8-K
CF Industries Holdings, Inc. (CF)
8-K
2023-02-15
For: 2023-02-15
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April 11, 2026
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section
13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
February 15, 2023
CF
Industries Holdings, Inc.
(Exact name of registrant as specified in its charter)
| Delaware | 001-32597 | 20-2697511 |
|---|---|---|
| (State<br> or other jurisdiction<br><br> of incorporation) | (Commission<br> File Number) | (IRS<br> Employer<br><br> Identification No.) |
| 4 Parkway North **** <br>Deerfield**, Illinois** | 60015 | |
| --- | --- | |
| (Address<br> of principal <br><br> executive offices) | (Zip<br> Code) |
Registrant’s telephone number, including area code
(847
) 405-2400
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
| ¨ | Written<br>communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ¨ | Soliciting<br>material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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| ¨ | Pre-commencement<br>communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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| ¨ | Pre-commencement<br>communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading symbol(s) | Name of each exchange on which registered |
|---|---|---|
| common<br> stock, par value $0.01 per share | CF | New<br> York Stock Exchange |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On February 16, 2023, CF Industries Holdings, Inc. will host a conference call discussing its results for the quarter and year ended December 31, 2022, at which the presentation attached hereto as Exhibit 99.1 will be used.
The information set forth herein, including the exhibit attached hereto, shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in any such filing.
| Item 9.01. | Financial Statements and Exhibits. |
|---|---|
| (d) | Exhibits. |
| --- | --- |
| Exhibit No. | Description of Exhibit |
| --- | --- |
| 99.1 | Presentation of CF Industries Holdings, Inc.<br> dated February 15, 2023 |
| 104 | Cover Page Interactive<br> Data File (the cover page XBRL tags are embedded within the Inline XBRL document) |
| 2 |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Date: | February 15, 2023 | CF INDUSTRIES HOLDINGS, INC. | |
|---|---|---|---|
| By: | /s/ Christopher D. Bohn | ||
| Name: | Christopher D. Bohn | ||
| Title: | Senior Vice President and Chief Financial Officer |
| 3 |
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Exhibit 99.1
| 2022 Fourth Quarter<br>and Full Year<br>Financial Results<br>February 15, 2023<br>NYSE: CF |
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| Safe harbor statement<br>All statements in this presentation by CF Industries Holdings, Inc. (together with its subsidiaries, the “Company”), other than those relating to<br>historical facts, are forward-looking statements. Forward-looking statements can generally be identified by their use of terms such as “anticipate,”<br> “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “project,” “will” or “would” and similar terms and phrases, including<br>references to assumptions. Forward-looking statements are not guarantees of future performance and are subject to a number of assumptions,<br>risks and uncertainties, many of which are beyond the Company’s control, which could cause actual results to differ materially from such<br>statements. These statements may include, but are not limited to, statements about strategic plans and management’s expectations with respect to<br>the production of green and blue (low-carbon) ammonia, the development of carbon capture and sequestration projects, the transition to and<br>growth of a hydrogen economy, greenhouse gas reduction targets, projected capital expenditures, statements about future financial and operating<br>results, and other items described in this presentation. Important factors that could cause actual results to differ materially from those in the<br>forward-looking statements include, among others, the cyclical nature of the Company’s business and the impact of global supply and demand on<br>the Company’s selling prices; the global commodity nature of the Company’s nitrogen products, the conditions in the international market for<br>nitrogen products, and the intense global competition from other producers; conditions in the United States, Europe and other agricultural areas,<br>including the influence of governmental policies and technological developments on the demand for agricultural products; the volatility of natural<br>gas prices in North America and the United Kingdom; weather conditions and the impact of severe adverse weather events; the seasonality of the<br>fertilizer business; the impact of changing market conditions on the Company’s forward sales programs; difficulties in securing the supply and<br>delivery of raw materials, increases in their costs or delays or interruptions in their delivery; reliance on third party providers of transportation<br>services and equipment; the Company’s reliance on a limited number of key facilities; risks associated with cyber security; acts of terrorism and<br>regulations to combat terrorism; risks associated with international operations; the significant risks and hazards involved in producing and handling<br>the Company’s products against which the Company may not be fully insured; the Company’s ability to manage its indebtedness and any<br>additional indebtedness that may be incurred; the Company’s ability to maintain compliance with covenants under its revolving credit agreement<br>and the agreements governing its indebtedness; downgrades of the Company’s credit ratings; risks associated with changes in tax laws and<br>disagreements with taxing authorities; risks involving derivatives and the effectiveness of the Company’s risk measurement and hedging activities;<br>potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; regulatory<br>restrictions and requirements related to greenhouse gas emissions; the development and growth of the market for green and blue (low-carbon)<br>ammonia and the risks and uncertainties relating to the development and implementation of the Company’s green and blue ammonia projects;<br>risks associated with expansions of the Company’s business, including unanticipated adverse consequences and the significant resources that<br>could be required; risks associated with the operation or management of the strategic venture with CHS (the “CHS Strategic Venture”), risks and<br>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<br>agreement, and the risk that any challenges related to the CHS Strategic Venture will harm the Company’s other business relationships; and the<br>impact of the novel coronavirus disease 2019 (COVID-19) pandemic on our business and operations. More detailed information about factors that<br>may affect the Company’s performance and could cause actual results to differ materially from those in any forward-looking statements may be<br>found in CF Industries Holdings, Inc.’s filings with the Securities and Exchange Commission, including CF Industries Holdings, Inc.’s most recent<br>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<br>not possible to predict or identify all risks and uncertainties that might affect the accuracy of our forward-looking statements and, consequently, our<br>descriptions of such risks and uncertainties should not be considered exhaustive. There is no guarantee that any of the events, plans or goals<br>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<br>our business, results of operations, cash flows, financial condition and future prospects. Forward-looking statements are given only as of the date<br>of this presentation and the Company disclaims any obligation to update or revise the forward-looking statements, whether as a result of new<br>information, future events or otherwise, except as required by law. |
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| Note regarding non-GAAP financial measures<br>The Company reports its financial results in accordance with U.S. generally accepted accounting principles (GAAP). Management<br>believes that EBITDA, adjusted EBITDA, free cash flow, free cash flow to adjusted EBITDA conversion and free cash flow yield,<br>which are non-GAAP financial measures, provide additional meaningful information regarding the Company's performance and<br>financial strength. Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company's<br>reported results prepared in accordance with GAAP. In addition, because not all companies use identical calculations, EBITDA,<br>adjusted EBITDA, free cash flow, free cash flow to adjusted EBITDA conversion and free cash flow yield included in this presentation<br>may not be comparable to similarly titled measures of other companies. Reconciliations of EBITDA, adjusted EBITDA, free cash<br>flow, and free cash flow yield to the most directly comparable GAAP measures are provided in the tables accompanying this<br>presentation.<br>EBITDA is defined as net earnings attributable to common stockholders plus interest expense - net, income taxes, and depreciation<br>and amortization. Other adjustments include the elimination of loan fee amortization that is included in both interest and<br>amortization, and the portion of depreciation that is included in noncontrolling interest. The Company has presented EBITDA<br>because management uses the measure to track performance and believes that it is frequently used by securities analysts, investors<br>and other interested parties in the evaluation of companies in the industry.<br>Adjusted EBITDA is defined as EBITDA adjusted with the selected items included in EBITDA as summarized in the tables<br>accompanying this presentation. The Company has presented adjusted EBITDA because management uses adjusted EBITDA, and<br>believes it is useful to investors, as a supplemental financial measure in the comparison of year-over-year performance.<br>Free cash flow is defined as net cash provided by operating activities, as stated in the consolidated statements of cash flows,<br>reduced by capital expenditures and distributions to noncontrolling interests. Free cash flow to adjusted EBITDA conversion is<br>defined as free cash flow divided by adjusted EBITDA. Free cash flow yield is defined as free cash flow divided by market value of<br>equity (market cap). For full year 2022, the Company has also presented cash provided by operating activities, free cash flow, free<br>cash flow to adjusted EBITDA conversion and free cash flow yield, in each case excluding certain tax and interest payments made to<br>Canadian tax authorities in relation to an arbitration decision covering tax years 2006 through 2011 and to our transfer pricing<br>positions between Canada and the United States for open years 2012 and after. The Company has presented these financial<br>measures, as well as the financial measures free cash flow, free cash flow to adjusted EBITDA conversion and free cash flow yield,<br>because management uses these measures and believes they are useful to investors, as an indication of the strength of the<br>Company and its ability to generate cash and to evaluate the Company’s cash generation ability relative to its industry competitors. It<br>should not be inferred that the entire free cash flow amount is available for discretionary expenditures. |
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| 4<br>Record results driven by strong operational performance and<br>wide energy spreads in 2022<br>(1) See appendix for reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures<br>(2) Represents cash provided by operating activities (cash from operations) less capital expenditures less distributions to noncontrolling interest; see appendix for<br>reconciliation of free cash flow<br>(3) Excludes the impact of $491M of tax and interest payments related to a dispute between Canadian and U.S. tax authorities dating back to the early 2000s; the<br>Company is filing amended tax returns in the U.S. seeking refunds of related taxes paid<br>EBITDA(1)<br>Net earnings Net earnings per<br>diluted share<br>Adjusted EBITDA(1)<br>$5.88 B<br>FY 2022<br>$2.74 B<br>FY 2021<br>$16.38<br>FY 2022<br>$4.24<br>FY 2021<br>2022 Cash from<br>operations<br>2022 Free cash flow(2)<br> Returned $1.65 billion to shareholders<br>through share repurchases and<br>dividends<br> $3 billion share repurchase program<br>authorized by the Board through 2025<br> Advanced our clean energy initiatives<br>- Signed MOU with JERA Co., Inc. for<br>long-term clean ammonia supply<br>- Collaboration with ExxonMobil on<br>landmark carbon capture and<br>sequestration project<br>- Progressed blue and green ammonia<br>projects<br>$3.86 B<br>Excl. Canada/US tax matter(3)<br>$4.35 B<br>$5.54 B<br>FY 2022<br>$2.17 B<br>FY 2021<br>$3.35 B<br>FY 2022<br>$917 M<br>FY 2021<br>$2.78 B<br>Excl. Canada/US tax matter(3)<br>$3.27 B |
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| 5<br>Financial results – fourth quarter and FY 2022<br>(1) See appendix for reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures<br>(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<br>method. Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas<br>derivatives. For the year ended December 31, 2021, excludes the $112 million gain on net settlement of certain natural gas contracts with suppliers due to Winter<br>Storm Uri in February 2021<br>In millions, except percentages, per MMBtu and<br>EPS Q4 2022 Q4 2021 FY 2022 FY 2021<br>Net sales $ 2,608 $ 2,540 $ 11,186 $ 6,538<br>Gross margin 1,256 1,155 5,861 2,387<br>- As a percentage of net sales 48.2% 45.5% 52.4% 36.5%<br>Net earnings attributable to<br>common stockholders $ 860 $ 705 $ 3,346 $ 917<br>Net earnings per diluted share 4.35 3.27 16.38 4.24<br>EBITDA(1) 1,246 1,188 5,542 2,172<br>Adjusted EBITDA(1) 1,296 1,258 5,880 2,743<br>Diluted weighted-average common shares<br>outstanding 197.4 215.5 204.2 216.2<br>Cost of natural gas used for production in cost of<br>sales(2) (per MMBtu) $ 6.88 $ 6.00 $ 7.18 $ 4.21<br>Average daily market price of natural gas Henry<br>Hub - Louisiana (per MMBtu) 5.55 4.74 6.38 3.82<br>Average daily market price of natural gas National<br>Balancing Point - United Kingdom (per MMBtu) 19.53 29.96 24.56 15.50<br>Depreciation and amortization 198 238 850 888<br>Capital expenditures 134 132 453 514 |
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| 6<br>Strong free cash flow metrics show undervalued equity<br>Attractive free cash flow yield and free cash flow to adjusted EBITDA conversion rate suggest<br>undervalued equity, supporting robust share repurchase program<br>9.7% 8.9% 9.0%<br>14.7%<br>16.7%<br>2018 2019 2020 2021 2022<br>2018-2022 average yield<br>Free Cash Flow Yield(1)<br>(1) Represents annual free cash flow divided by market value of equity (market cap) as of December 31st of each year; see appendix for reconciliation of free cash flow to<br>the most directly comparable GAAP measure and calculation of market cap<br>(2) Represents annual free cash flow divided by annual adjusted EBITDA; see appendix for reconciliations of free cash flow and adjusted EBITDA to the most directly<br>comparable GAAP measures<br>(3) Excludes the impact of $491M of tax and interest payments related to a dispute between Canadian and U.S. tax authorities dating back to the early 2000s; the<br>Company is filing amended tax returns in the U.S. seeking refunds of related taxes paid<br>FCF/Adj EBITDA<br>conversion(2) % 67% 57% 55% 79% 47%<br>56%(3)<br>Excl. Canada/US<br>tax matter $491M 19.6%(3) |
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| 7<br>2.6 6.0(1) 6.0 6.1 6.6(2) 6.6 7.0(3) 8.1(4) 8.1 8.2(5) 8.2 8.2 8.2 7.9(6)<br>All N production numbers based on year end figures per 10-K filings.<br>(1) Beginning in 2010 includes capacity from Terra Industries acquisition<br>(2) Beginning in 2013 includes incremental 34% of Medicine Hat production to reflect<br>CF acquisition of Viterra's interests<br>(3) Beginning in 2015 includes incremental 50% interest in CF Fertilisers UK acquired<br>from Yara<br>(4) Beginning in 2016 excludes nitrogen equivalent of 1.1 million tons of urea and<br>0.58 million tons of UAN under CHS supply agreement and includes expansion<br>project capacity at Donaldsonville and Port Neal<br>(5) Beginning in 2018 includes incremental 15% of Verdigris production to reflect CF’s<br>acquisition of publicly traded TNH units<br>(6) Decrease in production capacity due to Ince plant closure<br>(7) Share count based on end of year common shares outstanding; share count prior<br>to 2015 based on 5-for-1 split-adjusted shares<br>Production Capacity (M nutrient tons)<br>Annual Nitrogen Equivalent Tons per 1,000 Shares Outstanding<br>CF Industries’ Nitrogen Volumes and Shares Outstanding as of Year-end<br>Million Shares Outstanding (7)<br>2009 – 2022 Nitrogen per share CAGR: 10.8%<br>11<br>17 18 19<br>24<br>27<br>30<br>35 35<br>37 38 39 40 41<br>0<br>50<br>100<br>150<br>200<br>250<br>300<br>350<br>400<br>0<br>5<br>10<br>15<br>20<br>25<br>30<br>35<br>40<br>45<br>2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022<br>Capacity growth coupled with share repurchases continue to<br>drive nitrogen participation per share… |
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| 8<br>Annual Free Cash Flow (millions)<br>CF Industries’ Free Cash Flow and Shares Outstanding as of Year-end<br>Shares Outstanding (millions)<br>0<br>50<br>100<br>150<br>200<br>250<br>300<br>350<br>400<br>-$2,000<br>-$1,000<br>$0<br>$1,000<br>$2,000<br>$3,000<br>$4,000<br>2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022<br> …resulting in ~3x free cash flow participation since 2011<br>$682 1,194 2,079 2,376 1,467 1,409 1,204 617 1,631 1,497 1,505 1,231 2,873 3,855<br>(236) (258) (247) (524) (824) (1,809) (2,469) (2,211) (473) (422) (404) (309) (514) (453)<br>(112) (117) (146) (232) (74) (46) (45) (119) (131) (139) (186) (174) (194) (619)<br>$334 819 1,686 1,620 569 (446) (1,310) (1,713) 1,027 936 915 748 2,165 2,783<br>End of year shares 243 356 327 315 279 242 233 233 233 223 216 214 208 196<br>outstanding<br>Cash from Operations<br>Capital expenditures<br>Distributions to<br>noncontrolling interests<br>Free Cash Flow<br>(millions) Non-GAAP reconciliation: Cash from Operations to Free Cash Flow<br>Canada/US tax matter<br>$491M<br>(2)<br>(1) 2017 free cash flow includes a federal tax refund of $815M as a result of the claim to carry back the Company’s 2016 federal net operating loss to<br>prior income tax years<br>(2) 2022 free cash flow includes $491M of tax and interest payments related to a dispute between Canadian and U.S. tax authorities dating back to<br>the early 2000s; the Company is filing amended tax returns in the U.S. seeking refunds of related taxes paid<br>(1) |
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| 9<br>Low stocks-to-use ratios drive higher grain values; stocks<br>expected to require two or more growing seasons to replenish<br>(1) Crop futures prices represent Marketing Year (September – August) average daily settlement of the front month future contracts for 2010/11 through 2021/22; 2022/23F<br>represents forward curve through August 2023<br>Source: USDA, CME, CF<br>Global Coarse Grains Stocks-to-Use Ratio<br>vs Corn Futures Prices(1)<br>Percent<br>$0<br>$1<br>$2<br>$3<br>$4<br>$5<br>$6<br>$7<br>0.0%<br>2.0%<br>4.0%<br>6.0%<br>8.0%<br>10.0%<br>12.0%<br>14.0%<br>16.0%<br>World-ex China<br>Crop Futures Price (RHS)<br>USD per Bushel<br>Global Oilseeds Stocks-to-Use Ratio vs<br>Soybean Futures Prices<br>Percent<br>$0<br>$2<br>$4<br>$6<br>$8<br>$10<br>$12<br>$14<br>$16<br>0%<br>5%<br>10%<br>15%<br>20%<br>25%<br>30%<br>World-ex China<br>Crop Futures Price (RHS)<br>USD per Bushel |
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| 10<br>(1) Advantage per tonne based on annualized costs including settled feedstock prices through January 2022 and from February 2023 to December 2023 based on forward curve and<br>projections as of February 13, 2023; Coal MMBtu price includes efficiency factor of 1.3 (additional coal requires hydrogen yield equivalent to feedstock natural gas)<br>(2) North American production assumed to be 37.2 MMBtu per tonne of ammonia for feedstock and fuel, European production assumed at 37.8 MMBtu per tonne for feedstock and fuel,<br>Chinese production assumed to be 1.2 tonnes of coal and 1300 KWH for feedstock and power<br>(3) Forecast Chinese anthracite coal prices are derived from thermal prices in Wood Mackenzie’s China Coal Short Term Outlook™<br>Note: dotted lines represent forward price curves<br>Source: ICE, Bloomberg, SX Coal, Wood Mackenzie, CF Analysis<br>Energy forward spreads support North American margin<br>advantage in 2023 compared to Europe and Asian producers<br>Global Energy Price 2020-2023F<br>USD/tonne<br>North American Production Margin Advantage(1)<br>0<br>10<br>20<br>30<br>40<br>50<br>60<br>70<br>80<br>90<br>100<br>2020 2021 2022 2023<br>Henry Hub natural gas<br>TTF natural gas<br>Chinese anthracite coal - lump<br>JKM natural gas<br>0<br>200<br>400<br>600<br>800<br>1,000<br>1,200<br>1,400<br>1,600 Ammonia(2) Urea<br>TTF Anthracite(3)<br> ’19 ’20 ’21 ’22F ’23F<br>TTF Anthracite<br>USD/MMBtu<br>Spreads<br>projected to<br>remain wide<br>through<br>2023<br>F<br>The data and information provided by Wood Mackenzie should not be interpreted as advice and you should not rely on it for any purpose. You may not copy or use this data and information except as expressly permitted by Wood<br>Mackenzie in writing. To the fullest extent permitted by law, Wood Mackenzie accepts no responsibility for your use of this data and information except as specified in a written agreement you may have entered into with Wood<br>Mackenzie for the provision of such data and information<br>Versus:<br> ’19 ’20 ’21 ’22F ’23F ‘19 ‘20 ’21 ’22F ’23F ‘19 ’20 ’21 ’22F ’23F |
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| 11<br>Chinese urea export constraints continue to limit volumes<br>available for trade<br>Sources: Industry Publications, CF analysis, 2023E CF estimate<br>0<br>1<br>2<br>3<br>4<br>5<br>6<br>7<br>2017 2018 2019 2020 2021 2022 2023E<br>Chinese Urea Exports<br>Jan-Aug<br>Sep-Dec<br>Million metric tons (MMT)<br>Estimated<br>2-3MMT |
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| 12<br>Resilient import demand in India and Brazil, lower volumes in<br>developing countries in 2022<br>(1) Rest of Asia Includes Southeast Asia and East Asia, excludes India, Pakistan and Bangladesh<br>(2) Rest of Latin America includes Caribbean, Central, and South America, excludes Brazil<br>Source: CRU Urea Market Forecast as of December 16, 2022, India DOF, FAI, Trade Data Monitor, industry publications<br>0<br>2<br>4<br>6<br>8<br>10<br>12<br>2013 2015 2017 2019 2021<br>0<br>2<br>4<br>6<br>8<br>10<br>12<br>2013 2015 2017 2019 2021<br>India Imports Million metric tons Brazil Imports Million metric tons<br>0<br>1<br>2<br>3<br>4<br>5<br>6<br>7<br>8<br>2013 2015 2017 2019 2021<br>0<br>1<br>2<br>3<br>4<br>5<br>6<br>7<br>8<br>2013 2015 2017 2019 2021<br>Rest of Asia(1) Imports<br>Million metric tons<br>Rest of Latin America(2) Imports<br>Million metric tons<br>+36% (6)%<br>(11)% (26)% |
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| 13<br>Capital management<br>Capital structure and<br>allocation<br>Clean energy<br>initiatives<br>Capital expenditures<br> Committed to maintaining investment grade ratings through the cycle<br> Repurchased ~14.9 million shares for $1.35 billion during 2022<br> Company expects to fund blue/green ammonia projects with cash on hand<br> CF Industries’ Board of Directors authorized a new $3 billion share repurchase<br>program through 2025, which will commence upon completion of current program<br> Signed a memorandum of understanding with JERA Co., Inc., Japan’s largest energy<br>generator, regarding the supply of up to 500,000 metric tons per year of clean<br>ammonia beginning in 2027 for the world’s first commercial scale ammonia co-firing<br>operations<br> CF Industries and Mitsui & Co. Ltd. signed a joint development agreement for<br>proposed plans for an export-oriented facility to produce blue ammonia in the U.S. and<br>continue to progress a FEED study. Expected FID on the proposed facility 2H 2023<br> CF Industries has entered into a commercial agreement with ExxonMobil to transport<br>and permanently store up to 2 million tons of CO2 emissions annually from its<br>Donaldsonville Complex<br> Equipment fabrication and site work has begun for installation of the new electrolyzer<br>unit at Donaldsonville; once complete the project will enable the Company to produce<br>~20k tons of green ammonia per year<br> Capital expenditures (capex) in Q4 and FY 2022 were $134 million and $453 million,<br>respectively<br> The Company expects capex for full year 2023 to be in the range of $500-$550 million<br> 2023 capex includes expenditures related to the Company’s clean energy initiatives |
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| 14<br>Tight global supply/demand balance into 2025<br>Global nitrogen<br>price dynamics<br>Global nitrogen<br>supply/demand<br>Global energy<br>differentials<br> Global nitrogen supply/demand balance to remain tight into 2025 due to agriculture-led demand<br>and forward energy curves that point to challenging production economics for producers in<br>Europe and Asia<br> Global nitrogen demand driven by the need to replenish global grain stocks, which has<br>supported high prices for corn, wheat and canola<br> Global nitrogen supply availability loosened in the fourth quarter due to weak industrial demand<br>in Europe and Asia, delayed purchasing in the agriculture sector and a partial recovery of<br>European ammonia operating rates. Management expects global trade flows to continue to<br>adjust to market dynamics that have affected global supply availability over the previous 18<br>months<br> North America: farm economics are expected to remain positive for 2023, supported by strong<br>crop futures prices and improving yields, assuming a return to normal weather conditions<br> India: expected to continue to be one of the world’s largest importers of urea in 2023<br> Brazil: management expects demand for urea imports to remain strong in 2023 due to high crop<br>prices, increases in planted acres and improved farm income levels<br> Europe: higher-than-normal levels of nitrogen imports into Europe expected in 2023 due to<br>lower-than-normal ammonia operating rates in the region<br> China: urea exports remain low due to government measures to promote domestic availability<br>and affordability; 2-3M metric tons expected for export in 2023, returning to 3-5M metric ton<br>range if government measures loosen<br> Russia: ammonia exports were significantly lower in 2022 compared to prior years due to<br>Russia’s invasion of Ukraine; exports of other nitrogen products at near-normal levels<br> Forward energy curves continue to suggest that wider differentials between North America and<br>Europe/Asia will persist; supporting significant margin opportunities for low-cost North American<br>producers<br> European production economics continue to favor importing ammonia to manufacture upgraded<br>products for facilities able to do so |
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| 15<br>Significant progress to support our commitment to a Clean<br>Energy Economy<br>Engineering<br>activities<br>progress<br>Expected<br>project<br>completion<br>FEED study commenced<br>FID expected 2H 2023<br>Estimated completion<br>~4 years from FID<br>Signed<br>MOU<br>Potential supply of up to ~500k<br>metric tons/year of<br>clean ammonia to JERA<br>2023 2024 2025 2027<br>Donaldsonville<br>green ammonia<br>Donaldsonville<br>blue ammonia<br>Blue ammonia<br>JV w/Mitsui<br>JERA clean<br>ammonia supply<br>Engineering<br>activities<br>progress<br>Early 2025<br>project start-up<br>Decarbonization Organic Growth Clean Energy Demand<br>Purchased 2.2 billion<br>cubic feet of natural<br>gas certified by MiQ<br>Initiated |
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| 16<br>(1) Source of data: December 16, 2022 CRU Ammonia Database<br>(2) Represents CF Industries historical North American production and CRU’s capacity estimates for CF Industries<br>(3) Calculated by removing CF Industries’ annual reported production and capacity from the CRU data for all North American ammonia production peer group<br>(4) ~0.9 million tons represents the difference between CF Industries’ actual trailing 5-year average ammonia production of 9.2 million tons at 96% of capacity utilization and the 8.3 million tons CF<br>Industries would have produced if operated at the 86% CRU North American benchmark excluding CF Industries<br>Note: CRU North American peer group includes AdvanSix, Austin Powder (US Nitrogen), Carbonair, CF Industries, Chevron, CVR Partners, Dakota Gasification Co, Dyno Nobel, Fortigen, Incitec<br>Pivot, Koch Industries, LSB Industries, LSB Industries/Cherokee Nitrogen, Mississippi Power, Mosiac, Nutrien, OCI N.V., RenTech Nitrogen, Sherritt International Corp, Shoreline Chemical, Simplot,<br>Yara International<br>North American Ammonia Percent of<br>Capacity Utilization (1)<br>5-Year Rolling Avg. Percent of Capacity<br>CF’s 10% greater capacity utilization yields<br>an additional ~0.9 million tons of ammonia<br>annually(4)<br>Outstanding safety performance drives industry leading<br>production capacity utilization<br>0.0<br>0.5<br>1.0<br>1.5<br>2.0<br>2.5<br>3.0<br>3.5<br>4.0<br>4.5<br>2011 2012 2014 2016 2018 2020 2022<br>Total injuries per 200,000 work hours<br>Total Recordable Incident Rate<br>BLS Fertilizer<br>Manufacturing<br>CF<br>Industries<br>CF Industries safety performance greatly<br>exceeds industry average<br>97%<br>96% 96%<br>85%<br>84%<br>86%<br>80%<br>82%<br>84%<br>86%<br>88%<br>90%<br>92%<br>94%<br>96%<br>98%<br>100%<br>Five Years Ending<br>2020<br>Five Years Ending<br>2021<br>Five Years Ending<br>2022<br>CF North<br>America (2)<br>North<br>America<br>Excl. CF (3) |
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| Appendix |
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| CF Industries Adjusted EBITDA sensitivity table<br>Table illustrates the CF Industries business model across a broad range of<br>industry conditions<br>$50/ton urea realized movement implies ~$700M change in EBITDA on an annual basis<br>(1) Based on 2022 sales volumes of approximately 18.3 million product tons, 2022 gas consumption of 331 million MMBtus and 2022 nitrogen product sales price relationships for Ammonia,<br>Urea, AN, and Other and 2021 - 2022 average nitrogen product sales relationship for UAN. Changes in product prices and gas costs are not applied to the CHS minority interest or industrial<br>contracts where CF Industries is naturally hedged against changes in product prices and gas costs<br>(2) Assumes that a $50 per ton change in urea prices is also applied proportionally to all nitrogen products and is equivalent to a $34.78 per ton change in UAN price, $36.96 per ton change in<br>AN price, $89.14 per ton change in ammonia price, and $21.20 per ton change in the price of the Other segment<br>EBITDA Sensitivity to Natural Gas and Urea Prices(1)<br>$ billions CF Realized Natural Gas Cost ($/MMBtu)<br>CF Realized Urea Price ($/ton)(2)<br>2.00 2.50 3.00 3.50 4.00 4.50 5.00 5.50 6.00<br>$300 $2.2 $2.0 $1.9 $1.8 $1.6 $1.5 $1.4 $1.2 $1.1<br>$350 $2.9 $2.7 $2.6 $2.5 $2.3 $2.2 $2.1 $1.9 $1.8<br>$400 $3.6 $3.4 $3.3 $3.2 $3.0 $2.9 $2.8 $2.6 $2.5<br>$450 $4.3 $4.1 $4.0 $3.9 $3.7 $3.6 $3.5 $3.3 $3.2<br>$500 $5.0 $4.8 $4.7 $4.6 $4.4 $4.3 $4.2 $4.0 $3.9<br>$550 $5.6 $5.5 $5.4 $5.3 $5.1 $5.0 $4.9 $4.7 $4.6<br>$600 $6.3 $6.2 $6.1 $6.0 $5.8 $5.7 $5.6 $5.4 $5.3<br>$650 $7.0 $6.9 $6.8 $6.6 $6.5 $6.4 $6.3 $6.1 $6.0 |
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| 19<br>Non-GAAP: reconciliation of net earnings to EBITDA and<br>adjusted EBITDA<br>(1) Loan fee amortization is included in both interest expense – net and depreciation and amortization<br>In millions Q4 2022 Q4 2021 FY 2022 FY 2021<br>Net earnings $ 1,009 $ 859 $ 3,937 $ 1,260<br>Less: Net earnings attributable to noncontrolling interest (149) (154) (591) (343)<br>Net earnings attributable to common stockholders 860 705 3,346 917<br>Interest expense – net (34) 43 279 183<br>Income tax provision 245 226 1,158 283<br>Depreciation and amortization 198 238 850 888<br>Less other adjustments:<br>Depreciation and amortization in noncontrolling interest (22) (23) (87) (95)<br>Loan fee amortization(1) (1) (1) (4) (4)<br>EBITDA $ 1,246 $ 1,188 $ 5,542 $ 2,172<br>Unrealized net mark-to-market loss on natural gas derivatives 80 43 41 25<br>(Gain) loss on foreign currency transactions, including<br>intercompany loans (10) 1 28 6<br>U.K. goodwill impairment - 26 - 285<br>U.K. long-lived and intangible asset impairment - - 239 236<br>U.K. operations restructuring 1 - 19 -<br>Unrealized gain on embedded derivative liability (14) - (14) -<br>Pension settlement loss and curtailment gains – net (7) - 17 -<br>Loss on debt extinguishment - - 8 19<br>Total adjustments 50 70 338 571<br>Adjusted EBITDA $ 1,296 $ 1,258 $ 5,880 $ 2,743 |
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| 20<br>Non-GAAP: reconciliation of net earnings to EBITDA and<br>adjusted EBITDA, continued<br>(1) For the year ended December 31, 2019, amount relates only to CF Industries<br>Nitrogen, LLC (CFN). For the year ended December 31, 2018, amount includes<br>CFN and Terra Nitrogen Company, L.P. (TNCLP), as we purchased the remaining<br>publicly traded common units of TNCLP on April 2, 2018<br>(2) Loan fee amortization is included in both interest expense – net and depreciation<br>and amortization<br>(3) Represents expense incurred due to the deferral of certain plant turnaround<br>activities as a result of the COVID-19 pandemic<br>(4) Represents costs written off upon the cancellation of a project at one of our nitrogen<br>complexes<br>(5) Represents proceeds related to a property insurance claim at one of the Company’s<br>nitrogen complexes<br>(6) Represents a charge in the year ended December 31, 2019 on the books of Point<br>Lisas Nitrogen Limited (PLNL), the Company’s Trinidad joint venture for a tax<br>withholding matter; amount reflects our 50 percent equity interest in PLNL<br>In millions FY 2020 FY 2019 FY 2018<br>Net earnings $ 432 $ 646 $ 428<br>Less: Net earnings attributable to noncontrolling interests (115) (153) (138)<br>Net earnings attributable to common stockholders 317 493 290<br>Interest expense – net 161 217 228<br>Income tax provision 31 126 119<br>Depreciation and amortization 892 875 888<br>Less other adjustments:<br>Depreciation and amortization in noncontrolling interests(1) (80) (82) (87)<br>Loan fee amortization(2) (5) (9) (9)<br>EBITDA $ 1,316 $ 1,620 $ 1,429<br>Unrealized net mark-to-market (gain) loss on natural gas derivatives (6) 14 (13)<br>COVID impact: Special COVID-19 bonus for operational workforce 19 - -<br>COVID impact: Turnaround deferral(3) 7 - -<br>Loss (gain) on foreign currency transactions, including intercompany loans 5 (1) (5)<br>Engineering cost write-off(4) 9 - -<br>Loss on sale of surplus land 2 -<br>Gain on sale of Pine Bend facility - (45) -<br>Property insurance proceeds(5) (2) (15) (10)<br>Costs related to acquisition of TNCLP units - - 2<br>PLNL tax withholding charge(6) - 16 -<br>Loss on debt extinguishment - 21 -<br>Total adjustments 34 (10) (26)<br>Adjusted EBITDA $ 1,350 $ 1,610 $ 1,403 |
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| 21<br>Non-GAAP: reconciliation of cash from operations to<br>free cash flow and free cash flow yield<br>In millions, except percentages, share price, and<br>ratios FY 2018 FY 2019 FY 2020 FY 2021 FY 2022<br>Cash provided by operating activities $ 1,497 $ 1,505 $ 1,231 $ 2,873 $ 3,855<br>Capital expenditures (422) (404) (309) (514) (453)<br>Distributions to noncontrolling interests (139) (186) (174) (194) (619)<br>Free cash flow $ 936 $ 915 $ 748 $ 2,165 $ 2,783<br>Free cash flow yield(1) 9.7% 8.9% 9.0% 14.7% 16.7%<br>Shares outstanding as of period end 222.8 216.0 214.0 207.6 195.6<br>Share price as of period end – US dollars(2) 43.51 47.74 38.71 70.78 85.20<br>Market Cap $ 9,694 $ 10,312 $ 8,284 $ 14,694 $ 16,665<br>Adjusted EBITDA 1,403 1,610 1,350 2,743 5,880<br>Free cash flow to Adjusted EBITDA conversion(3) 67% 57% 55% 79% 47%<br>(1) Represents annual free cash flow divided by market value of equity (market cap) as of December 31st for each year<br>(2) Source Capital IQ<br>(3) Represents annual free cash flow divided by annual adjusted EBITDA<br>(4) Includes the impact of $491M of tax and interest payments related to a dispute between Canadian and U.S. tax authorities dating back to the early 2000s; Cash provided by operating activities, free cash flow,<br>free cash flow yield and free cash flow to adjusted EBITDA conversion excluding the impact of such is $491M is equal to $4.35B, $3.27B, 19.6% and 56%, respectively. The Company is filing amended tax<br>returns in the U.S. seeking refunds of related taxes paid.<br>(4)<br>(4)<br>(4)<br>(4) |
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