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Analyst Actions: Credit Suisse On Agrium. Inc. - "Finding Value in Distribution Models"

Credit Suise said: "After fielding several questions from clients in regards to recent shareholder debates, we want to quickly re-visit our views and focus on what we believe are the key core areas of opportunity to further improve Retail's performance."

Core View on Retail Potential Intact, Guidance Likely Conservative: "We continue to believe that there remains a substantial opportunity to improve margins in the retail segment driven by (i.) further fixed asset optimization driving a greater degree of operating leverage, (ii.) the Landmark acquisition becoming less of a headwind to results, and (iii.) continued strength in private label crop protection sales. Based on our analysis, these core themes should result in ~200bps operating margin improvement over the next two years, leading us to believe company guidance is conservative."

The Comparable Conundrum - Distribution 101: "While there are no "direct" comps on which to measure Retail's appropriate attributable value, this is true for almost every single publicly traded distributor. Whether analyzing an MRO, metal working or agricultural distributor, as with any investable sector adjustments are necessary to accommodate differences in growth strategy, earnings/working capital cyclicality levels and market share gain opportunities. We believe the market continues to underappreciate the retail segment's value contribution, a theme which should change due to a higher degree of visible operating leverage and less integration risk."

What The Farming Community Cares About in Distribution: "Based on our field work, farmers utilize distributors due to (i.) product availability, (ii.) salesperson knowledge and relationship, and (iii.) pricing; value propositions which are representative of numerous distribution models and end markets."

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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