Delaware (State or other jurisdiction of incorporation) 4 Parkway North, Suite 400 Deerfield, IL (Address of principal executive office) | 001-32597 (Commission File No.) | 20-2697511 (I.R.S. Employer Identification Number) 60015 (Zip Code) |
99.1 | Press release dated May 4, 2016 |
Date: | May 4, 2016 | CF INDUSTRIES HOLDINGS, INC. | |||
By: | /s/ Dennis P. Kelleher | ||||
Name: | Dennis P. Kelleher | ||||
Title: | Senior Vice President and Chief Financial Officer |
Exhibit Number | Description | |
99.1 | Press release dated May 4, 2016 |
4 Parkway North, Suite 400 | ||
Deerfield, IL 60015 | ||
Contact: | Dan Aldridge, Director of Investor Relations | |
847-405-2530 - daldridge@cfindustries.com |
▪ | EBITDA(1) of $207 million; adjusted EBITDA(1) of $300 million |
▪ | Net earnings of $26 million or $0.11 per diluted share; adjusted net earnings(2) of $95 million or adjusted net earnings per diluted share(2) of $0.40 |
▪ | New Donaldsonville UAN plant began production in March, having produced approximately 95,000 tons through the end of the quarter |
▪ | Commencement of the CHS strategic venture on February 1, 2016: $2.8 billion in cash received; CHS took delivery of over 273,000 tons under the supply agreement through the end of the quarter |
▪ | New record urea production of 819,000 tons |
(1) | EBITDA is defined as net earnings attributable to common stockholders plus interest expense (income)-net, income taxes, and depreciation and amortization. See reconciliations of EBITDA and adjusted EBITDA to the most comparable GAAP measures in the tables accompanying this release. |
(2) | See reconciliations of adjusted net earnings and adjusted net earnings per diluted share to the most comparable GAAP measures in the tables accompanying this release. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per share and per MMBtu amounts) | |||||||
Net sales | $ | 1,004 | $ | 954 | |||
Cost of sales | 787 | 538 | |||||
Gross margin | $ | 217 | $ | 416 | |||
Gross margin percentage | 21.6 | % | 43.6 | % | |||
EBITDA(1) | $ | 207 | $ | 486 | |||
Adjusted EBITDA(1) | $ | 300 | $ | 470 | |||
Net earnings attributable to common stockholders | $ | 26 | $ | 231 | |||
Adjusted net earnings (1) | $ | 95 | $ | 220 | |||
Net earnings per diluted share(2) | $ | 0.11 | $ | 0.96 | |||
Adjusted net earnings per diluted share(1)(2) | $ | 0.40 | $ | 0.91 | |||
Tons of product sold (000s) | 4,051 | 2,912 | |||||
Cost of natural gas: | |||||||
Purchased natural gas costs (per MMBtu)(3) | $ | 2.30 | $ | 2.96 | |||
Realized derivatives loss (per MMBtu)(4) | 0.79 | 0.52 | |||||
Cost of natural gas (per MMBtu) | $ | 3.09 | $ | 3.48 | |||
Average daily market price of natural gas: | |||||||
Henry Hub (per MMBtu) | $ | 1.98 | $ | 2.87 | |||
National Balancing Point UK (per MMBtu) | $ | 4.36 | $ | 7.24 | |||
Capital expenditures | $ | 676 | $ | 445 | |||
Production volume by product tons (000s): | |||||||
Ammonia(5) | 2,003 | 1,817 | |||||
Granular urea | 819 | 625 | |||||
UAN (32%) | 1,518 | 1,430 | |||||
AN | 431 | 229 |
(1) | See reconciliations of EBITDA, adjusted EBITDA, adjusted net earnings and adjusted net earnings per diluted share to the most comparable GAAP measures in the tables accompanying this release. |
(2) | On June 17, 2015, CF Industries common stock split 5 for 1. The per share amounts for the prior period have been restated to reflect the stock split. |
(3) | Includes the cost of natural gas purchased during the period for use in production. |
(4) | Includes the realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. |
(5) | Gross ammonia production including amounts subsequently upgraded into other products. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 267 | $ | 288 | |||
Cost of sales | 204 | 168 | |||||
Gross margin | $ | 63 | $ | 120 | |||
Gross margin percentage | 23.6 | % | 41.7 | % | |||
Sales volume by product tons (000s) | 737 | 531 | |||||
Sales volume by nutrient tons (000s)(1) | 605 | 435 | |||||
Average selling price per product ton | $ | 362 | $ | 542 | |||
Average selling price per nutrient ton(1) | 441 | 661 | |||||
Gross margin per product ton | $ | 85 | $ | 226 | |||
Gross margin per nutrient ton(1) | 104 | 276 | |||||
Depreciation and amortization | $ | 21 | $ | 22 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | Ammonia sales volume increased in the first quarter of 2016 from the first quarter of 2015 due to an early start to the spring application season given favorable soil and weather conditions in the Southern Plains and Midwest regions of the United States. Additionally, the inclusion of CF Fertilisers UK contributed to higher sales. |
• | Ammonia average selling prices decreased in the first quarter of 2016 compared to 2015 primarily due to high ammonia inventory entering the quarter given the poor fall application in 2015, lower manufacturing and ocean freight costs and softer global industrial demand, including phosphate fertilizer producers. |
• | Ammonia gross margin decreased due to lower average selling prices which were partially offset by lower realized natural gas costs. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 235 | $ | 212 | |||
Cost of sales | 175 | 100 | |||||
Gross margin | $ | 60 | $ | 112 | |||
Gross margin percentage | 25.5 | % | 52.8 | % | |||
Sales volume by product tons (000s) | 919 | 616 | |||||
Sales volume by nutrient tons (000s)(1) | 423 | 283 | |||||
Average selling price per product ton | $ | 256 | $ | 344 | |||
Average selling price per nutrient ton(1) | 556 | 750 | |||||
Gross margin per product ton | $ | 65 | $ | 182 | |||
Gross margin per nutrient ton(1) | 142 | 396 | |||||
Depreciation and amortization | $ | 25 | $ | 10 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | Granular urea sales volume for the first quarter of 2016 increased due to increased production as a result of the company's new urea plant coming on line at Donaldsonville, LA, coupled with increased demand late in the quarter due to the arrival of spring weather. |
• | Granular urea average selling price per ton decreased due to increased supply driven by global capacity additions coupled with lower manufacturing and ocean freight costs. |
• | Granular urea gross margin decreased due to lower average selling prices partially offset by an increase in sales volume and lower natural gas costs. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 309 | $ | 356 | |||
Cost of sales | 231 | 197 | |||||
Gross margin | $ | 78 | $ | 159 | |||
Gross margin percentage | 25.2 | % | 44.6 | % | |||
Sales volume by product tons (000s) | 1,452 | 1,317 | |||||
Sales volume by nutrient tons (000s)(1) | 457 | 414 | |||||
Average selling price per product ton | $ | 213 | $ | 270 | |||
Average selling price per nutrient ton(1) | 676 | 859 | |||||
Gross margin per product ton | $ | 54 | $ | 121 | |||
Gross margin per nutrient ton(1) | 171 | 383 | |||||
Depreciation and amortization | $ | 58 | $ | 51 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | UAN sales volume for the first quarter of 2016 increased due to increased production as a result of the company's new UAN plant coming on line at Donaldsonville, LA, and increased demand late in the quarter due to the arrival of spring weather. |
• | UAN average selling price per ton decreased due to increased nitrogen supply driven by global capacity additions coupled with lower manufacturing and ocean freight costs. |
• | UAN gross margin decreased due to lower average selling prices partially offset by an increase in UAN sales volume and lower natural gas costs. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 125 | $ | 51 | |||
Cost of sales | 112 | 43 | |||||
Gross margin | $ | 13 | $ | 8 | |||
Gross margin percentage | 10.4 | % | 15.7 | % | |||
Sales volume by product tons (000s) | 558 | 224 | |||||
Sales volume by nutrient tons (000s)(1) | 188 | 77 | |||||
Average selling price per product ton | $ | 224 | $ | 228 | |||
Average selling price per nutrient ton(1) | 665 | 662 | |||||
Gross margin per product ton | $ | 23 | $ | 36 | |||
Gross margin per nutrient ton(1) | 69 | 104 | |||||
Depreciation and amortization | $ | 22 | $ | 12 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | AN sales volume was higher due to the inclusion of CF Fertilisers UK sales. |
• | AN average selling price per ton decreased only slightly. |
• | AN gross margin increased primarily due to the inclusion of CF Fertilisers UK and lower natural gas costs partially offset by slightly lower average selling prices. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 68 | $ | 47 | |||
Cost of sales | 65 | 30 | |||||
Gross margin | $ | 3 | $ | 17 | |||
Gross margin percentage | 4.4 | % | 36.2 | % | |||
Sales volume by product tons (000s) | 385 | 224 | |||||
Sales volume by nutrient tons (000s)(1) | 73 | 43 | |||||
Average selling price per product ton | $ | 177 | $ | 210 | |||
Average selling price per nutrient ton(1) | 932 | 1,093 | |||||
Gross margin per product ton | $ | 8 | $ | 76 | |||
Gross margin per nutrient ton(1) | 41 | 395 | |||||
Depreciation and amortization | $ | 10 | $ | 11 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
• | Other segment volume was higher due to the inclusion of CF Fertilisers UK sales. |
• | Other segment average selling price per ton decreased due to increased nitrogen supply driven by global capacity additions coupled with lower nitrogen manufacturing and transportation costs. |
• | Other segment gross margin decreased primarily due to lower average selling prices. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions, except per share amounts) | |||||||
Net sales | $ | 1,004 | $ | 954 | |||
Cost of sales | 787 | 538 | |||||
Gross margin | 217 | 416 | |||||
Selling, general and administrative expenses | 45 | 40 | |||||
Transaction costs | 14 | — | |||||
Other operating—net | 61 | 18 | |||||
Total other operating costs and expenses | 120 | 58 | |||||
Equity in earnings of operating affiliates | — | 9 | |||||
Operating earnings | 97 | 367 | |||||
Interest expense | 38 | 34 | |||||
Interest income | (1 | ) | (1 | ) | |||
Other non-operating—net | (2 | ) | — | ||||
Earnings before income taxes and equity in earnings of non-operating affiliates | 62 | 334 | |||||
Income tax provision | 15 | 113 | |||||
Equity in earnings of non-operating affiliates—net of taxes | — | 15 | |||||
Net earnings | 47 | 236 | |||||
Less: Net earnings attributable to noncontrolling interests | 21 | 5 | |||||
Net earnings attributable to common stockholders | $ | 26 | $ | 231 | |||
Net earnings per share attributable to common stockholders(1): | |||||||
Basic | $ | 0.11 | $ | 0.96 | |||
Diluted | $ | 0.11 | $ | 0.96 | |||
Weighted-average common shares outstanding(1): | |||||||
Basic | 233.2 | 239.7 | |||||
Diluted | 233.5 | 240.6 |
(1) | On June 17, 2015, CF Industries common stock split 5 for 1. The share and per share amounts for the prior period have been restated to reflect the stock split. |
(unaudited) | |||||||
March 31, 2016 | December 31, 2015 | ||||||
(in millions) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 2,689 | $ | 286 | |||
Restricted cash | 12 | 23 | |||||
Accounts receivable—net | 262 | 267 | |||||
Inventories | 304 | 321 | |||||
Prepaid income taxes | 207 | 185 | |||||
Other current assets | 46 | 45 | |||||
Total current assets | 3,520 | 1,127 | |||||
Property, plant and equipment—net | 9,052 | 8,539 | |||||
Investments in affiliates | 298 | 298 | |||||
Goodwill | 2,384 | 2,390 | |||||
Other assets | 327 | 329 | |||||
Total assets | $ | 15,581 | $ | 12,683 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 880 | $ | 918 | |||
Income taxes payable | 4 | 5 | |||||
Customer advances | 227 | 162 | |||||
Other current liabilities | 162 | 130 | |||||
Total current liabilities | 1,273 | 1,215 | |||||
Long-term debt | 5,539 | 5,537 | |||||
Deferred income taxes | 955 | 916 | |||||
Other liabilities | 620 | 628 | |||||
Equity: | |||||||
Stockholders' equity | 4,042 | 4,035 | |||||
Noncontrolling interests | 3,152 | 352 | |||||
Total equity | 7,194 | 4,387 | |||||
Total liabilities and equity | $ | 15,581 | $ | 12,683 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Operating Activities: | |||||||
Net earnings | $ | 47 | $ | 236 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 146 | 115 | |||||
Deferred income taxes | 36 | — | |||||
Stock-based compensation expense | 4 | 4 | |||||
Excess tax benefit from stock-based compensation | — | (1 | ) | ||||
Unrealized loss (gain) on derivatives | 18 | (11 | ) | ||||
Loss on disposal of property, plant and equipment | 3 | 6 | |||||
Undistributed earnings of affiliates—net of taxes | (4 | ) | (18 | ) | |||
Changes in: | |||||||
Accounts receivable—net | 4 | 24 | |||||
Inventories | 16 | (68 | ) | ||||
Accrued and prepaid income taxes | (23 | ) | 84 | ||||
Accounts payable and accrued expenses | (6 | ) | (11 | ) | |||
Customer advances | 65 | 170 | |||||
Other—net | 40 | 1 | |||||
Net cash provided by operating activities | 346 | 531 | |||||
Investing Activities: | |||||||
Additions to property, plant and equipment | (676 | ) | (445 | ) | |||
Proceeds from sale of property, plant and equipment | 2 | 3 | |||||
Withdrawals from restricted cash funds | 11 | 23 | |||||
Other—net | 1 | (11 | ) | ||||
Net cash used in investing activities | (662 | ) | (430 | ) | |||
Financing Activities: | |||||||
Proceeds from short-term borrowings | 150 | — | |||||
Payments of short-term borrowings | (150 | ) | — | ||||
Financing fees | — | (2 | ) | ||||
Dividends paid on common stock | (70 | ) | (72 | ) | |||
Issuance of noncontrolling interest in CFN | 2,800 | — | |||||
Distributions to noncontrolling interest | (13 | ) | (11 | ) | |||
Purchases of treasury stock | — | (236 | ) | ||||
Issuances of common stock under employee stock plans | — | 6 | |||||
Excess tax benefit from stock-based compensation | — | 1 | |||||
Net cash provided by (used in) financing activities | 2,717 | (314 | ) | ||||
Effect of exchange rate changes on cash and cash equivalents | 2 | (5 | ) | ||||
Increase (decrease) in cash and cash equivalents | 2,403 | (218 | ) | ||||
Cash and cash equivalents at beginning of period | 286 | 1,997 | |||||
Cash and cash equivalents at end of period | $ | 2,689 | $ | 1,779 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Net earnings attributable to common stockholders | $ | 26 | $ | 231 | |||
Interest expense (income)—net | 37 | 33 | |||||
Income taxes | 15 | 113 | |||||
Depreciation and amortization | 146 | 115 | |||||
Less: other adjustments | (17 | ) | (6 | ) | |||
EBITDA | 207 | 486 | |||||
Unrealized mark-to-market loss (gain) on natural gas derivatives | 21 | (28 | ) | ||||
Transaction costs(1) | 14 | — | |||||
Expansion project expenses | 16 | 9 | |||||
(Gain) loss on foreign currency derivatives | (3 | ) | 23 | ||||
Loss (gain) on foreign currency transactions(2) | 45 | (20 | ) | ||||
Total adjustments | 93 | (16 | ) | ||||
Adjusted EBITDA | $ | 300 | $ | 470 |
(1) | Transaction costs relate to various consulting and legal services associated with executing the strategic agreements pertaining to our proposed combination with certain businesses of OCI and our strategic venture with CHS. |
(2) | Loss (gain) on foreign currency transactions primarily relates to foreign currency denominated intercompany debt that has not been permanently invested. |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
(in millions) | |||||||
Net earnings attributable to common stockholders | $ | 26 | $ | 231 | |||
Unrealized mark-to-market loss (gain) on natural gas derivatives, net of tax(1) | 13 | (18 | ) | ||||
Transaction costs(2) | 14 | — | |||||
Expansion project expenses, net of tax(1) | 10 | 6 | |||||
(Gain) loss on foreign currency derivatives, net of tax(1) | (2 | ) | 14 | ||||
Loss (gain) on foreign currency transactions, net of tax(3) | 34 | (13 | ) | ||||
Total adjustments | 69 | (11 | ) | ||||
Adjusted net earnings | $ | 95 | $ | 220 |
Three months ended March 31, | |||||||
2016 | 2015 | ||||||
Net earnings per diluted share attributable to common stockholders | $ | 0.11 | $ | 0.96 | |||
Unrealized mark-to-market loss (gain) on natural gas derivatives | 0.06 | (0.08 | ) | ||||
Transaction costs | 0.06 | — | |||||
Expansion project expenses | 0.04 | 0.02 | |||||
(Gain) loss on foreign currency derivatives | (0.01 | ) | 0.06 | ||||
Loss (gain) on foreign currency transactions | 0.14 | (0.05 | ) | ||||
Total adjustments | 0.29 | (0.05 | ) | ||||
Adjusted net earnings per diluted share | $ | 0.40 | $ | 0.91 |
(1) | For the three months ended March 31, 2016 and 2015, unrealized mark-to-market loss (gain) on natural gas derivatives is presented net of tax of $8 million and $(10) million, respectively; expansion project expenses are presented net of tax of $6 million and $3 million, respectively; and (gain) loss on foreign currency derivatives is presented net of tax of $(1) million and $9 million, respectively. For each of these tax effects, the rate used for the three months ended March 31, 2016 and 2015 was 37.2% and 37.0%, respectively, which represented the company's blended deferred tax rates for each respective period. |
(2) | Transactions costs have no tax effect because these items are not tax deductible. |
(3) | Loss (gain) on foreign currency transactions is presented net of tax of $11 million and $(7) million for the three months ended March 31, 2016 and 2015, respectively. The tax effect is calculated at the blended deferred tax rate of primarily 25.0% and 37.0% for the three months ended March 31, 2016 and 2015, respectively. |
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