CF Industries Holdings Inc. reported record earnings attributable to common shareholders for the first quarter ending March 31, 2012, at $368.4 million ($5.54 per diluted share) on net sales of $1.53 billion, compared to the year-ago $282 million ($3.91 per share) on sales of $1.17 billion. Net sales, which were up 30 percent, were also a record for the quarter, as was EBITDA, which was $701.5 million, up from $585.1 million.
Results could have been even higher except for a non-cash $55.9 million pre-tax mark-to-market loss on natural gas derivatives, which reduced after-tax earnings per diluted share by $.52. Year-ago results included a $32.5 million pre-tax gain on the sale of four dry product warehouses, $19.9 million of accelerated amortization of loan costs related to retirement of a bank term loan, $2.1 million in restructuring and integration costs, and $700,000 non-cash mark-to-market gain on natural gas derivatives.
“We are pleased with the excellent financial results our company continues to produce,” said Stephen Wilson, CF chairman and CEO. “Record first quarter sales and earnings were underpinned by the strong demand that emerged as the quarter progressed and by the continuation of a favorable cost environment. Our team took full advantage of this opportunity by executing very well.”
CF said an exceptionally mild winter and early spring weather created favorable field conditions and pre-plant nutrient applications well ahead of normal schedules. The early application contributed to an increase in demand for ammonia and urea.
Nitrogen made the difference for CF, with gross margins up 50 percent to $662.1 million on net sales of $1.27 billion, compared to the year-ago $442.5 million on sales of $925.9 million. Tons of product sold moved up to 3.2 million st from the year-ago 2.84 million st. Ammonia sales volumes were 672,000 st at an average selling price of $598/st, compared to the year-ago 410,000 st ($494/st). CF said it was an unprecedented early start to the ammonia pre-plant season and higher expected corn acres. Company average price realizations increased 21 percent, reflecting a larger-than-normal percentage of agricultural ammonia in the sales mix. CF said its ammonia plants in aggregate ran at approximately 100 percent of rated capacity during the quarter.
Granular urea volumes were 758,000 st ($461/st), versus the year-ago 604,000 st ($371/st). The 25 percent volume increase was to serve corn pre-plant and strong wheat topdress. CF said it maximized its Donaldsonville, La., and Courtright, Ont., urea production to take advantage of attractive margin opportunities.
UAN volumes were off slightly, but prices were higher – 1.4 million st ($302/st) versus the year-ago 1.45 million st ($277/st). CF said that due to higher downsteam UAN inventories. it opted to favor urea sales. It said higher prices were due to favorably priced orders booked in earlier quarters; however, prices began moving up toward the end of the quarter. This trend has continued into the second quarter, as they have moved up in reaction to higher urea prices and strong demand in preparation for UAN sidedress applications. CF expects a strong UAN application season due to large plantings and tight supplies of urea and ammonia.
Ammonium nitrate volumes were up slightly, also with prices higher – 247,000 st ($259/st) versus 244,000 st ($251/st). Other nitrogen volumes were off slightly at 123,000 st from the year-ago 129,000 st.
CF’s average natural gas price for the quarter was $3.48/mmBtu, versus the year-ago $4.32/mmBtu.
While overall phosphate sales volumes were up, gross margins were off for that product group to $49.7 million on net sales of $255.9 million, compared to the year-ago $82.5 million on sales of $248.1 million. While total phosphate sales were up 17 percent, to 516,000 st from the year-