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CF Industries Holdings, Inc. (CF)·Q2 2025 Earnings Summary

Executive Summary

  • Revenue beat, EPS slight miss: CF delivered Q2 revenue of $1.89B vs S&P Global consensus $1.78B*, while diluted EPS was $2.37 vs $2.47 consensus*; adjusted EBITDA of $761M trailed S&P Global EBITDA consensus $789M*, as higher realized gas costs and logistics costs offset stronger pricing and volumes .
  • Structural tailwinds and low-carbon execution: Donaldsonville CCS started up in July, with management guiding to >$100M annual EBITDA and free cash flow uplift beginning in Q3, supported by 45Q credits and product premiums .
  • Blue Point JV derisked and cost updated: JV signed Linde to build/operate the ASU; total project cost now ~$3.7B (down from ~$4.0B assessed in Q1 FEED), with CF’s share ~$2.0B over four years including common facilities .
  • Commercial setup remains tight: Prolonged North America season and global supply disruptions left inventories at decade lows entering Q3; CF delayed the UAN fill to set materially higher prices, citing tight supply and strong demand in Brazil/India .

What Went Well and What Went Wrong

  • What Went Well

    • Strong pricing/volumes lifted sales and margins YoY: Q2 net sales rose to $1.89B (vs $1.57B Q2’24) on higher average selling prices across products; granular urea and UAN segments posted YoY gross margin improvements .
    • Low-carbon milestone live: Donaldsonville CCS is operational; management expects >$100M annual EBITDA/FCF benefit beginning Q3, plus premium pricing for low-carbon ammonia and emerging CBAM upside in Europe .
    • Capital returns intact: CF repurchased 2.8M shares for $202M in Q2 and remains on track to complete $425M under the current program in 2025, then commence a new $2B authorization through 2029 .
    • Management quote: “We will deliver incremental EBITDA and free cash flow beginning in the third quarter… north of $100 million annually from the tax incentives and product premiums.” — CFO Greg Cameron .

  • What Went Wrong

    • EPS/EBITDA below consensus despite revenue beat: Q2 diluted EPS $2.37 missed by ~$0.10 vs $2.47*, and adjusted EBITDA $761M trailed $789M*, reflecting higher realized gas costs and elevated logistics from tight inventories .
    • Cost pressures and outages: SG&A rose due to JV-related legal fees and higher variable comp; unplanned downtime at two facilities and higher freight to honor commitments increased controllable and logistics costs .
    • Ammonia margin sequential pressure: Despite lower Henry Hub, ammonia segment gross margin per ton fell sequentially due to outages and distribution costs; Q3 has heavier turnarounds and more industrial export mix .

Financial Results

MetricQ2 2024Q1 2025Q2 2025 (Actual)Q2 2025 (Consensus)*
Revenue ($B)$1.57 $1.66 $1.89 $1.78
Diluted EPS ($)$2.30 $1.85 $2.37 $2.47 [functions.GetEstimates]
Gross Margin (%)43.2% 34.4% 39.9% —
EBITDA ($M)752 617 757 789 [functions.GetEstimates]
Adjusted EBITDA ($M)752 644 761 —
  • Notes: Consensus values marked with an asterisk come from S&P Global; Values retrieved from S&P Global.

Segment performance (Q2 2025 vs Q2 2024)

SegmentNet Sales ($M)Gross Margin ($M)GM %Sales Volume (000s tons)Avg Selling Price ($/ton)
Ammonia491 vs 409 136 vs 147 27.7% vs 35.9% 1,087 vs 979 452 vs 418
Granular Urea547 vs 457 279 vs 227 51.0% vs 49.7% 1,188 vs 1,251 460 vs 365
UAN610 vs 475 270 vs 216 44.3% vs 45.5% 1,902 vs 1,748 321 vs 272
AN117 vs 98 25 vs 23 21.4% vs 23.5% 378 vs 340 310 vs 288
Other125 vs 133 45 vs 66 36.0% vs 49.6% 466 vs 557 268 vs 239

KPIs and operating drivers

KPIQ2 2024Q2 2025
Natural gas cost in cost of sales ($/MMBtu)$1.90 $3.36
Gross ammonia production (000s tons)2,602 2,557
Sales volume total (000s tons)4,875 5,021
1H gross ammonia utilization—99%
TTM Cash from Ops ($B)$2.02 (FY24) $2.50
TTM Free Cash Flow ($B)$1.15 (FY24) $1.73
Share repurchases (Q2)—$202M, 2.8M shares
CHS distribution (7/31/25)—$175M

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Capital expenditures (CF-funded)FY2025~$650M (CF-funded within $800–$900M total) ~$650M (within $800–$900M total; BP JV $300–$400M, CF-funded ~$650M) Maintained
Blue Point ATR plant total costProject~$4.0B FEED estimate (Q1) ~$3.7B; Linde to build/operate ASU Lowered
CF share of Blue Point + common facilities2025–2029Not specified~ $2.0B over 4 years (facility + common) New detail
Donaldsonville CCS2025Start-up expected 2025 Started July; >$100M annual EBITDA/FCF uplift from Q3 Activated/raised clarity
Ammonia productionFY2025~10M tons ~10M tons Maintained
Share repurchases2025/ongoing$630M remaining in $3B program; new $2B auth for 2029 $425M remaining; plan to finish in 2025, then begin $2B through 2029 Increased execution clarity
Dividend2025$0.50/share quarterly $0.50 for Aug 29, 2025 pay date Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’24 and Q1’25)Current Period (Q2’25)Trend
Supply/demand and China exportsQ4: Inventories below avg; Europe marginal producer; China exports minimal in 2024 . Q1: Positive demand; China export controls; India/Brazil strong needs .China quota ~3MMT; exports underperforming; India closed tender at higher-than-expected prices; inventories low; disruptions in Egypt/Iran/Russia .Tight S&D persists/upward pressure.
Low-carbon ammonia & CCSQ4: Donaldsonville CCS commissioning underway, start-up expected 2025 . Q1: CCS on track; Blue Point JV announced .Donaldsonville CCS started; >$100M annual EBITDA/FCF uplift from Q3; premiums for low-carbon tons; CBAM benefit $25/t rising toward ~$100/t by 2030 .Accelerating monetization/premium pricing.
Blue Point JV executionQ4: FEED completed; ~$4.0B plant plus ~$500M common infra . Q1: JV with JERA/Mitsui; production 2029 .Linde ASU agreement; project cost ~$3.7B; CF’s share ~$2B over 4 years; consolidation mechanics clarified .De-risking and cost clarity improving.
Farmer economics & fillQ1: Strong corn returns support nitrogen demand .UAN inventories decade-low; fill delayed; prices “significantly higher than 2024”; nitrogen remains non-discretionary .Pricing power near-term.
Costs and outagesQ1: Realized gas costs $3.69/MMBtu; fewer outages vs 1Q24 .Higher realized gas and logistics; SG&A elevated on JV legal and variable comp; two unplanned outages .Watch cost discipline/logistics.
Europe/CBAMQ4: Europe remains marginal producer .CBAM transitional phase; ~$25/t benefit today for low-C ammonia, rising toward ~$100/t by 2030 .Structural advantage building.

Management Commentary

  • “We generated adjusted EBITDA of $1.4 billion [in 1H25]… against the backdrop of a tight global nitrogen supply demand balance.” — CEO Tony Will .
  • “We will deliver incremental EBITDA and free cash flow beginning in the third quarter… north of $100 million annually from the tax incentives and product premiums.” — CFO Greg Cameron .
  • “Our UAN inventory at June was the lowest… entering the third quarter in the last decade… fill prices will be significantly higher than 2024 given the tight global supply demand balance.” — EVP Bert Frost .
  • “CBAM… probably ~$25 per metric ton benefit [today]… by 2030 would be equivalent to $100 per metric ton advantage.” — COO Chris Bohn .
  • “As we generate more cash… we will probably deploy that capital against the share repurchase more expeditiously.” — CEO Tony Will .

Q&A Highlights

  • Inventory/load rumors addressed: Management refuted reports of Donaldsonville loading issues; the decision to briefly build inventory reflected prudent operations amid extremely low stocks and strong daily loadings .
  • SG&A and cost drivers: SG&A uplift tied to Blue Point JV legal work and higher variable comp; controllable costs affected by unplanned outages and logistics to meet customer commitments .
  • 45Q monetization mechanics: 45Q accrues into EBITDA as CO2 flows; cash benefit begins with estimated tax payments as early as September; Exxon’s Class VI permit for ROSE is progressing .
  • China exports/India tenders: China guided ~3MMT through Q3, underperforming shipments recently; India tendered significant volumes at elevated prices; limited fourth-quarter China exports expected .
  • Use of cash vs Blue Point capex: Blue Point spend ramps more in years 3–4; with strong FCF, CF expects to pace buybacks faster if cash generation outperforms .

Estimates Context

  • Q2 2025: Revenue beat ($1.89B vs $1.78B*), EPS miss ($2.37 vs $2.47*), adjusted EBITDA below S&P consensus ($761M vs $789M*) [functions.GetEstimates].
  • Q1 2025 context: Revenue beat ($1.66B vs $1.54B*), EPS beat ($1.85 vs $1.50*), EBITDA above S&P consensus (company EBITDA 617M vs 568M*), reflecting early-season strength [functions.GetEstimates].
  • Forward: FY2025 EPS consensus ~8.998*, FY2026 ~7.252*; FY2025 revenue consensus ~$6.98B*, FY2026 ~$6.58B* [functions.GetEstimates].
  • Note: Consensus values marked with an asterisk come from S&P Global; Values retrieved from S&P Global.

Key Takeaways for Investors

  • Momentum into 2H: Tight S&D, decade-low UAN inventories, and delayed fill at “significantly higher” prices should support Q3/Q4 pricing and margins despite higher turnaround activity in Q3 .
  • Low-carbon monetization is real: Donaldsonville CCS is live; >$100M annual EBITDA/FCF uplift commences in Q3, with additional premium pricing and future CBAM benefits offering incremental upside .
  • Blue Point de-risking: Cost clarity ($3.7B), ASU outsourced to Linde, and phased capex smooth CF’s ~$2B share; 2029 start enhances long-term low-carbon exposure .
  • Capital return cadence: Management plans to complete $425M under the current authorization by year-end, then roll into the $2B 2029 program; cash outperformance could accelerate repurchases .
  • Watch cost items: Realized gas costs moved to $3.36/MMBtu and logistics were elevated; monitor sequential margin normalization as turnarounds conclude .
  • Macro watchlist: China’s export cadence (quota adherence), India’s frequent tenders, and European energy remain key variables for pricing into 2026 .
  • Trading angle: Near-term catalysts include UAN fill pricing, Q3 CCS contribution appearing in reported EBITDA/FCF, and sustained tender-driven price support; any pullbacks on cost headlines may offer entries given structural advantages and buyback support .