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Share Name | Share Symbol | Market | Type |
---|---|---|---|
CF Industries Holdings Inc | NYSE:CF | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.22 | 0.30% | 74.09 | 75.17 | 73.41 | 74.11 | 2,360,741 | 01:00:00 |
|
FORM
|
10-Q
|
(Mark One)
|
|
|
|
☒
|
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
|
OR
|
|||
☐
|
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 |
|
For the transition period from to
|
Delaware
|
|
|
|
|
20-2697511
|
||
(State or other jurisdiction of
incorporation or organization)
|
|
|
|
|
(I.R.S. Employer
Identification No.)
|
||
|
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|
|
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|
|
|
4 Parkway North, Suite 400
|
|
|
|
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60015
|
||
Deerfield,
|
Illinois
|
|
|
|
|
(Zip Code)
|
|
(Address of principal executive offices)
|
|
|
|
|
|
Title of each class
|
|
Trading symbol(s)
|
|
Name of each exchange on which registered
|
common stock, par value $0.01 per share
|
|
CF
|
|
New York Stock Exchange
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
Emerging growth company
|
☐
|
|
|
|||
|
|
||
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||
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||
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||
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||
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||
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||
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|||
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|||
|
|||
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|||
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|||
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||
|
|||
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions, except per share amounts)
|
||||||
Net sales
|
$
|
971
|
|
|
$
|
1,001
|
|
Cost of sales
|
767
|
|
|
781
|
|
||
Gross margin
|
204
|
|
|
220
|
|
||
Selling, general and administrative expenses
|
54
|
|
|
58
|
|
||
Other operating—net
|
6
|
|
|
4
|
|
||
Total other operating costs and expenses
|
60
|
|
|
62
|
|
||
Equity in earnings of operating affiliate
|
3
|
|
|
7
|
|
||
Operating earnings
|
147
|
|
|
165
|
|
||
Interest expense
|
44
|
|
|
60
|
|
||
Interest income
|
(1
|
)
|
|
(4
|
)
|
||
Other non-operating—net
|
—
|
|
|
(1
|
)
|
||
Earnings before income taxes
|
104
|
|
|
110
|
|
||
Income tax provision (benefit)
|
13
|
|
|
(8
|
)
|
||
Net earnings
|
91
|
|
|
118
|
|
||
Less: Net earnings attributable to noncontrolling interest
|
23
|
|
|
28
|
|
||
Net earnings attributable to common stockholders
|
$
|
68
|
|
|
$
|
90
|
|
Net earnings per share attributable to common stockholders:
|
|
|
|
|
|
||
Basic
|
$
|
0.31
|
|
|
$
|
0.40
|
|
Diluted
|
$
|
0.31
|
|
|
$
|
0.40
|
|
Weighted-average common shares outstanding:
|
|
|
|
|
|
||
Basic
|
216.0
|
|
|
223.4
|
|
||
Diluted
|
216.6
|
|
|
224.6
|
|
||
Dividends declared per common share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Net earnings
|
$
|
91
|
|
|
$
|
118
|
|
Other comprehensive (loss) income:
|
|
|
|
|
|
||
Foreign currency translation adjustment—net of taxes
|
(83
|
)
|
|
32
|
|
||
Defined benefit plans—net of taxes
|
9
|
|
|
(2
|
)
|
||
|
(74
|
)
|
|
30
|
|
||
Comprehensive income
|
17
|
|
|
148
|
|
||
Less: Comprehensive income attributable to noncontrolling interest
|
23
|
|
|
28
|
|
||
Comprehensive (loss) income attributable to common stockholders
|
$
|
(6
|
)
|
|
$
|
120
|
|
|
(Unaudited)
|
|
|
||||
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(in millions, except share
and per share amounts)
|
||||||
Assets
|
|
|
|
|
|
||
Current assets:
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
753
|
|
|
$
|
287
|
|
Accounts receivable—net
|
251
|
|
|
242
|
|
||
Inventories
|
379
|
|
|
351
|
|
||
Prepaid income taxes
|
78
|
|
|
71
|
|
||
Other current assets
|
19
|
|
|
23
|
|
||
Total current assets
|
1,480
|
|
|
974
|
|
||
Property, plant and equipment—net
|
7,938
|
|
|
8,170
|
|
||
Investment in affiliate
|
91
|
|
|
88
|
|
||
Goodwill
|
2,346
|
|
|
2,365
|
|
||
Operating lease right-of-use assets
|
287
|
|
|
280
|
|
||
Other assets
|
299
|
|
|
295
|
|
||
Total assets
|
$
|
12,441
|
|
|
$
|
12,172
|
|
Liabilities and Equity
|
|
|
|
|
|
||
Current liabilities:
|
|
|
|
|
|
||
Short-term debt
|
$
|
500
|
|
|
$
|
—
|
|
Accounts payable and accrued expenses
|
378
|
|
|
437
|
|
||
Income taxes payable
|
19
|
|
|
1
|
|
||
Customer advances
|
239
|
|
|
119
|
|
||
Current operating lease liabilities
|
94
|
|
|
90
|
|
||
Other current liabilities
|
5
|
|
|
18
|
|
||
Total current liabilities
|
1,235
|
|
|
665
|
|
||
Long-term debt
|
3,958
|
|
|
3,957
|
|
||
Deferred income taxes
|
1,217
|
|
|
1,246
|
|
||
Operating lease liabilities
|
197
|
|
|
193
|
|
||
Other liabilities
|
431
|
|
|
474
|
|
||
Equity:
|
|
|
|
|
|
||
Stockholders’ equity:
|
|
|
|
|
|
||
Preferred stock—$0.01 par value, 50,000,000 shares authorized
|
—
|
|
|
—
|
|
||
Common stock—$0.01 par value, 500,000,000 shares authorized, 2020—216,610,856 shares issued and 2019—216,023,826 shares issued
|
2
|
|
|
2
|
|
||
Paid-in capital
|
1,313
|
|
|
1,303
|
|
||
Retained earnings
|
1,961
|
|
|
1,958
|
|
||
Treasury stock—at cost, 2020—2,813,869 shares and 2019—0 shares
|
(108
|
)
|
|
—
|
|
||
Accumulated other comprehensive loss
|
(440
|
)
|
|
(366
|
)
|
||
Total stockholders’ equity
|
2,728
|
|
|
2,897
|
|
||
Noncontrolling interest
|
2,675
|
|
|
2,740
|
|
||
Total equity
|
5,403
|
|
|
5,637
|
|
||
Total liabilities and equity
|
$
|
12,441
|
|
|
$
|
12,172
|
|
|
Common Stockholders
|
|
|
|
|
||||||||||||||||||||||||||
|
$0.01 Par
Value
Common
Stock
|
|
Treasury
Stock
|
|
Paid-In
Capital
|
|
Retained
Earnings
|
|
Accumulated
Other
Comprehensive
Loss
|
|
Total
Stockholders’ Equity
|
|
Noncontrolling
Interest
|
|
Total
Equity
|
||||||||||||||||
|
(in millions, except per share amounts)
|
||||||||||||||||||||||||||||||
Balance as of December 31, 2019
|
$
|
2
|
|
|
$
|
—
|
|
|
$
|
1,303
|
|
|
$
|
1,958
|
|
|
$
|
(366
|
)
|
|
$
|
2,897
|
|
|
$
|
2,740
|
|
|
$
|
5,637
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
68
|
|
|
—
|
|
|
68
|
|
|
23
|
|
|
91
|
|
||||||||
Other comprehensive loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(74
|
)
|
|
(74
|
)
|
|
—
|
|
|
(74
|
)
|
||||||||
Purchases of treasury stock
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(100
|
)
|
|
—
|
|
|
(100
|
)
|
||||||||
Acquisition of treasury stock under employee stock plans
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(8
|
)
|
|
—
|
|
|
(8
|
)
|
||||||||
Issuance of $0.01 par value common stock under employee stock plans
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
—
|
|
|
3
|
|
|
—
|
|
|
3
|
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
—
|
|
|
7
|
|
|
—
|
|
|
7
|
|
||||||||
Cash dividends ($0.30 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
(65
|
)
|
|
—
|
|
|
(65
|
)
|
||||||||
Distribution declared to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(88
|
)
|
|
(88
|
)
|
||||||||
Balance as of March 31, 2020
|
$
|
2
|
|
|
$
|
(108
|
)
|
|
$
|
1,313
|
|
|
$
|
1,961
|
|
|
$
|
(440
|
)
|
|
$
|
2,728
|
|
|
$
|
2,675
|
|
|
$
|
5,403
|
|
Balance as of December 31, 2018
|
$
|
2
|
|
|
$
|
(504
|
)
|
|
$
|
1,368
|
|
|
$
|
2,463
|
|
|
$
|
(371
|
)
|
|
$
|
2,958
|
|
|
$
|
2,773
|
|
|
$
|
5,731
|
|
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
90
|
|
|
—
|
|
|
90
|
|
|
28
|
|
|
118
|
|
||||||||
Other comprehensive income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
30
|
|
|
30
|
|
|
—
|
|
|
30
|
|
||||||||
Purchases of treasury stock
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(60
|
)
|
|
—
|
|
|
(60
|
)
|
||||||||
Retirement of treasury stock
|
—
|
|
|
504
|
|
|
(65
|
)
|
|
(439
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Acquisition of treasury stock under employee stock plans
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4
|
)
|
|
—
|
|
|
(4
|
)
|
||||||||
Issuance of $0.01 par value common stock under employee stock plans
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
—
|
|
|
2
|
|
|
—
|
|
|
2
|
|
||||||||
Stock-based compensation expense
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
—
|
|
|
6
|
|
|
—
|
|
|
6
|
|
||||||||
Cash dividends ($0.30 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
|
—
|
|
|
(67
|
)
|
||||||||
Distribution declared to noncontrolling interest
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(86
|
)
|
|
(86
|
)
|
||||||||
Balance as of March 31, 2019
|
$
|
2
|
|
|
$
|
(64
|
)
|
|
$
|
1,311
|
|
|
$
|
2,047
|
|
|
$
|
(341
|
)
|
|
$
|
2,955
|
|
|
$
|
2,715
|
|
|
$
|
5,670
|
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Operating Activities:
|
|
|
|
|
|
||
Net earnings
|
$
|
91
|
|
|
$
|
118
|
|
Adjustments to reconcile net earnings to net cash provided by operating activities:
|
|
|
|
|
|
||
Depreciation and amortization
|
211
|
|
|
188
|
|
||
Deferred income taxes
|
(50
|
)
|
|
14
|
|
||
Stock-based compensation expense
|
7
|
|
|
6
|
|
||
Unrealized net (gain) loss on natural gas derivatives
|
(12
|
)
|
|
2
|
|
||
Unrealized (gain) loss on embedded derivative
|
(1
|
)
|
|
1
|
|
||
Loss on disposal of property, plant and equipment
|
—
|
|
|
1
|
|
||
Undistributed earnings of affiliate—net of taxes
|
(4
|
)
|
|
(8
|
)
|
||
Changes in:
|
|
|
|
|
|
||
Accounts receivable—net
|
(12
|
)
|
|
(28
|
)
|
||
Inventories
|
(29
|
)
|
|
(101
|
)
|
||
Accrued and prepaid income taxes
|
10
|
|
|
24
|
|
||
Accounts payable and accrued expenses
|
(47
|
)
|
|
(65
|
)
|
||
Customer advances
|
120
|
|
|
152
|
|
||
Other—net
|
8
|
|
|
2
|
|
||
Net cash provided by operating activities
|
292
|
|
|
306
|
|
||
Investing Activities:
|
|
|
|
|
|
||
Additions to property, plant and equipment
|
(67
|
)
|
|
(80
|
)
|
||
Proceeds from sale of property, plant and equipment
|
—
|
|
|
5
|
|
||
Insurance proceeds for property, plant and equipment
|
2
|
|
|
—
|
|
||
Net cash used in investing activities
|
(65
|
)
|
|
(75
|
)
|
||
Financing Activities:
|
|
|
|
|
|
||
Proceeds from short-term borrowings
|
500
|
|
|
—
|
|
||
Dividends paid on common stock
|
(65
|
)
|
|
(67
|
)
|
||
Distributions to noncontrolling interest
|
(88
|
)
|
|
(86
|
)
|
||
Purchases of treasury stock
|
(100
|
)
|
|
(87
|
)
|
||
Issuances of common stock under employee stock plans
|
3
|
|
|
2
|
|
||
Shares withheld for taxes
|
(8
|
)
|
|
(4
|
)
|
||
Net cash provided by (used in) financing activities
|
242
|
|
|
(242
|
)
|
||
Effect of exchange rate changes on cash and cash equivalents
|
(3
|
)
|
|
—
|
|
||
Increase (decrease) in cash and cash equivalents
|
466
|
|
|
(11
|
)
|
||
Cash and cash equivalents at beginning of period
|
287
|
|
|
682
|
|
||
Cash and cash equivalents at end of period
|
$
|
753
|
|
|
$
|
671
|
|
|
Ammonia
|
|
Granular
Urea |
|
UAN
|
|
AN
|
|
Other
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Three months ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
North America
|
$
|
154
|
|
|
$
|
331
|
|
|
$
|
230
|
|
|
$
|
46
|
|
|
$
|
59
|
|
|
$
|
820
|
|
Europe and other
|
39
|
|
|
6
|
|
|
5
|
|
|
70
|
|
|
31
|
|
|
151
|
|
||||||
Total revenue
|
$
|
193
|
|
|
$
|
337
|
|
|
$
|
235
|
|
|
$
|
116
|
|
|
$
|
90
|
|
|
$
|
971
|
|
Three months ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
North America
|
$
|
160
|
|
|
$
|
335
|
|
|
$
|
242
|
|
|
$
|
46
|
|
|
$
|
59
|
|
|
$
|
842
|
|
Europe and other
|
27
|
|
|
8
|
|
|
14
|
|
|
81
|
|
|
29
|
|
|
159
|
|
||||||
Total revenue
|
$
|
187
|
|
|
$
|
343
|
|
|
$
|
256
|
|
|
$
|
127
|
|
|
$
|
88
|
|
|
$
|
1,001
|
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions, except per share amounts)
|
||||||
Net earnings attributable to common stockholders
|
$
|
68
|
|
|
$
|
90
|
|
Basic earnings per common share:
|
|
|
|
|
|
||
Weighted-average common shares outstanding
|
216.0
|
|
|
223.4
|
|
||
Net earnings attributable to common stockholders
|
$
|
0.31
|
|
|
$
|
0.40
|
|
Diluted earnings per common share:
|
|
|
|
|
|
||
Weighted-average common shares outstanding
|
216.0
|
|
|
223.4
|
|
||
Dilutive common shares—stock-based awards
|
0.6
|
|
|
1.2
|
|
||
Diluted weighted-average shares outstanding
|
216.6
|
|
|
224.6
|
|
||
Net earnings attributable to common stockholders
|
$
|
0.31
|
|
|
$
|
0.40
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Finished goods
|
$
|
336
|
|
|
$
|
311
|
|
Raw materials, spare parts and supplies
|
43
|
|
|
40
|
|
||
Total inventories
|
$
|
379
|
|
|
$
|
351
|
|
|
March 31,
2020 |
|
December 31,
2019 |
||||
|
(in millions)
|
||||||
Land
|
$
|
70
|
|
|
$
|
71
|
|
Machinery and equipment
|
12,243
|
|
|
12,338
|
|
||
Buildings and improvements
|
888
|
|
|
890
|
|
||
Construction in progress
|
242
|
|
|
236
|
|
||
Property, plant and equipment(1)
|
13,443
|
|
|
13,535
|
|
||
Less: Accumulated depreciation and amortization
|
5,505
|
|
|
5,365
|
|
||
Property, plant and equipment—net
|
$
|
7,938
|
|
|
$
|
8,170
|
|
(1)
|
As of March 31, 2020 and December 31, 2019, we had property, plant and equipment that was accrued but unpaid of approximately $36 million and $42 million, respectively. As of March 31, 2019 and December 31, 2018, we had property, plant and equipment that was accrued but unpaid of $26 million and $48 million, respectively.
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Net capitalized turnaround costs:
|
|
|
|
|
|
||
Beginning balance
|
$
|
246
|
|
|
$
|
252
|
|
Additions
|
7
|
|
|
9
|
|
||
Depreciation
|
(25
|
)
|
|
(30
|
)
|
||
Effect of exchange rate changes
|
(5
|
)
|
|
2
|
|
||
Ending balance
|
$
|
223
|
|
|
$
|
233
|
|
|
Ammonia
|
|
Granular Urea
|
|
UAN
|
|
AN
|
|
Other
|
|
Total
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Balance as of December 31, 2019
|
$
|
587
|
|
|
$
|
828
|
|
|
$
|
576
|
|
|
$
|
302
|
|
|
$
|
72
|
|
|
$
|
2,365
|
|
Effect of exchange rate changes
|
(2
|
)
|
|
(1
|
)
|
|
—
|
|
|
(14
|
)
|
|
(2
|
)
|
|
(19
|
)
|
||||||
Balance as of March 31, 2020
|
$
|
585
|
|
|
$
|
827
|
|
|
$
|
576
|
|
|
$
|
288
|
|
|
$
|
70
|
|
|
$
|
2,346
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||||||||||
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
|
Gross
Carrying
Amount
|
|
Accumulated
Amortization
|
|
Net
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Customer relationships
|
$
|
125
|
|
|
$
|
(46
|
)
|
|
$
|
79
|
|
|
$
|
131
|
|
|
$
|
(45
|
)
|
|
$
|
86
|
|
Trade names
|
30
|
|
|
(7
|
)
|
|
23
|
|
|
31
|
|
|
(7
|
)
|
|
24
|
|
||||||
Total intangible assets
|
$
|
155
|
|
|
$
|
(53
|
)
|
|
$
|
102
|
|
|
$
|
162
|
|
|
$
|
(52
|
)
|
|
$
|
110
|
|
|
Estimated
Amortization
Expense
|
||
|
(in millions)
|
||
Remainder of 2020
|
$
|
6
|
|
2021
|
8
|
|
|
2022
|
8
|
|
|
2023
|
8
|
|
|
2024
|
8
|
|
|
2025
|
8
|
|
|
March 31, 2020
|
||||||||||||||
|
Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
Cash
|
$
|
53
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
53
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
U.S. and Canadian government obligations
|
680
|
|
|
—
|
|
|
—
|
|
|
680
|
|
||||
Other debt securities
|
20
|
|
|
—
|
|
|
—
|
|
|
20
|
|
||||
Total cash and cash equivalents
|
$
|
753
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
753
|
|
Nonqualified employee benefit trusts
|
16
|
|
|
2
|
|
|
—
|
|
|
18
|
|
|
December 31, 2019
|
||||||||||||||
|
Cost Basis
|
|
Unrealized
Gains
|
|
Unrealized
Losses
|
|
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
Cash
|
$
|
59
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
59
|
|
Cash equivalents:
|
|
|
|
|
|
|
|
||||||||
U.S. and Canadian government obligations
|
211
|
|
|
—
|
|
|
—
|
|
|
211
|
|
||||
Other debt securities
|
17
|
|
|
—
|
|
|
—
|
|
|
17
|
|
||||
Total cash and cash equivalents
|
$
|
287
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
287
|
|
Nonqualified employee benefit trusts
|
17
|
|
|
2
|
|
|
—
|
|
|
19
|
|
|
March 31, 2020
|
||||||||||||||
|
Total Fair
Value
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(in millions)
|
||||||||||||||
Cash equivalents
|
$
|
700
|
|
|
$
|
700
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nonqualified employee benefit trusts
|
18
|
|
|
18
|
|
|
—
|
|
|
—
|
|
||||
Embedded derivative liability
|
(19
|
)
|
|
—
|
|
|
(19
|
)
|
|
—
|
|
|
December 31, 2019
|
||||||||||||||
|
Total Fair
Value
|
|
Quoted Prices
in Active
Markets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
||||||||
|
(in millions)
|
||||||||||||||
Cash equivalents
|
$
|
228
|
|
|
$
|
228
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Nonqualified employee benefit trusts
|
19
|
|
|
19
|
|
|
—
|
|
|
—
|
|
||||
Derivative liabilities
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
—
|
|
||||
Embedded derivative liability
|
(20
|
)
|
|
—
|
|
|
(20
|
)
|
|
—
|
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
Carrying
Amount
|
|
Fair Value
|
|
Carrying
Amount
|
|
Fair Value
|
||||||||
|
(in millions)
|
||||||||||||||
Long-term debt
|
$
|
3,958
|
|
|
$
|
3,970
|
|
|
$
|
3,957
|
|
|
$
|
4,295
|
|
|
Three months ended
March 31, |
||||||
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Interest on borrowings(1)
|
$
|
46
|
|
|
$
|
57
|
|
Fees on financing agreements(1)
|
2
|
|
|
3
|
|
||
Interest on tax liabilities(2)
|
(4
|
)
|
|
—
|
|
||
Total interest expense
|
$
|
44
|
|
|
$
|
60
|
|
(1)
|
See Note 12—Financing Agreements for additional information.
|
(2)
|
Interest on tax liabilities for the three months ended March 31, 2020 consists of a reduction in interest accrued on the reserve for unrecognized tax benefits.
|
|
Effective Interest Rate
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Principal
|
|
Carrying Amount (1)
|
|
Principal
|
|
Carrying Amount (1)
|
|||||||||
|
|
|
(in millions)
|
||||||||||||||
Public Senior Notes:
|
|
|
|
|
|
|
|
|
|
||||||||
3.450% due June 2023
|
3.562%
|
|
750
|
|
|
748
|
|
|
750
|
|
|
747
|
|
||||
5.150% due March 2034
|
5.279%
|
|
750
|
|
|
740
|
|
|
750
|
|
|
740
|
|
||||
4.950% due June 2043
|
5.031%
|
|
750
|
|
|
742
|
|
|
750
|
|
|
742
|
|
||||
5.375% due March 2044
|
5.465%
|
|
750
|
|
|
741
|
|
|
750
|
|
|
741
|
|
||||
Senior Secured Notes:
|
|
|
|
|
|
|
|
|
|
||||||||
3.400% due December 2021
|
3.782%
|
|
250
|
|
|
248
|
|
|
250
|
|
|
248
|
|
||||
4.500% due December 2026
|
4.759%
|
|
750
|
|
|
739
|
|
|
750
|
|
|
739
|
|
||||
Total long-term debt
|
|
|
$
|
4,000
|
|
|
$
|
3,958
|
|
|
$
|
4,000
|
|
|
$
|
3,957
|
|
(1)
|
Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $10 million as of both March 31, 2020 and December 31, 2019, and total deferred debt issuance costs were $32 million and $33 million as of March 31, 2020 and December 31, 2019, respectively.
|
|
2020
|
|
2019
|
||||
|
(in millions)
|
||||||
Noncontrolling interest:
|
|
|
|
||||
Balance as of January 1
|
$
|
2,740
|
|
|
$
|
2,773
|
|
Earnings attributable to noncontrolling interest
|
23
|
|
|
28
|
|
||
Declaration of distributions payable
|
(88
|
)
|
|
(86
|
)
|
||
Balance as of March 31
|
$
|
2,675
|
|
|
$
|
2,715
|
|
Distributions payable to noncontrolling interest:
|
|
|
|
||||
Balance as of January 1
|
$
|
—
|
|
|
$
|
—
|
|
Declaration of distributions payable
|
88
|
|
|
86
|
|
||
Distributions to noncontrolling interest
|
(88
|
)
|
|
(86
|
)
|
||
Balance as of March 31
|
$
|
—
|
|
|
$
|
—
|
|
|
Shares
|
|
Amounts
|
|||
|
(in millions)
|
|||||
Shares repurchased in 2019:
|
|
|
|
|||
First quarter
|
1.5
|
|
|
$
|
60
|
|
Second quarter
|
2.7
|
|
|
118
|
|
|
Third quarter
|
1.5
|
|
|
72
|
|
|
Fourth quarter
|
1.9
|
|
|
87
|
|
|
Shares repurchased in 2019
|
7.6
|
|
|
337
|
|
|
Shares repurchased in 2020:
|
|
|
|
|||
First quarter
|
2.6
|
|
|
100
|
|
|
Shares repurchased as of March 31, 2020
|
10.2
|
|
|
$
|
437
|
|
|
Foreign
Currency
Translation
Adjustment
|
|
Unrealized
Gain on
Derivatives
|
|
Defined
Benefit
Plans
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
||||||||
|
(in millions)
|
||||||||||||||
Balance as of December 31, 2018
|
$
|
(250
|
)
|
|
$
|
5
|
|
|
$
|
(126
|
)
|
|
$
|
(371
|
)
|
Effect of exchange rate changes and deferred taxes
|
32
|
|
|
—
|
|
|
(2
|
)
|
|
30
|
|
||||
Balance as of March 31, 2019
|
$
|
(218
|
)
|
|
$
|
5
|
|
|
$
|
(128
|
)
|
|
$
|
(341
|
)
|
|
|
|
|
|
|
|
|
||||||||
Balance as of December 31, 2019
|
$
|
(188
|
)
|
|
$
|
5
|
|
|
$
|
(183
|
)
|
|
$
|
(366
|
)
|
Reclassification to earnings(1)
|
—
|
|
|
—
|
|
|
1
|
|
|
1
|
|
||||
Effect of exchange rate changes and deferred taxes
|
(83
|
)
|
|
—
|
|
|
8
|
|
|
(75
|
)
|
||||
Balance as of March 31, 2020
|
$
|
(271
|
)
|
|
$
|
5
|
|
|
$
|
(174
|
)
|
|
$
|
(440
|
)
|
(1)
|
Reclassifications out of accumulated other comprehensive income (loss) to earnings during the three months ended March 31, 2020 and 2019 were not material.
|
|
Ammonia
|
|
Granular
Urea(1)
|
|
UAN(1)
|
|
AN(1)
|
|
Other(1)
|
|
Consolidated
|
||||||||||||
|
(in millions)
|
||||||||||||||||||||||
Three months ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
$
|
193
|
|
|
$
|
337
|
|
|
$
|
235
|
|
|
$
|
116
|
|
|
$
|
90
|
|
|
$
|
971
|
|
Cost of sales
|
173
|
|
|
224
|
|
|
193
|
|
|
103
|
|
|
74
|
|
|
767
|
|
||||||
Gross margin
|
$
|
20
|
|
|
$
|
113
|
|
|
$
|
42
|
|
|
$
|
13
|
|
|
$
|
16
|
|
|
204
|
|
|
Total other operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
60
|
|
|||||||
Equity in earnings of operating affiliate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3
|
|
|||||||
Operating earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
147
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Three months ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
$
|
187
|
|
|
$
|
343
|
|
|
$
|
256
|
|
|
$
|
127
|
|
|
$
|
88
|
|
|
$
|
1,001
|
|
Cost of sales
|
166
|
|
|
228
|
|
|
195
|
|
|
114
|
|
|
78
|
|
|
781
|
|
||||||
Gross margin
|
$
|
21
|
|
|
$
|
115
|
|
|
$
|
61
|
|
|
$
|
13
|
|
|
$
|
10
|
|
|
220
|
|
|
Total other operating costs and expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
62
|
|
|||||||
Equity in earnings of operating affiliate
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
7
|
|
|||||||
Operating earnings
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
165
|
|
(1)
|
The cost of the products that are upgraded into other products is transferred at cost into the upgraded product results.
|
•
|
Overview of CF Holdings
|
•
|
Our Company
|
•
|
Market Conditions and Current Developments
|
•
|
Items Affecting Comparability of Results
|
•
|
Financial Executive Summary
|
•
|
Results of Consolidated Operations
|
•
|
Operating Results by Business Segment
|
•
|
Liquidity and Capital Resources
|
•
|
Off-Balance Sheet Arrangements
|
•
|
Critical Accounting Policies and Estimates
|
•
|
Recent Accounting Pronouncements
|
•
|
Forward-Looking Statements
|
•
|
five U.S. nitrogen manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Port Neal, Iowa; Yazoo City, Mississippi; Verdigris, Oklahoma; and Woodward, Oklahoma. These facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc. (CHS) owns the remainder. See Note 13—Noncontrolling Interest for additional information on our strategic venture with CHS;
|
•
|
two Canadian nitrogen manufacturing facilities located in Medicine Hat, Alberta (the largest nitrogen complex in Canada) and Courtright, Ontario;
|
•
|
two United Kingdom nitrogen manufacturing facilities located in Billingham and Ince;
|
•
|
an extensive system of terminals and associated transportation equipment located primarily in the Midwestern United States; and
|
•
|
a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago that we account for under the equity method.
|
|
Three Months Ended March 31,
|
||||||||||||||
|
2020
|
|
2019
|
||||||||||||
|
Pre-Tax
|
|
After-Tax
|
|
Pre-Tax
|
|
After-Tax
|
||||||||
|
(in millions)
|
||||||||||||||
Unrealized net mark-to-market (gain) loss on natural gas derivatives(1)
|
$
|
(12
|
)
|
|
$
|
(9
|
)
|
|
$
|
2
|
|
|
$
|
1
|
|
Loss on foreign currency transactions, including intercompany loans(2)
|
18
|
|
|
14
|
|
|
2
|
|
|
1
|
|
||||
Insurance proceeds(2)
|
(10
|
)
|
|
(8
|
)
|
|
—
|
|
|
—
|
|
||||
Louisiana incentive tax credit(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
(30
|
)
|
(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)
|
Included in income tax provision (benefit) in our consolidated statement of operations.
|
•
|
Gross margin decreased by $16 million in the first quarter of 2020 to $204 million as compared to $220 million in the first quarter of 2019. The decrease in gross margin was primarily driven by a 16% decrease in average selling prices, which reduced gross margin by $203 million, partially offset by a 29% decrease in natural gas costs, which increased gross margin by $87 million, and a 15% increase in sales volume, which increased gross margin by $74 million.
|
•
|
Net interest expense decreased by $13 million in the first quarter of 2020 to $43 million as compared to $56 million in the first quarter of 2019. The decrease was due primarily to our redemption in November 2019 of all of the remaining $500 million outstanding principal amount of the 7.125% senior notes due May 2020 (the 2020 Notes) and the redemption in December 2019 of $250 million principal amount, representing 50% of the $500 million principal amount outstanding immediately prior to such redemption, of the 3.400% senior secured notes due December 2021 (the 2021 Notes).
|
•
|
Income tax provision increased by $21 million in the first quarter of 2020 to $13 million as compared to an income tax benefit of $8 million in the first quarter of 2019. The primary driver of the increase relates to an incentive tax credit of $30 million recognized in the first quarter of 2019, which is more fully described in the section above titled “Items Affecting Comparability of Results.”
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(in millions, except per share and per MMBtu)
|
|||||||||||||
Net sales
|
$
|
971
|
|
|
$
|
1,001
|
|
|
$
|
(30
|
)
|
|
(3
|
)%
|
Cost of sales
|
767
|
|
|
781
|
|
|
(14
|
)
|
|
(2
|
)%
|
|||
Gross margin
|
204
|
|
|
220
|
|
|
(16
|
)
|
|
(7
|
)%
|
|||
Gross margin percentage
|
21.0
|
%
|
|
22.0
|
%
|
|
(1.0
|
)%
|
|
|
||||
Selling, general and administrative expenses
|
54
|
|
|
58
|
|
|
(4
|
)
|
|
(7
|
)%
|
|||
Other operating—net
|
6
|
|
|
4
|
|
|
2
|
|
|
50
|
%
|
|||
Total other operating costs and expenses
|
60
|
|
|
62
|
|
|
(2
|
)
|
|
(3
|
)%
|
|||
Equity in earnings of operating affiliate
|
3
|
|
|
7
|
|
|
(4
|
)
|
|
(57
|
)%
|
|||
Operating earnings
|
147
|
|
|
165
|
|
|
(18
|
)
|
|
(11
|
)%
|
|||
Interest expense—net
|
43
|
|
|
56
|
|
|
(13
|
)
|
|
(23
|
)%
|
|||
Other non-operating—net
|
—
|
|
|
(1
|
)
|
|
1
|
|
|
100
|
%
|
|||
Earnings before income taxes
|
104
|
|
|
110
|
|
|
(6
|
)
|
|
(5
|
)%
|
|||
Income tax provision (benefit)
|
13
|
|
|
(8
|
)
|
|
21
|
|
|
N/M
|
|
|||
Net earnings
|
91
|
|
|
118
|
|
|
(27
|
)
|
|
(23
|
)%
|
|||
Less: Net earnings attributable to noncontrolling interest
|
23
|
|
|
28
|
|
|
(5
|
)
|
|
(18
|
)%
|
|||
Net earnings attributable to common stockholders
|
$
|
68
|
|
|
$
|
90
|
|
|
$
|
(22
|
)
|
|
(24
|
)%
|
Diluted net earnings per share attributable to common stockholders
|
$
|
0.31
|
|
|
$
|
0.40
|
|
|
$
|
(0.09
|
)
|
|
(23
|
)%
|
Diluted weighted-average common shares outstanding
|
216.6
|
|
|
224.6
|
|
|
(8.0
|
)
|
|
(4
|
)%
|
|||
Dividends declared per common share
|
$
|
0.30
|
|
|
$
|
0.30
|
|
|
$
|
—
|
|
|
—
|
%
|
Natural gas supplemental data (per MMBtu)
|
|
|
|
|
|
|
|
|||||||
Natural gas costs in cost of sales(1)
|
$
|
2.42
|
|
|
$
|
3.70
|
|
|
$
|
(1.28
|
)
|
|
(35
|
)%
|
Realized derivatives loss (gain) in cost of sales(2)
|
0.19
|
|
|
(0.02
|
)
|
|
0.21
|
|
|
N/M
|
|
|||
Cost of natural gas in cost of sales
|
$
|
2.61
|
|
|
$
|
3.68
|
|
|
$
|
(1.07
|
)
|
|
(29
|
)%
|
Average daily market price of natural gas Henry Hub (Louisiana)
|
$
|
1.88
|
|
|
$
|
2.89
|
|
|
$
|
(1.01
|
)
|
|
(35
|
)%
|
Average daily market price of natural gas National Balancing Point (UK)
|
$
|
3.20
|
|
|
$
|
6.56
|
|
|
$
|
(3.36
|
)
|
|
(51
|
)%
|
Unrealized net mark-to-market (gain) loss on natural gas derivatives
|
$
|
(12
|
)
|
|
$
|
2
|
|
|
$
|
(14
|
)
|
|
N/M
|
|
Depreciation and amortization
|
$
|
211
|
|
|
$
|
188
|
|
|
$
|
23
|
|
|
12
|
%
|
Capital expenditures
|
$
|
67
|
|
|
$
|
80
|
|
|
$
|
(13
|
)
|
|
(16
|
)%
|
Sales volume by product tons (000s)
|
4,688
|
|
|
4,087
|
|
|
601
|
|
|
15
|
%
|
|||
Production volume by product tons (000s):
|
|
|
|
|
|
|
|
|||||||
Ammonia(3)
|
2,670
|
|
|
2,567
|
|
|
103
|
|
|
4
|
%
|
|||
Granular urea
|
1,285
|
|
|
1,306
|
|
|
(21
|
)
|
|
(2
|
)%
|
|||
UAN (32%)
|
1,599
|
|
|
1,637
|
|
|
(38
|
)
|
|
(2
|
)%
|
|||
AN
|
515
|
|
|
482
|
|
|
33
|
|
|
7
|
%
|
(1)
|
Includes the cost of natural gas and related transportation that is included in cost of sales during the period under the first-in, first-out inventory cost method.
|
(2)
|
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.
|
(3)
|
Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.
|
|
Ammonia
|
|
Granular
Urea(1)
|
|
UAN(1)
|
|
AN(1)
|
|
Other(1)
|
|
Consolidated
|
||||||||||||
|
(dollars in millions)
|
||||||||||||||||||||||
Three months ended March 31, 2020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
$
|
193
|
|
|
$
|
337
|
|
|
$
|
235
|
|
|
$
|
116
|
|
|
$
|
90
|
|
|
$
|
971
|
|
Cost of sales
|
173
|
|
|
224
|
|
|
193
|
|
|
103
|
|
|
74
|
|
|
767
|
|
||||||
Gross margin
|
$
|
20
|
|
|
$
|
113
|
|
|
$
|
42
|
|
|
$
|
13
|
|
|
$
|
16
|
|
|
$
|
204
|
|
Gross margin percentage
|
10.4
|
%
|
|
33.5
|
%
|
|
17.9
|
%
|
|
11.2
|
%
|
|
17.8
|
%
|
|
21.0
|
%
|
||||||
Three months ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net sales
|
$
|
187
|
|
|
$
|
343
|
|
|
$
|
256
|
|
|
$
|
127
|
|
|
$
|
88
|
|
|
$
|
1,001
|
|
Cost of sales
|
166
|
|
|
228
|
|
|
195
|
|
|
114
|
|
|
78
|
|
|
781
|
|
||||||
Gross margin
|
$
|
21
|
|
|
$
|
115
|
|
|
$
|
61
|
|
|
$
|
13
|
|
|
$
|
10
|
|
|
$
|
220
|
|
Gross margin percentage
|
11.2
|
%
|
|
33.5
|
%
|
|
23.8
|
%
|
|
10.2
|
%
|
|
11.4
|
%
|
|
22.0
|
%
|
(1)
|
The cost of products that are upgraded into other products is transferred at cost into the upgraded product results.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(dollars in millions, except per ton amounts)
|
|||||||||||||
Net sales
|
$
|
193
|
|
|
$
|
187
|
|
|
$
|
6
|
|
|
3
|
%
|
Cost of sales
|
173
|
|
|
166
|
|
|
7
|
|
|
4
|
%
|
|||
Gross margin
|
$
|
20
|
|
|
$
|
21
|
|
|
$
|
(1
|
)
|
|
(5
|
)%
|
Gross margin percentage
|
10.4
|
%
|
|
11.2
|
%
|
|
(0.8
|
)%
|
|
|
||||
Sales volume by product tons (000s)
|
762
|
|
|
606
|
|
|
156
|
|
|
26
|
%
|
|||
Sales volume by nutrient tons (000s)(1)
|
625
|
|
|
497
|
|
|
128
|
|
|
26
|
%
|
|||
Average selling price per product ton
|
$
|
253
|
|
|
$
|
309
|
|
|
$
|
(56
|
)
|
|
(18
|
)%
|
Average selling price per nutrient ton(1)
|
$
|
309
|
|
|
$
|
376
|
|
|
$
|
(67
|
)
|
|
(18
|
)%
|
Gross margin per product ton
|
$
|
26
|
|
|
$
|
35
|
|
|
$
|
(9
|
)
|
|
(26
|
)%
|
Gross margin per nutrient ton(1)
|
$
|
32
|
|
|
$
|
42
|
|
|
$
|
(10
|
)
|
|
(24
|
)%
|
Depreciation and amortization
|
$
|
39
|
|
|
$
|
29
|
|
|
$
|
10
|
|
|
34
|
%
|
Unrealized net mark-to-market gain on natural gas derivatives
|
$
|
(4
|
)
|
|
$
|
—
|
|
|
$
|
(4
|
)
|
|
N/M
|
|
(1)
|
Ammonia represents 82% nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(dollars in millions, except per ton amounts)
|
|||||||||||||
Net sales
|
$
|
337
|
|
|
$
|
343
|
|
|
$
|
(6
|
)
|
|
(2
|
)%
|
Cost of sales
|
224
|
|
|
228
|
|
|
(4
|
)
|
|
(2
|
)%
|
|||
Gross margin
|
$
|
113
|
|
|
$
|
115
|
|
|
$
|
(2
|
)
|
|
(2
|
)%
|
Gross margin percentage
|
33.5
|
%
|
|
33.5
|
%
|
|
—
|
%
|
|
|
||||
Sales volume by product tons (000s)
|
1,381
|
|
|
1,184
|
|
|
197
|
|
|
17
|
%
|
|||
Sales volume by nutrient tons (000s)(1)
|
635
|
|
|
545
|
|
|
90
|
|
|
17
|
%
|
|||
Average selling price per product ton
|
$
|
244
|
|
|
$
|
290
|
|
|
$
|
(46
|
)
|
|
(16
|
)%
|
Average selling price per nutrient ton(1)
|
$
|
531
|
|
|
$
|
629
|
|
|
$
|
(98
|
)
|
|
(16
|
)%
|
Gross margin per product ton
|
$
|
82
|
|
|
$
|
97
|
|
|
$
|
(15
|
)
|
|
(15
|
)%
|
Gross margin per nutrient ton(1)
|
$
|
178
|
|
|
$
|
211
|
|
|
$
|
(33
|
)
|
|
(16
|
)%
|
Depreciation and amortization
|
$
|
72
|
|
|
$
|
66
|
|
|
$
|
6
|
|
|
9
|
%
|
Unrealized net mark-to-market (gain) loss on natural gas derivatives
|
$
|
(4
|
)
|
|
$
|
1
|
|
|
$
|
(5
|
)
|
|
N/M
|
|
(1)
|
Granular urea represents 46% nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(dollars in millions, except per ton amounts)
|
|||||||||||||
Net sales
|
$
|
235
|
|
|
$
|
256
|
|
|
$
|
(21
|
)
|
|
(8
|
)%
|
Cost of sales
|
193
|
|
|
195
|
|
|
(2
|
)
|
|
(1
|
)%
|
|||
Gross margin
|
$
|
42
|
|
|
$
|
61
|
|
|
$
|
(19
|
)
|
|
(31
|
)%
|
Gross margin percentage
|
17.9
|
%
|
|
23.8
|
%
|
|
(5.9
|
)%
|
|
|
||||
Sales volume by product tons (000s)
|
1,390
|
|
|
1,268
|
|
|
122
|
|
|
10
|
%
|
|||
Sales volume by nutrient tons (000s)(1)
|
436
|
|
|
396
|
|
|
40
|
|
|
10
|
%
|
|||
Average selling price per product ton
|
$
|
169
|
|
|
$
|
202
|
|
|
$
|
(33
|
)
|
|
(16
|
)%
|
Average selling price per nutrient ton(1)
|
$
|
539
|
|
|
$
|
646
|
|
|
$
|
(107
|
)
|
|
(17
|
)%
|
Gross margin per product ton
|
$
|
30
|
|
|
$
|
48
|
|
|
$
|
(18
|
)
|
|
(38
|
)%
|
Gross margin per nutrient ton(1)
|
$
|
96
|
|
|
$
|
154
|
|
|
$
|
(58
|
)
|
|
(38
|
)%
|
Depreciation and amortization
|
$
|
52
|
|
|
$
|
46
|
|
|
$
|
6
|
|
|
13
|
%
|
Unrealized net mark-to-market (gain) loss on natural gas derivatives
|
$
|
(3
|
)
|
|
$
|
1
|
|
|
$
|
(4
|
)
|
|
N/M
|
|
(1)
|
UAN represents between 28% and 32% of nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(dollars in millions, except per ton amounts)
|
|||||||||||||
Net sales
|
$
|
116
|
|
|
$
|
127
|
|
|
$
|
(11
|
)
|
|
(9
|
)%
|
Cost of sales
|
103
|
|
|
114
|
|
|
(11
|
)
|
|
(10
|
)%
|
|||
Gross margin
|
$
|
13
|
|
|
$
|
13
|
|
|
$
|
—
|
|
|
—
|
%
|
Gross margin percentage
|
11.2
|
%
|
|
10.2
|
%
|
|
1.0
|
%
|
|
|
||||
Sales volume by product tons (000s)
|
547
|
|
|
501
|
|
|
46
|
|
|
9
|
%
|
|||
Sales volume by nutrient tons (000s)(1)
|
184
|
|
|
166
|
|
|
18
|
|
|
11
|
%
|
|||
Average selling price per product ton
|
$
|
212
|
|
|
$
|
253
|
|
|
$
|
(41
|
)
|
|
(16
|
)%
|
Average selling price per nutrient ton(1)
|
$
|
630
|
|
|
$
|
765
|
|
|
$
|
(135
|
)
|
|
(18
|
)%
|
Gross margin per product ton
|
$
|
24
|
|
|
$
|
26
|
|
|
$
|
(2
|
)
|
|
(8
|
)%
|
Gross margin per nutrient ton(1)
|
$
|
71
|
|
|
$
|
78
|
|
|
$
|
(7
|
)
|
|
(9
|
)%
|
Depreciation and amortization
|
$
|
26
|
|
|
$
|
22
|
|
|
$
|
4
|
|
|
18
|
%
|
Unrealized net mark-to-market gain on natural gas derivatives
|
$
|
(1
|
)
|
|
$
|
—
|
|
|
$
|
(1
|
)
|
|
N/M
|
|
(1)
|
AN represents between 29% and 35% of nitrogen content. Nutrient tons represent the tons of nitrogen within the product tons.
|
•
|
Diesel exhaust fluid (DEF) is an aqueous urea solution typically made with 32.5% or 50% high-purity urea and the remainder deionized water.
|
•
|
Urea liquor is a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate.
|
•
|
Nitric acid is a nitrogen-based industrial product.
|
•
|
Compound fertilizer products (NPKs) are granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.
|
|
Three Months Ended March 31,
|
|||||||||||||
|
2020
|
|
2019
|
|
2020 v. 2019
|
|||||||||
|
(dollars in millions, except per ton amounts)
|
|||||||||||||
Net sales
|
$
|
90
|
|
|
$
|
88
|
|
|
$
|
2
|
|
|
2
|
%
|
Cost of sales
|
74
|
|
|
78
|
|
|
(4
|
)
|
|
(5
|
)%
|
|||
Gross margin
|
$
|
16
|
|
|
$
|
10
|
|
|
$
|
6
|
|
|
60
|
%
|
Gross margin percentage
|
17.8
|
%
|
|
11.4
|
%
|
|
6.4
|
%
|
|
|
||||
Sales volume by product tons (000s)
|
608
|
|
|
528
|
|
|
80
|
|
|
15
|
%
|
|||
Sales volume by nutrient tons (000s)(1)
|
120
|
|
|
103
|
|
|
17
|
|
|
17
|
%
|
|||
Average selling price per product ton
|
$
|
148
|
|
|
$
|
167
|
|
|
$
|
(19
|
)
|
|
(11
|
)%
|
Average selling price per nutrient ton(1)
|
$
|
750
|
|
|
$
|
854
|
|
|
$
|
(104
|
)
|
|
(12
|
)%
|
Gross margin per product ton
|
$
|
26
|
|
|
$
|
19
|
|
|
$
|
7
|
|
|
37
|
%
|
Gross margin per nutrient ton(1)
|
$
|
133
|
|
|
$
|
97
|
|
|
$
|
36
|
|
|
37
|
%
|
Depreciation and amortization
|
$
|
17
|
|
|
$
|
17
|
|
|
$
|
—
|
|
|
—
|
%
|
Unrealized net mark-to-market gain (loss) on natural gas derivatives
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
—
|
%
|
(1)
|
Nutrient tons represent the tons of nitrogen within the product tons.
|
|
Shares
|
|
Amounts
|
|||
|
(in millions)
|
|||||
Shares repurchased in 2019:
|
|
|
|
|||
First quarter
|
1.5
|
|
|
$
|
60
|
|
Second quarter
|
2.7
|
|
|
118
|
|
|
Third quarter
|
1.5
|
|
|
72
|
|
|
Fourth quarter
|
1.9
|
|
|
87
|
|
|
Shares repurchased in 2019
|
7.6
|
|
|
337
|
|
|
Shares repurchased in 2020:
|
|
|
|
|||
First quarter
|
2.6
|
|
|
100
|
|
|
Shares repurchased as of March 31, 2020
|
10.2
|
|
|
$
|
437
|
|
|
Effective Interest Rate
|
|
March 31, 2020
|
|
December 31, 2019
|
||||||||||||
|
|
Principal
|
|
Carrying Amount (1)
|
|
Principal
|
|
Carrying Amount (1)
|
|||||||||
|
|
|
(in millions)
|
||||||||||||||
Public Senior Notes:
|
|
|
|
|
|
|
|
|
|
||||||||
3.450% due June 2023
|
3.562%
|
|
750
|
|
|
748
|
|
|
750
|
|
|
747
|
|
||||
5.150% due March 2034
|
5.279%
|
|
750
|
|
|
740
|
|
|
750
|
|
|
740
|
|
||||
4.950% due June 2043
|
5.031%
|
|
750
|
|
|
742
|
|
|
750
|
|
|
742
|
|
||||
5.375% due March 2044
|
5.465%
|
|
750
|
|
|
741
|
|
|
750
|
|
|
741
|
|
||||
Senior Secured Notes:
|
|
|
|
|
|
|
|
|
|
||||||||
3.400% due December 2021
|
3.782%
|
|
250
|
|
|
248
|
|
|
250
|
|
|
248
|
|
||||
4.500% due December 2026
|
4.759%
|
|
750
|
|
|
739
|
|
|
750
|
|
|
739
|
|
||||
Total long-term debt
|
|
|
$
|
4,000
|
|
|
$
|
3,958
|
|
|
$
|
4,000
|
|
|
$
|
3,957
|
|
(1)
|
Carrying amount is net of unamortized debt discount and deferred debt issuance costs. Total unamortized debt discount was $10 million as of both March 31, 2020 and December 31, 2019, and total deferred debt issuance costs were $32 million and $33 million as of March 31, 2020 and December 31, 2019, respectively.
|
•
|
the impact of the novel coronavirus disease 2019 (COVID-19) pandemic, including measures taken by governmental authorities to slow the spread of the virus, on our business and operations;
|
•
|
the cyclical nature of our business and the impact of global supply and demand on our selling prices;
|
•
|
the global commodity nature of our fertilizer products, the conditions in the international market for nitrogen products, and the intense global competition from other fertilizer producers;
|
•
|
conditions in the United States, Europe and other agricultural areas;
|
•
|
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 our products against which we may not be fully insured;
|
•
|
our ability to manage our indebtedness and any additional indebtedness that may be incurred;
|
•
|
our ability to maintain compliance with covenants under our revolving credit agreement and the agreements governing our indebtedness;
|
•
|
downgrades of our credit ratings;
|
•
|
risks associated with cyber security;
|
•
|
weather conditions;
|
•
|
risks associated with changes in tax laws and disagreements with taxing authorities;
|
•
|
our 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 our 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 our forward sales programs;
|
•
|
risks involving derivatives and the effectiveness of our risk measurement and hedging activities;
|
•
|
risks associated with the operation or management of the CHS strategic venture, risks and uncertainties relating to the market prices of the fertilizer products that are the subject of our 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 our other business relationships;
|
•
|
risks associated with our PLNL joint venture;
|
•
|
acts of terrorism and regulations to combat terrorism;
|
•
|
risks associated with international operations; and
|
•
|
deterioration of global market and economic conditions.
|
|
Issuer Purchases of Equity Securities
|
||||||||||||
Period
|
Total
number
of shares
(or units)
purchased
|
|
Average
price paid
per share
(or unit)(1)
|
|
Total number of
shares (or units)
purchased as part of
publicly announced
plans or programs(2)
|
|
Maximum number (or
approximate dollar
value) of shares (or
units) that may yet be
purchased under the
plans or programs
(in thousands)(2)
|
||||||
January 1, 2020 - January 31, 2020
|
82,721
|
|
(3)
|
$
|
46.40
|
|
|
—
|
|
|
$
|
663,407
|
|
February 1, 2020 - February 29, 2020
|
2,092,349
|
|
(4)
|
38.24
|
|
|
2,092,035
|
|
|
583,407
|
|
||
March 1, 2020 - March 31, 2020
|
638,799
|
|
(5)
|
37.84
|
|
|
529,358
|
|
|
563,407
|
|
||
Total
|
2,813,869
|
|
|
$
|
38.39
|
|
|
2,621,393
|
|
|
|
|
(1)
|
Average price paid per share of CF Industries Holdings, Inc. (CF Holdings) common stock repurchased under the 2019 Stock Repurchase Program, as defined below, is the execution price, excluding commissions paid to brokers.
|
(2)
|
On February 13, 2019, our Board of Directors authorized management to repurchase CF Holdings common stock for a total expenditure of up to $1 billion through December 31, 2021 (the 2019 Stock Repurchase Program). This program is discussed in Note 14—Stockholders’ Equity, in the notes to the unaudited consolidated financial statements included in Part I.
|
(3)
|
The 82,721 shares were withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units.
|
(4)
|
Includes 314 shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units.
|
(5)
|
Includes 109,441 shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units and performance restricted stock units.
|
A list of exhibits filed with this Report on Form 10-Q (or incorporated by reference to exhibits previously filed or furnished) is provided in the Exhibit Index on page 44 of this report.
|
Exhibit No.
|
Description
|
|
|
||
|
||
|
||
|
||
|
||
101
|
|
The following financial information from CF Industries Holdings, Inc.’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, formatted in Inline XBRL (eXtensible Business Reporting Language): (1) Consolidated Statements of Operations, (2) Consolidated Statements of Comprehensive (Loss) Income, (3) Consolidated Balance Sheets, (4) Consolidated Statements of Equity, (5) Consolidated Statements of Cash Flows, and (6) the Notes to Unaudited Consolidated Financial Statements
|
104
|
|
Cover Page Interactive Data File (included in Exhibit 101)
|
|
|
CF INDUSTRIES HOLDINGS, INC.
|
|
|
Date: May 7, 2020
|
By:
|
/s/ W. ANTHONY WILL
|
|
|
|
W. Anthony Will
President and Chief Executive Officer
(Principal Executive Officer)
|
|
Date: May 7, 2020
|
By:
|
/s/ CHRISTOPHER D. BOHN
|
|
|
|
Christopher D. Bohn
Senior Vice President and Chief Financial Officer (Principal Financial Officer)
|
1 Year CF Industries Chart |
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