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 (IRS Employer Identification No.) 60015 (Zip Code) |
Title of each class | Trading symbol(s) | Name of each exchange on which registered | ||
common stock, par value $0.01 per share | CF | New York Stock Exchange |
Exhibit No. | Description of Exhibit | |
Date: | May 1, 2019 | 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 $90 million, or $0.40 per diluted share; EBITDA(1) of $301 million; adjusted EBITDA(1) of $305 million |
• | Repurchased approximately 1.5 million shares during the quarter under the previously announced |
(1) | EBITDA is defined as net earnings 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. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per share and per MMBtu amounts) | |||||||
Net sales | $ | 1,001 | $ | 957 | |||
Cost of sales | 781 | 767 | |||||
Gross margin | $ | 220 | $ | 190 | |||
Gross margin percentage | 22.0 | % | 19.9 | % | |||
Net earnings attributable to common stockholders | $ | 90 | $ | 63 | |||
Net earnings per diluted share | $ | 0.40 | $ | 0.27 | |||
EBITDA(1) | $ | 301 | $ | 302 | |||
Adjusted EBITDA(1) | $ | 305 | $ | 296 | |||
Tons of product sold (000s) | 4,087 | 4,303 | |||||
Supplemental data (per MMBtu): | |||||||
Natural gas costs in cost of sales(2) | $ | 3.70 | $ | 3.32 | |||
Realized derivatives (gain) loss in cost of sales(3) | (0.02 | ) | 0.01 | ||||
Cost of natural gas in cost of sales | $ | 3.68 | $ | 3.33 | |||
Average daily market price of natural gas (per MMBtu): | |||||||
Henry Hub | $ | 2.89 | $ | 3.02 | |||
National Balancing Point UK | $ | 6.56 | $ | 8.20 | |||
Unrealized net mark-to-market loss (gain) on natural gas derivatives | $ | 2 | $ | (3 | ) | ||
Depreciation and amortization | $ | 188 | $ | 193 | |||
Capital expenditures | $ | 80 | $ | 68 | |||
Production volume by product tons (000s): | |||||||
Ammonia(4) | 2,567 | 2,508 | |||||
Granular urea | 1,306 | 1,151 | |||||
UAN (32%) | 1,637 | 1,805 | |||||
AN | 482 | 458 |
(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 and related transportation 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, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 187 | $ | 212 | |||
Cost of sales | 166 | 188 | |||||
Gross margin | $ | 21 | $ | 24 | |||
Gross margin percentage | 11.2 | % | 11.3 | % | |||
Sales volume by product tons (000s) | 606 | 664 | |||||
Sales volume by nutrient tons (000s)(1) | 497 | 544 | |||||
Average selling price per product ton | $ | 309 | $ | 319 | |||
Average selling price per nutrient ton(1) | 376 | 390 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 21 | $ | 24 | |||
Depreciation and amortization | 29 | 25 | |||||
Unrealized net mark-to-market gain on natural gas derivatives | — | (1 | ) | ||||
Adjusted gross margin | $ | 50 | $ | 48 | |||
Adjusted gross margin as a percent of net sales | 26.7 | % | 22.6 | % | |||
Gross margin per product ton | $ | 35 | $ | 36 | |||
Gross margin per nutrient ton(1) | 42 | 44 | |||||
Adjusted gross margin per product ton | 83 | 72 | |||||
Adjusted gross margin per nutrient ton(1) | 101 | 88 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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 2019 compared to 2018 as applications were delayed in North America due to cold and wet weather. |
• | Ammonia average selling prices decreased for the first quarter of 2019 compared to 2018 due to lower volumes of ammonia for agricultural use compared to the prior year. |
• | Ammonia adjusted gross margin per ton increased for the first quarter of 2019 compared to 2018 due in part to a lower cost for purchased product from the company’s joint venture in Trinidad compared to the prior year. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 343 | $ | 264 | |||
Cost of sales | 228 | 189 | |||||
Gross margin | $ | 115 | $ | 75 | |||
Gross margin percentage | 33.5 | % | 28.4 | % | |||
Sales volume by product tons (000s) | 1,184 | 982 | |||||
Sales volume by nutrient tons (000s)(1) | 545 | 452 | |||||
Average selling price per product ton | $ | 290 | $ | 269 | |||
Average selling price per nutrient ton(1) | 629 | 584 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 115 | $ | 75 | |||
Depreciation and amortization | 66 | 59 | |||||
Unrealized net mark-to-market loss (gain) on natural gas derivatives | 1 | (1 | ) | ||||
Adjusted gross margin | $ | 182 | $ | 133 | |||
Adjusted gross margin as a percent of net sales | 53.1 | % | 50.4 | % | |||
Gross margin per product ton | $ | 97 | $ | 76 | |||
Gross margin per nutrient ton(1) | 211 | 166 | |||||
Adjusted gross margin per product ton | 154 | 135 | |||||
Adjusted gross margin per nutrient ton(1) | 334 | 294 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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 first quarter of 2019 compared to 2018 from increased production at the company’s Donaldsonville and Port Neal facilities due to production mix favoring urea. |
• | Urea average selling prices improved in the first quarter of 2019 compared to 2018 due to a tighter global nitrogen supply and demand balance than the prior period. |
• | Granular urea adjusted gross margin per ton increased for the first quarter of 2019 compared to 2018 due primarily to higher average selling prices partially offset by higher realized natural gas costs. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 256 | $ | 283 | |||
Cost of sales | 195 | 230 | |||||
Gross margin | $ | 61 | $ | 53 | |||
Gross margin percentage | 23.8 | % | 18.7 | % | |||
Sales volume by product tons (000s) | 1,268 | 1,669 | |||||
Sales volume by nutrient tons (000s)(1) | 396 | 527 | |||||
Average selling price per product ton | $ | 202 | $ | 170 | |||
Average selling price per nutrient ton(1) | 646 | 537 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 61 | $ | 53 | |||
Depreciation and amortization | 46 | 63 | |||||
Unrealized net mark-to-market loss (gain) on natural gas derivatives | 1 | (1 | ) | ||||
Adjusted gross margin | $ | 108 | $ | 115 | |||
Adjusted gross margin as a percent of net sales | 42.2 | % | 40.6 | % | |||
Gross margin per product ton | $ | 48 | $ | 32 | |||
Gross margin per nutrient ton(1) | 154 | 101 | |||||
Adjusted gross margin per product ton | 85 | 69 | |||||
Adjusted gross margin per nutrient ton(1) | 273 | 218 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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 for the first quarter of 2019 decreased compared to 2018 as the application season was delayed due to cold and wet weather. |
• | UAN average selling prices improved in the first quarter of 2019 compared to 2018 due to a tighter global nitrogen supply and demand balance than the prior period. |
• | UAN adjusted gross margin per ton increased for the first quarter of 2019 compared to 2018 due primarily to higher average selling prices partially offset by higher realized natural gas costs. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 127 | $ | 100 | |||
Cost of sales | 114 | 74 | |||||
Gross margin | $ | 13 | $ | 26 | |||
Gross margin percentage | 10.2 | % | 26.0 | % | |||
Sales volume by product tons (000s) | 501 | 417 | |||||
Sales volume by nutrient tons (000s)(1) | 166 | 140 | |||||
Average selling price per product ton | $ | 253 | $ | 240 | |||
Average selling price per nutrient ton(1) | 765 | 714 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 13 | $ | 26 | |||
Depreciation and amortization | 22 | 18 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | — | — | |||||
Adjusted gross margin | $ | 35 | $ | 44 | |||
Adjusted gross margin as a percent of net sales | 27.6 | % | 44.0 | % | |||
Gross margin per product ton | $ | 26 | $ | 62 | |||
Gross margin per nutrient ton(1) | 78 | 186 | |||||
Adjusted gross margin per product ton | 70 | 106 | |||||
Adjusted gross margin per nutrient ton(1) | 211 | 314 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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 increased for the first quarter of 2019 compared to 2018 due to an earlier start to spring AN applications in the United Kingdom compared to the prior year. |
• | AN average selling prices improved for the first quarter of 2019 compared to 2018 due to a tighter global nitrogen supply and demand balance than the prior period. |
• | AN adjusted gross margin per ton was lower for the first quarter of 2019 compared to 2018 as higher average selling prices were more than offset by higher costs related to plant maintenance activities. |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(dollars in millions, except per ton amounts) | |||||||
Net sales | $ | 88 | $ | 98 | |||
Cost of sales | 78 | 86 | |||||
Gross margin | $ | 10 | $ | 12 | |||
Gross margin percentage | 11.4 | % | 12.2 | % | |||
Sales volume by product tons (000s) | 528 | 571 | |||||
Sales volume by nutrient tons (000s)(1) | 103 | 111 | |||||
Average selling price per product ton | $ | 167 | $ | 172 | |||
Average selling price per nutrient ton(1) | 854 | 883 | |||||
Adjusted gross margin(2): | |||||||
Gross margin | $ | 10 | $ | 12 | |||
Depreciation and amortization | 17 | 17 | |||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives | — | — | |||||
Adjusted gross margin | $ | 27 | $ | 29 | |||
Adjusted gross margin as a percent of net sales | 30.7 | % | 29.6 | % | |||
Gross margin per product ton | $ | 19 | $ | 21 | |||
Gross margin per nutrient ton(1) | 97 | 108 | |||||
Adjusted gross margin per product ton | 51 | 51 | |||||
Adjusted gross margin per nutrient ton(1) | 262 | 261 |
(1) | Nutrient tons represent the tons of nitrogen within the product tons. |
(2) | Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton 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 decreased for the first quarter of 2019 primarily from lower supply availability of compound fertilizer products for sale in the United Kingdom due to plant maintenance issues. |
• | Other average selling prices decreased in the first quarter of 2019 compared to 2018 due to the mix of products sold. |
• | Other segment adjusted gross margin per ton was unchanged for the first quarter of 2019 compared to 2018. |
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, | |||||||
2019 | 2018 | ||||||
(in millions, except per share amounts) | |||||||
Net sales | $ | 1,001 | $ | 957 | |||
Cost of sales | 781 | 767 | |||||
Gross margin | 220 | 190 | |||||
Selling, general and administrative expenses | 58 | 57 | |||||
Other operating—net | 4 | (21 | ) | ||||
Total other operating costs and expenses | 62 | 36 | |||||
Equity in earnings of operating affiliate | 7 | 7 | |||||
Operating earnings | 165 | 161 | |||||
Interest expense | 60 | 60 | |||||
Interest income | (4 | ) | (3 | ) | |||
Other non-operating—net | (1 | ) | (1 | ) | |||
Earnings before income taxes | 110 | 105 | |||||
Income tax (benefit) provision | (8 | ) | 17 | ||||
Net earnings | 118 | 88 | |||||
Less: Net earnings attributable to noncontrolling interests | 28 | 25 | |||||
Net earnings attributable to common stockholders | $ | 90 | $ | 63 | |||
Net earnings per share attributable to common stockholders: | |||||||
Basic | $ | 0.40 | $ | 0.27 | |||
Diluted | $ | 0.40 | $ | 0.27 | |||
Weighted-average common shares outstanding: | |||||||
Basic | 223.4 | 233.9 | |||||
Diluted | 224.6 | 234.8 |
(unaudited) | |||||||
March 31, 2019 | December 31, 2018 | ||||||
(in millions) | |||||||
Assets | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 671 | $ | 682 | |||
Accounts receivable—net | 264 | 235 | |||||
Inventories | 446 | 309 | |||||
Prepaid income taxes | 1 | 28 | |||||
Other current assets | 30 | 20 | |||||
Total current assets | 1,412 | 1,274 | |||||
Property, plant and equipment—net | 8,471 | 8,623 | |||||
Investment in affiliate | 100 | 93 | |||||
Goodwill | 2,360 | 2,353 | |||||
Operating lease right-of-use assets | 285 | — | |||||
Other assets | 314 | 318 | |||||
Total assets | $ | 12,942 | $ | 12,661 | |||
Liabilities and Equity | |||||||
Current liabilities: | |||||||
Accounts payable and accrued expenses | $ | 432 | $ | 545 | |||
Income taxes payable | 3 | 5 | |||||
Customer advances | 301 | 149 | |||||
Current operating lease liabilities | 85 | — | |||||
Other current liabilities | 5 | 6 | |||||
Total current liabilities | 826 | 705 | |||||
Long-term debt | 4,700 | 4,698 | |||||
Deferred income taxes | 1,135 | 1,117 | |||||
Operating lease liabilities | 203 | — | |||||
Other liabilities | 408 | 410 | |||||
Equity: | |||||||
Stockholders’ equity | 2,955 | 2,958 | |||||
Noncontrolling interests | 2,715 | 2,773 | |||||
Total equity | 5,670 | 5,731 | |||||
Total liabilities and equity | $ | 12,942 | $ | 12,661 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Operating Activities: | |||||||
Net earnings | $ | 118 | $ | 88 | |||
Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||
Depreciation and amortization | 188 | 193 | |||||
Deferred income taxes | 14 | 29 | |||||
Stock-based compensation expense | 6 | 6 | |||||
Unrealized net loss (gain) on natural gas derivatives | 2 | (3 | ) | ||||
Unrealized loss on embedded derivative | 1 | — | |||||
Loss on disposal of property, plant and equipment | 1 | — | |||||
Undistributed earnings of affiliate—net of taxes | (8 | ) | (3 | ) | |||
Changes in: | |||||||
Accounts receivable—net | (28 | ) | 61 | ||||
Inventories | (101 | ) | (97 | ) | |||
Accrued and prepaid income taxes | 24 | (14 | ) | ||||
Accounts payable and accrued expenses | (65 | ) | (24 | ) | |||
Customer advances | 152 | 65 | |||||
Other—net | 2 | (19 | ) | ||||
Net cash provided by operating activities | 306 | 282 | |||||
Investing Activities: | |||||||
Additions to property, plant and equipment | (80 | ) | (68 | ) | |||
Proceeds from sale of property, plant and equipment | 5 | 8 | |||||
Distributions received from unconsolidated affiliate | — | 4 | |||||
Other—net | — | 1 | |||||
Net cash used in investing activities | (75 | ) | (55 | ) | |||
Financing Activities: | |||||||
Financing fees | — | 1 | |||||
Dividends paid on common stock | (67 | ) | (70 | ) | |||
Distributions to noncontrolling interests | (86 | ) | (59 | ) | |||
Purchases of treasury stock | (87 | ) | — | ||||
Issuances of common stock under employee stock plans | 2 | 2 | |||||
Shares withheld for taxes | (4 | ) | (1 | ) | |||
Net cash used in financing activities | (242 | ) | (127 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | — | 1 | |||||
(Decrease) increase in cash and cash equivalents | (11 | ) | 101 | ||||
Cash and cash equivalents at beginning of period | 682 | 835 | |||||
Cash and cash equivalents at end of period | $ | 671 | $ | 936 |
Three months ended March 31, | |||||||
2019 | 2018 | ||||||
(in millions) | |||||||
Net earnings | $ | 118 | $ | 88 | |||
Less: Net earnings attributable to noncontrolling interests | (28 | ) | (25 | ) | |||
Net earnings attributable to common stockholders | 90 | 63 | |||||
Interest expense—net | 56 | 57 | |||||
Income tax (benefit) provision | (8 | ) | 17 | ||||
Depreciation and amortization | 188 | 193 | |||||
Less other adjustments: | |||||||
Depreciation and amortization in noncontrolling interests(1) | (23 | ) | (26 | ) | |||
Loan fee amortization(2) | (2 | ) | (2 | ) | |||
EBITDA | 301 | 302 | |||||
Unrealized net mark-to-market loss (gain) on natural gas derivatives | 2 | (3 | ) | ||||
Loss (gain) on foreign currency transactions including intercompany loans | 2 | (5 | ) | ||||
Costs related to acquisition of TNCLP units | — | 2 | |||||
Total adjustments | 4 | (6 | ) | ||||
Adjusted EBITDA | $ | 305 | $ | 296 | |||
Net sales | $ | 1,001 | $ | 957 | |||
Tons of product sold (000s) | 4,087 | 4,303 | |||||
Net earnings attributable to common stockholders as a percent of net sales | 9.0 | % | 6.6 | % | |||
Net earnings attributable to common stockholders per ton | $ | 22.02 | $ | 14.64 | |||
EBITDA as a percent of net sales | 30.1 | % | 31.6 | % | |||
EBITDA per ton | $ | 73.65 | $ | 70.18 | |||
Adjusted EBITDA as a percent of net sales | 30.5 | % | 30.9 | % | |||
Adjusted EBITDA per ton | $ | 74.63 | $ | 68.79 |
(1) | For the three months ended March 31, 2019, amount relates only to CFN, as we purchased the remaining publicly traded common units of Terra Nitrogen Company, L.P. (TNCLP) on April 2, 2018. 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. |
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