Delaware (State or other jurisdiction of incorporation) 4 Parkway North, Suite 400 Deerfield, IL (Address of principal executive offices) | 001-32597 (Commission File Number) | 20-2697511 (I.R.S. Employer Identification No.) 60015 (Zip Code) |
Exhibit No. | Description of Exhibit | |
Date: | May 2, 2018 | CF INDUSTRIES HOLDINGS, INC. | |||
By: | /s/ Dennis P. Kelleher | ||||
Name: | Dennis P. Kelleher | ||||
Title: | Senior Vice President and Chief Financial Officer |
4 Parkway North, Suite 400 | ||||
Deerfield, IL 60015 | ||||
www.cfindustries.com |
• | Net earnings of $63 million, or $0.27 per diluted share |
• | EBITDA(1) of $302 million; adjusted EBITDA(1) of $296 million |
• | 12-month rolling average recordable incident rate at company's lowest level ever |
• | Completed purchase of all publicly traded common units of Terra Nitrogen Company, L.P. on April 2, 2018 |
(1) | EBITDA is defined as net earnings (loss) attributable to common stockholders plus interest expense-net, income taxes and depreciation and amortization. See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
For additional information: | |
Media | Investors |
Chris Close | Martin Jarosick |
Director, Corporate Communications | Vice President, Investor Relations |
847-405-2542 - cclose@cfindustries.com | 847-405-2045 - mjarosick@cfindustries.com |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per share and per MMBtu amounts) | |||||||
Net sales | $ | 957 | $ | 1,037 | |||
Cost of sales | 767 | 930 | |||||
Gross margin | $ | 190 | $ | 107 | |||
Gross margin percentage | 19.9 | % | 10.3 | % | |||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | ||
Net earnings (loss) per diluted share | $ | 0.27 | $ | (0.10 | ) | ||
EBITDA(1) | $ | 302 | $ | 218 | |||
Adjusted EBITDA(1) | $ | 296 | $ | 272 | |||
Tons of product sold (000s) | 4,303 | 4,745 | |||||
Supplemental data (per MMBtu): | |||||||
Natural gas costs in cost of sales(2) | $ | 3.32 | $ | 3.66 | |||
Realized derivatives loss (gain) in cost of sales(3) | 0.01 | (0.01 | ) | ||||
Cost of natural gas in cost of sales | $ | 3.33 | $ | 3.65 | |||
Average daily market price of natural gas (per MMBtu): | |||||||
Henry Hub | $ | 3.02 | $ | 3.00 | |||
National Balancing Point UK | $ | 8.20 | $ | 5.98 | |||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | $ | (3 | ) | $ | 53 | ||
Depreciation and amortization | $ | 193 | $ | 205 | |||
Capital expenditures | $ | 68 | $ | 94 | |||
Production volume by product tons (000s): | |||||||
Ammonia(4) | 2,508 | 2,508 | |||||
Granular urea | 1,151 | 1,002 | |||||
UAN (32%) | 1,805 | 1,817 | |||||
AN | 458 | 542 |
(1) | See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
(2) | Includes the cost of natural gas that is included in cost of sales during the period under the first-in, first-out inventory cost method. |
(3) | Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. |
(4) | Gross ammonia production including amounts subsequently upgraded into other products. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 212 | $ | 282 | |||
Cost of sales | 188 | 265 | |||||
Gross margin | $ | 24 | $ | 17 | |||
Gross margin percentage | 11.3 | % | 6.0 | % | |||
Sales volume by product tons (000s) | 664 | 920 | |||||
Sales volume by nutrient tons (000s)(1) | 544 | 754 | |||||
Average selling price per product ton | $ | 319 | $ | 307 | |||
Average selling price per nutrient ton(1) | 390 | 374 | |||||
Gross margin per product ton | $ | 36 | $ | 18 | |||
Gross margin per nutrient ton(1) | 44 | 23 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 24 | $ | 17 | |||
Depreciation and amortization | 25 | 44 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | (1 | ) | 17 | ||||
Adjusted gross margin | $ | 48 | $ | 78 | |||
Adjusted gross margin as a percent of net sales | 22.6 | % | 27.7 | % |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin and adjusted gross margin as a percent of net sales are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. The company has presented adjusted gross margin and adjusted gross margin as a percent of net sales because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. A reconciliation of adjusted gross margin and adjusted gross margin as a percent of net sales to gross margin, the most directly comparable GAAP measure, is provided in the table above. See "Note Regarding Non-GAAP Financial Measures" in this release. |
• | Ammonia sales volume decreased for the first quarter of 2018 compared to the first quarter of 2017 due to unfavorable weather that delayed the start of the spring fertilizer application season in the Southern Plains and the Midwest. |
• | Ammonia average selling prices increased primarily due to the impact of a tighter global nitrogen supply and demand balance partially offset by the effects of lower sales volumes due to the cold and wet spring delaying ammonia fertilizer applications. |
• | Ammonia gross margin per ton increased in the first quarter of 2018 compared to the first quarter of 2017 due to higher average selling prices, a $1 million unrealized mark-to-market gain on natural gas derivatives in the quarter compared to a $17 million unrealized mark-to-market loss on natural gas derivatives in the prior year period, the absence of production inefficiencies associated with the new Port Neal ammonia unit in the first quarter of 2017, and lower realized gas costs. These were partially offset by significantly lower sales volumes due to the cold and wet spring delaying ammonia applications and higher fixed costs associated with plant disruptions due to unseasonably cold weather early in the quarter that affected production at the company's Donaldsonville and Yazoo City plants. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 264 | $ | 238 | |||
Cost of sales | 189 | 213 | |||||
Gross margin | $ | 75 | $ | 25 | |||
Gross margin percentage | 28.4 | % | 10.5 | % | |||
Sales volume by product tons (000s) | 982 | 958 | |||||
Sales volume by nutrient tons (000s)(1) | 452 | 441 | |||||
Average selling price per product ton | $ | 269 | $ | 248 | |||
Average selling price per nutrient ton(1) | 584 | 540 | |||||
Gross margin per product ton | $ | 76 | $ | 26 | |||
Gross margin per nutrient ton(1) | 166 | 57 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 75 | $ | 25 | |||
Depreciation and amortization | 59 | 53 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | (1 | ) | 14 | ||||
Adjusted gross margin | $ | 133 | $ | 92 | |||
Adjusted gross margin as a percent of net sales | 50.4 | % | 38.7 | % |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin and adjusted gross margin as a percent of net sales are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. The company has presented adjusted gross margin and adjusted gross margin as a percent of net sales because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. A reconciliation of adjusted gross margin and adjusted gross margin as a percent of net sales to gross margin, the most directly comparable GAAP measure, is provided in the table above. See "Note Regarding Non-GAAP Financial Measures" in this release. |
• | Granular urea sales volume increased for the quarter primarily due to increased production volume from the company's Port Neal Nitrogen Complex. |
• | Granular urea average selling price per ton increased primarily due to the impact of a tighter global nitrogen supply and demand balance. |
• | Granular urea gross margin per ton increased in the first quarter of 2018 compared to the first quarter of 2017 due to higher average selling prices, a $1 million unrealized mark-to-market gain on natural gas derivatives in the quarter compared to a $14 million unrealized mark-to-market loss on natural gas derivatives in the prior year period, reduced maintenance and employee costs, and lower realized gas costs. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 283 | $ | 317 | |||
Cost of sales | 230 | 281 | |||||
Gross margin | $ | 53 | $ | 36 | |||
Gross margin percentage | 18.7 | % | 11.4 | % | |||
Sales volume by product tons (000s) | 1,669 | 1,849 | |||||
Sales volume by nutrient tons (000s)(1) | 527 | 584 | |||||
Average selling price per product ton | $ | 170 | $ | 171 | |||
Average selling price per nutrient ton(1) | 537 | 543 | |||||
Gross margin per product ton | $ | 32 | $ | 19 | |||
Gross margin per nutrient ton(1) | 101 | 62 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 53 | $ | 36 | |||
Depreciation and amortization | 63 | 65 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | (1 | ) | 16 | ||||
Adjusted gross margin | $ | 115 | $ | 117 | |||
Adjusted gross margin as a percent of net sales | 40.6 | % | 36.9 | % |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin and adjusted gross margin as a percent of net sales are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. The company has presented adjusted gross margin and adjusted gross margin as a percent of net sales because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. A reconciliation of adjusted gross margin and adjusted gross margin as a percent of net sales to gross margin, the most directly comparable GAAP measure, is provided in the table above. See "Note Regarding Non-GAAP Financial Measures" in this release. |
• | UAN sales volume decreased in the first quarter of 2018 due to unfavorable weather that delayed the start of the spring application season in the Southern Plains. |
• | UAN average selling price per ton was relatively unchanged. |
• | UAN gross margin per ton increased in the first quarter of 2018 compared to the first quarter of 2017 primarily due to a $1 million unrealized mark-to-market gain on natural gas derivatives in the quarter compared to a $16 million unrealized mark-to-market loss on natural gas derivatives in the prior year period and lower realized gas costs. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 100 | $ | 125 | |||
Cost of sales | 74 | 106 | |||||
Gross margin | $ | 26 | $ | 19 | |||
Gross margin percentage | 26.0 | % | 15.2 | % | |||
Sales volume by product tons (000s) | 417 | 568 | |||||
Sales volume by nutrient tons (000s)(1) | 140 | 191 | |||||
Average selling price per product ton | $ | 240 | $ | 220 | |||
Average selling price per nutrient ton(1) | 714 | 654 | |||||
Gross margin per product ton | $ | 62 | $ | 33 | |||
Gross margin per nutrient ton(1) | 186 | 99 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 26 | $ | 19 | |||
Depreciation and amortization | 18 | 19 | |||||
Unrealized net mark-to-market loss on natural gas derivatives | — | 2 | |||||
Adjusted gross margin | $ | 44 | $ | 40 | |||
Adjusted gross margin as a percent of net sales | 44.0 | % | 32.0 | % |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin and adjusted gross margin as a percent of net sales are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market loss on natural gas derivatives. The company has presented adjusted gross margin and adjusted gross margin as a percent of net sales because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. A reconciliation of adjusted gross margin and adjusted gross margin as a percent of net sales to gross margin, the most directly comparable GAAP measure, is provided in the table above. See "Note Regarding Non-GAAP Financial Measures" in this release. |
• | AN sales volume decreased in the first quarter of 2018 compared to the first quarter of 2017 due to unfavorable weather that delayed the start of the spring application season across the Northern Hemisphere. |
• | AN average selling price per ton increased in the first quarter of 2018 compared to the first quarter of 2017 primarily due to the impact of a tighter global nitrogen supply and demand balance. |
• | AN gross margin per ton increased due primarily to a $2 million lower unrealized mark-to-market loss on natural gas derivatives compared to the prior year period and higher average selling prices. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 98 | $ | 75 | |||
Cost of sales | 86 | 65 | |||||
Gross margin | $ | 12 | $ | 10 | |||
Gross margin percentage | 12.2 | % | 13.3 | % | |||
Sales volume by product tons (000s) | 571 | 450 | |||||
Sales volume by nutrient tons (000s)(1) | 111 | 88 | |||||
Average selling price per product ton | $ | 172 | $ | 167 | |||
Average selling price per nutrient ton(1) | 883 | 852 | |||||
Gross margin per product ton | $ | 21 | $ | 22 | |||
Gross margin per nutrient ton(1) | 108 | 114 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 12 | $ | 10 | |||
Depreciation and amortization | 17 | 12 | |||||
Unrealized net mark-to-market loss on natural gas derivatives | — | 4 | |||||
Adjusted gross margin | $ | 29 | $ | 26 | |||
Adjusted gross margin as a percent of net sales | 29.6 | % | 34.7 | % |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin and adjusted gross margin as a percent of net sales are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market loss on natural gas derivatives. The company has presented adjusted gross margin and adjusted gross margin as a percent of net sales because management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. A reconciliation of adjusted gross margin and adjusted gross margin as a percent of net sales to gross margin, the most directly comparable GAAP measure, is provided in the table above. See "Note Regarding Non-GAAP Financial Measures" in this release. |
• | Other segment volume increased in the first quarter of 2018 due primarily to higher year-over-year sales of DEF as additional volume available for sale from the new DEF unit at the Donaldsonville Nitrogen complex supports the company's ongoing efforts to grow its North American DEF business. |
• | Other segment average selling price per ton increased primarily due to the mix of products sold. |
• | Other segment gross margin per ton was relatively unchanged. |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions, except per share amounts) | |||||||
Net sales | $ | 957 | $ | 1,037 | |||
Cost of sales | 767 | 930 | |||||
Gross margin | 190 | 107 | |||||
Selling, general and administrative expenses | 57 | 46 | |||||
Other operating—net | (21 | ) | 6 | ||||
Total other operating costs and expenses | 36 | 52 | |||||
Equity in earnings of operating affiliates | 7 | 3 | |||||
Operating earnings | 161 | 58 | |||||
Interest expense | 60 | 80 | |||||
Interest income | (3 | ) | (1 | ) | |||
Other non-operating—net | (1 | ) | 1 | ||||
Earnings (loss) before income taxes | 105 | (22 | ) | ||||
Income tax provision (benefit) | 17 | (13 | ) | ||||
Net earnings (loss) | 88 | (9 | ) | ||||
Less: Net earnings attributable to noncontrolling interests | 25 | 14 | |||||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | ||
Net earnings (loss) per share attributable to common stockholders: | |||||||
Basic | $ | 0.27 | $ | (0.10 | ) | ||
Diluted | $ | 0.27 | $ | (0.10 | ) | ||
Weighted-average common shares outstanding: | |||||||
Basic | 233.9 | 233.1 | |||||
Diluted | 234.8 | 233.1 |
(unaudited) | |||||||
March 31, 2018 | December 31, 2017 | ||||||
(in millions) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 936 | $ | 835 | |||
Accounts receivable—net | 247 | 307 | |||||
Inventories | 401 | 275 | |||||
Prepaid income taxes | 55 | 33 | |||||
Other current assets | 21 | 15 | |||||
Total current assets | 1,660 | 1,465 | |||||
Property, plant and equipment—net | 9,031 | 9,175 | |||||
Investment in affiliate | 100 | 108 | |||||
Goodwill | 2,381 | 2,371 | |||||
Other assets | 350 | 344 | |||||
Total assets | $ | 13,522 | $ | 13,463 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 447 | $ | 472 | |||
Income taxes payable | 10 | 2 | |||||
Customer advances | 154 | 89 | |||||
Other current liabilities | 15 | 17 | |||||
Total current liabilities | 626 | 580 | |||||
Long-term debt | 4,693 | 4,692 | |||||
Deferred income taxes | 1,076 | 1,047 | |||||
Other liabilities | 462 | 460 | |||||
Equity: | |||||||
Stockholders' equity | 3,594 | 3,579 | |||||
Noncontrolling interests | 3,071 | 3,105 | |||||
Total equity | 6,665 | 6,684 | |||||
Total liabilities and equity | $ | 13,522 | $ | 13,463 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Operating Activities: | |||||||
Net earnings (loss) | $ | 88 | $ | (9 | ) | ||
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities: | |||||||
Depreciation and amortization | 193 | 205 | |||||
Deferred income taxes | 29 | (16 | ) | ||||
Stock-based compensation expense | 6 | 4 | |||||
Unrealized net (gain) loss on natural gas derivatives | (3 | ) | 53 | ||||
Unrealized loss on embedded derivative | — | 1 | |||||
Loss on disposal of property, plant and equipment | — | 1 | |||||
Undistributed earnings of affiliates—net of taxes | (3 | ) | (5 | ) | |||
Changes in: | |||||||
Accounts receivable—net | 61 | (9 | ) | ||||
Inventories | (97 | ) | (15 | ) | |||
Accrued and prepaid income taxes | (14 | ) | (5 | ) | |||
Accounts payable and accrued expenses | (24 | ) | 5 | ||||
Customer advances | 65 | 142 | |||||
Other—net | (19 | ) | 4 | ||||
Net cash provided by operating activities | 282 | 356 | |||||
Investing Activities: | |||||||
Additions to property, plant and equipment | (68 | ) | (94 | ) | |||
Proceeds from sale of property, plant and equipment | 8 | 8 | |||||
Distributions received from unconsolidated affiliates | 4 | — | |||||
Other—net | 1 | — | |||||
Net cash used in investing activities | (55 | ) | (86 | ) | |||
Financing Activities: | |||||||
Financing fees | 1 | — | |||||
Dividends paid on common stock | (70 | ) | (70 | ) | |||
Distributions to noncontrolling interests | (59 | ) | (54 | ) | |||
Issuances of common stock under employee stock plans | 2 | — | |||||
Shares withheld for taxes | (1 | ) | — | ||||
Net cash used in financing activities | (127 | ) | (124 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 1 | 1 | |||||
Increase in cash, cash equivalents and restricted cash | 101 | 147 | |||||
Cash, cash equivalents and restricted cash at beginning of period | 835 | 1,169 | |||||
Cash, cash equivalents and restricted cash at end of period | $ | 936 | $ | 1,316 |
Three months ended March 31, | |||||||
2018 | 2017 | ||||||
(in millions) | |||||||
Net earnings (loss) attributable to common stockholders | $ | 63 | $ | (23 | ) | ||
Interest expense—net | 57 | 79 | |||||
Income tax provision (benefit) | 17 | (13 | ) | ||||
Depreciation and amortization | 193 | 205 | |||||
Less other adjustments: | |||||||
Depreciation and amortization in noncontrolling interests(1) | (26 | ) | (27 | ) | |||
Loan fee amortization(2) | (2 | ) | (3 | ) | |||
EBITDA | 302 | 218 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | (3 | ) | 53 | ||||
Gain on foreign currency transactions including intercompany loans(3) | (5 | ) | — | ||||
Costs related to acquisition of TNCLP units | 2 | — | |||||
Unrealized loss on embedded derivative(4) | — | 1 | |||||
Total adjustments | (6 | ) | 54 | ||||
Adjusted EBITDA | $ | 296 | $ | 272 | |||
Net sales | $ | 957 | $ | 1,037 | |||
Tons of product sold (000s) | 4,303 | 4,745 | |||||
Net earnings (loss) as a percent of net sales | 6.6 | % | (2.2 | )% | |||
Net earnings (loss) per ton | $ | 14.64 | $ | (4.85 | ) | ||
EBITDA as a percent of net sales | 31.6 | % | 21.0 | % | |||
EBITDA per ton | $ | 70.18 | $ | 45.94 | |||
Adjusted EBITDA as a percent of net sales | 30.9 | % | 26.2 | % | |||
Adjusted EBITDA per ton | $ | 68.79 | $ | 57.32 |
(1) | For the three months ended March 31, 2018, amount includes $22 million related to CFN and $4 million related to TNCLP. |
(2) | Loan fee amortization is included in both interest expense—net and depreciation and amortization. |
(3) | Gain on foreign currency transactions primarily relates to the unrealized foreign currency exchange rate impact on intercompany debt that has not been permanently invested and is included in other operating—net in our consolidated statements of operations. |
(4) | Represents the change in fair value on the embedded derivative included within the terms of the company's strategic venture with CHS. |
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