Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Investor Presentation (September 2018)
26 slides from Cf Industries's investor presentation, Sep 17, 2018
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 and adjusted EBITDA which are non-GAAP financial measures, provide additional meaningful information regarding
Slide 3: Table of contents
Table of contents Cover Page: DEF loading at Donaldsonville 4 Safe Harbor Statement/Note Regarding Non-GAAP Financial Measures 2-3 Company Overview 5-12 Global Market Update 13-18 Overview of Financial Results 19-21 Appendix 22-26
Slide 4: Company Overview
Donaldsonville urea plant 5 Company Overview 5
Slide 5: CF Investment Thesis
CF Investment Thesis • Nitrogen demand growing at ~2% per year annually – Agricultural demand driven by population growth and increased protein consumption per capita Industrial demand driven by global GDP plus growth in emissions abatement – • Net new nitrogen capacity growth (new construction minu
Slide 6: CF serves a global market from strong North American base
CF serves a global market from strong North American base – – Chile Deepwater vessel Source: IFDC (1) Excludes Chinese state owned enterprise JAMG and Indonesian consortium PT Pupuk 7 …with outstanding domestic and export logistical capabilities. •All CF facilities have access to multiple shipping m
Slide 7: Best North American distribution capabilities with a global reach
Best North American distribution capabilities with a global reach Rycroft Vanscoy Medicine Hat Brandon Ability to export to mainland Europe Ritzville Grand Forks Velva Billingham Glenwood Ince Pine Bend Spencer Courtright Port Neal Blair Fremont Aurora Albany Seneca Kingston Garner Huntington Frankf
Slide 8: CF is well positioned to benefit from continued price recovery
CF is well positioned to benefit from continued price recovery Table illustrates the leverage of CF’s business model to improving industry conditions EBITDA Sensitivity to Natural Gas and Urea Prices(1)(2) $ billions CF Realized North American Natural Gas Cost ($/MMBtu)(3) Source: CF Industries (1)
Slide 9: CF's Capital Allocation Philosophy
CF’s Capital Allocation Philosophy • 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 • • • Commitment to investment grade metrics over the lo
Slide 10: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation $1.20 $1.20 $1.20 $1.00 2012 2013 2014 2015 2016 2017 Total Shares Outstanding (in millions) 323.5 296.0 256.7 236.1 233.1 233.9 Source: Factset, Company filings (1)Includes $210 million in total dividend payments through August 31, 2018 (2)Includes $388 milli
Slide 11: CF's shareholder nitrogen-participation/share has more than tripled since 2009
CF’s shareholder nitrogen-participation/share has more than tripled since 2009 CF Industries’ Nitrogen Volumes and Shares Outstanding as of Year-end 2009 – 2018 Nitrogen per share CAGR: 15.5% Million shares Outstanding (6) Annual Nitrogen Equivalent Tons per 1,000 Shares Outstanding 40 400 35 350 30
Slide 12: Global Market Update
Donaldsonville DEF storage Global Market Update
Slide 13: Market overview
Market overview • Increased production costs, particularly for producers in Europe and China, have raised and flattened the upper half of the global cost curve, supporting higher prices year-to-date compared to 2017 Natural gas per MMBtu at Dutch TTF hub was 53% higher in June 2018 than June 2017; T
Slide 14: Consistent global nitrogen demand growth
Consistent global nitrogen Total Nitrogen Consumption 2003-2018(1) demand growth Million Nutrient Metric Tons Expected global demand growth driven by: 180 • Global population expected to increase 1% per annum Global GDP expected to increase 2-2.5% per annum, increasing personal income 160 • 140 120
Slide 15: Expected net new capacity additions growth post 2017
Expected net new capacity additions growth post 2017 CF Projected Global Net Urea Capacity Additions(1) Thousand Product Metric Tons below projected global demand 20,000 15,000 10,000 5,000 2% Growth - (5,000) 2015 2016 2017 2018 2019 2020 2021 (1)See appendix for details of the 2017-2021 projected
Slide 16: Rising energy costs are increasing CF's North American production cost advantage
Rising energy costs (ex-North production cost advantage Global Energy Price 2016-2019F USD/MMBtu America) are increasing CF’s Energy Cost per ton of Ammonia* 2016-2019F USD/ton 14.00 400.00 12.00 350.00 10.00 300.00 8.00 250.00 6.00 200.00 4.00 150.00 2.00 100.00 - 50.00 2016 2017 2018 2019 2016 201
Slide 17: Trade flows are rebalancing as nitrogen fertilizer imports into North America have declined
Trade flows are rebalancing as nitrogen fertilizer imports into North America have declined while new North America Offshore Urea Imports capacity ramped up to full production North America Offshore UAN Imports Million Tons Million Tons 10 5.0 9 4.5 8 4.0 7 3.5 CF projected 2018 urea import level 6
Slide 18: Overview of Financial Results
Donaldsonville vessel loading Overview of Financial Results 19
Slide 19: First half 2018 results
First half 2018 results • First half 2018 net earnings of $211 million, or $0.90 per diluted share; first half EBITDA(1) of $772 million and adjusted EBITDA(1) of $764 million Q2 net earnings of $148 million, or $0.63 per diluted share; Q2 EBITDA(1) of $470 million and adjusted EBITDA(1) of $468 mil
Slide 20: Financial results - second quarter and first half 2018
Financial results - second quarter and first half 2018 3 211 (20) 148 stockholders 18 (8) 71 (5) natural gas derivatives (1) Depreciation and amortization was $241 million and $434 million for the three and six months ended June 30, 2018, respectively, and $217 million and $422 million for the three
Slide 21: Appendix
Yazoo City control room Appendix
Slide 22: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (26) (21) (51) (35) interests 148 3 211 (20) stockholders (20) (25) (46) (52) interests(1) (5) 18 (8) 71 natural gas derivatives 2 1 (3) 1 including intercompany loans(3) - 7 - 7 accrual(4) (1) (4) For the three months ended June
Slide 23: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (1)Loss on foreign currency transactions, including intercompany loans primarily relates to the unrealized foreign currency exchange rate impact on intercompany debt that has not been permanently invested (2)Represents an accrual
Slide 24: Projected new global urea plants (2018-2022)
Projected new global urea plants (2018-2022) 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 18,400 Grand Total (1) (2) (3) Subtotals rounded to nearest 100k New since last forecast T
Slide 25: Urea plants in permanent shutdown
Urea plants in permanent shutdown China Shunchang Fubao Co Anthracite Lump Integer Nov, 2017 140 2017 China Zhangqiu Riyue Chemical Industry Co Anthracite Lump Fert.cn July, 2016 160 2018 China Liuguo Chemical Stock Co Ltd Anthracite Lump Fert.cn Unreported 230 2018 China Brazil Brazil Kuwait Additi
Slide 26: Urea plants in permanent shutdown
Urea plants in permanent shutdown Plants included in closure foreca: 15.5 Million Tons 2017-2019 tnt a = en a ee ae eel ae = cepirnone oe ae * or = cmusaowe —— oe eas a oa om Sepesricccnmms> Somes ma hat a os ‘Srumcestgoctene ane ay Sar Be es Newtons a a oe on peice moe a sm i xmamas mayen Se einer
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