Cf Industries Holdings, Inc. · NYSE:CF

Cf Industries — Q4 2023 Earnings Presentation

26 slides from Cf Industries's earnings presentation, Feb 15, 2024

  1. Slide 1: 2023 Fourth Quarter and Full Year Financial Results

    2023 Fourth Quarter and Full Year Financial Results February 14, 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 global demand and favorable energy spreads underpin solid results

    Strong global demand and favorable energy spreads underpin solid results  Strong cash generation enabled significant return of capital since the beginning of 2021: Net earnings Net earnings per - Invested $1.4 billion in growth projects diluted share - Deployed $2.5 billion to repurchase 31.3 milli

  5. Slide 5: Financial results – fourth quarter and FY 2023

    Financial results – fourth quarter and FY 2023 In millions, except percentages, per MMBtu and EPS Q4 2023 Q4 2022 FY 2023 FY 2022 Net sales $ 1,571 $ 2,608 $ 6,631 $ 11,186 Gross margin 501 1,256 2,545 5,861 - As a percentage of net sales 31.9 % 48.2 % 38.4 % 52.4 % Net earnings attributable to comm

  6. Slide 6: 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%

  7. Slide 7: Consistently strong free cash flow metrics show undervalued equity

    Consistently strong free cash flow metrics show undervalued equity Attractive free cash flow yield and free cash flow to adjusted EBITDA conversion rate suggest undervalued equity, supporting robust share repurchase program Free Cash Flow Yield(1) Canada/US tax matter (3) 19.6%(3) 2018-2023 average

  8. Slide 8: 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

  9. Slide 9: Disciplined approach to capital investments and shareholder returns

    Disciplined approach to capital investments and shareholder returns… Total ~$6.0 B Dividends $0.9  Strong free cash flow enables strategic growth and substantial Share return of capital Repurchase  $2.6 billion remaining in $Billions $2.5 $3 billion share repurchase $3.0 authorization that expires

  10. Slide 10: …continues to drive nitrogen participation per share…

    …continues to drive nitrogen participation per share… CF Industries’ Nitrogen Volumes and Shares Outstanding as of December 31, 2023 Annual Nitrogen Equivalent 2013 – 2023 Nitrogen per share CAGR: 6.3% Million Shares Outstanding (7) Tons per 1,000 Shares Outstanding 50 300 45 43 40 41 38 39 250 40 3

  11. Slide 11: …resulting in strong free cash flow participation

    …resulting in strong free cash flow participation CF Industries’ Free Cash Flow and Shares Outstanding as of year end Annual Free Cash Flow (millions) Shares Outstanding (millions) Canada/US tax matter (1) $3,500 230 $3,000 220 $2,500 210 $2,000 200 $1,500 190 $1,000 $500 180 $0 170 2018 2019 2020 2

  12. Slide 12: Clean Energy Growth: Low-carbon ammonia demand

    Additional low-carbon ammonia FEED studies and further demand clarity expected 2H 2024 Disciplined approach to align supply with demand Low-carbon Clean Energy Growth ammonia demand • FEED study completed 2023  North America Low-carbon ammonia plant • Estimated cost in the range of $3 billion - Sus

  13. Slide 13: 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 91 million acres  India: Urea imports expected to be in a range of 6 – 7 million metric tons  Brazil: Urea imports expected to be in a range of 7 – 8

  14. Slide 14: 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

  15. Slide 15: 2024 global delivered U.S. Gulf urea cost curve suggests prices near historic averages

    2024 global delivered U.S. Gulf urea cost curve suggests prices near historic averages 2024 Monthly Delivered U.S. Gulf Urea Cost Curve Y-axis: USD/st X-axis: Monthly Production Capacity at 95% Operating Rate, 85% Operating Rate in China, million short tons 2024 Shipments: 17.5M Tons Avg. Appx. Mont

  16. Slide 16: Appendix

    Appendix

  17. Slide 17: 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 $1.8 $1.6

  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 underway Donaldsonville green ammonia Engineering 2025 project activities ongoing start-up Donaldsonville CCS l

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

    Global grain stocks-to-use expected to approach five-year average by 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 Percent USD per Bushel Percent USD per Bushel 16% $7 30% $16 14% $6 $14

  21. Slide 21: 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  Import demand into Brazil and India were key 6 market drivers in 2023 with the trend expected to 5 ~4 MMT continue in 2024 4  Despite lower natural gas prices in Europe, 4.3 domestic p

  22. Slide 22: 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

  23. Slide 23: 2024 cost curve assumptions

    2024 cost curve assumptions Annual Average Energy Cost Location Source 2023E(1) Current(2) 2024F(3) Gas Prices ($/MMBtu) Henry Hub NYMEX 5.56 2.18 2.96 TTF ICE 44.62 9.00 10.35 NBP ICE 43.66 8.66 10.06 JKM ICE 37.10 9.29 11.66 Oil ($/Bbl) Brent Crude NYMEX 85 84 78 China Coal ($/tonne) Thermal 156 1

  24. Slide 24: Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA

    Non-GAAP: reconciliation of net earnings to EBITDA and adjusted EBITDA In millions Q4 2023 Q4 2022 FY 2023 FY 2022 Net earnings $ 352 $ 1,009 $ 1,838 $ 3,937 Less: Net earnings attributable to noncontrolling interest (78) (149) (313) (591) Net earnings attributable to common stockholders 274 860 1,5

  25. Slide 25: 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 2021 FY 2020 FY 2019 FY 2018 Net earnings $ 1,260 $ 432 $ 646 $ 428 Less: Net earnings attributable to noncontrolling interests (343) (115) (153) (138) Net earnings attributable to common stockholders 91

  26. Slide 26: 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 2018 FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 price, and ratios Cash provided by operating activities(1) $ 1,497 $ 1,505 $ 1,231 $ 2,873 $ 3,855 $ 2,757 Capital expend

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