10q10k10q10k.net

What changed in CF Industries's 10-K — 2022 vs 2023

vs

Paragraph-level year-over-year comparison of CF Industries's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+548 added−565 removedSource: 10-K (2024-02-22) vs 10-K (2023-02-23)

Top changes in CF Industries's 2023 10-K

548 paragraphs added · 565 removed · 395 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

71 edited+30 added−7 removed67 unchanged
Biggest change(6) Includes product tons of: urea liquor and DEF from the Donaldsonville, Port Neal, Woodward, Yazoo City, and Courtright facilities; nitric acid from the Courtright, Yazoo City and Billingham facilities. Production of DEF can be increased by reducing urea and/or UAN production. (7) The Donaldsonville facility capacities present an estimated production mix.
Biggest changeUrea liquor and DEF production capacities are included in Other. (5) AN includes prilled products (Amtrate and industrial-grade AN, or IGAN) and AN solution produced for sale. (6) Includes product tons of: urea liquor and DEF from the Donaldsonville, Port Neal, Woodward, Yazoo City, and Courtright facilities; nitric acid from the Billingham facility.
Copies of our Corporate Governance Guidelines, Code of Corporate Conduct and charters for the Audit Committee, Compensation and Management Development Committee, Corporate Governance and Nominating Committee, and Environmental Sustainability and Community Committee 1 Table of Contents CF INDUSTRIES HOLDINGS, INC. of our Board of Directors (the Board) are also available on our Internet website.
Copies of our Corporate Governance Guidelines, Code of Corporate Conduct and charters for the Audit Committee, Compensation and Management Development 1 Table of Contents CF INDUSTRIES HOLDINGS, INC. Committee, Corporate Governance and Nominating Committee, and Environmental Sustainability and Community Committee of our Board of Directors (the Board) are also available on our Internet website.
Because ammonia, urea and UAN are widely-traded fertilizer products and there are limited barriers to entry, we experience competition from foreign-sourced products continuously. Producers of nitrogen-based fertilizers located in the Middle East, Trinidad, North Africa and Russia have been major exporters to North America in recent years.
Because ammonia, urea and UAN are widely-traded fertilizer products and there are limited barriers to entry, we experience competition from foreign-sourced products continuously. Producers of nitrogen-based fertilizers located in the Middle East, Trinidad, Africa and Russia have been major exporters to North America in recent years.
A further description of turnaround activities is included in Note 6—Property, Plant and Equipment—Net in the notes to consolidated financial statements included in Item 8 of this report. Environmental, health and safety laws and regulations are complex, change frequently and have tended to become more stringent over time.
A further description of turnaround activities is included in Note 8—Property, Plant and Equipment—Net in the notes to consolidated financial statements included in Item 8 of this report. Environmental, health and safety laws and regulations are complex, change frequently and have tended to become more stringent over time.
Competition Our markets are global and intensely competitive, based primarily on delivered price and, to a lesser extent, on customer service and product quality. During the peak demand periods, product availability and delivery time also play a role in the buying decisions of customers.
Competition Our markets are global and intensely competitive, based primarily on delivered price and, to a lesser extent, on reliability, customer service and product quality. During the peak demand periods, product availability and delivery time also play a role in the buying decisions of customers.
ITEM 1. BUSINESS. Our Company All references to “CF Holdings,” “we,” “us,” “our” and “the Company,” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries.
ITEM 1. BUSINESS. Our Company All references to “CF Holdings,” “we,” “us,” “our” and “the Company,” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is to CF Industries Holdings, Inc. only and not its subsidiaries.
Our primary North American-based competitors include Nutrien Ltd., Koch Fertilizer LLC, N-7 LLC (a joint venture between OCI N.V. and Dakota Gasification Company) and Yara International. There is also significant competition from products sourced from other regions of the world, including some with lower natural gas or other feedstock costs, which may include the benefit of government subsidies.
Our primary competitors with North American operations include Nutrien Ltd., Koch Fertilizer LLC, N-7 LLC (a joint venture between OCI N.V. and Dakota Gasification Company) and Yara International. There is also significant competition from products sourced from other regions of the world, including some with lower natural gas or other feedstock costs, which may include the benefit of government subsidies.
See Note 15—Derivative Financial Instruments for additional information about our natural gas hedging activities. Nitrogen Product Distribution The safe, efficient and economical distribution of nitrogen products is critical for successful operations. Our nitrogen production facilities have access to multiple transportation modes by which we ship products to terminals, warehouses and customers.
See Note 17—Derivative Financial Instruments for additional information about our natural gas hedging activities. Nitrogen Product Distribution The safe, efficient and economical distribution of nitrogen products is critical for successful operations. Our nitrogen production facilities have access to multiple transportation modes by which we ship products to terminals, warehouses and customers.
Our quarterly financial results can vary significantly from one year to 7 Table of Contents CF INDUSTRIES HOLDINGS, INC. the next due to weather-related shifts in planting and application schedules and purchasing patterns as well as import timing, import and distribution costs and logistical limitations, such as river conditions.
Our quarterly financial results can vary significantly from one year to the next due to weather-related shifts in planting and application schedules and purchasing patterns as well as import timing, import and distribution costs and logistical limitations, such as river conditions. 8 Table of Contents CF INDUSTRIES HOLDINGS, INC.
The facility consists of two ammonia plants, three urea plants, two nitric acid plants and one UAN plant. The location has on-site storage for 85,000 tons of ammonia, 130,000 tons of granular urea, and 100,000 tons of 32% UAN. Claremore, Oklahoma (the Verdigris facility) The Verdigris facility is located northeast of Tulsa, Oklahoma, near the Verdigris River, in Claremore, Oklahoma.
The facility consists of two ammonia plants, three urea plants, two nitric acid plants and one UAN plant. The location has on-site storage for 82,000 tons of ammonia, 130,000 tons of granular urea, and 100,000 tons of 32% UAN. Claremore, Oklahoma (the Verdigris facility) The Verdigris facility is located northeast of Tulsa, Oklahoma, near the Verdigris River, in Claremore, Oklahoma.
Across the Company, all employees completed training to learn to recognize and address the effects of unconscious bias by challenging assumptions; encouraging diversity of experience, opinion, and expression; and supporting a workplace culture that actively strives to be more inclusive.
Across the Company, all employees complete training to learn to recognize and address the effects of unconscious bias by challenging assumptions; encouraging diversity of experience, opinion, and expression; and supporting a workplace culture that actively strives to be more inclusive.
The complex has on-site storage for 60,000 tons of ammonia and 60,000 tons of granular urea. Sergeant Bluff, Iowa (the Port Neal facility) The Port Neal facility is located approximately 12 miles south of Sioux City, Iowa, on the Missouri River in Sergeant Bluff, Iowa.
The complex has on-site storage for 55,000 tons of ammonia and 55,000 tons of granular urea. Sergeant Bluff, Iowa (the Port Neal facility) The Port Neal facility is located approximately 12 miles south of Sioux City, Iowa, on the Missouri River in Sergeant Bluff, Iowa.
We view training and development programs as being a key part of talent management, allowing us to grow a stronger company today and in the future. 10 Table of Contents CF INDUSTRIES HOLDINGS, INC.
We view training and development programs as being a key part of talent management, allowing us to grow a stronger company today and in the future. 11 Table of Contents CF INDUSTRIES HOLDINGS, INC.
With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities.
With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement and other industrial activities.
Billingham, United Kingdom The Billingham facility, located in the Teesside chemical area in northeastern England, is geographically split among three primary locations: the main site, which contains an ammonia plant, three nitric acid plants and a carbon dioxide plant; the Portrack site, approximately two miles away, which contains an AN fertilizer plant; and the North Tees site, approximately seven miles away, which contains an ammonia storage area.
Billingham, United Kingdom The Billingham facility, located in the Teesside chemical area in northeastern England, is geographically split among three primary locations: the main site, which contains three nitric acid plants; the Portrack site, approximately two miles away, which contains an AN fertilizer plant; and the North Tees site, approximately seven miles away, which contains an ammonia storage area.
In order to continue to improve the inclusiveness and diversity of our company and culture, our comprehensive ESG goals announced in 2020 include goals to increase the representation of females and persons of color in senior leadership roles and to implement a program designed to increase the hiring and promotion of minority and female candidates.
In order to continue to improve the inclusiveness and diversity of our company and culture, our comprehensive Environmental, Social and Governance (ESG) goals announced in 2020 include goals to increase the representation of females and persons of color in senior leadership roles and to implement a program designed to increase the hiring and promotion of minority and female candidates.
Our North American nitrogen production facilities can ship products via truck and rail to customers and to our storage facilities in the U.S. and Canada, with access to our leased railcar fleet of approximately 5,000 tank and hopper cars, as well as railcars provided by rail carriers. Our United Kingdom nitrogen production facility mainly ships products via truck.
Our North American nitrogen production facilities can ship products via truck and rail to customers and to our storage facilities in the U.S. and Canada, with access to our leased railcar fleet of approximately 4,900 tank and hopper cars, as well as railcars provided by rail carriers. Our United Kingdom nitrogen production facility mainly ships products via truck.
In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester the CO 2 from Donaldsonville. Start-up for the project is scheduled for early 2025.
In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester the CO 2 from Donaldsonville. Start-up for the project is planned for 2025.
As of December 31, 2022, we had exceeded our representation goal with approximately 38% of senior leadership roles held by females and persons of color. Workforce Health and Safety. Operating in a safe and responsible manner is a core value and an integral part of what sets the Company apart.
As of December 31, 2023, we had exceeded our representation goal with approximately 37% of senior leadership roles held by females and persons of color. Workforce Health and Safety. Operating in a safe and responsible manner is a core value and an integral part of what sets the Company apart.
In 2022, our nitrogen manufacturing facilities consumed, in the aggregate, approximately 330 million MMBtus of natural gas. We employ a combination of daily spot and term purchases from a variety of quality suppliers to maintain a reliable, competitively-priced supply of natural gas. We also use certain financial instruments to hedge natural gas prices.
In 2023, our nitrogen manufacturing facilities consumed, in the aggregate, approximately 340 million MMBtus of natural gas. We employ a combination of daily spot and term purchases from a variety of quality suppliers to maintain a reliable, competitively-priced supply of natural gas. We also use certain financial instruments to hedge natural gas prices.
Sales are generated by our internal marketing and sales force. CHS was our largest customer in 2022 and accounted for approximately 13% of our consolidated net sales. We have a strategic venture with CHS under which CHS has a minority equity interest in CFN. See Note 17—Noncontrolling Interest for additional information on our strategic venture with CHS.
Sales are generated by our internal marketing and sales force. CHS was our largest customer in 2023 and accounted for approximately 13% of our consolidated net sales. We have a strategic venture with CHS under which CHS has a minority equity interest in CFN. See Note 19—Noncontrolling Interest for additional information on our strategic venture with CHS.
The complex has on-site storage for 140,000 tons of ammonia, 201,000 tons of UAN (measured on a 32% nitrogen content basis) and 130,000 tons of granular urea. Medicine Hat, Alberta, Canada The Medicine Hat facility, located in southeast Alberta, is the largest nitrogen complex in Canada. It has two ammonia plants and one urea plant.
The complex has on-site storage for 139,000 tons of ammonia, 202,000 tons of UAN (measured on a 32% nitrogen content basis) and 130,000 tons of granular urea. Medicine Hat, Alberta, Canada The Medicine Hat facility, located in southeast Alberta, is the largest nitrogen complex in Canada. It has two ammonia plants and one urea plant.
The site has on-site storage for 50,000 tons of ammonia, 48,000 tons of 32% UAN and 11,000 tons of AN and related products. Courtright, Ontario, Canada The Courtright facility is located south of Sarnia, Ontario near the St. Clair River. The facility consists of an ammonia plant, a UAN plant, a nitric acid plant and a urea plant.
The site has on-site storage for 48,000 tons of ammonia, 47,000 tons of 32% UAN and 10,000 tons of AN and related products. Courtright, Ontario, Canada The Courtright facility is located south of Sarnia, Ontario near the St. Clair River. The facility consists of an ammonia plant, a UAN plant, a nitric acid plant and a urea plant.
The following table shows the production capacities as of December 31, 2022 at each of our nitrogen manufacturing facilities: Average Annual Capacity (1) Gross Ammonia (2) Net Ammonia (2) UAN (3) Urea (4) AN (5) Other (6) (tons in thousands) Donaldsonville (Louisiana) (7) 4,335 1,390 3,255 2,635 — 445 Medicine Hat (Alberta) 1,230 770 — 810 — — Port Neal (Iowa) 1,230 65 800 1,350 — 290 Verdigris (Oklahoma) (8) 1,210 430 1,955 — — — Woodward (Oklahoma) 480 130 810 — — 115 Yazoo City (Mississippi) (8)(9) 570 — 160 — 1,035 125 Courtright (Ontario) (8)(10) 500 265 345 — — 400 Billingham (U.K.) (8) 595 230 — — 625 410 10,150 3,280 7,325 4,795 1,660 1,785 Unconsolidated Affiliate PLNL (Trinidad) (11) 360 360 — — — — Total 10,510 3,640 7,325 4,795 1,660 1,785 _______________________________________________________________________________ (1) Average annual capacity includes allowance for normal outages and planned maintenance shutdowns.
The following table shows the production capacities as of December 31, 2023 at each of our nitrogen manufacturing facilities: Average Annual Capacity (1) Gross Ammonia (2) Net Ammonia (2) UAN (3) Urea (4) AN (5) Other (6) (tons in thousands) Donaldsonville (Louisiana) (7)(8) 4,335 1,390 3,255 2,635 — 445 Medicine Hat (Alberta) 1,230 770 — 810 — — Port Neal (Iowa) 1,230 65 800 1,350 — 290 Verdigris (Oklahoma) (8) 1,210 430 1,955 — — — Waggaman (Louisiana) 880 880 — — — — Woodward (Oklahoma) 480 130 810 — — 115 Yazoo City (Mississippi) (8)(9) 570 — 160 — 1,035 125 Courtright (Ontario) (8)(10) 500 265 345 — — 400 Billingham (U.K.) (8) — — — — 595 410 10,435 3,930 7,325 4,795 1,630 1,785 Unconsolidated Affiliate PLNL (Trinidad) (11) 360 360 — — — — Total 10,795 4,290 7,325 4,795 1,630 1,785 _______________________________________________________________________________ (1) Average annual capacity includes allowance for normal outages and planned maintenance shutdowns.
In 2022, natural gas accounted for approximately 50% of our total production costs for nitrogen products. Our nitrogen manufacturing facilities have access to abundant, competitively-priced natural gas through a reliable network of pipelines that are connected to major natural gas trading hubs.
In 2023, natural gas accounted for approximately 40% of our total production costs for nitrogen products. Our nitrogen manufacturing facilities have access to abundant, competitively-priced natural gas through a reliable network of pipelines that are connected to major natural gas trading hubs.
For the year ended December 31, 2022, our days away, restricted or transferred (DART) incident rate was 0.22 injuries per 200,000 work hours, and our lost time incident rate was 0.04 injuries per 200,000 work hours. Talent Development.
For the year ended December 31, 2023, our days away, restricted or transferred (DART) incident rate was 0.11 injuries per 200,000 work hours, and our lost time incident rate was 0.04 injuries per 200,000 work hours. Talent Development.
As of December 31, 2022, the combined production capacity of these seven facilities represented approximately 37%, 42%, 44% and 19% of North American ammonia, granular urea, UAN and AN production capacity, respectively. Each of our nitrogen manufacturing facilities in North America has on-site storage to provide flexibility to manage the flow of outbound shipments without impacting production.
As of December 31, 2023, the combined production capacity of these eight facilities represented approximately 40%, 42%, 44% and 19% of North American ammonia, granular urea, UAN and AN production capacity, respectively. Each of our nitrogen manufacturing facilities in North America has on-site storage to provide flexibility to manage the flow of outbound shipments without impacting production.
Executive orders issued by the Biden administration, including in particular an executive order issued on January 27, 2021 focusing on climate change, evidence the administration’s intent to undertake numerous initiatives in an effort to reduce GHG emissions, including promoting renewable energy development, limiting new oil and gas leases on federal lands and, in general, making climate change considerations a critical component of federal policy.
Executive orders issued by the Biden administration, including in particular an executive order issued on January 27, 2021 focusing on climate change, evidence the administration’s intent to undertake numerous initiatives in an effort to reduce GHG emissions, including promoting renewable energy development, limiting new oil and gas leases on federal lands and, in general, making climate change considerations a critical component of federal policy. 10 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Storage Facilities and Other Properties As of December 31, 2022, we owned or leased space at 50 in-market storage terminals and warehouses located in a 21-state region of the United States, Canada and the United Kingdom. Including storage at our production facilities, we have an aggregate storage capacity for approximately 3.0 million tons of product.
Storage Facilities and Other Properties As of December 31, 2023, we owned or leased space at 48 in-market storage terminals and warehouses located in a 22-state region of the United States, Canada and the United Kingdom. Including storage at our production facilities, we have an aggregate storage capacity for approximately 3.0 million tons of product.
Our principal assets as of December 31, 2022 include: • five U.S. nitrogen manufacturing facilities, located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); and Woodward, Oklahoma.
Our principal assets as of December 31, 2023 include: • six U.S. nitrogen manufacturing facilities, located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); Woodward, Oklahoma; and Waggaman, Louisiana.
Originally established as a fertilizer brokerage company, we expanded owning and operating fertilizer manufacturing and distribution facilities in the early 1950s with a principal objective of assured supply for our owners. At various times in our history, we manufactured and/or distributed nitrogen, phosphate and potash fertilizers.
Central Farmers became CF Industries in 1970. Originally established as a fertilizer brokerage company, we expanded owning and operating fertilizer manufacturing and distribution facilities in the early 1950s with a principal objective of assured supply for our owners. At various times in our history, we manufactured and/or distributed nitrogen, phosphate and potash fertilizers.
For calendar year 2023, the excess emissions fee under the federal, Alberta and Ontario regulatory programs is CAD $65 per tonne, which fee will increase by CAD $15 per tonne per year, reaching CAD $170 per tonne by 2030.
For calendar year 2024, the excess emissions fee under the federal, Alberta and Ontario regulatory programs is CAD $80 per tonne, which fee will increase by CAD $15 per tonne per year, reaching CAD $170 per tonne by 2030.
It is the second largest UAN production facility in North America. The facility comprises two ammonia plants, two nitric acid plants, two UAN plants and a port terminal. We lease the port terminal from the Tulsa-Rogers County Port Authority. The complex has on-site storage for 60,000 tons of ammonia and 100,000 tons of 32% UAN.
It is the second largest UAN production facility in North America. The facility consists of two ammonia plants, two nitric acid plants, two UAN plants and a port terminal. We lease the port terminal from the Tulsa-Rogers County Port Authority. The complex has on-site storage for 57,000 tons of ammonia and 102,000 tons of 32% UAN.
We are also entitled to semi-annual cash distributions from CFN. See Note 17—Noncontrolling Interest for additional information on our strategic venture with CHS. For the years ended December 31, 2022, 2021 and 2020, we sold 18.3 million, 18.5 million and 20.3 million product tons generating net sales of $11.19 billion, $6.54 billion and $4.12 billion, respectively.
We are also entitled to semi-annual cash distributions from CFN. See Note 19—Noncontrolling Interest for additional information on our strategic venture with CHS. For the years ended December 31, 2023, 2022 and 2021, we sold 19.1 million, 18.3 million and 18.5 million product tons generating net sales of $6.63 billion, $11.19 billion and $6.54 billion, respectively.
Our U.K. manufacturing plant is subject to the UK Emissions Trading Scheme (UK ETS), which generally requires us to hold or obtain emission allowances to offset GHG emissions from those aspects of our operations that are subject to regulation under this program. 8 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Our U.K. manufacturing plant is subject to the UK Emissions Trading Scheme (UK ETS), which generally requires us to hold or obtain emission allowances to offset GHG emissions from those aspects of our operations that are subject to regulation under this program.
Our United Kingdom nitrogen manufacturing facility produces ammonia and AN and serves primarily the British agricultural and industrial markets.
Our United Kingdom nitrogen manufacturing facility produces AN and serves primarily the agricultural and industrial markets in the United Kingdom.
As of December 31, 2022, our employee 12-month rolling average recordable incident rate (RIR) was 0.33 incidents per 200,000 work hours, and during the year ended December 31, 2022, our total recordable injury count was nine.
As of December 31, 2023, our employee 12-month rolling average recordable incident rate (RIR) was 0.36 incidents per 200,000 work hours, and during the year ended December 31, 2023, our total recordable injury count was ten.
At the time of the IPO, our assets consisted of one wholly owned nitrogen manufacturing facility in Louisiana, United States; a joint venture nitrogen manufacturing facility in Alberta, Canada, of which we owned 66 percent; a phosphate mining and manufacturing operation in Florida, United States; and distribution facilities throughout North America. 2 Table of Contents CF INDUSTRIES HOLDINGS, INC.
At the time of the IPO, our assets consisted of one wholly owned nitrogen manufacturing facility in Louisiana, United States; a joint venture nitrogen manufacturing facility in Alberta, Canada, of which we owned 66 percent; a phosphate mining and manufacturing operation in Florida, United States; and distribution facilities throughout North America. In April 2010, we acquired Terra Industries Inc.
Company for less than 6 years. Full-time employees represented nearly 100% of our workforce as of December 31, 2022 and approximately 6% were covered by collective bargaining agreements. We supplement our workforce with contractors with specialized skill sets during periods of peak activity, such as during turnarounds and maintenance events. Culture, Inclusion and Diversity.
Full-time employees represented nearly 100% of our workforce as of December 31, 2023 and approximately 5% were covered by collective bargaining agreements. We supplement our workforce with contractors with specialized skill sets during periods of peak activity, such as during turnarounds and maintenance events. Culture, Inclusion and Diversity.
Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes), are centrally managed and are not included in the measurement of segment profitability reviewed by management. See Note 21—Segment Disclosures for additional information. 3 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Total other operating costs and expenses (consisting primarily of selling, general and administrative expenses and other operating—net) and non-operating expenses (consisting primarily of interest and income taxes), are centrally managed and are not included in the measurement of segment profitability reviewed by management. See Note 22—Segment Disclosures for additional information.
Our principal executive offices are located outside of Chicago, Illinois, at 4 Parkway North, Deerfield, Illinois 60015, and our telephone number is 847-405-2400. Our Internet website address is www.cfindustries.com. Information made available on our website does not constitute part of this Annual Report on Form 10-K.
Our principal executive offices are located outside of Chicago, Illinois, at 2375 Waterview Drive, Northbrook, Illinois 60062, and our telephone number is 847-405-2400. Our Internet website address is www.cfindustries.com. Information made available on our website does not constitute part of this Annual Report on Form 10-K.
Gross margin was $5.86 billion, $2.39 billion and $801 million for the years ended December 31, 2022, 2021 and 2020, respectively. We own and operate seven nitrogen manufacturing facilities in North America, including five nitrogen manufacturing facilities in the United States, and two in Canada.
Gross margin was $2.55 billion, $5.86 billion and $2.39 billion for the years ended December 31, 2023, 2022 and 2021, respectively. We own and operate eight nitrogen manufacturing facilities in North America, including six nitrogen manufacturing facilities in the United States, and two in Canada.
We employed approximately 2,700 employees at December 31, 2022, of which 76% were located in the United States, 15% in Canada, and 9% in the United Kingdom.
We employed approximately 2,700 employees at December 31, 2023, of which 78% were located in the United States, 15% in Canada, and 7% in the United Kingdom.
The following table summarizes our production volume for the last three years: December 31, 2022 2021 2020 (tons in thousands) Ammonia (1) 9,807 9,349 10,353 Granular urea 4,561 4,123 5,001 UAN (32%) 6,706 6,763 6,677 AN 1,517 1,646 2,115 _______________________________________________________________________________ (1) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN or AN.
The following table summarizes our production volume for the last three years: December 31, 2023 2022 2021 (tons in thousands) Ammonia (1) 9,496 9,807 9,349 Granular urea 4,544 4,561 4,123 UAN (32%) 6,852 6,706 6,763 AN 1,520 1,517 1,646 _______________________________________________________________________________ (1) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN or AN.
We can also export nitrogen products via seagoing vessels from our Donaldsonville and Billingham manufacturing facilities. The Donaldsonville facility is connected to the 2,000-mile long Nustar pipeline through which we have the ability to transport ammonia to ten terminals and shipping points in the Midwestern U.S. corn belt. 6 Table of Contents CF INDUSTRIES HOLDINGS, INC.
We can also export nitrogen products via seagoing vessels from our Donaldsonville and Billingham manufacturing facilities. The Donaldsonville and Waggaman facilities are connected to the 2,000-mile long Nustar pipeline through which we have the ability to transport ammonia to ten terminals and shipping points in the Midwestern U.S. corn belt.
Woodward, Oklahoma The Woodward facility is located in rural northwest Oklahoma and consists of one ammonia plant, two nitric acid plants, two urea plants and two UAN plants. The facility has on-site storage for 36,000 tons of ammonia and 84,000 tons of 32% UAN. 5 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Woodward, Oklahoma The Woodward facility is located in rural northwest Oklahoma and consists of one ammonia plant, two nitric acid plants, two urea plants and two UAN plants. The facility has on-site storage for 34,000 tons of ammonia and 84,000 tons of 32% UAN.
We will provide electronic or paper copies of these documents free of charge upon request. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC.
We will provide electronic or paper copies of these documents free of charge upon request. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. Our Strategy Our strategy is to leverage our unique capabilities to accelerate the world’s transition to clean energy.
Environmental, Health and Safety Expenditures Our environmental, health and safety capital expenditures in 2022 totaled approximately $31 million. We estimate that we will have approximately $57 million of environmental, health and safety capital expenditures in 2023.
Environmental, Health and Safety Expenditures Our environmental, health and safety capital expenditures in 2023 totaled approximately $36 million. We estimate that we will have approximately $47 million of environmental, health and safety capital expenditures in 2024.
Once the dehydration and compression unit is in service and sequestration is initiated, we expect that the Donaldsonville complex will have the capacity to dehydrate and compress up to 2 million tons per year of CO 2 , enabling the production of blue ammonia.
Once the dehydration and compression unit is in service and sequestration is initiated, we expect that the Donaldsonville complex will have the capacity to dehydrate and compress up to 2 million tons per year of process CO 2 , thereby converting a portion of our existing ammonia production to low-carbon ammonia.
In 2022, the federal government found that both the Alberta and Ontario programs for 2023-2030 met such minimum criteria, and therefore, the provincial laws apply. Effective January 1, 2023, these provincial regulations will increase in stringency from 2022 levels.
In 2022, the federal government found that both the Alberta and Ontario programs for 2023-2030 met such minimum criteria, and therefore, the provincial laws apply.
(8) Reduction of UAN or AN production at the Yazoo City, Courtright, Verdigris, and Billingham facilities can allow more merchant nitric acid to be made available for sale. (9) The Yazoo City facility’s production capacity depends on product mix. With the facility maximizing the production of AN products, 160,000 tons of UAN can be produced.
The facility is also capable of producing up to 1.2 million product tons of 32.5% DEF. (8) Reduction of UAN or AN production at the Yazoo City, Courtright, Verdigris, Donaldsonville and Billingham facilities can allow more merchant nitric acid to be made available for sale. (9) The Yazoo City facility’s production capacity depends on product mix.
These facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc.
The Waggaman facility is wholly owned by us, and the other five U.S. nitrogen manufacturing facilities are wholly owned directly or indirectly by CF Industries Nitrogen, LLC (CFN), of which we own approximately 89% and CHS Inc.
This transaction added CF Fertilisers UK’s nitrogen manufacturing complexes to our consolidated manufacturing capacity. In February 2016, our strategic venture with CHS commenced, at which time CHS made a capital contribution of $2.8 billion to CFN in exchange for membership interests in CFN, which represented approximately 11% of the total membership interests of CFN.
In February 2016, our strategic venture with CHS commenced, at which time CHS made a capital contribution of $2.8 billion to CFN in exchange for membership interests in CFN, which represented approximately 11% of the total membership interests of CFN. 3 Table of Contents CF INDUSTRIES HOLDINGS, INC.
As of December 31, 2022, approximately 15% of our global workforce was female and 17% of the Company’s employees in frontline managerial roles were female. Minorities represented approximately 17% of the Company’s U.S. workforce and 15% of our U.S. employees in managerial roles.
As of December 31, 2023, approximately 16% of our global workforce was female and 17% of the Company’s employees in frontline managerial roles were female. Underrepresented groups account for approximately 18% of the Company’s U.S. workforce and 17% of our U.S. employees in managerial roles.
Net sales do not reflect amounts used internally, such as ammonia, in the manufacture of other products. 2022 2021 2020 Sales Volume (tons) Net Sales Sales Volume (tons) Net Sales Sales Volume (tons) Net Sales (tons in thousands; dollars in millions) Ammonia 3,300 $ 3,090 3,589 $ 1,787 3,767 $ 1,020 Granular Urea 4,572 2,892 4,290 1,880 5,148 1,248 UAN 6,788 3,572 6,584 1,788 6,843 1,063 AN 1,594 845 1,720 510 2,216 455 Other (1) 2,077 787 2,318 573 2,322 338 Total 18,331 $ 11,186 18,501 $ 6,538 20,296 $ 4,124 _______________________________________________________________________________ (1) Other segment products primarily include DEF, urea liquor, nitric acid and aqua ammonia.
Net sales do not reflect amounts used internally, such as ammonia, in the manufacture of other products. 2023 2022 2021 Sales Volume (tons) Net Sales Sales Volume (tons) Net Sales Sales Volume (tons) Net Sales (tons in thousands; dollars in millions) Ammonia 3,546 $ 1,679 3,300 $ 3,090 3,589 $ 1,787 Granular Urea 4,570 1,823 4,572 2,892 4,290 1,880 UAN 7,237 2,068 6,788 3,572 6,584 1,788 AN 1,571 497 1,594 845 1,720 510 Other (1) 2,206 564 2,077 787 2,318 573 Total 19,130 $ 6,631 18,331 $ 11,186 18,501 $ 6,538 _______________________________________________________________________________ (1) Other segment products primarily include DEF, urea liquor, nitric acid and aqua ammonia. 4 Table of Contents CF INDUSTRIES HOLDINGS, INC.
UAN production can be increased to 450,000 tons by reducing the production of AN to 900,000 tons. (10) Production of urea liquor and DEF at the Courtright facility can be increased by reducing UAN production. (11) Represents our 50% interest in the capacity of PLNL.
With the facility maximizing the production of AN products, 160,000 tons of UAN can be produced. UAN production can be increased to 450,000 tons by reducing the production of AN to 900,000 tons. (10) Production of urea liquor and DEF at the Courtright facility can be increased by reducing UAN production.
The location has on-site storage for 64,000 tons of ammonia and 16,000 tons of 32% UAN.
The location has on-site storage for 61,000 tons of ammonia and 16,000 tons of 32% UAN. 6 Table of Contents CF INDUSTRIES HOLDINGS, INC.
As a result of the Terra acquisition, we acquired five nitrogen fertilizer manufacturing facilities; an approximately 75.3% interest in Terra Nitrogen Company, L.P. (TNCLP), a publicly traded limited partnership; and certain joint venture interests. Prior to April 30, 2013, CF Industries owned 66 percent of Canadian Fertilizers Limited (CFL), a joint venture nitrogen manufacturing facility in Alberta, Canada.
(TNCLP), a publicly traded limited partnership; and certain joint venture interests. Prior to April 30, 2013, we owned 66 percent of Canadian Fertilizers Limited (CFL), a joint venture nitrogen manufacturing facility in Alberta, Canada.
As of December 31, 2022, 12% of our employees have worked for the Company more than 20 years, 18% of our employees have worked for the Company between 11 and 20 years, 28% of our employees have worked for the Company between 6 and 10 years, and 42% of our employees have worked at the 9 Table of Contents CF INDUSTRIES HOLDINGS, INC.
As of December 31, 2023, 11% of our employees have worked for the Company more than 20 years, 20% of our employees have worked for the Company between 11 and 20 years, 27% of our employees have worked for the Company between 6 and 10 years, and 42% of our employees have worked at the Company for less than 6 years.
In April 2010, we acquired Terra Industries Inc. (Terra), a leading North American producer and marketer of nitrogen fertilizer products for a purchase price of $4.6 billion, which was paid in cash and shares of our common stock.
(Terra), a leading North American producer and marketer of nitrogen fertilizer products for a purchase price of $4.6 billion, which was paid in cash and shares of our common stock. As a result of the Terra acquisition, we acquired five nitrogen fertilizer manufacturing facilities; an approximately 75.3% interest in Terra Nitrogen Company, L.P.
Under current regulations, the project would be expected to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per tonne of CO 2 sequestered.
Under current regulations, the project would be expected to qualify for tax credits under Section 45Q of the Internal Revenue Code, which provides a credit per tonne of CO 2 sequestered. Alongside these projects, we are also evaluating the construction of greenfield low-carbon ammonia capacity in Louisiana. In the fourth quarter of 2023, we and Mitsui & Co., Ltd.
Our storage capabilities are summarized in the following table: Ammonia Granular Urea UAN (1) AN Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Plants 8 535 3 320 6 549 2 139 Terminal and Warehouse Locations Owned (2) 22 760 — — 9 239 — — Leased (3) 5 69 2 32 22 325 — — Total In-Market 27 829 2 32 31 564 — — Total Storage Capacity 1,364 352 1,113 139 _______________________________________________________________________________ (1) Capacity is expressed as the equivalent volume of UAN measured on a 32% nitrogen content basis.
Ammonia Granular Urea UAN (1) AN Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Number of Facilities Capacity (000 Tons) Plants 9 552 3 315 6 551 2 148 Terminal and Warehouse Locations Owned (2) 22 766 — — 9 244 — — Leased (3) 5 69 3 35 19 279 — — Total In-Market 27 835 3 35 28 523 — — Total Storage Capacity 1,387 350 1,074 148 _______________________________________________________________________________ (1) Capacity is expressed as the equivalent volume of UAN measured on a 32% nitrogen content basis.
The next step will be a risk assessment, followed by a feasibility study. In 2015, we and several other parties received a notice that the U.S.
The next step will be a risk assessment, followed by a feasibility study. In 2015, we and several other parties received a notice that the U.S. Department of the Interior and other trustees intended to undertake a natural resource damage assessment for 18 former phosphate mines and three former processing facilities in southeast Idaho.
Company History We were founded in 1946 as Central Farmers Fertilizer Company, and were owned by a group of regional agriculture cooperatives for the first 59 years of our existence. Central Farmers became CF Industries in 1970.
We are also evaluating and in various stages of developing discussions and agreements with other companies for clean ammonia long-term offtake opportunities related to new applications of ammonia. Company History We were founded in 1946 as Central Farmers Fertilizer Company, and were owned by a group of regional agriculture cooperatives for the first 59 years of our existence.
We have announced a project with an estimated cost of $200 million to construct a CO 2 dehydration and compression facility at our Donaldsonville complex to enable the transport and permanent sequestration of the ammonia process CO 2 byproduct.
At an estimated cost of $200 million, we are constructing a CO 2 dehydration and compression facility to enable CCS at the facility.
In April 2021, we signed an engineering and procurement contract with thyssenkrupp to supply a 20 MW alkaline water electrolysis plant to produce green hydrogen at our Donaldsonville complex. Construction and installation, which is being managed by us, is expected to finish in 2023, with an estimated total cost of approximately $100 million.
In April 2021, we signed an engineering and procurement contract with thyssenkrupp to supply a 20 MW alkaline water electrolysis plant to produce green hydrogen at our Donaldsonville complex. We will integrate the green hydrogen generated by the electrolysis plant into existing ammonia synthesis loops to enable the production of approximately 20,000 tons per year of green ammonia.
This facility is capable of producing between 2.4 million and 3.3 million tons of granular urea and between 1.2 million and 4.3 million tons of UAN annually. The facility is also capable of producing up to 1.2 million product tons of 32.5% DEF.
Production of DEF can be increased by reducing urea and/or UAN production. (7) The Donaldsonville facility capacities present an estimated production mix. This facility is capable of producing between 2.4 million and 3.3 million tons of granular urea and between 1.2 million and 4.3 million tons of UAN annually.
These locations collectively have on-site storage for 40,000 tons of ammonia and 128,000 tons of AN. Point Lisas, Trinidad The Point Lisas Nitrogen facility in Trinidad is owned jointly through a 50/50 venture with Koch Fertilizer LLC.
Since that time, we have imported ammonia for upgrade at the facility into AN and other nitrogen products. In the third quarter of 2023, we approved our plan to permanently close the ammonia plant at the Billingham facility. Point Lisas, Trinidad The Point Lisas Nitrogen facility in Trinidad is owned jointly through a 50/50 venture with Koch Fertilizer LLC.
Should the companies agree to move forward, the ammonia facility would be constructed at our new Blue Point complex. We acquired the land on the west bank of the Mississippi river in Ascension Parish, Louisiana, for the complex during the third quarter of 2022.
We expect to complete both FEED studies in the second half of 2024. We and Mitsui are targeting the second half of 2024 for the final investment decision on the proposed greenfield low-carbon ammonia facility. Should the companies agree to move forward, the ammonia facility would be constructed at our new Blue Point complex.
Our approach includes green ammonia production, which refers to ammonia produced through a carbon-free process, and blue ammonia production, which relates to ammonia produced by conventional processes but with CO 2 byproduct removed through carbon capture and sequestration (CCS).
Low-carbon ammonia is ammonia produced by conventional processes but with approximately 60-98% of the process and flue gas CO 2 generated by ammonia production removed through carbon capture and sequestration (CCS). We are executing a project also at our Donaldsonville complex that will enable us to produce a significant volume of low-carbon ammonia.
Construction and commissioning of a new world-scale ammonia plant typically takes approximately four years from the time construction begins. We are also exploring opportunities to produce blue ammonia from our existing ammonia production network.
We own the land for the complex, which is located on the west bank of the Mississippi river in Ascension Parish, Louisiana. Construction and commissioning of a new world-scale ammonia plant typically takes approximately four years from the time construction begins. 2 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Removed
Our Commitment to a Clean Energy Economy We are taking significant steps to support a global hydrogen and clean fuel economy, through the production of green and blue ammonia.
Added
We believe this strategy builds upon the Company’s leadership in ammonia production to capture emerging opportunities available to ammonia produced with a lower carbon intensity than that of ammonia produced through traditional processes.
Removed
Since ammonia is one of the most efficient ways to transport and store hydrogen and is also a fuel in its own right, we believe that the Company, as the world’s largest producer of ammonia, with an unparalleled manufacturing and distribution network and deep technical expertise, is uniquely positioned to fulfill anticipated demand for hydrogen and ammonia from green and blue sources.
Added
These opportunities include traditional applications in agriculture to help reduce the carbon footprint of food production and the life cycle carbon intensity of ethanol production, enabling its use for sustainable aviation fuel, among other purposes.
Removed
We will integrate the green hydrogen generated by the electrolysis plant into existing ammonia synthesis loops to enable the production of approximately 20,000 tons per year of green ammonia. We believe that the Donaldsonville green ammonia project will be the largest of its kind in North America. In July 2022, we and Mitsui & Co., Ltd.
Added
They also include new applications, such as power generation and marine shipping, that would use the hydrogen component of the ammonia molecule for clean energy given that ammonia does not contain or emit carbon when combusted.
Removed
(Mitsui) signed a joint development agreement for the companies’ proposed plans to construct an export-oriented blue ammonia facility. We and Mitsui continue to progress a front-end engineering and design (FEED) study for the project, and expect to make a final investment decision on the proposed facility in the second half of 2023.
Added
We execute our strategy across four dimensions: decarbonizing our existing network to accelerate the availability of low-carbon ammonia; evaluating new low-carbon ammonia capacity growth; forging partnerships to accelerate our timeline and bridge gaps in areas where we do not have expertise; and collaborating to build understanding of ammonia’s clean energy capability, safety track record and regulatory environment.
Removed
Engineering activities and procurement of major equipment for the facility are in progress, and modification of the site’s existing equipment to allow integration with existing operations has begun.

… 28 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

96 edited+17 added−22 removed160 unchanged
Biggest changeSuch factors include, among others: • the cyclical nature of our business and the impact of global supply and demand on our selling prices; • the global commodity nature of our nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers; • conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for our fertilizer products; • the volatility of natural gas prices in North America and the United Kingdom; • weather conditions and the impact of adverse weather events; • the seasonality of the fertilizer business; • the impact of changing market conditions on our forward sales programs; • difficulties in securing the supply and delivery of raw materials, increases in their costs or delays or interruptions in their delivery; • reliance on third party providers of transportation services and equipment; • our reliance on a limited number of key facilities; • risks associated with cybersecurity; • acts of terrorism and regulations to combat terrorism; • risks associated with international operations; • the significant risks and hazards involved in producing and handling our products against which we may not be fully insured; • our ability to manage our indebtedness and any additional indebtedness that may be incurred; • our ability to maintain compliance with covenants under our revolving credit agreement and the agreements governing our indebtedness; • downgrades of our credit ratings; • risks associated with changes in tax laws and disagreements with taxing authorities; • risks involving derivatives and the effectiveness of our risk management and hedging activities; • potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; • regulatory restrictions and requirements related to greenhouse gas emissions; • the development and growth of the market for green and blue (low-carbon) ammonia and the risks and uncertainties relating to the development and implementation of our green and blue ammonia projects; • risks associated with expansions of our business, including unanticipated adverse consequences and the significant resources that could be required; and • risks associated with the operation or management of the CHS strategic venture, risks and uncertainties relating to the market prices of the fertilizer products that are the subject of our supply agreement with CHS over the life of the supply agreement, and the risk that any challenges related to the CHS strategic venture will harm our other business relationships. 26 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Biggest changeSuch factors include, among others: • the cyclical nature of our business and the impact of global supply and demand on our selling prices; • the global commodity nature of our nitrogen products, the conditions in the international market for nitrogen products, and the intense global competition from other producers; • conditions in the United States, Europe and other agricultural areas, including the influence of governmental policies and technological developments on the demand for our fertilizer products; • the volatility of natural gas prices in North America and the United Kingdom; • weather conditions and the impact of adverse weather events; • the seasonality of the fertilizer business; • the impact of changing market conditions on our forward sales programs; • difficulties in securing the supply and delivery of raw materials or utilities, increases in their costs or delays or interruptions in their delivery; • reliance on third party providers of transportation services and equipment; • our reliance on a limited number of key facilities; • risks associated with cybersecurity; • acts of terrorism and regulations to combat terrorism; • risks associated with international operations; • the significant risks and hazards involved in producing and handling our products against which we may not be fully insured; • our ability to manage our indebtedness and any additional indebtedness that may be incurred; • our ability to maintain compliance with covenants under our revolving credit agreement and the agreements governing our indebtedness; • downgrades of our credit ratings; • risks associated with changes in tax laws and disagreements with taxing authorities; • risks involving derivatives and the effectiveness of our risk management and hedging activities; • potential liabilities and expenditures related to environmental, health and safety laws and regulations and permitting requirements; • regulatory restrictions and requirements related to greenhouse gas emissions; • the development and growth of the market for green and low-carbon (blue) ammonia and the risks and uncertainties relating to the development and implementation of our green and low-carbon ammonia projects; and • risks associated with expansions of our business, including unanticipated adverse consequences and the significant resources that could be required. 27 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Some of our competitors have greater total resources and are less dependent on earnings from fertilizer sales, which make them less vulnerable to industry downturns and better positioned to pursue new expansion and development opportunities.
Some of our competitors have greater total resources and are less dependent on earnings from fertilizer sales, which make them less vulnerable to fertilizer industry downturns and better positioned to pursue new expansion and development opportunities.
Strategic Risks The market for green and blue (low-carbon) ammonia may be slow to develop, may not develop to the size expected or may not develop at all.
Strategic Risks The market for green and low-carbon (blue) ammonia may be slow to develop, may not develop to the size expected or may not develop at all.
We are subject to numerous environmental, health and safety laws and regulations in the United States, Canada, the United Kingdom, the EU, Trinidad and other locations, including laws and regulations relating to the generation and handling of hazardous substances and wastes; the introduction of new chemicals or substances into a market; the cleanup of hazardous substance releases; the discharge of regulated substances to air or water; and the demolition and cleanup of existing plant sites upon permanent closure.
We are subject to numerous environmental, health and safety laws and regulations in the United States, Canada, the United Kingdom, the EU, Trinidad and other locations, including laws and regulations relating to the generation and handling of hazardous substances and wastes; the introduction of new chemicals or substances into a market; the cleanup of hazardous substance releases; the discharge of regulated substances to land, air or water; and the demolition and cleanup of existing plant sites upon permanent closure.
Also, certain third party service providers, such as railroads, have from time to time experienced service delays or shutdowns due to capacity constraints in their systems, operational and maintenance difficulties, blockades, organized labor strikes, weather or safety-related embargoes and delays, and other events, which could impact the shipping of our products and cause disruption in our supply chain.
Also, certain third party service providers, such as railroads, have from time to time experienced service delays or shutdowns due to capacity constraints in their systems, operational and maintenance difficulties, blockades, organized labor strikes, weather or safety-related embargoes and delays, and other events, which could impact the shipping of our products and cause disruption in our operations and supply chain.
Given the nature of our business, we have incurred, are incurring currently, and are likely to incur periodically in the future, liabilities under CERCLA and other environmental cleanup laws at our current facilities or facilities previously owned by us or other acquired businesses, adjacent or nearby third-party facilities or offsite disposal locations.
Given the nature of our business, we have incurred, are incurring currently, and are likely to incur periodically in the future, liabilities under CERCLA and other environmental cleanup laws at our current facilities or facilities previously owned or operated by us or other acquired businesses, adjacent or nearby third-party facilities or offsite disposal locations.
There can be no assurance that we will be able to buy and maintain insurance with adequate limits and reasonable pricing terms and conditions. Our substantial indebtedness could adversely affect our cash flow, prevent us from fulfilling our obligations and impair our ability to pursue or achieve other business objectives.
There can be no assurance that we will be able to buy and maintain insurance with adequate limits and reasonable pricing terms and conditions. Our indebtedness could adversely affect our cash flow, prevent us from fulfilling our obligations and impair our ability to pursue or achieve other business objectives.
Developments in crop technology, such as nitrogen fixation, the conversion of atmospheric nitrogen into compounds that plants can assimilate, or nitrogen-efficient varieties, or developments in alternatives to traditional animal feed or alternative proteins, could also reduce the use of chemical fertilizers and adversely affect the demand for our products.
Developments in crop technology, such as nitrogen fixation, the conversion of atmospheric nitrogen into compounds that plants can assimilate, or nitrogen-efficient varieties, or developments in alternatives to traditional animal feed or alternative proteins, could also reduce the use of nitrogen fertilizers and adversely affect the demand for our products.
On October 9, 2019, the European Commission (the Commission) imposed definitive anti-dumping duties on imports to the European Union (EU) of UAN manufactured in Russia, Trinidad and the United States. For imports of UAN manufactured in the United States, the fixed duty rate is €29.48 per tonne (or €26.74 per ton).
In October 2019, the European Commission (the Commission) imposed definitive anti-dumping duties on imports to the European Union (EU) of UAN manufactured in Russia, Trinidad and the United States. For imports of UAN manufactured in the United States, the fixed duty rate is €29.48 per tonne (or €26.74 per ton).
Foreign Corrupt Practices Act of 1977, the United Kingdom Bribery Act 2010, the Canadian Corruption of Foreign Public Officials Act; economic sanctions programs administered by the United Nations, the EU and the Office of Foreign Assets Control of the U.S. Department of the Treasury; and regulations under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.
Foreign Corrupt Practices Act of 1977, the United Kingdom Bribery Act 2010, the Canadian Corruption of Foreign Public Officials Act; economic sanctions programs administered by the United Nations (UN), the EU and the Office of Foreign Assets Control of the U.S. Department of the Treasury; and regulations under the Comprehensive Iran Sanctions, Accountability, and Divestment Act of 2010.
Furthermore, certain governments, in some cases as owners of some of our competitors, may be willing to accept lower prices and profitability on their products or subsidize production or consumption in order to support domestic employment or other political or social goals.
Furthermore, certain governments, in some cases as owners of some of our competitors, may be willing to accept lower prices and profitability on their products or subsidize production inputs or consumption in order to support domestic employment or other political or social goals.
The market for green and blue (low-carbon) ammonia is developing and evolving, may not develop to the size or at the rate we expect, and is dependent in part on the developing market for green and blue (low-carbon) hydrogen, for which ammonia can serve as a transport and storage mechanism.
The market for green and low-carbon ammonia is developing and evolving, may not develop to the size or at the rate we expect, and is dependent in part on the developing market for green and low-carbon hydrogen, for which ammonia can serve as a transport and storage mechanism.
A failure to satisfy the financial maintenance covenants under the Revolving Credit Agreement or a breach of the covenants under any of the agreements governing our indebtedness could limit the borrowing availability under the Revolving Credit Agreement or result in an event of default under such agreements.
A failure to satisfy the financial maintenance covenant under the Revolving Credit Agreement or a breach of the covenants under any of the agreements governing our indebtedness could limit the borrowing availability under the Revolving Credit Agreement or result in an event of default under such agreements.
The construction of new nitrogen fertilizer manufacturing capacity in the industry, plus improvements to increase output from the existing production assets, increase nitrogen supply availability and affect the balance of supply and demand and nitrogen selling prices.
The construction of new nitrogen manufacturing capacity in the industry, plus improvements to increase output from the existing production assets, increase nitrogen supply availability and affect the balance of supply and demand and nitrogen selling prices.
These factors include, among others, the extent to which and rate at which cost competitive global renewable energy capacity increases, the pricing of traditional and alternative sources of energy, the realization of technological improvements required to increase the efficiency and lower the costs of production of green and blue ammonia, the regulatory environment, the rate and extent of infrastructure investment and development which may be affected by the relevant parties’ ability to obtain permits for these investments, the availability of tax benefits and other incentives, the implementation of policy in foreign jurisdictions providing economic support for or otherwise mandating decarbonization and our ability to provide green and blue ammonia offerings cost-effectively.
These factors include, among others, the extent to which and rate at which cost competitive global renewable energy capacity increases, the pricing of traditional and alternative sources of energy, the realization of technological improvements required to increase the efficiency and lower the costs of production of green and low-carbon ammonia, the regulatory environment, the rate and extent of infrastructure investment and development which may be affected by the relevant parties’ ability to obtain permits for these investments, the availability of tax benefits and other incentives, the implementation of policy in foreign jurisdictions providing economic support for or otherwise mandating decarbonization and our ability to provide green and low-carbon ammonia offerings cost-effectively.
Any reduction in the demand for chemical fertilizer products, including as a result of technological developments and/or limitations on the use and application of chemical fertilizers, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our business is dependent on natural gas, the prices of which are subject to volatility.
Any reduction in the demand for our nitrogen fertilizer products, including as a result of technological developments and/or limitations on the use and application of nitrogen fertilizers, could have a material adverse effect on our business, financial condition, results of operations and cash flows. Our business is dependent on natural gas, the prices of which are subject to volatility.
Any significant adverse weather event or combination of adverse weather events 14 Table of Contents CF INDUSTRIES HOLDINGS, INC. could decrease demand for our fertilizer products, increase the cost of natural gas or materially disrupt our operations — any of which could have a material adverse impact on our business, financial condition, results of operations and cash flows.
Any significant adverse weather event or combination of adverse weather events could decrease demand for our fertilizer products, increase the cost of natural gas or materially disrupt our operations — any of which could have a material adverse impact on our business, financial condition, results of operations and cash flows. 15 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Tax matters, including changes in tax laws or rates, adverse determinations by taxing authorities and imposition of new taxes could adversely affect our results of operations and financial condition. We are subject to taxes in (i) the United States, where most of our operations are located, and (ii) several foreign jurisdictions where our subsidiaries are organized or conduct business.
Tax matters, including changes in tax laws or rates, adverse determinations by taxing authorities and imposition of new taxes could adversely affect our results of operations and financial condition. We are subject to taxes in the United States, where most of our operations are located, and in several foreign jurisdictions where our subsidiaries are organized or conduct business.
In certain years, global nitrogen fertilizer capacity has increased faster than global nitrogen fertilizer demand, creating a surplus of global nitrogen fertilizer capacity, which has led to lower nitrogen fertilizer selling prices.
In certain years, global nitrogen capacity has increased faster than global nitrogen demand, creating a surplus of global nitrogen capacity, which has led to lower nitrogen selling prices.
It is possible that governmental entities in the United States or elsewhere could impose additional limitations on the use, sale or distribution of nitrogen products, thereby limiting our ability to manufacture or sell those products, or that illicit use of our products could result in liability for us. 17 Table of Contents CF INDUSTRIES HOLDINGS, INC.
It is possible that governmental entities in the United States or elsewhere could impose additional limitations on the use, sale or distribution of nitrogen products, thereby limiting our ability to manufacture or sell those products, or that illicit use of our products could result in liability for us. 18 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Our substantial debt service obligations will have an impact on our earnings and cash flow for so long as the indebtedness is outstanding.
Our debt service obligations will have an impact on our earnings and cash flow for so long as the indebtedness is outstanding.
Our competitive position could suffer as a result of these factors, including if we are not able to expand our own resources to a similar extent, either through investments in new or existing operations or through acquisitions or joint ventures. 11 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Our competitive position could suffer as a result of these factors, including if we are not able to expand our own resources to a similar extent, either through investments in new or existing operations or through acquisitions or joint ventures. 12 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Due to the cyclical nature of our industry, we cannot predict the timing or duration of oversupply conditions or the degree to which oversupply conditions would impact our business, financial condition, results of operations and cash flows. Nitrogen products are global commodities, and we face intense global competition from other producers.
Due to the cyclical nature of our industry, we cannot predict the timing or duration of such periods of industry oversupply or the degree to which oversupply conditions would impact our business, financial condition, results of operations and cash flows. Nitrogen products are global commodities, and we face intense global competition from other producers.
The resulting increase in ethanol production has led to an increase in the amount of corn grown in the United States and to increased fertilizer usage on both corn and other crops that have also 12 Table of Contents CF INDUSTRIES HOLDINGS, INC. benefited from improved farm economics.
The resulting increase in ethanol production has led to an increase in the 13 Table of Contents CF INDUSTRIES HOLDINGS, INC. amount of corn grown in the United States and to increased fertilizer usage on both corn and other crops that have also benefited from improved farm economics.
Moreover, our facilities may be subject to failure of equipment that may be difficult to replace or have long delivery lead times, due in part to a limited number of suppliers, and could result in operational disruptions. 16 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Moreover, our facilities may be subject to failure of equipment that may be difficult to replace or have long delivery lead times, due in part to a limited number of suppliers, and could result in operational disruptions. 17 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Recently, many proposed green and blue ammonia projects have been announced or considered, and future hydrogen, energy, or environmental/carbon policies may support development of additional nitrogen production in locations outside North America, including Europe, Australia, and the Middle East.
Recently, many proposed green and low-carbon ammonia projects have been announced or considered, and future hydrogen, energy, or environmental/carbon policies may support development of additional nitrogen production in locations outside North America, including Europe, Australia, and the Middle East.
In addition, from time to time various foreign governments and U.S. state legislatures have considered limitations on the use and application of chemical fertilizers due to concerns about the negative impact that the application of these products can have on the environment.
In addition, from time to time various foreign governments and U.S. state legislatures have considered limitations on the use and application of nitrogen fertilizers due to concerns about the negative impact that the application of these products can have on the environment.
If a sustainable market for green or blue ammonia or hydrogen fails to develop, develops more slowly than we anticipate, or develops in a way that is not viable to serve with our assets and capabilities, we may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan.
If a sustainable market for green or low-carbon ammonia or hydrogen fails to develop, develops more slowly than we anticipate, or develops in a way that is not viable to serve with our assets and capabilities, we may decide not to implement, or may not be successful in implementing, one or more elements of our multi-year strategic plan.
Government policies in these regions may also stimulate future ammonia or hydrogen investments. Recently, many proposed green and blue ammonia projects have been announced or considered, and future hydrogen, energy, or environmental/carbon policies may support development of additional nitrogen production in locations outside North America, including Europe, Australia and the Middle East.
Government policies in these regions may also stimulate future ammonia or hydrogen investments. Recently, many proposed green and low-carbon ammonia projects have been announced or considered, and future hydrogen, energy, or environmental/carbon policies may support development of additional nitrogen production in locations outside North America, including Europe, Australia, India, and the Middle East.
Although we did not own or operate the facility or directly sell our products to the facility, products that we manufactured and sold to others were delivered to the facility and may have been stored at the facility at the time of the incident.
We did not own or operate the facility or directly sell our products to the facility, but products that we manufactured and sold to others were delivered to the facility and may have been stored at the facility at the time of the incident.
Additionally, future environmental, health and safety laws and regulations or reinterpretation of current laws and regulations may require us to make substantial expenditures. Our costs to comply with, or any liabilities under, these laws and regulations could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Additionally, future environmental, health and safety laws and regulations or reinterpretation of or changes to current laws and regulations may require us to make substantial expenditures or modify business plans. Our costs to comply with, or any liabilities under, these laws and regulations could have a material adverse effect on our business, financial condition, results of operations and cash flows.
In addition, we rely on railroad, barge, truck, vessel and pipeline companies to coordinate and deliver finished products to our distribution system and to ship finished products to our customers. We also lease rail cars in order to ship raw materials and finished products.
In addition, we rely on railroad, barge, truck, vessel and pipeline companies to coordinate and deliver finished products to our distribution system and to ship finished products to our customers. We also lease rail cars in order to ship finished products.
As of December 31, 2022, we had approximately $3.0 billion of total funded indebtedness, consisting primarily of unsecured senior notes with varying maturity dates between 2026 and 2044, or approximately 27% of our total capitalization (total debt plus total equity), and an additional $750 million of unsecured senior borrowing availability (reflecting no outstanding borrowings and no outstanding letters of credit) for general corporate purposes under our revolving credit agreement (the Revolving Credit Agreement).
As of December 31, 2023, we had approximately $3.0 billion of total funded indebtedness, consisting primarily of unsecured senior notes with varying maturity dates between 2026 and 2044, or approximately 26% of our total capitalization (total debt plus total equity), and an additional $750 million of unsecured senior borrowing availability (reflecting no outstanding borrowings and no outstanding letters of credit) for general corporate purposes under our revolving credit agreement (the Revolving Credit Agreement).
The recognition and acceptance of green and blue ammonia as a transport and storage mechanism for green and blue hydrogen, the use of green and blue ammonia as a fuel in its own right, the use of green and blue ammonia as a fertilizer, and the development and growth of end market demand and applications for green and blue hydrogen and green and blue ammonia are uncertain and dependent on a number of factors outside of our control.
The recognition and acceptance of green and low-carbon ammonia as a transport and storage mechanism for green and low-carbon hydrogen, the use of green and low-carbon ammonia as a fuel in its own right, the use of green and low-carbon ammonia as a fertilizer, and the development and growth of end market demand and applications for green and low-carbon hydrogen and green and low-carbon ammonia are uncertain and dependent on a number of factors outside of our control.
Major investments in our business, including acquisitions, partnerships, joint ventures, business combination transactions or other major investments, such as our green and blue ammonia projects, require significant managerial resources, the diversion of which from our other activities or opportunities may negatively affect the existing operations of our business.
Major investments in our business, including acquisitions, partnerships, joint ventures, business combination transactions or other major investments, such as our green and low-carbon ammonia projects, require significant managerial resources, the diversion of which from our other activities or opportunities may negatively affect the existing operations of our business.
We believe the demand for green and blue ammonia could take several years to materialize and then ten or more years to fully develop and mature, and we cannot be certain that this market or the market for green and blue hydrogen will grow to the size or at the rate we expect or at all.
We believe the demand for green and low-carbon ammonia could take several years to materialize and then ten or more years to fully develop and mature, and we cannot be certain that this market or the market for green and low-carbon hydrogen will grow to the size or at the rate we expect or at all.
For example, our Donaldsonville complex is located in an area of the United States that experiences extreme weather events, including a relatively high level of hurricane or high wind activity, and several of our other complexes are also located in areas that experience extreme weather events.
For example, our Donaldsonville and Waggaman complexes are located in an area of the United States that experiences extreme weather events, including a relatively high level of hurricane or high wind activity, and several of our other complexes are also located in areas that experience extreme weather events.
As a result, we may not prevent certain material adverse impacts that could have been mitigated through the use of derivative strategies. Environmental and Regulatory Risks We are subject to numerous environmental, health and safety laws, regulations and permitting requirements, as well as potential environmental liabilities, which may require us to make substantial expenditures.
As a result, we may not prevent certain material adverse impacts that could have been mitigated through the use of derivative strategies. Environmental and Regulatory Risks We are subject to numerous environmental, health and safety laws, regulations and permitting requirements, as well as potential environmental liabilities, which may require us to make substantial expenditures or modify business plans.
A decision by a government agency to deny or delay issuing a new or renewed regulatory permit or approval, or to revoke or substantially modify an existing permit or approval, or a determination that we have violated a law or permit as a result of a governmental inspection of our facilities could have a material adverse effect on our ability to continue operations at our facilities and on our business, financial condition, results of operations and cash flows.
A decision by a government agency to deny or delay issuing a new or renewed regulatory permit or approval, or to revoke or substantially modify an existing permit or approval, or a determination that we have violated a law or permit could have a material adverse effect on our ability to continue operations at our facilities and on our business, financial condition, results of operations and cash flows.
For example, in the two-year period ended December 31, 2017, additional production capacity came on line and, at the same time, the average selling price for our products declined 34%, from $314 per ton in 2015 to $207 per ton in 2017. Additional production capacity is expected to come on line over the next 12 months outside of North America.
For example, in the two-year period ended December 31, 2017, additional production capacity came online and, at the same time, the average selling price for our products declined 34%, from $314 per ton in 2015 to $207 per ton in 2017. Additional nitrogen production capacity is expected to come online over the next 12 months outside of North America.
In addition, plans for building new facilities for green and blue ammonia have been announced by other companies and CF Holdings, such as our proposed plans for an export-oriented greenfield blue ammonia production facility in the southeastern United States. We cannot predict the impact of this additional capacity on nitrogen fertilizer selling prices.
In addition, plans for building new facilities for green and low-carbon ammonia have been announced by other companies and CF Holdings, such as our proposed plans for an export-oriented greenfield low-carbon ammonia production facility in the southeastern United States. We cannot predict the impact of this additional capacity on nitrogen selling prices.
The price of natural gas in North America has been volatile in recent years. The price has declined on average due in part to the development of significant natural gas reserves, including shale gas, and the rapid improvement in shale gas extraction techniques, such as hydraulic fracturing and horizontal drilling.
The price of natural gas in North America has historically been volatile. The price has declined on average due in part to the development of significant natural gas reserves, including shale gas, and the rapid improvement in shale gas extraction techniques, such as hydraulic fracturing and horizontal drilling.
Changes could also be made to tax policies related to decarbonization, electricity generation or clean energy that could impact our business and investment decisions.
Changes could also be made to tax or other regulatory policies related to decarbonization, electricity generation or clean energy that could impact our business and investment decisions.
Major investments such as capital improvements at our 24 Table of Contents CF INDUSTRIES HOLDINGS, INC. facilities are subject to a number of risks, any of which could prevent us from completing capital projects in a timely or economic manner or at all, including, without limitation, cost overruns, non-performance of third parties, the inability to obtain necessary permits or other permitting matters, adverse weather, defects in materials and workmanship, labor and raw material shortages, transportation constraints, engineering and construction change orders, errors in design, construction or start-up, and other unforeseen difficulties.
Major investments such as capital improvements at our 25 Table of Contents CF INDUSTRIES HOLDINGS, INC. facilities are subject to a number of risks, any of which could prevent us from completing capital projects in a timely or economic manner or at all, including, without limitation, cost overruns, non-performance of third parties, the inability to obtain necessary permits or other permitting matters, adverse weather, defects in materials and workmanship, labor and raw material shortages, transportation constraints, changes to international trade-related policy, engineering and construction change orders, errors in design, construction or start-up, and other unforeseen difficulties.
Moreover, we may not be successful in the development and implementation of our green and blue ammonia projects in a timely or economic manner, or at all, due to a number of factors, many of which are beyond our control.
Moreover, we may not be successful in the development and implementation of our green and low-carbon ammonia projects in a timely or economic manner, or at all, due to a number of factors, many of which are beyond our control.
If our assumptions about the engineering and project execution requirements necessary to successfully build or convert the facility capacity that we are contemplating and to scale up to larger production quantities prove to be incorrect, we may be unable to produce substantial quantities of green or blue ammonia, and the cost to construct such green and blue ammonia facilities, or the production costs 23 Table of Contents CF INDUSTRIES HOLDINGS, INC. associated with the operation of such facilities, may be higher than we project.
If our assumptions about the engineering and project execution requirements necessary to successfully build or convert the facility capacity that we are contemplating and to scale up to larger production quantities prove to be incorrect, we may be unable to produce substantial quantities of green or low-carbon ammonia, and the cost to construct such green and low-carbon ammonia 24 Table of Contents CF INDUSTRIES HOLDINGS, INC. facilities, or the production costs associated with the operation of such facilities, may be higher than we project.
Delays or interruptions in the delivery of natural gas or other raw materials may be caused by, among other things, extreme weather or natural disasters, unscheduled downtime, labor difficulties or shortages, insolvency of our suppliers or their inability to meet existing contractual arrangements, deliberate sabotage and terrorist incidents, or mechanical failures.
Delays or interruptions in the delivery of raw materials and utilities may be caused by, among other things, extreme weather or natural disasters, unscheduled downtime, labor difficulties or shortages, insolvency of our suppliers or their inability to meet existing contractual arrangements, deliberate sabotage and terrorist incidents, unplanned maintenance or mechanical failures.
In addition, further development of alternative decarbonization technologies may result in viable alternatives to the use of blue ammonia for many potential decarbonization applications, resulting in lower than expected market demand growth relative to our current expectations.
In addition, further development of alternative decarbonization technologies may result in viable alternatives to the use of low-carbon ammonia for many potential decarbonization applications, resulting in lower than expected market demand growth relative to our current expectations.
In the event that the growth in supply of green and blue ammonia and green and blue hydrogen exceeds the growth in demand for those products, the resulting unfavorable supply and demand balance could lead to lower selling prices than we expect, which could negatively affect our business, financial condition, results of operations and cash flows.
In the event that the growth in supply of green and low-carbon ammonia and green and low-carbon hydrogen exceeds the growth in demand for those products, the resulting unfavorable supply and demand balance could lead to lower selling prices than we expect for many of our products, which could negatively affect our business, financial condition, results of operations and cash flows.
Our Donaldsonville complex is located in an area of the United States that experiences a relatively high level of hurricane or high wind activity and several of our complexes are located in areas that experience extreme weather events.
Our Donaldsonville and Waggaman complexes are located in an area of the United States that experiences a relatively high level of hurricane or high wind activity and several of our complexes are located in areas that experience extreme weather events.
Over time, as we seek to convert additional existing facilities to green and blue production and further expand our green and blue ammonia production capacity, we may face operational difficulties and execution risks related to the design, development and construction.
Over time, as we seek to convert additional existing facilities to green and low-carbon production and further expand our green and low-carbon ammonia production capacity, we may face operational difficulties and execution risks related to the design, development and construction.
The production of blue ammonia depends to a large extent upon the ability of third parties to develop class VI carbon sequestration wells, which currently do not exist at large scale and are subject to a permitting process and operational risks, which may result in delays, impact viability in some or all situations, or create long-term liabilities.
The production of low-carbon ammonia depends to a large extent upon the ability of third parties to develop class VI carbon sequestration wells and carbon dioxide transportation pipelines, which currently do not exist at large scale and are subject to a permitting process and operational risks, which may result in delays, impact viability in some or all situations, or create long-term liabilities.
Periods of strong demand, high capacity utilization and increasing operating margins tend to stimulate global investment in production capacity. In the past, fertilizer producers, including CF Holdings, have built new production facilities or expanded capacity of existing production assets, or announced plans to do so.
Periods of strong demand, high capacity utilization and increasing operating margins tend to stimulate global investment in production capacity. In the past, nitrogen manufacturers, including CF Holdings, have built new production facilities or expanded capacity of existing production assets, or announced plans to do so.
These transportation operations, equipment and services are subject to various hazards and other sources of disruption, including adverse operating conditions on the inland waterway system, extreme weather conditions, system failures, unscheduled downtime, labor difficulties or shortages, shutdowns, delays, accidents such as spills and derailments, vessel groundings and other accidents and operating hazards.
These transportation operations, equipment and services are subject to various hazards and other sources of disruption, including adverse operating conditions on the inland waterway system or on the seas with respect to oceangoing vessels, extreme weather conditions, system failures, unscheduled downtime, labor difficulties or shortages, shutdowns, delays, accidents such as spills and derailments, vessel groundings and other accidents and operating hazards.
Our clean energy strategy also depends on the realization of certain technical improvements required to increase the efficiency and lower the costs of production of green and blue ammonia.
Our clean energy strategy also depends on the realization of certain technical improvements required to increase the efficiency and lower the costs of production of green and low-carbon ammonia.
Any increases in the volume of liquefied natural gas exported from the United States to other regions, or increases in the usage of hydraulic fracturing outside the United States, particularly in regions where nitrogen products are produced, could increase our natural gas costs and/or lower natural gas costs for our competitors.
Any increases in the volume of liquefied natural gas (LNG) exported from the United States to other regions, or increases in natural gas development outside the United States, particularly in regions where nitrogen products are produced, could increase our natural gas costs and/or lower natural gas costs for our competitors.
If natural gas prices outside of North America were to decrease or North American natural gas prices were to increase, our favorable energy cost differentials relative to the industry’s marginal nitrogen producers could significantly erode, which could have a material adverse effect on our business, financial condition, results of operations and cash flows.
If natural gas prices outside of North America were to decrease or North American natural gas prices were to increase, our favorable energy cost differentials relative to the industry’s marginal nitrogen producers could significantly erode, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. 14 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Any delay or interruption in the delivery of natural gas or other raw materials, even for a limited period, could have a material adverse effect on our business, financial condition, results of operations and cash flows. 15 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Any delay or interruption in the delivery of raw materials or utilities, even for a limited period, could have a material adverse effect on our business, financial condition, results of operations and cash flows. 16 Table of Contents CF INDUSTRIES HOLDINGS, INC.
We are reliant on a limited number of key facilities. Our nitrogen manufacturing facilities are located at eight separate nitrogen complexes, the largest of which is the Donaldsonville complex, which represented approximately 41% of our ammonia production capacity as of December 31, 2022.
We are reliant on a limited number of key facilities. Our nitrogen manufacturing facilities are located at nine separate nitrogen complexes, the largest of which is the Donaldsonville complex, which represented approximately 40% of our ammonia production capacity as of December 31, 2023.
More stringent GHG regulations, if they are enacted, are likely to have a significant impact on us, because our production facilities emit GHGs such as carbon dioxide and nitrous oxide and because natural gas, a fossil fuel, is a primary raw material used in our nitrogen production process.
More stringent GHG regulations, if they are enacted, are likely to have a significant impact on us, because our production facilities emit GHGs such as carbon dioxide and nitrous oxide and because natural gas, a fossil fuel that releases methane when extracted from the earth, is a primary raw material used in our nitrogen production process.
As of February 13, 2023, our corporate credit rating by S&P Global Ratings is BBB with a stable outlook; our corporate credit rating by Moody’s Investor Services, Inc. is Baa3 with a stable outlook; and our corporate credit rating with Fitch Ratings, Inc. is BBB with a stable outlook.
As of February 12, 2024, our corporate credit rating by S&P Global Ratings is BBB with a stable outlook; our corporate credit rating by Moody’s Investor Services, Inc. is Baa3 with a positive outlook; and our corporate credit rating with Fitch Ratings, Inc. is BBB with a stable outlook.
Violations of environmental, health and safety laws can result in substantial penalties, court orders to install pollution-control equipment, civil and criminal sanctions, permit revocations and facility shutdowns. Environmental, health and safety 21 Table of Contents CF INDUSTRIES HOLDINGS, INC. laws change regularly and have tended to become more stringent over time.
Violations of environmental, health and safety laws can result in substantial penalties, court orders to install pollution-control equipment, civil and criminal sanctions, permit revocations and facility shutdowns. Environmental, health and safety laws change regularly and have tended to become more stringent over time.
We use natural gas and other raw materials in the manufacture of our nitrogen products. We purchase the natural gas and other raw materials from third party suppliers. Our natural gas is transported by pipeline to our facilities by third party transportation providers or through the use of facilities owned by third parties.
We purchase raw materials and utilities from third party suppliers. Our natural gas is transported by pipeline to our facilities by third party transportation providers or through the use of facilities owned by third parties.
We are subject to various self-insured retentions, deductibles and limits under these insurance policies. The policies also contain exclusions and conditions that could have a material adverse impact on our ability to receive indemnification thereunder. Our policies are generally renewed annually.
We are 19 Table of Contents CF INDUSTRIES HOLDINGS, INC. subject to various self-insured retentions, deductibles and limits under these insurance policies. The policies also contain exclusions and conditions that could have a material adverse impact on our ability to receive indemnification thereunder. Our policies are generally renewed annually.
From time to time, our production, distribution or storage of anhydrous ammonia and other hazardous or regulated substances has resulted in accidental releases that have temporarily disrupted our operations and/or resulted in liability for administrative penalties and/or claims for personal injury. To date, our costs to resolve these liabilities have not been material.
From time to time, our production, distribution or storage of anhydrous ammonia and other hazardous or regulated substances has resulted in accidental releases that have temporarily disrupted our operations and/or resulted in liability for administrative penalties, cleanup costs, and/or claims for personal injury.
If the funds generated by our U.S. business are not sufficient to meet our need for cash in the United States, we may need to repatriate a portion of our future international earnings to the United States.
If the funds generated by our U.S. business are not sufficient to meet our need for cash in the United States or if cash generated outside the United States exceeds the needs of such non-U.S. operations, we may repatriate a portion of our future international earnings to the United States.
Changes in the supply of and demand for natural gas can lead to extended periods of higher natural gas prices. In recent years, the cost of North American natural gas for the production of nitrogen fertilizers has been significantly lower than the energy costs of the industry’s marginal nitrogen producers.
Changes in the supply of and demand for natural gas can lead to extended periods of higher natural gas prices. In recent years, the cost of North American natural gas for the production of nitrogen fertilizers has been significantly lower than the cost of natural gas in other parts of the world where the industry’s marginal nitrogen producers are located.
In addition, adverse weather events not only can cause loss of power at our facilities or damage to or delays in logistics capabilities disrupting our operations, but also can impact the supply of natural gas and utilities and cause prices to rise.
In addition, adverse weather events, such as storms, hurricanes, tornadoes, or floods, not only can cause loss of power or other impacts to our facilities or damage to or delays in logistics capabilities disrupting our operations, but also can impact the supply of natural gas and utilities and cause prices to rise.
In recent years, we have experienced periods of industry oversupply, which impacted our financial performance, credit ratings and the trading price for our common stock.
From time to time, we have experienced periods of industry oversupply, which impacted our financial performance, credit ratings and the trading price for our common stock.
Due to concerns related to terrorism or the potential use of certain nitrogen products as explosives, we are subject to various security laws and regulations. In the United States, these security laws include the Maritime Transportation Security Act of 2002 and the Chemical Facility Anti-Terrorism Standards regulation.
Due to concerns related to terrorism or the potential use of certain nitrogen products as explosives, we are subject to various security laws and regulations. In the United States, these security laws include the Maritime Transportation Security Act of 2002 and the Chemical Facility Anti-Terrorism Standards (although this legislation is currently expired as Congress works to reauthorize it).
Each of these consequences could adversely affect our business, reputation and our financial statements. Our business involves the use, storage, and transmission of information about our employees, customers, and suppliers. The protection of such information, as well as our proprietary information, is critical to us.
Each of these consequences could have an adverse effect on our business, reputation and our financial statements, some of which could be material. Our business involves the use, storage, and transmission of information about our employees, customers, and suppliers. The protection of such information, as well as our proprietary information, is critical to us.
For example, in 2013, a fire and explosion occurred at a fertilizer storage and distribution facility in West, Texas. The incident resulted in 15 fatalities and claims of injuries to approximately 200 people, and damaged or destroyed a number of homes and buildings around the facility.
Our exposure to these risks and hazards is exemplified by a fire and explosion that occurred at a fertilizer storage and distribution facility in West, Texas, in 2013. The fire and explosion resulted in 15 fatalities and claims of injuries to approximately 200 people, and damaged or destroyed a number of homes and buildings around the facility.
We also export nitrogen fertilizer products via seagoing vessels from deep-water docking facilities at certain of our manufacturing sites.
We also export nitrogen fertilizer products via seagoing vessels from deep-water docking facilities at certain of our manufacturing sites on the U.S. river system through the U.S. Gulf of Mexico.
In that event, we may not be able to access the borrowing availability under the Revolving Credit Agreement and we would need to seek an amendment to our debt agreements or would need to refinance our indebtedness.
We may not be able to maintain compliance with all of these covenants. In that event, we may not be able to access the borrowing availability under the 20 Table of Contents CF INDUSTRIES HOLDINGS, INC. Revolving Credit Agreement and we would need to seek an amendment to our debt agreements or would need to refinance our indebtedness.
As a result of these and other factors, including general economic risk, we may not be able to realize our projected returns or other expected benefits from any future acquisitions, partnerships, joint ventures, business combination transactions or other major investments.
In addition, these efforts may require capital resources that could otherwise be used for the improvement and expansion of our existing business. As a result of these and other factors, including general economic risk, we may not be able to realize our projected returns or other expected benefits from acquisitions, partnerships, joint ventures, business combination transactions or other major investments.
During the three-year period ended December 31, 2022, the daily closing price at the Henry Hub reached a low of $1.34 per 13 Table of Contents CF INDUSTRIES HOLDINGS, INC. MMBtu on September 22, 2020 and three consecutive days in October 2020 and a high of $23.61 per MMBtu on February 18, 2021.
During the three-year period ended December 31, 2023, the daily closing price at the Henry Hub reached a low of $1.72 per MMBtu on three consecutive days in June 2023 and a high of $23.61 per MMBtu on February 18, 2021.
While CF Fertilisers UK Limited does not sell solid urea fertilizer in the United Kingdom, limitations on fertilizer use have been and may be considered by other jurisdictions, such as the EU, which announced its Farm to Fork Strategy and Biodiversity Strategy, or Canada, which has begun consulting stakeholders on its target of reducing emissions from fertilizers by 30% below 2020 levels through improved nitrogen management and optimizing fertilizer use.
While CF Fertilisers UK Limited does not sell solid urea fertilizer in the United Kingdom, limitations on fertilizer use have been and may be considered by other jurisdictions, such as the EU, which has announced its Farm to Fork Strategy and Biodiversity Strategy.
A business combination transaction between us and another company could result in our stockholders receiving cash or shares of another entity on terms that such stockholders may not consider desirable. Moreover, the regulatory approvals associated with a business combination may result in divestitures or other changes to our business, the effects of which are difficult to predict.
A business combination transaction between us and another company could result in our stockholders receiving cash or shares of another entity on terms that such stockholders may not consider desirable.
Expansion or modification of our operations is predicated upon securing necessary environmental or other permits or approvals. More stringent environmental, health and safety laws and regulations, or a reinterpretation of current laws and regulations, could make it more difficult to obtain necessary governmental permits or approvals.
More stringent environmental, health and safety laws and regulations, a reinterpretation of or changes to current laws and regulations, or community opposition to permits and approvals could make it more difficult to obtain necessary governmental permits (including renewals of our existing permits) or approvals.
Because conventional ammonia production generates CO 2 as an unavoidable chemical byproduct, ammonia production globally is considered an emissions- and energy-intensive industry. We are subject to GHG regulations in the United Kingdom, Canada and the United States. In the United States, our existing facilities, which are considered large emitters of GHGs, currently are only subject to GHG emissions reporting obligations.
We are subject to GHG regulations in the United Kingdom, Canada and the United States. In the United States, our existing facilities, which are considered large emitters of GHGs, currently are only subject to GHG emissions reporting obligations.

… 55 more changes not shown on this page.

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

2 edited+0 added−0 removed0 unchanged
Biggest changeFinancial Statements and Supplementary Data 60 Report of Independent Registered Public Accounting Firm 60 Consolidated Statements of Operations 63 Consolidated Statements of Comprehensive Income 64 Consolidated Balance Sheets 65 Consolidated Statements of Equity 66 Consolidated Statements of Cash Flows 67 Notes to Consolidated Financial Statements 68
Biggest changeFinancial Statements and Supplementary Data 62 Report of Independent Registered Public Accounting Firm 62 Consolidated Statements of Operations 65 Consolidated Statements of Comprehensive Income 66 Consolidated Balance Sheets 67 Consolidated Statements of Equity 68 Consolidated Statements of Cash Flows 69 Notes to Consolidated Financial Statements 70
Item 4. Mine Safety Disclosures 27 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 27 Item 6. [Reserved] 27 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 28 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 59 Item 8.
Item 4. Mine Safety Disclosures 29 PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities 29 Item 6. [Reserved] 29 Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations 30 Item 7A. Quantitative and Qualitative Disclosures About Market Risk 61 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

6 edited+0 added−1 removed0 unchanged
Biggest change(3) Includes 3,856 shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units and performance restricted stock units. (4) Represents shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units.
Biggest change(4) Includes 43 shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the New York Stock Exchange under the symbol “CF.” As of February 13, 2023, there were 689 stockholders of record.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Our common stock is traded on the New York Stock Exchange under the symbol “CF.” As of February 12, 2024, there were 680 stockholders of record.
(CF Holdings) common stock repurchased under the 2021 Share Repurchase Program, as defined below, is the execution price, excluding commissions paid to brokers.
(CF Holdings) common stock repurchased under the 2022 Share Repurchase Program, as defined below, is the execution price, excluding commissions paid to brokers and excise taxes.
On November 2, 2022, we announced that the Board authorized the repurchase of up to $3 billion of CF Holdings common stock commencing upon completion of the 2021 Share Repurchase Program and effective through December 31, 2025. These share repurchase programs are discussed in Item 7.
(2) On November 2, 2022, we announced that our Board of Directors authorized the repurchase of up to $3 billion of CF Holdings common stock, which is effective through December 31, 2025 (the 2022 Share Repurchase Program). This share repurchase program is discussed in Item 7.
The following table sets forth share repurchases, on a trade date basis, for each of the three months of the quarter ended December 31, 2022: Issuer Purchases of Equity Securities Period Total number of shares (or units) purchased Average price paid per share (or unit) (1) Total number of shares (or units) purchased as part of publicly announced plans or programs (2) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (in thousands) (2) October 1, 2022 - October 31, 2022 1,571,364 (3) $ 102.60 1,567,508 $ 216,978 November 1, 2022 - November 30, 2022 590,567 105.65 590,567 3,154,583 December 1, 2022 - December 31, 2022 328 (4) 103.00 — 3,154,583 Total 2,162,259 103.43 2,158,075 __________________________________________________________________________ (1) Average price paid per share of CF Industries Holdings, Inc.
The following table sets forth share repurchases, on a trade date basis, for each of the three months of the quarter ended December 31, 2023: Issuer Purchases of Equity Securities Period Total number of shares (or units) purchased Average price paid per share (or unit) (1) Total number of shares (or units) purchased as part of publicly announced plans or programs (2) Maximum number (or approximate dollar value) of shares (or units) that may yet be purchased under the plans or programs (in thousands) (2) October 1, 2023 - October 31, 2023 1,298 (3) $ 80.27 — $ 2,800,052 November 1, 2023 - November 30, 2023 2,870,066 (4) 78.40 2,870,023 2,575,052 December 1, 2023 - December 31, 2023 — — — 2,575,052 Total 2,871,364 78.40 2,870,023 __________________________________________________________________________ (1) Average price paid per share of CF Industries Holdings, Inc.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Programs and in Note 18—Stockholders’ Equity, in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data.
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Programs and in Note 20—Stockholders’ Equity, in the notes to consolidated financial statements included in Item 8. Financial Statements and Supplementary Data. (3) Represents shares withheld to pay employee tax obligations upon the lapse of restrictions on restricted stock units.
Removed
(2) On November 3, 2021, we announced that our Board of Directors (the Board) authorized the repurchase of up to $1.5 billion of CF Holdings common stock from January 1, 2022 through December 31, 2024 (the 2021 Share Repurchase Program).

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

213 edited+106 added−140 removed83 unchanged
Biggest changeConsolidated Results of Operations The following table presents our consolidated results of operations and supplemental data: Year ended December 31, 2022 2021 2020 (1) 2022 v. 2021 2021 v. 2020 (in millions, except as noted) Net sales $ 11,186 $ 6,538 $ 4,124 $ 4,648 71 % $ 2,414 59 % Cost of sales (COS) 5,325 4,151 3,323 1,174 28 % 828 25 % Gross margin 5,861 2,387 801 3,474 146 % 1,586 198 % Gross margin percentage 52.4 % 36.5 % 19.4 % 15.9 % 17.1 % Selling, general and administrative expenses 290 223 206 67 30 % 17 8 % U.K. goodwill impairment — 285 — (285) (100) % 285 N/M U.K. long-lived and intangible asset impairment 239 236 — 3 1 % 236 N/M U.K. operations restructuring 19 — — 19 N/M — — % Other operating—net 10 (39) (17) 49 N/M (22) (129) % Total other operating costs and expenses 558 705 189 (147) (21) % 516 273 % Equity in earnings of operating affiliate 94 47 11 47 100 % 36 327 % Operating earnings 5,397 1,729 623 3,668 212 % 1,106 178 % Interest expense—net 279 183 161 96 52 % 22 14 % Loss on debt extinguishment 8 19 — (11) (58) % 19 N/M Other non-operating—net 15 (16) (1) 31 N/M (15) N/M Earnings before income taxes 5,095 1,543 463 3,552 230 % 1,080 233 % Income tax provision 1,158 283 31 875 309 % 252 N/M Net earnings 3,937 1,260 432 2,677 212 % 828 192 % Less: Net earnings attributable to noncontrolling interest 591 343 115 248 72 % 228 198 % Net earnings attributable to common stockholders $ 3,346 $ 917 $ 317 $ 2,429 265 % $ 600 189 % Diluted net earnings per share attributable to common stockholders $ 16.38 $ 4.24 $ 1.47 $ 12.14 286 % $ 2.77 188 % Diluted weighted-average common shares outstanding 204.2 216.2 215.2 (12.0) (6) % 1.0 — % Dividends declared per common share $ 1.50 $ 1.20 $ 1.20 $ 0.30 25 % $ — — % Natural gas supplemental data (per MMBtu) Cost of natural gas used for production in COS (2) $ 7.18 $ 4.21 $ 2.24 $ 2.97 71 % $ 1.97 88 % Average daily market price of natural gas Henry Hub (Louisiana) $ 6.38 $ 3.82 $ 1.99 $ 2.56 67 % $ 1.83 92 % Average daily market price of natural gas National Balancing Point (United Kingdom) $ 24.56 $ 15.50 $ 3.20 $ 9.06 58 % $ 12.30 384 % Unrealized net mark-to-market loss (gain) on natural gas derivatives $ 41 $ 25 $ (6) $ 16 64 % $ 31 N/M Depreciation and amortization $ 850 $ 888 $ 892 $ (38) (4) % $ (4) — % Capital expenditures $ 453 $ 514 $ 309 $ (61) (12) % $ 205 66 % Sales volume by product tons (000s) 18,331 18,501 20,296 (170) (1) % (1,795) (9) % Production volume by product tons (000s): Ammonia (3) 9,807 9,349 10,353 458 5 % (1,004) (10) % Granular urea 4,561 4,123 5,001 438 11 % (878) (18) % UAN (32%) 6,706 6,763 6,677 (57) (1) % 86 1 % AN 1,517 1,646 2,115 (129) (8) % (469) (22) % ______________________________________________________________________________ N/M—Not Meaningful (1) For a discussion and analysis of the year ended December 31, 2020, see Item 7.
Biggest changeConsolidated Results of Operations The following table presents our consolidated results of operations for the years ended December 31, 2023, 2022 and 2021: Year ended December 31, 2023 2022 2021 2023 v. 2022 2022 v. 2021 (in millions, except as noted) Net sales $ 6,631 $ 11,186 $ 6,538 $ (4,555) (41) % $ 4,648 71 % Cost of sales (COS) 4,086 5,325 4,151 (1,239) (23) % 1,174 28 % Gross margin 2,545 5,861 2,387 (3,316) (57) % 3,474 146 % Gross margin percentage 38.4 % 52.4 % 36.5 % (14.0) % 15.9 % Selling, general and administrative expenses 289 290 223 (1) — % 67 30 % U.K. goodwill impairment — — 285 — — % (285) (100) % U.K. long-lived and intangible asset impairment — 239 236 (239) (100) % 3 1 % U.K. operations restructuring 10 19 — (9) (47) % 19 N/M Acquisition and integration costs 39 — — 39 N/M — — % Other operating—net (31) 10 (39) (41) N/M 49 N/M Total other operating costs and expenses 307 558 705 (251) (45) % (147) (21) % Equity in (loss) earnings of operating affiliate (8) 94 47 (102) N/M 47 100 % Operating earnings 2,230 5,397 1,729 (3,167) (59) % 3,668 212 % Interest expense 150 344 184 (194) (56) % 160 87 % Interest income (158) (65) (1) (93) (143) % (64) N/M Loss on debt extinguishment — 8 19 (8) (100) % (11) (58) % Other non-operating—net (10) 15 (16) (25) N/M 31 N/M Earnings before income taxes 2,248 5,095 1,543 (2,847) (56) % 3,552 230 % Income tax provision 410 1,158 283 (748) (65) % 875 309 % Net earnings 1,838 3,937 1,260 (2,099) (53) % 2,677 212 % Less: Net earnings attributable to noncontrolling interest 313 591 343 (278) (47) % 248 72 % Net earnings attributable to common stockholders $ 1,525 $ 3,346 $ 917 $ (1,821) (54) % $ 2,429 265 % Diluted net earnings per share attributable to common stockholders $ 7.87 $ 16.38 $ 4.24 $ (8.51) (52) % $ 12.14 286 % Diluted weighted-average common shares outstanding 193.8 204.2 216.2 (10.4) (5) % (12.0) (6) % Dividends declared per common share $ 1.60 $ 1.50 $ 1.20 $ 0.10 7 % $ 0.30 25 % ______________________________________________________________________________ N/M—Not Meaningful 39 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Operations In 2022, we recognized total charges related to our U.K. operations of $258 million, consisting of $239 million of asset impairment charges primarily related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets and $19 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.
In 2022, related to our U.K. operations, we recognized total charges of $258 million, consisting of $239 million of asset impairment charges primarily related to property, plant and equipment at our Billingham and Ince facilities and definite-lived intangible assets and $19 million of restructuring charges primarily related to post-employment benefits related to contractual and statutory obligations and one-time termination benefits.
Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of our solid nitrogen fertilizers. Granular urea is produced at our Donaldsonville, Port Neal and Medicine Hat nitrogen complexes.
Produced from ammonia and carbon dioxide, it has the highest nitrogen content of any of our solid nitrogen fertilizers. Granular urea is produced at our Donaldsonville, Port Neal and Medicine Hat complexes.
UAN, a liquid fertilizer product with a nitrogen content that typically ranges from 28% to 32%, is produced by combining urea and ammonium nitrate. UAN is produced at our Courtright, Donaldsonville, Port Neal, Verdigris, Woodward, and Yazoo City nitrogen complexes.
UAN, a liquid fertilizer product with a nitrogen content that typically ranges from 28% to 32%, is produced by combining urea and ammonium nitrate. UAN is produced at our Courtright, Donaldsonville, Port Neal, Verdigris, Woodward, and Yazoo City complexes.
AN, which has a nitrogen content between 29% and 35%, is produced by combining anhydrous ammonia and nitric acid. AN is used as nitrogen fertilizer and is also used by industrial customers for commercial explosives and blasting systems. AN is produced at our Yazoo City and Billingham nitrogen complexes.
AN, which has a nitrogen content between 29% and 35%, is produced by combining anhydrous ammonia and nitric acid. AN is used as nitrogen fertilizer and is also used by industrial customers for commercial explosives and blasting systems. AN is produced at our Yazoo City and Billingham complexes.
Other Segment Our Other segment primarily includes the following products: • Diesel exhaust fluid (DEF) is an aqueous urea solution typically made with 32.5% or 50% high-purity urea and the remainder deionized water. • Urea liquor is a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate. • Nitric acid is a nitrogen-based mineral acid that is used in the production of nitrate-based fertilizers, nylon precursors and other specialty chemicals.
Other Segment Our Other segment primarily includes the following products: • diesel exhaust fluid (DEF), an aqueous urea solution typically made with 32.5% or 50% high-purity urea and the remainder deionized water; • urea liquor, a liquid product that we sell in concentrations of 40%, 50% and 70% urea as a chemical intermediate; and • nitric acid, a nitrogen-based mineral acid that is used in the production of nitrate-based fertilizers, nylon precursors and other specialty chemicals.
PLNL is our joint venture investment in Trinidad and operates an ammonia plant that relies on natural gas supplied, under a Gas Sales Contract (the NGC Contract), by the National Gas Company of Trinidad and Tobago Limited (NGC). The joint venture is accounted for under the equity method.
PLNL is our joint venture investment in Trinidad and operates an ammonia plant that relies on natural gas supplied, under a gas sales contract, by the National Gas Company of Trinidad and Tobago Limited (NGC). The joint venture is accounted for under the equity method.
The Revolving Credit Agreement contains events of default (with notice requirements and cure periods, as applicable) customary for a financing of this type, including, but not limited to, non-payment of principal, interest or fees; inaccuracy of representations and warranties in any material respect; and failure to comply with specified covenants.
The New Revolving Credit Agreement contains events of default (with notice requirements and cure periods, as applicable) customary for a financing of this type, including, but not limited to, non-payment of principal, interest or fees; inaccuracy of representations and warranties in any material respect; and failure to comply with specified covenants.
Repurchases under our share repurchase programs may be made from time to time in the open market, through privately negotiated transactions, through block transactions or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.
Repurchases under our share repurchase programs may be made from time to time in the open market, through privately negotiated transactions, through block transactions, through accelerated share repurchase programs, or otherwise. The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.
Upon the occurrence and during the continuance of an event of default under the Revolving Credit Agreement and after any applicable cure period, subject to specified exceptions, the administrative agent may, and at the request of the requisite lenders is required to, accelerate the loans under the Revolving Credit Agreement or terminate the lenders’ commitments under the Revolving Credit Agreement.
Upon the occurrence and during the continuance of an event of default under the New Revolving Credit Agreement and after any applicable cure period, subject to specified exceptions, the administrative agent may, and at the request of the requisite lenders is required to, accelerate the loans under the New Revolving Credit Agreement or terminate the lenders’ commitments under the New Revolving Credit Agreement.
All references to “CF Holdings,” “we,” “us,” “our” and “the Company” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is only to CF Industries Holdings, Inc. itself and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.
All references to “CF Holdings,” “we,” “us,” “our” and “the Company” refer to CF Industries Holdings, Inc. and its subsidiaries, except where the context makes clear that the reference is to CF Industries Holdings, Inc. only and not its subsidiaries. All references to “CF Industries” refer to CF Industries, Inc., a 100% owned subsidiary of CF Industries Holdings, Inc.
This has led to further increases in natural gas prices and natural gas price volatility, which in turn have led to disruptions in manufacturing and distribution activities at other nitrogen manufacturers and suppliers in our industry, resulting in changes in nitrogen product trade flows and reductions in global fertilizer supply.
This led to further increases in natural gas prices and natural gas price volatility, which in turn have led to disruptions in manufacturing and distribution activities at other nitrogen manufacturers and suppliers in our industry, resulting in changes in nitrogen product trade flows and reductions in global fertilizer supply.
Global Supply and Demand Factors Our products are globally traded commodities and are subject to price competition. The customers for our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on customer service and product quality.
Global Supply and Demand Factors Our products are globally traded commodities and are subject to price competition. The customers for our products make their purchasing decisions principally on the basis of delivered price and, to a lesser extent, on reliability, customer service and product quality.
If the level of sales under our forward sales programs were to decrease in the future, our cash received from customer advances would likely decrease and our accounts receivable balances would likely increase. Additionally, borrowing under the Revolving Credit Agreement could become necessary.
If the level of sales under our forward sales programs were to decrease in the future, our cash received from customer advances would likely decrease and our accounts receivable balances would likely increase. Additionally, borrowing under the New Revolving Credit Agreement could become necessary.
In 2022, as a result of the impact of these events on our Canadian and U.S. federal and state income taxes, we recognized an income tax provision of $78 million, reflecting the net impact of $129 million of accrued income taxes payable to Canada for tax years 2006 through 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $102 million, primarily reflecting the interest paid to Canada.
In 2022, as a result of the impact of these events on our Canadian and U.S. federal and state income taxes, we recognized an income tax provision of $78 million, reflecting the net impact of $129 million of accrued income taxes payable to Canada for tax years 2006 through 2011, partially offset by net income tax receivables of approximately $51 million in the United States, and we accrued net interest of $102 million, primarily reflecting the estimated interest payable to Canada.
In September 2022, as a result of extremely high and volatile natural gas prices and the lack of a corresponding increase in global nitrogen product market prices, we temporarily idled ammonia production at our Billingham complex. Since that time, we have imported ammonia for upgrade into AN and other nitrogen products at that location.
In September 2022, as a result of extremely high and volatile natural gas prices and the lack of a corresponding increase in global nitrogen product market prices, we idled ammonia production at our Billingham complex. Since that time, we have imported ammonia for upgrade into AN and other nitrogen products at our Billingham complex.
Unrealized net mark-to-market loss on natural gas derivatives Natural gas is the largest and most volatile single component of the manufacturing cost for nitrogen-based products. At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments.
Unrealized net mark-to-market (gain) loss on natural gas derivatives Natural gas is the largest and most volatile single component of the manufacturing cost for our nitrogen-based products. At certain times, we have managed the risk of changes in natural gas prices through the use of derivative financial instruments.
Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 In June 2022, we approved and announced our proposed plan to restructure our U.K. operations, including the planned permanent closure of our Ince facility. In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.
Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 In June 2022, we approved and announced our proposed plan to restructure our U.K. operations, including the planned permanent closure of our Ince facility. In August 2022, the final restructuring plan was approved, and decommissioning activities were initiated.
Forward Sales and Customer Advances We offer our customers the opportunity to purchase products from us on a forward basis at prices and on delivery dates we propose. Therefore, our reported nitrogen selling prices and margins may differ from market spot prices and margins available at the time of shipment.
Forward Sales and Customer Advances We offer our customers the opportunity to purchase products from us on a forward basis at prices and on delivery dates we propose. Therefore, our reported fertilizer selling prices and margins may differ from market spot prices and margins available at the time of shipment.
(CHS) owns the remainder (see Note 17—Noncontrolling Interest for additional information on our strategic venture with CHS); • two Canadian nitrogen manufacturing facilities, located in Medicine Hat, Alberta (the largest nitrogen complex in Canada) and Courtright, Ontario; • a United Kingdom nitrogen manufacturing facility located in Billingham; • an extensive system of terminals and associated transportation equipment located primarily in the Midwestern United States; and • a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago (Trinidad) that we account for under the equity method. 28 Table of Contents CF INDUSTRIES HOLDINGS, INC.
(CHS) owns the remainder (see Note 19—Noncontrolling Interest for additional information on our strategic venture with CHS); • two Canadian nitrogen manufacturing facilities, located in Medicine Hat, Alberta (the largest nitrogen complex in Canada) and Courtright, Ontario; • a United Kingdom nitrogen manufacturing facility located in Billingham; • an extensive system of terminals and associated transportation equipment located primarily in the Midwestern United States; and 30 Table of Contents CF INDUSTRIES HOLDINGS, INC. • a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago (Trinidad) that we account for under the equity method.
Historically, the estimated additional U.S. and foreign income taxes due upon repatriation of the earnings of these foreign operations to the U.S. were recognized in our consolidated financial statements as the earnings were recognized, unless the earnings were considered to be permanently reinvested based upon our then current plans.
Historically, the estimated additional U.S. and foreign income taxes due upon repatriation of the earnings of these foreign operations to the United States were recognized in our consolidated financial statements as the earnings were recognized, unless the earnings were considered to be permanently reinvested based upon our then current plans.
Canada Revenue Agency Competent Authority Matter In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian affiliates asserting a disallowance of certain patronage deductions.
Canada Revenue Agency Competent Authority Matter In 2016, the Canada Revenue Agency (CRA) and Alberta Tax and Revenue Administration (Alberta TRA) issued Notices of Reassessment for tax years 2006 through 2009 to one of our Canadian subsidiaries asserting a disallowance of certain patronage deductions.
As a result, we recognized a loss on debt extinguishment of $8 million, consisting primarily of the premium paid on the redemption of the $500 million principal amount of the 2023 Notes prior to their scheduled maturity. 51 Table of Contents CF INDUSTRIES HOLDINGS, INC.
As a result, we recognized a loss on debt extinguishment of $8 million, consisting primarily of the premium paid on the redemption of the $500 million principal amount of the 2023 Notes prior to their scheduled maturity. 38 Table of Contents CF INDUSTRIES HOLDINGS, INC.
We have not provided for deferred taxes on the remainder of undistributed earnings from our foreign affiliates because such earnings would not give rise to additional tax liabilities upon repatriation or are considered to be indefinitely reinvested.
We have not provided for deferred taxes on the remainder of undistributed earnings from our foreign subsidiaries because such earnings would not give rise to additional tax liabilities upon repatriation or are considered to be indefinitely reinvested.
We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed. The letters of credit served as security until the matter was resolved, as discussed below.
We filed Notices of Objection with respect to the Notices of Reassessment with the CRA and Alberta TRA and posted letters of credit in lieu of paying the additional tax liability assessed. The letters of credit served as security until the matter was resolved.
As of December 31, 2022 and 2021, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $73 million and $31 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.
As of December 31, 2023 and 2022, the aggregate fair value of the derivative instruments with credit-risk-related contingent features in net liability positions was $34 million and $73 million, respectively, which also approximates the fair value of the assets that may be needed to settle the obligations if the credit-risk-related contingent features were triggered at the reporting dates.
With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and blue hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities.
With our employees focused on safe and reliable operations, environmental stewardship, and disciplined capital and corporate management, we are on a path to decarbonize our ammonia production network – the world’s largest – to enable green and low-carbon hydrogen and nitrogen products for energy, fertilizer, emissions abatement, and other industrial activities.
Share Repurchase Programs On November 3, 2021, our Board of Directors (the Board) authorized the repurchase of up to $1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program).
Share Repurchase Programs On November 3, 2021, the Board authorized the repurchase of up to $1.5 billion of CF Holdings common stock through December 31, 2024 (the 2021 Share Repurchase Program).
The following is a discussion and analysis of our consolidated results of operations for the year ended December 31, 2022, compared to the year ended December 31, 2021. For a discussion and analysis of our consolidated results of operations for the year ended December 31, 2021 compared to the year ended December 31, 2020, see Item 7.
The following is a discussion and analysis of our consolidated results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022. For a discussion and analysis of our consolidated results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021, see Item 7.
For a discussion and analysis of our operating results by business segment for the year ended December 31, 2021 compared to the year ended December 31, 2020, see Item 7.
For a discussion and analysis of our operating results by business segment for the year ended December 31, 2022 compared to the year ended December 31, 2021, see Item 7.
(ii) require that the total net leverage ratio (as defined in the Revolving Credit Agreement) be not greater than 3.75:1.00 (the Maximum Total Net Leverage Ratio) as of the last day of each fiscal quarter, provided that, if any borrower or subsidiary consummates a material acquisition during any fiscal quarter, CF Industries may elect to increase the Maximum Total Net Leverage Ratio to 4.25:1.00 for the period of four consecutive fiscal quarters commencing with such fiscal quarter (and no further such election may be made unless and until the Maximum Total Net Leverage Ratio is less than or equal to 3.75:1.00 as of the end of two consecutive fiscal quarters after the end of such period).
The financial covenant requires that the total net leverage ratio (as defined in the New Revolving Credit Agreement) be not greater than 3.75:1.00 (the Maximum Total Net Leverage Ratio) as of the last day of each fiscal quarter, provided that, if any borrower or subsidiary consummates a material acquisition during any fiscal quarter, CF Industries may elect to increase the Maximum Total Net Leverage Ratio to 4.25:1.00 for the period of four consecutive fiscal quarters commencing with such fiscal quarter (and no further such election may be made unless and until the Maximum Total Net Leverage Ratio is less than or equal to 3.75:1.00 as of the end of two consecutive fiscal quarters after the end of such period).
Any cash payments received in advance from customers in connection with forward sales contracts are reflected on our consolidated balance sheets as a current liability until control transfers and revenue is recognized. As of December 31, 2022 and 2021, we had $229 million and $700 million, respectively, in customer advances on our consolidated balance sheets.
Any cash payments received in advance from customers in connection with forward sales contracts are reflected on our consolidated balance sheets as a current liability until control transfers and revenue is recognized. As of December 31, 2023 and 2022, we had $130 million and $229 million, respectively, in customer advances on our consolidated balance sheets.
The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. Defined Benefit Pension Plans We contributed $26 million to our pension plans in 2022.
The credit support documents executed in connection with certain of our ISDA agreements generally provide us and our counterparties the right to set off collateral against amounts owing under the ISDA agreements upon the occurrence of a default or a specified termination event. Defined Benefit Pension Plans We contributed $44 million to our pension plans in 2023.
If NGC does not make sufficient quantities of natural gas available to PLNL at prices that permit profitable operations, PLNL may cease operating its facility and we would write off the remaining investment in PLNL. The carrying value of our equity method investment in PLNL at December 31, 2022 was $74 million.
If NGC does not make sufficient quantities of natural gas available to PLNL at prices that permit profitable operations, PLNL may cease operating its facility and we would write off the remaining investment in PLNL. The carrying value of our equity method investment in PLNL at December 31, 2023 was $26 million.
In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester the CO 2 from Donaldsonville. Start-up for the project is scheduled for early 2025.
In October 2022, we announced that we had entered into a definitive CO 2 offtake agreement with ExxonMobil to transport and permanently sequester the CO 2 from Donaldsonville. Start-up for the project is planned for 2025.
Senior Notes Long-term debt presented on our consolidated balance sheets as of December 31, 2022 and 2021 consisted of the following debt securities issued by CF Industries: Effective Interest Rate December 31, 2022 December 31, 2021 Principal Outstanding Carrying Amount (1) Principal Outstanding Carrying Amount (1) (in millions) Public Senior Notes: 3.450% due June 2023 3.665% $ — $ — $ 500 $ 499 5.150% due March 2034 5.293% 750 741 750 741 4.950% due June 2043 5.040% 750 742 750 742 5.375% due March 2044 5.478% 750 740 750 741 Senior Secured Notes: 4.500% due December 2026 (2) 4.783% 750 742 750 742 Total long-term debt $ 3,000 $ 2,965 $ 3,500 $ 3,465 _______________________________________________________________________________ (1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs.
Senior Notes Long-term debt presented on our consolidated balance sheets as of December 31, 2023 and 2022 consisted of the following debt securities issued by CF Industries: Effective Interest Rate December 31, 2023 December 31, 2022 Principal Outstanding Carrying Amount (1) Principal Outstanding Carrying Amount (1) (in millions) Public Senior Notes: 5.150% due March 2034 5.293% $ 750 $ 741 $ 750 $ 741 4.950% due June 2043 5.040% 750 742 750 742 5.375% due March 2044 5.478% 750 741 750 740 Senior Secured Notes: 4.500% due December 2026 (2) 4.783% 750 744 750 742 Total long-term debt $ 3,000 $ 2,968 $ 3,000 $ 2,965 _______________________________________________________________________________ (1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022. Net Sales Our net sales are derived primarily from the sale of nitrogen products and are determined by the quantities of nitrogen products we sell and the selling prices we realize.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K filed with the SEC on February 23, 2023. Net Sales Our net sales are derived primarily from the sale of nitrogen products and are determined by the quantities of nitrogen products we sell and the selling prices we realize.
Natural Gas Natural gas is the principal raw material used to produce nitrogen products. We use natural gas both as a chemical feedstock and as a fuel to produce ammonia, granular urea, UAN, AN and other products. Expenditures on natural gas are a significant portion of our production costs, representing approximately 50% of our total production costs in 2022.
Natural Gas Natural gas is the principal raw material used to produce our nitrogen products. We use natural gas both as a chemical feedstock and as a fuel to produce ammonia, granular urea, UAN, AN and other products. Expenditures on natural gas are a significant portion of our production costs, representing approximately 40% of our total production costs in 2023.
In September 2022, as a result of extremely high and volatile natural gas prices and the lack of a corresponding increase in global nitrogen product market prices, we temporarily idled ammonia production at our Billingham complex.
In September 2022, as a result of extremely high and volatile natural gas prices in the United Kingdom and the lack of a corresponding increase in global nitrogen product market prices, we idled ammonia production at our Billingham complex.
The December 31, 2022 PBO was computed based on a weighted-average discount rate of 5.1% for our North America plans and 4.8% for our United Kingdom plans, which were based on yields for high-quality (AA rated or better) fixed income debt securities that match the timing and amounts of expected benefit payments as of the measurement date of December 31, 2022.
The December 31, 2023 PBO was computed based on a weighted-average discount rate of 4.8% for our North America plans and 4.6% for our United Kingdom plans, which were based on yields for high-quality (AA rated or better) fixed income debt securities that match the timing and amounts of expected benefit payments as of the measurement date of December 31, 2023.
Upon the occurrence of a change of control repurchase event with respect to the 2026 Notes, unless CF Industries has 52 Table of Contents CF INDUSTRIES HOLDINGS, INC. exercised its option to redeem such notes, CF Industries will be required to offer to repurchase them at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.
Upon the occurrence of a change of control repurchase event with respect to the 2026 Notes, unless CF Industries has exercised its option to redeem such notes, CF Industries will be required to offer to repurchase them at a price equal to 101% of the principal amount thereof, plus accrued and unpaid interest, if any, to, but not including, the date of repurchase.
At both December 31, 2022 and 2021, we had no cash collateral on deposit with counterparties for derivative contracts.
At both December 31, 2023 and 2022, we had no cash collateral on deposit with counterparties for derivative contracts.
Nutrient tons represent the tons of nitrogen within the product tons. Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 Net Sales.
Nutrient tons represent the tons of nitrogen within the product tons. Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 Net Sales.
Under the indenture governing the 2026 Notes, in the case of an event of default arising from one of the specified events of bankruptcy or insolvency, the 2026 Notes would become due and payable immediately, and, in the case of any other event of default (other than an event of default related to CF Industries’ and CF Holdings’ reporting obligations), the trustee or the holders of at least 25% in aggregate principal amount of the 2026 Notes then outstanding may declare all of such notes to be due and payable immediately.
Under the indenture governing the 2026 Notes, in the case of an event of default arising from one of the specified events of bankruptcy or insolvency, the 2026 Notes would become due and payable immediately, and, in the case of any other event of default (other than an event of default related to CF Industries’ and CF Holdings’ reporting obligations), the trustee or the holders of at least 25% in aggregate principal amount of the 2026 Notes then outstanding may declare all of such notes to be due and payable immediately. 54 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K filed with the SEC on February 24, 2022. 42 Table of Contents CF INDUSTRIES HOLDINGS, INC. Ammonia Segment Our Ammonia segment produces anhydrous ammonia (ammonia), which is the base product that we manufacture, containing 82% nitrogen and 18% hydrogen.
Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K filed with the SEC on February 23, 2023. 44 Table of Contents CF INDUSTRIES HOLDINGS, INC. Ammonia Segment Our Ammonia segment produces anhydrous ammonia (ammonia), which is the base product that we manufacture, containing 82% nitrogen and 18% hydrogen.
European energy markets, which have historically sourced a substantial portion of their natural gas from Russia, have been disrupted by Russia’s invasion of Ukraine and the subsequent reduction of Russian natural gas supply to Europe.
European energy markets, which have historically sourced a substantial portion of their natural gas from Russia, were disrupted by Russia’s invasion of Ukraine and the subsequent reduction of Russian natural gas supply to Europe during 2022.
Selling, General and Administrative Expenses Our selling, general and administrative expenses consist primarily of corporate office expenses such as salaries and other payroll-related costs for our executive, administrative, legal, financial, IT, and sales functions, as well as certain taxes and insurance and other professional service fees, including those for corporate initiatives.
Selling, General and Administrative Expenses Our selling, general and administrative expenses consist primarily of corporate office expenses such as salaries and other payroll-related costs for our executive, administrative, legal, financial, IT, and sales functions, as well as certain taxes and insurance and other professional service fees, including those for corporate initiatives, and amortization of definite-lived intangible assets.
Operating Results by Business Segment Our reportable segment structure reflects how our chief operating decision maker, as defined in U.S. GAAP, assesses the performance of our reportable segments and makes decisions about resource allocation. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources.
Operating Results by Business Segment Our reportable segment structure reflects how our chief operating decision maker, as defined in accounting principles generally accepted in the United States (U.S. GAAP), assesses the performance of our reportable segments and makes decisions about resource allocation. These segments are differentiated by products. Our management uses gross margin to evaluate segment performance and allocate resources.
We produced compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium, only at our Ince facility, and closure of this facility has resulted in our discontinuation of the NPK product line.
We produced compound fertilizer products (NPKs), which are solid granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium, only at our Ince facility, and closure of this facility resulted in our discontinuation of the NPK product line, which was included in our Other segment.
Our principal assets as of December 31, 2022 include: • five U.S. nitrogen manufacturing facilities, located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); and Woodward, Oklahoma.
Our principal assets as of December 31, 2023 include: • six U.S. nitrogen manufacturing facilities, located in Donaldsonville, Louisiana (the largest nitrogen complex in the world); Sergeant Bluff, Iowa (our Port Neal complex); Yazoo City, Mississippi; Claremore, Oklahoma (our Verdigris complex); Woodward, Oklahoma; and Waggaman, Louisiana.
Planned capital expenditures are generally subject to change due to delays in regulatory approvals or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delays in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints, acceleration or delays in the timing of the work and other unforeseen difficulties.
Planned capital expenditures are generally subject to change due to delays in regulatory approvals or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delays in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints, acceleration or delays in the timing of the work and other unforeseen difficulties. 50 Table of Contents CF INDUSTRIES HOLDINGS, INC.
(5) For the year ended December 31, 2022, the after-tax income tax provision amount of $65 million reflects an income tax provision of $70 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $8 million of income tax benefit referenced below under “Transfer pricing positions,” net of $5 million of income tax provision that is reflected in the after-tax interest expense and interest income amounts shown in this table.
(6) The after-tax income tax provision amount of $65 million reflects an income tax provision of $70 million, consisting of the $78 million income tax provision referenced below under “Canada Revenue Agency Competent Authority Matter” and the $8 million of income tax benefit referenced below under “Transfer pricing positions,” net of $5 million of income tax provision that is reflected in the after-tax interest expense and interest income amounts shown in this table.
As of December 31, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 66.3 million MMBtus. As of December 31, 2021, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 60.0 million MMBtus.
As of December 31, 2023, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 49.0 million MMBtus. As of December 31, 2022, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 66.3 million MMBtus.
An income tax benefit for the U.K. goodwill impairment was not recorded as it is nondeductible for income tax purposes. (2) Included in cost of sales in our consolidated statements of operations. (3) Included in other operating—net in our consolidated statements of operations. (4) Included in other non-operating—net in our consolidated statement of operations.
An income tax benefit for the U.K. goodwill impairment was not recorded as it is nondeductible for income tax purposes. (2) Included in cost of sales in our consolidated statements of operations. (3) Included in other operating—net in our consolidated statements of operations. (4) Included in equity in (loss) earnings of operating affiliate in our consolidated statements of operations.
As of December 31, 2022, we were in compliance with all covenants under the Revolving Credit Agreement.
As of December 31, 2023, we were in compliance with all covenants under the New Revolving Credit Agreement.
The following is an outline of the discussion and analysis included herein: • Overview of CF Holdings • Market Conditions and Current Developments • Financial Executive Summary • Items Affecting Comparability of Results • Consolidated Results of Operations • Operating Results by Business Segment • Liquidity and Capital Resources • Critical Accounting Estimates Overview of CF Holdings Our Company Our mission is to provide clean energy to feed and fuel the world sustainably.
The following is an outline of the discussion and analysis included herein: • Overview of CF Holdings • Market Conditions • Financial Executive Summary • Acquisition of Waggaman Ammonia Production Facility • Items Affecting Comparability of Results • Consolidated Results of Operations • Operating Results by Business Segment • Liquidity and Capital Resources • Critical Accounting Estimates • Recent Accounting Pronouncements Overview of CF Holdings Our Company Our mission is to provide clean energy to feed and fuel the world sustainably.
The factors we use are consistent with those used in our internal planning process. The recoverability of the values associated with our goodwill, long-lived assets and our investment in an unconsolidated affiliate is dependent upon future operating performance of the specific businesses to which they are attributed.
Judgment is involved in estimating each of these factors, which include inherent uncertainties. The factors we use are consistent with those used in our internal planning process. The recoverability of the values associated with our goodwill, long-lived assets and our investment in an unconsolidated affiliate is dependent upon future operating performance of the specific businesses to which they are attributed.
Gross margin also includes the impact of a $13 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $7 million loss in 2021. 43 Table of Contents CF INDUSTRIES HOLDINGS, INC. Granular Urea Segment Our Granular Urea segment produces granular urea, which contains 46% nitrogen.
Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $13 million loss in 2022. 45 Table of Contents CF INDUSTRIES HOLDINGS, INC. Granular Urea Segment Our Granular Urea segment produces granular urea, which contains 46% nitrogen.
For a discussion and analysis of the year ended December 31, 2021 compared to December 31, 2020, you should read Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2021 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 24, 2022.
For a discussion and analysis of the year ended December 31, 2022 compared to the year ended December 31, 2021, see Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our 2022 Annual Report on Form 10-K filed with the Securities and Exchange Commission (SEC) on February 23, 2023.
Gross margin also includes the impact of a $13 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $6 million loss in 2021. 44 Table of Contents CF INDUSTRIES HOLDINGS, INC. UAN Segment Our UAN segment produces urea ammonium nitrate solution (UAN).
Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $13 million loss in 2022. 46 Table of Contents CF INDUSTRIES HOLDINGS, INC. UAN Segment Our UAN segment produces urea ammonium nitrate solution (UAN).
Market Conditions and Current Developments Geopolitical Environment Russia’s invasion of Ukraine in February 2022, and the resulting war between Russia and Ukraine, have disrupted global markets for certain commodities, including natural gas, nitrogen fertilizers and certain commodity grains, leading to production curtailments, export reductions and logistical complications involving these commodities.
Russia’s invasion of Ukraine in February 2022, and the resulting war between Russia and Ukraine, disrupted global markets for certain commodities, including natural gas, nitrogen fertilizers and certain commodity grains and oilseeds, leading to production curtailments, export reductions and logistical complications involving these commodities.
As of December 31, 2022, we recorded a deferred tax liability of $12 million on the undistributed earnings of our Canadian affiliates for which the Company does not have an indefinite reinvestment assertion.
As of December 31, 2023, we recorded a deferred tax liability of $9 million on the undistributed earnings of our Canadian subsidiaries for which the Company does not have an indefinite reinvestment assertion.
We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees. The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time.
We are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the New Revolving Credit Agreement and customary letter of credit fees. The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time. 52 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Declines in comparable bond yields would increase our PBO. For our United Kingdom plans, the 3.2% RPI used to 57 Table of Contents CF INDUSTRIES HOLDINGS, INC. calculate our PBO is developed using a U.K. government gilt prices only retail price inflation curve, which is based on the difference between yields on fixed interest government bonds and index-linked government bonds.
Declines in comparable bond yields would increase our PBO. For our United Kingdom plans, the 3.0% RPI used to calculate our PBO is developed using a U.K. government gilt prices only retail price inflation curve, which is based on the difference between yields on fixed interest government bonds and index-linked government bonds.
We expect that the recent geopolitical events, and any further government-imposed sanctions or other government actions affecting food or energy security, will continue to have an impact on the supply and demand balance of nitrogen fertilizer products globally and selling prices for our nitrogen fertilizer products, but the ultimate scope and duration of these impacts remain to be seen.
We expect that these geopolitical events, and any further government-imposed sanctions or other government actions affecting food or energy security, will continue to have an impact on the supply and demand balance of nitrogen fertilizer products globally and selling prices for our nitrogen fertilizer products.
In addition, we may from time to time seek to retire or purchase our outstanding debt through cash purchases, in open market or privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.
We may also utilize our cash to fund acquisitions. In addition, we may from time to time seek to retire or purchase our outstanding debt through cash purchases, in open market or privately negotiated transactions or otherwise. Such repurchases, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors.
Gross margin includes the impact of a $14 million unrealized net mark-to-market loss on natural gas derivatives in 2022 compared to a $5 million loss in 2021. 45 Table of Contents CF INDUSTRIES HOLDINGS, INC. AN Segment Our AN segment produces ammonium nitrate (AN).
Gross margin also includes the impact of an $11 million unrealized net mark-to-market gain on natural gas derivatives in 2023 compared to a $14 million loss in 2022. 47 Table of Contents CF INDUSTRIES HOLDINGS, INC. AN Segment Our AN segment produces ammonium nitrate (AN).
As a result, we recognized a loss on debt extinguishment of $6 million, consisting primarily of the premium paid on the redemption of the $250 million principal amount of the 2021 Notes prior to their scheduled maturity.
As a result, we recognized a loss on debt extinguishment of $8 million, consisting primarily of the premium paid on the redemption of the $500 million principal amount of the 2023 Notes prior to their scheduled maturity.
Distributions on Noncontrolling Interest in CFN The CFN Board of Managers approved semi-annual distribution payments for the years ended December 31, 2022, 2021 and 2020, in accordance with CFN’s limited liability company agreement, as follows: Approved and paid Distribution Period Distribution Amount (in millions) First quarter of 2023 Six months ended December 31, 2022 $ 255 Third quarter of 2022 Six months ended June 30, 2022 372 First quarter of 2022 Six months ended December 31, 2021 247 Third quarter of 2021 Six months ended June 30, 2021 130 First quarter of 2021 Six months ended December 31, 2020 64 Third quarter of 2020 Six months ended June 30, 2020 86 Cash Flows Net cash provided by operating activities in 2022 was $3.86 billion as compared to $2.87 billion in 2021, an increase of $982 million.
Distributions on Noncontrolling Interest in CFN The CFN Board of Managers approved semi-annual distribution payments for the years ended December 31, 2023, 2022 and 2021, in accordance with CFN’s limited liability company agreement, as follows: Approved and paid Distribution Period Distribution Amount (in millions) First quarter of 2024 Six months ended December 31, 2023 $ 144 Third quarter of 2023 Six months ended June 30, 2023 204 First quarter of 2023 Six months ended December 31, 2022 255 Third quarter of 2022 Six months ended June 30, 2022 372 First quarter of 2022 Six months ended December 31, 2021 247 Third quarter of 2021 Six months ended June 30, 2021 130 Cash Flows Net cash provided by operating activities in 2023 was $2.76 billion, a decrease of $1.10 billion compared to $3.86 billion in 2022.
The loss on foreign currency transactions in 2022 was partially offset by an unrealized gain of $14 million related to an embedded derivative liability. See “Items Affecting Comparability of Results—Unrealized gain on embedded derivative liability,” above, for further information. The income in 2021 includes a gain of $29 million on sales of emission credits.
The loss on foreign currency transactions in 2022 was partially offset by an unrealized gain of $14 million related to an embedded derivative liability. See “Items Affecting Comparability of Results—Unrealized gain on embedded derivative liability,” above, for further information.
In general, the prevailing global prices for nitrogen products must be at a level to incent the high cost marginal producer to produce product at a breakeven or above price, or else they would cease production and leave a portion of global demand unsatisfied.
Intense global competition—reflected in import volumes and prices—strongly influences delivered prices for nitrogen fertilizers. In general, the prevailing global prices for nitrogen products must be at a level to incent the high cost marginal producer to produce product at a breakeven or above price, or else they would cease production and leave a portion of global demand unsatisfied.
The descriptions of items below that refer to amounts in the table refer to the pre-tax amounts unless otherwise noted. 2022 2021 Pre-Tax After-Tax (1) Pre-Tax After-Tax (1) (in millions) Unrealized net mark-to-market loss on natural gas derivatives (2) $ 41 $ 31 $ 25 $ 19 Loss on foreign currency transactions, including intercompany loans (3) 28 21 6 5 U.K. operations: U.K. goodwill impairment — — 285 285 U.K. long-lived and intangible asset impairment 239 180 236 178 U.K. operations restructuring 19 14 — — Unrealized gain on embedded derivative liability (3) (14) (11) — — Pension settlement loss and curtailment gains — net (4) 17 13 — — Canada Revenue Agency Competent Authority Matter and Transfer pricing positions: Interest expense 170 168 — — Interest income (29) (22) — — Income tax provision (5) — 65 — — Loss on debt extinguishment 8 6 19 15 ______________________________________________________________________________ (1) The tax impact is calculated utilizing a marginal effective rate of 23.5% and 23.6% in 2022 and 2021, respectively, except for U.K. long-lived and intangible asset impairments, which reflects the amount of income tax benefit recognized.
The descriptions of items below that refer to amounts in the table refer to the pre-tax amounts unless otherwise noted. 2023 2022 Pre-Tax After-Tax (1) Pre-Tax After-Tax (1) (in millions) Unrealized net mark-to-market (gain) loss on natural gas derivatives (2) $ (39) $ (30) $ 41 $ 31 Loss on foreign currency transactions, including intercompany loans (3) — — 28 21 U.K. operations: U.K. long-lived and intangible asset impairment — — 239 180 U.K. operations restructuring 10 8 19 14 Acquisition and integration costs 39 29 — — Unrealized gain on embedded derivative liability (3) — — (14) (11) Impairment of equity method investment in PLNL (4) 43 32 — — Pension settlement loss and curtailment gains — net (5) — — 17 13 Canada Revenue Agency Competent Authority Matter and Transfer pricing positions: Interest expense — — 170 168 Interest income — — (29) (22) Income tax provision (6) — — — 65 Loss on debt extinguishment — — 8 6 ______________________________________________________________________________ (1) The tax impact is calculated utilizing a marginal effective rate of 23.5% in both 2023 and 2022, except for acquisition and integration costs related to the Waggaman acquisition, which reflects a 26.2% marginal effective rate, and U.K. long-lived and intangible asset impairment, which reflects the amount of income tax benefit recognized.
Natural Gas Natural gas is the principal raw material used to produce our nitrogen products. Natural gas is both a chemical feedstock and a fuel to produce nitrogen products. Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 50% of our production costs in 2022 and 40% of our production costs in 2021.
Natural gas is both a chemical feedstock and a fuel used to produce nitrogen products. Natural gas is a significant cost component of our manufactured nitrogen products, representing approximately 40% and 50%, respectively, of our production costs in 2023 and 2022.
Income Tax Provision Our income tax provision for 2022 was $1.16 billion on pre-tax income of $5.10 billion, or an effective tax rate of 22.7%, compared to an income tax provision of $283 million on pre-tax income of $1.54 billion, or an effective tax rate of 18.3%, in 2021.
Income Tax Provision Our income tax provision for 2023 was $410 million on pre-tax income of $2.25 billion, or an effective tax rate of 18.3%, compared to an income tax provision of $1.16 billion on pre-tax income of $5.10 billion, or an effective tax rate of 22.7%, in 2022.
Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. (3) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN. 38 Table of Contents CF INDUSTRIES HOLDINGS, INC.
(2) Includes realized gains and losses on natural gas derivatives settled during the period. Excludes unrealized mark-to-market gains and losses on natural gas derivatives. (3) Gross ammonia production, including amounts subsequently upgraded on-site into granular urea, UAN, or AN.
As a result of these factors, natural gas prices have a significant impact on our operating expenses and can thus affect our liquidity. Natural gas costs in our cost of sales, including the impact of realized natural gas derivatives, increased 71% to $7.18 per MMBtu in 2022 from $4.21 per MMBtu in 2021.
As a result of these factors, natural gas prices have a significant impact on our operating expenses and can thus affect our liquidity. Natural gas costs in our cost of sales, including the impact of realized natural gas derivatives, decreased 49% to $3.67 per MMBtu in 2023 from $7.18 per MMBtu in 2022.
During the three-year period ended December 31, 2022, the daily closing price at the Henry Hub reached a low of $1.34 per MMBtu on September 22, 2020 and three consecutive days in October 2020 and a high of $23.61 per MMBtu on February 18, 2021.
During the three-year period ended December 31, 2023, the daily closing price at the Henry Hub reached a low of $1.72 per MMBtu on three consecutive days in June 2023 and a high of $23.61 per MMBtu on February 18, 2021.
As a result, there are instances where regulators within the jurisdictions involved in a cross border transaction may reach different conclusions regarding the taxability of the transaction in their respective jurisdictions based on the same set of facts and circumstances.
As a result, there are instances where regulators within the jurisdictions involved in a cross-border transaction may reach different conclusions regarding the taxability of the transaction in their respective jurisdictions based on the same set of facts and circumstances. We work closely with regulators to reach a common understanding and conclusion regarding the taxability of cross border transactions.
As of December 31, 2022, approximately $96 million of our consolidated cash and cash equivalents balance of $2.32 billion was held by our Canadian and United Kingdom subsidiaries.
As of December 31, 2023, approximately $205 million of our consolidated cash and cash equivalents balance of $2.03 billion was held by our Canadian and United Kingdom subsidiaries.
The increase was due primarily to $141 million of net interest expense recorded in 2022 related to income tax matters, which are described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.
The decrease of $194 million was due primarily to $184 million of tax-related interest expense recorded in 2022, including $170 million of interest expense related to income tax matters described under “Items Affecting Comparability of Results—Canada Revenue Agency Competent Authority Matter” and “Items Affecting Comparability of Results—Transfer pricing positions,” above.

… 379 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−0 removed4 unchanged
Biggest changeThere were no borrowings outstanding under the Revolving Credit Agreement as of December 31, 2022 or 2021, or during 2022 or 2021. Foreign Currency Exchange Rates We are directly exposed to changes in the value of the Canadian dollar, the British pound and the euro.
Biggest changeBorrowings under the New Revolving Credit Agreement bear current market rates of interest, and we are subject to interest rate risk on such borrowings. As of and during the years ended December 31, 2023 and 2022, there were no borrowings outstanding under either the Prior Revolving Credit Agreement or the New Revolving Credit Agreement.
From time to time, we may purchase nitrogen products on the open market to augment or replace production at our facilities. Interest Rates As of December 31, 2022, we had four series of senior notes totaling $3.00 billion of principal outstanding with maturity dates of December 1, 2026, March 15, 2034, June 1, 2043 and March 15, 2044.
From time to time, we may purchase nitrogen products on the open market to augment or replace production at our facilities. Interest Rates As of December 31, 2023, we had four series of senior notes totaling $3.00 billion of principal outstanding with maturity dates of December 1, 2026, March 15, 2034, June 1, 2043 and March 15, 2044.
As of December 31, 2022, we had natural gas derivative contracts covering certain periods through March 2023. As of December 31, 2022 and 2021, we had open derivative contracts for 66.3 million MMBtus and 60.0 million MMBtus, respectively.
As of December 31, 2023, we had natural gas derivative contracts covering certain periods through March 2024. As of December 31, 2023 and 2022, we had open natural gas derivative contracts for 49.0 million MMBtus and 66.3 million MMBtus, respectively.
A $1.00 per MMBtu increase in the forward curve prices of natural gas at December 31, 2022 would result in a favorable change in the fair value of these derivative positions of $39 million, and a $1.00 per MMBtu decrease in the forward curve prices of natural gas would change their fair value unfavorably by $39 million.
A $1.00 per MMBtu increase in the forward curve prices of natural gas at December 31, 2023 would result in a favorable change in the fair value of these derivative positions of approximately $48 million, and a $1.00 per MMBtu decrease in the forward curve prices of natural gas would change their fair value unfavorably by approximately $49 million.
The senior notes have fixed interest rates. As of December 31, 2022, the carrying value and fair value of our senior notes was approximately $2.97 billion and $2.76 billion, respectively. Borrowings under the Revolving Credit Agreement bear current market rates of interest and we are subject to interest rate risk on such borrowings.
The senior notes have fixed interest rates. As of December 31, 2023, the carrying value and fair value of our senior notes was approximately $2.97 billion and $2.89 billion, respectively. Borrowings under the Prior Revolving Credit Agreement bore current market rates of interest, and we were subject to interest rate risk on such borrowings.
Commodity Prices Our net sales, cash flows and estimates of future cash flows related to nitrogen-based products are sensitive to changes in selling prices as well as changes in the prices of natural gas and other raw materials unless these costs have been fixed or hedged.
Commodity Prices Our gross margin, cash flows and estimates of future cash flows related to nitrogen-based products are sensitive not only to selling prices of our products, but also to changes in market prices of natural gas and other raw materials except to the extent the prices we pay for those inputs have been fixed or hedged.
We generally do not maintain any exchange rate derivatives or hedges related to these currencies. 59 Table of Contents CF INDUSTRIES HOLDINGS, INC.
Foreign Currency Exchange Rates We are directly exposed to changes in the value of the Canadian dollar, the British pound and the euro. We generally do not maintain any exchange rate derivatives or hedges related to these currencies. 61 Table of Contents CF INDUSTRIES HOLDINGS, INC.

Other CF 10-K year-over-year comparisons