Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q3 2005 Earnings Presentation
35 slides from Cf Industries's earnings presentation, Nov 30, 2005
Slide 1: CF Industries Holdings, Inc.
>. CF industries CF Industries Holdings, Inc. NYSE: CF
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 release, other than those relating to our historical information or current condition, are forward-looking statem
Slide 3: CF Industries Holdings, Inc. Completed IPO
CF Industries Holdings, Inc. Completed IPO on August 16, 2005 = 47,437,500 shares at $16 per share, including full over-allotment = 7,562,500 additional shares issued to two of eight former owners, with 360-day lock-up, bringing total shares outstanding to 55,000,000 * Raised $715.4 million, with al
Slide 4: The 'Investable Idea' for CF Industries
The ‘Investable Idea’ for CF Industries . . . » A business model transformation that effectively positioned the organization as a publicly ttaded company = Important competitive strengths and flexibility to optimize performance and create value for shareholders in a volatile, challenging industry FS
Slide 5: The Fertilizer Market
The Fertilizer Market ® Three major nutrients: N, P, and K = These plant nutrients are absolutely necessary for improved yield, growth, and durability = There are no substitutes for these nutrients, and they are not substitutable for each other = Growth has been consistent at approximately 2.7 perce
Slide 6: The Fertilizer Market
The Fertilizer Market ® Fertilizer is a global worldwide commodity = Commodity prices may or may not fully reflect the cost of raw materials, such as natural gas... = The cost of natural gas is critical, but more critical is the relationship between natural gas and nitrogen fertilizer prices... = U.
Slide 7: An Overview of CF Industries
An Overview of CF Industries = Founded as a cooperative in 1946. Today a leading manufacturer and distributor of nitrogen and phosphate fertilizers = 2004 sales volume was 1.9 million tons of phosphate and 6.6 million tons of nitrogen; nine months’ 2005 totals are nearly 1.6 million tons of phosphat
Slide 8: Strengths and Flexibility
Strengths and Flexibility = World-Scale Manufacturing Facilities Modular configuration allows CF Industries to adjust production to market conditions = Strategically Located, Flexible Distribution System Ideally suited to serve Corn Belt customers with produced or purchased product = Long-Standing C
Slide 9: Strengths and Flexibility
Strengths and Flexibility = Innovative Margin Risk Program It's much more than simply a forward pricing program... = Strong Financial Position A necessary foundation for future strategic initiatives... = Experienced Management Team A productive blend of CF Industries and public company experience...
Slide 10: Third Quarter Performance
Third Quarter Performance = Net sales increased by 10 percent to $359.4 million = Operating earnings of $35.1 million more than offset by non- recurring IPO-related charges and other items = Net loss of $91.4 million = Adjusted net earnings, totaled $13.8 million, or $0.25 per common share, on a pro
Slide 11: Reconciliation of Net Earnings to Adjusted Net Earnings
Reconciliation of Net Earnings to Adjusted Net Earnings Three Morths Ended Nine Months Ended September 20, September 20, (inmittions) 2004 2005, 2004 2005 Earnings before income taxes $ 231 $ 32 $ 796 $ 1112 Equity in eamings ofunconsolidated Subsidiaries - net oftax = - 02 E ‘Add (subtract) adjustm
Slide 12: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA Three Months Ended Nine Months Ended September 30, September 30, (in millions) 2004 2005 2004 2005 Net earnings (loss) $ 143 $ @14) $ 496 $ (26.2) Interest - net 40 0.9) 13.8 19 Income tax provision 88 94.6 30.2 137.4 Depreciation, depleti
Slide 13: Fourth Quarter and 2006 Prospects
Fourth Quarter and 2006 Prospects = Natural gas prices off their peak but still troubling: for fertilizer producers and (with resulting fertilizer prices) for farmers * Spring domestic demand the near-term uncertainty (due to prices) = U.S. grain stocks and grain prices another near-term issue, but
Slide 14: Fourth Quarter and 2006 Prospects
Fourth Quarter and 2006 Prospects = FPP bookings rebounded in late October/early November, but still well below comparable 2004 levels = Adjusting production and purchased product levels accordingly = Adverse impact on margins due to market conditions and lost production = Good news on Russian and U
Slide 15: Strengths and Flexibility in CF Industries' Third Quarter Performance
Strengths and Flexibility in CF Industries’ Third Quarter Performance = Flexible ‘Make versus Buy’ capability at Donaldsonville Strategic distribution network positioned to serve key Corn Belt states Innovative risk management program provided effective buffer in high-natural-gas-cost environment St
Slide 16: Long-Term Strategic Priorities
Long-Term Strategic Priorities = Reduce dependence on North American natural gas = Expand usage and duration of FPP = Identify next generation of cost-reduction efforts = Develop new, post-cooperative market opportunities 16 <C>. 6F industries
Slide 17: Long-Term Strategic Priorities
Long-Term Strategic Priorities Expand Formal Long-Term Strategic Planning Process = Through February of 2005, limited strategic mission as a cooperative = Today, new Strategic Leadership Team exploring opportunities = Aconscious decision: urgency but discipline! ” <C>. 6F ntustries
Slide 18: Long-Term Strategic Priorities: Reduce Dependence on North American Natural Gas
Long-Term Strategic Priorities Reduce Dependence on North American Natural Gas ®= Trinidad joint venture to produce ammonia and UAN * Petroleum coke option for Donaldsonville plant = Longer-term, LNG may alter world competitive landscape for the better, with important implications for domestic produ
Slide 19: Long-Term Strategic Priorities: Expand Usage and Duration of FPP
Long-Term Strategic Priorities Expand Usage and Duration of FPP. = In Q3, 68 percent of nitrogen and 50 percent of phosphate volume = Benefits producer and customer: locks in margin and assures customers’ supply 2 <C>. 6F industries
Slide 20: Long-Term Strategic Priorities: Next Generation of Cost-Reduction Efforts
Long-Term Strategic Priorities Identify Next Generation of Cost-Reduction Efforts « Achieved $50 million in sustainable estimated EBITDA improvements since 2002 * Next goal: ‘mid-hanging fruit’ Fa CES. 6F ntustries
Slide 21: Long-Term Strategic Priorities: New Post-Cooperative Market Opportunities
Long-Term Strategic Priorities Develop New, Post-Cooperative Market Opportunities = New customers now account for almost 50 percent of sales = Opportunities exist to optimize the mix an CES. 6F industries
Slide 22: CF Industries Holdings, Inc.
CF Industries Holdings, Inc. The assets, the flexibility, the talent, and the financial strength to compete in a challenging, volatite marketplace = Don’t bet the company on any one natural gas price scenario = Optimize our strong distribution system » Use our financial strength to improve/grow the
Slide 23: ADDENDUM
ADDENDUM 23 <C>. 6F industries
Slide 24: Industry Overview
Industry Overview - Three key nutints: esa — Nitrogen (N) — Phosphate (P) — Potash (kK) Phosphate (P) 24 E>. CF intusries
Slide 25: 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... mm DE OME Developed i Developing ee Global Fertilizer Consumption y7ongr1 1900/1981 19901991 200072001 ——_-20n9210E Nees: (1) Exes forme Soviet rio
Slide 26: 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 a <C>. 6F industries
Slide 27: Significant Scale Advantage
Significant Scale Advantage _ , Whim . ll TTT ere a E>. CF intustries
Slide 28: 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 2% CES. 6F industries
Slide 29: 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 rage | advantage: of $27/ton ammonia Ammonia is) Urea 08 29 CES. CF indu
Slide 30: World-Scale Manufacturing — Central Florida
World-Scale Manufacturing — Central Florida = Hardee Rock Mine — newest U.S. phosphate rock mine — 27 years of reserves = 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 ‘Sulfuric Acid Phosp
Slide 31: Strategically Located, Flexible Distribution Network
Strategically Located, Flexible Distribution Network a ign 7 CES CF industries
Slide 32: Forward Pricing Program
Forward Pricing Program = Natural gas and = Customers purchase + Margin certainty nitrogen fertilizer product forward prices are highly + Improved production volatile = CF locks in margin scheduling by fixing natural gas costs + Reduced inventory risk = Substantial customer deposit + Enhanced liquid
Slide 33: Leading Market Positions in North America
Leading Market Positions in North America Market Share (2004) Nitrogen Phosphate cosas i | ow sa 8 [J § Key Driver: Strategically located network of terminals and warehouses 33 CES. 6F ntustries
Slide 34: Experienced Management Team
Experienced Management Team Steve Wilson Emie Thomas David Pruett Steve Chase Phil Koch Fred Mugica Monty Summa Lou Frey Russ Holowachuk Herschel Morris 56 51 51 53 53 54 52 54 58 54 President, CEO and Chairman SVP and CFO SVP, Operations VP, Corporate Planning VP, Raw Materials Procurement VP, Supp
Slide 35: Searchable text section of graphics shown above
Searchable text section of graphics shown above [L OGO] [GRAPHIC] CF Industries Holdings, Inc. NYSE: CF Sa fe Harbor Statement Certain statements contained in this presentation may constitute “forward-looking statements” within the meaning of federal securities laws. All statements in this release,
CF Industries Holdings — Q3 2005 Earnings Presentation on 6ix