Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q1 2021 Earnings Presentation
20 slides from Cf Industries's earnings presentation, May 6, 2021
Slide 1: 2021 First Quarter Financial Results
2021 First Quarter Financial Results May 5, 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, free cash flow, free cash flow to adjusted EBITDA conversion, and free cash flow yield,
Slide 4: First quarter highlights
4 First quarter highlights (1) Average cost of natural gas excludes the $112 million gain on net settlement of certain natural gas contracts with suppliers in February 2021 (2) See appendix for reconciliation of EBITDA and adjusted EBITDA (3) Represents cash provided by operating activities (cash fr
Slide 5: Financial results – first quarter 2021
5 Financial results – first quarter 2021 I n millions, except percentages, per MMBtu and EPS Q1 20 21 Q1 2020 Net sales $ 1,048 $ 971 Gross margin 289 204 - As percent age of net sales 27.6 % 21.0 % Net earnings attributable to common stockholders $ 151 $ 68 Net earnings per diluted share 0.70 0.31
Slide 6: Active risk management mitigated extreme natural gas price spike in February
6 Active risk management mitigated extreme natural gas price spike in February Oklahoma Natural Gas USD per MMBtu North American Natural Gas (Henry Hub) CF actively manages natural gas price risk by location During periods of high volatility (winter), basis differentials between Henry Hub (Louisiana
Slide 7: Management actions overcame Q1 2021 challenges
7 (48) (63) (1) -120 -100 -80 -60 -40 -20 0 Higher natural gas costs Higher manufacturing, maintenance and other costs Purchased urea Gain on net settlement of natural gas contracts 112 Gross margin variances to Q1 prior year for select items (1) USD in millions Management actions overcame Q1 2021 c
Slide 8: Strengthening global nitrogen outlook
8 Strengthening global nitrogen outlook Global nitrogen price dynamics Global nitrogen demand Global energy differentials Low global coarse grains stocks - to - use ratios and higher energy prices in Europe and Asia have significantly tightened the global nitrogen supply and demand balance Highly fa
Slide 9: Low stocks-to-use ratio drives higher grain values
9 Low stocks - to - use ratio drives higher grain values, may require more than one season to replenish Global Coarse Grains Stocks - to - Use Ratio vs Corn Futures Prices* Percent 0 1 2 3 4 5 6 7 0 2 4 6 8 10 12 14 16 World-ex China Crop Futures Price (RHS) USD per Bushel Global Oilseeds Stocks - t
Slide 10: Natural gas spreads in Europe and Asia have expanded
10 Natural gas spreads in Europe and Asia have expanded, creating a wide shelf at the high end of the cost curve Global Energy Price 2019 - 2021F USD/ tonne North American Production Advantage (1) 0 2 4 6 8 10 12 14 16 18 2019 2020 2021 Henry Hub natural gas TTF natural gas Chinese anthracite coal -
Slide 11: India and Brazil have consistent long-term growth, rising import demand
11 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 February 12, 2021, India DOF, FAI, industry publications 0 2 4 6 8 10 12 2010 20
Slide 12: Capital management
12 Capital management Capital structure and allocation Clean energy initiative Capital expenditures Committed to returning to investment grade Redeemed in full all of the remaining $250 million outstanding principal amount of the Company’s 3.400% Senior Secured Notes due December 2021 on March 20, 2
Slide 13: CF Industries is the most efficient converter of EBITDA into cash
13 CF Industries is the most efficient converter of EBITDA into cash (1) Market value of equity (market cap) is calculated as shares outstanding as of March 31, 2021 for CF Industries, Yara Internat ion al, Mosaic, and Nutrien and as of December 31, 2020 for OCI N.V. multiplied by the close share pr
Slide 14: CF Industries delivers free cash flow yield above peer group average
14 CF Industries delivers free cash flow yield above peer group average (1) Represents LTM free cash flow divided by market value of equity (market cap) as of May 4, 2021; LTM free cash flow is the 12 - mon th period ending March 31, 2021; see appendix for reconciliation of free cash flow and calcul
Slide 15: Appendix
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Slide 16: CF Industries EBITDA sensitivity table
16 CF Industries EBITDA sensitivity table Table illustrates the CF Industries business model across a broad range of industry conditions $25/ton ureal 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 17: Reconciliation of net earnings to EBITDA and adjusted EBITDA
17 In millions Q1 2 021 Q1 2020 LTM Q1 2021 Net earnings $ 175 $ 91 $ 516 Less: Net earnings attributable to noncontrolling interest (24) (23) (116) Net earnings attributable to common stockholders 151 68 400 Interest expense – net 48 43 166 Income tax provision 18 13 36 Depreciation and amortizatio
Slide 18: Gross margin variance to prior year Q1 2020
18 Gross margin variance to prior year Q1 2020 Higher (lower) avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives Higher manufacturing, maintenance, and other costs Purchased urea (1) Gain on net settlement of natural gas contracts Q1 2021 Consoli
Slide 19: Gross margin variance to prior year, continued
19 Gross margin variance to prior year, continued Q1 2020 Higher (lower) avg selling prices (1) Volume (1) Higher natural gas costs (2) Unrealized MTM on natural gas derivatives Higher manufacturing, maintenance, and other costs Purchased urea (1) Gain on net settlement of natural gas contracts Q1 2
Slide 20: Reconciliation of LTM cash from operations to free cash flow and yield
20 Non - GAAP: reconciliation of LTM cash from operations to free cash flow and free cash flow yield In millions , except percentages , share price, and ratios CF Yara Mosaic Nutrien OCI Cash provided by operating activities (1) $ 1,517 $ 2,413 $ 1,712 $ 3,697 $ 986 C apital expenditures (313) (727)
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