CF Industries Holdings, Inc. Reports First Half 2021 Net Earnings of $397 Million, EBITDA of $994 Million, Adjusted EBITDA of $997 Million
Nitrogen Price Improvement Driven by Strong Demand, Favorable Energy Spreads
Low Global Grains Stocks-to-Use Ratio Supports Nitrogen Demand Strength Into 2023
Forward Energy Curves Suggest Positive Global Nitrogen Cost Curve Over Next 2 Years
DEERFIELD, Ill.–(BUSINESS WIRE)–CF Industries Holdings, Inc. (NYSE: CF), a leading global manufacturer of hydrogen and nitrogen products, today announced results for its first half and second quarter ended June 30, 2021.
Highlights
- First half net earnings of $397 million(1), or $1.83 per diluted share; EBITDA(2) of $994 million; adjusted EBITDA(2) of $997 million
- Second quarter net earnings of $246 million(1), or $1.14 per diluted share; EBITDA of $596 million; adjusted EBITDA of $599 million
- Trailing twelve month net cash from operating activities of $1.22 billion, free cash flow(3) of $698 million
- Company to redeem $250 million in debt on September 10, 2021
- Mitsui & Co., Inc., one of the leading ammonia marketers in the world, and CF Industries, the world’s largest producer of ammonia, have agreed to jointly explore development of blue ammonia projects in the United States
- Company requested the initiation of antidumping and countervailing duty investigations on imports of UAN from Russia and Trinidad and Tobago (Trinidad) due to the harm the domestic UAN industry has experienced from dumped and unfairly subsidized UAN imports from Russia and Trinidad
“The CF team performed well in the first half of 2021 as strong global nitrogen demand and favorable energy spreads enabled us to generate approximately $1 billion in adjusted EBITDA, nearly 25 percent higher than the first half of 2020,” said Tony Will, president and chief executive officer, CF Industries Holdings, Inc. “These dynamics continue to support global nitrogen prices at levels far above those of a year ago, positioning CF Industries well for the second half of 2021. Looking ahead, we expect positive global nitrogen industry conditions to persist into 2023, underpinned by the need to replenish global grains stocks.”
Operations Overview
The Company continues to operate safely and efficiently across its network. As of June 30, 2021, the 12-month rolling average recordable incident rate was 0.28 incidents per 200,000 work hours, which is significantly better than industry benchmarks.
Gross ammonia production for the second quarter of 2021 was approximately 2.2 million tons, and was approximately 4.7 million tons for the first half of 2021. Management expects gross ammonia production in 2021 will be at the lower end of its previous forecast, approximately 9.5 million tons. This reflects higher maintenance activity in 2021 compared to 2020, which includes activities deferred from 2020 due to the COVID-19 pandemic as well as maintenance related to the plant outages from the forced shut-downs due to natural gas availability issues in February 2021. Additionally, management intends to complete certain maintenance activities originally planned for 2022 in the second half of 2021.
First Half 2021 Financial Results Overview
For the first half of 2021, net earnings attributable to common stockholders were $397 million, or $1.83 per diluted share; EBITDA was $994 million; and adjusted EBITDA was $997 million. These results compare to the first half of 2020 net earnings attributable to common stockholders of $258 million, or $1.20 per diluted share; EBITDA of $786 million; and adjusted EBITDA of $808 million.
Net sales in the first half of 2021 were $2.64 billion compared to $2.18 billion in the first half of 2020. Average selling prices for the first half of 2021 were higher than the first half of 2020 across all segments due to strong global demand as well as decreased global supply availability as higher global energy costs drove lower global operating rates. Sales volumes in the first half of 2021 were lower than the first half of 2020 due to lower supply availability from lower production.
Cost of sales for the first half of 2021 was higher compared to the first half of 2020 due to higher natural gas costs and higher maintenance costs, partially offset by the gain the Company recognized from the net settlement of certain natural gas contracts with suppliers during February 2021 and the impact of lower sales volumes.
In the first half of 2021, the average cost of natural gas reflected in the Company’s cost of sales was $3.24 per MMBtu(4) compared to the average cost of natural gas in cost of sales of $2.20 per MMBtu in the first half of 2020.
Second Quarter 2021 Financial Results Overview
For the second quarter of 2021, net earnings attributable to common stockholders were $246 million, or $1.14 per diluted share; EBITDA was $596 million; and adjusted EBITDA was $599 million. These results compare to second quarter 2020 net earnings attributable to common stockholders of $190 million, or $0.89 per diluted share; EBITDA of $472 million; and adjusted EBITDA of $490 million.
Net sales in the second quarter of 2021 were $1.59 billion compared to $1.20 billion in the second quarter of 2020. Average selling prices for the second quarter of 2021 were higher than the second quarter of 2020 across all segments due to strong global demand as well as decreased global supply availability as higher global energy costs drove lower global operating rates. Sales volumes in the second quarter of 2021 were lower than the second quarter of 2020 due to lower supply availability from lower production.
Cost of sales for the second quarter of 2021 was higher compared to the second quarter of 2020 primarily due to higher natural gas costs and higher maintenance costs, partially offset by the impact of lower sales volumes.
In the second quarter of 2021, the average cost of natural gas reflected in the Company’s cost of sales was $3.25 per MMBtu compared to the average cost of natural gas in cost of sales of $1.86 per MMBtu in the second quarter of 2020.
Capital Management
Capital expenditures in the second quarter and first half of 2021 were $110 million and $181 million, respectively. Management projects capital expenditures for full year 2021 will be in the range of $500 million, reflecting higher maintenance activity in 2021 due to maintenance deferred from 2020 as well as activity that was previously planned to occur in 2022.
On August 9, 2021, the company announced that its wholly owned subsidiary CF Industries, Inc. has elected to redeem on September 10, 2021, $250 million principal amount, representing one-third of the currently outstanding $750 million principal amount, of its 3.450% senior notes due 2023 (the “2023 Notes”) in accordance with the optional redemption provisions provided in the indenture governing the 2023 Notes. Based on market interest rates on August 2, 2021, the Company estimates that the total amount for the partial redemption of the 2023 Notes will be approximately $265 million, including accrued interest.
On July 30, 2021, the Board of Managers of CF Industries Nitrogen, LLC (CFN) approved a semi-annual distribution payment to CHS Inc. (CHS) of $130 million for the distribution period ended June 30, 2021. The distribution was paid on July 30, 2021.
Nitrogen Market Outlook
Management expects the global nitrogen pricing outlook to remain favorable as the need to replenish global coarse grains stocks, increased economic activity, and high energy prices in Europe and Asia should sustain a tighter global nitrogen supply and demand balance into 2023.
Global demand for nitrogen is robust and widespread. The global coarse grains stocks-to-use ratio, excluding China, was the lowest since 2012 entering the 2021 spring planting season, supporting historically high crop near-term and futures prices. This has led to strong demand for nitrogen fertilizer to maximize yield in the 2021 growing season. The Company expects that strong global demand for coarse grains will contribute to persistent low global stocks into 2022, and will require at least two more growing seasons to be replenished. This should support further strong nitrogen demand in upcoming years. Additionally, increased economic activity as the world emerges from the COVID-19 pandemic has supported higher industrial consumption of nitrogen products.
In North America, demand for nitrogen fertilizer has been positive in 2021. The U.S. Department of Agriculture projects that nearly 93 million acres of corn were planted in the U.S. while canola plantings in Canada increased 8 percent compared to 2020 according to Statistics Canada. The Company expects that corn plantings in the U.S. will be at a similar level in 2022 given current projections that 2021 ending stocks will be lower than recent historical norms due to high export demand. Industrial activity also continues to increase, supporting demand for nitrogen products such as diesel exhaust fluid and nitric acid.
Nitrogen requirements in other key regions are expected to remain robust through 2023, driven by continued strong demand for urea imports from India and Brazil. In the near-term, the Company expects India to tender for urea frequently in the second half of this year, supporting global import demand with purchases approaching 10 million metric tons for 2021. Imports of urea to Brazil were 24 percent higher year-over-year through the first six months of 2021. Management projects that urea imports to Brazil will remain substantial through the end of the year supported by higher crop prices, increased planted corn acres and improved farm incomes.
Energy prices in Europe and Asia have increased significantly from the lows of 2020 and returned to sizable differentials compared to Henry Hub natural gas prices in North America. This has steepened the global nitrogen cost curve and increased margin opportunities for low-cost North American producers. Forward curves suggest that favorable energy spreads will persist throughout 2022 and into 2023.
Clean Energy Initiatives
The Company continues to advance its plans to support the global hydrogen and clean fuel economy, which is expected to grow significantly over the next decade, through the production of blue and green ammonia. Recent developments include:
-
Blue Ammonia:
- Mitsui & Co., Inc. and CF Industries have signed a memorandum of understanding that will guide the companies in a joint exploration of the development of blue ammonia projects in the United States. The companies plan to execute preliminary studies covering areas such as blue ammonia supply and supply chain infrastructure, CO2 transportation and storage, expected environmental impacts, and blue ammonia economics and marketing opportunities in Japan and in other countries.
- The Company has completed an engineering design study at its Donaldsonville Complex related to the installation of dehydration and compression equipment to prepare captured carbon dioxide for pipeline transportation and sequestration.
- The United Kingdom government is expected in October to select at least two carbon capture and sequestration (CCS) clusters to move into an operational phase by 2026. Both of the Company’s manufacturing complexes in the country are part of CCS clusters under consideration.
- Green Ammonia: Planning for the Company’s green ammonia project at its Donaldsonville complex is ongoing. Site preparation work is expected to commence later this year in anticipation of equipment deliveries that will begin in 2022.
- Ammonia as a Fuel: CF Industries is participating in a Joint Study Framework established by Itochu Corporation to verify and organize common issues regarding the use of ammonia as a maritime fuel. In the initial phases of the effort, the Company will contribute its expertise on ammonia production as well as the safe handling, transport and storage of ammonia.
- Renewable Energy: From October 1, 2021, 100 percent of the electricity purchased for the Company’s manufacturing complexes in the United Kingdom will be from renewable sources, up from 23 percent currently. The additional renewable energy purchases would increase the Company’s electricity procured from renewable sources from 22 percent to 38 percent based on CF Industries’ electricity purchases across its network in 2020.
CF Industries continues to develop other initiatives related to its clean energy strategy across the Company’s network.
UAN Antidumping and Countervailing Duty Investigations
On June 30, 2021, CF Industries, through certain of its production facilities, filed petitions with the U.S. Department of Commerce (“Commerce”) and the U.S. International Trade Commission (“ITC”) requesting the initiation of antidumping and countervailing duty investigations on imports of urea ammonium nitrate solutions (“UAN”) from Russia and Trinidad.
CF Industries, which is the largest producer of UAN in the United States, requested the investigations due to the harm the domestic UAN industry has experienced from dumped and unfairly subsidized UAN imports from Russia and Trinidad. CF Industries filed its petitions under United States antidumping and countervailing duty laws, which authorize Commerce to level the playing field for domestic industries injured by foreign imports that are dumped and unfairly subsidized. If Commerce and the ITC make affirmative determinations, then Commerce can impose duties equal to the level of dumping and unfair subsidies.
The ITC is expected to take a preliminary vote on whether there is a reasonable indication that imports are injuring the domestic industry on August 13. At this time, management cannot predict the outcome of the proceedings, including whether antidumping or countervailing duties will be imposed on imports from either country, or the rate of any such duties.
|
___________________________________________________ |
|
|
(1) |
Certain items recognized during the first half and second quarter of 2021 impacted our financial results and their comparability to the prior year period. See the table accompanying this release for a summary of these items. |
|
(2) |
EBITDA is defined as net earnings attributable to common stockholders plus interest expense—net, income taxes and depreciation and amortization. See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
|
(3) |
Free cash flow is defined as net cash from operating activities less capital expenditures and distributions to noncontrolling interest. See reconciliation of free cash flow to the most directly comparable GAAP measure in the table accompanying this release. |
|
(4) |
Average cost of natural gas excludes the $112 million gain the Company recognized from the net settlement of certain natural gas contracts with suppliers during February 2021. |
|
Consolidated Results |
|||||||||||||||||
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|
Three months ended June 30, |
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Six months ended June 30, |
||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
||||||||
|
|
(dollars in millions, except per share and per MMBtu amounts) |
||||||||||||||||
|
Net sales |
$ |
1,588 |
|
|
$ |
1,204 |
|
|
$ |
2,636 |
|
|
|
$ |
2,175 |
|
|
|
Cost of sales |
1,085 |
|
|
870 |
|
|
1,844 |
|
|
|
1,637 |
|
|
||||
|
Gross margin |
$ |
503 |
|
|
$ |
334 |
|
|
$ |
792 |
|
|
|
$ |
538 |
|
|
|
Gross margin percentage |
31.7 |
% |
|
27.7 |
% |
|
30.0 |
|
% |
|
24.7 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Net earnings attributable to common stockholders |
$ |
246 |
|
|
$ |
190 |
|
|
$ |
397 |
|
|
|
$ |
258 |
|
|
|
Net earnings per diluted share |
$ |
1.14 |
|
|
$ |
0.89 |
|
|
$ |
1.83 |
|
|
|
$ |
1.20 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
EBITDA(1) |
$ |
596 |
|
|
$ |
472 |
|
|
$ |
994 |
|
|
|
$ |
786 |
|
|
|
Adjusted EBITDA(1) |
$ |
599 |
|
|
$ |
490 |
|
|
$ |
997 |
|
|
|
$ |
808 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Tons of product sold (000s) |
5,174 |
|
|
5,386 |
|
|
9,738 |
|
|
|
10,074 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Natural gas supplemental data (per MMBtu): |
|
|
|
|
|
|
|
||||||||||
|
Cost of natural gas used for production in cost of sales(2) |
$ |
3.25 |
|
|
$ |
1.86 |
|
|
$ |
3.24 |
|
|
|
$ |
2.20 |
|
|
|
Average daily market price of natural gas Henry Hub (Louisiana) |
$ |
2.88 |
|
|
$ |
1.65 |
|
|
$ |
3.13 |
|
|
|
$ |
1.76 |
|
|
|
Average daily market price of natural gas National Balancing Point (UK) |
$ |
8.90 |
|
|
$ |
1.60 |
|
|
$ |
7.90 |
|
|
|
$ |
2.40 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Unrealized net mark-to-market gain on natural gas derivatives |
$ |
— |
|
|
$ |
— |
|
|
$ |
(6 |
) |
|
|
$ |
(12 |
) |
|
|
Depreciation and amortization |
$ |
243 |
|
|
$ |
239 |
|
|
$ |
447 |
|
|
|
$ |
450 |
|
|
|
Capital expenditures |
$ |
110 |
|
|
$ |
52 |
|
|
$ |
181 |
|
|
|
$ |
119 |
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
Production volume by product tons (000s): |
|
|
|
|
|
|
|
||||||||||
|
Ammonia(3) |
2,232 |
|
|
2,483 |
|
|
4,711 |
|
|
|
5,153 |
|
|
||||
|
Granular urea |
968 |
|
|
1,206 |
|
|
2,152 |
|
|
|
2,491 |
|
|
||||
|
UAN (32%) |
1,628 |
|
|
1,708 |
|
|
3,317 |
|
|
|
3,307 |
|
|
||||
|
AN |
449 |
|
|
546 |
|
|
924 |
|
|
|
1,061 |
|
|
||||
|
_______________________________________________________________________________ |
|
|
(1) |
See reconciliations of EBITDA and adjusted EBITDA to the most directly comparable GAAP measures in the tables accompanying this release. |
|
(2) |
Includes the cost of natural gas used for production and related transportation that is included in cost of sales during the period under the first-in, first-out inventory cost method. Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. For the six months ended June 30, 2021, excludes the $112 million gain on net settlement of certain natural gas contracts with suppliers due to Winter Storm Uri in February 2021. |
|
(3) |
Gross ammonia production, including amounts subsequently upgraded into other products. |
Ammonia Segment
CF Industries’ ammonia segment produces anhydrous ammonia (ammonia), which is the base product that the Company manufactures, containing 82 percent nitrogen and 18 percent hydrogen. The results of the ammonia segment consist of sales of ammonia to external customers for its nitrogen content as a fertilizer, in emissions control and in other industrial applications. The Company has also announced steps to produce blue ammonia and market to external customers for its hydrogen content in clean energy applications. In addition, the Company upgrades ammonia into other nitrogen products such as urea, UAN and AN.
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
||||||||
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||||
|
Net sales |
$ |
459 |
|
|
$ |
364 |
|
|
$ |
665 |
|
|
|
$ |
557 |
|
|
|
Cost of sales |
333 |
|
|
262 |
|
|
413 |
|
|
|
435 |
|
|
||||
|
Gross margin |
$ |
126 |
|
|
$ |
102 |
|
|
$ |
252 |
|
|
|
$ |
122 |
|
|
|
Gross margin percentage |
27.5 |
% |
|
28.0 |
% |
|
37.9 |
|
% |
|
21.9 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Sales volume by product tons (000s) |
1,036 |
|
|
1,118 |
|
|
1,719 |
|
|
|
1,880 |
|
|
||||
|
Sales volume by nutrient tons (000s)(1) |
850 |
|
|
917 |
|
|
1,410 |
|
|
|
1,542 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Average selling price per product ton |
$ |
443 |
|
|
$ |
326 |
|
|
$ |
387 |
|
|
|
$ |
296 |
|
|
|
Average selling price per nutrient ton(1) |
540 |
|
|
397 |
|
|
472 |
|
|
|
361 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||||
|
Gross margin |
$ |
126 |
|
|
$ |
102 |
|
|
$ |
252 |
|
|
|
$ |
122 |
|
|
|
Depreciation and amortization |
61 |
|
|
60 |
|
|
97 |
|
|
|
99 |
|
|
||||
|
Unrealized net mark-to-market gain on natural gas derivatives |
— |
|
|
— |
|
|
(2 |
) |
|
|
(4 |
) |
|
||||
|
Adjusted gross margin |
$ |
187 |
|
|
$ |
162 |
|
|
$ |
347 |
|
|
|
$ |
217 |
|
|
|
Adjusted gross margin as a percent of net sales |
40.7 |
% |
|
44.5 |
% |
|
52.2 |
|
% |
|
39.0 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross margin per product ton |
$ |
122 |
|
|
$ |
91 |
|
|
$ |
147 |
|
|
|
$ |
65 |
|
|
|
Gross margin per nutrient ton(1) |
148 |
|
|
111 |
|
|
179 |
|
|
|
79 |
|
|
||||
|
Adjusted gross margin per product ton |
181 |
|
|
145 |
|
|
202 |
|
|
|
115 |
|
|
||||
|
Adjusted gross margin per nutrient ton(1) |
220 |
|
|
177 |
|
|
246 |
|
|
|
141 |
|
|
||||
|
_______________________________________________________________________________ |
|
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
|
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of 2021 to 2020 first half periods:
- Ammonia sales volume decreased for the first half of 2021 compared to 2020 due to lower supply availability from lower production.
- Ammonia average selling prices increased for the first half of 2021 compared to 2020 due to strong global demand as well as decreased global supply availability as higher global energy costs drove lower global operating rates.
- Ammonia adjusted gross margin per ton increased for the first half of 2021 compared to 2020 due to higher average selling prices and the gain the Company recognized from the net settlement of certain natural gas contracts with suppliers during February 2021, partially offset by higher realized natural gas costs and higher maintenance costs.
Granular Urea Segment
CF Industries’ granular urea segment produces granular urea, which contains 46 percent nitrogen. Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of the Company’s solid nitrogen products.
|
|
Three months ended June 30, |
|
Six months ended June 30, |
||||||||||||||
|
|
2021 |
|
2020 |
|
2021 |
|
|
2020 |
|
||||||||
|
|
(dollars in millions, except per ton amounts) |
||||||||||||||||
|
Net sales |
$ |
433 |
|
|
$ |
329 |
|
|
$ |
832 |
|
|
|
$ |
666 |
|
|
|
Cost of sales |
241 |
|
|
205 |
|
|
505 |
|
|
|
429 |
|
|
||||
|
Gross margin |
$ |
192 |
|
|
$ |
124 |
|
|
$ |
327 |
|
|
|
$ |
237 |
|
|
|
Gross margin percentage |
44.3 |
% |
|
37.7 |
% |
|
39.3 |
|
% |
|
35.6 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Sales volume by product tons (000s) |
1,092 |
|
|
1,314 |
|
|
2,412 |
|
|
|
2,695 |
|
|
||||
|
Sales volume by nutrient tons (000s)(1) |
502 |
|
|
604 |
|
|
1,109 |
|
|
|
1,239 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Average selling price per product ton |
$ |
397 |
|
|
$ |
250 |
|
|
$ |
345 |
|
|
|
$ |
247 |
|
|
|
Average selling price per nutrient ton(1) |
863 |
|
|
545 |
|
|
750 |
|
|
|
538 |
|
|
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Adjusted gross margin(2): |
|
|
|
|
|
|
|
||||||||||
|
Gross margin |
$ |
192 |
|
|
$ |
124 |
|
|
$ |
327 |
|
|
|
$ |
237 |
|
|
|
Depreciation and amortization |
55 |
|
|
66 |
|
|
121 |
|
|
|
138 |
|
|
||||
|
Unrealized net mark-to-market gain on natural gas derivatives |
— |
|
|
— |
|
|
(2 |
) |
|
|
(4 |
) |
|
||||
|
Adjusted gross margin |
$ |
247 |
|
|
$ |
190 |
|
|
$ |
446 |
|
|
|
$ |
371 |
|
|
|
Adjusted gross margin as a percent of net sales |
57.0 |
% |
|
57.8 |
% |
|
53.6 |
|
% |
|
55.7 |
|
% |
||||
|
|
|
|
|
|
|
|
|
||||||||||
|
Gross margin per product ton |
$ |
176 |
|
|
$ |
94 |
|
|
$ |
136 |
|
|
|
$ |
88 |
|
|
|
Gross margin per nutrient ton(1) |
382 |
|
|
205 |
|
|
295 |
|
|
|
191 |
|
|
||||
|
Adjusted gross margin per product ton |
226 |
|
|
145 |
|
|
185 |
|
|
|
138 |
|
|
||||
|
Adjusted gross margin per nutrient ton(1) |
492 |
|
|
315 |
|
|
402 |
|
|
|
299 |
|
|
||||
|
_______________________________________________________________________________ |
|
|
(1) |
Nutrient tons represent the tons of nitrogen within the product tons. |
|
(2) |
Adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton are non-GAAP financial measures. Adjusted gross margin is defined as gross margin excluding depreciation and amortization and unrealized net mark-to-market (gain) loss on natural gas derivatives. A reconciliation of adjusted gross margin, adjusted gross margin as a percent of net sales and adjusted gross margin per product ton and per nutrient ton to gross margin, the most directly comparable GAAP measure, is provided in the table above. See “Note Regarding Non-GAAP Financial Measures” in this release. |
Comparison of 2021 to 2020 first half periods:
- Granular urea sales volume decreased for the first half of 2021 compared to 2020 due to lower supply availability from lower production partially offset by 201,000 tons of purchased urea.
- Urea average selling prices increased for the first half of 2021 compared to 2020 due to strong global demand as well as decreased global supply availability as higher global energy costs drove lower global operating rates.
- Granular urea adjusted gross margin per ton increased for the first half of 2021 compared to 2020 due to higher average selling prices, partially offset by higher realized natural gas costs, higher maintenance costs and the impact of $71 million in purchased urea that the Company sold for $68 million.
UAN Segment
CF Industries’ UAN segment produces urea ammonium nitrate solution (UAN). UAN is a liquid product with nitrogen content that typically ranges from 28 percent to 32 percent and is produced by combining urea and ammonium nitrate in solution.
Contacts
Media
Chris Close
Director, Corporate Communications
847-405-2542 – cclose@cfindustries.com
Investors
Martin Jarosick
Vice President, Investor Relations
847-405-2045 – mjarosick@cfindustries.com