CF(CF) - 2025 Q2 - Quarterly Results

Financial and Operational Highlights First Half and Q2 2025 Performance Summary CF Industries reported strong first-half 2025 financial results, with net earnings of $698 million and adjusted EBITDA of $1.41 billion, driven by operational excellence and a favorable nitrogen market, including the Donaldsonville CCS project start-up Key Financial Metrics (1H & Q2 2025 vs 2024) | Metric | 1H 2025 | 1H 2024 | Q2 2025 | Q2 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Earnings | $698M | $614M | $386M | $420M | | Diluted EPS | $4.20 | $3.31 | $2.37 | $2.30 | | EBITDA | $1.37B | $1.24B | $757M | $752M | | Adjusted EBITDA | $1.41B | $1.21B | $761M | $752M | - The company's strong performance was attributed to excellent operational execution and constructive global nitrogen industry dynamics[3] - A significant milestone was achieved with the start-up of the Donaldsonville Carbon Capture and Sequestration (CCS) project in July 2025, which began generating 45Q tax credits[1][3][5] - Higher average selling prices in H1 2025 compared to H1 2024 were driven by increased global energy costs, which raised the market clearing price for nitrogen products[7] Operations Overview The company maintained a strong safety record and increased first-half 2025 gross ammonia production to 5.2 million tons, projecting 10 million tons for the full year Gross Ammonia Production (in million tons) | Period | 2025 | 2024 | | :--- | :--- | :--- | | First Half | 5.2 | 4.8 | | Second Quarter | 2.6 | 2.6 | - The company expects gross ammonia production for the full year 2025 to be approximately 10 million tons[4] - The 12-month rolling average recordable incident rate was 0.30 incidents per 200,000 work hours as of June 30, 2025[4] Capital Management CF Industries formed the Blue Point JV for low-carbon ammonia, reported $1.69 billion in cash, and incurred $377 million in H1 2025 capital expenditures, projecting $800-$900 million for the full year - A joint venture (Blue Point) was formed with JERA Co., Inc. and Mitsui & Co., Ltd. for the production of low-carbon ammonia. CF Industries holds a 40% ownership stake[13] - As of June 30, 2025, cash and cash equivalents were $1.69 billion, with $264 million held by the Blue Point joint venture[14] Capital Expenditures (1H 2025) | Category | Q2 2025 | 1H 2025 | | :--- | :--- | :--- | | Total Capital Expenditures | $245M | $377M | | - CF Industries Existing Ops | $155M | $287M | | - Blue Point Joint Venture | $90M | $90M | - Projected capital expenditures for the full year 2025 are estimated to be between $800-$900 million[16] Market Outlook and Strategic Initiatives Nitrogen Market Outlook The company maintains a constructive outlook on the global nitrogen market, anticipating continued strong demand, persistent North American energy cost advantages, and a long-term tightening supply-demand balance - Near-term outlook is positive due to strong demand from Brazil and India, low global inventories, and supply constraints from regions like Egypt and Trinidad[21] - Chinese urea exports are capped at 3 million metric tons for 2025, which is not expected to significantly loosen the global supply-demand balance[22] - Medium-term outlook remains favorable for low-cost North American producers due to persistent energy cost differentials with Europe and Asia[22] - Long-term projections indicate a tightening global nitrogen market as demand growth (approx. 1.5% per year) is expected to exceed new capacity growth over the next four years[23] Strategic Initiatives Update The company is advancing its clean energy strategy with the Blue Point JV's $3.7 billion low-carbon ATR ammonia facility and the Donaldsonville CCS project, which started in July 2025, generating 45Q tax credits - The Blue Point joint venture will build an autothermal reforming (ATR) ammonia facility with carbon capture, estimated to cost approximately $3.7 billion[24] - The Donaldsonville CCS project started up in July 2025, allowing for the permanent sequestration of up to 2 million metric tons of CO2 annually[25] - The Donaldsonville project qualifies for tax credits under Section 45Q and is expected to produce approximately 1.9 million tons of low-carbon ammonia annually[25] Consolidated Financial Results Consolidated Results Summary (2025 vs 2024) | Metric | Q2 2025 | Q2 2024 | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Sales | $1,890M | $1,572M | $3,553M | $3,042M | | Gross Margin | $755M | $679M | $1,327M | $1,088M | | Net Earnings | $386M | $420M | $698M | $614M | | Diluted EPS | $2.37 | $2.30 | $4.20 | $3.31 | | Adjusted EBITDA | $761M | $752M | $1,405M | $1,211M | | Sales Volume (k tons) | 5,021 | 4,875 | 10,025 | 9,399 | | Natural Gas Cost ($/MMBtu) | $3.36 | $1.90 | $3.52 | $2.53 | Segment Performance Ammonia Segment The Ammonia segment's net sales increased to $1.01 billion in H1 2025, driven by higher sales volumes and average selling prices, leading to an improved adjusted gross margin per ton Ammonia Segment Performance (1H 2025 vs 1H 2024) | Metric | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | | Net Sales | $1,011M | $811M | | Gross Margin | $322M | $212M | | Sales Volume (k tons) | 2,233 | 1,897 | | Avg. Selling Price/ton | $453 | $428 | - Sales volume increased in H1 2025 due to greater supply availability from higher gross ammonia production[30] - Adjusted gross margin per ton increased due to higher selling prices and lower maintenance costs, partially offset by higher realized natural gas costs[30] Granular Urea Segment The Granular Urea segment's net sales rose to $986 million in H1 2025, primarily due to higher average selling prices driven by global energy costs, which improved adjusted gross margin per ton Granular Urea Segment Performance (1H 2025 vs 1H 2024) | Metric | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | | Net Sales | $986M | $864M | | Gross Margin | $452M | $381M | | Sales Volume (k tons) | 2,313 | 2,343 | | Avg. Selling Price/ton | $426 | $369 | - Sales volumes for granular urea were similar year-over-year for the first half[33] - The increase in average selling prices and adjusted gross margin per ton was primarily due to higher global energy costs raising the market clearing price[33] UAN Segment The UAN segment's net sales increased to $1.08 billion in H1 2025, driven by higher sales volumes and average selling prices, while adjusted gross margin per ton remained similar UAN Segment Performance (1H 2025 vs 1H 2024) | Metric | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | | Net Sales | $1,080M | $900M | | Gross Margin | $412M | $359M | | Sales Volume (k tons) | 3,777 | 3,359 | | Avg. Selling Price/ton | $286 | $268 | - UAN sales volumes were higher in H1 2025 due to inventory draw down, greater supply availability, and higher starting inventory[35] - Adjusted gross margin per ton for UAN was similar in H1 2025 compared to H1 2024[35] AN Segment The AN segment's net sales slightly increased to $218 million in H1 2025 due to higher average selling prices, which also improved adjusted gross margin per ton despite stable sales volumes AN Segment Performance (1H 2025 vs 1H 2024) | Metric | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | | Net Sales | $218M | $212M | | Gross Margin | $41M | $32M | | Sales Volume (k tons) | 706 | 730 | | Avg. Selling Price/ton | $309 | $290 | - AN sales volumes were similar in H1 2025 compared to H1 2024[38] - Adjusted gross margin per ton for AN increased due to higher average selling prices, which were partially offset by higher natural gas costs[38] Other Segment The Other segment's net sales were $258 million in H1 2025, comparable to prior year, with lower sales volumes offset by higher average selling prices, maintaining a similar adjusted gross margin per ton Other Segment Performance (1H 2025 vs 1H 2024) | Metric | 1H 2025 | 1H 2024 | | :--- | :--- | :--- | | Net Sales | $258M | $255M | | Gross Margin | $100M | $104M | | Sales Volume (k tons) | 996 | 1,070 | | Avg. Selling Price/ton | $259 | $238 | - Sales volumes in the Other segment were lower in H1 2025 primarily due to decreased sales of nitric acid and diesel exhaust fluid (DEF)[41] - Adjusted gross margin per ton for the Other segment was similar in H1 2025 compared to H1 2024[41] Shareholder Returns Share Repurchase Programs The company repurchased 8.2 million shares for $636 million in H1 2025, with $425 million remaining under the current program, and a new $2 billion program authorized through December 2029 Share Repurchases in 2025 | Period | Shares Repurchased | Cost | | :--- | :--- | :--- | | Q2 2025 | 2.8 million | $202 million | | 1H 2025 | 8.2 million | $636 million | - As of June 30, 2025, approximately $425 million remains under the current share repurchase program[17] - A new $2 billion share repurchase program has been authorized, effective from the completion of the current program through December 2029[18] Dividends and Distributions CF Industries approved a $175 million semi-annual distribution to CHS Inc. and declared a quarterly dividend of $0.50 per common share, payable in August 2025 - A semi-annual distribution of $175 million was approved for payment to CHS Inc. on July 31, 2025[19] - A quarterly dividend of $0.50 per common share was declared, payable on August 29, 2025, to stockholders of record as of August 15, 2025[42] Financial Statements and Reconciliations Consolidated Statements of Operations For the first half of 2025, CF Industries reported net sales of $3.55 billion and net earnings of $698 million, or $4.20 per diluted share, reflecting growth from the prior year period Statement of Operations Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Sales | $3,553M | $3,042M | | Gross Margin | $1,327M | $1,088M | | Operating Earnings | $1,103M | $941M | | Net Earnings Attributable to Common Stockholders | $698M | $614M | Condensed Consolidated Balance Sheets As of June 30, 2025, the company's total assets were $13.75 billion, with cash and cash equivalents at $1.69 billion, and total equity increasing to $7.82 billion Balance Sheet Summary (As of June 30, 2025) | Category | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $2,676M | $2,520M | | Total Assets | $13,750M | $13,466M | | Total Current Liabilities | $830M | $818M | | Long-Term Debt | $2,973M | $2,971M | | Total Equity | $7,821M | $7,592M | Consolidated Statements of Cash Flows For the first half of 2025, net cash from operating activities was $1.15 billion, while investing and financing activities used $368 million and $733 million respectively, resulting in a $72 million net increase in cash Cash Flow Summary (Six Months Ended June 30, 2025) | Category | Amount | | :--- | :--- | | Net Cash from Operating Activities | $1,149M | | Net Cash used in Investing Activities | ($368M) | | Net Cash used in Financing Activities | ($733M) | | Increase in Cash and Cash Equivalents | $72M | Non-GAAP Reconciliations The company provided non-GAAP reconciliations, reporting free cash flow of $1.73 billion for the twelve months ended June 30, 2025, and adjusted EBITDA of $1.41 billion for the first half of 2025 - Free cash flow for the twelve months ended June 30, 2025, was $1.729 billion, up from $1.153 billion for the same period ending in 2024[59] Adjusted EBITDA Reconciliation Summary (Six Months Ended June 30) | Metric | 2025 | 2024 | | :--- | :--- | :--- | | Net Earnings Attributable to Common Stockholders | $698M | $614M | | EBITDA | $1,374M | $1,240M | | Adjusted EBITDA | $1,405M | $1,211M |