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CF Industries Holdings, Inc. Reports Record Third Quarter Earnings

Stocks in this article: CF

Nine Month Results

For the first nine months of 2012, net earnings attributable to common stockholders were a record $1.4 billion, or $21.19 per diluted share, compared to $1.1 billion, or $15.41 per diluted share, in the same period of 2011. EBITDA was $2.5 billion in the first nine months of 2012, compared to $2.1 billion in the same period of 2011. Nine month results for 2012 included a $61.5 million non-cash, mark-to-market gain on natural gas derivatives, $15.2 million of accelerated amortization of capitalized financing fees related to the termination of the company’s prior credit facility, and a $10.9 million gain from a change in employee post-retirement benefits. These items increased/(decreased) after-tax earnings per diluted share by $0.59, ($0.14) and $0.10, respectively.

Net sales for the first nine months of 2012 were a record $4.6 billion, up six percent from $4.4 billion in the same period of 2011. The increase resulted from higher sales volumes for both the nitrogen and phosphate segments and higher average price realizations for most nitrogen products. Nitrogen volume was 9.7 million tons for the nine months ended September 30, 2012, a slight increase from the prior year period. Phosphate volume of 1.5 million tons for the nine months was three percent higher than in the prior year period due to higher exports, offset partially by lower domestic shipments.

Prices for all of the primary nitrogen products except ammonium nitrate were higher for the nine months ended September 30, 2012, compared to the prior year period due to robust demand and tight downstream inventories. Phosphate prices were lower for the nine months as compared to the prior year period due to lower global demand.

Nitrogen Segment

Nitrogen net sales in the third quarter totaled $1.1 billion, essentially unchanged from the 2011 third quarter, as higher prices were offset by lower volumes. Gross margin was $638.6 million, up 16 percent from $552.1 million in the 2011 third quarter. A 19 percent decline in cost of sales was due primarily to lower realized natural gas costs compared to the prior year period and a $39.8 million non-cash, mark-to-market gain on natural gas derivatives compared to a $14.1 million loss in the prior year period. Gross margin as a percent of sales was 58 percent, up from 49 percent in the year-earlier quarter.

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