Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Q1 2019 Earnings Presentation
21 slides from Cf Industries's earnings presentation, May 29, 2019
Slide 1: Safe harbor statement
Safe harbor statement 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 such
Slide 2: Note regarding non-GAAP financial measures
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 as a percentage of adjusted EBITDA, and free cash flow yield,
Slide 3: First quarter 2019 results
First quarter 2019 results • • • Q1 net earnings of $90 million, or $0.40 per diluted share EBITDA(1) of $301 million and adjusted EBITDA(1) of $305 million The company repurchased approximately 1.5 million shares during the quarter under the previously announced $1 billion share repurchase program
Slide 4: Financial results - first quarter 2019
Financial results - first quarter 2019 (1) (2) (3) (4) Depreciation and amortization was $188 million for the three months ended March 31, 2019, and $193 million for the three months ended March 31, 2018 See appendix for reconciliation of EBITDA and adjusted EBITDA Includes the cost of natural gas a
Slide 5: US Natural Gas prices 2019 vs. 2018
US Natural Gas prices 2019 vs. 2018 2019 vs. 2018 Henry Hub Natural Gas Prices $/MMBtu $7 $6 $5 2018 HH Daily Natural Gas $4 $3 2019 Actual HH Daily Natural Gas and NYMEX Futures (June – Dec) $2 $1 Source: 2018 & 2019 YTD HH daily natural gas from Platt’s as of May 28, 2019; HH NYMEX Futures June th
Slide 6: Superior capacity utilization compared to North American peers demonstrates significant operational advantage
Superior capacity utilization compared to North American peers demonstrates significant operational advantage North America Ammonia Percent of Capacity Utilization (1) 4 yr Rolling Avg. Percent of Capacity(4) 100% • CF’s four year rolling average North American capacity utilization of 96% is signifi
Slide 7: CF generated the highest free cash flow compared to peers
CF generated the highest free cash flow compared to peers LTM 1Q19 Cash from operations less capital expenditures and less cash distributions to non-controlling interests (1) In millions, except percentages and share price CF $1,521 (434) (166) Nutrien $1,877 (1,457) - Mosaic $1,305 (1,045) - OCI $5
Slide 8: Capacity growth and share repurchases drive per share nitrogen participation 236% higher over 10 years
Capacity growth and share repurchases drive per share nitrogen participation 236% higher over 10 years CF Industries’ Nitrogen Volumes and Shares Outstanding as of Year-end 2009 – Q1 2019 Nitrogen per share CAGR: 14.4% Million shares Outstanding (6) Annual Nitrogen Equivalent Tons per 1,000 Shares O
Slide 9: Operating performance + capital allocation approach drives long term value creation
Operating performance + capital allocation approach drives long term value creation Total Shareholder Return through March 31, 2019 248% CF TSR Peer Group TSR 225% 175% 125% 75% 34% 25% -8% -25% -15% -21% 1 3 5 Number of Years 7 10 1 As of March 31, 2019 2 Represents TSR over 1, 3, 5, 7, and 10 year
Slide 10: Operating performance + capital allocation approach drives long term value creation
Operating performance + capital allocation approach drives long term value creation Total Shareholder Return through March 31, 2019 248% mCFTSR Peer Group TSR 225% 175% 125% 75% 45% 5 35% 33% 34% 25% 11% 15% on —— 8% “ate 15% 21% 1 3 5 7 10 Number of Years "Ast io 3, 2019 * Rgrsers TSR oer 1,2. 5,7,
Slide 11: Capital Allocation
Capital Allocation • Pursue growth within our strategic fairway, where returns exceed the risk-adjusted cost of capital Consistently return excess cash to shareholders in a timely fashion through dividends and share repurchases • • Repurchased approximately 1.5 million shares during the quarter unde
Slide 12: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 110.2 111.6 99.2 99.2 99.2 90.4 52.0 15.3 2012 2013201420152016 20172018 2019 Diluted Weighted-Avg Shares Outstanding (in millions) 323.5 296.0 256.7236.1233.1 233.9233.8 224.6 Source: Factset, Company filings. (1) Includes the effect of approximately 1.5 mill
Slide 13: CF EBITDA sensitivity table
CF 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)(2) $ billions CF Realized North American Natural Gas Cost ($/MMBtu) Source: CF Industries (1) The table was c
Slide 14: Global nitrogen demand
Global nitrogen demand Total Nitrogen Consumption 2003-2018(1) growth Million Nutrient Metric Tons 180 Expected global demand growth driven by: 160 • Global population expected to increase 1% per annum Global GDP expected to increase 2-2.5% per annum, increasing personal income 140 • 120 - 100 BRIC
Slide 15: Expected net new urea capacity additions below historic global demand growth through 2022
Expected net new urea capacity additions below historic global demand growth of ~2% through 2022 CF Projected Global Net Urea Capacity Additions(1) Thousand Product Metric Tons 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 2019 2020 2021 2022 (1)See following slide for details of the 2019-20
Slide 16: Projected new global urea plants (2019-2022)
Projected new global urea plants (2019-2022) Russia Russia China PJSC Metafrax TogliattiAzot Xiaoyi Nongmei Perm Togliatti Shanxi Natural Gas Natural Gas Coke-oven gas 580 730 300 2022 2022 2022 2,900 Subtotal 16,900 Grand Total Urea plants in permanent shutdown Brazil Brazil China China China China
Slide 17: 2019 estimated cost curve – based on October 2018 inputs
2019 estimated cost curve – based on October 2018 inputs 2019 Monthly Delivered U.S. Gulf Urea Cost Curve Y-axis: USD/short ton, X-axis: Monthly Production Capacity at 95% Operating Rate, million short tons Shipments: 16.5 MM ST Avg Monthly Range (N.G.) 5 10 0 Source: Industry Publications, Fertecon
Slide 18: 2019 cost curve assumptions
2019 cost curve assumptions Gas Prices ($/Mmbtu) 76 Brent Crude NYMEX 65 Thermal SX Coal / 7.05 RMB/USD Bloomberg Composite Notes: Market prices updated as of 10/24/2018; Coal prices as of 10/15/2018 19 Annual Average Energy Cost LocationSource2019F Henry HubNYMEX2.87 TTFICE8.48 WEU-RussiaOil Index7
Slide 19: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA 2 (5) loans (1) For the three months ended March 31, 2019, amount relates only to CF Industries Nitrogen, LLC (CFN), as we purchased the remaining publicly traded common units of Terra Nitrogen Company, LP (TNCLP) on April 2, 201
Slide 20: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (138) (141) interests (8) (13) derivatives (5) 2 intercompany loans(2) (1) (2) (3) Represents proceeds related to a property insurance claim at one of our nitrogen complexes. Loan fee amortization is included in both interest exp
Slide 21: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA Net earnings Less: Net earnings attributable to noncontrolling interests Net earnings attributable to common stockholders Interest expense — net Income tax provision Depreciation and amortization Less other adjustments: Depreciat
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