Agrium Earnings Call Insights: Viterra Agri-Products Acquisitions, Retail Sales

On Wednesday, Agrium Inc (NYSE:AGU) reported its first quarter earnings and discussed the following topics in its earnings conference call. Here’s what the C-suite revealed.

Viterra Agri-Products Acquisitions

Joel Jackson – BMO Capital Markets: I had a couple of questions; maybe we could start with some of the acquisitions that (indiscernible) you picked up from the Viterra Agri-Products business, and what is your outlook here when you think of the sales mix and the margins for the different products; chemicals, fertilizers, seed, the storage you’re picking up versus your current business and how we should be thinking about that?

Michael M. Wilson – President and CEO: Well, we haven’t obviously closed the deal yet and won’t until the July, August period. So, we haven’t got into taking a hard look at what their margins are. We wouldn’t expect them to be significantly different than what we’ve got today in the rest of our Retail business.

Joel Jackson – BMO Capital Markets: Okay, and are you able to give any more guidance on your gas hedge; how much gas hedged in Q2 and maybe some commentary on the second half of the year?

Michael M. Wilson – President and CEO: I’ll get Ron Wilkinson to comment on that.

Ron A. Wilkinson – SVP and President, Wholesale Business Unit: Hi, Joel. It’s Ron Wilkinson. For the second quarter, we’re about 85% hedged moving to 90% as I speak and we get more committed sales. For the second half, we have virtually nothing hedged at this point. We’ll start to hedge as we make forward sales for the second half.

Joel Jackson – BMO Capital Markets: Finally, I know you’ve given some guidance on CapEx and the Vanscoy expansion. Before you’ve given guidance of about $1.2 billion on Vanscoy left to be spent; I think $700 million to $800 million this year. Can you update how much CapEx you expect to spend this year including on Vanscoy and looking to 2013, how much left on Vanscoy and what the maintenance CapEx could look like maybe factoring in bit of the Viterra assets as well?

Michael M. Wilson – President and CEO: Well it’s hard to factor in Viterra at this point again because we need to get in and take a hard look at their assets. On a sustaining capital basis we’re in that $450 million to $500 million range. On the Vanscoy expansion again it depends on the timing of some of the engineering and contracts but of the $1.5 billion we’re looking at roughly 40% this year.

Retail Sales

Christopher Perrella – Bank of America Merrill Lynch: This is (Chris Perrella) calling in for Kevin. Could you characterize how much of the nitrogen volume in your opinion and the retail sales have been pulled forward into the first quarter?

Michael M. Wilson – President and CEO: I’ll get Richard Gearheard to talk about the Retail aspect and how much he thinks got pulled forward. I think Ron can then comment on the Wholesale side.

Richard L. Gearheard – SVP and President, Retail Business Unit: On the Retail, we’re, as we said, we like to look at it as the first half and the first half we would expect to be 8% to 10% ahead of a year ago on fertilizer sales volume. That we’ll be pulling a little bit of the third quarter into the second quarter as well as losing some of the second quarter into the first.

Ron A. Wilkinson – SVP and President, Wholesale Business Unit: It’s Ron Wilkinson. On the Wholesale side the impact was primarily ammonia where our sales were up something like 70,000 tonnes year-over-year.

Christopher Perrella – Bank of America Merrill Lynch: And how are Dyna-Gro sales tracking in the first quarter year-over-year?

Richard L. Gearheard – SVP and President, Retail Business Unit: Actually oilseed sales were up. For the year Dyna-Gro included couple things there. One was obviously the season. There was a concerned shortage of the higher quality corn seed, so oilseed was up including Dyna-Gro.