flow. Regarding the 2026 performance targets and financial scenarios highlighted
by management, although generally encouraging, in our view, they do not appear to have come as a surprise to investors, as they are largely aligned with NTR's previously disclosed mid-cycle scenario targets.
2026 Targets: NTR targets achieving combined Potash and Nitrogen sales volume growth of ~2.0mm–3.0mm tonnes by 2026 vs. 2023. More specifically, NTR is targeting 2026 sales volumes of 14.0mm–15.0mm tonnes for Potash and 11.5mm–12.0mm tonnes for Nitrogen. For Retail, NTR targets adjusted EBITDA of $1.9bln–$2.1bln in 2026 and a gross margin of $1.4bln from NTR's proprietary products portfolio (it was ~$1.0bln in 2023). Furthermore, NTR is planning to reduce controllable costs across its operations and corporate function by ~$200mm by 2026, and intends to maintain annual average capex at $2.2bln– $2.3bln through 2026.
Financial Outlook: Management outlined what 2026 scenarios for NTR's adjusted EBITDA and cash flow from operations (CFO) could look like based on: 1) 10-year historical average fertilizer pricing assumptions (which NTR sees as conservative, given structural cost changes that have occurred), and 2) NTR's assessment of potential mid-cycle fertilizer pricing. Management sees 2026 adjusted EBITDA of $5.8bln–$6.2bln under
the 10-year historical average price scenario, and $7.0bln–$7.5bln under the mid-cycle price estimate scenario. Meanwhile, based on an assumed cash conversion ratio of 70– 75%, these two scenarios imply CFO ranges of $4.2bln–$4.5bln and $5.1bln–$5.4bln, respectively (note: NTR is focused on driving cash conversion through the cycle towards 75% vs. ~70% historically