dollars, except Dollars Tonnes (thousands) Average per Tonne
---------------------- ------------------------- --------------------
as otherwise
noted) 2021 2020 % Change 2021 2020 % Change 2021 2020 % Change
------------------ ----- ----- -------- ----- ----- ----------- ---- ---- --------
Manufactured
product
Net sales
Fertilizer 731 491 49 1,331 1,582 (16) 549 310 77
Industrial
and feed 365 304 20 577 551 5 633 552 15
------------------ ----- ----- -------- ----- ----- ----------- ---- ---- --------
1,096 795 38 1,908 2,133 (11) 575 373 54
Cost of goods
sold 853 779 9 448 366 22
------------------ ----- ----- -------- ---- ---- --------
Gross margin -
manufactured 243 16 n/m 127 7 n/m
Gross margin - Depreciation and
other (1) 15 4 275 amortization 59 84 (30)
------------------ ----- ----- -------- ------------------------- ---- ---- --------
Gross margin - Gross margin excluding
total 258 20 n/m depreciation
and amortization -
Expenses 26 799 (97) manufactured 186 91 104
------------------ ----- ----- -------- ------------------------- ---- ---- --------
EBIT 232 (779) n/m
Depreciation and
amortization 112 179 (37)
------------------ ----- ----- --------
EBITDA 344 (600) n/m
Adjustments (2) - 769 (100)
------------------ ----- ----- --------
Adjusted EBITDA 344 169 104
------------------ ----- ----- -------- ----- ----- ----------- ---- ---- --------
1 Includes other phosphate and purchased products and is comprised of net sales of $140
million (2020 -- $87 million) less cost of goods sold of $125 million (2020 -- $83
million).
2 See Note 2 to the interim financial statements.
-- Adjusted EBITDA increased in the third quarter and first nine months of
2021 due to higher net realized selling prices which more than offset
higher raw material costs and lower sales volumes.
-- Sales volumes were lower in the third quarter of 2021 due to the timing
of sales and a greater proportion of certain fertilizer and industrial
products with a higher P2O5 content. Sales volumes in the first nine
months of 2021 were also impacted by lower inventory volumes at the
beginning of 2021 compared to the same period in 2020.
-- Net realized selling price increased in the third quarter and first nine
months of 2021 as a result of higher fertilizer benchmark prices driven
by robust global phosphate demand, tight inventories and higher global
raw material costs. Industrial and feed prices also increased in the
third quarter and first nine months of 2021, but to a lesser extent than
fertilizer, due to a lag in price realizations relative to spot prices.
-- Cost of goods sold per tonne increased in the third quarter and first
nine months of 2021 due to significantly higher raw material input costs
and a favorable non-cash inventory adjustment in the third quarter of
2020, partially offset by lower depreciation and amortization. Results
for the first nine months of 2020 were also impacted by a $46 million
favorable change in estimate related to an asset retirement obligation
recorded in the second quarter of 2020.
Corporate and Others
(millions of US
dollars, except Three Months Ended Nine Months Ended September
as otherwise September 30 30
--------------------------- -----------------------------
noted) 2021 2020 % Change 2021 2020 % Change
---------------- ------- ------- --------- -------- -------- ---------
Sales (1) - 23 (100) - 70 (100)
Cost of goods
sold - 20 (100) - 63 (100)
---------------- ------- ------- --------- -------- -------- ---------
Gross margin - 3 (100) - 7 (100)
Selling expenses (9) (4) 125 (24) (17) 41
General and
administrative
expenses 58 66 (12) 182 191 (5)
Share-based
compensation
expense 64 29 121 125 9 n/m
Impairment of
assets - 5 (100) - 5 (100)
Other expenses 30 67 (55) 141 154 (8)
---------------- ------- ------- --------- -------- -------- ---------
EBIT (143) (160) (11) (424) (335) 27
Depreciation and
amortization 12 15 (20) 34 41 (17)
---------------- ------- ------- --------- -------- -------- ---------
EBITDA (131) (145) (10) (390) (294) 33
Adjustments (2) 89 74 20 232 92 152
---------------- ------- ------- --------- -------- -------- ---------
Adjusted EBITDA (42) (71) (41) (158) (202) (22)
---------------- ------- ------- --------- -------- -------- ---------
1 Primarily relates to our non-core Canadian business that was sold in 2020.
2 See Note 2 to the interim financial statements.
-- Share-based compensation expense was higher in the third quarter and
first nine months of 2021 compared to the same periods in 2020 due to an
increase in our share price. We also had a higher number of share-based
awards that vested in 2021.
-- Other expenses were lower in the third quarter and first nine months of
2021 compared to the same periods in 2020 due to lower information
technology project related costs and lower foreign exchange losses. This
was partially offset by additional cloud computing related expenses
recognized in the first nine months of 2021 from our change in accounting
policy (refer to Note 3 to the interim financial statements).
Eliminations
Eliminations of gross margin between operating segments in the third quarter of 2021 were $(82) million compared to $(12) million for the third quarter of 2020 and $(90) million in the first nine months of 2021 compared to a $15 million gross margin recovery for the same period in 2020. Eliminations increased due to higher margin inventories held by our Retail segment. Eliminations are not part of the Corporate and Others segment.
Finance Costs, Income Tax Expense (Recovery) and Other Comprehensive (Loss) Income
(millions of US
dollars, except Three Months Ended September Nine Months Ended September
as otherwise 30 30
---------------------------- ----------------------------
noted) 2021 2020 % Change 2021 2020 % Change
---------------- -------- ------- --------- -------- ------- ---------
Finance costs 122 129 (5) 367 401 (8)
Income tax
expense
(recovery) 209 (264) n/m 615 (45) n/m
Other
comprehensive
(loss) income (79) 71 n/m 6 (86) n/m
---------------- -------- ------- --------- -------- ------- ---------
-- Finance costs in the third quarter and first nine months of 2021 were
lower compared to the same periods in 2020 due to lower interest rates
and a lower short-term debt balance, more than offsetting a higher
long-term debt balance resulting from the $1.5 billion in notes issued in
the second quarter of 2020.
-- Income tax expense in the third quarter and first nine months of 2021 was
higher as a result of higher earnings before income taxes compared to the
same periods in 2020. Income tax recoveries were recorded in 2020 due to
an impairment of assets and discrete tax recoveries related to US
legislative changes.
-- Other comprehensive (loss) income is primarily driven by changes in the
currency translation of our foreign operations and our investment in
Sinofert Holdings Ltd. ("Sinofert"). The Australian dollar depreciated as
at September 30, 2021 relative to June 30, 2021 and December 31, 2020
levels which led to translation losses in the third quarter and first
nine months of 2021. This was partially offset by an increase in the fair
value of our investment in Sinofert.
Liquidity and Capital Resources
Sources and Uses of Liquidity
We continued to manage our capital in accordance with our capital allocation strategy. We believe that our internally generated cash flow, supplemented by available borrowings under our existing financing sources, if necessary, will be sufficient to meet our anticipated capital expenditures and other cash requirements for the foreseeable future. Refer to the "Capital Structure and Management" section for details on our existing long-term debt and credit facilities.