Cf Industries Holdings, Inc. · NYSE:CF
Cf Industries — Investor Presentation (September 2019)
31 slides from Cf Industries's investor presentation, Sep 16, 2019
Slide 1: Financial Results September 2019
Eu20ro1p7eTahnirRdoQaudasrhtoewr Financial Results November 1, 2017 Se ptember 2019 NYSE: CF NYSE: CF 1
Slide 2: 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 3: 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, and free cash flow yield, which are non-GAAP financial measures, provide add
Slide 4: Table of contents
Table of contents Cover Page: DEF loading at Donaldsonville 4 Company Overview 5-10 CF Advantages in the Global Nitrogen Market 11-17 Financial Results and Capital Allocation 18-23 Environmental Stewardship and Governance 24-27 Appendix 28-31
Slide 5: Company Overview
Donaldsonville urea plant 5 Company Overview 5
Slide 6: CF Investment Thesis
CF Investment Thesis • Nitrogen demand growth driven by: – population growth and increased protein consumption per capita for agricultural applications global GDP plus growth in emissions abatement for industrial applications – • Net new nitrogen capacity growth (new construction minus capacity clos
Slide 7: CF generated the highest free cash flow in the industry
CF generated the highest free cash flow LTM 2Q19 Yara $933 in the industry Cash from operations (millions) CF $1,592 Nutrien $2,448 OCI $614 Mosaic $1,006 Market Cap(1) (millions) $10,544 $29,441 $7,478 $12,252 $4,854 Free cash flow compared to peers(2) USD in millions 1,000 995 945 800 600 400 200
Slide 8: CF offers investors industry best free cash flow yield
CF offers investors industry best free cash 2 to 3 times greater than other industry participants flow yield FCF Yield(1) EV/Adj. EBITDA(2)(3) LTM 2Q19 10% 14 12 8% 10 9.3 9.1 8.6 6% 8 4% 6 4 2% 2 0% 0 -2% CF NTR YAR OCI MOS CF NTR YAR OCI MOS Source: Capital IQ September 5, 2019 (1)Represents LTM f
Slide 9: Capital invested to grow, returned to shareholders, and used to reduce debt
In the last 24 months, $2.7 billion of capital was invested to grow, returned to shareholders, and used to reduce debt • CF paid $388 million to acquire all publicly traded common units of Terra Nitrogen Company, L.P. in April 2018 • • $553 million paid through quarterly dividends $678 million retur
Slide 10: Capacity growth and share repurchases drive nitrogen accretion per share
Capacity growth coupled with share repurchases continue to drive nitrogen accretion per share CF Industries’ Nitrogen Volumes and Shares Outstanding as of Quarter-end 2009 – Q2 2019 Nitrogen per share CAGR: 14.1% Million shares Outstanding (6) Annual Nitrogen Equivalent Tons per 1,000 Shares Outstan
Slide 11: CF Advantages in the Global Nitrogen Market
Donaldsonville DEF storage CF Advantages in the Global Nitrogen Market
Slide 12: CF production cost remains advantaged due to energy cost differentials
CF production cost remains differentials Global Energy Price 2016-2019F USD/MMBtu advantaged due to energy cost Energy Cost per ton of Ammonia* 2016-2019F USD/ton 400 16 14 350 12 300 10 250 8 200 6 150 4 100 2 0 50 2016 2017 2018 2019 2016 2017 2018 2019 North American production advantage per ton
Slide 13: CF serves a global market from strong North American base
CF serves a global market from strong North American base – Belgium – Deepwater vessel – Argentina – Pipeline Aerial view of Donaldsonville plant and loading docks Source: IFDC (1) Excludes Chinese state owned enterprise JAMG and Indonesian consortium PT Pupuk 13 …with outstanding domestic and expor
Slide 14: Best North American distribution capabilities with a global reach
Best North American distribution capabilities with a global reach Rycroft Vanscoy Medicine Hat Brandon Ritzville Grand Forks Velva ngham Glenwood Pine Bend Spencer Courtright Port Neal Blair Fremont Aurora Albany Seneca Kingston Garner Huntington Frankfort Peru MinesTerre Haute Cowden Mount Vernon P
Slide 15: Superior capacity utilization compared to North American peers
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 16: Global market overview
Global market overview • Nitrogen industry fundamentals expected to be positive in both the near and longer term Global demand growth for nitrogen over the next four years expected to outpace net capacity additions given the limited number of facilities currently under construction around the world
Slide 17: Corn futures and farm economics favor more corn planting
Corn futures in 2020 prices and farm economics favor more corn planting U.S. Soy/Corn Price Ratio $4.50 • Farm economics strongly favor corn planting in 2019 due to the low soy/corn price ratio: ‒ Soybean price pressure from: o U.S./China trade dispute o African Swine Fever o Stocks-to-use ratio for
Slide 18: Financial Results and Capital Allocation
Donaldsonville vessel loading Financial Results and Capital Allocation 18
Slide 19: First half 2019 results
First half 2019 results • 1H net earnings of $373 million(1), or $1.67 per diluted share; EBITDA(2) of $973 million and adjusted EBITDA(2) of $936 million 2Q net earnings of $283 million(1), or $1.28 per diluted share; EBITDA(2) of $672 million; adjusted EBITDA(2) of $631 million Trailing 12-month n
Slide 20: Financial results - second quarter and first half 2019
Financial results - second quarter and first half 2019 (5) 1 (8) (1) natural gas derivatives (1) (3) (4) Depreciation and amortization was $252 million and $440 million for the three and six months ended June 30, 2019, respectively, and $241 million and $434 million for the three and six months ende
Slide 21: 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 • • Under the previously announced $1 billion share repurchase program a
Slide 22: Balanced Approach to Capital Allocation
Balanced Approach to Capital Allocation 114.4 110.2 99.2 99.2 99.2 90.4 52.0 15.3 2012 2013 2014 2015 2016 2017 2018 2019 Diluted Weighted-Avg Shares Outstanding (in millions) 323.5296.0 256.7 236.1 233.1 233.9 233.8 223.4 Source: Factset, Company filings. (1) Includes the effect of approximately 4.
Slide 23: 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 24: Environmental Stewardship and Governance
Yazoo City control room Environmental Stewardship and Governance
Slide 25: Committed to Environmental Stewardship
Committed to Environmental Stewardship (Million Metric Tonnes) 1.0 0.8 0.6 0.4 0.2 0.0 6.2 6.0 2014 2015 2016 2017 2018 2014 Source: Internal CF Data 2015 2016 2017 2018 Source: Internal CF Data; Greenhouse Gas Inventory Report for CF Industries 2018; Ruby Canyon CF’s recent capacity expansions have
Slide 26: Independent board with the right skills and expertise
Independent board with the right skills and expertise 3 directors transitioning off by May 2022 4 Dir 10+ Years 6 Dir 0-4 Years 2 Dir 5-9 Years Average Tenure: 6.3 Years 1 Represents the aggregate number of directors with each skill; a matrix with individual director attribution is available in the
Slide 27: Strong corporate governance practices
Strong corporate governance practices • • Regular assessment of Board composition and competencies/attributes; consideration of diversity in identifying nominees for directors Shareholder ability to call special meetings (25% threshold) – 4 of 6 directors added over the last 4 years have expanded bo
Slide 28: Appendix
Appendix
Slide 29: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (37) (26) (65) (51) interests (18) (20) (41) (46) interests(1) (1) (5) 1 (8) natural gas derivatives 5 2 7 (3) including intercompany loans (1) For the three and six months ended June 30, 2019 and the three months ended June 30,
Slide 30: Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA
Non-GAAP: reconciliation of Net Earnings to EBITDA and Adjusted EBITDA (138) (92) (152) interests (13) 61 (4) derivatives (5) 2 5 intercompany loans(2) (1) (2) Loan fee amortization is included in both interest expense – net and depreciation and amortization. (Gain) loss on foreign currency transact
Slide 31: Non-GAAP: reconciliation of LTM cash from operations to free cash flow and yield
operations(1) Non-GAAP: reconciliation of LTM cash from to free cash flow and free cash flow yield (1) LTM cash provided by operating activities (cash from operations) for CF, Nutrien, Yara, OCI, and Mosaic is 12-month period ending June 30, 2019 (4) Shares outstanding taken from the June 30, 2019 b
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