Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — 2010 Agriculture, Protein & Fertilizer Conference
29 slides from Cf Industries's conference presentation, May 20, 2010
Slide 1: 2010 Agriculture, Protein & Fertilizer Conference
Corporate Development Supply Chain Sales Finance Legal Operations Human Resources Dv Sc Sa Fi Le Op Hr 2010 Agriculture, Protein & Fertilizer Conference May 20, 2010 CF Industries NYSE: CF
Slide 2: Forward-looking statements
Certain statements contained in this communication may constitute “forward-looking statements.” All statements in this communication, other than those relating to historical information or current condition, are forward-looking statements. These forward-looking statements are subject to a number of
Slide 3: The New Nitrogen Fertilizer Bellwether
The New Nitrogen Fertilizer Bellwether
Slide 4: The New Nitrogen Fertilizer Bellwether
The New Nitrogen Fertilizer Bellwether A Leading Global Company Significantly enhanced scale and strategic platform Nearly doubles revenues Global #2 in Nitrogen Fertilizers and Leading Position in Phosphate Fertilizer (1) Nitrogen manufacturing capacity of 13.5MM product tons (6.3MM nutrient tons)
Slide 5: A Global Leader in Nitrogen Fertilizers
A Global Leader in Nitrogen Fertilizers Nitrogen Nutrient Tons Production Capacity (1) (MM Nutrient Tons) (2) Note: (1) Based on 2009 public data and Fertecon. (2) Koch production capacity estimated. 7.3 6.3 3.1 3.1 2.3 0.0 1.0 2.0 3.0 4.0 5.0 6.0 7.0 8.0 Yara CF Agrium Potash Koch
Slide 6: Complementary Strengths In Nitrogen
Complementary Strengths In Nitrogen (000s Product Tons) Legacy Terra Capacity Nitrogen Production Capacities Source: Product tons based on CF and Terra 10K filings for the year ended December 31, 2009, ammonia numbers shown are net of ammonia upgraded to other ammonia products using standard convers
Slide 7: World-Scale, Fully-Integrated Phosphate
3rd largest phosphate business among public fertilizer companies With 1.1 million tons of P2O5 capacity, Plant City is the 7th largest facility in Fertecon’s listing of phosphate operations World-Scale, Fully-Integrated Phosphate Pro Forma CF/Terra Revenues (1) (2009) Phosphate 17% $679MM Nitrogen 8
Slide 8: Strategically Located Manufacturing and Distribution Facilities
Strategically Located Manufacturing and Distribution Facilities Trinidad & Tobago U.K. Trinidad and Tobago and United Kingdom U.S. Fertilizer Consumption Legacy CF Distribution Legacy CF Production Legacy Terra Production Legacy Terra Distribution Source: Public filings Note: (1) Includes CF’s Tampa
Slide 9: CF Industries Value Drivers
CF Industries Value Drivers Competitive Advantages Serving North American Market Over the Cycle Natural gas cost advantage vs. swing producer $2-3 per MMBtu vs. delivered cost to Ukrainian producer Transportation cost advantage vs. swing producer Ocean freight from Black Sea to U.S. Gulf Estimated 5
Slide 10: CF Industries Value Drivers (cont.)
CF Industries Value Drivers (cont.) Competitive Advantages Serving North American Market Over the Cycle In-market production advantage Lower freight from plant to market for 3 million tons of UAN and 650k tons of ammonia Value created by ammonia storage/distribution Premium for in-market staging to
Slide 11: Cost Advantage Serving Principal Markets
Cost Advantage Serving Principal Markets ($ per tonne) High natural gas cost in both Western and Eastern Europe expected to force producers in those regions into the role of swing suppliers W. Europe Ukraine Russia U.S. Middle East Source: Fertecon 2009; Fertecon has not updated the 2010 Ammonia Out
Slide 12: Gas Cost for Ukraine Ammonia Producer
Gas Cost for Ukraine Ammonia Producer Gas cost to ammonia producers ($/mmBtu) Cash cost of ammonia supply from Yuzhny ($/mt) Q2 Q3 $295 $280 $340 $325 “It is almost certain that ammonia producers’ gas cost will have to increase in Q3 from the current level of $6.20/mmBtu to $7.50/mmBtu.” Source: Fer
Slide 13: Optimal Corn Prices
Optimal Corn Prices Farm Budget (per acre) Revenue Yield (bu/acre) 163.5 Dec-10 Price (as of end-April) $3.74 Total Revenue $611 Variable Costs Fertilizers $98 Crop Protection – Herbicides $29 Seeds $80 Other (Interest, Insurance, etc.) $57 Total Variable Costs $264 Returns over Variable Cost $347 D
Slide 14: Significant Synergy Opportunity
Significant Synergy Opportunity SG&A 55 – 65 Headquarters consolidation Estimated combined SG&A ~$140 million Logistics and Railcar Leases 25 – 30 Reduction in total product miles shipped Reduced railcar lease costs (more than 5,300 total railcars in the system) Estimated combined logistics costs in
Slide 15: Early Synergy Wins
Early Synergy Wins Found numerous transportation and logistics opportunities Cancelled leases on 139 redundant rail cars (more to come) Used idled Terra barges to move UAN from CF Donaldsonville and between DFs Switched customer orders between legacy CF and Terra sites for transportation cost saving
Slide 16: Enhanced Scale – Comparable Company Performance
Enhanced Scale – Comparable Company Performance EBITDA ($MM) (1) 2007 – 2009 CF Avg: 827 Avg: 622 Pro Forma: 1,110 Avg: 1,344 2007 – 2009 Terra Pro Forma 2009 CF + Terra (2) 2007 – 2009 Agrium 2007 – 2009 Yara (3) Avg: 1,832 Source: Based on public filings Note: (1) CF and Terra EBITDA defined as ne
Slide 17: Second Quarter Profitability
Second Quarter Profitability 5-year average Q1 results reflected some volume being deferred to Q2 April weather was ideal for pre-plant ammonia application and corn planting, resulting in record ammonia volume in CF’s public company era We expect strong UAN application in side-dress, in part due to
Slide 18: A Clear Path Forward
A Clear Path Forward ©CFindustries
Slide 19: Our Demonstrated Commitment to Value Creation
Our Demonstrated Commitment to Value Creation CF has generated significant value for stockholders since its IPO in August 2005 Highest share price appreciation among public global fertilizer companies Maintained exclusive focus on fertilizer manufacturing with outstanding operational execution Histo
Slide 20: Our Strategic Imperatives
Our Strategic Imperatives Integrate the Operations of CF Industries and Terra Execute detailed integration plan over the next 18 to 24 months Deliver Targeted Cost Synergies Identified up to $135MM of synergies expected to be realized within two years Reaching the Operational Potential of CF Industr
Slide 21: The New Nitrogen Fertilizer Bellwether
The New Nitrogen Fertilizer Bellwether A Leading Global Company Significantly enhanced scale and strategic platform Nearly doubles revenues Global #2 in Nitrogen Fertilizers and Leading Position in Phosphate Fertilizer (1) Nitrogen manufacturing capacity of 13.5MM product tons (6.3MM nutrient tons)
Slide 22: Appendix
Appendix ©CFindustries
Slide 23: Historical Financial Summary – CF Industries
Historical Financial Summary – CF Industries Generated Free Cash Flow of ~$1.3Bn during the last three years (1) Income Statement 2007 2008 2009 Revenue 2,757 3,921 2,608 EBITDA 634 1,139 709 Net Income 373 685 366 Diluted EPS 6.56 12.13 7.42 Cash Flow Capital Expenditures 105 142 236 FCF Before Div
Slide 24: Historical Financial Summary – Terra
Historical Financial Summary – Terra Generated Free Cash Flow of ~$1.0Bn during the last three years (1) Income Statement 2007 2008 2009 Revenue 2,343 2,891 1,581 Adjusted EBITDA (2) 500 964 402 Net Income 202 641 153 Diluted EPS 1.90 6.20 1.53 Cash Flow Capital Expenditures 82 89 134 FCF Before Div
Slide 25: Non-GAAP Reconciliation – CF Industries
Non-GAAP Reconciliation – CF Industries EBITDA is defined as net earnings attributable to common stockholders plus interest income—net, income taxes and depreciation, depletion and amortization. We have presented EBITDA because management uses the measure to track performance and believes that it is
Slide 26: Non-GAAP Reconciliation – Terra Industries
Non-GAAP Reconciliation – Terra Industries Adjusted EBITDA is defined as net income from continuing operations less income plus interest expense plus income tax provision plus depreciation, depletion and amortization and charges related to loss on early retirement of debt, which is a non-cash item.
Slide 27: Non-GAAP Reconciliation – Pro Forma 2009
Non-GAAP Reconciliation – Pro Forma 2009 EBITDA is defined as net earnings attributable to common stockholders plus interest income—net, income tax provision and depreciation, depletion and amortization. We have presented EBITDA because management uses the measure to track performance and believes t
Slide 28: Non-GAAP Reconciliation – CF Industries Free Cash Flow
Non-GAAP Reconciliation – CF Industries Free Cash Flow Free cash flow is defined as net cash flows from continuing operations less additions to property, plant and equipment less distribution to noncontrolling interest less preferred share dividends paid. We have presented free cash flow because man
Slide 29: @CFindustries
® @CFindustries
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