Ben Isaacson

Ben Isaacson inquired about Nutrien's expectations for its Brazil operations in 2026, specifically asking about potential upside scenarios, key swing factors, and how the company plans to improve upon the loss in 2024 and near break-even performance in 2025.

Answer

Ken Seitz, Nutrien's President and CEO, acknowledged the ongoing challenges in the Brazilian market but highlighted significant progress from their margin improvement plan, which included idling blenders, closing unproductive locations, rationalizing the workforce, and focusing on collections. These actions transitioned the business from a loss in 2024 to profitability in 2025, with modest improvement expected in 2026. Seitz stated that Nutrien continues to assess its presence in Brazil, particularly for seeds and retail, while identifying growth opportunities in proprietary products and Agron. He reaffirmed Nutrien's commitment as a major potash supplier to Brazil and indicated potential operational changes in 2026.

Ben Isaacson inquired about expectations for Nutrien's Brazil business in 2026, following a loss in 2024 and near break-even in 2025, asking about upside cases and swing factors.

Answer

Ken Seitz, President and CEO, noted that the Brazilian market remains challenged, but the margin improvement plan moved the business from a loss in 2024 to making a bit of money in 2025. He expects modest improvement in 2026 but indicated an ongoing assessment of Nutrien's presence, including seeds, proprietary products, and the retail front, to determine the optimal approach to the market.

Ben Isaacson inquired about Mark Thompson's initiatives as CFO over the past year and provided a check-in on the progress towards the 2026 targets set at the June 2024 Investor Day.

Answer

Mark Thompson, CFO, highlighted significant progress on strategic initiatives. He noted a projected 1.4 million tons of volume growth in upstream fertilizer, $300 million in retail EBITDA growth, achieving the $200 million cost reduction target a year ahead of schedule, and $900 million from non-core asset divestitures. He also mentioned CapEx reduction to $2-$2.1 billion and increased, ratable share repurchases, emphasizing a focus on structural free cash flow growth.

Ben Isaacson asked Mark Thompson, CFO, to reflect on his initiatives over the past year and provide an update on the progress towards the 2026 targets that were set in the summer of 2024.

Answer

Mark Thompson, CFO, detailed significant progress on 2026 targets, including an anticipated 1.4 million tons of upstream fertilizer volume growth and $300 million in retail EBITDA growth by 2025 compared to the 2023 baseline. He highlighted achieving the $200 million cost reduction target a year ahead of schedule, $900 million from non-core asset divestitures, CapEx reduction to $2-$2.1 billion, and a 42% increase in shareholder returns through dividends and ratable share repurchases of approximately $45 million per month. Ken Seitz, President and CEO, reinforced the focus on increasing structural free cash flow.

Ben Isaacson from Scotiabank asked about the potential risks to Nutrien's business segments in 2026 if crop prices remain low, questioning the argument that potash is 'affordable' when it can be a lower-priority input for farmers under economic pressure.

Answer

President & CEO Ken Seitz maintained a constructive outlook for 2026 across all nutrients. He argued that for potash, strong trend demand and supply project delays support the market. For nitrogen, he cited Chinese export limits and supply disruptions. For phosphate, he acknowledged elevated prices are being monitored. Overall, Seitz believes these supportive supply-side fundamentals will persist into 2026, even with lower crop prices.

Ben Isaacson asked when Nutrien might start increasing potash production volumes in response to rising prices, noting that Canpotex is sold out for Q2 and a peer has already nudged up its volume guidance.

Answer

President and CEO Kenneth Seitz stated that while prices are not too low to respond, it is still early in the year. He confirmed the company is maintaining its current guidance range but acknowledged that market conditions could push them towards the higher end of that range as the year progresses. Seitz emphasized that Nutrien has the operational flexibility with its six mines to surge capacity to meet customer demand if the market calls for it.

Ben Isaacson inquired about the potential risks and impacts of tariffs on Nutrien's nitrogen, potash, and retail segments, and what factors the company is considering.

Answer

CEO Kenneth Seitz responded, focusing primarily on potash, which he identified as the most significant area of concern. He stated that Nutrien believes the U.S. farmer would ultimately bear the cost of any tariffs on Canadian potash, given Canada supplies over 80% of the U.S. market. Seitz noted that Nutrien has mechanisms in place to manage the collection of tariffs and has been pre-emptively filling its U.S. distribution channels to ensure supply continuity for the spring season.

Ben Isaacson posed a long-term strategic question about Brazil, highlighting approximately $1 billion in write-downs and FX issues against a business generating modest EBITDA, and asked about the ultimate goal and risk profile.

Answer

CEO Kenneth Seitz acknowledged the challenges and stated that a complete commercial review of the Brazil business is underway. He framed Nutrien's presence as a strategic entry point into a major agricultural market for potash and proprietary products. He confirmed that for the balance of the business, a strategic review is in progress to determine the best path forward.

Ben Isaacson asked for qualitative insights into the balance of margins between SPF (Spruce-Pine-Fir) and SYP (Southern Yellow Pine) in Q4, and how sustainable the reported cost reductions (lower SPF log costs, SYP manufacturing costs, and OSB labor costs) are going forward.

Answer

President and CEO Sean McLaren noted that West Fraser does not specifically break out segment margins but observed a closing spread between SPF and SYP pricing. He emphasized that the cost structure improvements are a result of multi-year efforts in capacity adjustment, asset modernization, and flexible operating schedules, indicating their sustainability.

Ben Isaacson asked for qualitative color on the balance of margins between SPF and SYP lumber in Q4 2025 and the current outlook. He also inquired about the sustainability of lower log costs for SPF, lower manufacturing costs for SYP, and lower labor costs for OSB.

Answer

President and CEO Sean McLaren noted that West Fraser does not specifically call out different segment margins but observed the spread between SPF and SYP pricing closing. He stated that both businesses are positioned to operate through the bottom of the cycle, actively reducing costs. McLaren also indicated that the observed cost structure trends are a result of several years of work, including capacity adjustments, asset modernization, and flexible operating schedules, implying their sustainability.

Ben Isaacson inquired about the progress of federal government support and conversations regarding the lumber industry, given the continued challenging macro backdrop. He also asked about West Fraser's customers' inventory levels in the U.S. channel for mid-October relative to normal conditions, and their reorder patterns.

Answer

President and CEO Sean McLaren mentioned that the British Columbia Premier rolled out some support measures for the industry in early August, including funding for market exploration, which West Fraser supports. SVP of Sales and Marketing Matt Tobin stated that West Fraser does not have visibility into customer inventory levels but noted that West Fraser's own SYP and SPF inventories are intentionally lean. Sean McLaren added that customers are buying as needed, and products are readily available.

Ben Isaacson inquired about the progress of federal government support conversations for the lumber industry and sought insights into U.S. channel inventory levels for lumber among West Fraser's customers relative to normal conditions in mid-October.

Answer

Sean McLaren, President and CEO, mentioned British Columbia's Premier rolling out support measures in early August, including funding for market exploration, which West Fraser supports. Matt Tobin, SVP of Sales and Marketing, stated West Fraser lacks visibility into customer inventory levels but confirmed West Fraser's own SYP and SPF inventories are intentionally lean. Sean McLaren, President and CEO, added that customers are buying as needed due to readily available products.

Ben Isaacson of Scotiabank inquired about the substitutability and price elasticity between SPF and SYP lumber, the company's view on a potential lumber export quota, and whether the North American lumber and OSB segments are currently cash flow positive.

Answer

President and CEO Sean McLaren, along with SVP of Sales and Marketing Matt Tobin, explained that lumber price spreads are demand-driven, narrowing in high demand and widening in low demand, with customer preference being a key factor. Regarding trade, McLaren stated all options are on the table in government discussions and West Fraser is positioned to adapt. CFO Chris Virostek addressed the cash flow question by highlighting the company's diversified portfolio and cost discipline, which create resilience to drive cash flow even in difficult markets, without confirming segment-specific profitability.

Ben Isaacson of Scotiabank inquired about the substitutability between SPF and SYP lumber, potential shifts in price elasticity, the company's view on a possible lumber export quota, and whether the North American lumber and OSB businesses are currently cash flow positive.

Answer

CEO Sean McLaren and SVP of Sales and Marketing Matt Tobin explained that price spreads between SPF and SYP are driven by supply, demand, and customer preference, widening in low-demand periods. Regarding a potential quota, McLaren stated that all options are on the table in broader trade discussions and that West Fraser is prepared for any outcome. CFO Chris Virostek declined to comment on segment-specific cash flow but emphasized the company's resilience due to its diversified portfolio, cost optimization, and strong balance sheet.

Ben Isaacson of Scotiabank inquired about the substitutability and price elasticity between SPF and SYP lumber, the company's view on a potential lumber export quota, and whether the North American lumber and OSB businesses are currently cash flow positive.

Answer

CEO Sean McLaren and SVP of Sales and Marketing Matt Tobin explained that price spreads between SPF and SYP are driven by supply, demand, and customer preference, widening in low-demand periods. Regarding trade, McLaren stated all options are on the table for a broader Canada-U.S. trade deal and West Fraser is prepared for any outcome. CFO Chris Virostek declined to comment on segment-specific cash flow but emphasized the company's resilience due to its diversified portfolio and cost discipline.

Ben Isaacson of Scotiabank inquired about the substitutability and price elasticity between SPF and SYP lumber, the company's view on potential lumber export quotas, and whether the North American lumber and OSB segments are currently cash flow positive.

Answer

President & CEO Sean McLaren, along with SVP of Sales & Marketing Matt Tobin, explained that price spreads between SPF and SYP widen in low-demand periods based on specific supply-demand dynamics and customer preference. Regarding trade, McLaren noted all options are on the table in Canada-US discussions and West Fraser is prepared for any outcome. SVP & CFO Chris Virostek declined to comment on segment-level cash flow but highlighted the company's overall resilience due to product diversity, portfolio optimization, and counter-cyclical investments.

Ben Isaacson of Scotiabank inquired about the substitutability between SPF and SYP lumber, shifts in price elasticity, views on a potential lumber export quota, and whether the North American lumber and OSB businesses are currently cash flow positive.

Answer

President and CEO Sean McLaren, along with SVP of Sales and Marketing Matt Tobin, explained that lumber price spreads are driven by supply, demand, and customer preference. Regarding trade, McLaren stated that all options are on the table for a broader Canada-U.S. agreement and that West Fraser is prepared for any outcome. CFO Chris Virostek declined to comment on segment-specific cash flow but emphasized the company's resilience due to its diversified portfolio and cost management.

Ben Isaacson of Scotiabank inquired about the substitutability between SPF and SYP lumber, the company's view on a potential lumber export quota, and whether the North American lumber and OSB businesses are currently cash flow positive.

Answer

President and CEO Sean McLaren, along with SVP of Sales and Marketing Matt Tobin, explained that price spreads between SPF and SYP are driven by supply, demand, and customer preference, widening in soft markets. Regarding trade, Mr. McLaren stated that all options are on the table in discussions with the U.S. and that West Fraser is prepared to adapt. CFO Chris Virostek declined to comment on segment-level cash flow but emphasized the company's overall resilience and ability to generate cash through cycles due to its diversified portfolio and cost discipline.

Ben Isaacson from Scotiabank inquired about market preparations for potential tariffs, such as stockpiling, and how West Fraser's scenario planning weighs the benefits to its U.S. portfolio against the risks to its Canadian operations.

Answer

President and CEO Sean McLaren, along with SVP of Sales and Marketing Matt Tobin, stated that they see normal inventory levels and buying patterns, noting that uncertainty generally doesn't drive purchasing. Regarding portfolio impact, McLaren explained that while it's difficult to predict specifics, the company has experience with duties and is well-positioned to react in both Canada and the U.S. to meet customer needs, leveraging its operational flexibility.

Ben Isaacson questioned the state of the order books for SYP, SPF, and OSB, whether industry supply curtailments have been sufficient to balance the market, and the impact of pulp log demand on OSB margins.

Answer

President and CEO Sean McLaren and SVP of Sales and Marketing Matt Tobin described the lumber order book as 'normal' for this time of year. McLaren stated that West Fraser's own 800 million board feet of curtailments have brought its supply in balance with current demand, and they are positioned to adjust as the market changes. He also explained that while there are localized, short-term pressures on pulpwood costs for OSB, the long-term trend is favorable due to increased SYP production and recent pulp mill closures in the U.S. South.

Ben Isaacson of Scotiabank inquired about the long-term strategy for the Specialty Plant Nutrition (SPN) business, the status of the Mount Holland lithium expansion, and the market dynamics for iodine, including what might cause prices to fall.

Answer

Juan Pablo Bellolio, VP of Plant Nutrition, stated the SPN strategy is to grow by adding products and services to maintain brand strength and pricing. Mark Fones, CEO of the International Lithium Division, confirmed the Mount Holland expansion decision is deferred from 2025 pending further review. Pablo Altimiras, CEO of the Iodine Division, explained that iodine demand remains strong and is currently supply-constrained, with no significant price changes expected next year despite some new capacity coming online.

Ben Isaacson of Scotiabank inquired about the long-term strategic goals for the Specialty Plant Nutrition (SPN) business, the company's current stance on the Mount Holland expansion, and the market factors that could potentially disrupt the current high prices for iodine.

Answer

Juan Pablo Bellolio, VP of Plant Nutrition, stated the SPN strategy is to grow by adding products and services to maintain brand strength and pricing. Mark Fones, CEO of the International Lithium division, confirmed the Mount Holland expansion decision is deferred beyond 2025 and will be reviewed next year. Pablo Altimiras, CEO of the Iodine division, explained that iodine demand growth is supply-constrained and that despite some new capacity expected next year, strong fundamentals should maintain stable market dynamics.

Ben Isaacson of Scotiabank inquired about SQM's Q2 lithium operating cash flow projections, changes to its capital structure strategy amid lower lithium prices, and the political 'noise' surrounding the Codelco joint venture in Chile.

Answer

VP of Services & Finance, Gerardo Illanes, confirmed that SQM's lithium operations are expected to remain significantly profitable and far from breakeven in Q2, citing the company's low-cost position. He also stated that the company's strong balance sheet and cash generation from other business lines mean its capital structure strategy remains unchanged and is not a constraint on growth projects. CEO Ricardo Ramos characterized the Codelco JV discussions as political 'noise' typical of an election year, reaffirming that the deal is beneficial for all parties and is proceeding as planned toward a final execution in the second half of the year.

Ben Isaacson of Scotiabank inquired about the lithium segment's Q2 cash flow outlook, potential changes to the capital structure amid lower lithium prices, and the political debate surrounding the Codelco joint venture in Chile.

Answer

Gerardo Illanes, VP of Services & Finance, confirmed that SQM's lithium operations are far from breakeven and will remain significantly cash-positive. He also noted the company's strong balance sheet and diverse business lines provide ample capacity to fund growth without constraint. CEO Ricardo Ramos characterized the Codelco JV debate as political "noise" typical of an election year, reaffirming that the deal is progressing as planned for execution in H2 2025.

Ben Isaacson of Scotiabank inquired about the negative stock price reaction, asking for clarification on what fundamental aspects of the outlook have changed for better or worse since the company's Investor Day.

Answer

Bruce Bodine, CEO, President & Director, acknowledged the market's concern over Q2's extraordinary expenses and lower-than-guided phosphate production volumes due to maintenance delays at New Wales. However, he stressed that these issues are transitory and the underlying performance drivers, including potash costs, Biosciences progress, and Brazil operations, are trending positively and align with Investor Day targets, positioning the company for a strong second half.

Ben Isaacson asked about the growth trajectory and margins for Mosaic Biosciences on its path to $200 million in EBITDA, and the long-term strategic plan for the business.

Answer

EVP, Commercial Jenny Wang detailed that growth comes from both high-margin (60%) proprietary products and lower-margin (30-40%) licensed products. President and CEO Bruce Bodine added that they view the business as complementary and are considering how to achieve a sum-of-the-parts valuation as it scales.

Ben Isaacson questioned the potential 'trapped value' in Methanex's idled plants and asked about the market impact of U.S. secondary sanctions on Iranian methanol producers.

Answer

President, CEO & Director Rich Sumner explained that the value of idled assets is primarily option value tied to future feedstock availability, not a significant monetizable sum today. Regarding sanctions, he believes Iran will continue to get its product to market via its 'shadow fleet,' with the main impact being a potential limitation on which customers will accept the product.

Ben Isaacson asked about Methanex's capital allocation strategy, questioning the Board's flexibility to pivot from the OCI acquisition to share buybacks given the change in stock price and market conditions. He also inquired about the impact of a recent port explosion in Iran and the enforcement of sanctions on the country's methanol flows.

Answer

Executive Rich Sumner responded that the company's primary focus is deleveraging the balance sheet following the OCI acquisition and that share repurchases are not currently being considered. Regarding Iran, he stated the port explosion is not believed to be impacting methanol, and that while Iranian operating rates were very low in Q1 due to gas constraints, they are expected to increase in the coming months.

Ben Isaacson asked for details on the New Zealand production outlook, questioning if the new guidance was a step down and what the long-term risk of a complete shutdown is. He also inquired if the post-OCI acquisition sales mix would lead to a higher average selling price (ASP) and margin.

Answer

President and CEO Rich Sumner clarified the New Zealand guidance reflects a one-plant operation at less than full rates, with long-term viability dependent on future upstream investment. Regarding the OCI deal, he confirmed the regional mix shift would likely result in a higher ASP due to more Atlantic-based sales, but this was factored into forecasts and would not necessarily translate to higher margins as it replaces lower-margin purchased product.

Ben Isaacson of Scotiabank inquired about the strategic sense of idling a plant in New Zealand due to consistent production disappointments and asked about the competitive constraints of the new Entropy carbon capture deal.

Answer

President and CEO Rich Sumner explained that Methanex is currently operating one plant in New Zealand and will assess its long-term strategy in the coming months. Regarding the Entropy project, he noted that its replicability is limited by the need for supportive regulatory frameworks and available sequestration sites, making it a unique opportunity.

Ben Isaacson asked for a detailed outlook on the cash cost trajectory over the next four to six quarters, considering deferred maintenance, cost optimization efforts, and the future impact of DLE technology. He also inquired about the specific benefits of easing FX restrictions in Argentina, the nature of a $4.5 million compensation expense, and the current plant operating rate.

Answer

Sam Pigott, President and CEO, confirmed a 5-10% cost improvement is expected this year and that long-term costs should meet or beat the $6,500/tonne feasibility study target, with DLE offering further reductions. He also affirmed that production is on track with guidance. Alex Shulga, VP and CFO, explained that easing FX restrictions will allow for a freer flow of capital. He clarified the compensation expense was primarily one-time, stock-based compensation related to bonuses and contract changes, and is not expected to recur at that level.

An analyst on behalf of Ben Isaacson asked for details on the shape of the amended leverage covenant limits through 2026, particularly the increase to 5.75x in mid-2025.

Answer

An executive, likely CFO Neal Sheorey, explained that the shape of the covenant waiver was designed to align with the trailing 12-month EBITDA calculation. The structure anticipates the look-back effect of EBITDA generated throughout 2024, ensuring the company maintains flexibility as it navigates the current market.

Asked for details on recent weather-related power disruptions and the assumptions, particularly pricing, underlying the company's guidance for positive cash flow from operations in 2024.

Answer

The power disruptions were caused by an unusual number of electrical storms, and mitigation efforts like improving redundancies are underway. The positive cash flow forecast is based on recent, year-to-date average lithium prices.