CF Industries Holdings, Inc. Reports First Quarter 2024 Net Earnings of $194 Million, Adjusted EBITDA of $459 Million
CF Industries Holdings, Inc. reported first quarter 2024 net earnings of $194 million and adjusted EBITDA of $459 million. Despite production challenges due to severe cold, the company remains positive about North American spring 2024 nitrogen demand and energy spreads. CF Industries also announced a joint development agreement with JERA Co., Inc. to explore greenfield low-carbon ammonia production.
Strong net earnings of $194 million and adjusted EBITDA of $459 million.
Continued positive outlook for North American spring 2024 nitrogen demand and energy spreads.
Joint development agreement with JERA Co., Inc. for greenfield low-carbon ammonia production.
Lower first quarter 2024 net earnings compared to 2023.
Reduced ammonia production and higher maintenance expenses in the first quarter of 2024.
Decline in average selling prices for various products in the first quarter of 2024.
Severe Cold, High Maintenance Activity Leads to Challenging Production Environment
Continued Strong Cash Generation
Outlook for Positive North American Spring 2024 Nitrogen Demand, Favorable Energy Spreads
Highlights
-
First quarter net earnings(1)(2) of
$194 million $1.03 $488 million $459 million -
Trailing twelve months net cash from operating activities of
$2.26 billion $1.38 billion -
Production outages in the first quarter 2024 due to severe cold and other maintenance events resulted in approximately
$75 million - Lower ammonia production in the first quarter of 2024 compared to the first quarter of 2023 reduced ammonia available to produce higher-margin upgraded fertilizer products
-
Executed a joint development agreement with JERA Co., Inc., Japan’s largest energy company, to explore development of greenfield low-carbon ammonia production capacity in
Louisiana -
Commissioning of electrolyzer at Company’s
Donaldsonville, Louisiana , facility nearing completion, with start-up of green ammonia production to follow -
Repurchased 4.3 million shares for
$347 million
“The CF Industries team faced a challenging quarter as severe cold in January and some unplanned maintenance disrupted our network significantly,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “However, our team did an outstanding job restoring our operations to normal utilization rates.
“Longer-term, we remain confident in our ability to drive strong cash generation due to a global energy cost structure favorable to our North American-based production network and continued progress on our low-carbon clean energy initiatives. As a result, we believe we will be able to continue to create significant shareholder value from disciplined investments in growth opportunities and returning substantial capital to shareholders.”
Operations Overview
The Company continues to operate safely across its network. As of March 31, 2024, the 12-month rolling average recordable incident rate was 0.36 incidents per 200,000 work hours, significantly better than industry averages.
Gross ammonia production for the first quarter of 2024 was approximately 2.1 million tons compared to 2.4 million tons in the first quarter of 2023 due to the impact of a significant planned turnaround event in the quarter, severe weather in January that caused or contributed to ammonia plant outages, and other unplanned maintenance. This was partially offset by production in the first quarter of 2024 from the
Following the disruptions to gross ammonia production in the first quarter of 2024, the Company expects gross ammonia production for the full year 2024 to be approximately 9.8 million tons.
Financial Results Overview
First Quarter 2024 Financial Results
For the first quarter of 2024, net earnings attributable to common stockholders were
Net sales in the first quarter of 2024 were
Cost of sales for the first quarter of 2024 was lower compared to the first quarter of 2023 due to lower realized natural gas costs partially offset by higher maintenance costs.
The average cost of natural gas reflected in the Company’s cost of sales was
Capital Management
Capital Expenditures
Capital expenditures in the first quarter of 2024 were
Share Repurchase Program
The Company repurchased 4.3 million shares for
CHS Inc. Distribution
CHS Inc. (CHS) is entitled to semi-annual distributions resulting from its minority equity investment in CF Industries Nitrogen, LLC (CFN). The estimate of the partnership distribution earned by CHS, but not yet declared, for the first quarter of 2024 is approximately
Nitrogen Market Outlook
Early in the second quarter of 2024, the global nitrogen market moved to a long supply position due to lower-than-expected demand from
-
North America : Management expects nitrogen demand for the first half of 2024 to be positive due to approximately 91 million acres of corn expected to be planted inthe United States , good soil moisture throughout theU.S. Midwest supporting higher application rates, and constructive farmer economics. The Company forecasts that nitrogen channel inventories for all products will be below average following the spring application season. -
Brazil : Urea consumption inBrazil in 2024 is forecast to increase3% year-over-year to more than 8.0 million metric tons, supported by improved supply availability and lower global urea prices. Urea imports toBrazil in 2024 are expected to be in the range of 7.0-8.0 million metric tons as domestic production remains limited. -
India : Demand for urea inIndia is expected to remain strong due to a recovery in rice production and improved weather conditions. Management expects imports of urea toIndia in 2024 to be in a range of 5.5-6.5 million metric tons as recently revitalized plants and new facilities in the country operate at higher rates. -
Europe : Over35% of ammonia and25% of urea capacity were reported in shutdown/curtailment inEurope in March 2024. Management believes that ammonia operating rates and overall domestic nitrogen product output inEurope will remain below historical averages over the long-term given the region’s status as the global marginal producer. As a result, the Company expects nitrogen imports of ammonia and upgraded products to the region to be higher than historical averages. -
China : Management expects urea exports fromChina to resume in the middle of 2024 following spring applications. Urea exports fromChina are projected to be approximately 4.0 million metric tons for 2024. -
Trinidad : Ammonia production inTrinidad in recent years has been approximately 1.0 million metric tons lower annually compared to the 2018-2020 average. Management expects ammonia production to remain below average due to anticipated higher natural gas prices and lower natural gas availability in the country for nitrogen producers. -
Russia : Exports of urea fromRussia are expected to increase in 2024 due to the start-up of new capacity and the willingness of certain countries to purchase Russian fertilizer, includingBrazil andthe United States . 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 of Odessa inUkraine .
Over the near- and medium-terms, significant energy cost differentials between North American producers and high-cost producers in
Longer-term, management expects the global nitrogen supply-demand balance to tighten as global nitrogen capacity growth over the next four years is not projected to keep pace with expected global nitrogen demand growth of approximately
Strategic Initiatives Update
Joint Development Agreement with JERA Co., Inc. to explore development of greenfield low-carbon ammonia capacity
On April 17, 2024, CF Industries Holdings, Inc., and JERA Co., Inc. (JERA), Japan’s largest energy company, announced that they executed a joint development agreement (JDA) to explore the development of greenfield low-carbon ammonia production capacity at CF Industries’ Blue Point Complex in
The JDA will guide JERA and CF Industries’ evaluation of a joint venture agreement to build an approximately 1.4 million metric ton capacity low-carbon ammonia plant. JERA is contemplating a
Evaluation of low-carbon ammonia technologies and global low-carbon demand development
CF Industries, along with its partners, continue to advance front-end engineering and design studies evaluating autothermal reforming (ATR) ammonia production technology and assessing the cost and viability of adding flue gas carbon dioxide capture to a steam methane reforming (SMR) ammonia facility. Both FEED studies are expected to be completed in the second half of 2024.
CF Industries and its partners also expect greater clarity later in 2024 regarding demand for low-carbon ammonia, including the ammonia carbon intensity requirements of offtake partners as well as government incentives and regulatory developments in partners’ local jurisdictions.
Donaldsonville Complex green ammonia project
CF Industries’ green ammonia project at its Donaldsonville Complex in
Commissioning activities for the electrolysis system are nearing completion with start-up of green ammonia production to follow. At full capacity, the project will enable the Company to produce approximately 20,000 tons of green ammonia per year. This represents North America’s first commercial-scale green ammonia capacity.
Donaldsonville Complex carbon capture and sequestration project
Engineering activities for the construction of a dehydration and compression unit at CF Industries’ Donaldsonville Complex continue to advance: all major equipment for the facility has been procured, fabrication of the CO2 compressors is proceeding and construction of the cooling tower required for the unit has begun. Once in service, the dehydration and compression unit will enable up to 2 million tons of captured process CO2 to be transported and permanently 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 low-carbon ammonia.
___________________________________________________ |
|
(1) |
Certain items recognized during the first quarter of 2024 impacted the Company’s financial results and their comparability to the prior year period. See the table accompanying this release for a summary of these items. |
(2) |
Financial results for the first quarter of 2024 include the impact of CF Industries’ acquisition of the |
(3) |
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. |
(4) |
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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in millions, except per share and per MMBtu amounts) |
||||||
Net sales |
$ |
1,470 |
|
|
$ |
2,012 |
|
Cost of sales |
|
1,061 |
|
|
|
1,149 |
|
Gross margin |
$ |
409 |
|
|
$ |
863 |
|
Gross margin percentage |
|
27.8 |
% |
|
|
42.9 |
% |
|
|
|
|
||||
Net earnings attributable to common stockholders |
$ |
194 |
|
|
$ |
560 |
|
Net earnings per diluted share |
$ |
1.03 |
|
|
$ |
2.85 |
|
|
|
|
|
||||
EBITDA(1) |
$ |
488 |
|
|
$ |
924 |
|
Adjusted EBITDA(1) |
$ |
459 |
|
|
$ |
866 |
|
|
|
|
|
||||
Sales volume by product tons (000s) |
|
4,524 |
|
|
|
4,535 |
|
|
|
|
|
||||
Natural gas supplemental data (per MMBtu): |
|
|
|
||||
Natural gas costs in cost of sales(2) |
$ |
2.73 |
|
|
$ |
5.14 |
|
Realized derivatives loss in cost of sales(3) |
|
0.46 |
|
|
|
1.48 |
|
Cost of natural gas used for production in cost of sales |
$ |
3.19 |
|
|
$ |
6.62 |
|
Average daily market price of natural gas Henry Hub ( |
$ |
2.43 |
|
|
$ |
2.68 |
|
|
|
|
|
||||
Unrealized net mark-to-market gain on natural gas derivatives |
$ |
(33 |
) |
|
$ |
(72 |
) |
Depreciation and amortization |
$ |
253 |
|
|
$ |
206 |
|
Capital expenditures |
$ |
98 |
|
|
$ |
69 |
|
|
|
|
|
||||
Production volume by product tons (000s): |
|
|
|
||||
Ammonia(4) |
|
2,148 |
|
|
|
2,359 |
|
Granular urea |
|
959 |
|
|
|
1,211 |
|
UAN ( |
|
1,631 |
|
|
|
1,598 |
|
Ammonium nitrate (AN) |
|
341 |
|
|
|
388 |
|
___________________________________________________ |
|
(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 March 31, |
||||||
|
2024(1) |
|
2023 |
||||
|
(dollars in millions, except per ton amounts) |
||||||
Net sales |
$ |
402 |
|
|
$ |
424 |
|
Cost of sales |
|
337 |
|
|
|
280 |
|
Gross margin |
$ |
65 |
|
|
$ |
144 |
|
Gross margin percentage |
|
16.2 |
% |
|
|
34.0 |
% |
|
|
|
|
||||
Sales volume by product tons (000s) |
|
918 |
|
|
|
652 |
|
Sales volume by nutrient tons (000s)(2) |
|
753 |
|
|
|
535 |
|
|
|
|
|
||||
Average selling price per product ton |
$ |
438 |
|
|
$ |
650 |
|
Average selling price per nutrient ton(2) |
|
534 |
|
|
|
793 |
|
|
|
|
|
||||
Adjusted gross margin(3): |
|
|
|
||||
Gross margin |
$ |
65 |
|
|
$ |
144 |
|
Depreciation and amortization |
|
72 |
|
|
|
31 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(12 |
) |
|
|
(21 |
) |
Adjusted gross margin |
$ |
125 |
|
|
$ |
154 |
|
Adjusted gross margin as a percent of net sales |
|
31.1 |
% |
|
|
36.3 |
% |
|
|
|
|
||||
Gross margin per product ton |
$ |
71 |
|
|
$ |
221 |
|
Gross margin per nutrient ton(2) |
|
86 |
|
|
|
269 |
|
Adjusted gross margin per product ton |
|
136 |
|
|
|
236 |
|
Adjusted gross margin per nutrient ton(2) |
|
166 |
|
|
|
288 |
|
___________________________________________________ |
|
(1) |
Financial results for the first quarter of 2024 include the impact of CF Industries’ acquisition of the |
(2) |
Nutrient tons represent the tons of nitrogen within the product tons. |
(3) |
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 quarter 2024 to first quarter 2023:
-
Ammonia sales volume for 2024 increased compared to 2023 due to the addition of contractual commitments served from the recently acquired
Waggaman ammonia production facility and spring ammonia applications inNorth America being pulled into the first quarter of 2024 due to favorable weather. - Ammonia average selling prices decreased for 2024 compared to 2023 as lower global energy costs reduced the global market clearing price required to meet global demand as well as due to a higher proportion of non-agricultural ammonia sales.
-
Ammonia adjusted gross margin per ton decreased for 2024 compared to 2023 due primarily to lower average selling prices and higher maintenance costs partially offset by lower realized natural gas costs.
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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in millions, except per ton amounts) |
||||||
Net sales |
$ |
407 |
|
|
$ |
611 |
|
Cost of sales |
|
253 |
|
|
|
327 |
|
Gross margin |
$ |
154 |
|
|
$ |
284 |
|
Gross margin percentage |
|
37.8 |
% |
|
|
46.5 |
% |
|
|
|
|
||||
Sales volume by product tons (000s) |
|
1,092 |
|
|
|
1,323 |
|
Sales volume by nutrient tons (000s)(1) |
|
502 |
|
|
|
608 |
|
|
|
|
|
||||
Average selling price per product ton |
$ |
373 |
|
|
$ |
462 |
|
Average selling price per nutrient ton(1) |
|
811 |
|
|
|
1,005 |
|
|
|
|
|
||||
Adjusted gross margin(2): |
|
|
|
||||
Gross margin |
$ |
154 |
|
|
$ |
284 |
|
Depreciation and amortization |
|
69 |
|
|
|
79 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(9 |
) |
|
|
(20 |
) |
Adjusted gross margin |
$ |
214 |
|
|
$ |
343 |
|
Adjusted gross margin as a percent of net sales |
|
52.6 |
% |
|
|
56.1 |
% |
|
|
|
|
||||
Gross margin per product ton |
$ |
141 |
|
|
$ |
215 |
|
Gross margin per nutrient ton(1) |
|
307 |
|
|
|
467 |
|
Adjusted gross margin per product ton |
|
196 |
|
|
|
259 |
|
Adjusted gross margin per nutrient ton(1) |
|
426 |
|
|
|
564 |
|
___________________________________________________ |
|
(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 quarter 2024 to first quarter 2023:
- Granular urea sales volumes for 2024 were lower than 2023 primarily due to reduced availability of ammonia for upgrade and lower supply availability from the impact of severe weather that caused urea plant outages.
- Urea average selling prices decreased for 2024 compared to 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.
-
Granular urea adjusted gross margin per ton decreased for 2024 compared to 2023 due primarily to lower average selling prices and the impact of purchased volumes of granular urea to meet customer commitments partially offset by lower realized natural gas costs.
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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in millions, except per ton amounts) |
||||||
Net sales |
$ |
425 |
|
|
$ |
667 |
|
Cost of sales |
|
282 |
|
|
|
346 |
|
Gross margin |
$ |
143 |
|
|
$ |
321 |
|
Gross margin percentage |
|
33.6 |
% |
|
|
48.1 |
% |
|
|
|
|
||||
Sales volume by product tons (000s) |
|
1,611 |
|
|
|
1,662 |
|
Sales volume by nutrient tons (000s)(1) |
|
509 |
|
|
|
524 |
|
|
|
|
|
||||
Average selling price per product ton |
$ |
264 |
|
|
$ |
401 |
|
Average selling price per nutrient ton(1) |
|
835 |
|
|
|
1,273 |
|
|
|
|
|
||||
Adjusted gross margin(2): |
|
|
|
||||
Gross margin |
$ |
143 |
|
|
$ |
321 |
|
Depreciation and amortization |
|
69 |
|
|
|
66 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(10 |
) |
|
|
(21 |
) |
Adjusted gross margin |
$ |
202 |
|
|
$ |
366 |
|
Adjusted gross margin as a percent of net sales |
|
47.5 |
% |
|
|
54.9 |
% |
|
|
|
|
||||
Gross margin per product ton |
$ |
89 |
|
|
$ |
193 |
|
Gross margin per nutrient ton(1) |
|
281 |
|
|
|
613 |
|
Adjusted gross margin per product ton |
|
125 |
|
|
|
220 |
|
Adjusted gross margin per nutrient ton(1) |
|
397 |
|
|
|
698 |
|
___________________________________________________ |
|
(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 quarter 2024 to first quarter 2023:
- UAN sales volumes for 2024 approximated 2023 sales volumes.
- UAN average selling prices decreased for 2024 compared to 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.
-
UAN adjusted gross margin per ton decreased for 2024 compared to 2023 due primarily to lower average selling prices partially offset by lower realized natural gas costs.
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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in millions, except per ton amounts) |
||||||
Net sales |
$ |
114 |
|
|
$ |
159 |
|
Cost of sales |
|
105 |
|
|
|
104 |
|
Gross margin |
$ |
9 |
|
|
$ |
55 |
|
Gross margin percentage |
|
7.9 |
% |
|
|
34.6 |
% |
|
|
|
|
||||
Sales volume by product tons (000s) |
|
390 |
|
|
|
374 |
|
Sales volume by nutrient tons (000s)(1) |
|
134 |
|
|
|
128 |
|
|
|
|
|
||||
Average selling price per product ton |
$ |
292 |
|
|
$ |
425 |
|
Average selling price per nutrient ton(1) |
|
851 |
|
|
|
1,242 |
|
|
|
|
|
||||
Adjusted gross margin(2): |
|
|
|
||||
Gross margin |
$ |
9 |
|
|
$ |
55 |
|
Depreciation and amortization |
|
13 |
|
|
|
11 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(1 |
) |
|
|
(3 |
) |
Adjusted gross margin |
$ |
21 |
|
|
$ |
63 |
|
Adjusted gross margin as a percent of net sales |
|
18.4 |
% |
|
|
39.6 |
% |
|
|
|
|
||||
Gross margin per product ton |
$ |
23 |
|
|
$ |
147 |
|
Gross margin per nutrient ton(1) |
|
67 |
|
|
|
430 |
|
Adjusted gross margin per product ton |
|
54 |
|
|
|
168 |
|
Adjusted gross margin per nutrient ton(1) |
|
157 |
|
|
|
492 |
|
___________________________________________________ |
|
(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 quarter 2024 to first quarter 2023:
- AN sales volume for 2024 approximated 2023 sales volumes.
- AN average selling prices decreased for 2024 compared to 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.
-
AN adjusted gross margin per ton decreased for 2024 compared to 2023 due primarily to lower average selling prices partially offset by lower realized natural gas costs.
Other Segment
CF Industries’ Other segment primarily includes diesel exhaust fluid (DEF), urea liquor and nitric acid.
|
Three months ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(dollars in millions, except per ton amounts) |
||||||
Net sales |
$ |
122 |
|
|
$ |
151 |
|
Cost of sales |
|
84 |
|
|
|
92 |
|
Gross margin |
$ |
38 |
|
|
$ |
59 |
|
Gross margin percentage |
|
31.1 |
% |
|
|
39.1 |
% |
|
|
|
|
||||
Sales volume by product tons (000s) |
|
513 |
|
|
|
524 |
|
Sales volume by nutrient tons (000s)(1) |
|
99 |
|
|
|
103 |
|
|
|
|
|
||||
Average selling price per product ton |
$ |
238 |
|
|
$ |
288 |
|
Average selling price per nutrient ton(1) |
|
1,232 |
|
|
|
1,466 |
|
|
|
|
|
||||
Adjusted gross margin(2): |
|
|
|
||||
Gross margin |
$ |
38 |
|
|
$ |
59 |
|
Depreciation and amortization |
|
20 |
|
|
|
16 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(1 |
) |
|
|
(7 |
) |
Adjusted gross margin |
$ |
57 |
|
|
$ |
68 |
|
Adjusted gross margin as a percent of net sales |
|
46.7 |
% |
|
|
45.0 |
% |
|
|
|
|
||||
Gross margin per product ton |
$ |
74 |
|
|
$ |
113 |
|
Gross margin per nutrient ton(1) |
|
384 |
|
|
|
573 |
|
Adjusted gross margin per product ton |
|
111 |
|
|
|
130 |
|
Adjusted gross margin per nutrient ton(1) |
|
576 |
|
|
|
660 |
|
___________________________________________________ |
|
(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 quarter 2024 to first quarter 2023:
- Other sales volume for 2024 approximated 2023 sales volumes.
- Other average selling prices decreased for 2024 compared to 2023 as lower global energy costs reduced the global market clearing price required to meet global demand.
-
Other adjusted gross margin per ton decreased for 2024 compared to 2023 due primarily to lower average selling prices partially offset by lower realized natural gas costs.
Dividend Payment
On April 18, 2024, CF Industries’ Board of Directors declared a quarterly dividend of
Conference Call
CF Industries will hold a conference call to discuss its first quarter 2024 results at 10:00 a.m. ET on Thursday, May 2, 2024. 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 low-carbon 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 synergies and other benefits, and other aspects of the transactions with Incitec Pivot Limited (“IPL”), strategic plans and management’s expectations with respect to the production of green and 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 of obstacles to realization of the benefits of the transactions with IPL; the risk that the synergies from the transactions with IPL may not be fully realized or may take longer to realize than expected; the risk that the completion of the 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.
|
|||||||
|
Three months ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(in millions, except per share amounts) |
||||||
Net sales |
$ |
1,470 |
|
|
$ |
2,012 |
|
Cost of sales |
|
1,061 |
|
|
|
1,149 |
|
Gross margin |
|
409 |
|
|
|
863 |
|
Selling, general and administrative expenses |
|
88 |
|
|
|
74 |
|
|
|
— |
|
|
|
2 |
|
Acquisition and integration costs |
|
3 |
|
|
|
13 |
|
Other operating—net |
|
17 |
|
|
|
(35 |
) |
Total other operating costs and expenses |
|
108 |
|
|
|
54 |
|
Equity in earnings of operating affiliate |
|
2 |
|
|
|
17 |
|
Operating earnings |
|
303 |
|
|
|
826 |
|
Interest expense |
|
37 |
|
|
|
40 |
|
Interest income |
|
(30 |
) |
|
|
(30 |
) |
Other non-operating—net |
|
(4 |
) |
|
|
(3 |
) |
Earnings before income taxes |
|
300 |
|
|
|
819 |
|
Income tax provision |
|
62 |
|
|
|
169 |
|
Net earnings |
|
238 |
|
|
|
650 |
|
Less: Net earnings attributable to noncontrolling interest |
|
44 |
|
|
|
90 |
|
Net earnings attributable to common stockholders |
$ |
194 |
|
|
$ |
560 |
|
|
|
|
|
||||
Net earnings per share attributable to common stockholders: |
|
|
|
||||
Basic |
$ |
1.03 |
|
|
$ |
2.86 |
|
Diluted |
$ |
1.03 |
|
|
$ |
2.85 |
|
Weighted-average common shares outstanding: |
|
|
|
||||
Basic |
|
187.6 |
|
|
|
196.2 |
|
Diluted |
|
188.1 |
|
|
|
196.9 |
|
CF INDUSTRIES HOLDINGS, INC.
|
|||||
|
(unaudited) |
|
|
||
|
March 31, 2024 |
|
December 31, 2023 |
||
|
(in millions) |
||||
Assets |
|
|
|
||
Current assets: |
|
|
|
||
Cash and cash equivalents |
$ |
1,773 |
|
$ |
2,032 |
Accounts receivable—net |
|
535 |
|
|
505 |
Inventories |
|
271 |
|
|
299 |
Prepaid income taxes |
|
102 |
|
|
167 |
Other current assets |
|
38 |
|
|
47 |
Total current assets |
|
2,719 |
|
|
3,050 |
Property, plant and equipment—net |
|
6,982 |
|
|
7,141 |
Investment in affiliate |
|
29 |
|
|
26 |
Goodwill |
|
2,495 |
|
|
2,495 |
Intangible assets—net |
|
532 |
|
|
538 |
Operating lease right-of-use assets |
|
240 |
|
|
259 |
Other assets |
|
864 |
|
|
867 |
Total assets |
$ |
13,861 |
|
$ |
14,376 |
|
|
|
|
||
Liabilities and Equity |
|
|
|
||
Current liabilities: |
|
|
|
||
Accounts payable and accrued expenses |
$ |
501 |
|
$ |
520 |
Income taxes payable |
|
— |
|
|
12 |
Customer advances |
|
104 |
|
|
130 |
Current operating lease liabilities |
|
77 |
|
|
96 |
Other current liabilities |
|
8 |
|
|
42 |
Total current liabilities |
|
690 |
|
|
800 |
Long-term debt |
|
2,969 |
|
|
2,968 |
Deferred income taxes |
|
985 |
|
|
999 |
Operating lease liabilities |
|
171 |
|
|
168 |
Supply contract liability |
|
747 |
|
|
754 |
Other liabilities |
|
303 |
|
|
314 |
Equity: |
|
|
|
||
Stockholders’ equity |
|
5,440 |
|
|
5,717 |
Noncontrolling interest |
|
2,556 |
|
|
2,656 |
Total equity |
|
7,996 |
|
|
8,373 |
Total liabilities and equity |
$ |
13,861 |
|
$ |
14,376 |
CF INDUSTRIES HOLDINGS, INC.
|
|||||||
|
Three months ended March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(in millions) |
||||||
Operating Activities: |
|
|
|
||||
Net earnings |
$ |
238 |
|
|
$ |
650 |
|
Adjustments to reconcile net earnings to net cash provided by operating activities: |
|
|
|
||||
Depreciation and amortization |
|
253 |
|
|
|
206 |
|
Deferred income taxes |
|
(11 |
) |
|
|
(26 |
) |
Stock-based compensation expense |
|
13 |
|
|
|
12 |
|
Unrealized net gain on natural gas derivatives |
|
(33 |
) |
|
|
(72 |
) |
Gain on sale of emission credits |
|
— |
|
|
|
(35 |
) |
Loss on disposal of property, plant and equipment |
|
5 |
|
|
|
— |
|
Undistributed earnings of affiliate—net of taxes |
|
(2 |
) |
|
|
(7 |
) |
Changes in assets and liabilities: |
|
|
|
||||
Accounts receivable—net |
|
(50 |
) |
|
|
101 |
|
Inventories |
|
20 |
|
|
|
39 |
|
Accrued and prepaid income taxes |
|
61 |
|
|
|
153 |
|
Accounts payable and accrued expenses |
|
(23 |
) |
|
|
(135 |
) |
Customer advances |
|
(25 |
) |
|
|
55 |
|
Other—net |
|
(1 |
) |
|
|
6 |
|
Net cash provided by operating activities |
|
445 |
|
|
|
947 |
|
Investing Activities: |
|
|
|
||||
Additions to property, plant and equipment |
|
(98 |
) |
|
|
(69 |
) |
Purchase of emission credits |
|
(2 |
) |
|
|
— |
|
Proceeds from sale of emission credits |
|
— |
|
|
|
35 |
|
Net cash used in investing activities |
|
(100 |
) |
|
|
(34 |
) |
Financing Activities: |
|
|
|
||||
Dividends paid on common stock |
|
(97 |
) |
|
|
(79 |
) |
Distributions to noncontrolling interest |
|
(144 |
) |
|
|
(255 |
) |
Purchases of treasury stock |
|
(339 |
) |
|
|
(54 |
) |
Proceeds from issuances of common stock under employee stock plans |
|
1 |
|
|
|
— |
|
Cash paid for shares withheld for taxes |
|
(23 |
) |
|
|
(22 |
) |
Net cash used in financing activities |
|
(602 |
) |
|
|
(410 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
(2 |
) |
|
|
(1 |
) |
(Decrease) increase in cash and cash equivalents |
|
(259 |
) |
|
|
502 |
|
Cash and cash equivalents at beginning of period |
|
2,032 |
|
|
|
2,323 |
|
Cash and cash equivalents at end of period |
$ |
1,773 |
|
|
$ |
2,825 |
|
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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(in millions) |
||||||
Net cash provided by operating activities(1) |
$ |
2,255 |
|
|
$ |
3,411 |
|
Capital expenditures |
|
(528 |
) |
|
|
(459 |
) |
Distributions to noncontrolling interest |
|
(348 |
) |
|
|
(627 |
) |
Free cash flow(1) |
$ |
1,379 |
|
|
$ |
2,325 |
|
___________________________________________________ |
|
(1) |
For the twelve months ended March 31, 2023, net cash provided by operating activities and free cash flow 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 March 31, |
||||||
|
|
2024 |
|
|
|
2023 |
|
|
(in millions) |
||||||
Net earnings |
$ |
238 |
|
|
$ |
650 |
|
Less: Net earnings attributable to noncontrolling interest |
|
(44 |
) |
|
|
(90 |
) |
Net earnings attributable to common stockholders |
|
194 |
|
|
|
560 |
|
Interest expense—net |
|
7 |
|
|
|
10 |
|
Income tax provision |
|
62 |
|
|
|
169 |
|
Depreciation and amortization |
|
253 |
|
|
|
206 |
|
Less other adjustments: |
|
|
|
||||
Depreciation and amortization in noncontrolling interest |
|
(27 |
) |
|
|
(20 |
) |
Loan fee amortization(1) |
|
(1 |
) |
|
|
(1 |
) |
EBITDA |
|
488 |
|
|
|
924 |
|
Unrealized net mark-to-market gain on natural gas derivatives |
|
(33 |
) |
|
|
(72 |
) |
Loss (gain) on foreign currency transactions, including intercompany loans |
|
1 |
|
|
|
(1 |
) |
|
|
— |
|
|
|
2 |
|
Acquisition and integration costs |
|
3 |
|
|
|
13 |
|
Total adjustments |
|
(29 |
) |
|
|
(58 |
) |
Adjusted EBITDA |
$ |
459 |
|
|
$ |
866 |
|
|
|
|
|
||||
Net sales |
$ |
1,470 |
|
|
$ |
2,012 |
|
Sales volume by product tons (000s) |
|
4,524 |
|
|
|
4,535 |
|
|
|
|
|
||||
Net earnings attributable to common stockholders per ton |
$ |
42.88 |
|
|
$ |
123.48 |
|
EBITDA per ton |
$ |
107.87 |
|
|
$ |
203.75 |
|
Adjusted EBITDA per ton |
$ |
101.46 |
|
|
$ |
190.96 |
|
___________________________________________________ |
|
(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 OF RESULTS |
For the three months ended March 31, 2024 and 2023, we reported net earnings attributable to common stockholders of
|
Three months ended March 31, |
||||||||||||||
|
2024 |
|
2023 |
||||||||||||
|
Pre-Tax |
|
After-Tax |
|
Pre-Tax |
|
After-Tax |
||||||||
|
(in millions) |
||||||||||||||
Unrealized net mark-to-market gain on natural gas derivatives(1) |
$ |
(33 |
) |
$ |
(26 |
) |
|
$ |
(72 |
) |
$ |
(55 |
) |
||
Loss (gain) on foreign currency transactions, including intercompany loans(2) |
|
1 |
|
|
1 |
|
|
|
(1 |
) |
|
(1 |
) |
||
|
|
— |
|
|
— |
|
|
|
2 |
|
|
2 |
|
||
Acquisition and integration costs |
|
3 |
|
|
2 |
|
|
|
13 |
|
|
10 |
|
||
___________________________________________________ |
|
(1) |
Included in cost of sales in our consolidated statements of operations. |
(2) |
Included in other operating—net in our consolidated statements of operations. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240501162475/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
FAQ
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