Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q3 2020 Earnings Presentation
22 slides from Cf Industries's earnings presentation, Nov 4, 2020
Slide 1: Third Quarter 2020 Financial Results
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Slide 2: Forward-looking statements
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 terms such as “anticipate,” “be
Slide 3: 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 are non-GAAP financial measures, provide
Slide 4: Financial overview
Financial overview •Nine month net earnings of $230 million, or $1.07 per diluted share; EBITDA(1) of $982 million and adjusted EBITDA(1) of $1,012 million •Third quarter net loss of $28 million, or $0.13 per diluted share; EBITDA of $196 million; adjusted EBITDA of $204 million •Trailing twelve mon
Slide 5: Ammonia production, sales and safety trends
10,000 TTM Ammonia Production Short tonsNameplate capacity, 10.53 million short tons 7,500 5,000 2,500 0 20,000 1Q182Q183Q184Q181Q192Q193Q194Q191Q202Q203Q20 TTM Total Product Sales Short tons 15,000 10,000 5,000 0 5.0 4.0 3.0 2.0 1.0 0.0 1Q182Q183Q184Q181Q192Q193Q194Q191Q202Q203Q20 Total Recordable
Slide 6: Commercial environment
Commercial environment For the first nine months of 2020 compared to the same period in 2019: •Average selling prices were lower across all segments due to increased global supply availability as lower global energy costs drove higher global operating rates •Sales volumes were higher across most seg
Slide 7: Financial results summary
(1) Depreciation and amortization was $212 million and $662 million for the three and nine months ended September 30, 2020, respectively, and $223 million and $663 million for the three and nine months ended September 30, 2019, respectively (2) See appendix for reconciliation of EBITDA and adjusted
Slide 8: CF Industries remains an efficient converter of EBITDA into cash
CF Industries remains an efficient converter of EBITDA into cash (USD in millions) Free cash flow compared to peers(2) USD in millions 1,600 FCF to 1,378 1,215 1,200 800 400 - Adjusted EBITDA Conversion(3) 756 56.5% 63.4% 495 38.6% 34.1% (0.8%) (6) (400) CFYaraMosaicNutrienOCI (1)Market value of equ
Slide 9: Free cash flow yield well above peer group
CF Industries continues to offer investors free cash flow yield well above peer group average FCF Yield(1) EV / Adj. EBITDA(2)(3) 16% 14% 12.6% LTM 3Q20 14.6% LTM 2Q20 12 10 LTM 3Q20 9.8 LTM 2Q20 12% 8.88.5 10% 8 7.0 8% 6.7% 6% 4% 5.1% 6 5.2 4 2% 0% -2% (0.2%) CFYARMOSNTROCI 2 0 CFYARMOSNTROCI (1)Re
Slide 10: Capital structure, clean energy initiative, capital allocation
Capital structure & fixed charges Clean energy initiative Capital allocation •Target liquidity: > $1 billion •Cash interest expense ~$190 million annually •Dividend of $1.20 per share annually •Capital expenditures (capex) in Q3 and first nine months of 2020 were $87 million and $206 million, respec
Slide 11: Global demand, pricing and energy outlook
Global demand Pricing Energy •Global nitrogen requirements expected to remain robust •The Company estimates ~90 million corn acres will be planted in 2021 •The 30% increase in corn futures prices since July, along with healthy level of corn planting in North America, support stable nitrogen demand i
Slide 12: 2021 estimated cost curve
2021 estimated cost curve 2021 Monthly Delivered U.S. Gulf Urea Cost Curve Y-axis: USD/short ton, X-axis: Monthly Production Capacity at 95% Operating Rate, million short tons Shipments: 16.6 MM ST Avg Appx. Monthly Range Appx. 2021 Price Range: $220-250 Appx. 2020 Price Range: $210-245 Freight Othe
Slide 13: 2021 cost curve assumptions
2021 cost curve assumptions Annual Average Energy Cost Location Gas Prices ($/MMBtu) Henry Hub TTF NBP Source NYMEX ICE ICE 2020F 2.17 3.09 3.18 Current 3.05 4.70 5.14 2021F 3.03 4.83 4.92 JKMICE3.74 Oil ($/Bbl) 6.80 5.26 Brent Crude China Coal ($/tonne) NYMEX 394045 Thermal687068 Anthracite Powder
Slide 14: Energy cost differentials expected to widen
Energy cost differentials expected to widen, supporting improved global prices USD/MMBtu 10 Global Energy Price 2019-2021F USD/tonne 350 Energy Cost per tonne of Ammonia(1) 2019-2021F Chinese anthracite coal - lump JKM natural gas 8 6 Henry Hub natural gas TTF natural gas 300 250 200 4150 2Unsustain
Slide 15: Unsustainable natural gas differentials globally
Unsustainable natural gas differentials globally $/MMBtuU.S. LNG Exports React to Global Basis Differentials changes 12.00 BCF/day 10 10.00 8.00 Strength in global prices9 led to recovery in8 LNG deliveries 7 Henry Hub (LHS) Asia Spot Index (LHS) TTF (LHS) 6.00 6 U.S. LNG Exports (RHS) 5 4 4.00 3 2
Slide 16: Domestic ethanol demand rebounding
Following second quarter decline, domestic ethanol demand is rebounding as miles traveled recovers U.S. Ethanol Production and Consumption in Bushel Equivalents Million Bushels per Month 600 500 400 300 200 U.S. Monthly Vehicle Miles Traveled Billion Miles per Month 12 10 8 6 4 100 0 Ethanol Product
Slide 17: India demand and imports robust
India demand and imports robust due to good monsoons and domestic stimulus India Urea Sales Record: Consistent Long-term Growth… … Leading to Rising Urea Import Demand Million product metric tons, monthly 12-month moving average 3.5 Million product metric tons 12 3.0 2.5 10 2009-2019 8Import CAGR: 5
Slide 18: Brazil urea demand continues to grow
Brazil urea demand continues to grow while domestic production ceases Long-term Urea Growth Driven by Rising Agricultural Production Million product metric tons 8 2010-2020 Import CAGR: 8.0% 7 6 Consumption served by domestic production(1) 5 4 Consumption 3served by imports 2 1 0 2010201120122013201
Slide 19: Do It Right!
Do It\/ Right!
Slide 20: Reconciliation of net earnings to EBITDA and adj. EBITDA
Non-GAAP: reconciliation of net earnings to EBITDA and adj. 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 COVID-19 pandemic (3)Rep
Slide 21: Reconciliation of LTM cash from operations to free cash flow and yield
Non-GAAP: reconciliation of LTM cash from operations to free cash flow and free cash flow yield (1)LTM cash provided by operating activities (cash from operations) for CF Industries, Yara International, Mosaic, and Nutrien is the 12-month period ending September 30, 2020 and OCI N.V. is the 12-month
Slide 22: CF Industries EBITDA sensitivity table
CF Industries EBITDA sensitivity table Table illustrates the resiliency of CF Industries’ business model across a broad range of industry conditions EBITDA Sensitivity to Natural Gas and Urea Prices(1) $ billions CF Realized Urea Price ($/ton)(2) (1)Based on 2019 adjusted EBITDA of $1,610 million, s
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