Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Citigroup 6th Annual Basic Materials Symposium (December 2013)
19 slides from Cf Industries's conference presentation, Dec 4, 2013
Slide 1: CF Industries Holdings, Inc. Citigroup 6th Annual Basic Materials Symposium
CF Industries Holdings, Inc. Citigroup 6th Annual Basic Materials Symposium December 4, 2013
Slide 2: Forward-looking statements
All statements in this communication, other than those relating to historical facts, are “forward-looking statements.” These forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control,
Slide 3: Dennis Kelleher, Chief Financial Officer
3 Dennis Kelleher Chief Financial Officer
Slide 4: Business Model Transformation
Business Model Transformation 2002 Reassessment 2005 Execution 2003 – 2004 Implementation Approved new business model Financial performance established as primary objective Identified restructuring opportunities Low-cost feedstock Optimize market / customer mix Refine margin risk management Public l
Slide 5: Continuing Focus on Value Creation
$ Stock up more than 1,200% since 2005 IPO Continuing Focus on Value Creation 5 2005 - 2009 Execution 2010 Transformation 2013 Optimization Low-cost feedstock Optimize market / customer mix Refine margin risk management Public listing / refinancing Greatly expanded production and logistics footprint
Slide 6: Unparalleled Track Record of Creating Value for Shareholders
Unparalleled Track Record of Creating Value for Shareholders CF Industries’ shares have significantly outperformed peers over multiple time periods 6 Market data as of 11/29/2013.Total shareholder returns reflect share price appreciation plus dividends. Source: Bloomberg Since Terra Bid Launch (1/15
Slide 7: Disciplined Capital Deployment Track Record
Disciplined Capital Deployment Track Record 7 Organic Investment: $1.5B (3) Maintenance Capex Capacity Expansions – projects approved in 2012 and underway will lead to total nitrogen volume increase of ~40% since 2011 Last 3 Years Cumulative Operating Cash Flow : $6.4B (1) External Investment: $0.9B
Slide 8: Clear leader among peers in returning capital to shareholders
CF Industries is the clear leader among peers in returning capital to shareholders CF Industries Has Returned a Higher Percentage of Capital than Peers 8 Capital Allocation - Last 3 Years Organic Investment External Investment Other (3) Returned to Shareholders For Agrium and Mosaic, capital allocat
Slide 9: Optimal Capital Structure to Support Long Term Value Creation
Optimal Capital Structure to Support Long Term Value Creation Achieved investment grade ratings from Moody’s (May 2012) and S&P (July 2012) $1.5B inaugural investment grade bond offering in May 2013 was a significant step towards increasing low-cost leverage Believe “mid-cycle” Debt/EBITDA in 2.0x -
Slide 10: Funding Options
Funding Options CF Industries continuously evaluates alternative corporate and financing structures in order to optimize its cost of capital Company in discussions with financial advisors to evaluate MLP and MLP-like structures along with other financing options 10 Third Party Funding Alternatives C
Slide 11: Future Capital Deployment Priorities
Future Capital Deployment Priorities Maintain investment grade credit ratings Sustaining capital requirements typically $300–400 million annually 11 Capacity expansion program remains on schedule, on budget (mid-teens expected returns) Accretive acquisitions consistent with core business (e.g. 34% o
Slide 12: Future Capital Deployment Consistent With Historical Priorities
Future Capital Deployment Consistent With Historical Priorities 12 Indicative Sources of Capital (2014 – 2016) Indicative Uses of Capital (2014 – 2016) Total Sources: ~$ 8.5 – 9.5B Cash balance of $2.3 B as of 9/30/13 Assumes annual dividend of $4 / share Intend to maintain average cash balance in r
Slide 13: Critical Factors Supporting Decision to Invest in New Nitrogen Capacity
Critical Factors Supporting Decision to Invest in New Nitrogen Capacity Strong and growing nitrogen demand Reliable source of low-cost natural gas feedstock Lowest delivered cost, broadest reach Early mover advantage Outstanding capabilities in project management, technology, and sales and marketing
Slide 14: Capacity Expansion Projects
Capacity Expansion Projects Combined annual production: 2.1 million tons of gross ammonia 2.0 – 2.7 million tons of granular urea Up to 1.8 million(1) tons of UAN Projected to have almost $1B cash committed to projects by 12/31/2013 $720 million capital expenditures through year-end $150 million in
Slide 15: Estimated Return on Expansions
Estimated Return on Expansions Natural Gas Cost (3) ($ / thousand cubic feet) Urea Price (1) (2) ($ / ST) $300 $350 $400 $5.00 14% 16% 18% $4.00 15% 17% 19% $3.00 16% 18% 20% 15 Estimated IRRs Estimated Timeline 2014 2015 2016 Estimated Cash Outflow ~$ 2B $ 0.8 - 1B $ 50 - 200MM Major vessels arrive
Slide 16: Compelling Investment Rationale
Compelling Investment Rationale Current strategic activities a continuation of a long-history of value creation Significantly outperforming peers’ total shareholder returns across multiple time periods Strong industry leading record of cash returns to stockholders In process of increasing balance sh
Slide 17: [LOGO]
[LOGO]
Slide 18: Reconciliation of non-GAAP Measures – CF Industries
Reconciliation of non-GAAP Measures – CF Industries 18 We have presented EBITDA, EBITDA as a % of sales, Enterprise Value to EBITDA, total debt to EBITDA, Dividends & Share Repurchases as a % of EBITDA and Dividends & Share Repurchases as a % of Equity Market Value because management uses these meas
Slide 19: Reconciliation of non-GAAP Measures – CF Industries
Reconciliation of non-GAAP Measures – CF Industries 19 We have presented Total Debt to Equity Market Value, Free Cash Flow to Total Debt, Return on Invested Capital (ROIC) and Return on Equity (ROE) because management uses these measures to track the company’s performance in comparison to its peers
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