CF Industries' (CF) Q4 Earnings Lag, Lower Prices Hurt Sales
CF Industries Holdings, Inc. CF logged fourth-quarter 2023 earnings of $1.44 per share, down from $4.35 in the year-ago quarter.
Barring one-time items, earnings came in at $1.49 per share for the reported quarter. The figure missed the Zacks Consensus Estimate of $1.56.
Net sales fell around 40% year over year to $1,571 million in the quarter. It, however, beat the Zacks Consensus Estimate of $1,486.7 million. Sales were hurt by lower average selling prices as lower global energy costs led to reduced global market clearing price required to meet global demand.
Sales volumes rose year over year in the reported quarter on the back of higher urea ammonium nitrate, ammonia and diesel exhaust fluid sales volumes.
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 decreased 38% year over year to $495 million in the reported quarter. It was above our estimate of $368 million. Average selling price per product ton was $460, which was above our estimate of $458. Ammonia adjusted gross margin per ton decreased for full-year 2023 compared with 2022 due to lower average selling prices, partly offset by lower realized natural gas prices.
Sales in the Granular Urea segment fell around 35% year over year to $392 million. It was lower than our estimate of $417.5 million. Average selling price per product ton was $378, which lagged our estimate of $387. Granular urea adjusted gross margin per ton decreased for full-year 2023 compared with 2022 mainly due to a decline in average selling prices, partly offset by lower realized natural gas prices.
Sales in the Urea Ammonium Nitrate segment fell around 51% year over year to $418 million. It lagged our estimate of $470 million. Average selling price per product ton was $231, which was below our estimate of $298. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 mainly due to reduced average selling prices that more than offset a decline in realized natural gas costs.
Sales in the Ammonium Nitrate segment fell around 37% year over year to $120 million. It was higher than our estimate of $116.7 million. Average selling price per product ton was $290, which was below our estimate of $316. Adjusted gross margin per ton decreased for full-year 2023 compared with 2022 due to lower average selling prices, partly offset by the impact of using lower-cost imported ammonia for ammonium nitrate production in the U.K. and reduced realized natural gas prices in North America.
FY23 Results
Earnings for full-year 2023 were $7.87 per share, down from $16.38 per share a year ago. Net sales declined around 41% year over year to $6,631 million.
Financials
CF Industries ended 2023 with cash and cash equivalents of $2,032 million, down around 13% year over year. Long-term debt was $2,968 million at the end of 2023, essentially flat year over year.
Net cash provided by operating activities was $480 million in the reported quarter, down around 18% year over year.
During the fourth quarter, the company repurchased 2.9 million shares for $225 million. It repurchased around 7.9 million shares for $580 million during 2023.
Outlook
CF noted that global nitrogen industry fundamentals indicate a constructive global nitrogen supply-demand balance in the near term and a tightening global nitrogen supply-demand balance in the medium term. It sees global nitrogen demand to remain resilient in the near term on the back of continued strong agriculture applications and recovering industrial demand. Major producing regions remain exposed to challenging production economics due to the cost and availability of natural gas, CF noted.
Price Performance
Shares of CF Industries have declined 9.1% in the past year compared with a 39.2% fall of the industry.
Image Source: Zacks Investment Research
Zacks Rank & Key Picks
CF currently has a Zacks Rank #3 (Hold).
Better-ranked stocks worth a look in the basic materials space include, Carpenter Technology Corporation CRS, Alpha Metallurgical Resources Inc. AMR and Hawkins, Inc. HWKN.
The consensus estimate for Carpenter Technology’s current fiscal year earnings is pegged at $4.00, indicating a year-over-year surge of 250.9%. CRS beat the Zacks Consensus Estimate in three of the last four quarters while matching it once, with the average earnings surprise being 12.2%. The company’s shares have gained 27% in the past year. CRS currently carries a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Alpha Metallurgical Resources’ current-year earnings has been revised upward by 8.8% in the past 60 days. It currently carries a Zacks Rank #1. AMR delivered a trailing four-quarter earnings surprise of roughly 9.6%, on average. AMR shares are up around 126% in a year.
The consensus estimate for Hawkins’ current fiscal year earnings is pegged at $3.61 per share, indicating a year-over-year rise of 26.2%. The Zacks Consensus Estimate for HWKN’s current-year earnings has been revised 4.3% upward in the past 30 days. HWKN, a Zacks Rank #2 (Buy) stock, beat the consensus estimate in each of the last four quarters, with the average earnings surprise being 30.6%. The company’s shares have rallied roughly 64% in the past year.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Alpha Metallurgical Resources, Inc. (AMR) : Free Stock Analysis Report
CF Industries Holdings, Inc. (CF) : Free Stock Analysis Report
Carpenter Technology Corporation (CRS) : Free Stock Analysis Report
Hawkins, Inc. (HWKN) : Free Stock Analysis Report
