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CF Industries Holdings, Inc. (CF)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered strong results: revenue $1.66B, diluted EPS $1.85, adjusted EBITDA $644M, and gross margin 34.4%, driven by higher pricing, volumes, and fewer outages; natural gas costs rose sequentially, but pricing strength and lower controllable costs offset .
  • Results beat S&P Global consensus: revenue by ~$0.13B (+8%), EPS by ~$0.35 (+23%), and adjusted EBITDA by ~$76M (+13%); major upside came from stronger urea and ammonia pricing and higher volumes amid tight inventories and robust demand in North America and abroad * *.
  • Guidance and capital return: CF funded 2025 capex ~$650M and consolidated capex ~$800–$900M including Blue Point JV; Board authorized a new $2B buyback through 2029 and declared a $0.50 dividend, reinforcing free cash flow deployment .
  • Strategic catalyst: Blue Point JV (1.4 MMT low‑carbon ammonia; start-up 2029) reached FID with JERA and Mitsui, with modular construction and 45Q credits expected; management highlighted robust offtake interest and potential CBAM benefits for UK/Europe .

What Went Well and What Went Wrong

  • What Went Well

    • Pricing and volumes: net sales rose to $1.66B (+13% YoY), with higher prices across ammonia and granular urea, and higher volumes on fewer outages; gross margin expanded to 34.4% (vs 27.8% YoY) .
    • Operational execution: gross ammonia production hit ~2.6M tons and 100% utilization for the second straight quarter; projected ~10M tons for FY25 .
    • Capital returns and FCF: trailing-12-month free cash flow was ~$1.57B; $530M returned in Q1; additional $2B buyback authorization extends through 2029 .

  • What Went Wrong

    • UAN pricing: average selling price declined to $251/ton from $264 YoY due to timing (booked in lower-priced 4Q24 environment), compressing UAN margin percentage to 30.2% from 33.6% .
    • Natural gas: realized gas cost increased to $3.68/MMBtu (vs $3.19 YoY and $3.01 in 4Q24), creating a headwind though mitigated by pricing and lower controllable costs .
    • Restructuring and one-offs: UK operations restructuring ($23M pre-tax) and loss on sale of Ince facility ($23M pre-tax) were items affecting comparability in Q1 .

Financial Results

MetricQ1 2024Q3 2024Q4 2024Q1 2025
Revenue ($USD Billions)$1.47 $1.37 $1.52 $1.66
Diluted EPS ($)$1.03 $1.55 $1.89 $1.85
EBITDA ($USD Millions)$488 $509 $582 $617
Adjusted EBITDA ($USD Millions)$459 $511 $562 $644
Gross Margin %27.8% 32.4% 34.4% 34.4%

Consensus vs Actual – Q1 2025

MetricS&P Consensus*Actual (Company)Beat/(Miss)
Revenue ($USD Billions)$1.536*$1.663 +$0.127B / +8.3%*
Diluted EPS ($)$1.50*$1.85 +$0.35 / +23%*
Adjusted EBITDA ($USD Millions)$568*$644 +$76 / +13%*

Values retrieved from S&P Global.*

Segment breakdown (Q1 2025 vs Q1 2024)

SegmentNet Sales Q1 2024 ($mm)Net Sales Q1 2025 ($mm)Gross Margin Q1 2024 ($mm)Gross Margin Q1 2025 ($mm)GM % Q1 2024GM % Q1 2025
Ammonia$402 $520 $65 $186 16.2% 35.8%
Granular Urea$407 $439 $154 $173 37.8% 39.4%
UAN$425 $470 $143 $142 33.6% 30.2%
AN$114 $101 $9 $16 7.9% 15.8%
Other$122 $133 $38 $55 31.1% 41.4%

KPIs

KPIQ1 2024Q4 2024Q1 2025
Natural gas used for production in cost of sales ($/MMBtu)$3.19 $3.01 $3.68
Avg daily Henry Hub price ($/MMBtu)$2.43 $2.42 $4.28
Sales volume by product (000s tons)4,524 4,747 5,004
Gross ammonia production (000s tons)2,148 2,617 2,617
Urea production (000s tons)959 1,023 1,110
UAN production (000s tons, 32%)1,631 1,768 1,856
AN production (000s tons)341 354 322

Non‑GAAP adjustments and comparability items (Q1 2025): unrealized mark‑to‑market loss on natural gas derivatives $2M (pre‑tax), FX loss $2M, loss on sale of Ince facility $23M, UK restructuring $23M; adjusted EBITDA reconciled to $644M .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
CF‑funded CapExFY 2025~$500–$550M ~$650M Raised
Consolidated CapEx (incl. Blue Point JV)FY 2025N/A~$800–$900M; JV portion ~$300–$400M; CF common facilities ~$25M New
Gross ammonia productionFY 2025~10M tons ~10M tons Maintained
Share repurchaseThrough 2025$3B authorization; $1.06B remaining as of 12/31/24 Additional $2B authorization through 2029; ~$630M remaining on current plan as of 3/31/25 Raised / Extended
DividendQuarterly$0.50 declared 1/30/25 $0.50 declared 4/29/25 (payable 5/30/25) Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3 2024)Previous Mentions (Q4 2024)Current Period (Q1 2025)Trend
Low‑carbon ammonia (Blue Point JV)FEED studies progressing; evaluating ATR/CCS FEED completed; cost ~$4.0B; scalable infrastructure ~$500M; FIDs expected Q1 2025 FID announced; JV with JERA/Mitsui; 1.4 MMT capacity; modular construction; 45Q credits; offtake split by ownership Accelerating execution
Natural gas cost curveFavorable spreads vs EU; constructive industry backdrop Similar view; cost advantage for NA producers U.S. remains structurally advantaged; AI/data centers drive gas demand; long-term spreads remain sticky Reinforced
Tariffs & trade flowsEU capacity curtailments; Russia exports rising for urea Russia exports ~15% below pre-war; Gulf Coast ammonia capacity adds Frustration with zero tariffs on Russian fertilizer to U.S.; expected pricing uplift, trade flow shifts Policy watch
Inventory & demandBelow-average inventories; strong Brazil/India import needs Below-average inventories persisting; strong corn plantings Low channel inventories; U.S. spring demand strong; likely higher corn acres than USDA intentions Tightening
CCS projects (Donaldsonville/Yazoo)D’ville dehydration/compression progressing; start-up 2025; Yazoo start-up 2028 D’ville commissioning advanced; start-up 2025; Yazoo 2028 D’ville start-up H2 2025 (initiate 45Q); Yazoo on track On track
Pricing divergence (ammonia vs urea)Ammonia pricing stronger on supply constraints Similar dynamics Ammonia (merchant) weak near term on capacity adds; in-market ag ammonia and urea remain strong Mixed

Management Commentary

  • “Adjusted EBITDA of $644 million… reflect outstanding performance… and constructive global nitrogen industry conditions. We remain committed to returning capital… with an additional $2 billion share repurchase program” – CEO Tony Will .
  • “For the second quarter in a row, we produced over 2.6 million tons of gross ammonia… We continue to project approximately 10 million tons of gross ammonia production in 2025” – COO Chris Bohn .
  • “Channel inventories… are low… This has supported prices well into the second quarter. We expect to end the spring season with low inventory across all products” – EVP Bert Frost .
  • “We returned $530 million to shareholders in the first quarter… anticipate completing the remaining ~$630 million… before expiration in December; then begin the additional $2 billion program” – CFO Greg Cameron .

Q&A Highlights

  • Blue Point JV ownership/option: Management expects JERA to maintain 35% but is comfortable if JERA reduces; CF could move to ~55% ownership, with ~200k tons incremental offtake options available .
  • Tariffs/trade flows: Zero U.S. tariffs on Russian fertilizer create policy distortions; tariff regimes on MENA exporters could lift U.S. pricing toward Brazil parity; CF may allocate more tons domestically .
  • Capex phasing: CF‑funded sustaining ~$500M; Blue Point CF portion ~$150M in 2025, similar in 2026; heavier CF spend in 2027–2028; consolidated JV capex flows reported with disclosure .
  • Construction approach: Modular LSTK strategy to mitigate U.S. labor/capex inflation and tariff risks; modules built overseas and installed domestically .
  • Gas costs vs margins: Sequential gas cost increase was a headwind, but price realization and lower controllable costs supported margins; Q2 entering with moderated gas and stronger pricing .

Estimates Context

  • Q1 2025 results were above S&P Global consensus: revenue $1.663B vs $1.536B* (+8.3%), EPS $1.85 vs $1.50 (+23%), adjusted EBITDA $644M vs $568M (+13%) .
  • Street may lift forward estimates on higher realized pricing and volumes, sustained inventory tightness, and constructive demand into Q2/Q3 (Brazil/India), partly offset by merchant ammonia price volatility from capacity additions .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Significant beat: Bold top‑line and EPS outperformance vs S&P consensus, with gross margin expansion on price/volume; constructive nitrogen backdrop remains in place. Expect potential positive estimate revisions and sentiment support. *
  • Mix matters: UAN price headwinds from timing were more than offset by strength in ammonia and urea; watch Q2/Q3 pricing and fill programs given low inventories.
  • Cost dynamics: Higher gas costs in Q1 were manageable; management sees moderated gas into Q2 and strong pricing; U.S. structural gas advantage is intact long term.
  • Capital deployment: New $2B buyback through 2029 and steady dividends signal continued FCF conversion; consolidation of Blue Point will increase reported capex but CF‑funded spend steady at ~$650M for 2025.
  • Strategic growth: Blue Point JV FID positions CF for low‑carbon ammonia leadership, with modular construction and 45Q credits; offtake interest strong, and UK/Europe CBAM may enhance downstream economics.
  • Policy wildcard: Tariff regimes and Russian trade flows could reshape import dynamics and U.S. price formation; monitor U.S./EU actions and China’s export windows.
  • Near‑term setup: Tight inventories, favorable corn economics, and robust Brazil/India demand should support pricing into 2H, while merchant ammonia faces volatility from new Gulf Coast capacity.