Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — BMO Nesbitt Burns Global Fertilizer Conference 2006
42 slides from Cf Industries's conference presentation, Apr 3, 2006
Slide 1: Strategic Issues and Opportunities at CF Industries Holdings, Inc.
Strategic Issues and Opportunities at | CF Industries Holdings, Inc. Presentation to BMO Nesbitt Burns Global Fertilizer Conference April 3, 2006 Stephen R. Wilson Chairman and Chief Executive Officer Emest Thomas Senior Vice President and Chief Financial Officer
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this presentation may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this presentation, other than those relating to our historical information or current condition, are forward-looking st
Slide 3: Overview
Overview A Quick Look at CF Industries Holdings, Inc. = A leading manufacturer and distributor of nitrogen and phosphate fertilizer = Founded as cooperative in 1946; new bottom line-oriented business model in 2003 = Operates the industry’s most extensive distribution network = Market shares: 22 perc
Slide 4: Major Strategic Issue
Major Strategic Issue Long-Term Competitiveness of North American Nitrogen Assets = Nearly 40 percent of U.S. nitrogen capacity closed wien permanently between 1999 ‘i and 2005 ban = In Q4, our Donaldsonville nitrogen complex operated at significantly reduced levels = Fertilizer is a cyclical indust
Slide 5: CF Perspectives
CF Perspectives We don’t underestimate today’s challenges, but... There is uncertainty about natural gas price trends Rising natural gas costs aren't just a North American phenomenon. Plant location, scale and productivity are key factors under more “normalized” pricing scenario Increased LNG availa
Slide 6: CF Position
CF Position * The U.S. may not always be a relatively high-natural-gas-cost production point « In any gas cost environment, CF Industries’ distribution system will provide a valuable asset, especially for ammonia Today's uncertainty demands flexibility and nimbleness to adapt to changing market cond
Slide 7: Uncertainty Regarding Natural Gas Prices
Uncertainty Regarding Natural Gas Prices NYMEX Futures Prices on 8/1/05 and 9129105 Versus Actual Spot Prices 16 + 14 +. 12 + 10 +. siMMBtu 8 6 4. 4 2 ra fee va se & ee * oe oe ra Sec Se eee SE rs CES. tr tases
Slide 8: Uncertainty Regarding Natural Gas Prices
Uncertainty Regarding Natural Gas Prices Natural Gas Henry Hub Spot Prices (Base Case and 95% Confidence Interval’) Forecast cubie feet 49 aoe Jan04 — Jan-05 Jan-06 — Jan-07—Jan-08 Jan-02 Jan-03 seston eas” 8 CES. tr tases
Slide 9: Uncertainty Regarding Global Natural Gas Prices
Uncertainty Regarding Global Natural Gas Prices Natural Gas Prices for Industry in US Dollars ($ per MMBtu) a0 ae Poland om |. —+-Gerrany na-Frnce core —e- Czech Republic] os J |e-Hingary “# UK ani ||| Seas 20 1.00 2000 2001 2002 2003 2004 Source: International Energy Agency - 2005 Handbook 9 ES. tr
Slide 10: Uncertainty Regarding Offshore Production Costs
Uncertainty Regarding Offshore Production Costs “It is thought the Ukrainian nitrogen producers will now face a gas price equivalent to at least $3/MMBtu, but it could be higher.” -- FERTECON 10 CES. tr tases
Slide 11: Uncertainty Regarding Plant Productivity
Uncertainty Regarding Plant Productivity = Other producers (Western Europe) already face high, world market natural gas prices = Eastern Europe producers face rising natural gas costs and major logistical disadvantages ‘Vulnerable’ capacity isn’t just North American 1 CES. tr itasies
Slide 12: The Potential of LNG
The Potential of LNG FERC Existing and Proposed North American LNG Terminals 5 t Fy ieee anaes Spatipee re tang (intr ann Bec, a Eimear csesie rte ey pron SE Sn memento) ; ‘Aso March 8, 2006 + Som ap te pgm a sy Office of Energy Projects SBT Seca by 12 ES. tr testis
Slide 13: The Potential of LNG
The Potential of LNG Projected Liquefaction Capacity 2010 Sey 17, fea = ; RRS = ‘ Y 1B 2004 LNG imports. aS a eg Nhe B Fim Bh Projects cts Chao Resaech CHENIERE 2008 2008 2009" 2010 ‘Source: Chine Resear psd 13 ES. tr testis
Slide 14: The Potential of LNG
The Potential of LNG Existing & Approved Gulf Coast LNG Infrastructure Donaldsonville Lake Chariés, LA - So. Union/Trunkline Nitrogen Comple: (@xpand from 1.5 Bcfd to 2.1 Bcfd, 2006) Sabine, TX - ExxonMobil (1.0 fe a whe Befd, 2009) ee s “~ Henry Hub Freeport, TX - Cheniere (1.5 Vi "Sanieran; LA - S
Slide 15: CF Strategic Perspective
CF Strategic Perspective * Practice patience and discipline = Don't “bet the company” on any one scenario = Maintain the financial strength to implement strategic options 15 CES. tr tases
Slide 16: CF Financial Overview
CF Financial Overview Key Financial Items - Historical (in $ millions) 2002 _2003 Revenues 4014 1370 EBITDA 85 cc} Net Income (28) (18) Capital Expenditures 26 29 Net Debt 271 291 * Adjusted for one-time IPO costs of $36.7 million pre-tax ** Adjusted for IPO costs and other adjustments of $117 For r
Slide 17: CF Financial Overview
CF Financial Overview Sales Volume - Historical (thousands of tons) 2002 2003 2004 2005, Ammonia 1,435 1,475 1,438 1,382 Urea 2,663 2,572 2513 2518 UAN 1,926 2,228 2,593 2,483 DAP 1,560 1,627 1,549 1,583 MAP 289 252 351 426 Other 126 61 59 46 Total 7,999 8,215 8,503 8.438
Slide 18: CF Financial Position
CF Financial Position Key Balance Sheet Data - Historical (in $ millions) 2002 2003 2004 2005 Cash & Short Tem Investments 95 169 419 217 Total Assets 1,322 1,416 1,557 1,228 Customer Advances 40 166 212 132 Total Debt 326 294 259 4 ‘Stockholders' Equity 7441 734 787 756 Net Debt/Capitalization 26.8
Slide 19: CF Financial Overview
CF Financial Overview Adjusted Free Cash Flow torical (In $ millions) 2002 2003 2004 2005 Cash Flow from Operations 77 137 344 137 Less: Capital Expenditures 26 29 34 69 Distributions to Minorities 0 5 26 6 Working Capital (19) (60) 55 (24) Customer Advances 30 126 45 (80) Dividends 0 0 0 1 Adjusted
Slide 20: Priorities for Cash
CF Financial Overview Priorities for Cash ® Liquidity to operate through fertilizer cycle * Flexibility to fund strategic investments, i.e. Trinidad * Options such as share repurchases 20 CES. tr tases
Slide 21: CF Strategic Response
CF Strategic Response * Establish a diversified feed stock base Strategically, this makes sense — in any natural gas pricing scenario ® Intensify efforts to support domestic exploration There is no shortage of North American natural gas. = Maintain operational and financial flexibility Despite near-
Slide 22: Diversify the Feedstock
Diversify the Feedstock = We're currently 100 percent North America natural gas based = Options under consideration include: — JV in Trinidad — Conversion of a portion of Donaldsonville to proven petroleum coke gasification technology = Medicine Hat provides a degree of diversification * Donaldsonvi
Slide 23: Expand Domestic Natural Gas Supply
Expand Domestic Natural Gas Supply North America has significant untapped natural gas reserves The political climate in Washington is changing Exploration and LNG can significantly change pricing Donaldsonville well positioned for LNG supply 23 CES. tr tases
Slide 24: Expand Domestic Supply
Expand Domestic Supply fs |. a a “Ll? = Cora Ping Aree on Plane Are ¥ MMS 355222" Eastem Gulf of Mexico and Sale 181 Area eae — repose Sale Ara — Paming Ae Boundary Es | poarvan arsine) — Orga Sac Anant + Salone
Slide 25: Expand Domestic Supply
Expand Domestic Supply Undiscovered Technically Recoverable Resources On Federal OCS Total Natural Gas 419.8 Tef oil 85.8 BbbI ‘Tef = Trillion Cubic Feet of Natural Gas. ‘Bob! = Billion Barrels of Oi Sce: Ment Managment Se OCS ety 08 FS jane
Slide 26: Maintain Operational and Financial Flexibility
Maintain Operational and Financial Flexibility = Modular configuration a key plus at Donaldsonville «= Mississippi River location and significant import/handling/ distribution capabilities are additional advantages = Strong financial position supports additional flexibility 26 CES. tr tases
Slide 27: Optimize the Forward Pricing Program
Optimize the Forward Pricing Program « In '05, it accounted for nearly 70 percent of nitrogen fertilizer sales ® It proved very effective in a rising natural gas cost environment = The issue today is its effectiveness in different pricing scenarios
Slide 28: One Last Strategic Thought
One Last Strategic Thought * CF Industries’ Phosphate Operations » Newest U.S. phosphate rock mine (Hardee County) = One of largest U.S. integrated DAP/MAP complexes (Plant City) = Ammonia terminal and warehouse/shipping complex, with access to domestic and export markets = 23% of sales and 17% of g
Slide 29: Summary
Summary The Long Term Competitiveness of North American Nitrogen Capacity? = The markets, the infrastructure and the raw materials all exist * Globalization in the natural gas market is happening "= The political climate in the U.S. is changing = Alternative feed stocks offer additional options 2 CE
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Slide 31: APPENDIX
APPENDIX CES. tr tases
Slide 32: Industry Overview
Industry Overview » Three key nutrients: Global Fertilizer Consumption Total Tons 2004: 162MM — Nitrogen (N) — Phosphate (P) — Potash (K) 32 CES. tr tases
Slide 33: Long-Term Demand Drivers
Long-Term Demand Drivers World Population is .-While World Meat Consumption —_... Requiring More Corn to Growing... Is Increasing... Feed More Livestock... Wheat Soybeans. ‘seronrt Neen (1) Bade ter Sovel non courts 33 CES. tr tases
Slide 34: Competitive Strengths
Competitive Strengths = World-Scale Manufacturing Facilities = Strategically Located, Flexible Distribution System = Long-Standing Customer Relationships = Leading Market Positions = Innovative Risk Management = Strong Financial Position = Experienced Management Team coy CES. tr tases
Slide 35: Significant Scale Advantage
Significant Scale Advantage North American Nitroger zer Facilities — By Capacity MM Tons 25 20 1 15 a: a | | ‘ Wutitinun. hire 35 CES. tr tases
Slide 36: World-Scale Manufacturing — Donaldsonville, LA
World-Scale Manufacturing — Donaldsonville, LA #1 nitrogen fertilizer complex in North America Significant production flexibility Access to low cost transportation by barge, pipeline and rail Deep-water dock Annual Gross Capacity Ammonia 23 Urea 7 UAN 27
Slide 37: World-Scale Manufacturing — Medicine Hat, AB
World-Scale Manufacturing — Medicine Hat, AB « #1 nitrogen fertilizer complex in Canada, #3 in North America = Access to attractive markets of western Canada and northern U.S. » Supplied by lower-priced natural gas from Alberta — Average advantage of $27/ton ammonia Ammonia 13 Urea 08
Slide 38: World-Scale Manufacturing — Central Florida
World-Scale Manufacturing — Central Florida = Plant City Complex — one of the largest, integrated DAP/MAP complexes in U.S. = Port of Tampa — access to domestic and international markets Phosphate Rock 3.6 Sulfuric Acid 26 Phosphoric Acid 1.0 Phosphoric Acid 2.0 38 CES. tr tases
Slide 39: Strategically Located, Flexible Distribution Network
Strategically Located, Flexible Distribution Network
Slide 40: Forward Pricing Program
Forward Pricing Program * Natural gas and * Customers purchase nitrogen fertilizer product forward prices are highly volatile * CF locks in margin by fixing natural gas costs * Substantial customer deposit + Margin certainty + Improved production scheduling + Reduced inventory risk + Enhanced liquid
Slide 41: Leading Market Positions in North America
Leading Market Positions in North America Market Share (2004) Nitrogen Phosphate %) %) = 8 = 20% a 20 26 22% 46 18% 16: 10 10 a 5 ot ot Total US. Ten Core States Total US. Ten Core States ® Key Driver: Strategically located network of terminals and warehouses a CES. tr tases
Slide 42: Searchable text section of graphics shown above
Searchable text section of graphics shown above [GRAPHIC] Strategic Issues and Opportunities at CF Industries Holdings, Inc. Presentation to BMO Nesbitt Burns Global Fertilizer Conference April 3, 2006 Stephen R. Wilson Chairman and Chief Executive Officer Ernest Thomas Senior Vice President and Chi
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