Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — H1 2020 Earnings Presentation
22 slides from Cf Industries's earnings presentation, Aug 5, 2020
Slide 1: 2020 First Half Financial Results
1 1 2017 Third Quarter Financial Results November 1, 2017 NYSE: CF 2020 First Half Financial Results August 5, 2020 NYSE: CF
Slide 2: Safe harbor statement
2 Safe harbor s tatement All statements in this communication by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other t han those relating to historical facts, are forward - looking statements. Forward - looking statements can generally be identified by their use of te
Slide 3: Note regarding non-GAAP financial measures
3 Note regarding n on - GAAP f inancial m easures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Managemen t b elieves that EBITDA, adjusted EBITDA, free cash flow, free cash flow to adjusted EBITDA conversion, and free cash flow yi
Slide 4: CF response to spread of COVID - successful to date
4 CF response to spread of COVID - 19 successful to date Leadership planning and policies • Implemented employee remote work program March 2020; added voluntary return to office option June 2020 • Implemented company - wide close contact tracking in early March to mitigate risk exposure and revisit
Slide 5: Outstanding safety drives production, sales volume consistency
5 Outstanding safety drives production, sales volume consistency 0.0 1.0 2.0 3.0 4.0 5.0 2011 2012 2013 2014 2015 2016 2017 2018 2019 1Q20 2Q20 Total Recordable Incident Rate Total injuries per 200,000 work hours 0 5,000 10,000 15,000 20,000 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 1Q20 2Q20 TTM
Slide 6: First half 2020 results
6 First half 2020 results (1) See appendix for reconciliation of EBITDA and adjusted EBITDA (2) Represents cash provided by operating activities (cash from operations) less capital expenditures less distributions to noncontrolling interest; see appendix for reconciliation of free cash flow • First h
Slide 7: Financial results – second quarter and first half 2020
7 Financial results – second quarter and first half 2020 I n millions, except percentages, per MMBtu and EPS Q2 20 20 Q2 201 9 1H 20 20 1H 20 19 Net sales $ 1,204 $ 1,502 $ 2,175 $ 2,503 Gross margin 334 499 538 719 - As percent age of net sales 27.7 % 33.2 % 24.7 % 28.7 % Net earnings attributable
Slide 8: CF is the most efficient converter of EBITDA to free cash flow
8 (1) Market value of equity (market cap) is calculated as shares outstanding as of the end of each respective period (except OCI N.V. is as of December 31, 2019) mult ipl ied by the closing share price of each company on August 3, 2020; see appendix for the calculation of market cap (2) Represents
Slide 9: CF offers investors industry best free cash flow yield
9 6.8 6.4 7.6 8.1 7.7 0 2 4 6 8 10 14.5% 7.7% 11.2% 8.7% (1.4%) -2% 0% 2% 4% 6% 8% 10% 12% 14% 16% CF YAR MOS NTR OCI CF offers investors industry best free cash flow yield CF YAR MOS NTR OCI EV / Adj. EBITDA (2)(3) FCF Yield (1) (1) Represents LTM free cash flow divided by market value of equity (m
Slide 10: Capital Management
10 Capital Management • As of June 30, 2020, CF had cash and cash equivalents of $563 million and no borrowings outstanding under its $750 million revolving credit facility • CF did not repurchase shares during the second quarter of 2020 and has approximately $560 million remaining under the share r
Slide 11: Ammonia capacity and per-share growth
11 2.6 6.0 (1) 6.0 6.1 6.6 (2) 6.6 7.0 (3) 8.1 (4) 8.1 8.2 (5) 8.2 8.2 All N production numbers based on year end figures per 10 - K filings. (1) Beginning in 2010 includes capacity from Terra Industries acquisition (2) Beginning in 2013 includes incremental 34% of Medicine Hat production to reflect
Slide 12: Global production and demand Outlook
12 Global production and demand Outlook Market Outlook and Projections • G lobal nitrogen demand outlook will remain positive into 2021 • USDA estimates 92 million corn acres were planted in 2020, on the low end of CF’s projection of 92 - 94 million corn acres • Longer - term, global nitrogen demand
Slide 13: CF production cost remains advantaged due to energy cost differentials
13 CF production cost remains advantaged due to energy cost differentials (1) North American production assumed to be 37.2 MMBtu per tonne of ammonia for feedstock and fuel, European production assumed at 37.8 MMBtu per tonne for feedstock and fuel, Chinese production assumed to be 1.2 tonnes of coa
Slide 14: U.S. LNG shipments dramatically declined as prices in Asia and Europe fell
14 U.S. LNG Shipments Dramatically declined as prices in Asia and Europe fell Sources: Platts ,: © 2020 IHS Markit . All rights reserved. The use of this content was authorized in advance. Any further use or redistribution of this content is str ict ly prohibited without prior written permission by
Slide 15: Domestic ethanol demand is rebounding as miles traveled recovers
15 Following second quarter decline, d omestic ethanol demand is rebounding as miles traveled recovers Source : CF, USDA, EIA, Iowa State University U.S. Ethanol Production and Consumption in Bushel Equivalents Million Bushel per Month 0 2 4 6 8 10 12 Sep-16 Sep-17 Sep-18 Sep-19 Sep-20 Sep-21 U.S. M
Slide 16: Corn acres underpin a relatively stable base of U.S. nitrogen demand
16 Corn acres underpin a relatively stable base of U.S. nitrogen demand Note: Total Nitrogen U se represents nitrogen applied to all crops; AAPFCO (2010 - 2016), TFI/IFA (2017 - 2019), CF estimate (2020) Source : CF, USDA, AAPFCO, TFI, CF Analysis 0 2 4 6 8 10 12 14 0 10 20 30 40 50 60 70 80 90 100
Slide 17: India demand and imports robust due to good monsoons and domestic stimulus
17 India demand and imports robust due to good monsoons and domestic stimulus Source: CRU Urea Market Outlook, India DOF, FAI, industry publications India Urea Sales Record: Consistent Long Term Growth… Million product metric tons … Leading to Rising Urea Import Demand 0 2 4 6 8 10 12 2009 2010 2011
Slide 18: Brazil urea demand continues to grow while domestic production ceases
18 Brazil urea demand continues to grow while domestic production ceases Source: CRU Urea Market Outlook Long Term Urea Growth Driven by Rising Agricultural Production 0 1 2 3 4 5 6 7 8 2010 2012 2014 2016 2018 2020 Million product metric tons Consumption Served by Domestic Production Consumption Se
Slide 19: Appendix
19 Appendix
Slide 20: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA
20 Non - GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA In millions Q2 20 20 Q2 2019 1H 20 20 1H 2019 LTM Q2 2020 Net earnings $ 218 $ 320 $ 309 $ 438 $ 517 Less: Net earnings attributable to noncontrolling interest (28) (37) (51) (65) (139) Net earnings attributable to common st
Slide 21: Non-GAAP: reconciliation of LTM cash from operations to free cash flow
21 Non - GAAP: reconciliation of LTM cash from operations to free cash flow and free cash flow yield In millions , except percentages , share price, and ratios CF Yara Mosaic Nutrien OCI Cash provided by operating activities (1) $ 1,530 $ 1,901 $ 1,767 $ 3,654 $ 336 C apital expenditures (369) (908)
Slide 22: CF EBITDA sensitivity table
22 (1) Based on 2019 adjusted EBITDA of $ 1,610 million, sales volumes of approximately 19.5 million product tons, gas consumption of 344 million MMBtus, and nitrogen product sales price relationships. Changes in product prices and gas costs were not applied to the CHS minority interest or industria
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