CF Industries Holdings, Inc. Reports First Half 2023 Net Earnings of $1.09 Billion, Adjusted EBITDA of $1.72 Billion
Strong Operational Performance, Robust Demand Underpin Solid Results
Second Half Demand Driven by
Highlights
-
First half 2023 net earnings of
(1), or$1.09 billion per diluted share, EBITDA(2) of$5.55 , and adjusted EBITDA(2) of$1.78 billion $1.72 billion -
Second quarter 2023 net earnings of
, or$527 million per diluted share, EBITDA of$2.70 , and adjusted EBITDA of$855 million $857 million -
Trailing twelve months net cash from operating activities of
and free cash flow(3) of$3.23 billion $2.12 billion -
Repurchased 2 million shares for
during the second quarter of 2023$130 million
“The CF Industries team delivered strong results in the first half of 2023, as we ran our plants well and navigated this year’s just-in-time buying pattern,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “We believe North American nitrogen channel inventories were drawn down significantly during the spring application season, setting up a positive demand dynamic in the second half of 2023.
“Longer term, forward global energy curves continue to suggest attractive margin opportunities for our cost-advantaged network well into the foreseeable future. As a result, we expect to continue to drive strong cash generation and create long-term shareholder value through disciplined investments in growth opportunities and returning substantial capital to shareholders.”
Nitrogen Market Outlook
Global nitrogen prices stabilized during the latter part of the second quarter of 2023 as robust demand for the spring application season emerged in
Longer-term, management expects the global nitrogen supply-demand balance will remain positive, underpinned by resilient agriculture-led demand and forward energy curves that indicate a steep cost curve. In the near-term, global supply and demand dynamics will be driven largely by these key regions:
-
North America : The outlook for farm profitability inNorth America is strong for all major crops planted in the 2023 spring application season, helping drive significant increases in corn and wheat plantings in theU.S. Management believes that the North American inventory position at the end of the second quarter for all nitrogen products was below average due to lower import levels, higher export volumes and increased planted corn and wheat acreage compared to the prior year.
-
India : Higher domestic urea production and higher stocks of urea compared to the year before limited tender activity throughout the first half of 2023. Due to the lower import volumes to date and the government’s stated intention to maintain high urea volumes in stock, management expects thatIndia will tender for urea frequently in the second half of the year.
-
Brazil : Imports of urea toBrazil in the first half of 2023 were approximately9% lower than the same period the year before. However, the Company expects urea consumption inBrazil in 2023 to remain strong, supported by higher corn planted acres and robust farm incomes, with potential for higher import volumes in the second half of 2023 as favorable weather conditions could encourage demand against a backdrop of low inventories.
-
Europe : Approximately25% of ammonia,20% of urea and35% of UAN capacity were reported in shutdown/curtailment inEurope as of June 2023. Management believes that production economics inEurope will remain challenging as declining global nitrogen prices continue to make it difficult for European producers to compete with imports despite the decline in natural gas prices in the region. The Company does not expect full ammonia capacity production rates to return in the region during the year, with a corresponding higher-than-normal level of nitrogen imports to the region, with some facilities continuing to favor importing ammonia in order to manufacture upgraded products.
-
China : Urea exports fromChina in the first half of 2023 were approximately 1 million metric tons due to government measures to limit urea exports and domestic prices that have exceeded international values. Management continues to project urea exports fromChina will be in a range of 2-3 million metric tons in 2023 under current measures with exports returning to a range of 3-5 million metric tons on an annual basis if government measures limiting exports are loosened.
-
Russia : Exports of ammonia fromRussia continue to remain lower compared to prior years due to geopolitical disruptions arising from Russia’s invasion ofUkraine and the resulting closure of the ammonia pipeline fromRussia to the port ofOdessa inUkraine . Exports of other nitrogen products fromRussia are at pre-war levels, with product pushed to countries willing to purchase Russian fertilizer, includingBrazil andthe United States .
Energy differentials between North American producers and marginal producers in
Operations Overview
The Company continues to operate safely and efficiently across its network. As of June 30, 2023, the 12-month rolling average recordable incident rate was 0.54 incidents per 200,000 work hours.
Gross ammonia production for the first half and second quarter of 2023 was approximately 4.7 million and 2.4 million tons, respectively. The Company expects that gross ammonia production for 2023 will be in a range of 9.0-9.5 million tons as CF Fertilisers
Financial Results Overview
First Half 2023 Financial Results
For the first half of 2023, net earnings attributable to common stockholders were
Net sales in the first half of 2023 were
Cost of sales for the first half of 2023 was lower compared to the first half of 2022 primarily due to lower realized natural gas costs.
The average cost of natural gas reflected in the Company’s cost of sales was
Second Quarter 2023 Financial Results
For the second quarter of 2023, net earnings attributable to common stockholders were
Net sales in the second quarter of 2023 were
Cost of sales for the second quarter of 2023 was lower compared to 2022 primarily due to lower realized natural gas costs.
The average cost of natural gas reflected in the Company’s cost of sales was
Capital Management
Capital Expenditures
Capital expenditures in the second quarter and first half of 2023 were
Share Repurchase Programs
The Company repurchased 3.1 million shares for
CHS Inc. Distribution
On July 31, 2023, the Board of Managers of CF Industries Nitrogen, LLC (CFN) approved a semi-annual distribution payment to CHS Inc. (CHS) of
Strategic Initiatives
Agreement to Purchase
On March 20, 2023, CF Industries Holdings, Inc. announced that it had signed a definitive asset purchase agreement with Incitec Pivot, Ltd. (IPL) for its ammonia production complex located in
The transaction remains subject to the receipt of certain regulatory approvals and other customary closing conditions.
Clean Energy Initiatives Updates
CF Industries continues to advance its plans to support the global hydrogen and clean fuel economy, which is expected to grow significantly over the next decade, through the production of blue ammonia (ammonia produced with the corresponding carbon dioxide (CO2) byproduct removed through carbon capture and sequestration) and green ammonia (ammonia produced from hydrogen generated through an electrolysis process).
-
Memorandum of Understanding (MOU) with JERA Co., Inc.: On January 17, 2023, CF Industries announced that it had signed an MOU with JERA Co., Inc., regarding the supply of up to 500,000 metric tons per year of clean ammonia beginning in 2027. The companies are evaluating a range of potential supply options, including an equity investment alongside CF Industries to develop a clean ammonia facility in
Louisiana and a supplementary long-term offtake agreement. -
MOU with LOTTE CHEMICAL Corporation: On February 27, 2023, CF Industries announced that it had entered into an MOU with LOTTE CHEMICAL Corporation to assess the joint development of and investment in a greenfield clean ammonia production facility in the
U.S. and quantify expected clean ammonia demand inSouth Korea . -
Proposed Joint Venture with Mitsui & Co., Ltd. at CF Industries’ Blue Point Complex: CF Industries and Mitsui & Co., Ltd. (Mitsui) continue to progress a front-end engineering and design (FEED) study, which is being conducted by thyssenkrupp UHDE, for their proposed joint venture to construct an export-oriented blue ammonia facility in
Louisiana . CF Industries and Mitsui expect to make a final investment decision (FID) on the proposed facility later in 2023. Construction and commissioning of a new world-scale ammonia plant typically takes approximately 4 years from FID. - Donaldsonville Complex Blue Ammonia Project: Engineering activities for the construction of a dehydration and compression unit at the Donaldsonville Complex continue to advance, procurement of major equipment for the facility is in progress, and fabrication of the CO2 compressors has begun. Once in service, the dehydration and compression unit will enable up to 2 million tons of process CO2 to be transported and stored by ExxonMobil. Start-up for the project is scheduled for 2025, at which point CF Industries will be able to produce significant volumes of blue ammonia.
-
Donaldsonville Complex Green Ammonia Project: The
Donaldsonville green ammonia project, which involves installing an electrolysis system at the Donaldsonville Complex to generate hydrogen from water that will then be supplied to existing ammonia plants to produce ammonia, continues to progress. Major equipment is being fabricated and installation of the new electrolyzer unit has begun. Once complete, the project will enable the Company to produce approximately 20,000 tons of green ammonia per year. -
Verdigris Complex Green Hydrogen/Ammonia Debottleneck Project Evaluation: CF Industries and NextEra Energy Resources, LLC, are exploring a joint venture to develop a green hydrogen and ammonia production project at CF Industries’ Verdigris Complex in
Oklahoma , for which funding from theU.S. Department of Energy’s regional clean hydrogen hub program is a key element of the evaluation.
___________________________________________________ |
|
(1) |
Certain items recognized during the first half and second quarter of 2023 impacted our financial results and their comparability to the prior year period. See the table accompanying this release for a summary of these items. |
(2) |
EBITDA is defined as net earnings attributable to common stockholders plus interest expense—net, income taxes and depreciation and amortization. See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
(3) |
Free cash flow is defined as net cash from operating activities less capital expenditures and distributions to noncontrolling interest. See reconciliation of free cash flow to the most directly comparable GAAP measure in the table accompanying this release. |
Consolidated Results |
|||||||||||||||
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per share and per MMBtu amounts) |
||||||||||||||
Net sales |
$ |
1,775 |
|
|
$ |
3,389 |
|
|
$ |
3,787 |
|
|
$ |
6,257 |
|
Cost of sales |
|
971 |
|
|
|
1,398 |
|
|
|
2,120 |
|
|
|
2,568 |
|
Gross margin |
$ |
804 |
|
|
$ |
1,991 |
|
|
$ |
1,667 |
|
|
$ |
3,689 |
|
Gross margin percentage |
|
45.3 |
% |
|
|
58.7 |
% |
|
|
44.0 |
% |
|
|
59.0 |
% |
|
|
|
|
|
|
|
|
||||||||
Net earnings attributable to common stockholders |
$ |
527 |
|
|
$ |
1,165 |
|
|
$ |
1,087 |
|
|
$ |
2,048 |
|
Net earnings per diluted share |
$ |
2.70 |
|
|
$ |
5.58 |
|
|
$ |
5.55 |
|
|
$ |
9.78 |
|
|
|
|
|
|
|
|
|
||||||||
EBITDA(1) |
$ |
855 |
|
|
$ |
1,795 |
|
|
$ |
1,779 |
|
|
$ |
3,470 |
|
Adjusted EBITDA(1) |
$ |
857 |
|
|
$ |
1,953 |
|
|
$ |
1,723 |
|
|
$ |
3,601 |
|
|
|
|
|
|
|
|
|
||||||||
Tons of product sold (000s) |
|
4,938 |
|
|
|
4,835 |
|
|
|
9,473 |
|
|
|
9,459 |
|
|
|
|
|
|
|
|
|
||||||||
Natural gas supplemental data (per MMBtu): |
|
|
|
|
|
|
|
||||||||
Natural gas costs in cost of sales(2) |
$ |
2.74 |
|
|
$ |
6.95 |
|
|
$ |
3.86 |
|
|
$ |
6.83 |
|
Realized derivatives loss (gain) in cost of sales(3) |
|
0.01 |
|
|
|
0.10 |
|
|
|
0.70 |
|
|
|
(0.04 |
) |
Cost of natural gas used for production in cost of sales |
$ |
2.75 |
|
|
$ |
7.05 |
|
|
$ |
4.56 |
|
|
$ |
6.79 |
|
Average daily market price of natural gas Henry Hub ( |
$ |
2.12 |
|
|
$ |
7.40 |
|
|
$ |
2.40 |
|
|
$ |
6.01 |
|
|
|
|
|
|
|
|
|
||||||||
Unrealized net mark-to-market gain on natural gas derivatives |
$ |
— |
|
|
$ |
(17 |
) |
|
$ |
(72 |
) |
|
$ |
(50 |
) |
Depreciation and amortization |
$ |
221 |
|
|
$ |
223 |
|
|
$ |
427 |
|
|
$ |
431 |
|
Capital expenditures |
$ |
95 |
|
|
$ |
66 |
|
|
$ |
164 |
|
|
$ |
129 |
|
|
|
|
|
|
|
|
|
||||||||
Production volume by product tons (000s): |
|
|
|
|
|
|
|
||||||||
Ammonia(4) |
|
2,374 |
|
|
|
2,470 |
|
|
|
4,733 |
|
|
|
5,083 |
|
Granular urea |
|
1,122 |
|
|
|
1,157 |
|
|
|
2,333 |
|
|
|
2,231 |
|
UAN ( |
|
1,665 |
|
|
|
1,633 |
|
|
|
3,263 |
|
|
|
3,498 |
|
AN |
|
300 |
|
|
|
399 |
|
|
|
688 |
|
|
|
804 |
|
___________________________________________________ |
|
(1) |
See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
(2) |
Includes the cost of natural gas used for production and related transportation that is included in cost of sales during the period under the first-in, first-out inventory cost method. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. |
(3) |
Includes realized gains and losses on natural gas derivatives settled during the period. |
(4) |
Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN. |
Ammonia Segment
CF Industries’ ammonia segment produces anhydrous ammonia (ammonia), which is the base product that the Company manufactures, containing 82 percent nitrogen and 18 percent hydrogen. The results of the ammonia segment consist of sales of ammonia to external customers for its nitrogen content as a fertilizer, in emissions control and in other industrial applications. In addition, the Company upgrades ammonia into other nitrogen products such as urea, UAN and AN.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||
Net sales |
$ |
525 |
|
|
$ |
1,115 |
|
|
$ |
949 |
|
|
$ |
1,755 |
|
Cost of sales |
|
303 |
|
|
|
442 |
|
|
|
583 |
|
|
|
722 |
|
Gross margin |
$ |
222 |
|
|
$ |
673 |
|
|
$ |
366 |
|
|
$ |
1,033 |
|
Gross margin percentage |
|
42.3 |
% |
|
|
60.4 |
% |
|
|
38.6 |
% |
|
|
58.9 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales volume by product tons (000s) |
|
1,053 |
|
|
|
1,035 |
|
|
|
1,705 |
|
|
|
1,762 |
|
Sales volume by nutrient tons (000s)(1) |
|
863 |
|
|
|
849 |
|
|
|
1,398 |
|
|
|
1,445 |
|
|
|
|
|
|
|
|
|
||||||||
Average selling price per product ton |
$ |
499 |
|
|
$ |
1,077 |
|
|
$ |
557 |
|
|
$ |
996 |
|
Average selling price per nutrient ton(1) |
|
608 |
|
|
|
1,313 |
|
|
|
679 |
|
|
|
1,215 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||
Gross margin |
$ |
222 |
|
|
$ |
673 |
|
|
$ |
366 |
|
|
$ |
1,033 |
|
Depreciation and amortization |
|
47 |
|
|
|
50 |
|
|
|
78 |
|
|
|
84 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
(2 |
) |
|
|
(21 |
) |
|
|
(10 |
) |
Adjusted gross margin |
$ |
269 |
|
|
$ |
721 |
|
|
$ |
423 |
|
|
$ |
1,107 |
|
Adjusted gross margin as a percent of net sales |
|
51.2 |
% |
|
|
64.7 |
% |
|
|
44.6 |
% |
|
|
63.1 |
% |
|
|
|
|
|
|
|
|
||||||||
Gross margin per product ton |
$ |
211 |
|
|
$ |
650 |
|
|
$ |
215 |
|
|
$ |
586 |
|
Gross margin per nutrient ton(1) |
|
257 |
|
|
|
793 |
|
|
|
262 |
|
|
|
715 |
|
Adjusted gross margin per product ton |
|
255 |
|
|
|
697 |
|
|
|
248 |
|
|
|
628 |
|
Adjusted gross margin per nutrient ton(1) |
|
312 |
|
|
|
849 |
|
|
|
303 |
|
|
|
766 |
|
___________________________________________________ |
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of first half 2023 to first half 2022:
- Ammonia sales volume for 2023 approximated sales volume in 2022.
- Ammonia average selling prices decreased for 2023 compared to 2022 due to higher global supply availability as lower global energy costs led to increased global operating rates.
- Ammonia adjusted gross margin per ton decreased for 2023 compared to 2022 due to lower average selling prices partially offset by lower realized natural gas prices.
Granular Urea Segment
CF Industries’ granular urea segment produces granular urea, which contains 46 percent nitrogen. Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of the Company’s solid nitrogen products.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||
Net sales |
$ |
460 |
|
|
$ |
833 |
|
|
$ |
1,071 |
|
|
$ |
1,598 |
|
Cost of sales |
|
222 |
|
|
|
360 |
|
|
|
549 |
|
|
|
630 |
|
Gross margin |
$ |
238 |
|
|
$ |
473 |
|
|
$ |
522 |
|
|
$ |
968 |
|
Gross margin percentage |
|
51.7 |
% |
|
|
56.8 |
% |
|
|
48.7 |
% |
|
|
60.6 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales volume by product tons (000s) |
|
1,147 |
|
|
|
1,181 |
|
|
|
2,470 |
|
|
|
2,277 |
|
Sales volume by nutrient tons (000s)(1) |
|
529 |
|
|
|
544 |
|
|
|
1,137 |
|
|
|
1,048 |
|
|
|
|
|
|
|
|
|
||||||||
Average selling price per product ton |
$ |
401 |
|
|
$ |
705 |
|
|
$ |
434 |
|
|
$ |
702 |
|
Average selling price per nutrient ton(1) |
|
870 |
|
|
|
1,531 |
|
|
|
942 |
|
|
|
1,525 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||
Gross margin |
$ |
238 |
|
|
$ |
473 |
|
|
$ |
522 |
|
|
$ |
968 |
|
Depreciation and amortization |
|
71 |
|
|
|
70 |
|
|
|
150 |
|
|
|
134 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
(1 |
) |
|
|
(20 |
) |
|
|
(8 |
) |
Adjusted gross margin |
$ |
309 |
|
|
$ |
542 |
|
|
$ |
652 |
|
|
$ |
1,094 |
|
Adjusted gross margin as a percent of net sales |
|
67.2 |
% |
|
|
65.1 |
% |
|
|
60.9 |
% |
|
|
68.5 |
% |
|
|
|
|
|
|
|
|
||||||||
Gross margin per product ton |
$ |
207 |
|
|
$ |
401 |
|
|
$ |
211 |
|
|
$ |
425 |
|
Gross margin per nutrient ton(1) |
|
450 |
|
|
|
869 |
|
|
|
459 |
|
|
|
924 |
|
Adjusted gross margin per product ton |
|
269 |
|
|
|
459 |
|
|
|
264 |
|
|
|
480 |
|
Adjusted gross margin per nutrient ton(1) |
|
584 |
|
|
|
996 |
|
|
|
573 |
|
|
|
1,044 |
|
___________________________________________________ |
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of first half 2023 to first half 2022:
- Granular urea sales volume increased for 2023 compared to 2022 due to greater supply availability from higher production and higher starting inventory.
- Urea average selling prices decreased for 2023 compared to 2022 due to higher global supply availability as lower global energy costs led to increased global operating rates.
- Granular urea adjusted gross margin per ton decreased for 2023 compared to 2022 primarily due to lower average selling prices partially offset by lower realized natural gas prices.
UAN Segment
CF Industries’ UAN segment produces urea ammonium nitrate solution (UAN). UAN is a liquid product with nitrogen content that typically ranges from 28 percent to 32 percent and is produced by combining urea and ammonium nitrate in solution.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||
Net sales |
$ |
548 |
|
|
$ |
976 |
|
|
$ |
1,215 |
|
|
$ |
1,991 |
|
Cost of sales |
|
289 |
|
|
|
343 |
|
|
|
635 |
|
|
|
688 |
|
Gross margin |
$ |
259 |
|
|
$ |
633 |
|
|
$ |
580 |
|
|
$ |
1,303 |
|
Gross margin percentage |
|
47.3 |
% |
|
|
64.9 |
% |
|
|
47.7 |
% |
|
|
65.4 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales volume by product tons (000s) |
|
1,809 |
|
|
|
1,626 |
|
|
|
3,471 |
|
|
|
3,454 |
|
Sales volume by nutrient tons (000s)(1) |
|
570 |
|
|
|
515 |
|
|
|
1,094 |
|
|
|
1,091 |
|
|
|
|
|
|
|
|
|
||||||||
Average selling price per product ton |
$ |
303 |
|
|
$ |
600 |
|
|
$ |
350 |
|
|
$ |
576 |
|
Average selling price per nutrient ton(1) |
|
961 |
|
|
|
1,895 |
|
|
|
1,111 |
|
|
|
1,825 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||
Gross margin |
$ |
259 |
|
|
$ |
633 |
|
|
$ |
580 |
|
|
$ |
1,303 |
|
Depreciation and amortization |
|
70 |
|
|
|
65 |
|
|
|
136 |
|
|
|
135 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
— |
|
|
|
(21 |
) |
|
|
(8 |
) |
Adjusted gross margin |
$ |
329 |
|
|
$ |
698 |
|
|
$ |
695 |
|
|
$ |
1,430 |
|
Adjusted gross margin as a percent of net sales |
|
60.0 |
% |
|
|
71.5 |
% |
|
|
57.2 |
% |
|
|
71.8 |
% |
|
|
|
|
|
|
|
|
||||||||
Gross margin per product ton |
$ |
143 |
|
|
$ |
389 |
|
|
$ |
167 |
|
|
$ |
377 |
|
Gross margin per nutrient ton(1) |
|
454 |
|
|
|
1,229 |
|
|
|
530 |
|
|
|
1,194 |
|
Adjusted gross margin per product ton |
|
182 |
|
|
|
429 |
|
|
|
200 |
|
|
|
414 |
|
Adjusted gross margin per nutrient ton(1) |
|
577 |
|
|
|
1,355 |
|
|
|
635 |
|
|
|
1,311 |
|
___________________________________________________ |
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of first half 2023 to first half 2022:
- UAN sales volumes for 2023 approximated 2022 sales volumes.
- UAN average selling prices decreased for 2023 compared to 2022 due to higher global supply availability as lower global energy costs led to increased global operating rates.
- UAN adjusted gross margin per ton decreased for 2023 compared to 2022 primarily due to lower average selling prices partially offset by lower realized natural gas prices.
AN Segment
CF Industries’ AN segment produces ammonium nitrate (AN). AN is used as a nitrogen fertilizer with nitrogen content between 29 percent to 35 percent, and also is used by industrial customers for commercial explosives and blasting systems.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||
Net sales |
$ |
104 |
|
|
$ |
253 |
|
|
$ |
263 |
|
|
$ |
476 |
|
Cost of sales |
|
81 |
|
|
|
151 |
|
|
|
185 |
|
|
|
322 |
|
Gross margin |
$ |
23 |
|
|
$ |
102 |
|
|
$ |
78 |
|
|
$ |
154 |
|
Gross margin percentage |
|
22.1 |
% |
|
|
40.3 |
% |
|
|
29.7 |
% |
|
|
32.4 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales volume by product tons (000s) |
|
369 |
|
|
|
436 |
|
|
|
743 |
|
|
|
864 |
|
Sales volume by nutrient tons (000s)(1) |
|
127 |
|
|
|
149 |
|
|
|
255 |
|
|
|
295 |
|
|
|
|
|
|
|
|
|
||||||||
Average selling price per product ton |
$ |
282 |
|
|
$ |
580 |
|
|
$ |
354 |
|
|
$ |
551 |
|
Average selling price per nutrient ton(1) |
|
819 |
|
|
|
1,698 |
|
|
|
1,031 |
|
|
|
1,614 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||
Gross margin |
$ |
23 |
|
|
$ |
102 |
|
|
$ |
78 |
|
|
$ |
154 |
|
Depreciation and amortization |
|
12 |
|
|
|
17 |
|
|
|
23 |
|
|
|
34 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
(11 |
) |
|
|
(3 |
) |
|
|
(17 |
) |
Adjusted gross margin |
$ |
35 |
|
|
$ |
108 |
|
|
$ |
98 |
|
|
$ |
171 |
|
Adjusted gross margin as a percent of net sales |
|
33.7 |
% |
|
|
42.7 |
% |
|
|
37.3 |
% |
|
|
35.9 |
% |
|
|
|
|
|
|
|
|
||||||||
Gross margin per product ton |
$ |
62 |
|
|
$ |
234 |
|
|
$ |
105 |
|
|
$ |
178 |
|
Gross margin per nutrient ton(1) |
|
181 |
|
|
|
685 |
|
|
|
306 |
|
|
|
522 |
|
Adjusted gross margin per product ton |
|
95 |
|
|
|
248 |
|
|
|
132 |
|
|
|
198 |
|
Adjusted gross margin per nutrient ton(1) |
|
276 |
|
|
|
725 |
|
|
|
384 |
|
|
|
580 |
|
___________________________________________________ |
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of first half 2023 to first half 2022:
-
AN sales volume for 2023 decreased compared to 2022 due to lower supply availability from lower production in the
U.K. - AN average selling prices for 2023 decreased compared to 2022 due to higher global supply availability as lower global energy costs led to increased global operating rates.
-
AN adjusted gross margin per ton decreased for 2023 compared to 2022 due to lower average selling prices partially offset by the impact of using lower-cost imported ammonia for AN production in the
U.K. and lower realized natural gas prices.
Other Segment
CF Industries’ Other segment includes diesel exhaust fluid (DEF), urea liquor and nitric acid. The Company previously produced compound fertilizers (NPKs) only at its Ince manufacturing facility and closure of this facility has resulted in the discontinuation of this product line.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||
Net sales |
$ |
138 |
|
|
$ |
212 |
|
|
$ |
289 |
|
|
$ |
437 |
|
Cost of sales |
|
76 |
|
|
|
102 |
|
|
|
168 |
|
|
|
206 |
|
Gross margin |
$ |
62 |
|
|
$ |
110 |
|
|
$ |
121 |
|
|
$ |
231 |
|
Gross margin percentage |
|
44.9 |
% |
|
|
51.9 |
% |
|
|
41.9 |
% |
|
|
52.9 |
% |
|
|
|
|
|
|
|
|
||||||||
Sales volume by product tons (000s) |
|
560 |
|
|
|
557 |
|
|
|
1,084 |
|
|
|
1,102 |
|
Sales volume by nutrient tons (000s)(1) |
|
110 |
|
|
|
110 |
|
|
|
213 |
|
|
|
214 |
|
|
|
|
|
|
|
|
|
||||||||
Average selling price per product ton |
$ |
246 |
|
|
$ |
381 |
|
|
$ |
267 |
|
|
$ |
397 |
|
Average selling price per nutrient ton(1) |
|
1,255 |
|
|
|
1,927 |
|
|
|
1,357 |
|
|
|
2,042 |
|
|
|
|
|
|
|
|
|
||||||||
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||
Gross margin |
$ |
62 |
|
|
$ |
110 |
|
|
$ |
121 |
|
|
$ |
231 |
|
Depreciation and amortization |
|
17 |
|
|
|
17 |
|
|
|
33 |
|
|
|
36 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
(3 |
) |
|
|
(7 |
) |
|
|
(7 |
) |
Adjusted gross margin |
$ |
79 |
|
|
$ |
124 |
|
|
$ |
147 |
|
|
$ |
260 |
|
Adjusted gross margin as a percent of net sales |
|
57.2 |
% |
|
|
58.5 |
% |
|
|
50.9 |
% |
|
|
59.5 |
% |
|
|
|
|
|
|
|
|
||||||||
Gross margin per product ton |
$ |
111 |
|
|
$ |
197 |
|
|
$ |
112 |
|
|
$ |
210 |
|
Gross margin per nutrient ton(1) |
|
564 |
|
|
|
1,000 |
|
|
|
568 |
|
|
|
1,079 |
|
Adjusted gross margin per product ton |
|
141 |
|
|
|
223 |
|
|
|
136 |
|
|
|
236 |
|
Adjusted gross margin per nutrient ton(1) |
|
718 |
|
|
|
1,127 |
|
|
|
690 |
|
|
|
1,215 |
|
___________________________________________________ |
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of first half 2023 to first half 2022:
- Other sales volume for 2023 approximated 2022 sales volumes.
- Other average selling prices for 2023 decreased compared to 2022 due to higher global supply availability as lower global energy costs led to increased global operating rates.
- Other adjusted gross margin per ton decreased for 2023 compared to 2022 primarily due to lower average selling prices partially offset by lower realized natural gas costs.
Dividend Payment
On July 6, 2023, CF Industries’ Board of Directors declared a quarterly dividend of
Conference Call
CF Industries will hold a conference call to discuss its first half 2023 results at 11:00 a.m. ET on Thursday, August 3, 2023. This conference call will include discussion of CF Industries’ business environment and outlook. Investors can access the call and find dial-in information on the Investor Relations section of the Company’s website at www.cfindustries.com.
About CF Industries Holdings, Inc.
At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our manufacturing complexes in
Note Regarding Non-GAAP Financial Measures
The Company reports its financial results in accordance with
Safe Harbor Statement
All statements in this communication by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other than those relating to historical facts, are forward-looking statements. Forward-looking statements can generally be identified by their use of terms such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These statements may include, but are not limited to, statements about the financing, synergies and other benefits, and other aspects of the proposed transactions with Incitec Pivot Limited (“IPL”), strategic plans and management’s expectations with respect to the production of green and blue (low-carbon) ammonia, the development of carbon capture and sequestration projects, the transition to and growth of a hydrogen economy, greenhouse gas reduction targets, projected capital expenditures, statements about future financial and operating results, and other items described in this communication.
Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, the risk that regulatory approvals required for the proposed transactions with IPL are not obtained or that required approvals delay the transactions or cause the parties to abandon the transactions; the risk that other conditions to the closing of the proposed transactions with IPL are not satisfied; risks and uncertainties arising from the length of time necessary to consummate the proposed transactions with IPL and the possibility that the proposed transactions with IPL may be delayed or may not occur; the risk of obstacles to realization of the benefits of the proposed transactions with IPL; the risk that the synergies from the proposed transactions with IPL may not be fully realized or may take longer to realize than expected; the risk that the pendency or completion of the proposed transactions with IPL, including integration of the
More detailed information about factors that may affect the Company’s performance and could cause actual results to differ materially from those in any forward-looking statements may be found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent annual and quarterly reports on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the Company’s web site. It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events, plans or goals anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on our business, results of operations, cash flows, financial condition and future prospects. Forward-looking statements are given only as of the date of this communication and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited) |
|||||||||||||||
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in millions, except per share amounts) |
||||||||||||||
Net sales |
$ |
1,775 |
|
|
$ |
3,389 |
|
|
$ |
3,787 |
|
|
$ |
6,257 |
|
Cost of sales |
|
971 |
|
|
|
1,398 |
|
|
|
2,120 |
|
|
|
2,568 |
|
Gross margin |
|
804 |
|
|
|
1,991 |
|
|
|
1,667 |
|
|
|
3,689 |
|
Selling, general and administrative expenses |
|
71 |
|
|
|
73 |
|
|
|
145 |
|
|
|
137 |
|
|
|
— |
|
|
|
152 |
|
|
|
— |
|
|
|
152 |
|
|
|
— |
|
|
|
10 |
|
|
|
2 |
|
|
|
10 |
|
Transaction costs |
|
3 |
|
|
|
— |
|
|
|
16 |
|
|
|
— |
|
Other operating—net |
|
3 |
|
|
|
6 |
|
|
|
(32 |
) |
|
|
8 |
|
Total other operating costs and expenses |
|
77 |
|
|
|
241 |
|
|
|
131 |
|
|
|
307 |
|
Equity in earnings of operating affiliate |
|
7 |
|
|
|
28 |
|
|
|
24 |
|
|
|
54 |
|
Operating earnings |
|
734 |
|
|
|
1,778 |
|
|
|
1,560 |
|
|
|
3,436 |
|
Interest expense |
|
36 |
|
|
|
82 |
|
|
|
76 |
|
|
|
323 |
|
Interest income |
|
(40 |
) |
|
|
(8 |
) |
|
|
(70 |
) |
|
|
(44 |
) |
Loss on debt extinguishment |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
Other non-operating—net |
|
(2 |
) |
|
|
— |
|
|
|
(5 |
) |
|
|
1 |
|
Earnings before income taxes |
|
740 |
|
|
|
1,696 |
|
|
|
1,559 |
|
|
|
3,148 |
|
Income tax provision |
|
134 |
|
|
|
357 |
|
|
|
303 |
|
|
|
758 |
|
Net earnings |
|
606 |
|
|
|
1,339 |
|
|
|
1,256 |
|
|
|
2,390 |
|
Less: Net earnings attributable to noncontrolling interest |
|
79 |
|
|
|
174 |
|
|
|
169 |
|
|
|
342 |
|
Net earnings attributable to common stockholders |
$ |
527 |
|
|
$ |
1,165 |
|
|
$ |
1,087 |
|
|
$ |
2,048 |
|
|
|
|
|
|
|
|
|
||||||||
Net earnings per share attributable to common stockholders: |
|
|
|
|
|
|
|
||||||||
Basic |
$ |
2.71 |
|
|
$ |
5.59 |
|
|
$ |
5.56 |
|
|
$ |
9.83 |
|
Diluted |
$ |
2.70 |
|
|
$ |
5.58 |
|
|
$ |
5.55 |
|
|
$ |
9.78 |
|
Weighted-average common shares outstanding: |
|
|
|
|
|
|
|
||||||||
Basic |
|
194.6 |
|
|
|
208.2 |
|
|
|
195.4 |
|
|
|
208.4 |
|
Diluted |
|
195.0 |
|
|
|
208.9 |
|
|
|
195.9 |
|
|
|
209.4 |
|
CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION CONDENSED CONSOLIDATED BALANCE SHEETS |
|||||||
|
(unaudited) |
|
|
||||
|
June 30, 2023 |
|
December 31, 2022 |
||||
|
(in millions) |
||||||
Assets |
|
|
|
||||
Current assets: |
|
|
|
||||
Cash and cash equivalents |
$ |
3,219 |
|
$ |
2,323 |
||
Accounts receivable—net |
|
388 |
|
|
|
582 |
|
Inventories |
|
319 |
|
|
|
474 |
|
Prepaid income taxes |
|
81 |
|
|
|
215 |
|
Other current assets |
|
65 |
|
|
|
79 |
|
Total current assets |
|
4,072 |
|
|
|
3,673 |
|
Property, plant and equipment—net |
|
6,218 |
|
|
|
6,437 |
|
Investment in affiliate |
|
72 |
|
|
|
74 |
|
Goodwill |
|
2,089 |
|
|
|
2,089 |
|
Operating lease right-of-use assets |
|
278 |
|
|
|
254 |
|
Other assets |
|
808 |
|
|
|
786 |
|
Total assets |
$ |
13,537 |
|
|
$ |
13,313 |
|
|
|
|
|
||||
Liabilities and Equity |
|
|
|
||||
Current liabilities: |
|
|
|
||||
Accounts payable and accrued expenses |
$ |
451 |
|
|
$ |
575 |
|
Income taxes payable |
|
47 |
|
|
|
3 |
|
Customer advances |
|
9 |
|
|
|
229 |
|
Current operating lease liabilities |
|
100 |
|
|
|
93 |
|
Other current liabilities |
|
15 |
|
|
|
95 |
|
Total current liabilities |
|
622 |
|
|
|
995 |
|
Long-term debt |
|
2,967 |
|
|
|
2,965 |
|
Deferred income taxes |
|
910 |
|
|
|
958 |
|
Operating lease liabilities |
|
177 |
|
|
|
167 |
|
Other liabilities |
|
341 |
|
|
|
375 |
|
Equity: |
|
|
|
||||
Stockholders’ equity |
|
5,804 |
|
|
|
5,051 |
|
Noncontrolling interest |
|
2,716 |
|
|
|
2,802 |
|
Total equity |
|
8,520 |
|
|
|
7,853 |
|
Total liabilities and equity |
$ |
13,537 |
|
|
$ |
13,313 |
|
CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) |
|||||||||||||||
|
|
|
|
||||||||||||
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
||||||||||||||
Operating Activities: |
|
|
|
|
|
|
|
||||||||
Net earnings |
$ |
606 |
|
|
$ |
1,339 |
|
|
$ |
1,256 |
|
|
$ |
2,390 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization |
|
221 |
|
|
|
223 |
|
|
|
427 |
|
|
|
431 |
|
Deferred income taxes |
|
(27 |
) |
|
|
2 |
|
|
|
(53 |
) |
|
|
— |
|
Stock-based compensation expense |
|
7 |
|
|
|
12 |
|
|
|
19 |
|
|
|
22 |
|
Loss on debt extinguishment |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
Unrealized net gain on natural gas derivatives |
|
— |
|
|
|
(17 |
) |
|
|
(72 |
) |
|
|
(50 |
) |
|
|
— |
|
|
|
152 |
|
|
|
— |
|
|
|
152 |
|
Gain on sale of emission credits |
|
(1 |
) |
|
|
(3 |
) |
|
|
(36 |
) |
|
|
(3 |
) |
Loss on disposal of property, plant and equipment |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
— |
|
Undistributed losses (earnings) of affiliate—net of taxes |
|
7 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(3 |
) |
Changes in: |
|
|
|
|
|
|
|
||||||||
Accounts receivable—net |
|
97 |
|
|
|
(54 |
) |
|
|
198 |
|
|
|
(239 |
) |
Inventories |
|
101 |
|
|
|
(33 |
) |
|
|
140 |
|
|
|
(99 |
) |
Accrued and prepaid income taxes |
|
13 |
|
|
|
(375 |
) |
|
|
166 |
|
|
|
12 |
|
Accounts payable and accrued expenses |
|
(3 |
) |
|
|
147 |
|
|
|
(138 |
) |
|
|
223 |
|
Customer advances |
|
(275 |
) |
|
|
(526 |
) |
|
|
(220 |
) |
|
|
(628 |
) |
Other—net |
|
(35 |
) |
|
|
15 |
|
|
|
(29 |
) |
|
|
64 |
|
Net cash provided by operating activities |
|
712 |
|
|
|
889 |
|
|
|
1,659 |
|
|
|
2,280 |
|
Investing Activities: |
|
|
|
|
|
|
|
||||||||
Additions to property, plant and equipment |
|
(95 |
) |
|
|
(66 |
) |
|
|
(164 |
) |
|
|
(129 |
) |
Proceeds from sale of property, plant and equipment |
|
1 |
|
|
|
— |
|
|
|
1 |
|
|
|
1 |
|
Distributions received from unconsolidated affiliate |
|
— |
|
|
|
4 |
|
|
|
— |
|
|
|
4 |
|
Purchase of investments held in nonqualified employee benefit trust |
|
— |
|
|
|
(1 |
) |
|
|
— |
|
|
|
(1 |
) |
Proceeds from sale of investments held in nonqualified employee benefit trust |
|
— |
|
|
|
1 |
|
|
|
— |
|
|
|
1 |
|
Purchase of emission credits |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(9 |
) |
Proceeds from sale of emission credits |
|
1 |
|
|
|
3 |
|
|
|
36 |
|
|
|
12 |
|
Net cash used in investing activities |
|
(93 |
) |
|
|
(59 |
) |
|
|
(127 |
) |
|
|
(121 |
) |
Financing Activities: |
|
|
|
|
|
|
|
||||||||
Payments of long-term borrowings |
|
— |
|
|
|
(507 |
) |
|
|
— |
|
|
|
(507 |
) |
Financing fees |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(4 |
) |
Dividends paid |
|
(79 |
) |
|
|
(83 |
) |
|
|
(158 |
) |
|
|
(147 |
) |
Distributions to noncontrolling interest |
|
— |
|
|
|
— |
|
|
|
(255 |
) |
|
|
(247 |
) |
Purchases of treasury stock |
|
(151 |
) |
|
|
(479 |
) |
|
|
(205 |
) |
|
|
(577 |
) |
Proceeds from issuances of common stock under employee stock plans |
|
1 |
|
|
|
4 |
|
|
|
1 |
|
|
|
101 |
|
Cash paid for shares withheld for taxes |
|
— |
|
|
|
— |
|
|
|
(22 |
) |
|
|
(23 |
) |
Net cash used in financing activities |
|
(229 |
) |
|
|
(1,065 |
) |
|
|
(639 |
) |
|
|
(1,404 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
4 |
|
|
|
(12 |
) |
|
|
3 |
|
|
|
(13 |
) |
Increase (decrease) in cash and cash equivalents |
|
394 |
|
|
|
(247 |
) |
|
|
896 |
|
|
|
742 |
|
Cash and cash equivalents at beginning of period |
|
2,825 |
|
|
|
2,617 |
|
|
|
2,323 |
|
|
|
1,628 |
|
Cash and cash equivalents at end of period |
$ |
3,219 |
|
|
$ |
2,370 |
|
|
$ |
3,219 |
|
|
$ |
2,370 |
|
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
NON-GAAP DISCLOSURE ITEMS
Reconciliation of net cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure):
Free cash flow is defined as net cash provided by operating activities, as stated in the consolidated statements of cash flows, reduced by capital expenditures and distributions to noncontrolling interest. The Company has presented free cash flow because management uses this measure and believes it is useful to investors, as an indication of the strength of the Company and its ability to generate cash and to evaluate the Company’s cash generation ability relative to its industry competitors. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures.
|
Twelve months ended June 30, |
||||||
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
||||||
Net cash provided by operating activities(1) |
$ |
3,234 |
|
|
$ |
4,447 |
|
Capital expenditures |
|
(488 |
) |
|
|
(462 |
) |
Distributions to noncontrolling interest |
|
(627 |
) |
|
|
(377 |
) |
Free cash flow(1) |
$ |
2,119 |
|
|
$ |
3,608 |
|
___________________________________________________ |
|
(1) |
Includes the impact of |
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
NON-GAAP DISCLOSURE ITEMS (CONTINUED)
Reconciliation of net earnings attributable to common stockholders and net earnings attributable to common stockholders per ton (GAAP measures) to EBITDA, EBITDA per ton, adjusted EBITDA and adjusted EBITDA per ton (non-GAAP measures), as applicable:
EBITDA is defined as net earnings attributable to common stockholders plus interest expense—net, income taxes and depreciation and amortization. Other adjustments include the elimination of loan fee amortization that is included in both interest and amortization, and the portion of depreciation that is included in noncontrolling interest.
The Company has presented EBITDA and EBITDA per ton because management uses these measures to track performance and believes that they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry.
Adjusted EBITDA is defined as EBITDA adjusted with the selected items as summarized in the table below. The Company has presented adjusted EBITDA and adjusted EBITDA per ton because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance.
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||
|
|
2023 |
|
|
|
2022 |
|
|
|
2023 |
|
|
|
2022 |
|
|
(in millions) |
||||||||||||||
Net earnings |
$ |
606 |
|
|
$ |
1,339 |
|
|
$ |
1,256 |
|
|
$ |
2,390 |
|
Less: Net earnings attributable to noncontrolling interest |
|
(79 |
) |
|
|
(174 |
) |
|
|
(169 |
) |
|
|
(342 |
) |
Net earnings attributable to common stockholders |
|
527 |
|
|
|
1,165 |
|
|
|
1,087 |
|
|
|
2,048 |
|
Interest (income) expense—net |
|
(4 |
) |
|
|
74 |
|
|
|
6 |
|
|
|
279 |
|
Income tax provision |
|
134 |
|
|
|
357 |
|
|
|
303 |
|
|
|
758 |
|
Depreciation and amortization |
|
221 |
|
|
|
223 |
|
|
|
427 |
|
|
|
431 |
|
Less other adjustments: |
|
|
|
|
|
|
|
||||||||
Depreciation and amortization in noncontrolling interest |
|
(22 |
) |
|
|
(23 |
) |
|
|
(42 |
) |
|
|
(44 |
) |
Loan fee amortization(1) |
|
(1 |
) |
|
|
(1 |
) |
|
|
(2 |
) |
|
|
(2 |
) |
EBITDA |
|
855 |
|
|
|
1,795 |
|
|
|
1,779 |
|
|
|
3,470 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
— |
|
|
|
(17 |
) |
|
|
(72 |
) |
|
|
(50 |
) |
(Gain) loss on foreign currency transactions, including intercompany loans |
|
(1 |
) |
|
|
5 |
|
|
|
(2 |
) |
|
|
11 |
|
|
|
— |
|
|
|
152 |
|
|
|
— |
|
|
|
152 |
|
|
|
— |
|
|
|
10 |
|
|
|
2 |
|
|
|
10 |
|
Transaction costs related to acquisition agreement |
|
3 |
|
|
|
— |
|
|
|
16 |
|
|
|
— |
|
Loss on debt extinguishment |
|
— |
|
|
|
8 |
|
|
|
— |
|
|
|
8 |
|
Total adjustments |
|
2 |
|
|
|
158 |
|
|
|
(56 |
) |
|
|
131 |
|
Adjusted EBITDA |
$ |
857 |
|
|
$ |
1,953 |
|
|
$ |
1,723 |
|
|
$ |
3,601 |
|
|
|
|
|
|
|
|
|
||||||||
Net sales |
$ |
1,775 |
|
|
$ |
3,389 |
|
|
$ |
3,787 |
|
|
$ |
6,257 |
|
Tons of product sold (000s) |
|
4,938 |
|
|
|
4,835 |
|
|
|
9,473 |
|
|
|
9,459 |
|
|
|
|
|
|
|
|
|
||||||||
Net earnings attributable to common stockholders per ton |
$ |
106.72 |
|
|
$ |
240.95 |
|
|
$ |
114.75 |
|
|
$ |
216.51 |
|
EBITDA per ton |
$ |
173.15 |
|
|
$ |
371.25 |
|
|
$ |
187.80 |
|
|
$ |
366.85 |
|
Adjusted EBITDA per ton |
$ |
173.55 |
|
|
$ |
403.93 |
|
|
$ |
181.89 |
|
|
$ |
380.70 |
|
(1) |
Loan fee amortization is included in both interest expense—net and depreciation and amortization. |
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
ITEMS AFFECTING COMPARABILITY
During the three and six months ended June 30, 2023 and 2022, certain items impacted our financial results. The following table outlines these items that affected the comparability of our financial results during these periods. During the three months ended June 30, 2023 and 2022, we reported net earnings attributable to common stockholders of
|
Three months ended June 30, |
|
Six months ended June 30, |
|||||||||||||||||||||||
|
2023 |
|
2022 |
|
2023 |
|
2022 |
|||||||||||||||||||
|
Pre-Tax |
After-Tax |
|
Pre-Tax |
After-Tax |
|
Pre-Tax |
After-Tax |
|
Pre-Tax |
After-Tax |
|||||||||||||||
|
(in millions) |
|||||||||||||||||||||||||
Unrealized net mark-to-market gain on natural gas derivatives(1) |
$ |
— |
|
$ |
— |
|
$ |
(17 |
) |
$ |
(13 |
) |
|
$ |
(72 |
) |
$ |
(56 |
) |
|
$ |
(50 |
) |
$ |
(38 |
) |
(Gain) loss on foreign currency transactions, including intercompany loans(2) |
|
(1 |
) |
|
— |
|
|
5 |
|
|
3 |
|
|
|
(2 |
) |
|
(1 |
) |
|
|
11 |
|
|
8 |
|
Transaction costs related to acquisition agreement |
|
3 |
|
|
2 |
|
|
— |
|
|
— |
|
|
|
16 |
|
|
12 |
|
|
|
— |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
|
|
— |
|
|
— |
|
|
152 |
|
|
115 |
|
|
|
— |
|
|
— |
|
|
|
152 |
|
|
115 |
|
|
|
— |
|
|
— |
|
|
10 |
|
|
8 |
|
|
|
2 |
|
|
2 |
|
|
|
10 |
|
|
8 |
|
Canada Revenue Agency Competent Authority Matter and transfer pricing reserves: |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Interest expense |
|
— |
|
|
— |
|
|
30 |
|
|
30 |
|
|
|
— |
|
|
— |
|
|
|
228 |
|
|
226 |
|
Interest income |
|
— |
|
|
— |
|
|
(2 |
) |
|
(1 |
) |
|
|
— |
|
|
— |
|
|
|
(38 |
) |
|
(29 |
) |
Income tax provision(3) |
|
— |
|
|
— |
|
|
— |
|
|
(20 |
) |
|
|
— |
|
|
— |
|
|
|
— |
|
|
52 |
|
Loss on debt extinguishment |
|
— |
|
|
— |
|
|
8 |
|
|
6 |
|
|
|
— |
|
|
— |
|
|
|
8 |
|
|
6 |
|
___________________________________________________ |
|
(1) |
Included in cost of sales in our consolidated statements of operations. |
(2) |
Included in other operating—net in our consolidated statements of operations. |
(3) |
For the three months ended June 30, 2022, amount represents the combined impact of these tax matters of |
View source version on businesswire.com: https://www.businesswire.com/news/home/20230802542210/en/
Media
Chris Close
Senior Director, Corporate Communications
847-405-2542 - cclose@cfindustries.com
Investors
Darla Rivera
Director, Investor Relations
847-405-2045 - darla.rivera@cfindustries.com
Source: CF Industries Holdings, Inc.