Nutrien Ltd.

and welcome to Nutrien's 2025 good morning and

welcome to Nutrien's second quarter 2025 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 information for them. I will now turn the call over to Ken sites, 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 performance in the first half of 2025. Progress on our strategic priorities and the outlook for our business. Our first half results featured record potash sales volumes and our net nitrogen operating rates, lower expenses, reduced capital expenditures and increased returns of cash to our shareholders. We raised our 2025 full year guidance for potash sales volumes while maintaining all other operational guidance ranges. At our investor day in June 2024, we communicated a pathway to structurally improve our earnings and free cash flow through strategic initiatives across the portfolio. We also shared key operational and financial targets to measure our progress. Our results through the first half of 2025 demonstrated significant progress towards achieving these goals. Starting with our upstream operating segments, we increased fertilizer sales volumes by more than 400,000 tons compared to the same period last year and realized higher net selling prices. These results highlight the capabilities of our world-class operations, extensive distribution network and strong customer relationships that were built over many decades. We continue to prioritize investments that further strengthen our ability to cost effectively supply the growing needs of our customers. In potash, this includes advancing mine automation projects that enhance efficiency, flexibility and most importantly safety benefits at our sites. In the first half of 2025, we mined over 40% of our potash or using automation. This is within our 40 to 50% target range for 2026. Our nitrogen operations performed exceptionally well in the first half, achieving a 98% ammonia utilization rate. The focus on reliability projects at our nitrogen sites have yielded clear and favorable results. Further, brown field bottlenecking efforts are now complete at our red water and Guise Mar plants that will add 150,000 tons of annual production capacity. Within our downstream retail segment, well-defined growth opportunities continue to be progressed, along with network optimization initiatives that resulted in a 6% reduction in expenses in the first half. As previously communicated, we are ahead of schedule on our company-wide $200 million cost savings target and expect to achieve this goal in 2025. Capital expenditures in the first half of 2025 were 18% below the prior year as we optimized capital to sustain safe and reliable operations and progress a set of targeted growth projects. We allocated $786 million to dividends and share repurchases in the first half, representing a 49% increase from the prior year. To put this all together, Nutrien generated higher earnings and cash from operations driven by supportive fertilizer market fundamentals and execution of our strategic priorities. We lowered costs and capital expenditures through efforts to simplify and focus our business and we significantly increased the distribution of cash to shareholders. We believe these actions build upon the strength of our world-class asset base and position the company for strong performance into the future. Now turning to the market outlook. Global fertilizer fundamentals have strengthened in 2025, leading to higher benchmark prices across nearly all products. Potash prices increased at a steady pace since the beginning of the year, driven by trend demand growth that is testing global operating and supply chain capabilities. The settlement of potash contracts with India and China and favorable economics for key crops grown in Southeast Asia is expected to support demand in standard grade markets in the second half of 2025. We had a solid uptake on our potash summer fill program in North America and anticipate stable demand in Brazil. As a result, we have raised our 2025 full-year global potash market demand forecast to 73 to 75 million tons. Beyond 2025, we see a constructive outlook for the potash market. We expect demand growth in line with historical trend levels and limited new capacity additions in the near term. Recent industry announcements further highlight that building new capacity requires significant time and capital and often comes with the risk of delays. next few years. Global nitrogen markets are being supported by supply side challenges and strong seasonal demand from markets such as India. Nitrogen prices in the U.S. have been further supported by low domestic inventories and trade flow shifts, which we anticipate continuing in the second half of 2025. Phosphate markets remain tight due to limited supply, including Chinese export restrictions. We expect global shipments in 2025 will be constrained by supply availability and a weaker grower affordability for phosphate fertilizer could impact demand. We continue to closely monitor supply and demand developments for ag commodities and farmer sentiment in our key markets. Crop input demand in North America was strong in July as farmers focused on maintaining optimal plant health and yield potential. Based on current projected crop yields, we expect large nutrient removal will support the need to replenish nutrients in the soil. Brazilian soybean acreage is expected to increase by 1 to 3% in 2025, driven by strong international soybean demand. Growers in Brazil have been more active purchasing crop inputs in advance of the upcoming spring planting season, and we expect a higher demand for soybean products compared to the prior two years. Overall, we continue to see a solid backdrop for our business in the second half of 2025 and are well positioned to serve our customers. We operate to the most extensive network of assets across the ag value chain and will continue to focus on factors under our control to optimize free cash flow under any market conditions. I will now turn it over to Mark and Ken to discuss the end capital allocation priorities in more detail.

Thanks, Ken. As Ken described, our second quarter and first half results highlight strong pace of progress towards our investor day targets. Nutrient delivered adjusted EBITDA of $2.5 billion in the second quarter, up 11% from the prior year, while cash provided by operating activities rose by 40%. In Potash, we generated adjusted EBITDA of $2.5 billion in the second quarter, well above the prior year due to record sales volumes and higher offshore net selling prices. Our North American net selling price was down from the same quarter in 2024 but up $36 per ton from the first quarter of 2025 as we benefited from price increases following our winter fill program. Our first half controllable cash cost to product manufactured was higher than the prior year, due to lower planned Potash production and increased turnaround costs. However, we continue to track favorably against our goal of maintaining a controllable cash cost that is at or below $60 per ton. We raised our full-year Potash sales volume guidance to 13.9 to 14.5 million tons due to the strength of first half sales and increased visibility on the second half order book. We have a significant order book in place for the third quarter. Campotex is fully committed for third quarter sales volumes and has a significant order book in place for the fourth quarter. We had a favorable response to our domestic summer fill program and anticipate a similar split between offshore and domestic sales volumes in the third quarter compared to the prior year. Our nitrogen operating segment generated adjusted EBITDA of $1.5 million per quarter due to higher net selling prices and sales volumes. Our nitrogen plants operated very well, achieving a 98% ammonia operating rate in both the quarter and the first half. We have maintenance scheduled at our red water and border nitrogen sites starting in the third quarter that will reduce our planned second half ammonia operating rates to around 85%. Overall, we anticipate higher sales volumes on a full year basis and have maintained our nitrogen sales volumes guidance at 10.7 to 11.2 million tons. In phosphate, we generated adjusted EBITDA of $92 million in the second quarter with higher net selling prices offset by lower sales volumes and higher sulfur input costs. We completed two successful turnarounds in the second quarter and have operated at higher rates since the completion of the first quarter, positioning our phosphate business to deliver increased sales volumes and lower operating costs in the second half of the year. Our downstream retail business delivered adjusted EBITDA of $1.15 billion in the second quarter, up 2% from the prior year. We saw strong crop input demand in the U.S. corn belt consistent with our previous view that a slower start to field activity in March would be made up in the second quarter. of rice and cotton in the south was offset by unfavorable crop protection product mix shifts, dry weather in Australia and wet weather in the southern U.S. that impacted planted acres. A loss of rice and cotton acres in the south was a primary contributor to the reduction in our proprietary seed sales in the second quarter. We've maintained our full year retail adjusted EBITDA guidance of $1.65 to $1.85 billion with the midpoint of the range underpinned by four key items. First, as Ken mentioned, we saw strong North American crop input demand in July and anticipate higher crop nutritional and crop protection purchases in the third quarter compared to the prior year. Second, we assume an open fall season in North America and project fertilizer volumes up approximately 5% compared to last year, which had a shortened application window due to wet weather. Third, timely rains have improved winter crop planting prospects in Australia and the outlook for crop input demand looks more favorable for the second half of the year. And finally, our margin improvement plan in Brazil remains on track and we expect to generate increased year over year earnings through network optimization initiatives. To summarize, we delivered higher earnings and cash flow in the first half of the year and we see clear momentum for growth on a full year basis, supported by higher upstream fertilizer sales volumes, net selling prices, and downstream retail earnings. In terms of capital allocation, our priorities remain consistent. We're 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 capital to sustain safe and reliable operations and forwards a narrow set of growth opportunities that have a strong fit with our strategy, are expected to provide returns in excess of our hurdle rates, and have a relatively low degree of execution risk. capital and growing dividend and intend on enhancing the return of capital to shareholders through more rateable share buybacks through the cycle. We remain disciplined in our approach to maintain a strong balance sheet and prioritize capital towards opportunities that we expect will deliver long-term growth in free cash flow per share. I'll now turn it back to Ken.

Thanks, Mark. We have a constructive outlook and our business, supported by strong demand, persistent supply disruptions and project delays. We demonstrated strong operational performance and execution on our strategic priorities in the first half of the year, structurally improving nutrients earnings and free cash. We continue to strengthen our highly competitive asset base across the ag value chain and remain committed to disciplined We're happy to take your questions.

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speaker phone, please lift the handset before

you start the conversation. Thank you so much. In the beginning of the year, there was a little bit of a debate on potash supply being offline and the market and price appreciation be more of a supply-driven market. Towards the end of the first half it became more evident that it was more of a demand-driven market. It seems investors are still on edge given some belief that -on-half supply is going to dramatically improve and potentially increase the thoughts on those specific dynamics, especially out of the FSU and how that sets up for the 2026 market. Thank you so much.

Thanks, Chris. Talking specifically about potash, looking globally, we are seeing very strong demand. We saw a return to trend level demand last year coming out of 22 and 23. That's certainly the case this year where we have raised our expectations for the market to 73 to 75 million tons. That would be the strongest demand we have seen in the market. We also have confidence that potash is going to ground because we don't see inventories elevated in any market around the world. In several cases we see inventories below average levels. Part of that has to do with the fact that potash is still relatively affordable. It's the most affordable product nutrient. So we're seeing that today with that strong demand, it is testing the ability of the market to supply both in terms of mine production but also the supply chain as well. So at the intersection of that very strong demand and what we're seeing on the supply side of the equation, which when you asked about FSU times, we don't see any material change in FSU times coming to the potash market. At the intersection of those things we see the strengthening that we've seen in the potash price. We think we're in a good spot as it relates to the potash price. Here and now we've had our summer fill program, which we had strong uptake. We're fully committed in North America through Q3 and are now placing tons in Q4 at our up $20. Similarly in offshore markets, fully committed through camp attacks through Q3 and heavily committed now into Q4. So again, that very strong signpost that for 2025, our 73 to 75 million tons and our raised guidance that we have were constructive on those things. It is true that we're looking at North America now for the balance of the year and obviously with a very large corn crop that we're seeing in the U.S. And certainly a large crop in Brazil, we've seen some pressure on ag commodity prices. And farmer-grower margins at the same time here into the third quarter, we have seen strong field activity. We've seen good engagement and strong demand. And again, that's evidenced by our commitment levels in North America on potash and certainly we're seeing some strength into the fall in nitrogen as well. So your question was on potash. Put it all together, Chris. We're constructive on 2025. And then your question about that we're heading into 2026. Again, given where inventory levels are at, where we don't see all invaded inventory levels that with potash being affordable, growers are going to be looking to replace the large amount of crop nutrients that are going to be pulled out of the soil with this big crop.

Your next question comes from Andrew Wong from RBC capital markets. Please go ahead. Thank you, Mornin. Thanks for taking the question.

Maybe just touching a little bit on what you just touched on at the end of your answer on affordability. What's your sense on farmer sentiment and health today given some of the recent softness there and how does that

change

in fertilizer affordability impact purchasing and maybe more specific to just the dynamic between nitrogen, phosphate and carbon dioxide. And how does that impact farmer decision on what fertilizers to apply? Thank you.

Yeah, thanks, Andrew. Yeah, and certainly as I mentioned, we are seeing some pressure on it, on commodity prices, corn, soybeans and on grower margins. For the first half of the year things kind of played out the way we had expected in the corn belt in the western U.S. and Canada and Brazil was really the southern U.S. where it was wet and in Australia where it was dry, where we saw some pressure and we're feeling some of that now into the second quarter. That said, again, we're seeing strong uptake in the third quarter and a lot in field activity. And in Australia, while it was a slow start given a dry beginning of the planting season for their winter crop, they've gotten some rain in July here, which now we've seen increased activity. I'll hand it over to Jeff to talk a little bit more about that and then maybe Chris if you want to talk about those dynamics between NP and K, that sort of affordability discussion.

Yeah, thanks, Ken. And as you mentioned earlier, I mean, we can send you to see very strong engagement from our growers as we go into the third quarter. You know, if I'm looking to areas that were not affected by weather in the first half of the year, then we would see most of those regions have performed basically in line with what we thought. You mentioned the Corn Belt, Western U.S. business, Canada and Brazil from that standpoint. You mentioned the Corn Belt specifically. We saw our tonnage up about 9% for the first half of the year. And as I look going into the third quarter, you know, we see growers investing dollars to protect their yields right now. And when you get in a low-price environment, then growers are going to really push for yields in that type of environment. And we see that happening right now from the plant health standpoint and from a nutritional standpoint.

Yeah, thanks, Jeff. And Andrew, as we think about the domestic market and that balance between NPK, as Ken mentioned, there is a big crop growing out there that's going to pull a lot of nutrients out of the ground. Our midstream customers are telling us they need to prepare for what they believe is going to be a good fall application season. This crop is developing well, we do believe that subject weather, there will be an open window there for growers to get out and apply fertilizer in the fall, especially in the Midwest. And as Ken said, potash remains the most affordable nutrient. So what our customers are telling us is they're preparing for a good fall across NPK. As you've noticed, yeah, these nutrients have moved in different directions a little bit in terms of pricing. So we'll be watching how that's balanced in the fall. But overall, we're getting ready and our customers are getting ready for a good fall application period.

Your next question comes from Joel Jackson from BMO Capital Markets. Please go ahead.

Hi. If I could just harp on the retail demand or fall demand question Earth America a little bit more. I know that the biggest determinant, I think I know, that the biggest determinant of the fall season is just how big the weather is, how good the weather is, the open season weather. I know that. Are your comments just really about that, that it looks like the weather is going to be good and that's the largest determinant of a fall season? Not necessarily affordability. That's my first question. Again, the second question is just as you think about Brazil and retail, how confident are you that you'll be able to shift next year to getting back to a 50, 60, 70, $80 million EBITDA run rate versus the What are the drivers to get there?

Good. Thank you, Joel. I think you've actually articulated that well, that heading into the fall here, given the signposts that we're seeing and that we've talked about as it relates to good engagement so far in Q3 and certainly we saw that in July. And the crop that's coming off crop that's going to pull a lot of, again, fertilizer, soil nutrients out of the ground. And the discussions that we're having with our customers and where inventory levels are at, that given an open application season, yes, we expect to have a decent fall, but that's dependent on whether exactly as you said, we're expecting fertilizer volumes to be up 5% from last year. You may recall that we had a very depressed application season last year. And so where the crop is at today and some being harvested as we speak, things are pointing to an open fall and that's good for seeing volumes go to ground. As it relates to Brazil, what I'll say is our Brazil improvement plan is on track. We've talked about the decisions that we've made as it relates to shuttering of plants. We've reduced headcount there. Our focus on collections, our focus on inventory management and shuttering of blenders, all of those things now contributing for us to get to a sort of a break even, somewhat even perhaps positive EBITDA level here in 2025. And we expect that trend to continue into 2026 where, obviously, the market needs to continue to cooperate, but that we expect that will be in the positive next year.

Thank you. Your next question comes from Ben Isaacson from Scotiabank. Please go ahead. Thank you very much and good morning.

If we move past fall demand and start thinking about 2026, if corn and soy prices hold at about $4 and $10 respectively over the next little while,

what

are the risks to each of your segments? If farmer economics stay where they are in the Americas, how much downside do you think we have in which divisions? And the reason why I'm asking is you talked about potash being affordable, but on the other hand, some would argue that potash is typically a lower ranked crop input. So I'm just trying to triangulate that. Thank you.

Yeah, thank you for the question, Ben. And yeah, it's true. I'm already starting to think about 2026. And, you know, growers will get this crop off and they'll be looking to get ready for next year and another big crop. And we'll see where corn and soybean prices are at. But if we go commodity to commodity, again, we see ongoing strength in potash demand and the way it's been growing, as I said earlier, on trend. Heading into 2026, we believe that to be true as well. And it's just step change in demand in places like China, Southeast Asia with 4,200 ring We're looking at palm oil prices and a mandate of palm oil, clean fuel mandate of 40%, moving from 35, very strong demand in Southeast Asia. We look at Brazil where last year they consumed 47 million tons of fertilizer. This year it will be 48 million tons of fertilizer. And so we can go market to market. And of course, North America, again, we see a lot of crop nutrients coming out of the We see strength. And then on the supply side, I won't call it challenge, but we have seen project delays and we have seen the ability of the market to meet these demand levels. And at the intersection, we see where prices are at and prices are strong. Prices are at a good place right now because, as I said earlier, it's affordable, but at the same time, we like to see volumes moving to our customers at these levels. And so we see that carrying into 2026. On nitrogen, we've seen, again, strong demand and the Indians having difficulty procuring urea while at the same time Chinese limiting urea exports and certainly not getting back to sort of historic average levels out of that part of the world, which has meant strength in urea markets combined with some supply disruptions certainly out of the Middle East. And that would be true for ammonia where we, again, we see a bit of seasonal weakness at the moment, but given some of the challenges, supply challenges that are Russia in the Middle East and some of the new project challenges that are Russia and the Gulf Coast, there's been supply issues there as well. And we'll see about European gas pricing as compared to North America where the Delta is still $8 or $9. And again, we head into 2026 and we expect that those dynamics will persist. I think we can talk about phosphate. Yes, phosphate prices are elevated. We're watching for a grower reaction to higher prices here into the fall and how that translates into 2026. Again, strong demand over phosphate and supply-side issues. So you can go nutrient to nutrient and heading out of 2025 and 2026. We'll see how the international growers feeling. We'll see what happens here in North America. But overall, Ben, we feel constructive.

Your next question comes from Vincent Andrews from Morgan Stanley. Please go ahead.

Thank you. And good morning, everyone. I'm wondering if you could talk a little bit about your own expectations for your potash production going into next year. It sounds like you're anticipating another year of shipment growth for the industry. And the commentary for a while now has been that you're looking to take your traditional market share. So what incremental capacity would you look to add into next year?

Yeah, thanks, Vincent. And this year, you've seen our guidance range, which we've got. So just over 14 million tons at the midpoint. And we would say that we look at the way we've built out not just our mine production but now our supply chains and ability to get to customers that, you know, we have 15 million tons of installed capacity, although not obviously staffing to those levels. Because the lead time for staffing is such that we can watch the market and as it evolves, you know, bring on operators to continue to eight tons, that will be the same philosophy for next year where you can expect that as the market grows and we've talked about this two and a half percent average annual growth rates on trend, which is where we are today, that we will grow with the market and maintain market share. We will bring on those operators and we will produce those times. You know, again, we have the flexibility with our six-mile network. We have made those investments in our supply chain to get to our customers. That gives us, you know, the flexibility to expand tons into this growing market.

Your next question comes from Steve Hanson from Raymond James. Please go ahead.

Good morning. Thanks for the time. Just a broader question about the portfolio. How do you feel about the portfolio from an optimization standpoint today? You've gone through a process of divesting a few non-core items here in the south, not just recently. Is there more to do there on that front in terms of further optimizing or streamlining the core versus non-core? How do you view that as an opportunity or is it even a priority today? Thanks.

Yeah, thanks for the question, Steve. And, you know, I will say we're probably never done at looking at the portfolio and understanding how to optimize, you know, free cash flow per share and return on those assets. I think that's absolutely true that we have done quite a bit of work on that front already, whether it's the process that we're in in pro-fertile right now, the best end of our shares in Sinefer, which we've talked about. We've actually gotten rid of some smaller immaterial assets, some in Italy. We've sold a blender in Brazil. I just provide those as examples of us just continuing to really be rigorous across the portfolio insisting on performance and not in a position today to talk about, you know, further portfolio changes and how we're going to manage that. But what I can say is, yes, we're absolutely looking at opportunities to continue to upgrade that portfolio in the name of free cash flow per share and return on those assets.

Appreciate the time. Thank you. Your next question comes from Jeff from JP Morgan. Please go ahead.

Thanks very much. Your gross profits per ton in North America and crop nutrients is kind of flat, even though the different commodities have performed pretty well. And in general, in your retail segment, you seem to be doing a good job of cutting SG&A costs, but not so much making progress on the gross margin. Is that just weather? Are you satisfied with your general performance? What are the dynamics around gross profits and SG&A levels?

Yeah, thank you for the question, Jeff. And, you know, there's a number of moving parts there. We are pleased with our progress, certainly on the cost side of the equation. And, you know, there's more to do there. We know that and we expect carrying out through the balance of the year. That will be part of the story is ongoing focus and reductions in costs. But maybe I'll hand it over to Jeff to talk more about just margins on fertilizers and what we're seeing through the balance of the year.

Yeah, but if I just walk through the segments from a margin rate perspective, crop protection margins actually were surprisingly a bit better than we anticipated coming into this year through the first half. And we think we see an opportunity to expand that a bit more in the second half. If I look at our margins on fertilizer, if you look at it from a global basis where we are flat year over year, and that takes, you got to take into effect that we strategically made decisions in Brazil to lower our tonnage there and go to a different marketing, direct marketing concept versus going through those blenders that we've mentioned several times that we idle. And that brings a lower margin profile on those tons. I think we're down, we strategically plan to be down about 200,000 tons through the half. And that's basically what we're off from that standpoint. And we're in a, you know, as we talked about several times today, we're in a competitive environment. So I'm pleased with where we are today from a margin perspective. I think as we get an opportunity to get more of our nutritionals into our mix, which again, we've seen a very strong start in July, I think we'll see that margin per ton pick up a bit. And then on the seed side, our margin rates on seed are in line with our expectations as well. That was more of a volume story. But we're continuously working to try to get our margins up. You know, we talk about the second half of the year and we talk about controlling our rodents. And one aspect of that is working to continue to expand our margins across all of our crop input segments.

Your next question comes from Kristin Owen from Oppenheimer. Please go ahead.

Hi. Good morning. Thank you for the question. Somewhat of a double click or follow up on that prior one, speaking specifically to this the first half of the year. You've noted the more favorable environment in July. I'm just wondering if there's anything here in this bridge, whether it's crop protection products or maybe even on the expenses that that shifts around in the back half of the year. Anything that turns from a bad guy to a good guy to try to think about that bridge for the for the back half. Thank you.

Yeah, I certainly at the higher level. It's the things we've talked about, but I'll hand it over to Jeff for that double click.

Yeah, for the second half of the year, and I think I mentioned it just a minute ago, controlling our control will be at the top of our list. We also think again that we have an opportunity to convert more acres on on our foliar nutritionals, which. Which which we really like a lot. We like our portfolio as it relates to that. A heavy heavy focus on the expense side of things. I think through the first half we were able to take 6% out. We we're going to. We expect to continue with that effort in the in the second half of the year. And again, Ken mentioned Australia. We've got some, you know, we had a very tough half from a weather perspective there. We see improvements there. We think that's going to bring us some opportunities on the proprietary side to business as well as we go into second half of the year.

Your next question comes from Edelaine Rodriguez of Mizuho Securities. Please go ahead.

Thank you and good morning everyone. I mean, just quick question on products. Ken, so I mean, I think coming out I have heard somebody say like what is wrong with products now? As you know it, it's surprisingly like the most affordable nutrient lagging behind both phosphate and nitrogen. But seriously, do you prefer being in that position or do you want to close the price gap between products in the other nutrients? And related to that, I think like last week we saw a small decline in potash prices in Brazil. I mean, that's like a first drop in almost a year. Does that mean anything to you or you just think it's just a blip?

Yeah, and then thank you for the question. So, you know, I, we again, we're constructive on the potash market and we like when potash is affordable for growers and when it is, we see, you know, record potash demand and consumption. That's what's playing out today. And again, that meeting the supply side of the equation, that intersection clears the market at what has been kind of 10 year average historic level potash prices. Those are healthy prices for us. And again, we're constructive on that. So, you know, heading into the fall here and we've talked about North America, but globally, you know, whether it's Southeast Asia and palm plantations or whether it's step change in China, what we're seeing in, on the macro level in Brazil. And yeah, North American fall, an open fall application season in North America. Like our volumes are moving, our mines are producing, our unit cost of production is going to be below $60. And again, that's where we like to be. In Brazil, you know, they're getting ready to plant soybeans here in September. There's been a bit of a seasonal lull in Brazil. That's true. We've seen a bit of softening in the price, but we expect there's going to be a lot of volume moving again and going to ground as they plant soybeans in that part of the world. So overall, Elaine, I certainly appreciate the question, but no, we are constructive on where the potash market is today.

Your next question comes from Ariana Milin of CIBC Capital Markets. Please go ahead.

Good morning and thank you for taking my question. With relatively better pricing for ammonia over upgraded nitrogen products in North America, do you see the potential for a shift to greater ammonia use as a source of nitrogen in the fall?

Yeah, thanks for the question, Ariana. That's just no, but Chris, do you want to just explain that a bit?

Yeah, no, good morning, Ariana. Thanks for the question. As we look at that fall, it'll be dependent on how growers are thinking about what they're going to plant next year. And if they're going to put ammonia down in the fall, that would mean a commitment to planting corn. So we'll wait and see. I mean, sometimes these growers make this decision where they're on the combine and what they're thinking about for next year, but we don't see a material shift in terms of the nitrogen product going down this fall. We think that will be at about average levels. I would say that we are seeing low inventory levels of UAN right now, and we are thinking that there's going to be some strength in that price as we look towards the fall season.

Your next question comes from Matthew Dayo of Bank of America. Please go ahead.

Morning, yeah. I apologize if I missed this earlier, but seed sales obviously pretty weak through one agent retail, and maybe that's just cotton in the South or whatever. But as you think about, or can you provide a little clarity on price volumes there? And then, as we set up for next year, assuming more, if it is the South, right? If weather is more cooperative, do we get a, you expect to get that volume back pretty well, I guess? I don't know, I'll leave it there.

Yeah, no, Matt, thanks for the question. I think you've said it. We did see some crop mix shifts in that part of the world, but Jeff, do you want to just dive into that a little bit? Yeah, thanks Ken.

Yeah, the seed revenue is 100% around two factors. First, we saw significant prevent plant in our Southern region. Our Southern region is our largest share of seed in North America. And so when you have something like prevent plant, it can have a dramatic effect on seed revenue. So those acres actually did not get planted. I would expect 100% of that to return next year. That forecasting that we would have a spring not unlike what we had this last year, which in that area was one of the wettest springs in the last 150 years. We also saw crop mix changes, and that's primarily around cotton. And due to some of the economics around cotton and across the South, we saw a lot of cotton acres. If you're in Texas, a lot of cotton acres converted to sorghum or milo, which is much less significant from a revenue perspective. We'll have to see year over year what cotton commodity pricing does. I would anticipate in Texas, we would see some of those acres return, but it's way too early to predict that right now.

Your next question comes from David Simmons of BNP Paribas. Please go ahead.

Hi, good afternoon. Yeah, just come back on Jeff's question. If I look at the average selling price in the crop nutrient segment of retail, it's up 2% year on year, whilst into the third quarter, the post-lash NOLA benchmark, for example, is up 20% plus year on year. So is there a catch-up pricing benefit in the second half of retail?

That's if you want to take that. Yeah, and some of that's reflected from a standpoint. I've said this many times, with as many tons as we move to these markets, we have to layer in our purchasing. And so we would have, or at the tail end of the season, we would have been buying into a market that was much higher price from that standpoint. And that affects margins as well from that standpoint. We feel like we're well positioned going into the fall. We don't think we're overly aggressive from that standpoint. I'm gonna lead back to many of the things that were said here today. We talked a lot about having a really large corn crop. We also have a really large soybean crop, which removes a lot of nutrients as well. And so we do see some opportunities. In the back half of the year, we talked about it. If we get an open fall, then we see an opportunity to move about 5% more volume into that market. And we hope we can do it as well by expanding some margin.

Your next question comes from Lucas Beaumont of UBS Financial. Please go ahead.

Thank you, good morning. Just going back to Ardash. So I mean, you've mentioned that you've seen sort of some challenges in the market meeting the demand level this year from the suppliers perspective. So I think just looking to 2026, if we get another year of normal demand growth, where do you kind of see the supply coming from? And if you think the market's gonna struggle to meet that and you wanna kind of maybe flex up and take more than your 20% share, when would you kind of need to push the button on those staffing decisions you mentioned? Thanks.

Yeah, thanks for the question, Lucas. And yes, it continues to be the case that we've seen those FSU tons come back into the market. We've seen some new times coming out of Laos, although the rate of growth out of those, that part of the world has slowed. And we've seen, as we mentioned earlier, project delays that certainly are gonna impact next year and beyond. And so, strong demand meeting supply, we kind of call the market in balance at the moment or close to being in balance and heading into next year. We have a few other producers that can probably on the margins expand production a bit. And certainly we would be one of those as well, Lucas. And so, I would say with what we're intending for next year, which as I mentioned earlier, is a strategy to maintain market share, grow with the market as it grows, meet the needs of our customers who are growing at that rate as well and bring on people to produce accordingly. That's our plan. And again, we expect to be in a strong market next year, given the demand fundamentals and the fact that supply is right around that demand level will be right around that demand level. And certainly as project delays continue to persist.

Your next question comes from Ben Thurer of Barclays. Please go ahead.

Good morning and thank you very much for taking my question. I wanted to pull up real quick on capital allocation as we look into it. So you had a significant improvement in terms of free cash flow generation, whereas it's a year ago, but at the same time, it feels like there's a little bit of a slowdown on the share repurchase program. So just wanna understand like how you think about these purchases in regards to like just dividend versus investments and share repurchases. Thank you.

Yeah, and thank you for the question, Ben. No, no slowdown on share repurchases. We've been buying at about the sort of $45 million per month level. And I think for the balance of year, that's a good way to think about it. As the year has unfolded for us and certainly as we continue to be quite constructive on how it's unfolding, with respect to sort of the broader philosophy around capital allocation, dividend and share repurchases, I'll hand it over to Mark to provide more detail.

Yeah, thanks Ken. Good morning, Ben. Maybe just stepping back a bit, reiterate a couple of comments that both Ken and I have made this morning. I think first and foremost, continue to focus on generating increasing structural sources of cash for the business. So we continue to see strong operational performance and that was evident here in the first half for us. So growing underlying earnings across the entire business in line with our investor day targets. And we feel like we're making good progress on that. As Ken has also mentioned, and I have as well, continuing to look at a really rigorous approach to work in capital optimization and shedding assets in the portfolio that don't generate the types of returns that we want. And so over time, we think all of those things will grow cash. More specifically to your question on capital allocation, our priorities are consistent and they haven't really changed. So again, if you look at our CapEx profile of the year, two to 2.1 billion with four to 500 million of that, focused on a very narrow set of growth priorities that we continue to execute against. And more specifically with respect to return of capital, as Ken said, as the philosophy is around share repurchases and really over the past year has been rateable buybacks over time. And we want that to be something that is a staple in our capital allocation framework over time and through cycles. And as Ken mentioned, that roughly $45 million per month run rate is something that we see as being sustainable and balanced through the remainder of the year. You mentioned the dividend with respect to the dividend, the philosophy has also not changed there. We like the absolute level of the dividend from a cash outlay standpoint. And we believe that as we continue to repurchase the stock of the company, we'll be able to grow dividends per share over time, just as we have this year. And amongst all of that, we believe we can continue to strengthen the balance sheet. So it continues to be just a disciplined, focused and balanced approach on capital allocation.

Your next question comes from Richard Garza-Torrena of Wells Fargo, please go ahead.

Great, thank you. Maybe just wanted to touch on the cost progress you've made, almost $200 million in cost savings expected this year. Should we expect additional buckets? Do you see further upside potential in that target and are you thinking about additional cost savings in 26? Thanks.

Thank you for the question, Richard. Yes, we had set ourselves a $200 million cost reduction target by 2026. And it was really targeting SG&A. And thus far we would say we're gonna certainly achieve that in 2025, so ahead of schedule. And how about half of that coming out of our retail business and about half of it coming out of our corporate SG&A. Is there more to be done? The answer to that is also yes. And maybe I'll hand it over to Mark just to provide a little more color.

Sure, thanks Ken, good morning. So as Ken said, we're beginning to see those expense rationalization activities really show through our results. As we showed in our earnings presentation, if you look first half over first half, you can see over a hundred million or just over a hundred million in expense down versus last year in the first half. And so I think there's tangible evidence that the efforts that we've made are showing through. And as Ken said, that's really been focused about 50% in the retail business across the rationalization activities we've undertaken in Brazil, closures of underperforming locations in North America, regional consolidation of storefronts and optimization in Australia. And in our corporate functions, just continuing to be disciplined about simplifying and focusing the organization. And that's resulted in SG&A opportunities. So as we continue to move forward, as Ken said, we're quite bullish, there's gonna be more opportunities for us as we continue to explore opportunities and we'll have more to say on that in the future.

There are no further questions at this time. I will now turn the call back to Jeff Holtzman for closing remarks. Please go ahead.

Hey, thank you for joining us today. The investor relations team is available if you have any follow-up questions. Have a great day.