Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q4 2019 Earnings Presentation
20 slides from Cf Industries's earnings presentation, Feb 13, 2020
Slide 1: 2019 Fourth Quarter Financial Results
1 1 2017 Third Quarter Financial Results November 1, 2017 NYSE: CF 2019 Fourth Quarter Financial Results February 12, 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 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,
Slide 4: Fourth quarter and full year 2019 results
4 Fourth quarter and full year 2019 results (1) See appendix for reconciliation of EBITDA and adjusted EBITDA • Fourth quarter net earnings of $55 million; EBITDA (1 ) of $306 million and adjusted EBITDA (1) of $325 million • Full year net earnings of $493 million; EBITDA (1) of $1,620 million and a
Slide 5: Financial results - fourth quarter and full year 2019
5 Financial results - fourth quarter and full year 2019 I n millions, except percentages, per MMBtu and EPS Q4 201 9 Q4 201 8 Full year 201 9 Full year 201 8 Net sales $ 1,049 $ 1,132 $ 4,590 $ 4,429 Gross margin 227 242 1,174 917 - As percent age of net sales 21.6 % 21.4 % 25.6 % 20.7 % Net earning
Slide 6: CF continues to generate significant free cash flow
6 (1) Market capitalization is calculated as shares outstanding as of the end of each respective period multiplied by the closing s har e price of each company on February 11, 2020; see appendix for the calculation of market capitalization (2) Represents c ash p rovided by operating a ctivities (cas
Slide 7: CF offers investors industry best free cash flow yield
7 7.9 6.8 8.3 6.7 10.3 0 2 4 6 8 10 12 10.0% 7.4% 6.2% 5.4% (3.3%) -4% -2% 0% 2% 4% 6% 8% 10% CF YAR NTR OCI MOS CF offers investors industry best free cash flow yield CF YAR NTR OCI MOS EV / Adj. EBITDA (2)(3) FCF Yield (1) LTM 4Q19 LTM 4Q19 (1) Represents LTM free cash flow divided by market value
Slide 8: Exceptional operational performance
8 0.0 0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 4.5 2011 2012 2013 2014 2015 2016 2017 2018 2019 Exceptional o perational performance… Lowest year - end recordable incident rate Superior c apacity u tilization compared to North American peers (1) 5 yr Rolling Avg. Percent of Capacity Incidents per 200,000 wor
Slide 9: Strong free cash flow supports capital allocation strategy in 2019
9 -25% -20% -15% -10% -5% 0% 5% 10% 15% CF Yara Nutrien OCI Mosaic 0 100 200 300 400 500 600 700 800 900 Debt Reduction Return to Shareholders …yields strong results Strong free cash flow supports capital allocation strategy in 2019 Highest 2019 TSR (3) among fertilizer peers Total Shareholder Retur
Slide 10: Total shareholder return versus peers
10 -100% -50% 0% 50% 100% 150% 200% 250% 0 0.5 1 1.5 2 2.5 3 3.5 4 4.5 5 CF Mosaic Peer Group Index (1) Peers include: Yara International, OCI N.V., Mosaic, Nutrien , Potash - Nutrien , Agrium - Nutrien , LSB Industries, CVR Partners, and Incitec Pivot (2) For purposes of calculating the TSR of CF I
Slide 11: Capital allocation highlights
11 Capital Allocation • In November 2019, the Company redeemed in full the $500 million outstanding principal amount of its 7.125% Senior Notes due May 2020 • In December 2019, the Company redeemed $250 million principal amount, representing 50% of the $500 million outstanding principal amount of it
Slide 12: Nitrogen production capacity and share count
12 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 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 CF
Slide 13: CF EBITDA sensitivity table
13 (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
Slide 14: Global Market Overview
14 Chinese production Outlook Industry fundamentals Global Market Overview • Near - term , global nitrogen demand will be positive as application seasons develop in different regions of the world • Longer - term, the Company expects that the global nitrogen market will tighten as industry fundamenta
Slide 15: CF production cost remains advantaged due to energy cost differentials
15 50 100 150 200 250 300 350 400 2016 2017 2018 2019 2020 0 2 4 6 8 10 12 14 16 2016 2017 2018 2019 2020 Henry Hub Natural Gas TTF Natural Gas Chinese Anthacite Coal - Lump Brent Crude Oil CF production cost remains advantaged due to energy cost differentials (1) North American ammonia production a
Slide 16: Appendix
16 Appendix
Slide 17: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
17 Non - GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (1) For the three and twelve months ended December 31, 2019 and the three months ended December 31, 2018, amount relates only to CF Industries Nitrogen, LLC (CFN) as we purchased the remaining publicly traded common units of
Slide 18: Non-GAAP: reconciliation of LTM cash from operations to free cash flow
18 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 Nutrien OCI Mosaic Cash provided by operating activities (1) $ 1,505 $ 1,907 $ 3,214 $ 537 $ 968 C apital expenditures (404) (1,066)
Slide 19: $1.5B cash from operations supports capital allocation strategy
19 0 400 800 1,200 1,600 2,000 2,400 12/31/2018 Net cash provided by operating activities CAPEX Debt Redemption Cash Dividends Share Repurchases NCI & other net cash activity 12/31/2019 682 1,505 (404) 287 (370) (769) $1.5B cash from operations supports capital allocation strategy CF Cash & Cash Equ
Slide 20: Management actions reduce annual fixed charges by $188 million
20 Management actions will result in $188 million reduction in annual fixed charges compared to 2017 (1) 2017 Fixed charges comprised of $350 million CAPEX for new activities in 2017 (excludes $123 million for activities performed in 2016 but paid in 2017), $300 million interest expense on debt, $13
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