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CF Industries' (CF) Earnings & Sales Trail Estimates in Q3

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CF Industries Holdings, Inc. (CF - Free Report) delivered profits of $65 million or 29 cents per share in the third quarter of 2019, up from $30 million or 13 cents in the year-ago quarter. However, earnings per share missed the Zacks Consensus Estimate of 34 cents.

Net sales inched down 0.2% year over year to $1,038 million in the quarter. The figure also lagged the Zacks Consensus Estimate of $1,069.4 million.

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

 

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

CF Industries Holdings, Inc. price-consensus-eps-surprise-chart | CF Industries Holdings, Inc. Quote

 

Segment Review

Net sales in the Ammonia segment fell roughly 2.6% year over year to $187 million in the quarter. Ammonia sales volume rose 9.6% year over year to 720,000 tons. Average selling prices of ammonia fell nearly 11% year over year to $260 per ton due to higher global ammonia supply.

Sales in the Granular Urea segment declined roughly 7.4% year over year to $327 million. Sales volumes fell around 12% year over year to 1,200,000 tons. Lower volumes as a result of planned maintenance activities impacted performance in the reported quarter. Average selling prices for granular urea rose 5.4% year over year to $273 per ton mainly due to a tighter nitrogen demand and supply balance.

Sales in the UAN segment went up around 14.4% year over year to $309 million. UAN sales volume rose 7.5% year over year to 1,741,000 tons in the quarter. Results reflect late planting in North America, which delayed some fertilizer shipments in the third quarter. Average selling prices rose roughly 6% year over year to $177 per ton.

Sales in the AN segment fell 2.2% year over year to $136 million. Sales volumes fell around 6.7% to 561,000 tons. Average selling prices increased 4.8% year over year to $242 per ton.

Financials

CF Industries’ cash and cash equivalents inched down roughly 0.3% year over year of $1,019 million at the end of the third quarter. Long-term debt was $4,204 million at the end of the reported quarter.   

Cash flow from operation was $510 million, down 20.9% year over year. The company repurchased roughly 1.5 million shares during the reported quarter.

The company is currently executing a $1-billion share repurchase program that is authorized through 2021. Notably, the company has repurchased more than 1.5 million shares for $72 million since the authorization was announced in February 2019. Through Sep 30, 2019, it has repurchased around 5.7 million shares for $250 million.

Outlook
 
CF Industries is optimistic about the nitrogen fertilizer industry and expects fundamental factors to continue improving in the near and the long term as the global market continues to tighten.

The company expects demand from import-dependent regions to support global pricing in the near term. In North America, corn crop futures are expected to support higher planted corn acres over the next two seasons. Also, demand for urea from Brazil and India continues to be favorable.  

Global demand growth for nitrogen is expected to outpace net capacity additions over the next four years. The company expects net Chinese-produced urea exports in the range of 1-3 million metric tons per year. Over this period, CF Industries expect North American producers to continue to benefit from access to low-cost North American natural gas.  

Price Performance

Shares of CF Industries have lost 2.1% in the past year compared with the industry’s 13.6% decline.



Zacks Rank & Other Key Picks

CF Industries currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space are Kinross Gold Corporation (KGC - Free Report) , Franco-Nevada Corporation (FNV - Free Report) and Kirkland Lake Gold Ltd. (KL - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Kinross has an expected earnings growth rate of 210% for 2019. The company’s shares have surged 85.3% in the past year.

Franco-Nevada has a projected earnings growth rate of 39.3% for 2019. The company’s shares have rallied 51.8% in a year’s time.

Kirkland Lake Gold has an estimated earnings growth rate of 93.4% for the current year. Its shares have moved up 130.7% in the past year.

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