Aron Ceccarelli • Berenberg

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Management clarified that the strategy is complementary, not contradictory, as growth is focused on larger, more credit-worthy customers in expanding agricultural regions. Luciano Pires, EVP & CFO, outlined a long-term earnings potential path toward $1 billion in EBITDA for the segment, driven by distribution and production margins, co-products, and growth in Biosciences.

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EVP Bert Frost stated that after decades of observation and reviewing university studies, these biological products have not performed as advertised and their results are questionable and variable. CEO W. Anthony Will added that he sees these technologies as potential yield enhancers for growers, rather than as a replacement for traditional nitrogen, as the value of increased yield outweighs savings from reduced nitrogen application.

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CEO W. Will clarified that the company evaluated two different technologies. The initial concept was a smaller, conventional SMR plant. The company has since pivoted to a larger, 1.4 million-ton ATR plant, and both JERA and Mitsui are potential partners in this new, more advanced project. The SMR plant is no longer under active consideration.

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Chairman & CEO Timothy Knavish explained the Architectural guidance was lowered because the expected recovery momentum in Europe did not materialize in Q2, prompting a more cautious outlook. CFO Vince Morales noted the revision for the Industrial segment was a 'very modest decrement,' which he described as 'more rounding,' primarily reflecting a carry-forward of trends observed in China during Q2.

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CEO Timothy Knavish explained the Architectural guidance was lowered because European momentum stalled; the new forecast prudently assumes no market recovery. CFO Vince Morales stated the Industrial guidance change was a very modest decrement, essentially a "rounding" adjustment to carry forward the softness observed in China during Q2.

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Chairman and CEO Timothy Knavish explained that the business is facing tougher comparisons after six consecutive quarters of volume growth, and the flat Q4 outlook is a comp issue, not a sign of weakness. He remains bullish on the segment due to infrastructure, LNG, and near-shoring trends. In Marine specifically, he highlighted strong performance in the aftermarket, driven by differentiated technologies like Sigmaglide.

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Chair, President & CEO Heidi Petz cited the team's disciplined focus on new business wins and conversions as the source of confidence in the guidance. CFO Al Mestyshin clarified that the Q2 margin decline was primarily driven by factors like FX losses and a non-repeating prior-year asset sale gain, rather than just sales support costs.

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CEO Heidi Petz expressed confidence based on the team's focus on new business wins and conversions. CFO Allen Mistysyn clarified the margin decline was driven by several factors beyond operations, including a prior-year gain on an asset sale that did not repeat, higher non-operating expenses, and negative foreign currency transaction losses.

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Executive Allen Mistysyn indicated that volume improvement will be driven by continued momentum in the residential repaint and Protective & Marine segments. He added that he does not expect the commercial and property maintenance segments to worsen, so growth in the stronger areas will more effectively offset the weaker ones. New residential is expected to 'just plod along.'

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SVP & CFO Allen Mistysyn stated he would not make a blanket statement that new accounts are lower margin, as many can be moved to higher price points once they experience the company's full service ecosystem. CEO Heidi Petz added that they often engage new contractors early and successfully sell them on higher-value, more efficient products.

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CEO Kenneth Seitz explained that the guidance range reflects different scenarios. The high end assumes strong demand fundamentals continue, driven by good planting seasons and continued strength in markets like Brazil. The low end of the range, however, is primarily a supply-side consideration. Seitz stated that significant maintenance announcements and operational challenges in key global producing regions could limit the availability of supply, which would constrain global shipments despite strong underlying demand.

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Mark Thompson, incoming CFO, stated that incremental 2024 supply has come from the FSU, Canada, and Laos, as expected. He noted that Laos producers continue to face operational challenges, including water inflow issues, which have hindered production. While Nutrien anticipates about 1 million tonnes of incremental supply from Laos over the next 2-3 years, larger expansions have been delayed, keeping the market relatively balanced.

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