Agrium Reports Strong First Quarter Results
May 9, 2013 (Source: Marketwire) —
ALL AMOUNTS ARE STATED IN U.S.$
Agrium Inc. (TSX:AGU) (NYSE:AGU) announced today consolidated net earnings (“net earnings”) of $141-million ($0.94 diluted earnings per share) for the first quarter of 2013, compared with net earnings of $155-million in the first quarter of 2012 ($0.97 diluted earnings per share).
The 2013 first quarter results included a $16-million ($0.09 diluted earnings per share) share-based payments expense. Excluding this item, net earnings would have been $153-million ($1.03 diluted earnings per share).(1)
“The strength in Agrium’s first quarter results clearly demonstrates the benefits and synergies derived from our integrated strategy as we delivered a record $351-million in Adjusted EBITDA2 for the first quarter. This was supported by Wholesale and Retail achieving their second highest first quarter EBITDA on record, despite the late start to the spring season across North America. The continuation of cold, wet weather in April is likely to result in a somewhat compressed spring application season this year. However, we still expect excellent demand for crop inputs in the first half of 2013 given positive grower sentiment and the strength in the agricultural fundamentals. We also generated $355-million in operating cash flow this quarter, an excellent result for a quarter that is traditionally our slowest seasonally,” said Mike Wilson, Agrium President and CEO.
Agrium is providing guidance for the second quarter of 2013 of $4.60 to $5.40 diluted earnings per share. This excludes derivative gains or losses and share-based payments expense in our estimated second quarter results.3
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Normal Course Issuer Bid
Agrium’s Board of Directors has authorized the repurchase of up to 5 percent of its currently issued and outstanding common shares through a Normal Course Issuer Bid (the “Bid”) subject to regulatory approvals, including approval from the Toronto Stock Exchange.
“This repurchase program is another example of Agrium’s continuing commitment to providing strong total shareholder returns, as well as our confidence in the outlook for our business. We believe that we can continue to deliver value-added growth across the value chain, while at the same time delivering significant returns of capital to shareholders in the form of both dividends and share repurchases,” said Mr. Wilson.
The Bid is anticipated to commence in May 2013. The shares purchased under the bid will be cancelled. Agrium presently has a total of approximately 149 million shares outstanding. The timing and exact number of shares purchased will be determined at Agrium’s discretion. All repurchases will be made pursuant to applicable regulatory requirements, will be made on the open market and are expected to be funded with cash from operations.
|(1)||Realized and unrealized gains on derivative financial instruments (including natural gas and foreign exchange) were offset by an associated loss on foreign exchange related to the Glencore/Viterra transaction. First quarter effective tax rate of 27 percent used for adjusted diluted earnings per share calculation.|
|(2)||Adjusted EBITDA is defined as earnings before finance costs, income taxes, depreciation and amortization (“EBITDA”) and before finance costs, income taxes, depreciation and amortization of joint ventures.|
|(3)||See disclosure in the section “Outlook, Key Risks and Uncertainties” in our 2013 first quarter Management’s Discussion and Analysis and additional assumptions outlined on the following page.|
MANAGEMENT’S DISCUSSION AND ANALYSIS
May 9, 2013
Unless otherwise noted, all financial information in this Management’s Discussion and Analysis (“MD&A”) is prepared using accounting policies in accordance with International Financial Reporting Standards (“IFRS”) and is presented in accordance with International Accounting Standard 34 – Interim Financial Reporting. All comparisons of results for the first quarter of 2013 (three months ended March 31, 2013) are against results for the first quarter of 2012 (three months ended March 31, 2012). All dollar amounts refer to United States (“U.S.”) dollars except where otherwise stated. Certain financial measures in this MD&A are not prescribed by IFRS, and are defined in the Additional and Non-IFRS Financial Measures section of this MD&A.
The following interim MD&A is as of May 9, 2013 and should be read in conjunction with the consolidated interim financial statements for the three months ended March 31, 2013 and 2012, and the annual MD&A included in our 2012 Annual Report to Shareholders to which readers are referred. The Board of Directors carries out its responsibility for review of this disclosure principally through its Audit Committee, comprised exclusively of independent directors. The Audit Committee reviews, and prior to publication, approves, pursuant to the authority delegated to it by the Board of Directors this disclosure. No update is provided where an item is not material or there has been no material change from the discussion in our annual MD&A. Forward-Looking Statements are outlined after the Outlook, Key Risks and Uncertainties section of this MD&A.
The major assumptions made in preparing our second quarter guidance are outlined below and include but are not limited to:
- North America weather patterns will support normal spring applications;
- Wholesale realized selling prices through the second quarter of 2013 will approximate current benchmark prices except for selling prices on volumes already committed under programs;
- North America Wholesale anticipated sales volumes are over 70 percent committed at fixed prices in the second quarter of 2013;
- North America Wholesale produced fertilizer sales volumes will be higher than sales volumes in the same quarter of 2012;
- Capacity utilization for Wholesale’s North American facilities is expected to be 90 percent in the second quarter of 2013 compared to 88 percent in the same quarter of 2012;
- Retail North America fertilizer sales volumes will be higher than in the same quarter of 2012;
- Retail North America fertilizer margin percentages will be lower than the margin percentages realized in the second quarter of 2012;
- The average North American realized gas price will not deviate significantly from approximately $3.95 per MMBtu;
- Guidance issued excluding the second quarter effects of:
- Share-based payments
- Gains or losses on hedge positions
- Results of the pending acquisition of Viterra’s retail agri-business
2013 First Quarter Operating Results
CONSOLIDATED NET EARNINGS
Effective January 1, 2013, Agrium adopted IFRS 11 Joint Arrangements whereby the classification and accounting of our investment in Profertil S.A. (“Profertil”) and other joint arrangements previously accounted for using the proportionate consolidation method are accounted for using the equity method. 2012 figures have been restated and additional information has been provided in the Supplemental Information tables to display the results of our joint ventures. Adjusted EBITDA(1) has been added to show our results before finance costs, income taxes, depreciation and amortization of our joint ventures.
Agrium’s 2013 first quarter consolidated net earnings (“net earnings”) were $141-million, or $0.94 diluted earnings per share, compared to net earnings of $155-million, or $0.97 diluted earnings per share, for the same quarter of 2012.
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