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Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
| | | | | | | | | | | |
(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
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| | |
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OR |
☐ | | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from to |
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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 | | CF | | 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.
CF INDUSTRIES HOLDINGS, INC.
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.
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.
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.
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) | |
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Issuance of $0.01 par value common stock under employee stock plans | — | | | — | | | 4 | | | — | | | — | | | 4 | | | — | | | 4 | |
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Stock-based compensation expense | — | | | — | | | 10 | | | — | | | — | | | 10 | | | — | | | 10 | |
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Cash dividends ($0.40 per share) | — | | | — | | | — | | | (80) | | | — | | | (80) | | | — | | | (80) | |
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Distribution declared to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | (372) | | | (372) | |
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Balance as of September 30, 2022 | $ | 2 | | | $ | (863) | | | $ | 1,488 | | | $ | 4,087 | | | $ | (270) | | | $ | 4,444 | | | $ | 2,653 | | | $ | 7,097 | |
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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 | |
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Stock-based compensation expense | — | | | — | | | 32 | | | — | | | — | | | 32 | | | — | | | 32 | |
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Cash dividends ($1.10 per share) | — | | | — | | | — | | | (227) | | | — | | | (227) | | | — | | | (227) | |
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Distributions declared to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | (619) | | | (619) | |
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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)
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| 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) |
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Balance as of June 30, 2021 | $ | 2 | | | $ | — | | | $ | 1,357 | | | $ | 2,183 | | | $ | (296) | | | $ | 3,246 | | | $ | 2,712 | | | $ | 5,958 | |
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Net (loss) earnings | — | | | — | | | — | | | (185) | | | — | | | (185) | | | 94 | | | (91) | |
Other comprehensive loss | — | | | — | | | — | | | — | | | (20) | | | (20) | | | — | | | (20) | |
Purchases of treasury stock | — | | | (50) | | | — | | | — | | | — | | | (50) | | | — | | | (50) | |
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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 | |
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Stock-based compensation expense | — | | | — | | | 7 | | | — | | | — | | | 7 | | | — | | | 7 | |
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Cash dividends ($0.30 per share) | — | | | — | | | — | | | (65) | | | — | | | (65) | | | — | | | (65) | |
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Distribution declared to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | (130) | | | (130) | |
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Balance as of September 30, 2021 | $ | 2 | | | $ | (51) | | | $ | 1,370 | | | $ | 1,933 | | | $ | (316) | | | $ | 2,938 | | | $ | 2,676 | | | $ | 5,614 | |
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Balance as of December 31, 2020 | $ | 2 | | | $ | (4) | | | $ | 1,317 | | | $ | 1,927 | | | $ | (320) | | | $ | 2,922 | | | $ | 2,681 | | | $ | 5,603 | |
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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 | |
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Stock-based compensation expense | — | | | — | | | 23 | | | — | | | — | | | 23 | | | — | | | 23 | |
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Cash dividends ($0.90 per share) | — | | | — | | | — | | | (195) | | | — | | | (195) | | | — | | | (195) | |
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Distributions declared to noncontrolling interest | — | | | — | | | — | | | — | | | — | | | — | | | (194) | | | (194) | |
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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.
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 | | | | | |
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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 | | | — | | | | | |
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Distributions received from unconsolidated affiliate | 4 | | | — | | | | | |
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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: | | | | | | | |
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Payments of long-term borrowings | (507) | | | (518) | | | | | |
Financing fees | (4) | | | — | | | | | |
Dividends paid on common stock | (227) | | | (195) | | | | | |
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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) | | | | | |
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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 | |