CF Industries Holdings Inc., Deerfield, Ill., reported improved net income attributable to the company for the fourth-quarter, though it fell short for the full-year ending Dec. 31, 2020. However, it beat analyst estimates for both periods.
Fourth-quarter net income was $87 million ($0.40 per diluted share) on net sales of $1.1 billion, up from the year-ago $55 million ($0.25 per share) and $1.05 billion, respectively. The Bloomberg Consensus, the average estimate from major analysts, was $25 million. Adjusted EBITDA was up, at $338 million from $325 million.
Full-year net income was down, at $317 million ($1.47 per share) on net sales of $4.1 billion from the year-ago $493 million ($2.23 per share) and $4.6 billion, respectively. However, full-year results exceeded analyst projections of $247 million. Adjusted EBITDA was down at $1.35 billion from $1.61 billion.
“Our team’s outstanding execution in 2020 produced multiple records for safety, production, and sales volume, and delivered strong results in a challenging environment,” said Tony Will, CF President and CEO. “Nitrogen industry dynamics entering 2021 are the most favorable we’ve seen in nearly a decade, as rising grain values and higher global energy prices are driving significant price appreciation for nitrogen products. We expect that these conditions will provide a very positive backdrop for the year.
Sales volumes for full-year 2020 were 20.3 million st, up from 2019’s 19.5 million st due to greater supply availability from higher starting inventories and higher production compared to the prior year. CF expects sales volumes to return to a range of 19-19.5 million st in 2021 due to lower year-end inventory than the year before and lower expected production due to a higher number of planned maintenance activities than in 2020.
CF reported record annual gross ammonia production in 2020 at 10.4 million st, with record quarterly production of 2.7 million st.
CF reported improved gross margins in the fourth quarter for its Ammonia and Urea segments, and declines in UAN, AN, and Other. UAN was the only one in the negative column, at a minus $2 million.
CF’s full year 2020 average cost of natural gas reflected cost of sales was $2.24/mmBtu compared to the year-ago $2.74.mmBtu.
CF said the global nitrogen pricing outlook for 2021 is significantly more positive compared to 2020, underpinned by higher commodity crop futures prices and substantially higher energy prices in Asia and Europe.
The company projects approximately 90-92 million planted corn acres in the United States in 2021. Demand for nitrogen should also be supported by higher canola plantings in Canada. CF expects industrial demand for nitrogen to increase as COVID-19 declines due to vaccinations.
Global nitrogen requirements are expected to remain robust throughout the year, driven by continued strong demand for urea imports from India and Brazil. It expects Indian imports to be above the five-year average of 6.5-7.0 million mt, with Brazil to need 6.5 million mt, matching 2020.
In other news, CF’s wholly owned subsidiary, CF Industries Inc., has elected to redeem in full the entire outstanding $250 million principal amount of its 3.400 percent Senior Secured Notes due December 2021 on March 20, 2021, in accordance with the optional redemption provisions provided in the indenture governing the 2021 Notes. Based on market interest rates on Feb. 12, 2021, CF estimates that the total amount for the redemption of the 2021 Notes will be approximately $258 million, including accrued interest.
| Production (000 st) | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Ammonia | 2,732 | 2,682 | 10,353 | 10,246 |
| Gran Urea | 1,361 | 1,105 | 5,001 | 4,941 |
| UAN 32 | 1,798 | 1,958 | 6,677 | 6,768 |
| AN | 583 | 543 | 2,115 | 2,128 |
| Ammonia | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Net Sales ($/M) | 298 | 266 | 1,020 | 1,113 |
| Gross Margin ($/M) | 57 | 42 | 170 | 235 |
| Sales Volume (000 st) | 1,092 | 968 | 3,767 | 3,516 |
| Avg Realized Prices ($/st) | 273 | 275 | 271 | 317 |
| Gross Margin ($/st) | 52 | 43 | 45 | 67 |
| Granular Urea | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Net Sales ($/M) | 333 | 239 | 1,248 | 1,342 |
| Gross Margin ($/M) | 98 | 64 | 401 | 481 |
| Sales Volume (000 st) | 1,346 | 969 | 5,148 | 4,849 |
| Avg Realized Prices ($/st) | 247 | 247 | 242 | 277 |
| Gross Margin ($/st) | 73 | 66 | 78 | 99 |
| UAN | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Net Sales ($/M) | 272 | 336 | 1,063 | 1,270 |
| Gross Margin ($/M) | (2) | 77 | 114 | 289 |
| Sales Volume (000 st) | 1,888 | 1,927 | 6,843 | 6,807 |
| Avg Realized Prices ($/st) | 144 | 174 | 155 | 187 |
| Gross Margin ($/st) | (1) | 40 | 17 | 42 |
| AN | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Net Sales ($/M) | 112 | 117 | 455 | 506 |
| Gross Margin ($/M) | 12 | 26 | 65 | 107 |
| Sales Volume (000 st) | 545 | 519 | 2,216 | 2,109 |
| Avg Realized Prices ($/st) | 206 | 225 | 205 | 240 |
| Gross Margin ($/st) | 22 | 50 | 29 | 51 |
| Other | 4Q-20 | 4Q-19 | 2020 | 2019 |
| Net Sales ($/M) | 87 | 91 | 338 | 359 |
| Gross Margin ($/M) | 15 | 18 | 51 | 62 |
| Sales Volume (000 st) | 608 | 600 | 2,322 | 2,257 |
| Avg Realized Prices ($/st) | 143 | 152 | 146 | 159 |
| Gross Margin ($/st) | 25 | 30 | 22 | 27 |