Strong Operational Performance in Second
Quarter 2024
Favorable Energy Spreads Underpin Continued
Strong Cash Generation
Returned $832 Million to Shareholders through
Dividends, Share Repurchases in First Half 2024
CF Industries Holdings, Inc. (NYSE: CF), a leading global
manufacturer of hydrogen and nitrogen products, today announced
results for the first half and second quarter ended June 30,
2024.
Highlights
- First half 2024 net earnings(1)(2) of $614 million, or $3.31
per diluted share, EBITDA(3) of $1.24 billion, and adjusted
EBITDA(3) of $1.21 billion
- Second quarter 2024 net earnings of $420 million, or $2.30 per
diluted share, EBITDA of $752 million, and adjusted EBITDA of $752
million
- Trailing twelve months net cash from operating activities of
$2.02 billion and free cash flow(4) of $1.15 billion
- Entered agreement with ExxonMobil for the transport and
sequestration of up to 500,000 metric tons of carbon dioxide from
Company’s Yazoo City, Mississippi, facility; start-up expected in
2028
- Repurchased 4.0 million shares for $305 million during the
second quarter of 2024
"I am extremely proud of the team for running our plants
exceptionally well, with phenomenal safety performance in the
second quarter," said Tony Will, president and chief executive
officer, CF Industries Holdings, Inc.
Operations Overview
The Company continues to operate safely across its network. As
of June 30, 2024, the 12-month rolling average recordable incident
rate was 0.17 incidents per 200,000 work hours, significantly
better than industry averages.
Gross ammonia production for the first half and second quarter
of 2024 was approximately 4.8 million and 2.6 million tons,
respectively, compared to 4.7 million and 2.4 million tons in the
first half and second quarter, respectively, of 2023. The Company
expects gross ammonia production for the full year 2024 to be
approximately 9.8 million tons.
Financial Results Overview
First Half 2024 Financial Results
For the first half of 2024, net earnings attributable to common
stockholders were $614 million, or $3.31 per diluted share, EBITDA
was $1.24 billion, and adjusted EBITDA was $1.21 billion. These
results compare to first half of 2023 net earnings attributable to
common stockholders of $1.09 billion, or $5.55 per diluted share,
EBITDA of $1.78 billion, and adjusted EBITDA of $1.72 billion.
Net sales in the first half of 2024 were $3.04 billion compared
to $3.79 billion in the first half of 2023. Average selling prices
for the first half of 2024 were lower than in the first half of
2023 as lower global energy costs reduced the global market
clearing price required to meet global demand. Sales volumes in the
first half of 2024 were similar to the first half of 2023 as higher
ammonia sales volumes due primarily to the addition of contractual
commitments served from the recently acquired Waggaman ammonia
production facility were offset primarily by lower urea and UAN
sales volumes.
Cost of sales for the first half of 2024 was lower compared to
the first half of 2023 due to lower realized natural gas costs
partially offset by higher maintenance costs incurred in the first
quarter of 2024 related to plant outages.
The average cost of natural gas reflected in the Company’s cost
of sales was $2.53 per MMBtu in the first half of 2024 compared to
the average cost of natural gas in cost of sales of $4.56 per MMBtu
in the first half of 2023.
Second Quarter 2024 Financial Results
For the second quarter of 2024, net earnings attributable to
common stockholders were $420 million, or $2.30 per diluted share,
EBITDA was $752 million, and adjusted EBITDA was $752 million.
These results compare to second quarter of 2023 net earnings
attributable to common stockholders of $527 million, or $2.70 per
diluted share, EBITDA of $855 million, and adjusted EBITDA of $857
million.
Net sales in the second quarter of 2024 were $1.57 billion
compared to $1.78 billion in the second quarter of 2023. Average
selling prices for the second quarter of 2024 were lower than in
the second quarter of 2023 as lower global energy costs reduced the
global market clearing price required to meet global demand. Sales
volumes in the second quarter of 2024 were lower than the second
quarter of 2023 as lower ammonia, UAN and AN sales volumes were
partially offset by higher urea sales volumes.
Cost of sales for the second quarter of 2024 was lower compared
to the second quarter of 2023 primarily due to lower realized
natural gas costs.
The average cost of natural gas reflected in the Company’s cost
of sales was $1.90 per MMBtu in the second quarter of 2024 compared
to the average cost of natural gas in cost of sales of $2.75 per
MMBtu in the second quarter of 2023.
Capital Management
Capital Expenditures
Capital expenditures in the second quarter and first half of
2024 were $84 million and $182 million, respectively. Management
projects capital expenditures for full year 2024 will be
approximately $550 million.
Share Repurchase Program
The Company repurchased 8.3 million shares for $652 million
during the first half of 2024, which includes the repurchase of 4.0
million shares for $305 million during the second quarter of 2024.
Since CF Industries commenced its current $3 billion share
repurchase program in the second quarter of 2023, the Company has
repurchased 13.9 million shares for approximately $1.1 billion. As
of June 30, 2024, approximately $1.9 billion remains under the
program, which expires in December 2025.
CHS Inc. Distribution
On July 31, 2024, the Board of Managers of CF Industries
Nitrogen, LLC approved a semi-annual distribution payment to CHS
Inc. of $165 million for the distribution period ended June 30,
2024. The distribution was paid on July 31, 2024.
Nitrogen Market Outlook
From the end of the second quarter of 2024 into the third
quarter of 2024, gas curtailments in Egypt and Trinidad, along with
scheduled outages and a lack of substantial urea export
availability from China, have supported global nitrogen pricing
during a period of year that typically sees lower prices and low
global shipments as demand shifts from the Northern Hemisphere to
the Southern Hemisphere. In the near-term, management expects the
global supply-demand balance to remain constructive, led by
nitrogen import requirements through year-end for Brazil and India
and continued wide energy spreads between North America and
high-cost production in Europe.
- North America: Management believes nitrogen channel
inventories in the region for all products are below average based
on strong demand for urea and UAN during the spring application
season and higher-than-expected planted corn acres. Reported UAN
and ammonia fill programs achieved prices above 2023 levels despite
softening farm economics in the region as corn and soybean prices
have fallen due to higher forecasted production in 2024 in the
United States and Brazil.
- Brazil: Urea consumption in Brazil in 2024 is forecast
to increase 3% year-over-year to more than 8.0 million metric tons,
supported by improved supply availability and lower global urea
prices. Urea imports to Brazil in 2024 are expected to be in the
range of 7.0-8.0 million metric tons as domestic production remains
limited.
- India: India is expected to be active importing urea
through the second half of the year as the country secured
lower-than-expected volumes in its two most recent tenders and urea
consumption is expected to rise to support rice, wheat and other
crop production. Management expects urea imports to India in 2024,
including volumes supplied on a contractual basis, to be in a range
of 5.0-6.0 million metric tons as recently revitalized plants and
new facilities in the country operate at higher rates.
- Europe: Approximately 25% of ammonia and 30% of urea
capacity were reported in shutdown/curtailment in Europe in early
July 2024. Management believes that ammonia operating rates and
overall domestic nitrogen product output in Europe 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: Ongoing urea export controls by the Chinese
government continues to limit urea export availability from the
country. For the first six months of 2024, China exported 140,000
metric tons of urea, 86 percent lower than the same period in
2023.
- Russia: Urea exports from Russia are expected to
increase in 2024 due to the start-up of new urea granulation
capacity and the willingness of certain countries to purchase
Russian fertilizer, including Brazil and the United States. Exports
of ammonia from Russia are also expected to rise with the
completion of the country’s Taman port ammonia terminal in the
second half of 2024 though annual ammonia export volumes are
projected to remain below pre-war levels.
Over the medium-term, significant energy cost differentials
between North American producers and high-cost producers in Europe
and Asia are expected to persist. As a result, the Company believes
the global nitrogen cost curve will remain supportive of strong
margin opportunities for low-cost North American producers.
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 1.5% per
year for traditional applications and new demand growth for clean
energy applications. Global production is expected to remain
constrained by continued challenges related to cost and
availability of natural gas.
Strategic Initiatives Update
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 (FEED) 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 fourth quarter 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
Commissioning of the 20-megawatt alkaline water electrolysis
plant constructed at CF Industries’ Donaldsonville, Louisiana,
manufacturing complex is nearing completion. In anticipation of
start-up, the Company has entered into an agreement to procure
45V-compliant renewable energy certificates to pair with
electrolyzer operations. As a result, the electrolyzer will
generate green hydrogen that enables CF Industries to produce green
ammonia, which refers to ammonia produced with hydrogen sourced
from an electrolysis process that produces no carbon dioxide
emissions. At full electrolyzer capacity, the Company will be able
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 carbon dioxide compressors is proceeding and
construction of the cooling tower required for the unit has been
completed. Once in service, the dehydration and compression unit
will enable up to 2 million metric tons of captured process carbon
dioxide to be transported and permanently stored by ExxonMobil. CF
Industries expects the project to qualify for tax credits under
Section 45Q of the Internal Revenue Code, which provides a credit
per metric ton of carbon dioxide sequestered. Start-up of the
project is expected in 2025.
Yazoo City Complex carbon capture and sequestration project
CF Industries signed a definitive commercial agreement in July
2024 with ExxonMobil for the transport and sequestration in
permanent geologic storage of up to 500,000 metric tons of carbon
dioxide annually from the Company’s Yazoo City, Mississippi,
Complex. CF Industries will invest approximately $100 million into
its Yazoo City Complex to build a carbon dioxide dehydration and
compression unit to enable up to 500,000 metric tons of carbon
dioxide captured from the ammonia production process per year to be
transported and stored. CF Industries expects the project to
qualify for tax credits under Section 45Q of the Internal Revenue
Code, which provides a credit per metric ton of carbon dioxide
sequestered. Start-up of the project is expected in 2028.
___________________________________________________
(1)
Certain items recognized during
the first half 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
half of 2024 include the impact of CF Industries’ acquisition of
the Waggaman, Louisiana, ammonia production facility on December 1,
2023.
(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 June
30,
Six months ended June
30,
2024
2023
2024
2023
(dollars in millions, except
per share and per MMBtu amounts)
Net sales
$
1,572
$
1,775
$
3,042
$
3,787
Cost of sales
893
971
1,954
2,120
Gross margin
$
679
$
804
$
1,088
$
1,667
Gross margin percentage
43.2
%
45.3
%
35.8
%
44.0
%
Net earnings attributable to common
stockholders
$
420
$
527
$
614
$
1,087
Net earnings per diluted share
$
2.30
$
2.70
$
3.31
$
5.55
EBITDA(1)
$
752
$
855
$
1,240
$
1,779
Adjusted EBITDA(1)
$
752
$
857
$
1,211
$
1,723
Sales volume by product tons (000s)
4,875
4,938
9,399
9,473
Natural gas supplemental data (per
MMBtu):
Natural gas costs in cost of sales(2)
$
1.90
$
2.74
$
2.30
$
3.86
Realized derivatives loss in cost of
sales(3)
—
0.01
0.23
0.70
Cost of natural gas used for production in
cost of sales
$
1.90
$
2.75
$
2.53
$
4.56
Average daily market price of natural gas
Henry Hub (Louisiana)
$
2.04
$
2.12
$
2.24
$
2.40
Unrealized net mark-to-market gain on
natural gas derivatives
$
(1
)
$
—
$
(34
)
$
(72
)
Depreciation and amortization
$
222
$
221
$
475
$
427
Capital expenditures
$
84
$
95
$
182
$
164
Production volume by product tons
(000s):
Ammonia(4)
2,602
2,374
4,750
4,733
Granular urea
1,255
1,122
2,214
2,333
UAN (32%)
1,833
1,665
3,464
3,263
Ammonium nitrate (AN)
333
300
674
688
___________________________________________________
(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,
2024(1)
2023
2024(1)
2023
(dollars in millions, except
per ton amounts)
Net sales
$
409
$
525
$
811
$
949
Cost of sales
262
303
599
583
Gross margin
$
147
$
222
$
212
$
366
Gross margin percentage
35.9
%
42.3
%
26.1
%
38.6
%
Sales volume by product tons (000s)
979
1,053
1,897
1,705
Sales volume by nutrient tons
(000s)(2)
802
863
1,555
1,398
Average selling price per product ton
$
418
$
499
$
428
$
557
Average selling price per nutrient
ton(2)
510
608
522
679
Adjusted gross margin(3):
Gross margin
$
147
$
222
$
212
$
366
Depreciation and amortization
49
47
121
78
Unrealized net mark-to-market gain on
natural gas derivatives
—
—
(12
)
(21
)
Adjusted gross margin
$
196
$
269
$
321
$
423
Adjusted gross margin as a percent of net
sales
47.9
%
51.2
%
39.6
%
44.6
%
Gross margin per product ton
$
150
$
211
$
112
$
215
Gross margin per nutrient ton(2)
183
257
136
262
Adjusted gross margin per product ton
200
255
169
248
Adjusted gross margin per nutrient
ton(2)
244
312
206
303
___________________________________________________
(1)
Financial results for the second quarter
and first half of 2024 include the impact of CF Industries’
acquisition of the Waggaman, Louisiana, ammonia production facility
on December 1, 2023.
(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 half 2024 to first half 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, partially offset by
lower spring ammonia agricultural applications in North America
compared to the prior year.
- 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 and the Company had 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 June
30,
Six months ended June
30,
2024
2023
2024
2023
(dollars in millions, except
per ton amounts)
Net sales
$
457
$
460
$
864
$
1,071
Cost of sales
230
222
483
549
Gross margin
$
227
$
238
$
381
$
522
Gross margin percentage
49.7
%
51.7
%
44.1
%
48.7
%
Sales volume by product tons (000s)
1,251
1,147
2,343
2,470
Sales volume by nutrient tons
(000s)(1)
576
529
1,078
1,137
Average selling price per product ton
$
365
$
401
$
369
$
434
Average selling price per nutrient
ton(1)
793
870
801
942
Adjusted gross margin(2):
Gross margin
$
227
$
238
$
381
$
522
Depreciation and amortization
76
71
145
150
Unrealized net mark-to-market gain on
natural gas derivatives
—
—
(9
)
(20
)
Adjusted gross margin
$
303
$
309
$
517
$
652
Adjusted gross margin as a percent of net
sales
66.3
%
67.2
%
59.8
%
60.9
%
Gross margin per product ton
$
181
$
207
$
163
$
211
Gross margin per nutrient ton(1)
394
450
353
459
Adjusted gross margin per product ton
242
269
221
264
Adjusted gross margin per nutrient
ton(1)
526
584
480
573
___________________________________________________
(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 2024 to first half 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 in the first quarter of 2024.
- 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 June
30,
Six months ended June
30,
2024
2023
2024
2023
(dollars in millions, except
per ton amounts)
Net sales
$
475
$
548
$
900
$
1,215
Cost of sales
259
289
541
635
Gross margin
$
216
$
259
$
359
$
580
Gross margin percentage
45.5
%
47.3
%
39.9
%
47.7
%
Sales volume by product tons (000s)
1,748
1,809
3,359
3,471
Sales volume by nutrient tons
(000s)(1)
553
570
1,062
1,094
Average selling price per product ton
$
272
$
303
$
268
$
350
Average selling price per nutrient
ton(1)
859
961
847
1,111
Adjusted gross margin(2):
Gross margin
$
216
$
259
$
359
$
580
Depreciation and amortization
68
70
137
136
Unrealized net mark-to-market gain on
natural gas derivatives
—
—
(10
)
(21
)
Adjusted gross margin
$
284
$
329
$
486
$
695
Adjusted gross margin as a percent of net
sales
59.8
%
60.0
%
54.0
%
57.2
%
Gross margin per product ton
$
124
$
143
$
107
$
167
Gross margin per nutrient ton(1)
391
454
338
530
Adjusted gross margin per product ton
162
182
145
200
Adjusted gross margin per nutrient
ton(1)
514
577
458
635
___________________________________________________
(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 2024 to first half 2023:
- UAN sales volumes for 2024 were similar to 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 June
30,
Six months ended June
30,
2024
2023
2024
2023
(dollars in millions, except
per ton amounts)
Net sales
$
98
$
104
$
212
$
263
Cost of sales
75
81
180
185
Gross margin
$
23
$
23
$
32
$
78
Gross margin percentage
23.5
%
22.1
%
15.1
%
29.7
%
Sales volume by product tons (000s)
340
369
730
743
Sales volume by nutrient tons
(000s)(1)
116
127
250
255
Average selling price per product ton
$
288
$
282
$
290
$
354
Average selling price per nutrient
ton(1)
845
819
848
1,031
Adjusted gross margin(2):
Gross margin
$
23
$
23
$
32
$
78
Depreciation and amortization
7
12
20
23
Unrealized net mark-to-market gain on
natural gas derivatives
—
—
(1
)
(3
)
Adjusted gross margin
$
30
$
35
$
51
$
98
Adjusted gross margin as a percent of net
sales
30.6
%
33.7
%
24.1
%
37.3
%
Gross margin per product ton
$
68
$
62
$
44
$
105
Gross margin per nutrient ton(1)
198
181
128
306
Adjusted gross margin per product ton
88
95
70
132
Adjusted gross margin per nutrient
ton(1)
259
276
204
384
___________________________________________________
(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 2024 to first half 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 maintenance costs and 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 June
30,
Six months ended June
30,
2024
2023
2024
2023
(dollars in millions, except
per ton amounts)
Net sales
$
133
$
138
$
255
$
289
Cost of sales
67
76
151
168
Gross margin
$
66
$
62
$
104
$
121
Gross margin percentage
49.6
%
44.9
%
40.8
%
41.9
%
Sales volume by product tons (000s)
557
560
1,070
1,084
Sales volume by nutrient tons
(000s)(1)
109
110
208
213
Average selling price per product ton
$
239
$
246
$
238
$
267
Average selling price per nutrient
ton(1)
1,220
1,255
1,226
1,357
Adjusted gross margin(2):
Gross margin
$
66
$
62
$
104
$
121
Depreciation and amortization
13
17
33
33
Unrealized net mark-to-market gain on
natural gas derivatives
(1
)
—
(2
)
(7
)
Adjusted gross margin
$
78
$
79
$
135
$
147
Adjusted gross margin as a percent of net
sales
58.6
%
57.2
%
52.9
%
50.9
%
Gross margin per product ton
$
118
$
111
$
97
$
112
Gross margin per nutrient ton(1)
606
564
500
568
Adjusted gross margin per product ton
140
141
126
136
Adjusted gross margin per nutrient
ton(1)
716
718
649
690
___________________________________________________
(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 2024 to first half 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 July 10, 2024, CF Industries’ Board of Directors declared a
quarterly dividend of $0.50 per common share. The dividend will be
paid on August 30, 2024 to stockholders of record as of August 15,
2024.
Conference Call
CF Industries will hold a conference call to discuss its second
quarter and first half 2024 results at 11:00 a.m. ET on Thursday,
August 8, 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 the United States, Canada, and the
United Kingdom, an unparalleled storage, transportation and
distribution network in North America, and logistics capabilities
enabling a global reach underpin our strategy to leverage our
unique capabilities to accelerate the world’s transition to clean
energy. CF Industries routinely posts investor announcements and
additional information on the Company’s website at
www.cfindustries.com and encourages those interested in the Company
to check there frequently.
Note Regarding Non-GAAP Financial Measures
The Company reports its financial results in accordance with
U.S. generally accepted accounting principles (GAAP). Management
believes that EBITDA, EBITDA per ton, adjusted EBITDA, adjusted
EBITDA per ton, free cash flow, and, on a segment basis, adjusted
gross margin, adjusted gross margin as a percent of net sales and
adjusted gross margin per product ton and per nutrient ton, which
are non-GAAP financial measures, provide additional meaningful
information regarding the Company’s performance and financial
strength. Management uses these measures, and believes they are
useful to investors, as supplemental financial measures in the
comparison of year-over-year performance. Non-GAAP financial
measures should be viewed in addition to, and not as an alternative
for, the Company’s reported results prepared in accordance with
GAAP. In addition, because not all companies use identical
calculations, EBITDA, EBITDA per ton, adjusted EBITDA, adjusted
EBITDA per ton, free cash flow, adjusted gross margin, adjusted
gross margin as a percent of net sales and adjusted gross margin
per product ton and per nutrient ton, included in this release may
not be comparable to similarly titled measures of other companies.
Reconciliations of EBITDA, EBITDA per ton, adjusted EBITDA,
adjusted EBITDA per ton, and free cash flow to the most directly
comparable GAAP measures are provided in the tables accompanying
this release under “CF Industries Holdings, Inc.-Selected Financial
Information-Non-GAAP Disclosure Items.” Reconciliations 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 the
most directly comparable GAAP measures are provided in the segment
tables included in this release.
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 Waggaman
ammonia production complex into the Company’s operations, disrupt
current operations or harm relationships with customers, employees
and suppliers; the risk that integration of the Waggaman ammonia
production complex with the Company’s current operations will be
more costly or difficult than expected or may otherwise be
unsuccessful; diversion of management time and attention to issues
relating to the transactions with IPL; unanticipated costs or
liabilities associated with the IPL transactions; the cyclical
nature of the Company’s business and the impact of global supply
and demand on the Company’s selling prices; the global commodity
nature of the Company’s nitrogen products, the conditions in the
international market for nitrogen products, and the intense global
competition from other producers; conditions in the United States,
Europe and other agricultural areas, including the influence of
governmental policies and technological developments on the demand
for our fertilizer products; the volatility of natural gas prices
in North America and the United Kingdom; weather conditions and the
impact of adverse weather events; the seasonality of the fertilizer
business; the impact of changing market conditions on the Company’s
forward sales programs; difficulties in securing the supply and
delivery of raw materials and utilities, increases in their costs
or delays or interruptions in their delivery; reliance on third
party providers of transportation services and equipment; the
Company’s reliance on a limited number of key facilities; risks
associated with cybersecurity; acts of terrorism and regulations to
combat terrorism; risks associated with international operations;
the significant risks and hazards involved in producing and
handling the Company’s products against which the Company may not
be fully insured; the Company’s ability to manage its indebtedness
and any additional indebtedness that may be incurred; the Company’s
ability to maintain compliance with covenants under its revolving
credit agreement and the agreements governing its indebtedness;
downgrades of the Company’s credit ratings; risks associated with
changes in tax laws and disagreements with taxing authorities;
risks involving derivatives and the effectiveness of the Company’s
risk management and hedging activities; potential liabilities and
expenditures related to environmental, health and safety laws and
regulations and permitting requirements; regulatory restrictions
and requirements related to greenhouse gas emissions; the
development and growth of the market for green and low-carbon
ammonia and the risks and uncertainties relating to the development
and implementation of the Company’s green and low-carbon ammonia
projects; and risks associated with expansions of the Company’s
business, including unanticipated adverse consequences and the
significant resources that could be required.
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,
2024
2023
2024
2023
(in millions, except per share
amounts)
Net sales
$
1,572
$
1,775
$
3,042
$
3,787
Cost of sales
893
971
1,954
2,120
Gross margin
679
804
1,088
1,667
Selling, general and administrative
expenses
76
71
164
145
U.K. operations restructuring
—
—
—
2
Acquisition and integration costs
1
3
4
16
Other operating—net
(39
)
3
(22
)
(32
)
Total other operating costs and
expenses
38
77
146
131
Equity in (losses) earnings of operating
affiliate
(3
)
7
(1
)
24
Operating earnings
638
734
941
1,560
Interest expense
37
36
74
76
Interest income
(28
)
(40
)
(58
)
(70
)
Other non-operating—net
—
(2
)
(4
)
(5
)
Earnings before income taxes
629
740
929
1,559
Income tax provision
123
134
185
303
Net earnings
506
606
744
1,256
Less: Net earnings attributable to
noncontrolling interest
86
79
130
169
Net earnings attributable to common
stockholders
$
420
$
527
$
614
$
1,087
Net earnings per share attributable to
common stockholders:
Basic
$
2.30
$
2.71
$
3.31
$
5.56
Diluted
$
2.30
$
2.70
$
3.31
$
5.55
Weighted-average common shares
outstanding:
Basic
182.7
194.6
185.1
195.4
Diluted
182.8
195.0
185.5
195.9
CF INDUSTRIES HOLDINGS,
INC.
SELECTED FINANCIAL
INFORMATION
CONDENSED CONSOLIDATED BALANCE
SHEETS
(unaudited)
June 30, 2024
December 31,
2023
(in millions)
Assets
Current assets:
Cash and cash equivalents
$
1,819
$
2,032
Accounts receivable—net
531
505
Inventories
302
299
Prepaid income taxes
85
167
Other current assets
64
47
Total current assets
2,801
3,050
Property, plant and equipment—net
6,830
7,141
Investment in affiliate
25
26
Goodwill
2,493
2,495
Intangible assets—net
522
538
Operating lease right-of-use assets
241
259
Other assets
863
867
Total assets
$
13,775
$
14,376
Liabilities and Equity
Current liabilities:
Accounts payable and accrued expenses
$
501
$
520
Income taxes payable
—
12
Customer advances
8
130
Current operating lease liabilities
78
96
Other current liabilities
9
42
Total current liabilities
596
800
Long-term debt
2,970
2,968
Deferred income taxes
926
999
Operating lease liabilities
171
168
Supply contract liability
739
754
Other liabilities
271
314
Equity:
Stockholders’ equity
5,460
5,717
Noncontrolling interest
2,642
2,656
Total equity
8,102
8,373
Total liabilities and equity
$
13,775
$
14,376
CF INDUSTRIES HOLDINGS,
INC.
SELECTED FINANCIAL
INFORMATION
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(unaudited)
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
(in millions)
Operating Activities:
Net earnings
$
506
$
606
$
744
$
1,256
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation and amortization
222
221
475
427
Deferred income taxes
(59
)
(27
)
(70
)
(53
)
Stock-based compensation expense
6
7
19
19
Unrealized net gain on natural gas
derivatives
(1
)
—
(34
)
(72
)
Gain on sale of emission credits
(47
)
(1
)
(47
)
(36
)
Loss on disposal of property, plant and
equipment
1
1
6
1
Undistributed losses of affiliate—net of
taxes
3
7
1
—
Changes in assets and liabilities:
Accounts receivable—net
5
97
(45
)
198
Inventories
(26
)
101
(6
)
140
Accrued and prepaid income taxes
2
13
63
166
Accounts payable and accrued expenses
(3
)
(3
)
(26
)
(138
)
Customer advances
(97
)
(275
)
(122
)
(220
)
Other—net
(37
)
(35
)
(38
)
(29
)
Net cash provided by operating
activities
475
712
920
1,659
Investing Activities:
Additions to property, plant and
equipment
(84
)
(95
)
(182
)
(164
)
Purchase of Waggaman ammonia production
facility
2
—
2
—
Proceeds from sale of property, plant and
equipment
—
1
—
1
Proceeds from sale of investments held in
nonqualified employee benefit trust
1
—
1
—
Purchase of emission credits
—
—
(2
)
—
Proceeds from sale of emission credits
47
1
47
36
Net cash used in investing activities
(34
)
(93
)
(134
)
(127
)
Financing Activities:
Dividends paid on common stock
(91
)
(79
)
(188
)
(158
)
Distributions to noncontrolling
interest
—
—
(144
)
(255
)
Purchases of treasury stock
(305
)
(151
)
(644
)
(205
)
Proceeds from issuances of common stock
under employee stock plans
—
1
1
1
Cash paid for shares withheld for
taxes
—
—
(23
)
(22
)
Net cash used in financing activities
(396
)
(229
)
(998
)
(639
)
Effect of exchange rate changes on cash
and cash equivalents
1
4
(1
)
3
Increase (decrease) in cash and cash
equivalents
46
394
(213
)
896
Cash and cash equivalents at beginning of
period
1,773
2,825
2,032
2,323
Cash and cash equivalents at end of
period
$
1,819
$
3,219
$
1,819
$
3,219
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,
2024
2023
(in millions)
Net cash provided by operating
activities(1)
$
2,018
$
3,234
Capital expenditures
(517
)
(488
)
Distributions to noncontrolling
interest
(348
)
(627
)
Free cash flow(1)
$
1,153
$
2,119
___________________________________________________
(1)
For the twelve months ended June
30, 2023, net cash provided by operating activities and free cash
flow includes the impact of $491 million in tax and interest
payments made to Canadian tax authorities in relation to an
arbitration decision covering tax years 2006 through 2011 and
transfer pricing positions between Canada and the United States for
open years 2012 and after. The Company has filed amended tax
returns in the U.S. seeking refunds of related taxes paid
associated with the arbitration decision.
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,
2024
2023
2024
2023
(in millions)
Net earnings
$
506
$
606
$
744
$
1,256
Less: Net earnings attributable to
noncontrolling interest
(86
)
(79
)
(130
)
(169
)
Net earnings attributable to common
stockholders
420
527
614
1,087
Interest expense (income)—net
9
(4
)
16
6
Income tax provision
123
134
185
303
Depreciation and amortization
222
221
475
427
Less other adjustments:
Depreciation and amortization in
noncontrolling interest
(21
)
(22
)
(48
)
(42
)
Loan fee amortization(1)
(1
)
(1
)
(2
)
(2
)
EBITDA
752
855
1,240
1,779
Unrealized net mark-to-market gain on
natural gas derivatives
(1
)
—
(34
)
(72
)
(Gain) loss on foreign currency
transactions, including intercompany loans
—
(1
)
1
(2
)
U.K. operations restructuring
—
—
—
2
Acquisition and integration costs
1
3
4
16
Total adjustments
—
2
(29
)
(56
)
Adjusted EBITDA
$
752
$
857
$
1,211
$
1,723
Net sales
$
1,572
$
1,775
$
3,042
$
3,787
Sales volume by product tons (000s)
4,875
4,938
9,399
9,473
Net earnings attributable to common
stockholders per ton
$
86.15
$
106.72
$
65.33
$
114.75
EBITDA per ton
$
154.26
$
173.15
$
131.93
$
187.80
Adjusted EBITDA per ton
$
154.26
$
173.55
$
128.84
$
181.89
___________________________________________________
(1)
Loan fee amortization is included
in both interest expense (income)—net and depreciation and
amortization.
CF INDUSTRIES HOLDINGS,
INC.
SELECTED FINANCIAL
INFORMATION
ITEMS AFFECTING COMPARABILITY
OF RESULTS
For the three months ended June 30, 2024 and 2023, we reported
net earnings attributable to common stockholders of $420 million
and $527 million, respectively. For the six months ended June 30,
2024 and 2023, we reported net earnings attributable to common
stockholders of $614 million and $1.09 billion, respectively.
Certain items affected the comparability of our financial results
for the three and six months ended June 30, 2024 and 2023. The
following table outlines these items that affected the
comparability of our financial results for these periods.
Three months ended June
30,
Six months ended June
30,
2024
2023
2024
2023
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)
$
(1
)
$
(1
)
$
—
$
—
$
(34
)
$
(26
)
$
(72
)
$
(56
)
(Gain) loss on foreign currency
transactions, including intercompany loans(2)
—
—
(1
)
—
1
1
(2
)
(1
)
U.K. operations restructuring
—
—
—
—
—
—
2
2
Acquisition and integration costs
1
1
3
2
4
3
16
12
___________________________________________________
(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/20240807038881/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
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