Market Overview

CF Industries Holdings, Inc. Reports First Quarter Net Earnings of $63 Million, EBITDA of $302 Million, Adjusted EBITDA of $296 Million

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Continued Strong Operational Performance

Unfavorable Weather Delayed Spring Application Season

CF Industries Holdings, Inc. (NYSE:CF), a leading global fertilizer and
chemical company, today announced results for its first quarter ended
March 31, 2018.

Highlights

  • 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

Overview of Results

CF Industries Holdings, Inc., today announced first quarter 2018 net
earnings attributable to common stockholders of $63 million, or $0.27
per diluted share; EBITDA of $302 million; and adjusted EBITDA of
$296 million. These results compare to first quarter 2017 net loss
attributable to common stockholders of $23 million, or $0.10 per diluted
share; EBITDA of $218 million; and adjusted EBITDA of $272 million.

"The CF team executed well in all aspects of our business during the
first quarter, maximizing the opportunities available to us even as the
spring application season was delayed due to cold and wet weather," said
Tony Will, president and chief executive officer, CF Industries
Holdings, Inc. "Despite lower volumes, we generated $101 million in cash
and are well-positioned to meet the strong demand we expect through the
second quarter."

Manufacturing Operations

CF Industries' manufacturing network continued its focus on safety and
operated efficiently during the first quarter of 2018. As of March 31,
2018, CF Industries' 12-month rolling average recordable incident rate
was 0.6 incidents per 200,000 work hours, the lowest for the company and
well below industry averages.

Gross ammonia production during the first quarter of 2018 was more than
2.5 million tons, equal to production during the first quarter of 2017.

_________________________________________________________________________

 
(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.

 

Sales Overview

Net sales in the first quarter of 2018 decreased to $957 million from
$1,037 million in the same period last year due to lower sales volumes
across most segments partially offset by higher average selling prices
across most segments.

Total sales volumes for the quarter were lower compared to the first
quarter of 2017 due to unfavorable weather that delayed the start of the
spring application season across the Northern Hemisphere.

Average selling prices for the quarter were higher year-over-year across
most segments due primarily to a tighter global nitrogen supply and
demand balance driven by less nitrogen production from marginal
producers in Eastern Europe and China.

The company's average selling price for ammonia was $319 per ton in the
first quarter of 2018 compared to $307 per ton in the first quarter of
2017. The average selling price for urea was $269 per ton in the first
quarter of 2018 compared to $248 per ton in the first quarter of 2017,
and the average selling price for UAN was $170 per ton in the first
quarter of 2018 compared to $171 per ton in the first quarter of 2017.

Cost of sales decreased in the first quarter of 2018 compared to the
first quarter of 2017 primarily driven by lower sales volumes and lower
realized gas costs, and an unrealized net mark-to-market gain on natural
gas derivatives of $3 million in the first quarter of 2018 compared to
an unrealized net mark-to-market loss on natural gas derivatives of
$53 million in the first quarter of 2017.

In the first quarter of 2018, the average cost of natural gas reflected
in the company's cost of sales was $3.33 per MMBtu, which includes a
realized loss of $0.01 per MMBtu on natural gas hedges. This compares to
the average cost of natural gas in cost of sales of $3.65 per MMBtu for
the first quarter of 2017, which included a realized gain of $0.01 per
MMBtu on natural gas hedges. During the first quarter of 2018, the
average price of natural gas at Henry Hub in North America was $3.02 per
MMBtu, and the average price of natural gas at the National Balancing
Point in the United Kingdom was $8.20 per MMBtu.

The company did not enter into any additional natural gas NYMEX
hedges in the first quarter of 2018.

Market Overview

CF management expects demand in North America for nitrogen fertilizer
for the first half of 2018 to be similar to the first half of 2017,
projecting 88-90 million acres of corn, 46 million acres of wheat and 13
million acres of cotton to be planted in the United States, along with
25 million acres of wheat and 21 million acres of canola in Canada. Corn
planting was behind the average pace as of April 29, and ammonia
shipments were behind schedule due to cold, wet weather in the Midwest,
which slowed pre-plant applications. However, growers unable to apply
pre-plant ammonia have the option to follow with post-planting and
sidedress ammonia applications as well as other forms of nitrogen such
as urea and UAN.

In the first quarter of 2018, urea barge prices at New Orleans traded at
an average of $13 per ton below international parity, continuing a trend
since early 2017 and discouraging excess imports into the region. From
July through February, imports of urea and UAN to North America declined
38 percent and 35 percent, respectively, compared to the same time
period a year ago. Imports of nitrogen into North America should
continue to trend lower as global tradeflows adjust to account for the
additional production coming from the ramp-up of the remaining North
American nitrogen capacity additions. However, the region remains
nitrogen import-dependent for the foreseeable future.

Global urea prices are expected to remain above 2017 levels even after
the traditional seasonal reset at the end of the second quarter. Energy
prices remain significantly higher for producers in Eastern Europe and
China. The price of natural gas per MMBtu at TTF in Europe was 32
percent higher in March 2018 compared to March 2017, while the price of
a metric ton of anthracite coal in China was 52 percent higher in
February 2018 compared to February 2017. Ocean freight costs are higher
as well, with the average cost of shipping urea from the Arab Gulf to
the Gulf of Mexico in the first quarter of 2018 nearly 25 percent higher
than the first quarter of 2017.

Higher energy and freight costs, along with enforcement of environmental
regulations, have resulted in dramatically lower Chinese urea production
and exports. Through the first three months of 2018, Chinese urea
exports were 77 percent lower than the same period in 2017. CF expects
lower Chinese urea exports to continue in the near-term.

Additionally, demand in India and Brazil should provide support for
prices over the next few months. India recently completed a tender that
secured more than one million tons of urea through the end of May, which
will absorb significant volumes of urea from Black Sea, Iranian, and
Middle Eastern producers. The company expects nitrogen imports into
Brazil to increase slightly year-over-year due to the permanent closure
of two Petrobras urea plants in the country in the coming months
partially offset by lower projected corn plantings.

Capital Expenditures

Capital expenditures in 2018 for new activity are estimated to be in the
range of approximately $400 to $450 million, which takes into account a
higher number of scheduled plant turnarounds in 2018 compared to 2017.

Liquidity

As of March 31, 2018, the company had cash and cash equivalents of $936
million on the balance sheet, had no borrowings outstanding under its
$750 million revolving credit facility and was in compliance with all
applicable covenant requirements under its debt instruments.

Purchase of All Publicly Traded Units of Terra Nitrogen Company, L.P.

On April 2, 2018, the company's wholly owned subsidiary Terra Nitrogen
GP Inc. (TNGP) completed its previously announced purchase of all of the
issued and outstanding common units representing limited partner
interests in Terra Nitrogen Company, L.P. (TNCLP) not already owned by
TNGP or its affiliates for $388 million. The company funded the purchase
with cash on hand.

CHS Inc. Distribution

CHS Inc. (CHS) is entitled to semi-annual distributions resulting from
its minority equity investment in CF Industries Nitrogen, LLC (CFN). The
estimate of the partnership distribution earned by CHS, but not yet
declared, for the first quarter of 2018 is approximately $39 million.

 

Consolidated Results

 
    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.

 

Segment Results

Ammonia Segment

CF Industries' ammonia segment produces anhydrous ammonia (ammonia),
which is the company's most concentrated form of nitrogen, containing 82
percent nitrogen. The results of the ammonia segment consist of sales of
ammonia to external customers. In addition, ammonia is the "basic"
nitrogen form that the company upgrades into other nitrogen products
such as urea, UAN and AN.

    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.

 

Comparison of 2018 to 2017 first quarter periods:

  • 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.

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
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.

 

Comparison of 2018 to 2017 first quarter periods:

  • 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.

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
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.

 

 

Comparison of 2018 to 2017 first quarter periods:

  • 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.

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. AN is produced at the company's Yazoo
City, Mississippi; Billingham, United Kingdom; and Ince, United Kingdom,
complexes.

    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.

 

Comparison of 2018 to 2017 first quarter periods:

  • 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.

Other Segment

CF Industries' Other segment includes diesel exhaust fluid (DEF), urea
liquor, nitric acid and compound fertilizer products (NPKs).

    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.

 

Comparison of 2018 to 2017 first quarter periods:

  • 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.

Dividend Payment

On April 27, 2018, CF Industries' Board of Directors declared a
quarterly dividend of $0.30 per common share. The dividend will be paid
on May 31, 2018 to stockholders of record as of May 15, 2018.

Conference Call

CF Industries will hold a conference call to discuss its first quarter
2018 results at 9:00 a.m. ET on Thursday, May 3, 2018. 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.

CF Industries is a leading global fertilizer and chemical company with
outstanding operational capabilities and a highly cost-advantaged
production and distribution platform. Our 3,000 employees operate
world-class manufacturing complexes in Canada, the United Kingdom and
the United States. We serve our customers in North America through an
unparalleled production, storage, transportation and distribution
network. We also reach a global customer base with exports from our
Donaldsonville, Louisiana, plant, the world's largest and most flexible
nitrogen complex. Additionally, we move product to international
destinations from our Yazoo City, Mississippi, facility, our Billingham
and Ince facilities in the United Kingdom, and from a joint venture
ammonia facility in the Republic of Trinidad and Tobago in which we own
a 50 percent interest. 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, EBITDA as a percent of net sales, adjusted
EBITDA, adjusted EBITDA per ton, adjusted EBITDA as a percent of net
sales, and, on a segment basis, adjusted gross margin and adjusted gross
margin as a percent of net sales, which are non-GAAP financial measures,
provide additional meaningful information regarding the company's
performance and financial strength. 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,
EBITDA as a percent of net sales, adjusted EBITDA, adjusted EBITDA per
ton, adjusted EBITDA as a percent of net sales, adjusted gross margin
and adjusted gross margin as a percent of net sales, included in this
release may not be comparable to similarly titled measures of other
companies. Reconciliations of EBITDA, EBITDA per ton, EBITDA as a
percent of net sales, adjusted EBITDA, adjusted EBITDA per ton, and
adjusted EBITDA as a percent of net sales 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 and adjusted gross margin as a percent of net sales 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 strategic plans and statements
about future financial and operating results.

Important factors that could cause actual results to differ materially
from those in the forward-looking statements include, among others, the
cyclical nature of the Company's business and the agricultural sector;
the global commodity nature of the Company's fertilizer products, the
impact of global supply and demand on the Company's selling prices, and
the intense global competition from other fertilizer producers;
conditions in the U.S. and European agricultural industry; the
volatility of natural gas prices in North America and Europe;
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 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;
operating and financial restrictions imposed on the Company by the
agreements governing the Company's senior secured indebtedness; risks
associated with the Company's incurrence of additional indebtedness; the
Company's ability to maintain compliance with covenants under the
agreements governing its indebtedness; downgrades of the Company's
credit ratings; risks associated with cyber security; weather
conditions; risks associated with changes in tax laws and disagreements
with taxing authorities; the Company's reliance on a limited number of
key facilities; potential liabilities and expenditures related to
environmental, health and safety laws and regulations and permitting
requirements; future regulatory restrictions and requirements related to
greenhouse gas emissions; risks associated with expansions of the
Company's business, including unanticipated adverse consequences and the
significant resources that could be required; the seasonality of the
fertilizer business; the impact of changing market conditions on the
Company's forward sales programs; risks involving derivatives and the
effectiveness of the Company's risk measurement and hedging activities;
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; risks
associated with the Company's Point Lisas Nitrogen Limited joint
venture; acts of terrorism and regulations to combat terrorism; risks
associated with international operations; and deterioration of global
market and economic conditions.

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. 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
(unaudited)
 
    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  
 
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
CONDENSED CONSOLIDATED BALANCE SHEETS

 

    (unaudited)    
March 31, December 31,
2018 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
 
CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL INFORMATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
 
    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  
 

CF INDUSTRIES HOLDINGS, INC.
SELECTED FINANCIAL
INFORMATION

NON-GAAP DISCLOSURE ITEMS

Reconciliation of net earnings (loss), net earnings (loss) per ton
and net earnings (loss) as a percent of net sales (GAAP measures) to
EBITDA, EBITDA per ton, EBITDA as a percent of net sales, adjusted
EBITDA, adjusted EBITDA per ton and adjusted EBITDA as a percent of net
sales (non-GAAP measures), as applicable:

EBITDA is defined as net earnings (loss) 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 interests.

The company has presented EBITDA, EBITDA per ton and EBITDA as a percent
of net sales 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
included in EBITDA as summarized in the table below. The company has
presented adjusted EBITDA, adjusted EBITDA per ton and adjusted EBITDA
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.

    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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