Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q3 2021 Earnings Presentation
21 slides from Cf Industries's earnings presentation, Nov 4, 2021
Slide 1: 2021 Third Quarter Financial Results
2021 Third Quarter Financial Results November 3, 2021 NYSE: CF
Slide 2: Safe harbor statement
2 Safe harbor statement All statements in this presentation by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other th an those relating to historical facts, are forward - looking statements. Forward - looking statements can generally be identified by their use of term
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 and free cash flow, which are non - GAAP financial measures, provide additional meaningfu
Slide 4: First nine months highlights
4 First nine months highlights (1) Average cost of natural gas excludes a $112 million gain on net settlement of certain natural gas contracts with suppliers in Fe bruary 2021 (2) Net earnings and net earnings per diluted share include the impact of non - cash impairment charges of $495 million rela
Slide 5: Leveraging expertise to accelerate the world's transition to clean energy
5 Leveraging expertise to accelerate the world’s transition to clean energy CF Industries is the largest and most efficient ammonia producer in the world Access to low - cost US natural gas Facilities located near carbon sequestration regions Extensive logistics and distribution capability enable gl
Slide 6: Financial results – third quarter and first nine months
6 Financial results – third quarter and first nine months 2021 (1) See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the appendix (2) Includes the cost of natural gas used for production and related transportation that is included in cost of sales dur
Slide 7: Strengthening global nitrogen outlook
7 Strengthening global nitrogen outlook Global nitrogen price dynamics Global nitrogen supply and demand Global energy differentials Global nitrogen pricing outlook is favorable: high demand/low operating rates due to high energy prices should sustain a tight supply and demand balance into 2023 Forw
Slide 8: Lowest stocks-to-use ratios since 2012 drive higher grain values
8 Lowest stocks - to - use ratios since 2012 drive higher grain values, expected to require two or more growing seasons to replenish (1) Crop futures price represents the January - September average daily settlement of new crop futures price (e.g. 2021 corn price=J anuary – September 2021 daily sett
Slide 9: Higher natural gas prices in Europe and Asia widen spreads to North America
9 Sharply higher natural gas prices in Europe and Asia have widened spreads to North American benchmark prices Global Energy Price 2019 - 2022F USD/ tonne North American Production Advantage (1) 0 5 10 15 20 25 30 35 40 2019 2020 2021 2022 Henry Hub natural gas TTF natural gas Chinese anthracite coa
Slide 10: India and Brazil have consistent long-term growth and rising import demand
10 India and Brazil have consistent long - term growth, which has led to rising import demand (1) Brazil domestic production in 2020 is comprised solely of 2019 inventory carryover Source: CRU Urea Market Forecast as of August 31, 2021, India DOF, FAI, industry publications 0 2 4 6 8 10 12 2010 2012
Slide 11: 2021 Monthly Delivered U.S. Gulf Urea Cost Curve
11 0 200 400 600 800 $1,000 North America MENA Russia Other FSU Latin America Indonesia India Western Europe Eastern Europe South Asia Ukraine Lithuania China - Advanced Inland Low Southeast Asia China - Advanced Coastal China - Advanced Inland High China - Natural Gas Low China - Anthracite Low Chi
Slide 12: 2022 global urea cost curve range $365-445 per ton
12 0 200 400 600 800 $1,000 MENA North America Other FSU Russia Indonesia Latin America South Asia Southeast Asia China - Advanced Inland Low China - Natural Gas Low China - Anthracite Low China - Advanced Coastal China - Advanced Inland High India China - Natural Gas High Ukraine Eastern Europe Chi
Slide 13: Energy price assumptions and market notes
13 Notes: Market prices updated as of 11/2/2021; Coal prices as of 10/15/2021 (1) 2021E represents assumptions from November 2020 forecast cost curve (2) Current represents values as of November 2, 2021; Chinese coal prices are September 2021 monthly average (3) 2022F includes values as represented
Slide 14: Capital management
14 Capital management Capital structure and allocation Clean energy initiatives Capital expenditures Fitch Ratings and S&P Global Ratings issued investment - grade credit ratings with respect to CF Industries Redeemed $250 million in debt in 3Q, lowering long - term debt to $3.5 billion Repurchased
Slide 15: 2.6 6.0 (1) 6.0 6.1 6.6 (2) 6.6 7.0 (3) 8.1 (4) 8.1 8.2
15 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 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 ref
Slide 16: Appendix
Appendix
Slide 17: CF Industries EBITDA sensitivity table
17 CF Industries EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions $25/ton urea realized movement implies ~$375M change in EBITDA on an annual basis (1) Based on 2019 sales volumes of approximately 19.5 million product tons, 2019
Slide 18: Reconciliation of net (loss) earnings to EBITDA and adjusted EBITDA
18 Non - GAAP: reconciliation of net (loss) earnings to EBITDA and adjusted EBITDA (1) Loan fee amortization is included in both interest expense – net and depreciation and amortization (2) Represents expense incurred due to the deferral of certain plant turnaround activities as a result of the COVI
Slide 19: Gross margin variance to prior year
19 Gross margin variance to prior year Nine months ended 9/30/2020 Higher avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives (3) Higher manufacturing, maintenance, and other costs Increase in purchased urea (4) Gain on net settlement of natural g
Slide 20: Gross margin variance to prior year, continued
20 Gross margin variance to prior year, continued Nine months ended 9/30/2020 Higher avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives (3) Higher manufacturing, maintenance, and other costs Increase in purchased urea (4) Gain on net settlement o
Slide 21: Reconciliation of net cash provided by operating activities to free cash flow
21 Reconciliation of net cash provided by operating activities to free cash flow In millions Twelve months ended September 30, 2021 Net cash provided by operating activities $ 1,683 C apital expenditures (485) Distributions to noncontrolling interest (194) Free cash flow $ 1,004
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