Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q3 2019 Earnings Presentation
20 slides from Cf Industries's earnings presentation, Oct 30, 2019
Slide 1: 2019 Third Quarter Financial Results
1 1 2017 Third Quarter Financial Results November 1, 2017 NYSE: CF 2019 Third Quarter Financial Results October 30, 2019 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 n on - GAAP f inancial m easures The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management believes t hat EBITDA, a djusted EBITDA, free cash flow, and free cash flow yield, which are non - GAAP financial measures,
Slide 4: Third quarter and first nine months 2019 results
4 Third q uarter and first nine months 2019 results (1) Nine month and third quarter 2019 net earnings attributable to common stockholders include an after - tax gain of $29 million from insurance proceeds and a $16 million withholding tax charge related to our joint venture ammonia facility in the
Slide 5: Financial results – third quarter and first nine months 2019
5 Financial results – third quarter and first nine months 2019 $ i n millions, except percentages, per MMBtu and EPS Q3 201 9 Q3 201 8 First nine months 201 9 First nine months 201 8 Net sales $ 1,038 $ 1,040 $ 3,541 $ 3,297 Gross margin 228 173 947 675 - As percent age of net sales 22.0 % 16.6 % 26
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 October 29, 2019; see appendix for the calculation of market capitalization (2) Represents c ash p rovided by operating a ctivities (cash
Slide 7: CF offers investors industry best free cash flow yield
7 8.5 6.9 9.1 10.0 6.1 0 2 4 6 8 10 12 14 8.1% (0.2%) 3.3% 6.8% (1.7%) -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 3Q19 LTM 3Q19 LTM 2Q19 LTM 2Q19 Source: Capital IQ October 29, 2019 (1) R
Slide 8: Global Market Overview
8 Chinese production Outlook Industry fundamentals Global Market Overview • CF expects nitrogen industry fundamentals will continue to improve in the near - and longer - term as the global market continues to tighten • Near - term, demand from import - dependent regions should support global pricing
Slide 9: Capital deployed to grow, return to shareholders, reduce debt
9 Growth ~$400m In the last 24 months, more than $3.5 billion of capital was invested to grow, returned to shareholders, and to reduce debt • CF paid $388 million to acquire all publicly traded common units of Terra Nitrogen Company, L.P. in April 2018 Returned to Shareholders ~$1.3B • $550 million
Slide 10: Management actions reduce annual fixed charges
10 Management actions will result in a $186 million reduction in annual fixed charges since 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, $131 mi
Slide 11: Capital allocation
11 Capital allocation • Under the previously announced $1 billion share repurchase program authorized through 2021, the Company repurchased ~1.5 million shares for $72 million during Q3 2019 and ~5.7 million shares for $250 million during the first nine months of 2019 • CF to redeem remaining $500 m
Slide 12: Nitrogen production per share
12 2.6 6.0 6.0 6.1 6.6 6.6 7.0 8.1 8.1 8.2 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 acquisition of Viter
Slide 13: 2020 Monthly Delivered U.S. Gulf Urea Cost Curve
13 0 100 200 300 $400 North America MENA Latin America Other FSU Indonesia Russia India South Asia Ukraine Western Europe China - Advanced Inland Low Eastern Europe Lithuania Southeast Asia China - Advanced Coastal China - Natural Gas Low China - Advanced Inland High China - Anthracite Low China - N
Slide 14: 2020 cost curve assumptions
14 Location 2019F Henry Hub 2.55 TTF 4.84 NBP 5.06 Brent Crude 65 Thermal 73 Anthracite Powder 114 Anthracite 172 RMB/USD 6.96 USD/EUR 1.12 USD/GBP Source NYMEX ICE ICE NYMEX SX Coal / Woodmac Bloomberg Composite Bloomberg Composite Bloomberg Composite 1.27 Annual Average Energy Cost Gas Prices ($/
Slide 15: CF production cost remains advantaged due to energy cost differentials
15 CF production cost remains advantaged due to energy cost differentials * North American production assumed to be 37.2 MMBtu per tonne of ammonia for feedstock and fuel, European production assumed at 37.8 MMBtu per tonne for feedstock and fuel, Chinese production assumed to be 1.2 tonnes of coal
Slide 16: CF EBITDA sensitivity table
16 Source: CF Industries (1) Based on 2018 adjusted EBITDA of $ 1,403 million, sales volumes of approximately 19.3 million product tons, gas consumption of 340 million MMBtus, and nitrogen product sales price relationships described in footnote 3 below. Changes in product prices and gas costs were n
Slide 17: Appendix
17 Appendix
Slide 18: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
18 Non - GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (1) For the three and nine months ended September 30, 2019 and the three months ended September 30, 2018, amount relates only to CF Industries Nitrogen, LLC (CFN) as we purchased the remaining publicly traded common units of
Slide 19: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (full year, LTM)
19 Non - GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (1) Loan fee amortization is included in both interest expense – net and depreciation and amortization. (2) (Gain) loss on foreign currency transactions, including intercompany loans, primarily relates to the unrealized fore
Slide 20: Reconciliation of LTM cash from operations to free cash flow
20 Non - GAAP: reconciliation of LTM cash from operations (1) 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 $ 1,457 $ 1,129 $ 2,448 $ 614 $ 1,006 C apital expenditures (441) (1,14
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