CF Industries Holdings, Inc. (NYSE: CF), a major global producer of hydrogen and nitrogen products, disclosed its 2023 full-year and fourth-quarter outcomes concluding December 31, 2023, including:
Highlights:
- Full-year net earnings stood at $1.53 billion, or $7.87 per diluted share, with EBITDA of $2.71 billion and adjusted EBITDA of $2.76 billion.
- Fourth-quarter net earnings amounted to $274 million, or $1.44 per diluted share, alongside EBITDA of $556 million and adjusted EBITDA of $592 million.
- Full-year net cash from operating activities reached $2.76 billion, with free cash flow totaling $1.80 billion.
- Acquisition of the Waggaman ammonia production facility was completed on December 1, 2023.
- Installation of electrolyzers at the Donaldsonville, LA, Complex was mechanically finalized, with commissioning activities for the green ammonia project underway.
- The Company, along with Mitsui & Co., Ltd., targets the second half of 2024 for the final investment decision (FID) on the proposed greenfield low-carbon ammonia plant in Louisiana.
- During the fourth quarter of 2023, 2.9 million shares were repurchased for $225 million.
CF Industries’ President and CEO, Tony Will, stated, “CF Industries’ 2023 results underscore the robustness of our operations and the dedication of our team. We managed our plants effectively, expanded our network with the addition of the Waggaman facility, and progressed with our clean energy initiatives. We believe that the current global energy cost dynamics offer promising margin opportunities for our North American-based production network in the short term, and we anticipate a significant tightening of the global nitrogen supply-demand balance in the medium term. Consequently, we foresee sustaining strong cash generation, supporting our capacity to deliver substantial shareholder value through prudent investments in growth prospects and returning significant capital to shareholders.”
Update on Proposed Greenfield Low-Carbon Ammonia Plant at CF Industries’ Blue Point Complex: In the fourth quarter of 2023, CF Industries and Mitsui completed a front-end engineering and design (FEED) study on a greenfield steam methane reforming (SMR) ammonia facility with carbon capture and sequestration (CCS) technologies at CF Industries’ Blue Point Complex in Louisiana. The FEED study estimates the cost of a project with these attributes to be in the range of $3 billion, with approximately $2.5 billion allocated to the ammonia facility and CCS technologies and approximately $500 million allocated to scalable common infrastructure for the site, such as ammonia storage and vessel loading docks.
CF Industries and Mitsui are progressing two additional FEED studies focused on technologies with the potential to further reduce the carbon intensity of the proposed low-carbon ammonia plant. These include a previously announced FEED study evaluating autothermal reforming (ATR) ammonia production technology and a recently added FEED study assessing the cost and viability of adding flue gas capture to an SMR ammonia facility. Both FEED studies are expected to be completed in the second half of 2024.
CF Industries and Mitsui also expect greater clarity later in 2024 regarding demand for low-carbon ammonia, including the ammonia carbon intensity requirements of offtake partners as well as government incentives and regulatory developments in partners’ local jurisdictions. As a result of these factors, the companies are targeting the second half of 2024 for a final investment decision on the proposed low-carbon ammonia plant.
Operations Overview: The Company maintained safe and efficient operations across its network. As of December 31, 2023, the 12-month rolling average recordable incident rate was 0.36 incidents per 200,000 work hours, significantly better than industry averages.
Gross ammonia production for the full year and fourth quarter of 2023 was approximately 9.5 million and 2.5 million tons, respectively. Gross ammonia production volume for the full year and fourth quarter of 2023 includes one month of production from the recently acquired Waggaman ammonia production facility in Louisiana. The Company expects gross ammonia production in 2024 to be approximately 10 million tons.
Financial Results Overview:
Full Year 2023 Financial Results: For the full year 2023, net earnings attributable to common stockholders were $1.53 billion, or $7.87 per diluted share, EBITDA was $2.71 billion, and adjusted EBITDA was $2.76 billion. These results compare to full year 2022 net earnings attributable to common stockholders of $3.35 billion, or $16.38 per diluted share, EBITDA of $5.54 billion, and adjusted EBITDA of $5.88 billion.
Net sales for the full year 2023 were $6.63 billion compared to $11.19 billion for 2022. Average selling prices for 2023 were lower than 2022 as lower global energy costs reduced the global market clearing price required to meet global demand. Sales volumes for 2023 were higher compared to 2022 from higher urea ammonium nitrate (UAN), ammonia and diesel exhaust fluid (DEF) sales volumes.
Cost of sales for 2023 was lower compared to 2022 due primarily to lower realized natural gas costs.
In 2023, the average cost of natural gas reflected in the Company’s cost of sales was $3.67 per MMBtu compared to the average cost of natural gas in cost of sales of $7.18 per MMBtu for 2022.
Fourth Quarter 2023 Financial Results: For the fourth quarter of 2023, net earnings attributable to common stockholders were $274 million, or $1.44 per diluted share, EBITDA was $556 million, and adjusted EBITDA was $592 million. These results compare to fourth quarter of 2022 net earnings attributable to common stockholders of $860 million, or $4.35 per diluted share, EBITDA of $1.25 billion, and adjusted EBITDA of $1.30 billion.
Net sales in the fourth quarter of 2023 were $1.57 billion compared to $2.61 billion in 2022. Average selling prices for the fourth quarter of 2023 were lower than 2022 as lower global energy costs reduced the global market clearing price required to meet global demand. Sales volumes in the fourth quarter of 2023 were higher than 2022 driven by higher ammonia, UAN and DEF sales volumes.
Cost of sales for the fourth quarter of 2023 was lower compared to 2022 due primarily to lower realized natural gas costs.
The average cost of natural gas reflected in the Company’s cost of sales was $3.01 per MMBtu in the fourth quarter of 2023 compared to the average cost of natural gas in cost of sales of $6.88 per MMBtu in the fourth quarter of 2022.
Capital Management:
Acquisition of Waggaman, Louisiana, ammonia production facility: On December 1, 2023, CF Industries closed its acquisition of Incitec Pivot Limited’s (“IPL”) ammonia production plant and related assets located in Waggaman, Louisiana. In connection with the acquisition, the Company entered into a long-term ammonia offtake agreement providing for the Company to supply up to 200
