CF Industries Holdings, Inc. CF reported a first-quarter 2024 profit of $194 million or $1.03 per share, down from $560 million or $2.85 per share in the year-ago quarter. Earnings per share missed the Zacks Consensus Estimate of $1.47.
Net sales fell 26.9% year over year to $1,470 million in the quarter. The figure missed the Zacks Consensus Estimate of $1,473.9 million.
Average selling prices in the reported quarter were lower than in the first quarter of 2023 as decreased global energy costs reduced theglobal marketclearance price required to meet global demand.
CF Industries Holdings, Inc. Price, Consensus and EPS Surprise
CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote
Segmental Review
Net sales in the Ammonia segment fell 5.2% year over year to $402 million in the reported quarter. It topped our estimate of $325 million. Ammonia sales volumes increased due to the inclusion of contractual commitments fulfilled by the recently purchased Waggaman ammonia production facility and spring ammonia applications in North America being moved to the first quarter of 2024 due to favorable weather conditions.
Sales in the Granular Urea segment fell 33.4% year over year to $407 million. It beat our estimate of $367 million. Granular urea sales volumes declined from a year ago owing to lower availability of ammonia for upgrade and reduced supply availability as a result of severe weather that caused urea plant outages.
Sales in the UAN segment declined 36.3% year over year to $425 million. It was below our estimate of $522 million. UAN average selling prices fell in the reported quarter, as lower global energy costs reduced the worldwide market clearance price needed to meet global demand.
Sales in the AN segment declined 28.3% year over year to $114 million. It was above our estimate of $109 million. AN’s average selling prices decreased as lower global energy costs reduced the worldwide market clearance price needed to meet global demand.
Financials
CF Industries’ cash and cash equivalents were $1,773 million at the end of the quarter, down around 37% from the prior-year quarter. Long-term debt was $2,969 million at the end of the quarter, flat year over year.
Cash flow from operations was $445 million for the reported quarter, down from $947 million reported in the prior year.
In the first quarter of 2024, the company repurchased 4.3 million shares for $347 million. The current $3 billion share repurchase program has around $2.2 billion remaining. Capital expenditures in the first quarter totaled $98 million. Management anticipates that capital expenditures for the 2024 will be approximately $550 million.
Outlook
Per CF, the global nitrogen market entered a long supply position early in the second quarter of 2024 as a result of lower-than-expected demand from Europe and India, as well as a buying halt in North America as bad weather delayed spring fieldwork. Management anticipates that in the near future, worldwide demand will continue to be strong due to recovering industrial demand and farmer economics, while global nitrogen trade flows will adjust to account for the extra supply of nitrogen that is available for international trade.
In the long run, management anticipates a tightening of the global supply-demand balance for nitrogen, as the growth in global nitrogen capacity over the next four years is not expected to keep up with the estimated 1.5% annual growth in global nitrogen demand for traditional applications and the additional demand for clean energy applications. The ongoing issues with natural gas availability and cost are predicted to limit global production.
Price Performance
Shares of CF Industries have gained 5.6% in the past year against a 20.1% fall of the industry.
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Zacks Rank & Key Picks
CF currently carries a Zacks Rank #3 (Hold).
Better-ranked stocks worth a look in the basic materials space include Gold Fields Limited GFI, sporting a Zacks Rank #1 (Strong Buy), and L.B. Foster Company FSTR and American Vanguard Corporation AVD , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GFI’s first-quarter earnings is pegged at 22 cents per share. The figure remained stable in the past 60 days.
L.B. Foster is slated to report first-quarter results on May 7. The consensus estimate for FSTR’s first-quarter earnings is pegged at a loss of 16 cents per share. The company’s shares have rallied 114.7% in the past year.
American Vanguard is expected to report first-quarter results on May 14. The consensus estimate for AVD’s first-quarter earnings is pegged at 8 cents per share, indicating a year-over-year rise of 14.3%.
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