Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Credit Suisse 23rd Annual Chemical & Ag Science Conference (September 2010)
23 slides from Cf Industries's conference presentation, Sep 15, 2010
Slide 1: CF Industries at Credit Suisse 23rd Annual Chemical & Ag Science Conference
Corporate Development Supply Chain Sales Finance Legal Operations Human Resources Dv Sc Sa Fi Le Op Hr CF Industries NYSE: CF Credit Suisse 23rd Annual Chemical & Ag Science Conference September 15, 2010
Slide 2: Safe Harbor Statement
Safe Harbor Statement Certain statements contained in this communication may constitute "forward-looking statements." All statements in this communication, other than those relating to historical information or current condition, are forward-looking statements. These forward-looking statements are s
Slide 3: A Good Time to be a North American Fertilizer Producer
A Good Time to be a North American Fertilizer Producer Unfavorable Factor Favorable Grain prices Expected spring plantings Expected fall application window Fertilizer prices Fertilizer inventories Natural gas prices ü ü ü ü ü ü
Slide 4: Investment Thesis
Investment Thesis Strong agriculture and fertilizer markets Operational advantages over swing producers Excellent market position Growing synergy realization Strong cash flow and debt reduction 1. 2. 3. 4. 5.
Slide 5: Investment Thesis: 1. Strong Agriculture & Fertilizer Markets
Investment Thesis: 1. Strong Agriculture & Fertilizer Markets Global Grain Production Source: USDA, FAS Harvested Area Harvested - Million Hectares 1,000 750 500 250 0 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 3,000 2,000 1,000 Production - Million Metric Tonnes
Slide 6: Record Demand Offsetting Record U.S. Corn Production
Source: Source: USDA, CF Record Demand Offsetting Record U.S. Corn Production Marketing Years (Yr. Beg. - Sept. 1) USDA CF Est. Proj. Fct. 2008/09 2009/10 2010/11 2011/12 Planted Area 86.0 86.5 87.9 92.0 Harvested Area 78.6 79.6 81.0 84.0 Yield 153.9 164.7 162.5 166.5 Beginning Stocks 1,624 1,673 1,
Slide 7: 2011 U.S. Crop Budgets Clearly Favor Corn
Corn Soybeans Wheat Price ($/Bu) $4.40 $9.90 $5.30 Yield (Bu/Acre) 162.5 44.7 46.9 Revenue 715 443 249 Costs Fertilizer 100 18 42 Total Variable 280 135 115 Fixed Costs 139 123 113 Land Rent 121 111 57 Total 540 369 285 Returns Over: Variable Costs 435 308 134 Source: USDA, Green Markets, CF 2011 U.
Slide 8: U.S. Fertilizer Demand Outlook Best Since 2007
Source: AAPFCO, CF U.S. Fertilizer Demand Outlook Best Since 2007 Nutrient tons, Fertilizer Year Basis Source: AAPFCO, CF N P K 2007 13,194 4,572 5,133 2008 12,561 4,247 4,660 2009 12,027 3,647 3,265 2010 Est. 12,812 4,188 3,967 2011 Fct. 13,212 4,474 4,567 3.1% 15.1% 21.5% 6.8% 14.8% 6.5%
Slide 9: Fertilizer Prices
Fertilizer Prices (Price per Short Ton) Jun Jul Aug Sep Source: Green Markets Jun Jul Aug Sep Jun Jul Aug Sep Jun Jul Aug Sep
Slide 10: Investment Thesis: 2. Operational Advantage
Supply in the U.S. has increased due to low-cost non-conventional drilling Storage remains near record levels and storage capacity has grown Gas is attractively priced in the U.S. relative to world markets, due partly to high contract pricing in Europe North America now has a gas advantage Source: U
Slide 11: Shale Gas Plays are a Game-Changer
Shale Gas Plays are a Game-Changer Source: U.S. Energy Information Administration
Slide 12: Natural Gas Cost Advantage Compared to Global Swing Producers
Natural Gas Cost Advantage Compared to Global Swing Producers Approximately $2 per MMBtu advantage vs. delivered cost to Ukrainian producers A major factor in the pricing umbrella over North American nitrogen producers
Slide 13: Operational Advantages Compared to Nitrogen Swing Producers
Operational Advantages Compared to Nitrogen Swing Producers Estimated 5-10% efficiency advantage vs. swing producer CF Industries has a long history of continuous improvement Transportation cost advantage vs. swing producer Ocean freight from Black Sea to U.S. Gulf Value created by ammonia storage/d
Slide 14: Investment Thesis: 3. Excellent Market Position
Investment Thesis: 3. Excellent Market Position CF Industries #1 in N and #3 in P Extensive storage & transport N Mfg. in U.S. Gulf, Midwest, Western Canada Agrium Mfg. in Western Canada and Northern U.S. Large retail network Potash Corp. #1 in K and #2 in P 60% of N & 35% of P industrial Koch Indus
Slide 15: North America's Nitrogen Powerhouse
North America’s Nitrogen Powerhouse North American Nitrogen Capacities (000s Product Tons) 6,773 2,793 1,437 Note: Includes full year impact of Woodward UAN expansion and 100% of consolidated entities
Slide 16: Global Reach
Global Reach KEYTRADE partnership provides access to global markets for both imports and exports CF exports around the world Mexico Panama France Turkey Canada Argentina Brazil Chile Colombia Ecuador Peru Uruguay India Pakistan China Vietnam
Slide 17: Investment Thesis: 4. Increasing Synergy Realization
Investment Thesis: 4. Increasing Synergy Realization Millions $135 $105 Originally estimated synergies at $105-135 million per year within 18-24 months Have identified initiatives in excess of $135 million Overachieving in transportation & logistics, manufacturing, distribution and sales Now expect
Slide 18: Synergy Progress
Synergy Progress Supply Chain Supply customers from closer locations Eliminate overlapping shipping lanes Serve legacy Terra customers from CF ammonia terminals Rationalize railcar and barge tow fleets Harmonize transportation contracts Manufacturing Eliminate unnecessary capital projects Share and
Slide 19: Investment Thesis: 5. Strong Cash Flow and Debt Repayment
CF Industries is committed to maintaining a strong, flexible balance sheet through deleveraging, targeting net debt in the range of 1.0 to 1.5 times EBITDA Investment Thesis: 5. Strong Cash Flow and Debt Repayment $ billions Estimated Net Debt Position Sr Notes & Term Loan Q2 Payment Q2 Cash Balance
Slide 20: A Good Time to be a North American Fertilizer Producer
A Good Time to be a North American Fertilizer Producer Unfavorable Factor Favorable Grain prices Expected spring plantings Expected fall application window Fertilizer prices Fertilizer inventories Natural gas prices ü ü ü ü ü ü
Slide 21: Appendix
Appendix For more information, please visit www.cfindustries.com
Slide 22: Financial Metrics and Credit Statistics
Financial Metrics and Credit Statistics ($Millions) Notes: Excludes $125 million related to auction rate securities LIBOR floor rate of 150 bps Includes note payable by Canadian Fertilizers Limited to minority interest , outstanding Terra 2017 notes and OID Aggressive Debt Pay Down Good Liquidity Po
Slide 23: Non-GAAP Reconciliation – EBITDA
Non-GAAP Reconciliation – EBITDA EBITDA is defined as net earnings attributable to common stockholders plus interest income—net, income taxes, and depreciation, depletion and amortization. Loan fee amortization is subtracted in the calculation of EBITDA to adjust for amounts included in both interes