CF Industries Holdings, Inc.’s (CF) subsidiary CF Industries, Inc. announced the pricing of $1.5 billion public offering of senior notes, comprising $750 million aggregate principal amount of 5.150% senior notes due 2034 and $750 million aggregate principal amount of 5.375% senior notes due 2044.
CF Industries plans to utilize the proceeds from the offering to fund its capital expenditure programs and stock repurchases and for other general corporate purposes, including working capital. The senior notes offering is expected to close on Mar 11, 2014, subject to customary closing conditions. Morgan Stanley & Co. LLC and Goldman, Sachs & Co. are acting as joint book-running managers of the offering.
CF Industries posted better-than-expected fourth-quarter 2013 results on Feb 18. The company’s adjusted earnings (excluding one-time items) of $4.47 per share was down roughly 38.5% from the year-ago earnings of $7.27 a share. However, the results exceeded the Zacks Consensus Estimate by a penny.
Adjusted earnings exclude non-cash pre-tax mark-to-market gains on natural gas derivatives, pre-tax gains on foreign currency derivative and share buyback impact. Including one-time items, the company earned $5.71 a share in the quarter, down roughly 22.8% from $7.40 in the year-ago quarter. Lower prices and higher natural gas costs led to the earnings decline.
Sales were down 10% to $1,326.3 million in the quarter from $1,481.4 million in the prior year, but exceeded the Zacks Consensus Estimate of $1,266 million. Sales declined primarily due to lower average selling prices for both nitrogen and phosphate products, and lower phosphate sales volume.
CF Industries, which is one of the leading fertilizer makers along with Potash Corp. (POT), should benefit from favorable natural gas costs in North America and a solid start to the domestic planting season. Moreover, the company has a strong cash flow profile, which allows it to return value to shareholders and invest in growth initiatives.
CF Industries currently retains a Zacks Rank #3 (Hold).