CF Industries Holdings, Inc. Reports Full Year 2023 Net Earnings of $1.53 Billion, Adjusted EBITDA of $2.76 Billion

Outstanding Operational Performance, Positive Energy Spreads Drive Strong Financial Results

Acquisition of Waggaman Ammonia Production Facility Complete

Greenfield Low-Carbon SMR Ammonia Plant FEED Study Complete, FID Targeted for 2H-2024

CF Industries Holdings, Inc. (NYSE: CF), a leading global manufacturer of hydrogen and nitrogen products, today announced results for the full year and fourth quarter ended December 31, 2023.

Highlights

Full year net earnings(1)(2) of $1.53 billion, or $7.87 per diluted share, EBITDA(2) of $2.71 billion, and adjusted EBITDA(3) of $2.76 billion
Fourth quarter net earnings(1)(2) of $274 million, or $1.44 per diluted share, EBITDA of $556 million, and adjusted EBITDA of $592 million
Full year net cash from operating activities of $2.76 billion and free cash flow(4) of $1.80 billion
Closed acquisition of Waggaman ammonia production facility on December 1, 2023
Electrolyzer installation at Donaldsonville, LA, Complex mechanically complete; commissioning activities for green ammonia project underway
CF Industries and Mitsui & Co., Ltd. (“Mitsui”) targeting second half 2024 for final investment decision (FID) on proposed greenfield low-carbon ammonia plant in Louisiana
Repurchased 2.9 million shares for $225 million during the fourth quarter of 2023

“CF Industries’ 2023 results demonstrate the strength of our business and our team,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “We ran our plants well, added the Waggaman ammonia production facility to our network, and advanced our clean energy strategy. We believe that the global energy cost structure presents attractive margin opportunities for our North American-based production network in the near-term and that the global nitrogen supply-demand balance will tighten considerably in the medium-term. As a result, we expect to continue to drive strong cash generation, underpinning our ability to create significant shareholder value from disciplined investments in growth opportunities and returning substantial capital to shareholders.”

Update on Proposed Greenfield Low-Carbon Ammonia Plant at CF Industries’ Blue Point Complex

In the fourth quarter of 2023, CF Industries and Mitsui completed a front-end engineering and design (FEED) study on a greenfield steam methane reforming (SMR) ammonia facility with carbon capture and sequestration (CCS) technologies at CF Industries’ Blue Point Complex in Louisiana. The FEED study estimates the cost of a project with these attributes to be in the range of $3 billion, with approximately $2.5 billion allocated to the ammonia facility and CCS technologies and approximately $500 million allocated to scalable common infrastructure for the site, such as ammonia storage and vessel loading docks.

CF Industries and Mitsui are progressing two additional FEED studies focused on technologies with the potential to further reduce the carbon intensity of the proposed low-carbon ammonia plant. These include a previously announced FEED study evaluating autothermal reforming (ATR) ammonia production technology and a recently added FEED study assessing the cost and viability of adding flue gas capture to an SMR ammonia facility. Both FEED studies are expected to be completed in the second half of 2024.

CF Industries and Mitsui also expect greater clarity later in 2024 regarding demand for low-carbon ammonia, including the ammonia carbon intensity requirements of offtake partners as well as government incentives and regulatory developments in partners’ local jurisdictions. As a result of these factors, the companies are targeting the second half of 2024 for a final investment decision on the proposed low-carbon ammonia plant.

Operations Overview

The Company continues to operate safely and efficiently across its network. As of December 31, 2023, the 12-month rolling average recordable incident rate was 0.36 incidents per 200,000 work hours, significantly better than industry averages.

Gross ammonia production for the full year and fourth quarter of 2023 was approximately 9.5 million and 2.5 million tons, respectively. Gross ammonia production volume for the full year and fourth quarter of 2023 includes one month of production from the recently acquired Waggaman ammonia production facility in Louisiana. The Company expects gross ammonia production in 2024 to be approximately 10 million tons.

Financial Results Overview

Full Year 2023 Financial Results

For the full year 2023, net earnings attributable to common stockholders were $1.53 billion, or $7.87 per diluted share, EBITDA was $2.71 billion, and adjusted EBITDA was $2.76 billion. These results compare to full year 2022 net earnings attributable to common stockholders of $3.35 billion, or $16.38 per diluted share, EBITDA of $5.54 billion, and adjusted EBITDA of $5.88 billion.

Net sales for the full year 2023 were $6.63 billion compared to $11.19 billion for 2022. Average selling prices for 2023 were lower than 2022 as lower global energy costs reduced the global market clearing price required to meet global demand. Sales volumes for 2023 were higher compared to 2022 from higher urea ammonium nitrate (UAN), ammonia and diesel exhaust fluid (DEF) sales volumes.

Cost of sales for 2023 was lower compared to 2022 due primarily to lower realized natural gas costs.

In 2023, the average cost of natural gas reflected in the Company’s cost of sales was $3.67 per MMBtu compared to the average cost of natural gas in cost of sales of $7.18 per MMBtu for 2022.

Fourth Quarter 2023 Financial Results

For the fourth quarter of 2023, net earnings attributable to common stockholders were $274 million, or $1.44 per diluted share, EBITDA was $556 million, and adjusted EBITDA was $592 million. These results compare to fourth quarter of 2022 net earnings attributable to common stockholders of $860 million, or $4.35 per diluted share, EBITDA of $1.25 billion, and adjusted EBITDA of $1.30 billion.

Net sales in the fourth quarter of 2023 were $1.57 billion compared to $2.61 billion in 2022. Average selling prices for the fourth quarter of 2023 were lower than 2022 as lower global energy costs reduced the global market clearing price required to meet global demand. Sales volumes in the fourth quarter of 2023 were higher than 2022 driven by higher ammonia, UAN and DEF sales volumes.

Cost of sales for the fourth quarter of 2023 was lower compared to 2022 due primarily to lower realized natural gas costs.

The average cost of natural gas reflected in the Company’s cost of sales was $3.01 per MMBtu in the fourth quarter of 2023 compared to the average cost of natural gas in cost of sales of $6.88 per MMBtu in the fourth quarter of 2022.

Capital Management

Acquisition of Waggaman, Louisiana, ammonia production facility

On December 1, 2023, CF Industries closed its acquisition of Incitec Pivot Limited’s (“IPL”) ammonia production plant and related assets located in Waggaman, Louisiana. In connection with the acquisition, the Company entered into a long-term ammonia offtake agreement providing for the Company to supply up to 200,000 tons of ammonia per year to IPL’s Dyno Nobel, Inc. subsidiary. Under the terms of the asset purchase agreement, $425 million of the $1.675 billion purchase price, subject to adjustment, was allocated by the parties to the ammonia offtake agreement. The Company funded the balance of the purchase price with $1.223 billion in cash.

Capital Expenditures

Capital expenditures in the fourth quarter and full year 2023 were $188 million and $499 million, respectively. Management projects capital expenditures for full year 2024 will be in the range of $550 million.

Share Repurchase Program

The Company repurchased approximately 7.9 million shares for $580 million during 2023, which included the repurchase of 2.9 million shares for $225 million during the fourth quarter of 2023.

Quarterly Dividend

On January 31, 2024, the Board of Directors of CF Industries Holdings, Inc., declared a quarterly dividend of $0.50 per common share, representing a 25% increase compared to its prior quarterly dividend.

CHS Inc. Distribution

On January 31, 2024, the Board of Managers of CF Industries Nitrogen, LLC (CFN) approved a semi-annual distribution payment to CHS Inc. (CHS) of $144 million for the distribution period ended December 31, 2023. The distribution was paid on January 31, 2024. Distributions to CHS pertaining to 2023 distribution periods were approximately $348 million.

Nitrogen Market Outlook

Management believes that global nitrogen industry fundamentals point to a constructive global nitrogen supply-demand balance in the near-term and a tightening global nitrogen supply-demand balance in the medium-term.

In the near-term, the Company expects global nitrogen demand to remain resilient driven by continued strong agriculture applications and recovering industrial demand. Additionally, key producing regions continue to face challenging production economics due to the cost and availability of natural gas.

North America: Management believes nitrogen channel inventories remain below average following a strong fall 2023 ammonia season, nitrogen imports to the region that are below the 3-year average, and reported production downtime in the region during the fourth quarter of 2023. The Company projects that 91 million acres of corn will be planted in the United States in 2024 and that North American farm profitability will improve in 2024 compared to 2023 as lower crop prices are offset by lower input costs. As a result, management expects nitrogen demand in North America for the spring 2024 application season to remain strong.
Brazil: Imports of urea into Brazil totaled 7.3 million metric tons in 2023, an increase of approximately 3% year-over-year. Management expects Brazil to remain the largest importer of urea globally despite reported farmer caution regarding fertilizer purchases during this growing season as they evaluate the potential impact of poor weather conditions on the upcoming safrinha plantings.
India: Management expects India to remain a significant importer of urea in 2024 even as domestic production increases with higher operating rates at its new nitrogen facilities. Imports of urea in 2024 are projected to be in a range of 6.0-7.0 million metric tons.
Europe: Approximately 40% of ammonia and 25% of urea capacity were reported in shutdown/curtailment in Europe as of early January 2024 as high natural gas prices and lower global nitrogen values continue to challenge production economics in the region. Management believes that ammonia operating rates and overall domestic nitrogen product output in Europe will remain below historical averages over the long-term given the region’s status as the global marginal producer. As a result, the Company expects nitrogen imports of ammonia and upgraded products to the region to be higher than historical averages.
China: Management expects urea export controls and inspections imposed by the Chinese government on domestic producers to remain in place in 2024 in order to prioritize fertilizer production for domestic consumption. The Company also anticipates that the Chinese government will allow windows during the year that will enable Chinese producers to export. Urea exports from China are projected to be approximately 4 million metric tons for 2024.
Trinidad: Ammonia production in Trinidad in recent years has been approximately 1 million metric tons lower annually compared to the 2018-2020 average. Management expects ammonia production to remain below average due to anticipated higher natural gas prices and lower natural gas availability in the country for nitrogen producers.
Russia: Exports of ammonia from Russia continue to remain lower compared to prior years due to geopolitical disruptions arising from Russia’s invasion of Ukraine and the resulting closure of the ammonia pipeline from Russia to the port of Odessa in Ukraine. Exports of other nitrogen products from Russia are at pre-war levels, with product moving to countries willing to purchase Russian fertilizer, including Brazil and the United States.

Over the near- and medium-terms, significant energy cost differentials between North American producers and high-cost producers in Europe and Asia are expected to persist. As a result, the Company believes the global nitrogen cost curve will remain supportive of strong margin opportunities for low-cost North American producers.

Longer-term, management expects the global nitrogen supply-demand balance to tighten as global nitrogen capacity growth over the next four years is not projected to keep pace with expected global nitrogen demand growth of approximately 1.5% per year. Global production is expected to be further constrained by continued challenges related to cost and availability of natural gas.

Strategic Initiatives Update

Donaldsonville Complex green ammonia project

CF Industries’ green ammonia project at its Donaldsonville Complex in Louisiana, which involves installing an electrolysis system to generate hydrogen from water that will then be supplied to existing ammonia plants to produce ammonia, continues to progress. The electrolysis system is mechanically complete and commissioning activities are underway. At full capacity, the project will enable the Company to produce approximately 20,000 tons of green ammonia per year. Green ammonia refers to ammonia produced with hydrogen sourced through an electrolysis process that produces no carbon emissions. This represents North America’s first commercial-scale green ammonia capacity.

Donaldsonville Complex carbon capture and sequestration project

Engineering activities for the construction of a dehydration and compression unit at CF Industries’ Donaldsonville Complex continue to advance, all major equipment for the facility has been procured, and fabrication of the CO2 compressors is proceeding. Once in service, the dehydration and compression unit will enable up to 2 million tons of captured process CO2 to be transported and permanently stored by ExxonMobil. Start-up for the project is scheduled for 2025, at which point CF Industries will be able to produce significant volumes of low-carbon ammonia.

Certified natural gas purchase

CF Industries has entered into an agreement for 2024 with bp for the purchase of 4.4 billion cubic feet of certified natural gas, which is double its purchase in 2023. The certificates purchased by CF Industries are issued by not-for-profit MiQ and certify that certain natural gas produced by bp has a 90% lower methane emissions intensity - the ratio of methane emissions to natural gas produced - than the industry average. Methane emissions throughout the natural gas supply chain are a significant contributor to the lifecycle carbon intensity of ammonia production and the second largest source of Scope 3 emissions for CF Industries.

___________________________________________________

(1)

Certain items recognized during the full year and fourth quarter of 2023 impacted our financial results and their comparability to the prior year period. See the table accompanying this release for a summary of these items.

(2)

Financial results for full year and fourth quarter of 2023 include the impact of CF Industries’ acquisition of the Waggaman, Louisiana, ammonia production facility on December 1, 2023.

(3)

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.

(4)

Free cash flow is defined as net cash from operating activities less capital expenditures and distributions to noncontrolling interest. See reconciliation of free cash flow to the most directly comparable GAAP measure in the table accompanying this release.

Consolidated Results

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(dollars in millions, except per share and per MMBtu amounts)

Net sales

1,571

2,608

6,631

11,186

Cost of sales

1,070

1,352

4,086

5,325

Gross margin

501

1,256

2,545

5,861

Gross margin percentage

31.9

48.2

38.4

52.4

Net earnings attributable to common stockholders

274

860

1,525

3,346

Net earnings per diluted share

1.44

4.35

7.87

16.38

EBITDA(1)

556

1,246

2,707

5,542

Adjusted EBITDA(1)

592

1,296

2,760

5,880

Tons of product sold (000s)

4,912

4,464

19,130

18,331

Natural gas supplemental data (per MMBtu):

Natural gas costs in cost of sales(2)

2.79

6.55

3.26

7.16

Realized derivatives loss in cost of sales(3)

0.22

0.33

0.41

0.02

Cost of natural gas used for production in cost of sales

3.01

6.88

3.67

7.18

Average daily market price of natural gas Henry Hub (Louisiana)

2.74

5.55

2.53

6.38

Unrealized net mark-to-market loss (gain) on natural gas derivatives

(39

)

Depreciation and amortization

229

198

869

850

Capital expenditures

188

134

499

453

Production volume by product tons (000s):

Ammonia(4)

2,525

2,441

9,496

9,807

Granular urea

1,130

1,143

4,544

4,561

UAN (32%)

1,840

1,827

6,852

6,706

416

355

1,520

1,517

_______________________________________________________________________________

(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 used for production and related transportation that is included in cost of sales during the period under the first-in, first-out inventory cost method. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. (3) Includes realized gains and losses on natural gas derivatives settled during the period. (4) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.

Ammonia Segment

CF Industries’ ammonia segment produces anhydrous ammonia (ammonia), which is the base product that the Company manufactures, containing 82 percent nitrogen and 18 percent hydrogen. The results of the ammonia segment consist of sales of ammonia to external customers for its nitrogen content as a fertilizer, in emissions control and in other industrial applications. In addition, the Company upgrades ammonia into other nitrogen products such as urea, UAN and AN.

Three months ended December 31,

Year ended December 31,

2023(1)

2022

2023(1)

2022

(dollars in millions, except per ton amounts)

Net sales

495

804

1,679

3,090

Cost of sales

341

416

1,138

1,491

Gross margin

154

388

541

1,599

Gross margin percentage

31.1

48.3

32.2

51.7

Sales volume by product tons (000s)

1,077

895

3,546

3,300

Sales volume by nutrient tons (000s)(2)

883

734

2,908

2,707

Average selling price per product ton

460

898

473

936

Average selling price per nutrient ton(2)

561

1,095

577

1,141

Adjusted gross margin(3):

Gross margin

154

388

541

1,599

Depreciation and amortization

171

166

Unrealized net mark-to-market loss (gain) on natural gas derivatives

(11

)

Adjusted gross margin

216

454

701

1,778

Adjusted gross margin as a percent of net sales

43.6

56.5

41.8

57.5

Gross margin per product ton

143

434

153

485

Gross margin per nutrient ton(3)

174

529

186

591

Adjusted gross margin per product ton

201

507

198

539

Adjusted gross margin per nutrient ton(3)

245

619

241

657

_______________________________________________________________________________

(1) Financial results for full year and fourth quarter of 2023 include the impact of CF Industries’ acquisition of the Waggaman, Louisiana, ammonia production facility on December 1, 2023.

(2) Nutrient tons represent the tons of nitrogen within the product tons.

(3) 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. 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.

Comparison of 2023 to 2022:

Ammonia sales volume for 2023 increased compared to 2022 due to greater supply availability from higher starting inventory.
Ammonia average selling prices decreased for 2023 compared to 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.
Ammonia adjusted gross margin per ton decreased for 2023 compared to 2022 due primarily to lower average selling prices partially offset by lower realized natural gas costs.

Granular Urea Segment

CF Industries’ granular urea segment produces granular urea, which contains 46 percent nitrogen. Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of the Company’s solid nitrogen products.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(dollars in millions, except per ton amounts)

Net sales

392

605

1,823

2,892

Cost of sales

235

304

1,010

1,328

Gross margin

157

301

813

1,564

Gross margin percentage

40.1

49.8

44.6

54.1

Sales volume by product tons (000s)

1,038

1,033

4,570

4,572

Sales volume by nutrient tons (000s)(1)

477

475

2,102

2,103

Average selling price per product ton

378

586

399

633

Average selling price per nutrient ton(1)

822

1,274

867

1,375

Adjusted gross margin(2):

Gross margin

157

301

813

1,564

Depreciation and amortization

285

272

Unrealized net mark-to-market loss (gain) on natural gas derivatives

(11

)

Adjusted gross margin

233

377

1,087

1,849

Adjusted gross margin as a percent of net sales

59.4

62.3

59.6

63.9

Gross margin per product ton

151

291

178

342

Gross margin per nutrient ton(1)

329

634

387

744

Adjusted gross margin per product ton

224

365

238

404

Adjusted gross margin per nutrient ton(1)

488

794

517

879

_______________________________________________________________________________

(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. 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.

Comparison of 2023 to 2022:

Granular urea sales volumes for 2023 approximated 2022 sales volumes.
Urea average selling prices decreased for 2023 compared to 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.
Granular urea adjusted gross margin per ton decreased for 2023 compared to 2022 due primarily to lower average selling prices partially offset by lower realized natural gas costs.

UAN Segment

CF Industries’ UAN segment produces urea ammonium nitrate solution (UAN). UAN is a liquid product with nitrogen content that typically ranges from 28 percent to 32 percent and is produced by combining urea and ammonium nitrate in solution.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(dollars in millions, except per ton amounts)

Net sales

418

845

2,068

3,572

Cost of sales

314

387

1,251

1,489

Gross margin

104

458

817

2,083

Gross margin percentage

24.9

54.2

39.5

58.3

Sales volume by product tons (000s)

1,812

1,690

7,237

6,788

Sales volume by nutrient tons (000s)(1)

573

538

2,283

2,148

Average selling price per product ton

231

500

286

526

Average selling price per nutrient ton(1)

729

1,571

906

1,663

Adjusted gross margin(2):

Gross margin

104

458

817

2,083

Depreciation and amortization

288

269

Unrealized net mark-to-market loss (gain) on natural gas derivatives

(11

)

Adjusted gross margin

185

537

1,094

2,366

Adjusted gross margin as a percent of net sales

44.3

63.6

52.9

66.2

Gross margin per product ton

271

113

307

Gross margin per nutrient ton(1)

182

851

358

970

Adjusted gross margin per product ton

102

318

151

349

Adjusted gross margin per nutrient ton(1)

323

998

479

1,101

_______________________________________________________________________________

(1) Nutrient tons represent the tons of nitrogen within the product tons.

Comparison of 2023 to 2022:

UAN sales volumes for 2023 increased compared to 2022 sales volumes due to strong customer participation in the Company’s post-application season fill program as well as higher supply availability from higher production.
UAN average selling prices decreased for 2023 compared to 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.
UAN adjusted gross margin per ton decreased for 2023 compared to 2022 due primarily to lower average selling prices partially offset by lower realized natural gas costs.

AN Segment

CF Industries’ AN segment produces ammonium nitrate (AN). AN is used as a nitrogen fertilizer with nitrogen content between 29 percent to 35 percent, and also is used by industrial customers for commercial explosives and blasting systems.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(dollars in millions, except per ton amounts)

Net sales

120

189

497

845

Cost of sales

139

359

597

Gross margin

138

248

Gross margin percentage

20.8

26.5

27.8

29.3

Sales volume by product tons (000s)

414

367

1,571

1,594

Sales volume by nutrient tons (000s)(1)

142

126

538

545

Average selling price per product ton

290

515

316

530

Average selling price per nutrient ton(1)

845

1,500

924

1,550

Adjusted gross margin(2):

Gross margin

138

248

Depreciation and amortization

Unrealized net mark-to-market loss (gain) on natural gas derivatives

)

Adjusted gross margin

184

307

Adjusted gross margin as a percent of net sales

31.7

41.8

37.0

36.3

Gross margin per product ton

136

156

Gross margin per nutrient ton(1)

176

397

257

455

Adjusted gross margin per product ton

215

117

193

Adjusted gross margin per nutrient ton(1)

268

627

342

563

_______________________________________________________________________________

(1) Nutrient tons represent the tons of nitrogen within the product tons.

Comparison of 2023 to 2022:

AN sales volume for 2023 approximated 2022 sales volumes.
AN average selling prices for 2023 decreased compared to 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.
AN adjusted gross margin per ton decreased for 2023 compared to 2022 due to lower average selling prices partially offset by the lower cost of importing ammonia for AN production in the U.K. during the year compared to the cost of producing ammonia domestically in the U.K in 2022 and lower realized natural gas costs in North America.

Other Segment

CF Industries’ Other segment includes diesel exhaust fluid (DEF), urea liquor and nitric acid.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(dollars in millions, except per ton amounts)

Net sales

146

165

564

787

Cost of sales

106

328

420

Gross margin

236

367

Gross margin percentage

41.8

35.8

41.8

46.6

Sales volume by product tons (000s)

571

479

2,206

2,077

Sales volume by nutrient tons (000s)(1)

113

434

408

Average selling price per product ton

256

344

256

379

Average selling price per nutrient ton(1)

1,292

1,737

1,300

1,929

Adjusted gross margin(2):

Gross margin

236

367

Depreciation and amortization

Unrealized net mark-to-market loss (gain) on natural gas derivatives

)

Adjusted gross margin

296

437

Adjusted gross margin as a percent of net sales

54.8

50.3

52.5

55.5

Gross margin per product ton

107

123

107

177

Gross margin per nutrient ton(1)

540

621

544

900

Adjusted gross margin per product ton

140

173

134

210

Adjusted gross margin per nutrient ton(1)

708

874

682

1,071

_______________________________________________________________________________

(1) Nutrient tons represent the tons of nitrogen within the product tons.

Comparison of 2023 to 2022:

Other sales volume for 2023 increased compared to 2022 sales volumes due primarily to higher DEF sales volumes.
Other average selling prices for 2023 decreased compared to 2022 as lower global energy costs reduced the global market clearing price required to meet global demand.
Other adjusted gross margin per ton decreased for 2023 compared to 2022 due primarily to lower average selling prices partially offset by lower realized natural gas costs.

Dividend Payment

On January 31, 2024, CF Industries’ Board of Directors declared a quarterly dividend of $0.50 per common share. The dividend will be paid on February 29, 2024 to stockholders of record as of February 15, 2024.

Conference Call

CF Industries will hold a conference call to discuss its full year and fourth quarter 2023 results at 10:00 a.m. ET on Thursday, February 15, 2024. This conference call will include discussion of CF Industries’ business environment and outlook. Investors can access the call and find dial-in information on the Investor Relations section of the Company’s website at www.cfindustries.com.

About CF Industries Holdings, Inc.

At CF Industries, our mission is to provide clean energy to feed and fuel the world sustainably. With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities. Our manufacturing complexes in the United States, Canada, and the United Kingdom, an unparalleled storage, transportation and distribution network in North America, and logistics capabilities enabling a global reach underpin our strategy to leverage our unique capabilities to accelerate the world’s transition to clean energy. CF Industries routinely posts investor announcements and additional information on the Company’s website at www.cfindustries.com and encourages those interested in the Company to check there frequently.

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, EBITDA per ton, adjusted EBITDA, adjusted EBITDA per ton, free cash flow, and, on a segment basis, adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton, which are non-GAAP financial measures, provide additional meaningful information regarding the Company’s performance and financial strength. Management uses these measures, and believes they are useful to investors, as supplemental financial measures in the comparison of year-over-year performance. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, EBITDA, EBITDA per ton, adjusted EBITDA, adjusted EBITDA per ton, free cash flow, adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton, included in this release may not be comparable to similarly titled measures of other companies. Reconciliations of EBITDA, EBITDA per ton, adjusted EBITDA, adjusted EBITDA per ton, and free cash flow to the most directly comparable GAAP measures are provided in the tables accompanying this release under “CF Industries Holdings, Inc.-Selected Financial Information-Non-GAAP Disclosure Items.” Reconciliations 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 the most directly comparable GAAP measures are provided in the segment tables included in this release.

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 as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions, risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such statements. These statements may include, but are not limited to, statements about the synergies and other benefits, and other aspects of the transactions with Incitec Pivot Limited (“IPL”), strategic plans and management’s expectations with respect to the production of green and blue (low-carbon) ammonia, the development of carbon capture and sequestration projects, the transition to and growth of a hydrogen economy, greenhouse gas reduction targets, projected capital expenditures, statements about future financial and operating results, and other items described in this communication.

Important factors that could cause actual results to differ materially from those in the forward-looking statements include, among others, the risk of obstacles to realization of the benefits of the transactions with IPL; the risk that the synergies from the transactions with IPL may not be fully realized or may take longer to realize than expected; the risk that the completion of the transactions with IPL, including integration of the Waggaman ammonia production complex into the Company’s operations, disrupt current operations or harm relationships with customers, employees and suppliers; the risk that integration of the Waggaman ammonia production complex with the Company’s current operations will be more costly or difficult than expected or may otherwise be unsuccessful; diversion of management time and attention to issues relating to the transactions with IPL; unanticipated costs or liabilities associated with the IPL transactions; the cyclical nature of the Company’s business and the impact of global supply and demand on the Company’s selling prices; the global commodity nature of the Company’s nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers; conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for our fertilizer products; the volatility of natural gas prices in North America and the United Kingdom; weather conditions and the impact of adverse weather events; the seasonality of the fertilizer business; the impact of changing market conditions on the Company’s forward sales programs; difficulties in securing the supply and delivery of raw materials, increases in their costs or delays or interruptions in their delivery; reliance on third party providers of transportation services and equipment; the Company’s reliance on a limited number of key facilities; risks associated with cybersecurity; acts of terrorism and regulations to combat terrorism; risks associated with international operations; the significant risks and hazards involved in producing and handling the Company’s products against which the Company may not be fully insured; the Company’s ability to manage its indebtedness and any additional indebtedness that may be incurred; the Company’s ability to maintain compliance with covenants under its revolving credit agreement and the agreements governing its indebtedness; downgrades of the Company’s credit ratings; risks associated with changes in tax laws and disagreements with taxing authorities; risks involving derivatives and the effectiveness of the Company’s risk management and hedging activities; potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; regulatory restrictions and requirements related to greenhouse gas emissions; the development and growth of the market for green and blue (low-carbon) ammonia and the risks and uncertainties relating to the development and implementation of the Company’s green and blue ammonia projects; risks associated with expansions of the Company’s business, including unanticipated adverse consequences and the significant resources that could be required; and risks associated with the operation or management of the strategic venture with CHS (the “CHS Strategic Venture”), risks and uncertainties relating to the market prices of the fertilizer products that are the subject of the supply agreement with CHS over the life of the supply agreement, and the risk that any challenges related to the CHS Strategic Venture will harm the Company’s other business relationships.

More detailed information about factors that may affect the Company’s performance and could cause actual results to differ materially from those in any forward-looking statements may be found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent annual and quarterly reports on Form 10-K and Form 10-Q, which are available in the Investor Relations section of the Company’s web site. It is not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events, plans or goals anticipated by these forward-looking statements will occur, and if any of the events do occur, there is no guarantee what effect they will have on our business, results of operations, cash flows, financial condition and future prospects. Forward-looking statements are given only as of the date of this communication and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

CF INDUSTRIES HOLDINGS, INC.

SELECTED FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF OPERATIONS

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(in millions, except per share amounts)

Net sales

1,571

2,608

6,631

11,186

Cost of sales

1,070

1,352

4,086

5,325

Gross margin

501

1,256

2,545

5,861

Selling, general and administrative expenses

289

290

U.K. long-lived and intangible asset impairment

—

239

U.K. operations restructuring

Acquisition and integration costs

—

Other operating—net

(12

)

(23

)

(31

)

Total other operating costs and expenses

307

558

Equity in earnings (loss) of operating affiliate

)

Operating earnings

426

1,211

2,230

5,397

Interest expense

(25

)

150

344

Interest income

(43

)

(158

)

(65

)

Loss on debt extinguishment

—

Other non-operating—net

)

(10

)

Earnings before income taxes

436

1,254

2,248

5,095

Income tax provision

245

410

1,158

Net earnings

352

1,009

1,838

3,937

Less: Net earnings attributable to noncontrolling interest

149

313

591

Net earnings attributable to common stockholders

274

860

1,525

3,346

Net earnings per share attributable to common stockholders:

Basic

1.44

4.37

7.89

16.45

Diluted

1.44

4.35

7.87

16.38

Weighted-average common shares outstanding:

Basic

190.1

196.6

193.3

203.3

Diluted

190.6

197.4

193.8

204.2

CF INDUSTRIES HOLDINGS, INC.

SELECTED FINANCIAL INFORMATION

CONDENSED CONSOLIDATED BALANCE SHEETS

December 31, 2023

December 31, 2022

(in millions)

Assets

Current assets:

Cash and cash equivalents

2,032

2,323

Accounts receivable—net

505

582

Inventories

299

474

Prepaid income taxes

167

215

Other current assets

Total current assets

3,050

3,673

Property, plant and equipment—net

7,141

6,437

Investment in affiliate

Goodwill

2,495

2,089

Operating lease right-of-use assets

259

254

Other assets

867

771

Total assets

14,376

13,313

Liabilities and Equity

Current liabilities:

Accounts payable and accrued expenses

520

575

Income taxes payable

Customer advances

130

229

Current operating lease liabilities

Other current liabilities

Total current liabilities

800

995

Long-term debt

2,968

2,965

Deferred income taxes

999

958

Operating lease liabilities

168

167

Supply contract liability

754

—

Other liabilities

314

375

Equity:

Stockholders’ equity

5,717

5,051

Noncontrolling interest

2,656

2,802

Total equity

8,373

7,853

Total liabilities and equity

14,376

13,313

CF INDUSTRIES HOLDINGS, INC.

SELECTED FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(in millions)

Operating Activities:

Net earnings

352

1,009

1,838

3,937

Adjustments to reconcile net earnings to net cash provided by operating activities:

Depreciation and amortization

229

198

869

850

Deferred income taxes

154

(100

)

(107

)

Stock-based compensation expense

Loss on debt extinguishment

—

Unrealized net loss (gain) on natural gas derivatives

(39

)

Impairment of equity method investment in PLNL

—

Gain on embedded derivative

—

(14

)

—

(14

)

U.K. long-lived and intangible asset impairment

—

239

Pension settlement loss and curtailment gains

—

)

—

Gain on sale of emission credits

—

(39

)

Loss on disposal of property, plant and equipment

—

Undistributed losses (earnings) of affiliate—net of taxes

)

Changes in assets and liabilities, net of acquisition:

Accounts receivable—net

(65

)

135

100

(110

)

Inventories

152

(93

)

Accrued and prepaid income taxes

(101

)

(59

)

(44

)

(227

)

Accounts payable and accrued expenses

(110

)

(88

)

Customer advances

(153

)

(283

)

(100

)

(471

)

Other—net

(25

)

(321

)

(60

)

(252

)

Net cash provided by operating activities

480

585

2,757

3,855

Investing Activities:

Additions to property, plant and equipment

(188

)

(134

)

(499

)

(453

)

Proceeds from sale of property, plant and equipment

—

Purchase of Waggaman ammonia production facility

(1,223

)

—

(1,223

)

—

Distributions received from unconsolidated affiliate

—

Purchase of investments held in nonqualified employee benefit trust

)

—

)

Proceeds from sale of investments held in nonqualified employee benefit trust

—

Purchase of emission credits

)

—

)

Proceeds from sale of emission credits

—

Other—net

—

Net cash used in investing activities

(1,408

)

(132

)

(1,679

)

(440

)

CF INDUSTRIES HOLDINGS, INC.

SELECTED FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(continued)

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(in millions)

Financing Activities:

Payments of long-term borrowings

—

(507

)

Financing fees

)

—

)

Dividends paid

(76

)

(79

)

(311

)

(306

)

Distributions to noncontrolling interest

—

(459

)

(619

)

Purchases of treasury stock

(225

)

(251

)

(580

)

(1,347

)

Proceeds from issuances of common stock under employee stock plans

—

106

Cash paid for shares withheld for taxes

—

(22

)

(23

)

Net cash used in financing activities

(302

)

(330

)

(1,372

)

(2,700

)

Effect of exchange rate changes on cash and cash equivalents

(20

)

(Decrease) increase in cash and cash equivalents

(1,222

)

131

(291

)

695

Cash and cash equivalents at beginning of period

3,254

2,192

2,323

1,628

Cash and cash equivalents at end of period

2,032

2,323

2,032

2,323

CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION NON-GAAP DISCLOSURE ITEMS

Reconciliation of net cash provided by operating activities (GAAP measure) to free cash flow (non-GAAP measure):

Free cash flow is defined as net cash provided by operating activities, as stated in the consolidated statements of cash flows, reduced by capital expenditures and distributions to noncontrolling interest. The Company has presented free cash flow because management uses this measure and believes it is useful to investors, as an indication of the strength of the Company and its ability to generate cash and to evaluate the Company’s cash generation ability relative to its industry competitors. It should not be inferred that the entire free cash flow amount is available for discretionary expenditures.

Year ended December 31,

2023

2022

(in millions)

Net cash provided by operating activities(1)

2,757

3,855

Capital expenditures

(499

)

(453

)

Distributions to noncontrolling interest

(459

)

(619

)

Free cash flow(1)

1,799

2,783

_______________________________________________________________________________

(1) For the year ended December 31, 2022, net cash provided by operating activities and free cash flow includes the impact of $491 million in tax and interest payments made to Canadian tax authorities in relation to an arbitration decision covering tax years 2006 through 2011 and transfer pricing positions between Canada and the United States for open years 2012 and after. The Company has filed amended tax returns in the U.S. seeking refunds of related taxes paid.

CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION NON-GAAP DISCLOSURE ITEMS (CONTINUED)

Reconciliation of net earnings attributable to common stockholders and net earnings attributable to common stockholders per ton (GAAP measures) to EBITDA, EBITDA per ton, adjusted EBITDA and adjusted EBITDA per ton (non-GAAP measures), as applicable:

EBITDA is defined as net earnings attributable to common stockholders plus interest expense—net, income taxes and depreciation and amortization. Other adjustments include the elimination of loan fee amortization that is included in both interest and amortization, and the portion of depreciation that is included in noncontrolling interest.

The Company has presented EBITDA and EBITDA per ton because management uses these measures to track performance and believes that they are frequently used by securities analysts, investors and other interested parties in the evaluation of companies in the industry.

Adjusted EBITDA is defined as EBITDA adjusted with the selected items as summarized in the table below. The Company has presented adjusted EBITDA and adjusted EBITDA per 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.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

(in millions)

Net earnings

352

1,009

1,838

3,937

Less: Net earnings attributable to noncontrolling interest

(78

)

(149

)

(313

)

(591

)

Net earnings attributable to common stockholders

274

860

1,525

3,346

Interest (income) expense—net

)

(34

)

279

Income tax provision

245

410

1,158

Depreciation and amortization

229

198

869

850

Less other adjustments:

Depreciation and amortization in noncontrolling interest

(22

)

(22

)

(85

)

(87

)

Loan fee amortization(1)

)

EBITDA

556

1,246

2,707

5,542

Unrealized net mark-to-market loss (gain) on natural gas derivatives

(39

)

(Gain) loss on foreign currency transactions, including intercompany loans

)

(10

)

—

U.K. long-lived and intangible asset impairment

—

239

U.K. operations restructuring

Acquisition and integration costs

—

Impairment of equity method investment in PLNL

—

Pension settlement loss and curtailment gains—net

—

)

—

Unrealized gain on embedded derivative

—

(14

)

—

(14

)

Loss on debt extinguishment

—

Total adjustments

338

Adjusted EBITDA

592

1,296

2,760

5,880

Net sales

1,571

2,608

6,631

11,186

Tons of product sold (000s)

4,912

4,464

19,130

18,331

Net earnings attributable to common stockholders per ton

55.78

192.65

79.72

182.53

EBITDA per ton

113.19

279.12

141.51

302.33

Adjusted EBITDA per ton

120.52

290.32

144.28

320.77

_______________________________________________________________________________

(1) Loan fee amortization is included in both interest expense—net and depreciation and amortization.

CF INDUSTRIES HOLDINGS, INC. SELECTED FINANCIAL INFORMATION ITEMS AFFECTING COMPARABILITY

During the three months and year ended December 31, 2023 and 2022, certain items impacted our financial results. The following table outlines these items that affected the comparability of our financial results during these periods. During the three months ended December 31, 2023 and 2022, we reported net earnings attributable to common stockholders of $274 million and $860 million, respectively. During the year ended December 31, 2023 and 2022, we reported net earnings attributable to common stockholders of $1.53 billion and $3.35 billion, respectively.

Three months ended December 31,

Year ended December 31,

2023

2022

2023

2022

Pre-Tax

After-Tax

Pre-Tax

After-Tax

Pre-Tax

After-Tax

Pre-Tax

After-Tax

(in millions)

Unrealized net mark-to-market loss (gain) on natural gas derivatives(1)

(39

)

(30

)

(Gain) loss on foreign currency transactions, including intercompany loans(2)

)

(10

)

—

Unrealized gain on embedded derivative liability(2)(3)

—

(14

)

(11

)

—

(14

)

(11

)

U.K. operations:

U.K. long-lived and intangible asset impairment

—

239

180

U.K. operations restructuring

—

Acquisition and integration costs

—

Impairment of equity method investment in PLNL(4)

—

Pension settlement loss and curtailment gains—net(5)

—

)

—

Canada Revenue Agency Competent Authority Matter and transfer pricing reserves:

Interest expense

—

(64

)

(64

)

—

170

168

Interest income

—

(29

)

(22

)

Income tax provision(6)

—

Loss on debt extinguishment

—

_______________________________________________________________________________

(1) Included in cost of sales in our consolidated statements of operations.

(2) Included in other operating—net in our consolidated statements of operations.

(3) For the three months and year ended December 31, 2022, as a result of upgrades to our credit rating, we recognized an unrealized gain of $14 million due to a reduction in the fair value of an embedded derivative liability related to the terms of our strategic venture with CHS.

(4) Included in equity in earnings (loss) of operating affiliate in our consolidated statements of operations.

(5) Included in other non-operating—net in our consolidated statements of operations.

(6) For the three months ended December 31, 2022, amount represents the combined impact of these tax matters of $8 million of income tax provision plus $3 million of income tax provision on the related interest. For the year ended December 31, 2022, amount represents the combined impact of these tax matters of $70 million less a net $5 million of income tax provision on the related interest.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240214401228/en/

Media Chris Close Senior Director, Corporate Communications 847-405-2542 - cclose@cfindustries.com Investors Darla Rivera Director, Investor Relations 847-405-2045 - darla.rivera@cfindustries.com

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