CF Industries Holdings, Inc. (CF) posted a drop in fourth-quarter 2023 earnings to $1.44 per share from $4.35 in the year-ago quarter. Adjusted earnings, excluding one-time items, were $1.49 per share, missing the Zacks Consensus Estimate of $1.56. The company reported a 40% year-over-year decrease in net sales to $1,571 million for the quarter, although this surpassed the Zacks Consensus Estimate of $1,486.7 million.
The decline in sales was attributed to lower average selling prices due to reduced global energy costs, reflecting the diminished global market-clearing price demanded to meet global demand. However, sales volumes increased for urea ammonium nitrate, ammonia, and diesel exhaust fluid sales.
Segment Review
The Ammonia segment saw net sales decrease by 38% year over year to $495 million, while sales in the Granular Urea and Urea Ammonium Nitrate segments fell by around 35% to $392 million and 51% to $418 million, respectively. The Ammonium Nitrate segment’s sales dropped by 37% year over year to $120 million. The company experienced varied average selling prices and adjusted gross margins for these segments, mainly due to fluctuations in average selling prices and realized natural gas prices.
FY23 Results
For the full year 2023, CF Industries’ earnings amounted to $7.87 per share, down from $16.38 per share in the previous year, while net sales declined around 41% to $6,631 million.
Financials
The company ended 2023 with cash and cash equivalents of $2,032 million, showing a decrease of approximately 13% year over year. Meanwhile, long-term debt remained flat at $2,968 million. Net cash provided by operating activities was $480 million, down around 18% year over year.
In 2023, CF Industries repurchased around 7.9 million shares for $580 million, contributing to a total of 2.9 million shares repurchased for $225 million during the fourth quarter.
Outlook
CF Industries highlighted the constructive global nitrogen supply-demand balance in the near term and anticipates a resilient global nitrogen demand due to robust agricultural applications and a recovering industrial demand. Nevertheless, it acknowledged the challenging production economics due to natural gas costs and availability in major producing regions.
Price Performance
CF Industries’ stock declined by 9.1% in the past year, comparing unfavorably to the 39.2% fall of the fertilizer industry as a whole.
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Zacks Rank & Key Picks
Currently, CF holds a Zacks Rank #3 (Hold). For investors seeking alternatives in the basic materials space, stocks to consider include Carpenter Technology Corporation (CRS), Alpha Metallurgical Resources Inc. (AMR), and Hawkins, Inc. (HWKN).
Carpenter Technology Corporation is expected to see a year-over-year surge in earnings and holds a Zacks Rank #1 (Strong Buy), while Alpha Metallurgical Resources Inc. and Hawkins, Inc. are also favorable options with upward-revised earnings estimates and strong stock performance in the past year.
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A Closer Look at CF Industries
Additionally, for those intrigued by the remarkable growth of CF Industries Holdings, Inc., it’s worth delving into their recent financial performance. While their Q4 earnings trailed and sales were impacted by lower prices, this could be an opportunistic moment for investors to consider whether this represents a potential undervalued opportunity.
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