February 9, 2017 - ALL AMOUNTS ARE STATED IN U.S.$
CALGARY, AB--(Marketwired - February 09, 2017) - Agrium Inc. (TSX: AGU) (NYSE: AGU) announced today its 2016 fourth quarter results, with a net earnings to equity holders of Agrium of $67-million ($0.49 diluted earnings per share) compared to net earnings of $201-million ($1.45 diluted earnings per share) in the fourth quarter of 2015. The reduction in net earnings was driven primarily by lower year-over-year nutrient pricing. On an annual basis, 2016 earnings to equity holders of Agrium were $592-million ($4.29 diluted earnings per share) compared to $988-million ($6.98 diluted earnings per share) in 2015.
Highlights:
"Agrium continued to deliver solid results across our business this quarter, supported by record fourth quarter results in our Retail business and strong wholesale operating performance. We delivered on our promise of value-added growth in 2016 by successfully bringing our Borger expansion to completion and growing retail at a record pace through acquisitions," commented Chuck Magro, Agrium's President and CEO. "We have been encouraged by the recent firming in global nutrient markets and we anticipate solid demand for crop inputs in the coming spring application season," added Mr. Magro.
1 | Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended 2016 were used for the adjusted net earnings, guidance relevant earnings and per share calculations. These are non-IFRS measures which represent net earnings adjusted for certain income (expenses) that are considered to be non-operational in nature. We believe these measures provide meaningful comparison to the earnings of other companies and our guidance by eliminating share-based payments expense (recovery), gains (losses) on foreign exchange and related gains (losses) on non-qualifying derivative hedges and significant non-operating, non-recurring items. Our guidance is forward-looking information. We present guidance relevant earnings per share to provide an update to this previously disclosed forward-looking information. These should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS and may not be directly comparable to similar measures presented by other companies. |
2 | Earnings (loss) from operations before finance costs, income taxes, depreciation and amortization. |
3 | This is a non-IFRS measure. Refer to section "Non-IFRS Measures". |
ADJUSTED NET EARNINGS AND GUIDANCE RELEVANT EARNINGS RECONCILIATIONS
Three months ended | Twelve months ended | ||||||||||||
December 31, 2016 | December 31, 2016 | ||||||||||||
(millions of U.S. dollars, except per share amounts) | Expense |
Net earnings (loss) impact (post-tax) |
Per share (a) |
Expense |
Net earnings impact (post-tax) |
Per share (a) |
|||||||
67 | 0.49 | 596 | 4.29 | ||||||||||
Adjustments: | |||||||||||||
Share-based payments | 33 | 25 | 0.18 | 55 | 40 | 0.29 | |||||||
Foreign exchange loss net of non-qualifying derivatives | 3 | 2 | 0.01 | 13 | 9 | 0.06 | |||||||
Merger and related costs | 14 | 10 | 0.07 | 31 | 23 | 0.17 | |||||||
Egyptian pound devaluation impact on MOPCO equity investment | (35 | ) | (26 | ) | (0.19 | ) | (35 | ) | (25 | ) | (0.18 | ) | |
IT outsourcing costs | 7 | 5 | 0.04 | 14 | 10 | 0.07 | |||||||
Adjusted net earnings(b) | 83 | 0.60 | 653 | 4.70 | |||||||||
Additional items not included in earnings guidance: | |||||||||||||
Investment impairment | 15 | 11 | 0.08 | 15 | 11 | 0.08 | |||||||
Non-operational legal costs | - | - | - | 18 | 13 | 0.09 | |||||||
Guidance relevant earnings(b) | 94 | 0.68 | 677 | 4.87 |
(a) | Diluted per share information attributable to equity holders of Agrium |
(b) | Effective tax rate of 25.5 percent for the fourth quarter and 27.3 percent for the year ended was used for the adjusted net earnings, guidance relevant earnings, and per share calculations. |
MARKET OUTLOOK
Agricultural and Crop Input Fundamentals
Nitrogen
Potash
Phosphate
2017 ANNUAL GUIDANCE
Based on our assumptions set out under the heading "Market Outlook", Agrium expects to achieve annual diluted earnings per share of $4.50 to $6.00 in 2017. We have maintained a range width encompassing approximately $300-million of EBITDA variability to reflect the risk and opportunity associated with crop nutrient prices and demand for crop inputs at this time of year. We are assuming a normal spring and fall application season, recognizing there is always a risk that inclement weather could affect the timing and duration of each season. Our earnings per share guidance assumes some recovery from current nitrogen prices during the key application seasons.
Based on these and other assumptions regarding prices and demand for crop nutrients set out under the heading "Market Outlook", we expect Retail EBITDA to be $1.125-billion to $1.225-billion, and Retail nutrient sales volumes to range between 10.2 million to 10.6 million tonnes in 2017.
Based on our expected increase in utilization rate for our nitrogen assets, we anticipate nitrogen production to total 3.6 to 3.8 million tonnes. Agrium continues its hedging program for gas requirements in 2017 and is monitoring the market to mitigate any upward pressure on prices through near-term hedging. Our earnings per share guidance assumes NYMEX gas prices will be between $3.05 and $3.85 per MMBtu in 2017.
Agrium's expectation for potash production in 2017 assumes the full ramp-up of production following the expansion project at our Vanscoy mine. We expect to produce between 2.4 and 2.8 million tonnes of potash in 2017.
Total capital expenditures are expected to be in the range of $650-million to $750-million, of which approximately $500-million to $550-million is expected to be sustaining capital expenditures.
Agrium's annual effective tax rate for 2017 is expected to range between 27 to 29 percent.
This guidance and updated additional measures and related assumptions are summarized in the table below. Guidance excludes the impact of share-based payments expense (recovery), gains (losses) on foreign exchange and non-qualifying derivative hedges, and merger related costs. Volumetric and earnings estimates assume normal seasonal growing and harvest patterns in the geographies where Agrium operates.
2017 ANNUAL GUIDANCE RANGE AND ASSUMPTIONS
Annual | ||||||
Low | High | |||||
Diluted EPS (in U.S. dollars) | $4.50 | $6.00 | ||||
Guidance assumptions: | ||||||
Wholesale: | ||||||
Production tonnes: | ||||||
Nitrogen (millions) | 3.6 | 3.8 | ||||
Potash (millions) | 2.4 | 2.8 | ||||
Retail: | ||||||
EBITDA (millions of U.S. dollars) | $1,125 | $1,225 | ||||
Crop nutrient sales tonnes (millions) | 10.2 | 10.6 | ||||
Other: | ||||||
Tax rate | 29 | % | 27 | % | ||
Sustaining capital expenditures (millions of U.S. dollars) | $500 | $550 | ||||
Total capital expenditures (millions of U.S. dollars) | $650 | $750 |
February 9, 2017
All comparisons of results for the fourth quarter of 2016 (three months ended December 31, 2016) and for the twelve months ended December 31, 2016 are against results for the fourth quarter of 2015 (three months ended December 31, 2015) and twelve months ended December 31, 2015. All dollar amounts refer to United States (U.S.) dollars except where otherwise stated. This news release should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.
The financial measures cash operating coverage ratio, cash selling and general and administrative expenses, cash cost of product manufactured, and EBITDA used in this news release are not prescribed by, and do not have any standardized meaning under International Financial Reporting Standards (IFRS). Our method of calculation may not be directly comparable to that of other companies. We consider these non-IFRS financial measures to provide useful information to both management and investors in measuring our financial performance and financial condition. These non-IFRS financial measures should not be considered as a substitute for, or superior to, measures of financial performance prepared in accordance with IFRS. Please refer to the section entitled "Non-IFRS Financial Measures" for further details, including a reconciliation of such measures to their most directly comparable measure calculated in accordance with IFRS.
2016 Fourth Quarter Operating Results
CONSOLIDATED NET EARNINGS
Financial Overview | ||||||||
Three months ended December 31, | ||||||||
(millions of U.S. dollars, except per share amounts and where noted) | 2016 | 2015 | Change | % Change | ||||
Sales | 2,280 | 2,407 | (127 | ) | (5 | ) | ||
Gross profit | 748 | 900 | (152 | ) | (17 | ) | ||
Expenses | 586 | 576 | 10 | 2 | ||||
Earnings before finance costs and income taxes (EBIT) | 162 | 324 | (162 | ) | (50 | ) | ||
Net earnings | 67 | 200 | (133 | ) | (67 | ) | ||
Diluted earnings per share | 0.49 | 1.45 | (0.96 | ) | (66 | ) | ||
Effective tax rate (%) | 25 | 20 | N/A | N/A |
Sales and Gross Profit | |||||||
Three months ended December 31, | |||||||
(millions of U.S. dollars) | 2016 | 2015 | Change | ||||
Sales | |||||||
Retail | 1,828 | 1,765 | 63 | ||||
Wholesale | 657 | 888 | (231 | ) | |||
Other | (205 | ) | (246 | ) | 41 | ||
2,280 | 2,407 | (127 | ) | ||||
Gross profit | |||||||
Retail | 623 | 599 | 24 | ||||
Wholesale | 134 | 320 | (186 | ) | |||
Other | (9 | ) | (19 | ) | 10 | ||
748 | 900 | (152 | ) |
Expenses
For further breakdown on Other expenses, see table below:
Other expenses breakdown | ||||
Three months ended December 31, |
||||
(millions of U.S. dollars) | 2016 | 2015 | ||
Loss (gain) on foreign exchange and related derivatives | 3 | (5 | ) | |
Interest income | (17 | ) | (16 | ) |
Gain on sale of assets | - | (17 | ) | |
Asset impairment | 15 | 19 | ||
Environmental remediation and asset retirement obligations | 1 | 1 | ||
Bad debt expense | 3 | 4 | ||
Potash profit and capital tax | 2 | 3 | ||
Merger and related costs | 14 | - | ||
Outsourcing costs | 7 | - | ||
Other | 15 | 38 | ||
43 | 27 |
Depreciation and Amortization
Depreciation and amortization breakdown
Three months ended December 31, | |||||||||||||||||
2016 | 2015 | ||||||||||||||||
(millions of U.S. dollars) | Cost of product sold |
Selling |
General and administrative |
Total |
Cost of product sold |
Selling |
General and administrative |
Total |
|||||||||
Retail | 1 | 66 | 1 | 68 | 1 | 64 | 1 | 66 | |||||||||
Wholesale | |||||||||||||||||
Nitrogen | 22 | - | 1 | 23 | 18 | - | - | 18 | |||||||||
Potash | 26 | - | - | 26 | 28 | - | - | 28 | |||||||||
Phosphate | 15 | - | - | 15 | 14 | - | - | 14 | |||||||||
Wholesale Other (a) | 3 | - | - | 3 | 4 | - | 1 | 5 | |||||||||
66 | - | 1 | 67 | 64 | - | 1 | 65 | ||||||||||
Other | - | - | 6 | 6 | - | - | 4 | 4 | |||||||||
Total | 67 | 66 | 8 | 141 | 65 | 64 | 6 | 135 |
(a) | This includes product purchased for resale, ammonium sulfate, Environmentally Smart Nitrogen® (ESN) and other products. |
Effective Tax Rate
BUSINESS SEGMENT PERFORMANCE
Retail | ||||||
Three months ended December 31, | ||||||
(millions of U.S. dollars, except where noted) | 2016 | 2015 | Change | |||
Sales | 1,828 | 1,765 | 63 | |||
Cost of product sold | 1,205 | 1,166 | 39 | |||
Gross profit | 623 | 599 | 24 | |||
EBIT | 134 | 133 | 1 | |||
EBITDA | 202 | 199 | 3 | |||
Selling and general and administrative expenses | 502 | 491 | 11 |
1 | Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations. |
Retail sales and gross profit by product line | ||||||||||||||||
Three months ended December 31, | ||||||||||||||||
Sales | Gross profit | Gross profit (%) | ||||||||||||||
(millions of U.S. dollars, except where noted) | 2016 | 2015 | Change | 2016 | 2015 | Change | 2016 | 2015 | ||||||||
Crop nutrients | 779 | 843 | (64 | ) | 147 | 154 | (7 | ) | 19 | 18 | ||||||
Crop protection products | 620 | 541 | 79 | 296 | 268 | 28 | 48 | 50 | ||||||||
Seed | 101 | 75 | 26 | 43 | 54 | (11 | ) | 43 | 72 | |||||||
Merchandise | 167 | 156 | 11 | 27 | 27 | - | 16 | 17 | ||||||||
Services and other | 161 | 150 | 11 | 110 | 96 | 14 | 68 | 64 |
Crop nutrients
Crop protection products
Seed
Merchandise
Services and other
Wholesale | ||||||
Three months ended December 31, | ||||||
(millions of U.S. dollars, except where noted) | 2016 | 2015 | Change | |||
Sales | 657 | 888 | (231 | ) | ||
Sales volumes (tonnes 000's) | 2,273 | 2,292 | (19 | ) | ||
Cost of product sold | 523 | 568 | (45 | ) | ||
Gross profit | 134 | 320 | (186 | ) | ||
EBIT | 149 | 287 | (138 | ) | ||
EBITDA | 216 | 352 | (136 | ) | ||
Expenses (including earnings from associates and joint ventures) | (15 | ) | 33 | (48 | ) | |
Earnings from associates and joint ventures | (34 | ) | (2 | ) | (32 | ) |
Wholesale NPK product information | ||||||||||||||||||
Three months ended December 31, | ||||||||||||||||||
Nitrogen | Potash | Phosphate | ||||||||||||||||
2016 | 2015 | Change | 2016 | 2015 | Change | 2016 | 2015 | Change | ||||||||||
Gross profit (U.S. dollar millions) | 85 | 186 | (101 | ) | 21 | 63 | (42 | ) | 8 | 37 | (29 | ) | ||||||
Sales volumes (tonnes 000's) | 954 | 912 | 42 | 590 | 656 | (66 | ) | 303 | 325 | (22 | ) | |||||||
Selling price ($/tonne) | 298 | 403 | (105 | ) | 179 | 267 | (88 | ) | 475 | 610 | (135 | ) | ||||||
Cost of product sold ($/tonne) | 209 | 199 | 10 | 143 | 171 | (28 | ) | 449 | 495 | (46 | ) | |||||||
Gross margin ($/tonne) | 89 | 204 | (115 | ) | 36 | 96 | (60 | ) | 26 | 115 | (89 | ) |
Nitrogen
Natural gas prices: North American indices and North American Agrium prices | ||||
Three months ended December 31, |
||||
(U.S. dollars per MMBtu) | 2016 | 2015 | ||
Overall gas cost excluding realized derivative impact | 2.52 | 2.15 | ||
Realized derivative impact | 0.07 | 0.31 | ||
Overall gas cost | 2.59 | 2.46 | ||
Average NYMEX | 2.99 | 2.28 | ||
Average AECO | 2.12 | 2.00 |
Potash
Phosphate
Wholesale Other | ||||||
Wholesale Other: gross profit breakdown | ||||||
Three months ended December 31, | ||||||
(millions of U.S. dollars) | 2016 | 2015 | Change | |||
Ammonium sulfate | 11 | 16 | (5 | ) | ||
ESN | 8 | 15 | (7 | ) | ||
Product purchased for resale | - | 1 | (1 | ) | ||
Other | 1 | 2 | (1 | ) | ||
20 | 34 | (14 | ) |
Expenses
Other
EBITDA for our Other non-operating business unit for the fourth quarter of 2016 had a net expense of $115-million, compared to a net expense of $92-million for the fourth quarter of 2015. The variance was primarily due to:
Capital Spending and Expenditures (a) | |||||||||
Three months ended | Twelve months ended | ||||||||
December 31, | December 31, | ||||||||
(millions of U.S. dollars) | 2016 | 2015 | 2016 | 2015 | |||||
Retail | |||||||||
Sustaining | 23 | 38 | 111 | 141 | |||||
Investing | 21 | 12 | 50 | 37 | |||||
44 | 50 | 161 | 178 | ||||||
Acquisitions (b) | 26 | 42 | 342 | 127 | |||||
70 | 92 | 503 | 305 | ||||||
Wholesale | |||||||||
Sustaining | 38 | 189 | 244 | 388 | |||||
Investing | 90 | 26 | 312 | 604 | |||||
128 | 215 | 556 | 992 | ||||||
Other | |||||||||
Sustaining | 1 | 9 | 4 | 12 | |||||
Investing | - | 4 | 3 | 6 | |||||
1 | 13 | 7 | 18 | ||||||
Total | |||||||||
Sustaining | 62 | 236 | 359 | 541 | |||||
Investing | 111 | 42 | 365 | 647 | |||||
173 | 278 | 724 | 1,188 | ||||||
Acquisitions (b) | 26 | 42 | 342 | 127 | |||||
199 | 320 | 1,066 | 1,315 |
(a) | This excludes capitalized borrowing costs. |
(b) | This represents business acquisitions and includes acquired working capital; property, plant and equipment; intangibles; goodwill; and investments in associates and joint ventures. |
SHARE REPURCHASES
Pursuant to the agreement dated September 11, 2016 with PotashCorp, under which the companies will combine in a merger of equals, we are restricted from purchasing our outstanding shares prior to completion of the proposed plan of arrangement. No shares were repurchased under the Normal Course Issuer Bid in 2016 or the period from January 1, 2017 to February 18, 2017. During 2015, we purchased for cancellation 5,574,331 shares at an average share price of $100.25.
OUTSTANDING SHARE DATA
Agrium had 138,176,000 outstanding shares at February 3, 2017. At February 3, 2017, the number of shares issuable pursuant to stock options outstanding (issuable assuming full conversion, where each option granted can be exercised for one common share) was approximately 937,528.
SELECTED QUARTERLY INFORMATION | |||||||||||||||||
(millions of U.S. dollars, except per share amounts) | 2016 Q4 |
2016 Q3 |
2016 Q2 |
2016 Q1 |
2015 Q4 |
2015 Q3 |
2015 Q2 |
2015 Q1 |
|||||||||
Sales | 2,280 | 2,245 | 6,415 | 2,725 | 2,407 | 2,524 | 6,992 | 2,872 | |||||||||
Gross profit | 748 | 568 | 1,525 | 554 | 900 | 696 | 1,708 | 584 | |||||||||
Net earnings (loss) | 67 | (39 | ) | 565 | 3 | 200 | 99 | 675 | 14 | ||||||||
Earnings (loss) per share attributable to equity holders of Agrium: | |||||||||||||||||
Basic and diluted | 0.49 | (0.29 | ) | 4.08 | 0.02 | 1.45 | 0.72 | 4.71 | 0.08 | ||||||||
Dividends declared | 121 | 120 | 122 | 121 | 121 | 120 | 125 | 112 | |||||||||
Dividends declared per share | 0.875 | 0.875 | 0.875 | 0.875 | 0.875 | 0.875 | 0.875 | 0.780 |
The agricultural products business is seasonal. Consequently, year-over-year comparisons are more appropriate than quarter-over-quarter comparisons. Crop input sales are primarily concentrated in the spring and fall crop input application seasons. Crop nutrient inventories are normally accumulated leading up to each application season. Our cash collections from accounts receivables generally occur after the application season is complete, and our customer prepayments are concentrated in December and January.
NON-IFRS FINANCIAL MEASURES
Financial measures that are not specified, defined or determined under IFRS are non-IFRS measures unless they are presented in our Consolidated Financial Statements. The following table outlines our non-IFRS financial measures, their definitions and why management uses the measures.
Non-IFRS financial measure |
Definition |
Why we use the measure and why it is useful to investors | ||
Cash operating coverage ratio |
Cash operating coverage ratio represents gross profit excluding depreciation and amortization less EBITDA, divided by gross profit excluding depreciation and amortization. |
Assists management and investors in understanding the costs and underlying economics of our operations and in assessing our operating performance and our ability to generate free cash flow from our business units and overall as a company. | ||
Cash selling and general and administrative expenses | Selected financial measures excluding depreciation and amortization. | |||
EBITDA | Net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations. |
EBITDA is frequently used by investors and analysts for valuation purposes when multiplied by a factor to estimate the enterprise value of a company. EBITDA is also used in determining annual incentive compensation for certain management employees and in calculating certain of our debt covenants. | ||
Cash cost of product manufactured (COPM) | All fixed and variable costs are accumulated in cash COPM excluding depreciation and amortization expense and direct freight. | Enables investors to better understand the performance of our manufactured operations compared to other crop nutrient producers. | ||
When cash COPM costs are divided by the production tonnes for the period, the result is actual cash COPM per tonne, which is compared to the standard cash COPM per tonne - a calculation of fixed and variable costs for a standard or typical period of production. The standard cash COPM per tonne is multiplied by the production tonnes for the period, and the resulting dollar amount is transferred to inventory. Any remaining costs are recorded directly to cost of product sold as production volume or cost efficiency variances. Direct freight is a transportation cost to move the product from an Agrium location to the point of sale. There is no directly comparable IFRS measure for cash COPM. |
Retail cash operating coverage ratio | ||||
Rolling four quarters ended December 31, | ||||
(millions of U.S. dollars, except as noted) | 2016 | 2015 | ||
Gross profit | 2,786 | 2,728 | ||
Depreciation and amortization in cost of product sold | 6 | 6 | ||
Gross profit excluding depreciation and amortization | 2,792 | 2,734 | ||
EBITDA | 1,091 | 1,033 | ||
Operating expenses excluding depreciation and amortization | 1,701 | 1,701 | ||
Cash operating coverage ratio (%) | 61 | 62 |
Cash selling and general and administrative expenses | ||||||||||||
Three months ended December 31, | ||||||||||||
(millions of U.S. dollars) | 2016 | 2015 | 2016 | 2015 | 2016 | 2015 | ||||||
Retail | Wholesale | Consolidated | ||||||||||
Selling | 476 | 462 | 9 | 7 | 480 | 465 | ||||||
Depreciation and amortization in selling expense | 66 | 64 | - | - | 66 | 64 | ||||||
Cash selling | 410 | 398 | 9 | 7 | 414 | 401 | ||||||
General and administrative | 26 | 29 | 7 | 12 | 65 | 74 | ||||||
Depreciation and amortization in general and administrative | 1 | 1 | 1 | 1 | 8 | 6 | ||||||
Cash general and administrative | 25 | 28 | 6 | 11 | 57 | 68 |
Three months ended December 31, | ||||||||
Consolidated and business unit EBITDA | ||||||||
(millions of U.S. dollars) | Retail | Wholesale | Other | Consolidated | ||||
2016 | ||||||||
Net earnings | 67 | |||||||
Finance costs related to long-term debt | 51 | |||||||
Other finance costs | 21 | |||||||
Income taxes | 23 | |||||||
EBIT | 134 | 149 | (121 | ) | 162 | |||
Depreciation and amortization | 68 | 67 | 6 | 141 | ||||
EBITDA | 202 | 216 | (115 | ) | 303 | |||
2015 | ||||||||
Net earnings | 200 | |||||||
Finance costs related to long-term debt | 53 | |||||||
Other finance costs | 20 | |||||||
Income taxes | 51 | |||||||
EBIT | 133 | 287 | (96 | ) | 324 | |||
Depreciation and amortization | 66 | 65 | 4 | 135 | ||||
EBITDA | 199 | 352 | (92 | ) | 459 |
FORWARD-LOOKING STATEMENTS
Certain statements and other information included in this document constitute "forward-looking information" and/or "financial outlook" within the meaning of applicable Canadian securities legislation or constitute "forward-looking statements" within the meaning of applicable U.S. securities legislation (collectively, the "forward-looking statements"). All statements in this news release other than those relating to historical information or current conditions are forward-looking statements, including, but not limited to, statements as to management's expectations with respect to: 2017 annual guidance, including expectations regarding our diluted earnings per share and Retail EBITDA; capital spending expectations for 2017; expectations regarding performance of our business segments in 2017; expectations regarding completion of previously announced expansion projects (including timing and volumes of production associated therewith) and acquisitions; our market outlook for 2017, including nitrogen, potash and phosphate outlook and including anticipated supply and demand for our products and services, expected market and industry conditions with respect to crop nutrient application rates, planted acres, crop mix, prices and the impact of currency fluctuations and import and export volumes; and the proposed merger with PotashCorp, including timing of completion thereof. These forward-looking statements are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control, which could cause actual results to differ materially from such forward-looking statements. As such, undue reliance should not be placed on these forward-looking statements.
All of the forward-looking statements are qualified by the assumptions that are stated or inherent in such forward-looking statements, including the assumptions referred to below and elsewhere in this document. Although Agrium believes that these assumptions are reasonable, this list is not exhaustive of the factors that may affect any of the forward-looking statements and the reader should not place an undue reliance on these assumptions and such forward-looking statements. The additional key assumptions that have been made include, among other things, assumptions with respect to Agrium's ability to successfully integrate and realize the anticipated benefits of its already completed and future acquisitions and that we will be able to implement our standards, controls, procedures and policies at any acquired businesses to realize the expected synergies; that future business, regulatory and industry conditions will be within the parameters expected by Agrium, including with respect to prices, margins, product availability and supplier agreements; the completion of our expansion projects on schedule, as planned and on budget; assumptions with respect to global economic conditions and the accuracy of our market outlook expectations for 2017 and in the future; the adequacy of our cash generated from operations and our ability to access our credit facilities or capital markets for additional sources of financing; our ability to identify suitable candidates for acquisitions and negotiate acceptable terms; our ability to maintain our investment grade rating and achieve our performance targets; the receipt, on time, of all necessary permits, utilities and project approvals with respect to our expansion projects and that we will have the resources necessary to meet the projects' approach; the receipt, on a timely basis, of regulatory approvals in respect of the proposed merger with PotashCorp and satisfaction of other closing conditions relating thereto. Also refer to the discussion under the heading "Key Assumptions and Risks in Respect of Forward-Looking Statements" in our 2015 annual MD&A and under the heading "Market Outlook" herein, with respect to further material assumptions associated with our forward-looking statements.
Events or circumstances that could cause actual results to differ materially from those in the forward-looking statements include, but are not limited to: general global economic, market and business conditions; weather conditions, including impacts from regional flooding and/or drought conditions; crop planted acreage, yield and prices; the supply and demand and price levels for our major products may vary from what we currently anticipate; governmental and regulatory requirements and actions by governmental authorities, including changes in government policy, government ownership requirements, changes in environmental, tax and other laws or regulations and the interpretation thereof, and political risks, including civil unrest, actions by armed groups or conflict, regional natural gas supply restrictions, as well as counterparty and sovereign risk; delays in completion of turnarounds at our major facilities; gas supply interruptions at the Egyptian Misr Fertilizers Production Company S.A.E. nitrogen facility expansion in Egypt; the risk of additional capital expenditure cost escalation or delays in respect of our expansion projects; the risks that are inherent in the nature of the proposed merger with PotashCorp, including the failure to obtain required regulatory approvals and failure to satisfy all other closing conditions in accordance with the terms of the proposed merger with PotashCorp, in a timely manner or at all; and other risk factors detailed from time to time in Agrium reports filed with the Canadian securities regulators and the Securities and Exchange Commission in the U.S. including those disclosed under the heading "Risk Factors" in our Annual Information Form for the year ended December 31, 2015 and under the headings "Enterprise Risk Management" and "Key Assumptions and Risks in respect of Forward-Looking Statements" in our 2015 annual MD&A.
The purpose of our expected diluted earnings per share and Retail EBITDA guidance range is to assist readers in understanding our expected and targeted financial results, and this information may not be appropriate for other purposes.
Agrium disclaims any intention or obligation to update or revise any forward-looking statements in this document as a result of new information or future events, except as may be required under applicable U.S. federal securities laws or applicable Canadian securities legislation.
OTHER
Agrium Inc. is a major global producer and distributor of agricultural products, services and solutions. Agrium produces nitrogen, potash and phosphate fertilizers, with a combined wholesale nutrient capacity of over nine million tonnes and with significant competitive advantages across our product lines. We supply key products and services directly to growers, including crop nutrients, crop protection, seed, as well as agronomic and application services, thereby helping growers to meet the ever growing global demand for food and fiber. Agrium retail-distribution has an unmatched network of over 1,400 facilities and over 3,800 crop consultants who provide advice and products to our grower customers to help them increase their yields and returns on hundreds of different crops. With a focus on sustainability, the company strives to improve the communities in which it operates through safety, education, environmental improvement and new technologies such as the development of precision agriculture and controlled-release nutrient products. Agrium is focused on driving operational excellence across our businesses, pursuing value-enhancing growth opportunities and returning capital to shareholders. For more information visit: www.agrium.com.
A WEBSITE SIMULCAST of the 2016 4th Quarter Conference Call will be available in a listen-only mode beginning Friday, February 10, 2017 at 8:00 a.m. MT (10:00 a.m. ET). Please visit the following website: www.agrium.com.
AGRIUM INC. | |||||||||
Consolidated Statements of Operations | |||||||||
(Unaudited) | |||||||||
Three months ended | Twelve months ended | ||||||||
December 31, | December 31, | ||||||||
(millions of U.S. dollars, unless otherwise stated) | 2016 | 2015 | 2016 | 2015 | |||||
Sales | 2,280 | 2,407 | 13,665 | 14,795 | |||||
Cost of product sold | 1,532 | 1,507 | 10,270 | 10,907 | |||||
Gross profit | 748 | 900 | 3,395 | 3,888 | |||||
Expenses | |||||||||
Selling | 480 | 465 | 1,914 | 1,921 | |||||
General and administrative | 65 | 74 | 242 | 268 | |||||
Share-based payments | 33 | 15 | 55 | 51 | |||||
(Earnings) loss from associates and joint ventures | (35 | ) | (5 | ) | (66 | ) | 4 | ||
Other expenses | 43 | 27 | 152 | 28 | |||||
Earnings before finance costs and income taxes | 162 | 324 | 1,098 | 1,616 | |||||
Finance costs related to long-term debt | 51 | 53 | 204 | 181 | |||||
Other finance costs | 21 | 20 | 74 | 71 | |||||
Earnings before income taxes | 90 | 251 | 820 | 1,364 | |||||
Income taxes | 23 | 51 | 224 | 376 | |||||
Net earnings | 67 | 200 | 596 | 988 | |||||
Attributable to | |||||||||
Equity holders of Agrium | 67 | 201 | 592 | 988 | |||||
Non-controlling interest | - | (1 | ) | 4 | - | ||||
Net earnings | 67 | 200 | 596 | 988 | |||||
Earnings per share attributable to equity holders of Agrium | |||||||||
Basic and diluted earnings per share | 0.49 | 1.45 | 4.29 | 6.98 | |||||
Weighted average number of shares outstanding for basic and diluted earnings per share (millions of common shares) | 138 | 138 | 138 | 142 | |||||
See accompanying notes. |
Basis of preparation and statement of compliance
These consolidated interim financial statements ("interim financial statements") were prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board and were approved for issuance by the Audit Committee on February 9, 2017. These interim financial statements do not include all information and disclosures normally provided in annual or quarterly financial statements and should be read in conjunction with our audited annual financial statements and related notes, prepared in accordance with IFRS, contained in our 2015 Annual Report, available at www.agrium.com.
The accounting policies applied in these interim financial statements are the same as those applied in our audited annual financial statements in our 2015 Annual Report.
AGRIUM INC. | ||||||||||||
Consolidated Statements of Comprehensive Income | ||||||||||||
(Unaudited) | ||||||||||||
Three months ended | Twelve months ended | |||||||||||
December 31, | December 31, | |||||||||||
(millions of U.S. dollars) | 2016 | 2015 | 2016 | 2015 | ||||||||
Net earnings | 67 | 200 | 596 | 988 | ||||||||
Other comprehensive (loss) income | ||||||||||||
Items that are or may be reclassified to earnings | ||||||||||||
Cash flow hedges | ||||||||||||
Effective portion of changes in fair value | 19 | (15 | ) | 7 | (45 | ) | ||||||
Deferred income taxes | (5 | ) | 4 | (1 | ) | 12 | ||||||
Share of comprehensive (loss) income of associates and joint ventures | (36 | ) | 1 | (34 | ) | (6 | ) | |||||
Foreign currency translation | ||||||||||||
(Losses) gains | (94 | ) | (85 | ) | 59 | (617 | ) | |||||
Reclassifications to earnings | - | 7 | - | 8 | ||||||||
(116 | ) | (88 | ) | 31 | (648 | ) | ||||||
Items that will never be reclassified to earnings | ||||||||||||
Post-employment benefits | ||||||||||||
Actuarial gains (losses) | 15 | 14 | (10 | ) | 14 | |||||||
Deferred income taxes | (4 | ) | (5 | ) | 3 | (4 | ) | |||||
11 | 9 | (7 | ) | 10 | ||||||||
Other comprehensive (loss) income | (105 | ) | (79 | ) | 24 | (638 | ) | |||||
Comprehensive (loss) income | (38 | ) | 121 | 620 | 350 | |||||||
Attributable to | ||||||||||||
Equity holders of Agrium | (38 | ) | 124 | 616 | 350 | |||||||
Non-controlling interest | - | (3 | ) | 4 | - | |||||||
Comprehensive (loss) income | (38 | ) | 121 | 620 | 350 | |||||||
See accompanying notes. |
AGRIUM INC. | |||||||
Consolidated Balance Sheets | |||||||
(Unaudited) | |||||||
December 31, | |||||||
(millions of U.S. dollars) | 2016 | 2015 | |||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | 412 | 515 | |||||
Accounts receivable | 2,208 | 2,053 | |||||
Income taxes receivable | 33 | 4 | |||||
Inventories | 3,230 | 3,314 | |||||
Prepaid expenses and deposits | 855 | 688 | |||||
Other current assets | 123 | 144 | |||||
6,861 | 6,718 | ||||||
Property, plant and equipment | 6,818 | 6,333 | |||||
Intangibles | 566 | 632 | |||||
Goodwill | 2,095 | 1,980 | |||||
Investments in associates and joint ventures | 541 | 607 | |||||
Other assets | 48 | 54 | |||||
Deferred income tax assets | 34 | 53 | |||||
16,963 | 16,377 | ||||||
Liabilities and shareholders' equity | |||||||
Current liabilities | |||||||
Short-term debt | 604 | 835 | |||||
Accounts payable | 4,662 | 3,919 | |||||
Income taxes payable | 17 | 82 | |||||
Current portion of long-term debt | 110 | 8 | |||||
Current portion of other provisions | 59 | 85 | |||||
5,452 | 4,929 | ||||||
Long-term debt | 4,398 | 4,513 | |||||
Post-employment benefits | 141 | 124 | |||||
Other provisions | 322 | 336 | |||||
Other liabilities | 68 | 85 | |||||
Deferred income tax liabilities | 408 | 383 | |||||
10,789 | 10,370 | ||||||
Shareholders' equity | |||||||
Share capital | 1,766 | 1,757 | |||||
Retained earnings | 5,634 | 5,533 | |||||
Accumulated other comprehensive loss | (1,231 | ) | (1,287 | ) | |||
Equity holders of Agrium | 6,169 | 6,003 | |||||
Non-controlling interest | 5 | 4 | |||||
Total equity | 6,174 | 6,007 | |||||
16,963 | 16,377 | ||||||
See accompanying notes. |
AGRIUM INC. | ||||||||||
Consolidated Statements of Cash Flows | ||||||||||
(Unaudited) | ||||||||||
Three months ended | Twelve months ended | |||||||||
December 31, | December 31, | |||||||||
(millions of U.S. dollars) | 2016 | 2015 | 2016 | 2015 | ||||||
Operating | ||||||||||
Net earnings | 67 | 200 | 596 | 988 | ||||||
Adjustments for | ||||||||||
Depreciation and amortization | 141 | 135 | 532 | 480 | ||||||
(Earnings) loss from associates and joint ventures | (35 | ) | (5 | ) | (66 | ) | 4 | |||
Share-based payments | 33 | 15 | 55 | 51 | ||||||
Unrealized (gain) loss on derivative financial instruments | - | (28 | ) | 36 | (21 | ) | ||||
Unrealized foreign exchange loss (gain) | 1 | (12 | ) | (19 | ) | (35 | ) | |||
Interest income | (17 | ) | (16 | ) | (66 | ) | (68 | ) | ||
Finance costs | 72 | 73 | 278 | 252 | ||||||
Income taxes | 23 | 51 | 224 | 376 | ||||||
Other | 26 | 2 | 23 | (20 | ) | |||||
Interest received | 16 | 16 | 66 | 70 | ||||||
Interest paid | (49 | ) | (51 | ) | (272 | ) | (212 | ) | ||
Income taxes paid | (14 | ) | (30 | ) | (291 | ) | (111 | ) | ||
Dividends from associates and joint ventures | 68 | - | 116 | 2 | ||||||
Net changes in non-cash working capital | 1,130 | 743 | 455 | (93 | ) | |||||
Cash provided by operating activities | 1,462 | 1,093 | 1,667 | 1,663 | ||||||
Investing | ||||||||||
Business acquisitions, net of cash acquired | (26 | ) | (42 | ) | (342 | ) | (127 | ) | ||
Capital expenditures | (173 | ) | (278 | ) | (724 | ) | (1,188 | ) | ||
Capitalized borrowing costs | (6 | ) | (8 | ) | (24 | ) | (45 | ) | ||
Purchase of investments | (16 | ) | (18 | ) | (77 | ) | (128 | ) | ||
Proceeds from sale of investments | 19 | 18 | 97 | 83 | ||||||
Proceeds from sale of property, plant and equipment | 2 | 27 | 16 | 104 | ||||||
Other | 51 | (11 | ) | 33 | (4 | ) | ||||
Net changes in non-cash working capital | 10 | (9 | ) | 5 | (198 | ) | ||||
Cash used in investing activities | (139 | ) | (321 | ) | (1,016 | ) | (1,503 | ) | ||
Financing | ||||||||||
Short-term debt | (1,092 | ) | (932 | ) | (188 | ) | (514 | ) | ||
Long-term debt issued | - | - | - | 1,000 | ||||||
Transaction costs on long-term debt | - | - | - | (14 | ) | |||||
Repayment of long-term debt | (1 | ) | (2 | ) | (17 | ) | (19 | ) | ||
Dividends paid | (120 | ) | (123 | ) | (482 | ) | (468 | ) | ||
Shares issued | - | - | - | 1 | ||||||
Shares repurchased | - | - | - | (559 | ) | |||||
Cash used in financing activities | (1,213 | ) | (1,057 | ) | (687 | ) | (573 | ) | ||
Effect of exchange rate changes on cash and cash equivalents | (9 | ) | 47 | (67 | ) | 80 | ||||
Increase (decrease) in cash and cash equivalents | 101 | (238 | ) | (103 | ) | (333 | ) | |||
Cash and cash equivalents - beginning of period | 311 | 753 | 515 | 848 | ||||||
Cash and cash equivalents - end of period | 412 | 515 | 412 | 515 | ||||||
See accompanying notes. |
AGRIUM INC. | ||||||||||||||||||||||
Consolidated Statements of Shareholders' Equity | ||||||||||||||||||||||
(Unaudited) |
Other comprehensive income (loss) | ||||||||||||||||||||||
(millions of U.S. dollars, except per share data) | Millions of common shares |
Share capital |
Retained earnings |
Cash flow hedges |
Comprehensive loss of associates and joint ventures |
Foreign currency translation |
Total |
Equity holders of Agrium |
Non- controlling interest |
Total equity |
||||||||||||
December 31, 2014 | 144 | 1,821 | 5,502 | (27 | ) | (11 | ) | (605 | ) | (643 | ) | 6,680 | 7 | 6,687 | ||||||||
Net earnings | - | - | 988 | - | - | - | - | 988 | - | 988 | ||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||
Post-employment benefits | - | - | 10 | - | - | - | - | 10 | - | 10 | ||||||||||||
Other | - | - | - | (33 | ) | (6 | ) | (609 | ) | (648 | ) | (648 | ) | - | (648 | ) | ||||||
Comprehensive income (loss), net of tax | - | - | 998 | (33 | ) | (6 | ) | (609 | ) | (648 | ) | 350 | - | 350 | ||||||||
Dividends ($3.405 per share) | - | - | (478 | ) | - | - | - | - | (478 | ) | - | (478 | ) | |||||||||
Non-controlling interest transactions | - | - | - | - | - | - | - | - | (3 | ) | (3 | ) | ||||||||||
Shares repurchased | (6 | ) | (70 | ) | (489 | ) | - | - | - | - | (559 | ) | - | (559 | ) | |||||||
Share-based payment transactions | - | 6 | - | - | - | - | - | 6 | - | 6 | ||||||||||||
Reclassification of cash flow hedges, net of tax | - | - | - | 4 | - | - | 4 | 4 | - | 4 | ||||||||||||
December 31, 2015 | 138 | 1,757 | 5,533 | (56 | ) | (17 | ) | (1,214 | ) | (1,287 | ) | 6,003 | 4 | 6,007 | ||||||||
Net earnings | - | - | 592 | - | - | - | - | 592 | 4 | 596 | ||||||||||||
Other comprehensive income (loss), net of tax | ||||||||||||||||||||||
Post-employment benefits | - | - | (7 | ) | - | - | - | - | (7 | ) | - | (7 | ) | |||||||||
Other | - | - | - | 6 | (34 | ) | 59 | 31 | 31 | - | 31 | |||||||||||
Comprehensive income (loss), net of tax | - | - | 585 | 6 | (34 | ) | 59 | 31 | 616 | 4 | 620 | |||||||||||
Dividends ($3.5 per share) | - | - | (484 | ) | - | - | - | - | (484 | ) | - | (484 | ) | |||||||||
Non-controlling interest transactions | - | - | - | - | - | - | - | - | (3 | ) | (3 | ) | ||||||||||
Share-based payment transactions | - | 9 | - | - | - | - | - | 9 | - | 9 | ||||||||||||
Reclassification of cash flow hedges, net of tax | - | - | - | 25 | - | - | 25 | 25 | - | 25 | ||||||||||||
December 31, 2016 | 138 | 1,766 | 5,634 | (25 | ) | (51 | ) | (1,155 | ) | (1,231 | ) | 6,169 | 5 | 6,174 | ||||||||
See accompanying notes. |
AGRIUM INC.
Summarized Notes to the Consolidated Financial Statements
For the three and twelve months ended December 31, 2016
(millions of U.S. dollars, unless otherwise stated)
(Unaudited)
1. Corporate Management
Corporate information
Agrium Inc. ("Agrium") is incorporated under the laws of Canada with common shares listed under the symbol "AGU" on the New York Stock Exchange (NYSE) and the Toronto Stock Exchange (TSX). Our Corporate head office is located at 13131 Lake Fraser Drive S.E., Calgary, Canada. We conduct our operations globally from our Wholesale head office in Calgary and our Retail head office in Loveland, Colorado, United States. In these financial statements, "we", "us", "our" and "Agrium" mean Agrium Inc., its subsidiaries and joint arrangements.
We categorize our operating segments within the Retail and Wholesale business units as follows:
Additional information on our operating segments is included in note 2.
Seasonality in our business results from increased demand for our products during planting seasons. Sales are generally higher in spring and fall.
2. Operating Segments
Segment information by business unit | Three months ended December 31, | |||||||||||||||||
2016 | 2015 | |||||||||||||||||
Retail | Wholesale | Other (a) | Total | Retail | Wholesale | Other (a) | Total | |||||||||||
Sales | - external | 1,816 | 464 | - | 2,280 | 1,758 | 649 | - | 2,407 | |||||||||
- inter-segment | 12 | 193 | (205 | ) | - | 7 | 239 | (246 | ) | - | ||||||||
Total sales | 1,828 | 657 | (205 | ) | 2,280 | 1,765 | 888 | (246 | ) | 2,407 | ||||||||
Cost of product sold | 1,205 | 523 | (196 | ) | 1,532 | 1,166 | 568 | (227 | ) | 1,507 | ||||||||
Gross profit | 623 | 134 | (9 | ) | 748 | 599 | 320 | (19 | ) | 900 | ||||||||
Gross profit (%) | 34 | 20 | 33 | 34 | 36 | 37 | ||||||||||||
Expenses | ||||||||||||||||||
Selling | 476 | 9 | (5 | ) | 480 | 462 | 7 | (4 | ) | 465 | ||||||||
General and administrative | 26 | 7 | 32 | 65 | 29 | 12 | 33 | 74 | ||||||||||
Share-based payments | - | - | 33 | 33 | - | - | 15 | 15 | ||||||||||
Earnings from associates and joint ventures | (1 | ) | (34 | ) | - | (35 | ) | (2 | ) | (2 | ) | (1 | ) | (5 | ) | |||
Other (income) expenses | (12 | ) | 3 | 52 | 43 | (23 | ) | 16 | 34 | 27 | ||||||||
Earnings (loss) before finance costs and income taxes | 134 | 149 | (121 | ) | 162 | 133 | 287 | (96 | ) | 324 | ||||||||
Finance costs | - | - | 72 | 72 | - | - | 73 | 73 | ||||||||||
Earnings (loss) before income taxes | 134 | 149 | (193 | ) | 90 | 133 | 287 | (169 | ) | 251 | ||||||||
Depreciation and amortization | 68 | 67 | 6 | 141 | 66 | 65 | 4 | 135 | ||||||||||
Finance costs | - | - | 72 | 72 | - | - | 73 | 73 | ||||||||||
EBITDA (b) | 202 | 216 | (115 | ) | 303 | 199 | 352 | (92 | ) | 459 |
(a) | Includes inter-segment eliminations. |
(b) | EBITDA is net earnings (loss) before finance costs, income taxes, depreciation and amortization, and net earnings (loss) from discontinued operations. |
Segment information by business unit | Twelve months ended December 31, | |||||||||||||||||
2016 | 2015 | |||||||||||||||||
Retail | Wholesale | Other (a) | Total | Retail | Wholesale | Other (a) | Total | |||||||||||
Sales | - external | 11,723 | 1,942 | - | 13,665 | 12,168 | 2,627 | - | 14,795 | |||||||||
- inter-segment | 43 | 764 | (807 | ) | - | 31 | 975 | (1,006 | ) | - | ||||||||
Total sales | 11,766 | 2,706 | (807 | ) | 13,665 | 12,199 | 3,602 | (1,006 | ) | 14,795 | ||||||||
Cost of product sold | 8,980 | 2,134 | (844 | ) | 10,270 | 9,471 | 2,421 | (985 | ) | 10,907 | ||||||||
Gross profit | 2,786 | 572 | 37 | 3,395 | 2,728 | 1,181 | (21 | ) | 3,888 | |||||||||
Gross profit (%) | 24 | 21 | 25 | 22 | 33 | 26 | ||||||||||||
Expenses | ||||||||||||||||||
Selling | 1,899 | 32 | (17 | ) | 1,914 | 1,902 | 36 | (17 | ) | 1,921 | ||||||||
General and administrative | 102 | 30 | 110 | 242 | 112 | 39 | 117 | 268 | ||||||||||
Share-based payments | - | - | 55 | 55 | - | - | 51 | 51 | ||||||||||
(Earnings) loss from associates and joint ventures | (6 | ) | (61 | ) | 1 | (66 | ) | (5 | ) | 10 | (1 | ) | 4 | |||||
Other (income) expenses | (26 | ) | 62 | 116 | 152 | (60 | ) | 23 | 65 | 28 | ||||||||
Earnings (loss) before finance costs and income taxes | 817 | 509 | (228 | ) | 1,098 | 779 | 1,073 | (236 | ) | 1,616 | ||||||||
Finance costs | - | - | 278 | 278 | - | - | 252 | 252 | ||||||||||
Earnings (loss) before income taxes | 817 | 509 | (506 | ) | 820 | 779 | 1,073 | (488 | ) | 1,364 | ||||||||
Depreciation and amortization | 274 | 242 | 16 | 532 | 254 | 211 | 15 | 480 | ||||||||||
Finance costs | - | - | 278 | 278 | - | - | 252 | 252 | ||||||||||
EBITDA | 1,091 | 751 | (212 | ) | 1,630 | 1,033 | 1,284 | (221 | ) | 2,096 |
(a) | Includes inter-segment eliminations. |
Segment information - Retail | Three months ended December 31, | |||||||||||||
2016 | 2015 | |||||||||||||
North America | International | Retail (a) | North America | International | Retail | |||||||||
Sales | - external | 1,332 | 484 | 1,816 | 1,333 | 425 | 1,758 | |||||||
- inter-segment | 12 | - | 12 | 7 | - | 7 | ||||||||
Total sales | 1,344 | 484 | 1,828 | 1,340 | 425 | 1,765 | ||||||||
Cost of product sold | 860 | 345 | 1,205 | 853 | 313 | 1,166 | ||||||||
Gross profit | 484 | 139 | 623 | 487 | 112 | 599 | ||||||||
Expenses | ||||||||||||||
Selling | 376 | 100 | 476 | 375 | 87 | 462 | ||||||||
General and administrative | 18 | 8 | 26 | 22 | 7 | 29 | ||||||||
Earnings from associates and joint ventures | - | (1 | ) | (1 | ) | (1 | ) | (1 | ) | (2 | ) | |||
Other income | (5 | ) | (7 | ) | (12 | ) | (17 | ) | (6 | ) | (23 | ) | ||
Earnings before income taxes | 95 | 39 | 134 | 108 | 25 | 133 | ||||||||
Depreciation and amortization | 60 | 8 | 68 | 61 | 5 | 66 | ||||||||
EBITDA | 155 | 47 | 202 | 169 | 30 | 199 |
(a) | Included within the Retail business unit is a separate Financial Services operating segment with total sales of $7-million and EBITDA of $6-million. |
Segment information - Retail | Twelve months ended December 31, | |||||||||||||
2016 | 2015 | |||||||||||||
North America | International | Retail (a) | North America | International | Retail | |||||||||
Sales | - external | 9,565 | 2,158 | 11,723 | 10,093 | 2,075 | 12,168 | |||||||
- inter-segment | 43 | - | 43 | 31 | - | 31 | ||||||||
Total sales | 9,608 | 2,158 | 11,766 | 10,124 | 2,075 | 12,199 | ||||||||
Cost of product sold | 7,306 | 1,674 | 8,980 | 7,826 | 1,645 | 9,471 | ||||||||
Gross profit | 2,302 | 484 | 2,786 | 2,298 | 430 | 2,728 | ||||||||
Expenses | ||||||||||||||
Selling | 1,555 | 344 | 1,899 | 1,571 | 331 | 1,902 | ||||||||
General and administrative | 72 | 30 | 102 | 79 | 33 | 112 | ||||||||
Earnings from associates and joint ventures | (4 | ) | (2 | ) | (6 | ) | (3 | ) | (2 | ) | (5 | ) | ||
Other expenses (income) | 3 | (29 | ) | (26 | ) | (35 | ) | (25 | ) | (60 | ) | |||
Earnings before income taxes | 676 | 141 | 817 | 686 | 93 | 779 | ||||||||
Depreciation and amortization | 249 | 25 | 274 | 229 | 25 | 254 | ||||||||
EBITDA | 925 | 166 | 1,091 | 915 | 118 | 1,033 |
(a) | Included within the Retail business unit is a separate Financial Services operating segment with total sales of $16-million and EBITDA of $15-million. |
Segment information - Wholesale | Three months ended December 31, | |||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
Nitrogen | Potash | Phosphate | Wholesale Other (a) |
Wholesale | Nitrogen | Potash | Phosphate | Wholesale Other (a) | Wholesale | |||||||||||||
Sales | - external | 218 | 74 | 82 | 90 | 464 | 270 | 137 | 127 | 115 | 649 | |||||||||||
- inter-segment | 67 | 31 | 62 | 33 | 193 | 97 | 38 | 72 | 32 | 239 | ||||||||||||
Total sales | 285 | 105 | 144 | 123 | 657 | 367 | 175 | 199 | 147 | 888 | ||||||||||||
Cost of product sold | 200 | 84 | 136 | 103 | 523 | 181 | 112 | 162 | 113 | 568 | ||||||||||||
Gross profit | 85 | 21 | 8 | 20 | 134 | 186 | 63 | 37 | 34 | 320 | ||||||||||||
Expenses | ||||||||||||||||||||||
Selling | 4 | 2 | 1 | 2 | 9 | 3 | 1 | 1 | 2 | 7 | ||||||||||||
General and administrative | 4 | 2 | 1 | - | 7 | 5 | 2 | 1 | 4 | 12 | ||||||||||||
Earnings from associates and joint ventures | - | - | - | (34 | ) | (34 | ) | - | - | - | (2 | ) | (2 | ) | ||||||||
Other expenses (income) | 1 | 4 | - | (2 | ) | 3 | (12 | ) | 7 | 1 | 20 | 16 | ||||||||||
Earnings before income taxes | 76 | 13 | 6 | 54 | 149 | 190 | 53 | 34 | 10 | 287 | ||||||||||||
Depreciation and amortization | 23 | 26 | 15 | 3 | 67 | 18 | 28 | 14 | 5 | 65 | ||||||||||||
EBITDA | 99 | 39 | 21 | 57 | 216 | 208 | 81 | 48 | 15 | 352 |
(a) | Includes product purchased for resale, ammonium sulfate, ESN and other products. |
Segment information - Wholesale | Twelve months ended December 31, | |||||||||||||||||||||
2016 | 2015 | |||||||||||||||||||||
Nitrogen | Potash | Phosphate | Wholesale Other (a) |
Wholesale | Nitrogen | Potash | Phosphate | Wholesale Other (a) | Wholesale | |||||||||||||
Sales | - external | 860 | 280 | 356 | 446 | 1,942 | 1,129 | 364 | 471 | 663 | 2,627 | |||||||||||
- inter-segment | 284 | 139 | 211 | 130 | 764 | 401 | 151 | 270 | 153 | 975 | ||||||||||||
Total sales | 1,144 | 419 | 567 | 576 | 2,706 | 1,530 | 515 | 741 | 816 | 3,602 | ||||||||||||
Cost of product sold | 757 | 367 | 523 | 487 | 2,134 | 801 | 335 | 599 | 686 | 2,421 | ||||||||||||
Gross profit | 387 | 52 | 44 | 89 | 572 | 729 | 180 | 142 | 130 | 1,181 | ||||||||||||
Expenses | ||||||||||||||||||||||
Selling | 14 | 7 | 3 | 8 | 32 | 15 | 5 | 4 | 12 | 36 | ||||||||||||
General and administrative | 13 | 7 | 3 | 7 | 30 | 15 | 7 | 5 | 12 | 39 | ||||||||||||
(Earnings) loss from associates and joint ventures | - | - | - | (61 | ) | (61 | ) | - | - | - | 10 | 10 | ||||||||||
Other expenses (income) | 31 | 28 | 7 | (4 | ) | 62 | - | 25 | 17 | (19 | ) | 23 | ||||||||||
Earnings before income taxes | 329 | 10 | 31 | 139 | 509 | 699 | 143 | 116 | 115 | 1,073 | ||||||||||||
Depreciation and amortization | 75 | 99 | 55 | 13 | 242 | 72 | 71 | 51 | 17 | 211 | ||||||||||||
EBITDA | 404 | 109 | 86 | 152 | 751 | 771 | 214 | 167 | 132 | 1,284 |
(a) | Includes product purchased for resale, ammonium sulfate, ESN and other products. |
Gross profit by product line | Three months ended December 31, | Twelve months ended December 31, | |||||||||||||||||||||||
2016 | 2015 | 2016 | 2015 | ||||||||||||||||||||||
Sales | Cost of product sold |
Gross profit |
Sales | Cost of product sold |
Gross profit | Sales | Cost of product sold |
Gross profit |
Sales | Cost of product sold |
Gross profit | ||||||||||||||
Retail | |||||||||||||||||||||||||
Crop nutrients | 779 | 632 | 147 | 843 | 689 | 154 | 4,310 | 3,478 | 832 | 4,944 | 4,097 | 847 | |||||||||||||
Crop protection products | 620 | 324 | 296 | 541 | 273 | 268 | 4,684 | 3,570 | 1,114 | 4,543 | 3,476 | 1,067 | |||||||||||||
Seed | 101 | 58 | 43 | 75 | 21 | 54 | 1,462 | 1,165 | 297 | 1,425 | 1,141 | 284 | |||||||||||||
Merchandise | 167 | 140 | 27 | 156 | 129 | 27 | 621 | 518 | 103 | 638 | 539 | 99 | |||||||||||||
Services and other (a) | 161 | 51 | 110 | 150 | 54 | 96 | 689 | 249 | 440 | 649 | 218 | 431 | |||||||||||||
1,828 | 1,205 | 623 | 1,765 | 1,166 | 599 | 11,766 | 8,980 | 2,786 | 12,199 | 9,471 | 2,728 | ||||||||||||||
Wholesale | |||||||||||||||||||||||||
Nitrogen | 285 | 200 | 85 | 367 | 181 | 186 | 1,144 | 757 | 387 | 1,530 | 801 | 729 | |||||||||||||
Potash | 105 | 84 | 21 | 175 | 112 | 63 | 419 | 367 | 52 | 515 | 335 | 180 | |||||||||||||
Phosphate | 144 | 136 | 8 | 199 | 162 | 37 | 567 | 523 | 44 | 741 | 599 | 142 | |||||||||||||
Product purchased for resale | 37 | 37 | - | 53 | 52 | 1 | 215 | 211 | 4 | 398 | 387 | 11 | |||||||||||||
Ammonium sulfate, ESN and other | 86 | 66 | 20 | 94 | 61 | 33 | 361 | 276 | 85 | 418 | 299 | 119 | |||||||||||||
657 | 523 | 134 | 888 | 568 | 320 | 2,706 | 2,134 | 572 | 3,602 | 2,421 | 1,181 | ||||||||||||||
Other inter-segment eliminations | (205 | ) | (196 | ) | (9 | ) | (246 | ) | (227 | ) | (19 | ) | (807 | ) | (844 | ) | 37 | (1,006 | ) | (985 | ) | (21 | ) | ||
Total | 2,280 | 1,532 | 748 | 2,407 | 1,507 | 900 | 13,665 | 10,270 | 3,395 | 14,795 | 10,907 | 3,888 | |||||||||||||
Wholesale share of joint ventures | |||||||||||||||||||||||||
Nitrogen | 65 | 53 | 12 | 71 | 59 | 12 | 196 | 164 | 32 | 194 | 178 | 16 | |||||||||||||
Product purchased for resale | - | - | - | - | - | - | - | - | - | 38 | 37 | 1 | |||||||||||||
65 | 53 | 12 | 71 | 59 | 12 | 196 | 164 | 32 | 232 | 215 | 17 | ||||||||||||||
Total Wholesale including proportionate share in joint ventures | 722 |
576 |
146 |
959 |
627 |
332 |
2,902 |
2,298 |
604 |
3,834 |
2,636 |
1,198 |
(a) | Includes financial services products. |
Selected volumes and per tonne information | Three months ended December 31, | ||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Sales tonnes (000's) |
Selling price ($/tonne) |
Cost of product sold ($/tonne) |
Margin ($/tonne) |
Sales tonnes (000's) |
Selling price ($/tonne) |
Cost of product sold ($/tonne) |
Margin ($/tonne) |
||||||||||||
Retail | |||||||||||||||||||
Crop nutrients | |||||||||||||||||||
North America | 1,593 | 395 | 317 | 78 | 1,375 | 513 | 416 | 97 | |||||||||||
International | 395 | 381 | 321 | 60 | 327 | 424 | 364 | 60 | |||||||||||
Total crop nutrients | 1,988 | 392 | 318 | 74 | 1,702 | 496 | 406 | 90 | |||||||||||
Wholesale | |||||||||||||||||||
Nitrogen | |||||||||||||||||||
North America | |||||||||||||||||||
Ammonia | 334 | 371 | 374 | 499 | |||||||||||||||
Urea | 439 | 274 | 386 | 356 | |||||||||||||||
Other | 181 | 222 | 152 | 283 | |||||||||||||||
Total nitrogen | 954 | 298 | 209 | 89 | 912 | 403 | 199 | 204 | |||||||||||
Potash | |||||||||||||||||||
North America | 286 | 211 | 503 | 281 | |||||||||||||||
International | 304 | 148 | 153 | 220 | |||||||||||||||
Total potash | 590 | 179 | 143 | 36 | 656 | 267 | 171 | 96 | |||||||||||
Phosphate | 303 | 475 | 449 | 26 | 325 | 610 | 495 | 115 | |||||||||||
Product purchased for resale | 149 | 243 | 248 | (5 | ) | 148 | 362 | 356 | 6 | ||||||||||
Ammonium sulfate | 99 | 240 | 130 | 110 | 96 | 293 | 125 | 168 | |||||||||||
ESN and other | 178 | 155 | |||||||||||||||||
Total Wholesale | 2,273 | 289 | 230 | 59 | 2,292 | 387 | 248 | 139 | |||||||||||
Wholesale share of joint ventures | |||||||||||||||||||
Nitrogen | 222 | 293 | 235 | 58 | 198 | 359 | 295 | 64 | |||||||||||
Product purchased for resale | - | - | - | - | - | - | - | - | |||||||||||
222 | 293 | 235 | 58 | 198 | 359 | 295 | 64 | ||||||||||||
Total Wholesale including proportionate share in joint ventures | 2,495 |
289 |
230 |
59 |
2,490 |
385 |
251 |
134 |
Selected volumes and per tonne information | Twelve months ended December 31, | ||||||||||||||||||
2016 | 2015 | ||||||||||||||||||
Sales tonnes (000's) |
Selling price ($/tonne) |
Cost of product sold ($/tonne) |
Margin ($/tonne) |
Sales tonnes (000's) |
Selling price ($/tonne) |
Cost of product sold ($/tonne) |
Margin ($/tonne) |
||||||||||||
Retail | |||||||||||||||||||
Crop nutrients | |||||||||||||||||||
North America | 8,003 | 446 | 351 | 95 | 7,731 | 537 | 436 | 101 | |||||||||||
International | 1,956 | 379 | 341 | 38 | 1,843 | 431 | 393 | 38 | |||||||||||
Total crop nutrients | 9,959 | 433 | 349 | 84 | 9,574 | 516 | 427 | 89 | |||||||||||
Wholesale | |||||||||||||||||||
Nitrogen | |||||||||||||||||||
North America | |||||||||||||||||||
Ammonia | 1,165 | 402 | 1,209 | 530 | |||||||||||||||
Urea | 1,620 | 294 | 1,583 | 395 | |||||||||||||||
Other | 817 | 244 | 864 | 305 | |||||||||||||||
Total nitrogen | 3,602 | 318 | 211 | 107 | 3,656 | 418 | 219 | 199 | |||||||||||
Potash | |||||||||||||||||||
North America | 1,187 | 217 | 1,133 | 330 | |||||||||||||||
International | 1,052 | 154 | 601 | 235 | |||||||||||||||
Total potash | 2,239 | 187 | 164 | 23 | 1,734 | 297 | 193 | 104 | |||||||||||
Phosphate | 1,106 | 512 | 472 | 40 | 1,166 | 635 | 513 | 122 | |||||||||||
Product purchased for resale | 745 | 288 | 283 | 5 | 1,089 | 366 | 356 | 10 | |||||||||||
Ammonium sulfate | 341 | 268 | 122 | 146 | 336 | 330 | 140 | 190 | |||||||||||
ESN and other | 694 | 656 | |||||||||||||||||
Total Wholesale | 8,727 | 310 | 245 | 65 | 8,637 | 417 | 280 | 137 | |||||||||||
Wholesale share of joint ventures | |||||||||||||||||||
Nitrogen | 669 | 293 | 245 | 48 | 506 | 384 | 352 | 32 | |||||||||||
Product purchased for resale | - | - | - | - | 117 | 321 | 309 | 12 | |||||||||||
669 | 293 | 245 | 48 | 623 | 372 | 343 | 29 | ||||||||||||
Total Wholesale including proportionate share in joint ventures | 9,396 |
309 |
245 |
64 |
9,260 |
414 |
285 |
129 |
FOR FURTHER INFORMATION:
Investor/Media Relations:
Richard Downey, Vice President, Investor & Corporate Relations
(403) 225-7357
Todd Coakwell, Director, Investor Relations
(403) 225-7437
Louis Brown, Analyst, Investor Relations
(403) 225-7761
Contact us at: www.agrium.com