Cf Industries Holdings, Inc. · NYSE:CF

Cf Industries — Q1 2024 Earnings Presentation

25 slides from Cf Industries's earnings presentation, May 2, 2024

  1. Slide 1: 2024 First Quarter Financial Results

    2024 First Quarter Financial Results May 1, 2024 NYSE: CF

  2. Slide 2: Safe harbor statement

    Safe harbor statement All statements in this presentation 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

  3. Slide 3: Note regarding non-GAAP financial measures

    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, free cash flow, free cash flow to adjusted EBITDA conversion and free cash flow yield, which

  4. Slide 4: Strong cash generation despite challenging production environment in the first quarter

    Strong cash generation despite challenging production environment in the first quarter  Continued strong cash generation in Q1: Net operating Net earnings Net earnings per cash of $445M, free cash flow of $203M(1) diluted share  Q1 production outages due to severe cold and other maintenance events

  5. Slide 5: Financial results – first quarter 2024

    Financial results – first quarter 2024 In millions, except percentages, per MMBtu and EPS Q1 2024 Q1 2023 Net sales $ 1,470 $ 2,012 Gross margin 409 863 - As a percentage of net sales 27.8 % 42.9 % Net earnings attributable to common stockholders $ 194 $ 560 Net earnings per diluted share 1.03 2.85

  6. Slide 6: Capacity growth coupled with share repurchases continue to drive nitrogen participation per share

    Capacity growth coupled with share repurchases continue to drive nitrogen participation per share… CF Industries’ Nitrogen Volumes and Shares Outstanding as of March 31, 2024 2013 – Q1 2024 Nitrogen per share CAGR: 6.4% Annual Nitrogen Equivalent Million Shares Outstanding (7) Tons per 1,000 Shares

  7. Slide 7: …resulting in strong free cash flow participation

    …resulting in strong free cash flow participation CF Industries’ Free Cash Flow and Shares Outstanding as of period-end LTM Free Cash Flow (millions)(1) Shares Outstanding (millions) $3,500 230 Canada/US tax matter (2) $3,000 220 $2,500 210 $2,000 200 $1,500 190 $1,000 $500 180 $0 170 2019 2020 2021

  8. Slide 8: Global urea pricing sensitive to supply/demand and geopolitical uncertainties

    Global urea pricing sensitive to supply/demand and geopolitical uncertainties  Pricing sensitive to global factors: - India accepted 724k mt of urea in the latest tender, but cut actual urea purchases to 340k mt - China urea export quantity and timing uncertainty - Expected fertilizer pricing reset

  9. Slide 9: Forward global energy curves suggest attractive margin opportunities for CF's cost-advantaged network

    Forward global energy curves suggest attractive margin opportunities for CF’s cost-advantaged network Global Energy Price 2023-2024F North American Production Margin Advantage(1) USD per MMBtu USD per Metric Ton (MT) Ammonia(2) Urea 40 500 JKM natural gas 35 TTF natural gas Chinese anthracite coal 4

  10. Slide 10: Import demand expected to remain resilient in 2024

    Import demand expected to remain resilient in 2024 Supply/Demand Dynamics China Urea Exports Million metric tons  China urea exports expected to be ~4 million mt annual 6 following domestic spring applications 5 ~4 MMT  India import demand expected to be down vs prior year due 4 to higher domestic

  11. Slide 11: Global demand to remain resilient supported by constructive farmer economics

    Global demand to remain resilient supported by constructive farmer economics Anticipated Average Returns over Variable and Land Cost, by Crop (1) $/acre, U.S. average Corn Soybeans Wheat $500 $450 $400 $350 $300 $250 $200 $150 $100 $50 $0 2018 2019 2020 2021 2022 2023F 2024F (1) Annual cash cost on

  12. Slide 12: 2024 management outlook positive as industry fundamentals remain favorable

    2024 management outlook positive as industry fundamentals remain favorable Global Nitrogen Market  North America: Corn area planted expected to be approximately 91 million acres  India: Urea imports expected to be in a range of 5.5 – 6.5 million metric tons  Brazil: Urea imports expected to be in

  13. Slide 13: Appendix

    Appendix

  14. Slide 14: CF Industries Adjusted EBITDA sensitivity table

    CF Industries Adjusted EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions Adjusted EBITDA Sensitivity to Natural Gas and Urea Prices(1) $ billions CF Realized Natural Gas Cost ($/MMBtu) $2.00 $2.50 $3.00 $3.50 $4.00 $4.50 $5.00 $1.

  15. Slide 15: Recent transactions highlight economic value in North American assets has increased significantly

    Recent transactions highlight economic value in North American assets has increased significantly Nitrogen asset historic capex per N ton(1,2) pre-synergies ‘10 ‘12 ‘16 ‘17 ‘23  Capital intensity associated $000's / N ton CF Implied CF economic Assets value at precedent with new projects has $6 tra

  16. Slide 16: North American Nitrogen Precedent Transactions

    North American Nitrogen Precedent Transactions FID Completion Total Cost Net N Volume Project $000's / N Year Year $M 000's North American Nitrogen Assets CF - Terra Acquisition 2010 2010 4,800 2,414 2.0 CF - Medicine Hat Acquisition 2012 2012 900 346 2.6 CF - Donaldsonville Construction Cost 2012 2

  17. Slide 17: Strong free cash flow metrics show undervalued equity

    Strong free cash flow metrics show undervalued equity Free Cash Flow Yield(1) Canada/US tax matter (3) 19.6%(3) 2019-Q1 2024 LTM average yield 11.7% 16.7% 14.7% 12.0% 8.9% 9.0% 9.0% 2019 2020 2021 2022 2023 Q1 2024 LTM FCF/Adj EBITDA 57% 55% 79% 47% 65% 59% conversion(2) % 56%(3) Attractive free cas

  18. Slide 18: Capital management strategy focused on growing shareholder participation in our free cash flow

    Capital management strategy focused on growing shareholder participation in our free cash flow Low-carbon & DEF & Nitric Acid green ammonia production/logistics projects expansion Disciplined Invest in high growth initiatives return projects within & clean energy our network Return capital Inorganic

  19. Slide 19: Advancing decarbonization through significant progress on strategic initiatives

    Advancing decarbonization through significant progress on strategic initiatives PROJECTS Purchased 2.2 BCF Purchased 4.4 BCF Purchased natural gas certified by MiQ Commissioning activities nearing completion Donaldsonville green ammonia Engineering 2025 project activities ongoing start-up Donaldsonv

  20. Slide 20: Global grain stocks-to-use expected to approach five-year average by the end of the 2024 growing season

    Global grain stocks-to-use expected to approach five-year average by the end of the 2024 growing season Global Coarse Grains Stocks-to-Use Ratio Global Oilseeds Stocks-to-Use Ratio vs vs Corn Futures Prices(1) Soybean Futures Prices(1) Percent USD per Bushel Percent USD per Bushel 16% $7 30% $16 14%

  21. Slide 21: Outstanding safety performance drives industry leading production capacity utilization

    Outstanding safety performance drives industry leading production capacity utilization Total Recordable Incident Rate North American Ammonia Percent of Capacity Utilization (1) 5-Year Rolling Avg. Percent of Capacity Total injuries per 200,000 work hours 100% CF North 4.5 America (2) 98% 97% 4.0 96%

  22. Slide 22: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA

    Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA In millions Q1 2024 Q1 2023 Q1 2024 FY 2023 LTM Net earnings $ 238 $ 650 $ 1,426 $ 1,838 Less: Net earnings attributable to noncontrolling interest (44) (90) (267) (313) Net earnings attributable to common stockholders 194 560 1,

  23. Slide 23: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA, continued

    Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA, continued In millions FY 2022 FY 2021 FY 2020 FY 2019 Net earnings $ 3,937 $ 1,260 $ 432 $ 646 Less: Net earnings attributable to noncontrolling interest (591) (343) (115) (153) Net earnings attributable to common stockholders 3

  24. Slide 24: Non-GAAP: reconciliation of cash from operations to free cash flow and free cash flow yield

    Non-GAAP: reconciliation of cash from operations to free cash flow and free cash flow yield In millions, except percentages, share FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Q1 2024 LTM price, and ratios Cash provided by operating activities(1) $ 1,505 $ 1,231 $ 2,873 $ 3,855 $ 2,757 $ 2,255 Capital ex

  25. Slide 25: Non-GAAP: reconciliation of cash from operations to free cash flow

    Non-GAAP: reconciliation of cash from operations to free cash flow In millions Q1 2024 Cash provided by operating activities $ 445 Capital expenditures (98) Distributions to noncontrolling interest (144) Free cash flow $ 203 25

CF Industries Holdings — Q1 2024 Earnings Presentation on 6ix