CF Industries Holding Inc., Deerfield, Ill, reported first-quarter net earnings of $151 million ($0.70 per diluted share), up from the year-ago $68 million ($0.31 per share) and ahead of analyst estimates of $119.9 million. Adjusted EBITDA was $398 million, also surpassing the average analyst estimate or Bloomberg Consensus survey of major analysts, which was $390.6 million.
Net sales were $1.05 billion, up from the year-ago $971 million but below analysts’ $1.1 billion projection.
“The CF team delivered solid results in the first quarter as increased global energy spreads and strong demand led to rising nitrogen prices,” said Tony Will, CF President and CEO. “We experienced a number of unusual negative impacts from weather and other factors that created challenges during the quarter, but we navigated those issues successfully in a way that mitigated a potentially negative outcome.
“I am particularly proud of the way the CF team responded to the challenging situation brought on by the lack of gas availability at our plants,’ he added. “This would have been an extremely costly event had the team not responded quickly and effectively mitigated the higher costs and lost production we were facing.”
Facing imminent shutdowns at several plants, management worked with gas suppliers to net settle certain gas contracts, with the move resulting in the company receiving prevailing market prices for the gas, which resulted in a gain of $112 million. While some of the plants were taken down entirely, some reduced capacity and sold the unused gas.
“We suffered some prolonged outages and increased maintenance expense, including fixed cost write-offs, as a result of the abrupt disruption and extreme cold, and of course, gas prices rose for the portion of the gas that was not hedged,” said Will.
Because of the lost production, CF said it bought urea barges to meet customer commitments. The barge costs ($1 million), higher gas costs ($48 million), and higher manufacturing and maintenance costs ($63 million) balanced out the $112 million gain.
The company expects 90-92 million acres of corn to be planted in the U.S. this year, and said it is seeing higher canola planting in Canada and rising industrial demand.
Going forward, CF cited two positives: low coarse-grain stocks, which it said will take more than one growing season to replenish; and increased energy prices in Europe and Asia, which have returned the sizeable differentials compared to Henry Hub natural gas prices in North America. It said forward curves suggest these energy spreads will continue through 2021 and into 2022.
CF also noted that India and Brazil both expect consistent long-term growth, which has led to rising import demand.
| Production (000 st) | 1Q-21 | 1Q-20 |
| Ammonia | 2,479 | 2,670 |
| Gran Urea | 1,184 | 1,285 |
| UAN 32 | 1,689 | 1,599 |
| AN | 475 | 515 |
| Ammonia | 1Q-21 | 1Q-20 |
| Net Sales ($/M) | 206 | 193 |
| Gross Margin ($/M) | 126 | 20 |
| Sales Volumes (000 st) | 683 | 762 |
| Avg Realized Prices ($/st) | 302 | 253 |
| Gross Margin ($/st) | 184 | 26 |
| Gas Costs ($/mmBtu) | 3.22 | 2.61 |
| Urea | 1Q-21 | 1Q-20 |
| Net Sales ($/M) | 399 | 337 |
| Gross Margin ($/M) | 135 | 113 |
| Sales Volumes (000 st) | 1,320 | 1,381 |
| Avg Realized Prices ($/st) | 302 | 244 |
| Gross Margin ($/st) | 102 | 82 |
| UAN | 1Q-21 | 1Q-20 |
| Net Sales ($/M) | 232 | 235 |
| Gross Margin ($/M) | 2 | 42 |
| Sales Volumes (000 st) | 1,514 | 1,390 |
| Avg Realized Prices ($/st) | 153 | 169 |
| Gross Margin ($/st) | 1 | 30 |
| AN | 1Q-21 | 1Q-20 |
| Net Sales ($/M) | 105 | 116 |
| Gross Margin ($/M) | 10 | 13 |
| Sales Volumes (000 st) | 438 | 547 |
| Avg Realized Prices ($/st) | 240 | 212 |
| Gross Margin ($/st) | 23 | 24 |
| Other | 1Q-21 | 1Q-20 |
| Net Sales ($/M) | 106 | 90 |
| Gross Margin ($/M) | 16 | 16 |
| Sales Volumes (000 st) | 609 | 608 |
| Avg Realized Prices ($/st) | 174 | 148 |
| Gross Margin ($/st) | 26 | 26 |