CF Industries Holdings, Inc. Reports Record Fourth Quarter Earnings

Tue Feb 19, 2013 4:15pm EST

* Reuters is not responsible for the content in this press release.

http://pdf.reuters.com/htmlnews/8knews.asp?i=43059c3bf0e37541&u=urn:newsml:reuters.com:20130219:nBw197051a

http://www.businesswire.com/news/home/20130219007051/en

Strong Fall Ammonia Season Caps Record Setting 2012
DEERFIELD, Ill.--(Business Wire)--
CF Industries Holdings, Inc. (NYSE: CF): 

Fourth Quarter Highlights

* Record fourth quarter net earnings attributable to common stockholders of
$470.7 million, or $7.40 per diluted share, compared to earnings of $438.9
million, or $6.66 per diluted share, in the fourth quarter of 2011. 
* Record ammonia shipments from several terminals. 
* Announced approval of and began work on $3.8 billion nitrogen expansion
program.

Full Year Highlights

* Record net earnings attributable to common stockholders of $1.8 billion, or
$28.59 per diluted share, compared to earnings of $1.5 billion, or $21.98 per
diluted share, in 2011. 
* Record earnings before interest, taxes, depreciation and amortization (EBITDA)
of $3.3 billion, compared to $3.0 billion in 2011. 
* Record net sales of $6.1 billion and record sales volume of 15.0 million tons.

* Completed 2011 share repurchase program ahead of the expiration date with
repurchase of 3.1 million shares for $500 million. 
* Approved new share repurchase plan of up to $3.0 billion through December 31,
2016. 
* Announced agreement to purchase all of the outstanding interests in Canadian
Fertilizers Limited (CFL) for C$0.9 billion.

Outlook

* High anticipated 2013 corn planting, strong domestic fertilizer demand and
favorable natural gas costs provide a positive operating environment for the
first half of 2013.

CF Industries Holdings, Inc. today reported fourth quarter 2012 net earnings
attributable to common stockholders of $470.7 million, or $7.40 per diluted
share, compared to earnings of $438.9 million, or $6.66 per diluted share, in
the fourth quarter of 2011. Fourth quarter results included $13.1 million of
non-cash pre-tax mark-to-market gains on natural gas and foreign currency
derivatives, which increased after-tax earnings per diluted share by $0.13.
Fourth quarter 2011 results included a $49.7 million non-cash mark-to-market
loss on natural gas derivatives, which reduced after-tax earnings per diluted
share by $0.47. 

EBITDA was $835.2 million in the fourth quarter of 2012, compared to $870.6
million in the fourth quarter of 2011. 

Reported net sales in the fourth quarter were $1.5 billion, down 14 percent from
$1.7 billion in the same period last year. This decrease is due primarily to the
impact of a retroactive modification to the selling price calculation
methodology used for products sold by Canadian Fertilizers Limited (CFL), which
was made in connection with CF Industries` pending acquisition of the
outstanding interests in CFL. This modification impacts the comparability of the
financial results between the two periods1. Fourth quarter as adjusted net sales
were $1.6 billion in 2012, a decrease of 4 percent from the same period last
year, primarily due to lower average selling prices in the phosphate segment. 

1 See explanation under "CF Industries Holdings, Inc.-Selected Financial
Information-Non-GAAP Disclosure Items-CFL Selling Price Modification" in the
tables accompanying this release. To facilitate period-to-period comparisons of
the company`s underlying operating performance, the company is presenting in
this release certain financial information on an adjusted basis as if the
modified selling price calculation methodology had been in effect on January 1,
2011. Financial information referred to in this press release as "adjusted"
refers to items in those tables. 

Fourth quarter 2012 average selling prices in the nitrogen segment compared to
2011 were mixed. Adjusted average ammonia prices and average ammonium nitrate
(AN) prices were higher in the fourth quarter of 2012 compared to 2011 due to
strong fall application demand and a higher proportion of agricultural sales
volume. Adjusted average urea prices and average urea ammonium nitrate solutions
(UAN) prices were lower due to higher imports and lower demand, respectively.
Phosphate average selling prices in the fourth quarter of 2012 declined from the
prior year period due to lower global demand and higher supply from Saudi
Arabia. 

"With a strong ammonia market, favorable natural gas costs and excellent
execution, we again achieved record earnings for a quarter," said Stephen R.
Wilson, chairman and chief executive officer, CF Industries Holdings, Inc.
"Economics for North American corn farmers are exceptionally attractive, and
this led to robust demand for nitrogen products, especially ammonia. As the
leading domestic producer of nitrogen plant nutrients, CF Industries has
responded to this demand, meeting our customers` needs and delivering strong
results for our shareholders." 

Fertilizer markets during the fourth quarter were characterized by strong North
American demand for ammonia and phosphates. Weather that alleviated some
moisture concerns and an early harvest led to brisk fall application of ammonia
on fields across the Midwest and Plains states. Reduced off-shore nitrogen
production due to gas curtailments in several countries offset higher than
expected Chinese urea exports and helped support the global nitrogen market.
Lower phosphate demand in India and South America and higher supply from Saudi
Arabia resulted in weakness in global phosphate prices. 

Full Year Results

For the full year 2012, net earnings attributable to common stockholders were a
record $1.8 billion, or $28.59 per diluted share, compared to $1.5 billion, or
$21.98 per diluted share, in 2011. EBITDA was $3.3 billion in 2012, compared to
$3.0 billion in 2011. Full year results for 2012 included a $74.6 million
non-cash, mark-to-market gain on natural gas and foreign currency derivatives,
$15.2 million of accelerated amortization of capitalized financing fees related
to the termination of the company`s prior credit facility, and a $10.9 million
gain from a change in employee post-retirement benefits. These items
increased/(decreased) after-tax earnings per diluted share by $0.72, ($0.15) and
$0.10, respectively. 

Net sales for the full year 2012 were $6.1 billion, essentially unchanged from
reported net sales for 2011, but represent an increase of 2 percent from 2011
adjusted net sales of $6.0 billion. Nitrogen volume was essentially unchanged at
13.0 million tons for the full year 2012, and phosphate volume increased 6
percent from 1.9 million tons in 2011 to 2.0 million tons in 2012. 

Prices for all of the primary nitrogen products except UAN were higher on
average for the year ended December 31, 2012, compared to the prior year due to
robust demand and tight downstream inventories. UAN average selling prices
decreased from 2011 to 2012 due to lower domestic demand. Phosphate prices were
lower for the full year 2012 as compared to 2011 due to lower demand from India
and increased exports from Saudi Arabia. 

"This was an exceptional year for CF Industries. The company set records for
sales, EBITDA, earnings and earnings per share," stated Wilson. "Our business
generated strong cash flow, which enabled us to complete the $1.5 billion share
repurchase program we had put in place in August 2011, buying back approximately
9.6 million shares under the program. Our belief in the sustainability of robust
margins gave us the confidence to commit an additional $7.7 billion of capital
to strategic priorities including $3.0 billion to a new share repurchase
program, C$0.9 billion to the pending acquisition of CFL`s noncontrolling
interests, and $3.8 billion to our nitrogen capacity expansion projects." 

CF Industries continued to operate its production and distribution assets
exceptionally well. During the year, 4 of the company`s 13 ammonia plants set
production records, and 9 of the company`s 21 ammonia terminals set shipment
records, helping to set an ammonia shipping record for the company. These
records demonstrate CF Industries employees` commitment to operational
excellence in meeting customer needs. 

Capital expenditures for 2012 were $523.5 million, including approximately $120
million of spending for the capacity expansion projects at Donaldsonville and
Port Neal announced in November. 

Nitrogen Segment

Nitrogen segment reported net sales in the fourth quarter 2012 totaled $1.2
billion, a decrease of 16 percent from $1.5 billion in the fourth quarter 2011.
Reported gross margin was $620.0 million in the 2012 fourth quarter, or 51
percent of sales, compared to $786.0 million, or 54 percent of sales, in the
2011 fourth quarter. Nitrogen segment adjusted net sales were $1.4 billion in
the fourth quarter 2012, a decrease of 5 percent from adjusted net sales in the
fourth quarter 2011. Adjusted gross margin was $749.7 million in the 2012 fourth
quarter, or 55 percent of sales, compared to an adjusted gross margin of $742.3
million, or 52 percent of sales, in the 2011 fourth quarter. Cost of sales
decreased 11 percent from $677.1 million in the fourth quarter of 2011 to $605.6
million in 2012 due to lower realized natural gas costs compared to the prior
year period and a $5.0 million non-cash, mark-to-market gain on natural gas
derivatives compared to a $49.7 million loss in the prior year period. 

CF Industries sold 3.3 million tons of ammonia, granular urea, UAN, ammonium
nitrate (AN) and other nitrogen products during the fourth quarter of 2012, down
2 percent from the prior year period. 

In the fourth quarter of 2012, the company sold 905,000 tons of ammonia at a
reported average price of $567 per ton, or an adjusted price of $640, compared
to 874,000 tons at a reported average price of $633 per ton, or an adjusted
price of $609, in the fourth quarter of 2011. The 4 percent increase in volume
resulted from strong fall applications across the U.S. Corn Belt. The 5 percent
increase in adjusted price per ton was due to the tight ammonia market caused by
the robust fall ammonia application season in preparation for high corn
plantings in 2013 coupled with disruptions in supply from off-shore producers.
The company`s ammonia plants in aggregate operated at approximately 98 percent
of rated capacity during the quarter. For the full year, the company sold 2.8
million tons of ammonia at an average price of $602 per ton, compared to 2.7
million tons of ammonia in 2011 at a reported average price of $586 per ton, or
an adjusted average price of $558. 

CF Industries sold 582,000 tons of granular urea at a reported average price of
$291 per ton, or an adjusted average price of $401, in the fourth quarter of
2012, compared to 568,000 tons at a reported average price of $465 per ton, or
an adjusted average price of $426, in 2011. Granular urea volume increased by 2
percent, while the adjusted average price decreased 6 percent year over year due
to higher imports in 2012 as compared to 2011. For the full year, CF Industries
sold 2.6 million tons of urea, about equal to the amount sold in the 2011, but
at a reported average price of $441 per ton in 2012 compared to a reported
average price of $411 per ton, or an adjusted average price of $385, in 2011. 

The company sold 1.5 million tons of UAN in the fourth quarter of 2012, down 5
percent from the fourth quarter of 2011. UAN average realized prices were $307
per ton, compared to $354 per ton in the year-ago quarter. Sales volume declined
due to plant turnaround activity and a shift in production mix favoring higher
margin ammonia sales. The 13 percent lower average price was due to a
year-over-year decline in U.S. demand attributable to abnormally high demand in
the fall of 2011. For the full year 2012 the company sold 6.1 million tons of
UAN at an average price of $308 per ton compared to 6.2 million tons at an
average price of $319 per ton in 2011. 

CF Industries sold 137,000 tons of AN at an average price of $300 per ton in the
fourth quarter of 2012, compared to 198,000 tons at an average price of $258 per
ton in the year-ago quarter. Sales volume decreased as plant turnaround activity
reduced production, while the price per ton increased due to a higher proportion
of agricultural sales. For the full year AN sales volume was down from 953,000
tons in 2011 to 839,000 tons in 2012. 

CF Industries` realized natural gas cost averaged $3.61 per MMBtu in the fourth
quarter of 2012, compared to $4.06 per MMBtu during the fourth quarter of 2011.
Although the winter of 2011 - 2012 was the warmest on record in North America,
December 2012 was actually warmer than December 2011. 

Phosphate Segment

Phosphate net sales totaled $255.8 million, essentially unchanged from $255.3
million in the 2011 fourth quarter. Gross margin was $36.2 million, down 54
percent from $79.2 million in the 2011 fourth quarter. The decrease in gross
margin was due to lower prices and higher phosphate production costs. Gross
margin as a percent of sales was 14 percent, down from 31 percent in the
year-earlier quarter. 

The company sold 509,000 tons of phosphate products in the fourth quarter of
2012 compared to 439,000 tons in the fourth quarter of 2011. During the fourth
quarter of 2012, DAP and MAP average selling prices were $499 and $527 per ton,
respectively, compared to $576 and $604 per ton, respectively, in the prior year
period. The 16 percent increase in volume was due to higher domestic sales to
support strong fall application. Average prices for phosphate declined from the
prior year period due to higher global production and lower off-shore demand. 

CF Industries` Plant City, Florida, Phosphate Complex operated at 89 percent of
capacity during the 2012 fourth quarter. 

For the full year 2012, phosphate segment sales volume of 2.0 million tons was 6
percent higher than in 2011, with domestic volume up 5 percent and export volume
up 8 percent. Exports comprised 38 percent of total phosphate sales volume,
compared to the prior five-year average of 36 percent. Average price
realizations for DAP and MAP in 2012 were approximately 13 percent and 11
percent lower, respectively, than in 2011. 

Full year 2012 phosphate segment sales of $1.0 billion were 7 percent lower than
the previous year due to lower average selling prices. Gross margin for the
segment was $199.7 million, or 20 percent of sales. 

Environmental, Health & Safety Performance

The following company safety milestones were achieved during the fourth quarter
of 2012:

* The Donaldsonville, Louisiana, Nitrogen Complex achieved 6 million hours, or
approximately 10 years, without a lost time accident; 
* The Plant City, Florida, Phosphate Complex achieved 2 million hours, or
approximately 2 years, without a lost time accident; and 
* The Hardee County, Florida, Mine achieved 1.5 million hours, or approximately
3 years, without a lost time accident.

Attainment of these milestones reflects the company`s ongoing programs to
identify hazards before they result in injuries and illustrate CF Industries
employees` commitment to the company`s world-class safety standards. 

Liquidity and Financial Position

At December 31, 2012, CF Industries` cash and cash equivalents totaled $2.3
billion. Long-term debt outstanding was $1.6 billion. 

Dividend Payment

On February 6, 2013, CF Industries` board of directors declared the regular
quarterly dividend of $0.40 per common share. The dividend will be paid on
February 28, 2013, to stockholders of record as of February 19, 2013. 

Outlook

Tight stocks-to-use ratios for corn, wheat and soybeans underpin our expectation
of high crop prices and continue to provide significant economic incentives for
farmers to plant a large number of acres and apply optimal amounts of plant
nutrients. The high prices for corn and other coarse grains are supporting
expectations that growers in North America, Europe, Ukraine and China will plant
very large areas to grain, which should create robust global demand for plant
nutrients, especially nitrogen, during the first half of 2013. A continuation of
high prices for soybeans should lead to a large number of planted acres in South
America again in 2013 and strong demand for phosphates in the first half of the
year in support of that region`s fall fertilization needs. 

CF Industries projects that U.S. farmers will plant 97 million acres of corn in
2013 with a forecasted yield of 160 bushels per acre, compared to actual 2012 of
97 million acres and a yield of 123 bushels per acre. These factors should lead
to corn prices that sustain demand while still allowing farmers to earn
attractive returns. 

The North American nitrogen market is expected to be balanced-to-tight during
the first half of 2013. Demand is expected to be robust due to the anticipated
high number of corn acres to be planted. New nitrogen supply has been limited,
as there have been continued delays in completing a number of domestic and
international nitrogen projects. Additionally, gas curtailments and civil unrest
continue to impact nitrogen production in several regions of the world. 

Midwest ammonia market conditions are expected to be tight-to-balanced during
the first half of 2013. CF Industries` ammonia inventory at the beginning of the
first quarter was near record low due to strong fall shipments. The company`s
production flexibility and storage capacity have enabled it to react quickly to
market needs as it works to replenish ammonia inventory in anticipation of
strong spring demand. 

The North American UAN market is expected to be tight through the spring. Global
UAN demand is benefiting from anticipated robust planting seasons in North
America and Europe. North American UAN imports have been limited, as high prices
and strong demand in Europe and the Ukraine have resulted in nitrogen products
flowing to those markets. Additionally, domestic UAN projects that were expected
to come online by the end of 2012 have been delayed and are not expected to
start up until later in the first half of 2013. CF Industries has experienced
strong interest from customers for spring UAN shipments. 

Healthy demand is expected in the urea market in North America when the spring
application season begins. A large volume of U.S. urea imports is being offset
by lower North American production. 

CF Industries has hedged natural gas costs for approximately 90% of its
anticipated nitrogen production needs through April 2013. The hedges in place as
of the middle of February primarily consist of call options which cap prices
well below $4 per MMBtu. 

The global phosphate market is currently weak but is expected to improve over
the course of the first half of 2013. Seasonally low world demand for phosphate
has led some producers to curtail production. Demand should materialize later in
the first quarter as the North American and European application seasons get
underway, as South American buyers begin purchasing for an expected strong
soybean planting in the fall of 2013, and as India returns to the market after
working through its current inventory. 

"Agricultural market conditions are as attractive today as at any time in recent
history, and give us confidence in the demand outlook for our products," said
Wilson. "With the exceptional advantages provided by our North American assets,
we are well positioned to serve that demand. Our investments to expand our
production capacity will strengthen that position, and enable us to generate
long-term shareholder value." 

Capital expenditures in 2013 for the company`s announced capacity expansion
projects at Donaldsonville, Louisiana, and Port Neal, Iowa, are expected to be
in the range of $1.0 billion to $1.3 billion. Capital expenditures for the
company`s existing facilities are expected to be approximately $450 million. 

Conference Call

CF Industries will hold a conference call to discuss these fourth quarter and
full year results at 10:00 a.m. ET on Wednesday, February 20, 2013. Investors
can access the call and find dial-in information on the Investor Relations
section of the company`s Web site at www.cfindustries.com. 

About CF Industries Holdings, Inc.

CF Industries Holdings, Inc., headquartered in Deerfield, Illinois, through its
subsidiaries is a global leader in manufacturing and distribution of nitrogen
and phosphate products, serving both agricultural and industrial customers. CF
Industries operates world-class nitrogen manufacturing complexes in the central
United States and Canada; conducts phosphate mining and manufacturing operations
in Central Florida; and distributes plant nutrients through a system of
terminals, warehouses, and associated transportation equipment located primarily
in the Midwestern United States. The company also owns 50 percent interests in
GrowHow UK Limited, a plant nutrient manufacturer in the United Kingdom; an
ammonia facility in The Republic of Trinidad and Tobago; and KEYTRADE AG, a
global plant nutrient trading organization headquartered near Zurich,
Switzerland. CF Industries routinely posts investor announcements and additional
information on the company`s website at www.cfindustries.com and encourages
those interested in the company to check there frequently. 

Note Regarding Non-GAAP Financial Measures

The company reports its financial results in accordance with U.S. generally
accepted accounting principles (GAAP). Management believes that EBITDA, a
non-GAAP financial measure, provides additional meaningful information regarding
the company's performance, liquidity and financial strength. Management believes
that the presentation of net sales, nitrogen segment net sales, gross margin,
nitrogen segment gross margin, gross margin percentage, nitrogen segment gross
margin percentage and average selling prices per ton of ammonia and urea on an
as adjusted basis, as if all sales under CFL`s product purchase agreements had
been priced based on the amended pricing calculation methodology (production
cost plus an agreed upon margin) described in the tables accompanying this
release under "CF Industries Holdings, Inc. Selected Financial Information
Non-GAAP Disclosure Items-CFL Selling Price Modifications" beginning January 1,
2011, and the presentation of period-to-period percentage changes in certain of
those adjusted items, all of which adjusted items and percentage changes are
non-GAAP financial measures, provides investors with additional meaningful
information to facilitate period-to-period comparisons of the company`s
underlying operating performance. The adjusted items and percentage changes in
those adjusted items are provided only for the purpose of facilitating
comparisons between the company`s 2012 and 2011 full-year and fourth-quarter
operating performance and do not purport to represent what the actual
consolidated results of operations of the company would have been had the
amendment to the CFL product purchase agreements described in the tables
accompanying this release under "CF Industries Holdings, Inc.-Selected Financial
Information-Non-GAAP Disclosure Items-CFL Selling Price Modifications" been in
effect beginning on January 1, 2011, nor are they necessarily indicative of
future consolidated results of operations. Non-GAAP financial measures should be
viewed in addition to, and not as an alternative for, the company's reported
results prepared in accordance with GAAP. In addition, because not all companies
use identical calculations, EBITDA and the adjusted items and percentage changes
in adjusted items included in this release may not be comparable to similarly
titled measures of other companies. Reconciliations of EBITDA and the adjusted
items to GAAP are provided in the tables accompanying this release under "CF
Industries Holdings, Inc.-Selected Financial Information-Non-GAAP Disclosure
Items." 

Safe Harbor Statement

All statements in this communication, other than those relating to historical
facts, are "forward-looking statements." These forward-looking statements are
not guarantees of future performance and are subject to a number of assumptions,
risks and uncertainties, many of which are beyond our control, which could cause
actual results to differ materially from such statements. Important factors that
could cause actual results to differ materially from our expectations include,
among others: the volatility of natural gas prices in North America; the
cyclical nature of our business and the agricultural sector; the global
commodity nature of our fertilizer products, the impact of global supply and
demand on our selling prices, and the intense global competition from other
fertilizer producers; conditions in the U.S. agricultural industry; reliance on
third party providers of transportation services and equipment; difficulties in
the implementation of a new enterprise resource planning system and risks
associated with cyber security; weather conditions; our ability to complete our
recently announced production capacity expansion projects on schedule as planned
and on budget or at all; risks associated with other expansions of our business,
including unanticipated adverse consequences and the significant resources that
could be required; potential liabilities and expenditures related to
environmental and health and safety laws and regulations; our potential
inability to obtain or maintain required permits and governmental approvals or
to meet financial assurance requirements from governmental authorities; future
regulatory restrictions and requirements related to greenhouse gas emissions;
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; the significant
risks and hazards involved in producing and handling our products against which
we may not be fully insured; our reliance on a limited number of key facilities;
risks associated with joint ventures; acts of terrorism and regulations to
combat terrorism; difficulties in securing the supply and delivery of raw
materials, increases in their costs or delays or interruptions in their
delivery; risks associated with international operations; losses on our
investments in securities; deterioration of global market and economic
conditions; our ability to manage our indebtedness; and loss of key members of
management and professional staff. More detailed information about factors that
may affect our performance may be found in our filings with the Securities and
Exchange Commission, including our most recent periodic reports filed on Form
10-K and Form 10-Q, which are available in the Investor Relations section of the
CF Industries Web site. Forward-looking statements are given only as of the date
of this release and we disclaim any obligation to update or revise the
forward-looking statements, whether as a result of new information, future
events or otherwise, except as required by law.

 CF INDUSTRIES HOLDINGS, INC.                                                                                                                    
 SELECTED FINANCIAL INFORMATION                                                                                                                  
 RESULTS OF OPERATIONS                                                                                                                           
                                                                                                                                                 
                                                      Three months ended                              Twelve months ended                        
                                                      December 31,                                    December 31,                               
                                                           2012                    2011                    2012                    2011          
                                                      (in millions, except per share amounts)                                                    
 Net sales                                            $    1,481.4            $    1,718.4            $    6,104.0            $    6,097.9       
 Cost of sales                                             825.2                   853.2                   2,990.7                 3,202.3       
 Gross margin                                              656.2                   865.2                   3,113.3                 2,895.6       
 Selling, general and administrative expenses              40.2                    36.8                    151.8                   130.0         
 Restructuring and integration costs                       -                       0.2                     -                       4.4           
 Other operating - net                                     7.4                     8.6                     49.1                    20.9          
 Total other operating costs and expenses                  47.6                    45.6                    200.9                   155.3         
 Equity in earnings of operating affiliates                7.5                     9.5                     47.0                    50.2          
 Operating earnings                                        616.1                   829.1                   2,959.4                 2,790.5       
 Interest expense                                          30.4                    32.2                    135.3                   147.2         
 Interest income                                           (2.3     )              (0.2     )              (4.3     )              (1.7     )    
 Other non-operating - net                                 (0.2     )              -                       (1.1     )              (0.6     )    
 Earnings before income taxes and equity                                                                                                         
 in earnings of non-operating affiliates                   588.2                   797.1                   2,829.5                 2,645.6       
 Income tax provision                                      242.2                   301.8                   964.2                   926.5         
 Equity in earnings of non-operating                                                                                                             
 affiliates - net of taxes                                 9.3                     6.9                     58.1                    41.9          
 Net earnings                                              355.3                   502.2                   1,923.4                 1,761.0       
 Less: Net (loss) earnings attributable to                                                                                                       
 noncontrolling interest                                   (115.4   )              63.3                    74.7                    221.8         
 Net earnings attributable to                                                                                                                    
 common stockholders                                  $    470.7              $    438.9              $    1,848.7            $    1,539.2       
                                                                                                                                                 
 Net earnings per share attributable to                                                                                                          
 common stockholders                                                                                                                             
 Basic                                                $    7.48               $    6.71               $    28.94              $    22.18         
 Diluted                                              $    7.40               $    6.66               $    28.59              $    21.98         
                                                                                                                                                 
 Weighted average common shares outstanding                                                                                                      
 Basic                                                     62.9                    65.4                    63.9                    69.4          
 Diluted                                                   63.6                    65.9                    64.7                    70.0          
                                                                                                                                                 


 CF INDUSTRIES HOLDINGS, INC.                                                                              
 SELECTED FINANCIAL INFORMATION                                                                            
 SUMMARIZED BALANCE SHEETS                                                                                 
                                                                                                           
                                                                 December 31,            December 31,      
                                                                 2012                    2011              
                                                                 (in millions)                             
 Assets                                                                                                    
 Current assets:                                                                                           
 Cash and cash equivalents                                       $        2,274.9        $        1,207.0  
 Accounts receivable                                                      217.4                   269.4    
 Inventories - net                                                        277.9                   304.2    
 Deferred income taxes                                                    9.5                     -        
 Other                                                                    27.9                    18.0     
 Total current assets                                                     2,807.6                 1,798.6  
 Property, plant and equipment - net                                      3,900.5                 3,736.0  
 Asset retirement obligation funds                                        200.8                   145.4    
 Investments in and advances to unconsolidated affiliates                 935.6                   928.6    
 Goodwill                                                                 2,064.5                 2,064.5  
 Other assets                                                             257.9                   301.4    
                                                                                                           
 Total assets                                                    $        10,166.9       $        8,974.5  
                                                                                                           
 Liabilities                                                                                               
 Accounts payable and accrued expenses                           $        366.5          $        327.7    
 Income taxes payable                                                     187.1                   128.5    
 Customer advances                                                        380.7                   257.2    
 Notes payable                                                            5.0                     -        
 Deferred income taxes                                                    -                       90.1     
 Distributions payable to noncontrolling interest                         5.3                     149.7    
 Other                                                                    5.6                     78.0     
 Total current liabilities                                                950.2                   1,031.2  
 Notes payable                                                            -                       4.8      
 Long-term debt                                                           1,600.0                 1,613.0  
 Deferred income taxes                                                    938.8                   956.8    
 Other noncurrent liabilities                                             395.7                   435.8    
 Equity                                                                                                    
 Stockholders' equity                                                     5,902.2                 4,547.0  
 Noncontrolling interest                                                  380.0                   385.9    
 Total equity                                                             6,282.2                 4,932.9  
                                                                                                           
 Total liabilities and equity                                    $        10,166.9       $        8,974.5  
                                                                                                           


 CF INDUSTRIES HOLDINGS, INC.                                                                                                                                             
 SELECTED FINANCIAL INFORMATION                                                                                                                                           
 STATEMENTS OF CASH FLOWS                                                                                                                                                 
                                                                                                                                                                          
                                                                                Three months ended                            Twelve months ended                         
                                                                                December 31,                                  December 31,                                
                                                                                     2012                    2011                  2012                    2011           
                                                                                (in millions)                                                                             
 Operating Activities:                                                                                                                                                    
 Net earnings                                                                   $    355.3              $    502.2            $    1,923.4            $    1,761.0        
 Adjustments to reconcile net earnings to net cash                                                                                                                        
 provided by operating activities:                                                                                                                                        
 Depreciation, depletion and amortization                                            101.1                   101.3                 419.8                   416.2          
 Deferred income taxes                                                               (171.2   )              (49.3    )            (138.4   )              (32.9     )    
 Stock compensation expense                                                          3.1                     2.6                   11.9                    10.6           
 Excess tax benefit from stock-based compensation                                    (6.1     )              (21.5    )            (36.1    )              (47.2     )    
 Unrealized (gain) loss on derivatives                                               (17.3    )              49.7                  (78.8    )              77.3           
 Loss on disposal of property, plant and equipment and non-core assets               1.5                     1.4                   5.5                     8.8            
 Undistributed loss (earnings) of affiliates - net                                   44.1                    38.0                  (14.9    )              (13.5     )    
 Changes in:                                                                                                                                                              
 Accounts receivable - net                                                           121.0                   (1.8     )            53.2                    (35.5     )    
 Margin deposits                                                                     -                       (3.0     )            0.8                     1.4            
 Inventories - net                                                                   31.6                    36.6                  34.8                    (38.5     )    
 Accrued income taxes                                                                258.8                   80.4                  58.7                    101.6          
 Accounts payable and accrued expenses                                               (38.5    )              (37.3    )            25.5                    5.2            
 Customer advances                                                                   (236.8   )              (621.1   )            123.3                   (174.3    )    
 Other - net                                                                         (25.3    )              45.6                  (13.1    )              38.7           
 Net cash provided by operating activities                                           421.3                   123.8                 2,375.6                 2,078.9        
 Investing Activities:                                                                                                                                                    
 Additions to property, plant and equipment                                          (262.1   )              (78.0    )            (523.5   )              (247.2    )    
 Proceeds from the sale of property, plant and equipment and non-core assets         5.4                     3.4                   17.0                    54.7           
 Sales and maturities of short-term and auction rate securities                      17.4                    1.0                   48.4                    37.9           
 Deposits to asset retirement obligation funds                                       (53.2    )              (50.4    )            (55.4    )              (50.4     )    
 Other - net                                                                         -                       -                     -                       31.2           
 Net cash used in investing activities                                               (292.5   )              (124.0   )            (513.5   )              (173.8    )    
 Financing Activities:                                                                                                                                                    
 Payments of long-term debt                                                          -                       -                     (13.0    )              (346.0    )    
 Advances from unconsolidated affiliates                                             -                       -                     40.5                    -              
 Repayments of advances from unconsolidated affiliates                               (40.5    )              -                     (40.5    )              -              
 Financing fees                                                                      -                       -                     -                       (1.5      )    
 Purchase of treasury stock                                                          -                       (198.3   )            (500.0   )              (1,000.2  )    
 Dividends paid on common stock                                                      (25.3    )              (26.1    )            (102.7   )              (68.7     )    
 Distributions to noncontrolling interests                                           (19.0    )              (18.3    )            (231.8   )              (145.7    )    
 Issuances of common stock under employee stock plans                                2.0                     1.0                   14.6                    15.5           
 Excess tax benefit from stock-based compensation                                    6.1                     21.5                  36.1                    47.2           
 Net cash used in financing activities                                               (76.7    )              (220.2   )            (796.8   )              (1,499.4  )    
 Effect of exchange rate changes on cash and cash equivalents                        1.5                     1.3                   2.6                     3.6            
 Increase (decrease) in cash and cash equivalents                                    53.6                    (219.1   )            1,067.9                 409.3          
 Cash and cash equivalents at beginning of period                                    2,221.3                 1,426.1               1,207.0                 797.7          
 Cash and cash equivalents at end of period                                     $    2,274.9            $    1,207.0          $    2,274.9            $    1,207.0        
                                                                                                                                                                          


 CF INDUSTRIES HOLDINGS, INC.                                                                                                                                       
 SELECTED FINANCIAL INFORMATION                                                                                                                                     
 NITROGEN SEGMENT DATA                                                                                                                                              
                                                                                                                                                                    
                                                                         Three months ended                              Twelve months ended                        
                                                                         December 31,                                    December 31,                               
                                                                              2012                    2011                    2012                    2011          
                                                                         (in millions, except as noted)                                                             
 Net sales                                                               $    1,225.6            $    1,463.1            $    5,096.6            $    5,012.1       
 Cost of sales                                                                605.6                   677.1                   2,183.0                 2,448.9       
 Gross margin                                                            $    620.0              $    786.0              $    2,913.6            $    2,563.2       
                                                                                                                                                                    
 Gross margin percentage                                                      50.6     %              53.7     %              57.2     %              51.1     %    
                                                                                                                                                                    
 Tons of product sold (in thousands)                                          3,279                   3,344                   12,969                  13,002        
                                                                                                                                                                    
 Sales volumes by product (tons in thousands)                                                                                                                       
 Ammonia                                                                      905                     874                     2,786                   2,668         
 Granular urea                                                                582                     568                     2,593                   2,600         
 UAN                                                                          1,500                   1,586                   6,131                   6,241         
 AN                                                                           137                     198                     839                     953           
 Other nitrogen products                                                      155                     118                     620                     540           
                                                                                                                                                                    
 Average selling prices (dollars per ton)                                                                                                                           
 Ammonia                                                                 $    567                $    633                $    602                $    586           
 Granular urea                                                                291                     465                     441                     411           
 UAN                                                                          307                     354                     308                     319           
 AN                                                                           300                     258                     266                     260           
                                                                                                                                                                    
 Cost of natural gas (dollars per MMBtu) (1)                             $    3.61               $    4.06               $    3.39               $    4.28          
                                                                                                                                                                    
 Average daily market price of natural gas                                                                                                                          
 Henry Hub (dollars per MMBtu)                                           $    3.39               $    3.31               $    2.75               $    3.99          
                                                                                                                                                                    
 Depreciation and amortization                                           $    84.0               $    79.2               $    334.6              $    316.3         
 Capital expenditures                                                    $    238.8              $    60.0               $    431.3              $    177.0         
                                                                                                                                                                    
 Production volume by product (tons in thousands)                                                                                                                   
 Ammonia (2)                                                                  1,752                   1,791                   7,067                   7,244         
 Granular urea                                                                577                     642                     2,560                   2,588         
 UAN (32%)                                                                    1,571                   1,603                   6,027                   6,349         
 AN                                                                           151                     191                     839                     952           


(1) Includes gas purchases and realized gains and losses on gas derivatives. 

(2) Gross ammonia production, including amounts subsequently upgraded on-site
into urea and/or UAN.

                                                                                                                                                                  
 CF INDUSTRIES HOLDINGS, INC.                                                                                                                                     
 SELECTED FINANCIAL INFORMATION                                                                                                                                   
 PHOSPHATE SEGMENT DATA                                                                                                                                           
                                                                                                                                                                  
                                                                           Three months ended                          Twelve months ended                        
                                                                           December 31,                                December 31,                               
                                                                                2012                  2011                  2012                    2011          
                                                                           (in millions, except as noted)                                                         
 Net sales                                                                 $    255.8            $    255.3            $    1,007.4            $    1,085.8       
 Cost of sales                                                                  219.6                 176.1                 807.7                   753.4         
 Gross margin                                                              $    36.2             $    79.2             $    199.7              $    332.4         
                                                                                                                                                                  
 Gross margin percentage                                                        14.2   %              31.0   %              19.8     %              30.6     %    
                                                                                                                                                                  
 Tons of product sold (in thousands)                                            509                   439                   2,035                   1,922         
                                                                                                                                                                  
 Sales volumes by product (tons in thousands)                                                                                                                     
 DAP                                                                            424                   367                   1,611                   1,468         
 MAP                                                                            85                    72                    424                     454           
                                                                                                                                                                  
 Domestic vs. export sales (tons in thousands)                                                                                                                    
 Domestic                                                                       367                   240                   1,254                   1,197         
 Export                                                                         142                   199                   781                     725           
                                                                                                                                                                  
 Average selling prices (dollars per ton)                                                                                                                         
 DAP                                                                       $    499              $    576              $    493                $    565           
 MAP                                                                            527                   604                   502                     565           
                                                                                                                                                                  
 Depreciation, depletion, and amortization                                 $    10.7             $    14.9             $    43.5               $    50.7          
 Capital expenditures                                                      $    17.0             $    12.5             $    64.4               $    52.0          
                                                                                                                                                                  
 Production volume by product (tons in thousands)                                                                                                                 
                                                                                                                                                                  
 Hardee Phosphate Rock Mine                                                                                                                                       
 Phosphate rock                                                                 827                   938                   3,483                   3,504         
                                                                                                                                                                  
 Plant City Phosphate Fertilizer Complex                                                                                                                          
 Sulfuric Acid                                                                  622                   664                   2,530                   2,633         
 Phosphoric acid as P2O5(1)                                                     236                   249                   975                     1,005         
 DAP/MAP                                                                        473                   499                   1,952                   1,997         


(1) P2O5 is the basic measure of the nutrient content in phosphate fertilizer
products.

                                                                                                                                                      
 CF INDUSTRIES HOLDINGS, INC.                                                                                                                         
 SELECTED FINANCIAL INFORMATION                                                                                                                       
 NON-GAAP DISCLOSURE ITEMS                                                                                                                            
                                                                                                                                                      
 Reconciliation of net earnings to EBITDA:                                                                                                            
                                                                                                                                                      
                                                                 Three months ended                        Twelve months ended                        
                                                                 December 31,                              December 31,                               
                                                                      2012                  2011                2012                    2011          
                                                                 (in millions)                                                                        
 Net earnings attributable to common stockholders                $    470.7            $    438.9          $    1,848.7            $    1,539.2       
 Interest expense (income) - net                                      28.1                  32.0                131.0                   145.5         
 Income taxes                                                         241.9                 306.4               963.8                   932.0         
 Depreciation, depletion and amortization                             101.1                 101.3               419.8                   416.2         
 Less: other adjustments                                              (6.6   )              (8.0   )            (43.1    )              (47.2    )    
                                                                                                                                                      
 EBITDA                                                          $    835.2            $    870.6          $    3,320.2            $    2,985.7       


Reconciliation of net earnings to EBITDA:

EBITDA is defined as net earnings attributable to common stockholders plus
interest expense (income)-net, income taxes, and depreciation, depletion and
amortization. Other adjustments include the elimination of loan fee amortization
that is included in both interest and amortization, and the portion of
depreciation that is included in noncontrolling interest. We have presented
EBITDA because management uses the measure to track performance and believes
that it is frequently used by securities analysts, investors and other
interested parties in the evaluation of companies in our industry. 

Net earnings and EBITDA for the three and twelve months ended December 31, 2012
includes $13.1 million and $74.6 million, respectively, of mark-to-market gains
on derivatives. 

Net earnings and EBITDA for the twelve months ended December 31, 2012 include a
$10.9 gain related to a change in employee post-retirement benefits. 

Net earnings and EBITDA for the three and twelve months ended December 31, 2011
include ($0.3) million and $34.8 million, respectively, of impairment charge
related to the permanent shutdown and removal of the methanol plant at our
Woodward, nitrogen complex, $0.2 million and $4.4 million, respectively, of
restructuring and integration costs and a $49.7 million and $77.3 million,
respectively, of mark-to-market losses on derivatives. 

Net earnings and EBITDA for the twelve months ended December 31, 2011 include
$34.5 million of gains on the sale of non-core assets. 

Net earnings, interest expense (income) - net, and depreciation, depletion and
amortization for the twelve months ended December 31, 2012 includes $15.2
million of accelerated amortization of deferred fees related to the termination
of our 2010 Credit Agreement. 

Net earnings, interest expense (income) - net, and depreciation, depletion and
amortization for the twelve months ended December 31, 2011 include $19.9 million
of accelerated amortization of deferred loan fees related to repayments of
certain Terra acquisition financing. 

CFL Selling Price Modifications

CF Industries, Inc. (CF Industries) currently owns 49% of the voting common
shares and 66% of the non-voting preferred shares of Canadian Fertilizers
Limited (CFL), an Alberta, Canada based nitrogen fertilizer manufacturer and
purchases 66% of the production of CFL. Viterra, Inc. (Viterra) holds 34% of the
equity ownership of CFL, purchases the remaining 34% of CFL`s production and
receives a distribution from CFL equal to 34% of the net earnings. CFL is a
variable interest entity that is consolidated in the Company`s financial
statements. 

CF Industries and Viterra purchase nitrogen fertilizer products from CFL under
product purchase agreements. Under the provisions of these product purchase
agreements that were in effect until the fourth quarter of 2012, CFL`s selling
prices were based on market prices. An initial portion of the selling price was
paid based upon production cost plus an agreed-upon margin once title passed as
the product was shipped. The remaining portion of the selling price,
representing the difference between the market price and production cost plus an
agreed-upon margin, was paid after the end of the year. The sales revenue
attributable to this remaining portion of the selling price was accrued on an
interim basis. In the Company`s consolidated financial statements, the net sales
and accounts receivable attributable to CFL are solely generated by transactions
with Viterra, as all transactions with CF Industries are eliminated in
consolidation. 

In the fourth quarter of 2012, the CFL Board of Directors approved an amendment
to the product purchase agreements. The amendment modifies the selling prices
that CFL charges for products sold to Viterra and CF Industries. The modified
selling price is based on production cost plus an agreed-upon margin and is
effective retroactive to January 1, 2012. As a result of the January 1, 2012
effective date of the amendment, the Company has recognized in its fourth
quarter 2012 consolidated statement of operations a reduction in net sales to
Viterra of $129.7 million and a corresponding reduction in net earnings
attributable to the noncontrolling interest to reverse the interim market price
accruals recognized in the first three quarters of 2012. These items had no
impact on the Company`s net earnings attributable to common stockholders, but
they did reduce net sales, gross margin, operating earnings, earnings before
income taxes and net earnings attributable to noncontrolling interest by $129.7
million in the fourth quarter. The selling price modification also had no impact
on the Company`s net cash flows as the selling price modification was entirely
offset by a change in the distributions payable to the noncontrolling interest. 

In order to provide comparable information for the periods presented, the
company has provided certain financial information adjusted as if the modified
CFL pricing calculation methodology had been in effect beginning on January 1,
2011. The following table reflects and adjusts for the impact of the change on
our consolidated net sales, gross margin, gross margin as a percent of sales and
net earnings attributable to noncontrolling interest.

                                                                                                                                    
 CONSOLIDATED RESULTS                  Three months ended                              Twelve months ended                          
                                       December 31,                                    December 31,                                 
                                       2012                    2011                    2012                 2011                    
                                       (in millions, except as noted)                                                               
 Net sales                                                                                                                          
 As reported                           $    1,481.4            $    1,718.4            $     6,104.0        $     6,097.9           
 Impact of selling price adjustment         129.7                   (43.7    )               -                    (142.6   )        
 As adjusted                           $    1,611.1            $    1,674.7            $     6,104.0        $     5,955.3           
 Gross margin                                                                                                                       
 As reported                           $    656.2              $    865.2              $     3,113.3        $     2,895.6           
 Impact of selling price adjustment         129.7                   (43.7    )               -                    (142.6   )        
 As adjusted                           $    785.9              $    821.5              $     3,113.3        $     2,753.0           
 Gross margin percentage                                                                                                            
 As reported                                44.3          %         50.3          %          51.0     %           47.5           %  
 Impact of selling price adjustment         4.5           %         (1.2     )    %          -        %           (1.3     )     %  
 As adjusted                                48.8          %         49.1          %          51.0     %           46.2           %  
 Net earnings attributable to                                                                                                       
 noncontrolling interest                                                                                                            
 As reported                           $    (115.4   )         $    63.3               $     74.7           $     221.8             
 Impact of selling price adjustment         129.7                   (43.7    )               -                    (142.6   )        
 As adjusted                           $    14.3               $    19.6               $     74.7           $     79.2              
                                                                                                                                    


In addition, the table below reflects and adjusts for the impact of the change
in the CFL pricing calculation methodology on nitrogen segment net sales, gross
margin, gross margin as a percent of sales and average selling price per ton of
ammonia and urea.

                                                                                                                                       
 NITROGEN SEGMENT DATA                       Three months ended                             Twelve months ended                        
                                             December 31,                                   December 31,                               
                                             2012                 2011                      2012               2011                    
                                             (in millions, except as noted)                                                            
 Net sales                                                                                                                             
 As reported                                 $     1,225.6        $     1,463.1             $    5,096.6       $    5,012.1            
 Impact of selling price adjustment                129.7                (43.7    )               -                  (142.6   )         
 As adjusted                                 $     1,355.3        $     1,419.4             $    5,096.6       $    4,869.5            
 Gross margin                                                                                                                          
 As reported                                 $     620.0          $     786.0               $    2,913.6       $    2,563.2            
 Impact of selling price adjustment                129.7                (43.7    )               -                  (142.6   )         
 As adjusted                                 $     749.7          $     742.3               $    2,913.6       $    2,420.6            
 Gross margin percentage                                                                                                               
 As reported                                       50.6     %           53.7           %         57.2     %         51.1          %    
 Impact of selling price adjustment                4.7      %           (1.4     )     %         -        %         (1.4     )    %    
 As adjusted                                       55.3     %           52.3           %         57.2     %         49.7          %    
 Average selling prices (dollars per ton)                                                                                              
 Ammonia                                                                                                                               
 As reported                                 $     567            $     633                 $    602           $    586                
 Impact of selling price adjustment                73                   (24      )               -                  (28      )         
 As adjusted                                 $     640            $     609                 $    602           $    558                
 Granular urea                                                                                                                         
 As reported                                 $     291            $     465                 $    441           $    411                
 Impact of selling price adjustment                110                  (39      )               -                  (26      )         
 As adjusted                                 $     401            $     426                 $    441           $    385                
                                                                                                                                       


In August 2012, CF Industries entered into an agreement to acquire Viterra`s
interest in CFL (including its rights under its product purchase agreement with
CFL) for a total purchase price of C$0.9 billion, subject to certain
adjustments. Upon completion of this transaction, CF Industries will be entitled
to purchase 100% of CFL`s nitrogen fertilizer production. The completion of the
transaction is subject to the receipt of regulatory approvals in Canada and
other terms and conditions in the definitive agreements.

CF Industries Holdings, Inc.
Dan Swenson
Senior Director, Investor Relations & Corporate Communications
847-405-2515
dswenson@cfindustries.com



Copyright Business Wire 2013

Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.