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CF Industries' (CF) Q4 Earnings, Revenues Top Estimates

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CF Industries Holdings, Inc. (CF - Free Report) swung to a profit in the fourth quarter of 2017, aided by a sizable tax benefit. The fertilizer maker logged a profit of $465 million or $1.98 per share in the reported quarter compared with a loss of $320 million or $1.38 per share a year ago. The company recorded a tax benefit of $491 million related to the U.S. Tax Cuts and Jobs Act in the reported quarter.

Barring one-time items, adjusted loss came in at 2 cents per share for the quarter, which was narrower than the Zacks Consensus Estimate of a loss of 11 cents.

Net sales increased roughly 27% year over year to $1,099 million in the quarter. It also beat the Zacks Consensus Estimate of $1,039 million. Sales were driven by increased volumes across most segments and higher selling prices across all segments.

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise

 

CF Industries Holdings, Inc. Price, Consensus and EPS Surprise | CF Industries Holdings, Inc. Quote

FY17 Results

For 2017, profit was $358 million or $1.53 per share, compared with a loss of $277 million or $1.19 per share logged a year ago. Adjusted loss per share for the year was 25 cents.

Revenues for the full year rose 12% year over year to $4,130 million.

Segment Review

Net sales for the Ammonia segment climbed roughly 63% year over year to $344 million in the reported quarter. Ammonia sales volumes rose 58% year over year to 1,207,000 tons owing to additional production volumes from Donaldsonville and Port Neal complexes and higher demand for fall agricultural applications. Average selling prices rose 3% year over year to $285 per ton, aided by a tighter global nitrogen supply and demand balance.

Sales for the Granular Urea segment rose roughly 30% year over year to $246 million. Sales volumes increased roughly 14% year over year to 1,008,000 tons, driven by additional volume available from the Port Neal nitrogen complex. Average selling prices for granular urea rose 14% year over year to $244 per ton owing to a tighter global nitrogen supply and demand balance.

Sales at the urea ammonium nitrate solution (UAN) segment fell 6% year over year to $288 million. UAN sales volume dipped roughly 6% year over year to 1,920,000 in the quarter due to reduced export sales. Average selling prices were essentially flat year over year at $150 per ton.

Sales at the ammonium nitrate (AN) segment went up 34% year over year to $125 million. Sales volumes rose about 6% to 576,000 tons on increased demand for agricultural and industrial applications. Average selling prices increased 26% year over year to $217 per ton, owing to a tighter global nitrogen supply and demand balance and a new long-term AN supply agreement which started in 2017.
 
Financials

CF Industries’ cash and cash equivalents were $835 million at the end of 2017, down 28% year over year.

Long-term debt was $4,692 million, down around 19% year over year.

Outlook

Moving ahead, CF Industries expects higher energy costs in major producing regions, lower production in China, a weaker U.S. dollar, increased oil and freight costs and a steady global demand to support nitrogen prices during first-half 2018 at levels higher than the comparable period a year ago.

The company expects capital expenditures for new activities to be in the range of around $400 to $450 million in 2018, factoring in higher number of plant turnarounds compared with 2017.

Price Performance

Shares of CF Industries have moved up 18.3% over a year, outperforming the 1.1% gain recorded by its industry.



 

Zacks Rank &  Stocks to Consider

CF Industries currently carries a Zacks Rank #4 (Sell).

Better-ranked companies in the basic materials space include Olympic Steel, Inc. , Methanex Corporation (MEOH - Free Report) and The Mosaic Company (MOS - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Olympic Steel has an expected long-term earnings growth rate of 7.5%. Its shares rallied 34% over the past six months.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have rallied 31% over the past six months.

Mosaic has an expected long-term earnings growth rate of 9.5%. Its shares have rallied 25% over the past six months.

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