CF Industries Holdings, Inc. · NYSE:CF
CF Industries — FY2016 Earnings Presentation
26 slides from CF Industries's earnings presentation, Feb 16, 2017
Slide 1: Safe harbor statement
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
Slide 2: Note regarding non-GAAP financial measures
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, adjusted EBITDA, adjusted net (loss) earnings, and adjusted net (loss) earnings per diluted share, which are
Slide 3: Table of contents
Table of contents Safe Harbor Statement/Note Regarding Non-GAAP Financial Measures 2-3 Overview of Financial Results 5-9 CF Well Positioned for Industry Recovery 10-19 Capital Allocation and Structure 20-21 Appendix 22-27 Cover Page: Donaldsonville Urea Conveyer Belt
Slide 4: Overview of Financial Results
Overview of Financial Results Donaldsonville Urea Warehouse
Slide 5: Fourth quarter and full year 2016 results
Fourth quarter and full year 2016 results See slide 23 for reconciliation of adjusted net (loss) earnings and adjusted net (loss) earnings per diluted share See slide 24 for reconciliation of EBITDA and adjusted EBITDA Q4 net loss of $320 million, or ($1.38) per diluted share. Q4 adjusted net loss o
Slide 6: Financial results - fourth quarter and full year 2016
Financial results - fourth quarter and full year 2016 Depreciation and amortization related to property, plant and equipment was $182 million and $607 million for the three and twelve months ended December 31, 2016, respectively, and $127 million and $444 million for the three and twelve months ende
Slide 7: Items affecting comparability of financial results by category
Items affecting comparability of financial results by category In millions, pre-tax amounts (1) (2) (3) 2016 Q4 2016 Q3 2015 Q4 2015 Q3 Full Year 2016 2016 YTD Full Year 2015 2015 YTD Capacity Expansion Projects: Expansion project depreciation $ 56 $ 13 $ 116 $ 13 Start-up costs – expansion plants 3
Slide 8: Items affecting comparability of financial results by line item
Items affecting comparability of financial results by line item In millions, pre-tax amounts (1) 2016 Q4 2016 Q3 2015 Q4 2015 Q3 Full Year 2016 2016 YTD Full Year 2015 2015 YTD Subtotals of Amounts by Line Item in the Consolidated Statement of Operations: Cost of sales $ (1) $ 110 $ (92) $ 189 Selli
Slide 9: CF Well Positioned for Industry Recovery
Port Neal Nitrogen Complex – Fully Operational CF Well Positioned for Industry Recovery
Slide 10: Market outlook: Chinese marginal producers and rising costs
Chinese Marginal Producers: Rising Costs and Decreased Production Global Production Costs Expected to Increase in 2017 Nitrogen Demand Outlook Market outlook Long-term Recovery Expected in 2018 and Beyond Continued higher crude oil prices have increased effective natural gas costs across Europe and
Slide 11: Reduction of urea operating rates seen worldwide, mostly in China
Reduction of urea operating rates has been seen worldwide, majority of shutdowns have been in China Cumulative Shutdowns reported on a full year, nameplate basis Turndown of Operating Rates includes all reported turndowns in regions which have experienced economic hardship due to selling prices, gas
Slide 12: China Urea Nameplate Capacity Evolution, 2012-2016
China Urea Nameplate Capacity Evolution, 2012-2016 (Million Product Metric Tons) Capacity additions / closures reported on a nameplate basis, actual operating experience well below nameplate, estimated effective 2016 capacity ~86 million metric tons “Other” includes coke-oven gas, oil, and de-oil bi
Slide 13: Expected net new capacity additions well below demand growth post 2017
Expected net new capacity additions well below projected global demand growth post 2017 CF Projected Global Gross Urea Capacity Additions (Thousand Product Metric Tons) Sources: Fertecon, CRU, CF 3% Growth: 5.3M 2% Growth: 3.5M (1) Closures include projections for small amount of distressed capacity
Slide 14: Consistent nitrogen demand growth
China India Other Asia North America Europe Latin America Rest of World Total Nitrogen Consumption 2002-2017(1) (Million Nutrient Metric Tons) Industrial 15-yr CAGR =3.0% Overall 15-yr CAGR=2.3% Agricultural 15-yr CAGR =2.1% (1) 2002-2015 actuals, 2016E, 2017F (2) Assumes capex requirements consiste
Slide 15: U.S. and Canada remain significant importers of nitrogen products
U.S. and Canada combined remain a significant importer of nitrogen products U.S. imports, including from Canada, average approximately 1.8 million tons more than the combined U.S. and Canada import total shown on the chart above Sources: USDOC, TFI, CF Total U.S. and Canada Import Volume(1) (Million
Slide 16: CF has the premier North American network
CF has the premier North American network CF Industries is the largest nitrogen producer in North America with flexible production and output and outstanding domestic and export logistical capability Primarily a pure play nitrogen manufacturing company, focused on North America Largest production ba
Slide 17: Best North American distribution capabilities with a global reach
CF ammonia terminal CF ammonia and UAN terminal Donaldsonville Woodward Verdigris Port Neal Courtright Medicine Hat Yazoo City Terre Haute Mount Vernon Albany Kingston Mines Fremont Garner Pine Bend Peru Aurora Blair Brandon Cowden Frankfort Glenwood Grand Forks Huntington Palmyra Ritzville Rycroft
Slide 18: Capital Allocation and Structure
Port Neal Urea Load Out Capital Allocation and Structure
Slide 19: CF's capital allocation philosophy
CF’s capital allocation philosophy Commitment to investment grade metrics over the long term Pursue growth within strategic fairway, where returns exceed risk-adjusted cost of capital and the investments are cash flow accretive on a per share basis Consistently return excess cash to shareholders in
Slide 20: Appendix
Appendix Donaldsonville Ammonia
Slide 21: Reconciliation of adjusted net (loss) earnings and EPS
23 Three months ended December 31, Twelve months ended December 31, 2016 2015 2016 2015 Amount EPS Impact Amount EPS Impact Amount EPS Impact Amount EPS Impact Net (loss) earnings/EPS attributable to common stockholders(1) $ (320) $(1.38) $ 27 $0.11 $ (277) $(1.19) $ 700 $2.96 Selected items include
Slide 22: EBITDA and adjusted EBITDA reconciliation
24 Includes the tax benefit of $11 million on loss on sale of non-operating equity method investment for the twelve months ended December 31, 2015 Transaction costs include the $150 million termination fee paid by the company to OCI in the second quarter of 2016 as a result of the termination of the
Slide 23: CF has outperformed competitors during strengthening markets
CF has outperformed competitors during strengthening markets Note: assumes dividends reinvested pre-tax Source: Capital IQ as of 2/14/17 Overall Stronger Price Env. Declining Price Env. Beginning of Recovery Jan 2010 – 2/14/17 Jan 10 – Jun 15 Jul 15 – Sep 16 Oct 16 – 2/14/17 CF 122% 272% (60%) 52% A
Slide 24: 2017 urea price range forecast and cost curve
2017 urea price range forecast is ~$210-245 per ton at the US Gulf; 2018 projected higher 2017 Monthly Delivered U.S. Gulf Urea Cost Curve(1)(2) Y-axis: USD/short ton, X-axis: Monthly Production Capacity at 95% Operating Rate, million short tons Assumptions on demand growth, exchange rates, coal, ga
Slide 25: 2017 cost curve assumptions
Location Source 2015 2016 2017F Henry Hub NYMEX 2.63 2.51 3.07 TTF ICE 6.42 4.49 5.47 WEU-Russia Oil Index 7.30 4.35 5.37 Brent Crude NYMEX 54 44 55 Thermal SX Coal / 49 51 68 Anthracite Powder Woodmac 83 78 86 Anthracite 124 115 113 RMB/USD Bloomberg 6.28 6.63 6.85 USD/EUR Bloomberg 1.11 1.11 1.10
Slide 26: 2017 cost curve assumptions
2017 cost curve assumptions Location Source 2015 2016 2017F Gas Prices ($/MMBtu) Henry Hub NYMEX 2.63 2.51 3.07 TTF ICE 6.42 449 5.47 WEU-Russia Oil Index 7.30 4.35 5.37 Oil ($/Bbl) Brent Crude NYMEX 54 44 55 China Coal ($/tonne) Thermal SX Coal / 49 54 68 Anthracite Powder Woodmac 83 78 86 Anthraci
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