CF Industries Holdings, Inc. [CF] Filings

10-Q 1 cf-20220930.htm 10-Q cf-20220930

Table of Contents

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549


FORM			10-Q


(Mark One)
☒						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022





OR
☐						TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to

Commission file number 001-32597

CF INDUSTRIES HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware

20-2697511

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

4 Parkway North

60015

Deerfield,

Illinois

(Zip Code)

(Address of principal executive offices)

(847) 405-2400

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading symbol(s)

Name of each exchange on which registered

common stock, par value $0.01 per share

New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

196,189,463 shares of the registrant’s common stock, par value $0.01 per share, were outstanding at October 31, 2022.

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

TABLE OF CONTENTS


PART I.	Financial Information
	Item 1.	Financial Statements (unaudited)
		Consolidated Statements of Operations	1
		Consolidated Statements of Comprehensive Income	2
		Consolidated Balance Sheets	3
		Consolidated Statements of Equity	4
		Consolidated Statements of Cash Flows	5
		Notes to Unaudited Consolidated Financial Statements	6
	Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	26
	Item 3.	Quantitative and Qualitative Disclosures About Market Risk	57
	Item 4.	Controls and Procedures	58
PART II.	Other Information
	Item 1.	Legal Proceedings	58

	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
	Item 6.	Exhibits	59

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

PART I—FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	(in millions, except per share amounts)
Net sales	$	2,321	$	1,362	$	8,578	$	3,998
Cost of sales	1,405		922		3,973		2,766
Gross margin	916		440		4,605		1,232
Selling, general and administrative expenses	66		52		203		167

U.K. goodwill impairment	—		259		—		259
U.K. long-lived and intangible asset impairment	87		236		239		236

U.K. operations restructuring	8		—		18		—
Other operating—net	25		5		33		7
Total other operating costs and expenses	186		552		493		669

Equity in earnings of operating affiliate	20		15		74		37
Operating earnings (loss)	750		(97)		4,186		600
Interest expense	46		46		369		140
Interest income	(12)		—		(56)		—
Loss on debt extinguishment	—		13		8		19
Other non-operating—net	23		(19)		24		(17)
Earnings (loss) before income taxes	693		(137)		3,841		458
Income tax provision (benefit)	155		(46)		913		57

Net earnings (loss)	538		(91)		2,928		401
Less: Net earnings attributable to noncontrolling interest	100		94		442		189
Net earnings (loss) attributable to common stockholders	$	438	$	(185)	$	2,486	$	212
Net earnings (loss) per share attributable to common stockholders:
Basic	$	2.19	$	(0.86)	$	12.09	$	0.99
Diluted	$	2.18	$	(0.86)	$	12.04	$	0.98
Weighted-average common shares outstanding:
Basic	200.2		214.9		205.6		215.3
Diluted	200.9		214.9		206.5		216.4
Dividends declared per common share	$	0.40	$	0.30	$	1.10	$	0.90

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(Unaudited)


	Three months ended September 30,				Nine months ended September 30,
	2022		2021		2022		2021
	(in millions)
Net earnings (loss)	$	538	$	(91)	$	2,928	$	401
Other comprehensive (loss) income:
Foreign currency translation adjustment—net of taxes	(9)		(26)		(49)		(2)


Defined benefit plans—net of taxes	24		6		36		6
	15		(20)		(13)		4
Comprehensive income (loss)	553		(111)		2,915		405
Less: Comprehensive income attributable to noncontrolling interest	100		94		442		189
Comprehensive income (loss) attributable to common stockholders	$	453	$	(205)	$	2,473	$	216

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS


	(Unaudited)
	September 30, 2022		December 31, 2021
	(in millions, except share and per share amounts)
Assets
Current assets:
Cash and cash equivalents	$	2,192	$	1,628

Accounts receivable—net	721		497
Inventories	500		408

Prepaid income taxes	179		4
Other current assets	88		56
Total current assets	3,680		2,593
Property, plant and equipment—net	6,500		7,081
Investment in affiliate	86		82
Goodwill	2,088		2,091
Operating lease right-of-use assets	274		243
Other assets	652		285
Total assets	$	13,280	$	12,375
Liabilities and Equity
Current liabilities:

Accounts payable and accrued expenses	$	711	$	565
Income taxes payable	25		24
Customer advances	511		700
Current operating lease liabilities	96		89

Other current liabilities	38		54
Total current liabilities	1,381		1,432
Long-term debt	2,965		3,465
Deferred income taxes	1,010		1,029
Operating lease liabilities	185		162
Other liabilities	642		251
Equity:
Stockholders’ equity:
Preferred stock—$0.01 par value, 50,000,000 shares authorized	—		—
Common stock—$0.01 par value, 500,000,000 shares authorized, 2022—207,597,269 shares issued and 2021—207,603,940 shares issued	2		2
Paid-in capital	1,488		1,375
Retained earnings	4,087		2,088
Treasury stock—at cost, 2022—9,851,898 shares and 2021—27,962 shares	(863)		(2)
Accumulated other comprehensive loss	(270)		(257)
Total stockholders’ equity	4,444		3,206
Noncontrolling interest	2,653		2,830
Total equity	7,097		6,036
Total liabilities and equity	$	13,280	$	12,375

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited)


	Common Stockholders
	$0.01 Par Value Common Stock		Treasury Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
	(in millions, except per share amounts)
Balance as of June 30, 2022	$	2	$	(331)	$	1,474	$	3,729	$	(285)	$	4,589	$	2,925	$	7,514
Net earnings	—		—		—		438		—		438		100		538
Other comprehensive income	—		—		—		—		15		15		—		15
Purchases of treasury stock	—		(532)		—		—		—		(532)		—		(532)


Issuance of $0.01 par value common stock under employee stock plans	—		—		4		—		—		4		—		4

Stock-based compensation expense	—		—		10		—		—		10		—		10

Cash dividends ($0.40 per share)	—		—		—		(80)		—		(80)		—		(80)



Distribution declared to noncontrolling interest	—		—		—		—		—		—		(372)		(372)

Balance as of September 30, 2022	$	2	$	(863)	$	1,488	$	4,087	$	(270)	$	4,444	$	2,653	$	7,097

























Balance as of December 31, 2021	$	2	$	(2)	$	1,375	$	2,088	$	(257)	$	3,206	$	2,830	$	6,036
Net earnings	—		—		—		2,486		—		2,486		442		2,928
Other comprehensive loss	—		—		—		—		(13)		(13)		—		(13)
Purchases of treasury stock	—		(1,122)		—		—		—		(1,122)		—		(1,122)
Retirement of treasury stock	—		283		(23)		(260)		—		—		—		—
Acquisition of treasury stock under employee stock plans	—		(23)		—		—		—		(23)		—		(23)
Issuance of $0.01 par value common stock under employee stock plans	—		1		104		—		—		105		—		105

Stock-based compensation expense	—		—		32		—		—		32		—		32

Cash dividends ($1.10 per share)	—		—		—		(227)		—		(227)		—		(227)



Distributions declared to noncontrolling interest	—		—		—		—		—		—		(619)		(619)

Balance as of September 30, 2022	$	2	$	(863)	$	1,488	$	4,087	$	(270)	$	4,444	$	2,653	$	7,097

(Continued)

CONSOLIDATED STATEMENTS OF EQUITY

(Continued) (Unaudited)


	Common Stockholders
	$0.01 Par Value Common Stock		Treasury Stock		Paid-In Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity		Noncontrolling Interest		Total Equity
	(in millions, except per share amounts)


















Balance as of June 30, 2021	$	2	$	—	$	1,357	$	2,183	$	(296)	$	3,246	$	2,712	$	5,958


Net (loss) earnings	—		—		—		(185)		—		(185)		94		(91)
Other comprehensive loss	—		—		—		—		(20)		(20)		—		(20)
Purchases of treasury stock	—		(50)		—		—		—		(50)		—		(50)

Acquisition of treasury stock under employee stock plans	—		(1)		—		—		—		(1)		—		(1)
Issuance of $0.01 par value common stock under employee stock plans	—		—		6		—		—		6		—		6

Stock-based compensation expense	—		—		7		—		—		7		—		7

Cash dividends ($0.30 per share)	—		—		—		(65)		—		(65)		—		(65)



Distribution declared to noncontrolling interest	—		—		—		—		—		—		(130)		(130)

Balance as of September 30, 2021	$	2	$	(51)	$	1,370	$	1,933	$	(316)	$	2,938	$	2,676	$	5,614

























Balance as of December 31, 2020	$	2	$	(4)	$	1,317	$	1,927	$	(320)	$	2,922	$	2,681	$	5,603



Net earnings	—		—		—		212		—		212		189		401
Other comprehensive income	—		—		—		—		4		4		—		4
Purchases of treasury stock	—		(50)		—		—		—		(50)		—		(50)
Retirement of treasury stock	—		13		(2)		(11)		—		—		—		—
Acquisition of treasury stock under employee stock plans	—		(11)		—		—		—		(11)		—		(11)
Issuance of $0.01 par value common stock under employee stock plans	—		1		32		—		—		33		—		33

Stock-based compensation expense	—		—		23		—		—		23		—		23

Cash dividends ($0.90 per share)	—		—		—		(195)		—		(195)		—		(195)



Distributions declared to noncontrolling interest	—		—		—		—		—		—		(194)		(194)

Balance as of September 30, 2021	$	2	$	(51)	$	1,370	$	1,933	$	(316)	$	2,938	$	2,676	$	5,614

See accompanying Notes to Unaudited Consolidated Financial Statements.

Table of Contents

CF INDUSTRIES HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Nine months ended September 30,
	2022		2021
	(in millions)
Operating Activities:
Net earnings	$	2,928	$	401
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation and amortization	652		650
Deferred income taxes	(7)		(25)
Stock-based compensation expense	32		23

Loss on debt extinguishment	8		19
Unrealized net gain on natural gas derivatives	(39)		(18)
Unrealized loss on embedded derivative	—		2
U.K. goodwill impairment	—		259
U.K. long-lived and intangible asset impairment	239		236
Pension settlement loss	24		—
Gain on sale of emission credits	(6)		(20)
Loss on disposal of property, plant and equipment	1		3
Undistributed earnings of affiliate—net of taxes	(10)		(15)
Changes in:
Accounts receivable—net	(245)		(115)
Inventories	(131)		(120)
Accrued and prepaid income taxes	(168)		(132)
Accounts payable and accrued expenses	111		69
Customer advances	(188)		245
Other—net	69		(69)
Net cash provided by operating activities	3,270		1,393
Investing Activities:
Additions to property, plant and equipment	(319)		(382)
Proceeds from sale of property, plant and equipment	1		—


Distributions received from unconsolidated affiliate	4		—

Purchase of investments held in nonqualified employee benefit trust	(1)		(13)
Proceeds from sale of investments held in nonqualified employee benefit trust	1		13
Purchase of emission credits	(9)		(10)
Proceeds from sale of emission credits	15		10
Other—net	—		(1)
Net cash used in investing activities	(308)		(383)
Financing Activities:



Payments of long-term borrowings	(507)		(518)
Financing fees	(4)		—
Dividends paid on common stock	(227)		(195)

Distributions to noncontrolling interest	(619)		(194)
Purchases of treasury stock	(1,096)		(50)
Proceeds from issuances of common stock under employee stock plans	106		32
Cash paid for shares withheld for taxes	(23)		(11)

Net cash used in financing activities	(2,370)		(936)
Effect of exchange rate changes on cash and cash equivalents	(28)		—
Increase in cash and cash equivalents	564		74
Cash and cash equivalents at beginning of period

CF Industries Holdings, Inc. [CF] Filings
10-Q	[2022-11-03]
10-Q	[2022-08-02]
10-Q	[2022-05-05]
10-K	[2022-02-24]
10-Q	[2021-11-05]
10-Q	[2021-08-09]
10-Q	[2021-05-06]
10-K	[2021-02-24]
10-Q	[2020-11-05]
10-Q	[2020-08-06]
10-Q	[2020-05-07]
10-K	[2020-02-24]
10-Q	[2019-10-31]
10-Q	[2019-08-01]
10-Q	[2019-05-02]
10-K	[2019-02-22]
10-Q	[2018-11-01]
10-Q	[2018-08-02]
10-Q	[2018-05-03]
10-K	[2018-02-22]
10-Q	[2017-11-02]
10-Q	[2017-08-03]
10-Q	[2017-05-04]
10-K	[2017-02-23]
10-Q	[2016-11-03]
10-Q	[2016-08-04]
10-Q	[2016-05-05]
10-K	[2016-02-25]
10-Q	[2015-11-09]
10-Q	[2015-08-06]
10-Q	[2015-05-07]
10-K	[2015-02-26]
10-Q	[2014-11-06]
10-Q	[2014-08-07]
10-Q	[2014-05-08]
10-K	[2014-02-27]
10-Q	[2013-11-05]
10-Q	[2013-08-07]
10-Q	[2013-05-09]
10-K	[2013-02-27]
10-Q	[2012-11-06]
10-Q	[2012-08-07]
10-Q	[2012-05-04]
10-K	[2012-02-27]