CF(US:CF)2024-02-21 16:00Financial Performance - Net sales decreased by $4.56 billion, or 41%, to $6.63 billion in 2023 compared to $11.19 billion in 2022, primarily due to a 43% decrease in average selling prices [271]. - Net sales for the year ended December 31, 2023, were $6.631 billion, a decrease of 40.5% compared to $11.186 billion in 2022 [428]. - Net earnings for 2023 were $1,525 million, compared to $1,260 million in 2022, an increase of 21% [436]. - Net earnings attributable to common stockholders for 2023 were $1.525 billion, a decrease of 54.5% from $3.346 billion in 2022 [428]. - Comprehensive income for 2023 was $1.859 billion, compared to $3.964 billion in 2022, reflecting a decrease of 53.0% [431]. - The company reported a basic net earnings per share of $7.89 for 2023, down from $16.45 in 2022, representing a decline of 52.0% [428]. Sales and Pricing - Average selling price was $347 per ton in 2023, down 43% from $610 per ton in 2022, resulting in a decrease in net sales of approximately $4.98 billion [272]. - Sales volume increased by 4% to 19.1 million product tons in 2023, up from 18.3 million product tons in 2022, driven by higher sales in UAN, Ammonia, and Other segments [273]. - Net sales in the Ammonia segment decreased by $1.41 billion, or 46%, to $1.68 billion in 2023 from $3.09 billion in 2022, primarily due to a 49% decrease in average selling prices [306]. - Net sales in the Granular Urea segment decreased by $1.07 billion, or 37%, to $1.82 billion in 2023 compared to $2.89 billion in 2022, driven by a 37% decrease in average selling prices [310]. - Net sales in the UAN segment decreased by $1.50 billion, or 42%, to $2.07 billion in 2023 from $3.57 billion in 2022, primarily due to a 46% decrease in average selling prices [315]. - Average selling prices in the UAN segment decreased to $286 per ton in 2023 from $526 per ton in 2022, driven by lower global energy costs and increased imports of Russian UAN [315]. Cost of Sales - Cost of sales decreased by $1.24 billion, or 23%, to $4.09 billion in 2023, influenced by lower natural gas costs and the impact of the Waggaman acquisition [276]. - Cost of sales averaged $214 per ton in 2023, a 26% decrease from $290 per ton in 2022, with natural gas costs decreasing 49% to $3.67 per MMBtu [277]. - Cost of sales in the Ammonia segment averaged $320 per ton in 2023, a 29% decrease from $451 per ton in 2022, primarily due to lower realized natural gas costs [307]. - Cost of sales in the Granular Urea segment averaged $221 per ton in 2023, a 24% decrease from $291 per ton in 2022, attributed to lower realized natural gas costs [311]. - Cost of sales in the Other segment averaged $149 per ton in 2023, a 26% decrease from $202 per ton in 2022, due to lower production costs [325]. Gross Margin - Gross margin for 2023 was $2.545 billion, down from $5.861 billion in 2022, reflecting a decline of 56.6% [428]. - Gross margin in the Ammonia segment decreased by $1.06 billion to $541 million in 2023 from $1.60 billion in 2022, with a gross margin percentage of 32.2% compared to 51.7% in 2022 [308]. - Gross margin in the Granular Urea segment decreased by $751 million to $813 million in 2023 from $1.56 billion in 2022, with a gross margin percentage of 44.6% in 2023 compared to 54.1% in 2022 [312]. - Gross margin in the UAN segment decreased by $1.27 billion to $817 million in 2023 from $2.08 billion in 2022, with a gross margin percentage of 39.5% in 2023 compared to 58.3% in 2022 [317]. - Gross margin in the AN segment decreased by $110 million to $138 million in 2023 from $248 million in 2022, with a gross margin percentage of 27.8% in 2023 compared to 29.3% in 2022 [321]. - Gross margin in the Other segment decreased by $131 million to $236 million in 2023 from $367 million in 2022, with a gross margin percentage of 41.8% in 2023 compared to 46.6% in 2022 [322]. Expenses and Interest - Selling, general and administrative expenses were $289 million in 2023, slightly down from $290 million in 2022, primarily due to nonrecurring charitable contributions [279]. - Interest expense decreased by $194 million to $150 million in 2023, largely due to the absence of tax-related interest expense recorded in 2022 [290]. - Interest income increased by $93 million to $158 million in 2023, reflecting higher interest rates on short-term investments [292]. Cash Flow and Investments - Net cash provided by operating activities in 2023 was $2.76 billion, a decrease of $1.10 billion from $3.86 billion in 2022, primarily due to lower net earnings of $1.84 billion compared to $3.94 billion in 2022 [378]. - Net cash used in investing activities increased to $1.68 billion in 2023 from $440 million in 2022, largely due to the $1.223 billion paid for the Waggaman acquisition [379]. - Net cash used in financing activities decreased to $1.37 billion in 2023 from $2.70 billion in 2022, attributed to reduced share repurchases of $580 million compared to $1.35 billion in 2022 [380]. Acquisitions and Capital Expenditures - The company acquired an ammonia production facility in Waggaman, Louisiana, for $1.675 billion, with a nameplate capacity of 880,000 tons of ammonia annually [335]. - The acquisition included a long-term ammonia offtake agreement to supply up to 200,000 tons of ammonia per year to Dyno Nobel, Inc. [336]. - Capital expenditures in 2023 totaled $499 million, up from $453 million in 2022, with estimates for 2024 ranging from $550 million [333][334]. Debt and Equity - Total long-term debt as of December 31, 2023, was $3,000 million, with an effective interest rate of 5.293% for the 5.150% notes due March 2034 [355]. - The company had approximately $291 million of letters of credit outstanding under a bilateral agreement as of December 31, 2023, reflecting an increase of $75 million [354]. - Stockholders' equity increased to $5,717 million in 2023, up from $5,051 million in 2022, marking a growth of 13% [434]. Future Outlook and Strategic Initiatives - The company aims to decarbonize its ammonia production network to enable green and low-carbon hydrogen and nitrogen products, aligning with its mission for sustainable energy [440]. - The company plans to permanently close the ammonia plant at its Billingham complex, which has impacted production and sales strategies [319].