Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q2 2016 Earnings Presentation
24 slides from Cf Industries's earnings presentation, Aug 4, 2016
Slide 1: Note Regarding Non-GAAP Financial Measures
2 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, adjusted net earnings, and adjusted net earnings per diluted share, which are non-GAAP fin
Slide 2: Safe Harbor Statement
Safe Harbor Statement 3 All statements in this communication 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 su
Slide 3: Second Quarter 2016 Highlights
4 New Donaldsonville ammonia plant is expected to begin production during the third quarter New Port Neal ammonia plant is mechanically complete Ammonia subsystems and full scale plant is expected to start production by the end of the third or beginning of the fourth quarter Urea plant is expected t
Slide 4: Nitrogen Market Outlook
Nitrogen Market Outlook Demand outlook for the 2017 fertilizer season is positive as major nitrogen-consuming regions are expected to see continued slight increases in product applications. However, additional nitrogen supply is expected to continue to depress global nitrogen pricing as new ammonia,
Slide 5: Capacity Expansion Update
Capacity Expansion Update Donaldsonville New Donaldsonville ammonia plant is expected to begin production during the third quarter Commissioning of the new ammonia plant will mark the official completion of the capacity expansion project at the Donaldsonville site Port Neal Ammonia plant is mechanic
Slide 6: Capacity Expansion Projects Expected To Increase Nitrogen Capacity Per Share by 27%
7 The Capacity Expansion Projects Are Expected To Increase CF’s Nitrogen Capacity Per Share by 27% Excludes 34% of Canadian Fertilizers Limited (CFL) that was owned by Viterra. CFL operations were treated as a consolidated variable interest entity in CF Industries Holdings, Inc. financial statements
Slide 7: U.S. Has More Than 35 Years of Gas Resource at <$3.50 per MMBtu
Even with Increasing LNG Exports, the U.S. is Currently Estimated to Have More Than 35 years of Gas Resource at <$3.50 per MMBtu 8 Breakeven Price at Henry Hub (Y-axis: $ per MMBtu, X-axis: TCF) Estimated U.S. Gas Resource Increased From 2010 to 2015 due to: New basin discoveries and development. Th
Slide 8: Monthly Delivered U.S. Gulf Urea Cost Curve
20 0 5 10 15 Cap ∆ 1.7 MM ST/mo Shipments: 16.5 MM ST Avg Appx . Monthly Range (2016) 2016 vs. 2015 Monthly Delivered U.S. Gulf Urea Cost Curve (does not include cash costs for SG&A or interest) (Y-axis: USD/short ton, X-axis: Monthly Production Capacity at 95% Operating Rate, million short tons) En
Slide 9: North American Producers Remain Highly Profitable
Source: FERTECON, CRU, Integer, CF Urea Price/Production Cost In U.S. Dollars Per Ton 10 North American Producers Remain Highly Profitable Freight/Loading Other Cash North American natural gas cost assumed at an average price of $2.00 per MMBtu North American natural gas cost assumed at an average p
Slide 10: Imports Expected to Provide Nearly 30% of North America's Nitrogen Supply in 2017
11 2017 North America Nitrogen Landscape (‘000 short nutrient tons) Imports Are Expected to Provide Nearly 30% of North America’s Nitrogen Supply in 2017 11 Note: Assumes demand growth between 2015 and 2017 is offset by exports of domestic production. Source: CF Industries, IFDC, USDOC and TFI CF In
Slide 11: 2016 Expected High-Water Mark For Urea Capacity Additions
0 50 100 150 200 250 2012 World ex-China 196 2013-15 Additions All Other 17 2015 World ex-China 213 2016 Under Construction All Other 15 2019 228 China Net China China Net China World ex-China China 13 2016 is the Expected High-Water Mark For Urea Capacity Additions, with No Announced Net Capacity A
Slide 12: Producers Throughout the World Are At Risk of Shutdowns
Chinese turnaround frequency prompts regular consideration of shutdown We estimate that Chinese coal-fed plants face multi-million dollar annual overhauls of the coal gasifier and associated equipment in addition to ammonia and urea turnarounds every 3-4 years which are even more costly, similar to
Slide 13: CF Expects Global Nitrogen Demand To Grow
CF Expects Global Nitrogen Demand To Grow at 2 Percent per Year 15 Actual values from 2000-2015; projections from 2016-2019 China India Other Asia N. America Europe L. America Rest of World Total Nitrogen Consumption 2000-2019(1) (Million Nutrient Tonnes) Product Percentage of 2015 Demand IGAN: Expl
Slide 14: CF Expects Global Nitrogen Demand To Grow
CF Expects Global Nitrogen Demand To Grow at 2 Percent per Year CF Total Nitrogen Consumption 2000-2019") Percentage of (Million Nutrient Tonnes) 2015 Demand 180 IGAN: Explosives: 16% 160 Urea: resins, Industrial amines 33% | . Ammonia 140 15-yr CAGR Car oam, 1% =3.5% Acronitie, 120 Polymers Rest of
Slide 15: Financial Highlights
Financial Highlights 17 In millions, except percentages, per MMBtu and EPS 2016 Q2 2016 Q2 2015 Q2 2015 Q2 2016 YTD 2016 YTD 2015 YTD 2015 YTD Net sales $ 1,134 $ 1,311 $ 2,138 $ 2,265 Gross margin 527 686 744 1,102 - As percent of sales 46.5 % 52.3 % 34.8 % 48.6 % Net earnings attributable to commo
Slide 16: Reconciliation of Net Earnings and EPS to Adjusted Net Earnings and Adjusted EPS
Non-GAAP: Reconciliation of Net Earnings and Net Earnings Per Diluted Share (EPS) to Adjusted Net Earnings and Adjusted EPS 18 Transaction costs include the $150 million termination fee paid by by CF Holdings to OCI in the second quarter of 2016 as a result of the termination of the combination agre
Slide 17: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: Reconciliation of Net Earnings to EBITDA and Adjusted EBITDA Includes the tax benefit of $11 million on loss on sale of non-operating equity method investment for both the three and six months ended June 30, 2015. EBITDA is defined as net earnings attributable to common stockholders plus i
Slide 18: New North American Ammonia Plants Announced Since 2012
20 Since 2012, At Least 24 New North American Ammonia Plants Have Been Announced (Capacity in thousand tons per annum) Source: CF Industries and Industry Publications Announce Date Company Location Gross Ammonia Capacity Nutrient Capacity Product Focus Expansion Type Status Feb-12 Yara Belle Plaine,
Slide 19: Only a Few New Nitrogen Fertilizer Plants Have Proceeded to Construction
21 However, To Date, Only 3 New Nitrogen Fertilizer Plants Have Proceeded to Construction 1 Includes proposed new plants designed to produce at least 75K ammonia tons per year 24 Projects Announced (14.3M N Tons)1 ‘000 Nutrient Tons/Year 6 Projects 11 Projects 4 Projects 3 Projects 2 Others LSB, AR
Slide 20: Donaldsonville Expansion Site Overview
22 Donaldsonville Expansion Site Overview Urea Warehouse 90K Tons UAN Tank 50K Tons Ammonia 3,640 TPD Ammonia Tank 30K Tons UAN 5,050 TPD Urea 3,850 TPD Urea Barge Dock
Slide 21: Donaldsonville Expansion Ammonia Plant
Donaldsonville Expansion Ammonia Plant 23 Reformer Ammonia Syn-Loop Demin Water Storage Motor Control Center
Slide 22: Port Neal Expansion Ammonia Plant
Port Neal Expansion Ammonia Plant 25
Slide 23: Port Neal Expansion Urea Plant - Granulation and Synthesis Plants
26 Port Neal Expansion Urea Plant- Granulation and Synthesis Plants Granulation Synthesis
Slide 24: Port Neal Expansion Urea Plant
Port Neal Expansion @CFindustries Urea Plant- Granulation and Synthesis Plants
CF Industries Holdings — Q2 2016 Earnings Presentation on 6ix