CF Industries Holdings, Inc. reports first quarter 2019 net earnings of US$90 million

Overview

CF Industries Holdings, Inc. today announced first quarter 2019 net earnings attributable to common stockholders of US$90 million, or US$0.40/diluted share; EBITDA of US$301 million; and adjusted EBITDA of $305 million. As a result of a net incentive tax credit of US$30 million recognized during the quarter, the company’s first quarter 2019 net earnings of US$0.40/diluted share included a US$0.13/share net income tax benefit. These results compare to first quarter 2018 net earnings attributable to common stockholders of US$63 million, or US$0.27/diluted share; EBITDA of US$302 million; and adjusted EBITDA of US$296 million.

“The CF team’s strong execution, along with generally higher nitrogen prices compared to the year before, helped CF deliver solid results in the first quarter despite lower sales volumes driven by wet and cold weather,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “Looking ahead, we expect a compressed planting season and transportation issues to create logistical challenges in the Corn Belt over the next two months. We believe that our in-region production and extensive transportation and distribution network are tremendous advantages in this environment, enabling us to reliably deliver products to our customers when and where they need it.”

Figure 1. Consolidated results

Sales Overview

Net sales in the first quarter of 2019 were $1,001 million compared to $957 million in the same period last year. The increase was primarily due to higher average selling prices for granular urea, urea ammonium nitrate (UAN) and ammonium nitrate (AN).

Total sales volumes for the first quarter were lower compared to the same period in 2018 as an extended period of wet and cold weather in North America delayed the spring application season, resulting in lower UAN and ammonia sales volumes partially offset by higher granular urea volumes, including higher exports, and higher AN sales volumes in the United Kingdom.

Average selling prices for the first quarter of 2019 were higher year-over-year across most segments due to a tighter global nitrogen supply and demand balance than the prior period.

Cost of sales for the first quarter of 2019 increased slightly compared to the first quarter of 2018 driven primarily by higher realised natural gas costs and higher costs related to plant maintenance partially offset by the impact of lower sales volume.

In the first quarter of 2019, the average cost of natural gas reflected in the company’s cost of sales was US$3.68/MMBtu compared to the average cost of natural gas in cost of sales of US$3.33/MMBtu for the first quarter of 2018. The increase reflects the impact of inventory sold during the quarter that was produced in the fourth quarter of 2018 when natural gas costs were higher.

Looking ahead, the company expects the cost of natural gas for 2019 to be well below 2018 levels. During the first quarter of 2019, the average cost of natural gas at Henry Hub in North America was US$2.89/MMBtu, and the average cost of natural gas at the National Balancing Point in the United Kingdom was US$6.56/MMBtu. This compares to the average cost of natural gas at Henry Hub in North America of $3.02 per MMBtu, and the average cost of natural gas at the National Balancing Point in the United Kingdom of US$8.20/MMBtu in the first quarter of 2018. Through the end of 2019, Henry Hub natural gas futures remain well below US$3.00, and below 2018 costs.

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