) fourth-quarter 2013 adjusted earnings (excluding one-time
items) of $4.47 per share was down roughly 38.5% from the
year-ago earnings of $7.27 a share. However, the results exceeded
the Zacks Consensus Estimate by a penny.
Adjusted earnings exclude non-cash pre-tax mark-to-market
gains on natural gas derivatives, pre-tax gains on foreign
currency derivative and share buyback impact. Including one-time
items, the company earned $5.71 a share in the quarter, down
roughly 22.8% from $7.40 in the year-ago quarter. Lower prices
and higher natural gas costs led to the decline in earnings.
For full-year 2013earnings, as reported, came in at $24.74 per
share, down 13% from $28.59 in the year ago.
Sales were down 10% to $1,326.3 million in the quarter from
$1,481.4 million in the prior year, but exceeded the Zacks
Consensus Estimate of $1,266 million. Sales declined primarily
due to lower average selling prices for both nitrogen and
phosphate products, and lower phosphate sales volume.
Revenues for the full year fell around 10% year over year to
Costs and Margins
Cost of sales stood at $732.5 million in the reported quarter
versus $825.2 million in the year-ago quarter. Gross profit
decreased 9.5% year over year to $593.8 million in the quarter.
Selling, general and administrative expenses increased 11.9% to
$45 million from $40.2 million in the year-ago quarter. The
company reported an operating income of $564.8 million, down 8.3%
from $616.1 million in the prior-year quarter.
Earnings before interest, taxes, depreciation and amortization
(EBITDA) were $643 million in the quarter, indicating a 23% fall
from $470.7 million in fourth-quarter 2012. Despite a challenging
global fertilizer market and ground-level global urea prices, the
company generated strong EBITDA.
Sales fell 4% year over year to $1,178.7 million in the fourth
quarter due to a decline in overall average selling prices,
partially offset by an increase in tons of product sold. Gross
margin declined 4.5% to $592.1 million due to lower revenues and
an increase in natural gas costs.
Sales fell 42% year over year to $147.6 million due to lower
average selling prices resulting from lower global demand, mostly
from India, and lower sales volume. Gross margin declined 95% to
$1.7 million due to lower revenues.
Average selling price of diammonium phosphate (DAP) was $348
and monoammonium phosphate (MAP) was $382, down 30% and 28% year
over year, respectively.
Cash and cash equivalents totaled $1.7 billion as of Dec 31,
2013, compared with $2.3 billion as of Dec 31, 2012. Long-term
debt stood at $3.1 billion as of Dec 31, 2013, compared with $1.6
billion as of Dec 31, 2012.
On Jan 31, 2014, CF Industries' Board declared a regular
quarterly dividend of $1.00 per common share. The dividend, which
will be paid on Feb 28, 2014, to stockholders of record as of Feb
14, 2014, represents a 150% hike over the previous quarterly
Last month, CF Industries entered into various strategic
The Mosaic Company
). These agreements are expected to strengthen CF Industries'
nitrogen centric programs. CF Industries entered into a deal to
sell the entirety of its phosphate business to Mosaic for a cash
consideration of $1.4 billion. The company also entered into a
long-term agreement to supply Mosaic between 600,000 and 800,000
tons of ammonia per year from its Donaldsonville, La., nitrogen
complex beginning in 2017.
Both these contracts will provide CF Industries with a defined
margin independent of gas costs, and increased confidence in the
cash flow profile associated with a portion of the company's
CF Industries also reached several milestones on its capacity
expansion projects, which will increase its annual nitrogen
production capacity by 25% when the plants come on-line in 2015
CF Industries expects to benefit from a number of factors
supporting its growth and cash generation potential. Global
population rise, a shift towards higher protein diets and
continued use of crops as a source of renewable fuels are
increasing the need for grain and plant nutrients.
Global nitrogen prices have improved significantly since
November. Nitrogen floor prices are expected to continue to be
the cash cost of Chinese urea producers. During the high-tariff
season of November to June, nitrogen cash cost is estimated to be
about $340 to $350 per ton delivered to the U.S. Gulf compared to
$285 to $300 per ton during the low-tariff season of July to
North America is expected to have strong ammonia demand
through the first half of 2014.
Prices of urea and UAN in North America have increased and are
expected to remain firm in order to attract imports required to
fill 22 million nutrient tons of expected full year nitrogen
demand, which is well in excess of the 15 million nutrient tons
of expected North American production.
During 2014, CF Industries expects after-tax proceeds of roughly
$1 billion following the close of the sale of the phosphate
business to Mosaic in the first half of 2014.
CF Industries also intends to raise up to $1.5 billion of
additional long-term debt in early 2014. These new borrowings
along with cash from operations and proceeds from the sale of the
phosphate business will fund the company's capital expenditures,
working capital, dividends and additional share repurchases.
CF Industries anticipates total capital expenditures of
roughly $2.5 billion in 2014. This consists of $2 billion for the
capacity expansion projects and $0.5 billion for sustaining and
other capital expenditures. These amounts exclude the phosphate
CF Industries' objective is to deliver higher total
shareholder return. It aims on selectively investing in projects
with return profiles significantly above its cost of capital
while minimizing the overall cost of financing the
CF Industries, which is one of the leading fertilizer makers
), currently carries a Zacks Rank #3 (Hold).
AGRIUM INC (AGU): Free Stock Analysis Report
CF INDUS HLDGS (CF): Free Stock Analysis
MOSAIC CO/THE (MOS): Free Stock Analysis
POTASH SASK (POT): Free Stock Analysis Report
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