have been pass-through. So is there some kind of timing issue that held back your strip margins in Q1 meant that sulfur costs were a factor? And how would that evolve into Q2?

Yes. Thank you for the question, David. Yes, I would say that the phosphate price at the moment is more a story about supply and demand fundamentals and what's happening on both sides of that equation as opposed to the ability to pass-through cost increases. And sulfur is part of the story. But like others, we're experiencing inflationary pressures on other things as well. So the idea of a pass-through versus just the supply-demand fundamentals that we're seeing, it's certainly a story of the latter. But maybe I'll hand it over to Jason Newton, our Chief Economist, just to talk a little bit about what we're seeing in the sulfur market and some of the impact that we've experienced there.

Yes, as Ken mentioned, we're seeing sulfur market fundamentals tightening. We've seen those tighten in the first half of the year and Tampa sulfur prices in the second quarter were $270 a tonne. So a pretty significant increase quarter-over-quarter and then definitely an increase from where we saw sulfur prices in 2024, which were historically discounted relative to phosphate prices and actually low from a marginal cost and total cost perspective for producers, which meant that they were pouring product block or putting product in inventory rather than exporting. So that tightened supply. And coming into 2025, we've seen strong demand in China, strong demand from a base metal perspective in Southeast Asia. And so the combination of reduced export supply and higher demand to support prices. We expect that, that will start to change as we look towards the second half of the year and offer prices have remained pretty stable, but supplies are increasing and the level of demand is decreasing. So we expect more normal relationship with phosphate pricing as we move into the second half.

I will now turn the call back to Jeff Holzman for closing remarks.

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

Thank you, ladies and gentlemen. This concludes today's conference call. Thank you for your participation, and you may now disconnect.