Raise their target by 3 bucks to US$91.00. GLTA

Nutrien Ltd.

(NTR-N) US$77.17

Q4/21 Beat; 2022 Guidance Above Expectations; Reiterating BUY Event

  • NTR delivered its highest-ever quarterly earnings (despite Q4 not being NTR's seasonally strongest quarter), which were above expectations.

  • 2022 guidance was introduced. The midpoints of NTR's 2022 adjusted EBITDA and adjusted EPS guidance ranges are ~9% and ~13% above pre-quarter consensus, respectively. Specifically, NTR guided to 2022 adjusted EBITDA of $10.0bln–$11.2bln ($10.6bln midpoint) vs. pre-quarter consensus of $9.75bln. In addition, NTR guided to 2022 adjusted EPS of $10.20–$11.80 ($11.00 midpoint) vs. pre-quarter consensus of $9.76.

    Impact: POSITIVE

  • Adjusted EBITDA was $2,463mm (+221% y/y) vs. consensus/TD at $2,426mm/$2,414mm. Adjusted EPS was $2.47 vs. consensus/TD at $2.38/ $2.34.

  • Nutrien projects 2022 global potash deliveries of 68mm–71mm tonnes (essentially flat y/y vs. the record 70mm tonnes in 2021). Management expects to realize record potash sales volumes of 13.7mm–14.3mm tonnes in 2022, although NTR indicated that it is capable of ramping up production if the sanctions on Belarus wind up, having a more significant impact on global supply. For nitrogen, NTR expects 2022 sales volume growth of 3% y/y (at the midpoint of guidance)supported by the completion of Phase 1 of its nitrogen brownfield expansion projects and higher anticipated operating rates. On the retail side, NTR continues to convey positive outlook commentary for 2022.

  • NTR sees potential to generate CFO of $7.5bln$8.4bln in 2022. Regarding capital allocation, Nutrien announced a $0.02/share increase in its quarterly dividend (now $0.48/share) and a new NCIB (up to 10% of shares outstanding). Note, NTR's adjusted EPS guidance assumes a minimum of $2bln of share repurchases in 2022.

  • We have made various adjustments to our model, which have driven increases in our estimates.

    TD Investment Conclusion

    We remain encouraged by strong agriculture fundamentals and historically elevated fertilizer prices, which we see as supportive of NTR's outlook and share price. We reiterate our BUY rating.