01—Abstract
Summary
Summary of the 10-K filed February 23, 2023. Cited figures are marked; the original filing is the authoritative source.
CF Industries Holdings, Inc. reported net sales of $11.19 billiona for 2022, up from $6.54 billion in 2021, driven by higher average selling prices of $610 per ton versus $353 per ton, partly offset by a 1% decline in sales volume to 18.3 million tons.
Gross margin rose to $5.86 billionb from $2.39 billion, and net earnings attributable to common stockholders reached $3.35 billion, or $16.38 per diluted share, compared with $917 million, or $4.24 per diluted share, in 2021. Cost of sales increased as natural gas costs rose to $7.18 per MMBtu from $4.21, reducing gross margin by approximately $1.05 billion. The year also included $258 million of pre-tax impairment and restructuring charges tied to U.K. operations, including the planned permanent closure of the Ince facility and the temporary idling of ammonia production at Billingham in September 2022.
The income tax provision rose to $1.16 billionc, reflecting higher taxable income and a $78 million provision related to the Canada Revenue Agency Competent Authority Matter. Cash from operations was $3.86 billion, and the company repurchased $1.35 billion of shares while paying $619 million in distributions to noncontrolling interest in CFN. Total funded indebtedness was approximately $3.0 billion at year-end, and cash and cash equivalents were $2.32 billion.
The company is advancing its clean energy strategy, including a 20 MW green hydrogen project at Donaldsonville with a estimated cost of approximately $100 milliond, a $200 million CO2 dehydration and compression project tied to a definitive offtake agreement with ExxonMobil, and a blue ammonia facility under study with Mitsui, with a final investment decision expected in the second half of 2023. Management expects 2023 capital expenditures of $500 million to $550 million.
02—Key points
Key Highlights
- Net sales rose 71% to $11.19 billion in 2022, driven by a 73% increase in average selling prices to $610 per ton, while sales volume fell 1% to 18.3 million tons.
- Gross margin increased to $5.86 billion from $2.39 billion, with gross margin percentage of 52.4% versus 36.5% in 2021.
- Net earnings attributable to common stockholders were $3.35 billion, or $16.38 per diluted share, compared with $917 million, or $4.24 per diluted share, in 2021.
- Natural gas cost per MMBtu increased to $7.18 from $4.21, reducing gross margin by approximately $1.05 billion.
- U.K. operations incurred $258 million of pre-tax impairment and restructuring charges in 2022, including the planned permanent closure of the Ince facility.
- Share repurchases totaled $1.35 billion in 2022, and the Board authorized an additional $3 billion program effective through December 31, 2025.
- Cash and cash equivalents were $2.32 billion at December 31, 2022, and the Revolving Credit Agreement provided $750 million of unused capacity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2022, CF Industries Holdings kept $0.30.
- Revenue$11.19B100.0%
- Cost of revenue−$5.33B47.6%
- Gross profit$5.86B52.4%
- Operating costs−$464.0M4.1%
- Operating income$5.40B48.2%
- Interest, other & tax−$2.05B18.3%
- Net income$3.35B29.9%
Where FY2022 revenue went
$11.19B- Cost of revenue: $5.33B, 48% of revenue
- Net income: $3.35B, 30% of revenue
- Interest, other & tax: $2.05B, 18% of revenue
- SG&A: $290.0M, 2.6% of revenue
- Other operating costs: $174.0M, 1.6% of revenue
Kept 30% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2022filed February 23, 2023Financial Statements
FY2022 against FY2021
| Line item | FY2022FY2021 | Change |
|---|---|---|
| Revenue | $11.19B$6.54B | +71.1% |
| Cost of Revenue | $5.33B$4.15B | +28.3% |
| Gross Profit | $5.86B$2.39B | +145.5% |
| SG&A Expenses | $290.00M$223.00M | +30.0% |
| Operating Income | $5.40B$1.73B | +212.1% |
| Interest Expense | $344.00M$184.00M | +87.0% |
| Net Income | $3.35B$917.00M | +264.9% |
| EPS (Basic) | $16.45$4.27 | +285.2% |
| EPS (Diluted) | $16.38$4.24 | +286.3% |
| Shares Outstanding (Basic) | 203.30M215.00M | −5.4% |
| Shares Outstanding (Diluted) | 204.20M216.20M | −5.6% |
05—Questions
Frequently Asked Questions
What drove the increase in CF Industries' 2022 earnings?
Higher average selling prices, which rose to $610 per ton from $353 per ton, increased gross margin by $4.80 billion, partly offset by higher natural gas costs that reduced gross margin by approximately $1.05 billion.
How much debt does CF Industries carry and when does it mature?
As of December 31, 2022, the company had approximately $3.0 billion of total funded indebtedness, consisting primarily of unsecured senior notes with maturities between 2026 and 2044, representing approximately 27% of total capitalization.
What are the company's main green and blue ammonia initiatives?
The company is building a 20 MW green hydrogen plant at Donaldsonville expected to finish in 2023 at an estimated cost of approximately $100 million, and is developing a $200 million CO2 dehydration and compression facility with ExxonMobil targeting an early 2025 start-up. A blue ammonia facility with Mitsui at the new Blue Point complex is under study, with a final investment decision expected in the second half of 2023.
Why did CF Industries record charges related to its U.K. operations?
High natural gas prices in the United Kingdom led to the halt of operations in 2021 and, in 2022, to the approved plan to permanently close the Ince facility and the temporary idling of ammonia production at Billingham in September 2022, resulting in $258 million of pre-tax impairment and restructuring charges.
What did the company pay to shareholders and to CHS in 2022?
The company paid $306 million in common stock dividends and $1.35 billion in share repurchases, and distributions to noncontrolling interest totaled $619 million, with the CFN distribution to CHS of $255 million approved in January 2023.
06—Continue