CF Industries Holdings Inc., Deerfield, Ill., reported second-quarter earnings attributable to common shareholders of $246 million ($1.14 per diluted share) on net sales of $1.59 billion, up from the year-ago $190 million ($0.89 per share) and $1.2 billion, respectively. Adjusted EBITDA was up, at $599 million from the year-ago $490 million. Total tons sold were down, to 5.17 million st from the year-ago 5.39 million st.
Despite the earnings uptick versus year-ago figures, earnings, sales, and adjusted EBITDA missed analyst average estimates (Bloomberg Consensus). Analyst projections had been for earnings of $338 million, sales of $1.62 million, and adjusted EBITDA of $707 million.
“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, CF President and CEO. “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.”
Will told analysts that the CF incurred some $60 million in second-quarter turnaround and maintenance expenses and in the first-half hit by $100 million in costs to cover for lost production due to both the turnarounds and the big freeze that occurred in February, which required that the company buy urea and ammonia to cover commitments to customers. Cost of sales were also higher due to stronger natural gas prices and reduced volumes sold.
CF explained that in a normal year it has four major turnarounds, but that due to COVID-19 it only had two in 2020, which pushed 2021 turnarounds initially to six, but the company has now opted to pull a 2022 turnaround of the Port Neal 2 ammonia plant into 2021, for a total of seven. Will said this year would be the first that both Port Neal 2 and Donaldsonville 6 ammonia, its two largest plants, have had turnarounds, and those tend to take longer and be more expensive.
With all of these turnarounds under its belt by next year, CF said it may be able to set an all-time ammonia production record in 2022. Will said that as good as the pricing opportunity is right now, “we want to make sure we can run flat out” next year.
Six-month net earnings were $397 million ($1.83 per share) on net sales of $2.64 billion, up from the year-ago $258 million ($1.20 per share) and $2.18 billion. Adjusted EBITDA was up at $997 million from $808 million. Total tons sold were 9.74 million st, down from the year-ago 10.1 million st.
| Production (000 st) | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Ammonia | 2,232 | 2,483 | 4,711 | 5,153 |
| Gran Urea | 968 | 1,206 | 2,152 | 2,491 |
| UAN 32 | 1,628 | 1,708 | 3,317 | 3,307 |
| AN | 449 | 546 | 924 | 1,061 |
| Ammonia | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Net Sales ($/M) | 459 | 364 | 665 | 557 |
| Gross Margin ($/M) | 126 | 102 | 252 | 122 |
| Sales Volumes (000 st) | 1,036 | 1,118 | 1,719 | 1,880 |
| Avg Selling Price ($/st) | 443 | 326 | 387 | 296 |
| Gas Costs ($/mmBtu) | 3.25 | 1.86 | 3.24 | 2.20 |
| Gran Urea | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Net Sales ($/M) | 433 | 329 | 832 | 666 |
| Gross Margin ($/M) | 192 | 124 | 327 | 237 |
| Sales Volumes (000 st) | 1,092 | 1,314 | 2,412 | 2,695 |
| Avg Selling Price ($/st) | 397 | 250 | 345 | 347 |
| UAN | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Net Sales ($/M) | 434 | 308 | 666 | 543 |
| Gross Margin ($/M) | 138 | 63 | 140 | 105 |
| Sales Volumes (000 st) | 1,949 | 1,840 | 3,463 | 3,230 |
| Avg Selling Price ($/st) | 223 | 167 | 192 | 168 |
| AN | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Net Sales ($/M) | 136 | 118 | 241 | 234 |
| Gross Margin ($/M) | 16 | 27 | 26 | 40 |
| Sales Volumes (000 st) | 501 | 576 | 939 | 1,123 |
| Avg Selling Price ($/st) | 271 | 205 | 257 | 208 |
| Other | 2Q-21 | 2Q-20 | YTD-21 | YTD-20 |
| Net Sales ($/M) | 126 | 85 | 232 | 175 |
| Gross Margin ($/M) | 31 | 18 | 47 | 34 |
| Sales Volumes (000 st) | 596 | 538 | 1,205 | 1,146 |
| Avg Selling Price ($/st) | 211 | 158 | 193 | 153 |