Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q2 2021 Earnings Presentation
17 slides from Cf Industries's earnings presentation, Aug 10, 2021
Slide 1: 2021 Second Quarter Financial Results
2021 Second Quarter Financial Results August 9, 2021 NYSE: CF
Slide 2: Safe harbor statement
2 Safe harbor statement All statements in this presentation by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other th an those relating to historical facts, are forward - looking statements. Forward - looking statements can generally be identified by their use of term
Slide 3: Note regarding non-GAAP financial measures
3 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, adjusted EBITDA and free cash flow, which are non - GAAP financial measures, provide additional meaningfu
Slide 4: First half highlights
4 First half highlights (1) Average cost of natural gas excludes the $112 million gain on net settlement of certain natural gas contracts with suppliers in February 2021 (2) See appendix for reconciliation of EBITDA and adjusted EBITDA (3) Represents cash provided by operating activities (cash from
Slide 5: Clean energy strategy initiatives: Ammonia as a fuel
5 Ammonia as a fuel Clean energy strategy initiatives Blue Ammonia Green Ammonia Announced MOU with Mitsui & Co., Inc., one of the leading ammonia marketers in the world, to explore jointly the development of blue ammonia projects in the U.S. Completed engineering design study at the Donaldsonville
Slide 6: Financial results – second quarter and first half 2021
6 Financial results – second quarter and first half 2021 (1) See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the appendix (2) Includes the cost of natural gas used for production and related transportation that is included in cost of sales during th
Slide 7: Strengthening global nitrogen outlook
7 Strengthening global nitrogen outlook Global nitrogen price dynamics Global nitrogen demand Global energy differentials Low global coarse grains stocks - to - use ratio, excluding China, increased economic activity, and higher energy prices in Europe and Asia have significantly tightened the globa
Slide 8: Low stocks-to-use ratio drives higher grain values
8 Low stocks - to - use ratio drives higher grain values, expected to require at least two more growing seasons to replenish Global Coarse Grains Stocks - to - Use Ratio vs Corn Futures Prices* Percent 0 1 2 3 4 5 6 7 0 2 4 6 8 10 12 14 16 World-ex China Crop Futures Price (RHS) USD per Bushel Globa
Slide 9: Natural gas prices in Europe and Asia have increased, creating a wide shelf
9 Natural gas prices in Europe and Asia have increased, creating a wide shelf at the high end of the cost curve Global Energy Price 2019 - 2021F USD/ tonne North American Production Advantage (1) 0 2 4 6 8 10 12 14 16 2019 2020 2021 Henry Hub natural gas TTF natural gas Chinese anthracite coal - lum
Slide 10: India and Brazil have consistent long-term growth, rising import demand
10 India and Brazil have consistent long - term growth, which has led to rising import demand (1) Brazil domestic production in 2020 is comprised solely of 2019 inventory carryover Source: CRU Urea Market Forecast as of May 28, 2021, India DOF, FAI, industry publications 0 2 4 6 8 10 12 2010 2012 20
Slide 11: Capital management
11 Capital management Capital structure and allocation Clean energy initiatives Capital expenditures Committed to returning to investment grade Announced election to redeem $250 million principal amount of the Company’s 3.450% Senior Notes due June 2023; reducing gross debt to $3.5 billion Company i
Slide 12: Appendix
Appendix
Slide 13: CF Industries EBITDA sensitivity table
13 CF Industries EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions $25/ton ureal realized movement implies ~$375M change in EBITDA on an annual basis (1) Based on 2019 sales volumes of approximately 19.5 million product tons, 2019
Slide 14: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA
14 Non - GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA (1) Loan fee amortization is included in both interest expense – net and depreciation and amortization (2) Represents costs written off upon the cancellation of a project at one of our nitrogen complexes (3) Represents proce
Slide 15: Gross margin variance to prior year
15 Gross margin variance to prior year 1H 2020 Higher avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives Higher manufacturing, maintenance, and other costs Increase in purchased urea (3) Gain on net settlement of natural gas contracts 1H 2021 Con
Slide 16: Gross margin variance to prior year, continued
16 Gross margin variance to prior year, continued 1H 2020 Higher avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives Higher manufacturing, maintenance, and other costs Increase in purchased urea (3) Gain on net settlement of natural gas contracts
Slide 17: Reconciliation of net cash provided by operating activities to free cash flow
17 Reconciliation of net cash provided by operating activities to free cash flow In millions Twelve months ended June 30, 2021 Cash provided by operating activities $ 1,219 C apital expenditures (371) Distributions to noncontrolling interest (150) Free cash flow $ 698
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