CF Industries Holdings (CF)
Q2 2010 Earnings Call
August 06, 2010 10:00 am ET
Anthony Nocchiero - Chief Financial Officer and Senior Vice President
Terrell Huch - Senior Director of Investor Relations & Corporate Communications
Stephen Wilson - Chairman, Chief Executive Officer and President
Don Carson - Merrill Lynch
Charles Neivert - Dahlman Rose & Company, LLC
Mark Gulley - Soleil Securities Group, Inc.
Vincent Andrews - Morgan Stanley
Elaine Yip - Crédit Suisse AG
Mark Connelly - Credit Agricole Securities (USA) Inc.
David Silver - BofA Merrill Lynch
Michael Picken - CRC
Kristen McDuffy - Goldman Sachs
Horst Hueniken - Thomas Wiesel Partners
Edlain Rodriguez - Gleacher & Company, Inc.
Previous Statements by CF
» CF Industries Holdings Q1 2010 Earnings Call Transcript
» CF Industries Holdings, Inc. Q4 2009 Earnings Call Transcript
» CF Industries Holdings, Inc. Q3 2009 Earnings Call Transcript
Good day, ladies and gentlemen, and welcome to the CF Industries Second Quarter 2010 Results Conference Call. My name is Noella, and I will be your coordinator for today's call. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mr. Terry Huch, Senior Director of Investor Relations and Corporate Communications. Please proceed, sir.
Thanks, Noella. Good morning, and thanks to everyone for joining us in this call for CF Industries holdings, Inc. With me today are Steve Wilson, our Chairman and Chief Executive Officer; and Tony Nocchiero, our Senior Vice President and Chief Financial Officer.
CF Industries Holdings, Inc. reported its second quarter 2010 results yesterday afternoon, as did Terra Nitrogen Company, L.P. On this call, we'll review the CF Industries' results in detail and discuss our outlook for industry and company performance in 2010. At the end of the call, we'll host a question-and-answer session.
As you review the news releases posted on the Investor Relations section of our website at www.cfindustries.com and as you listen to this conference call, please recognize that they contain forward-looking statements, as defined by Federal Securities laws. All statements in the release and on this call other than those relating to historical information or current conditions are considered forward-looking statements. These forward-looking statements are subject to a number of risks and uncertainties, many of which are beyond our control and which could cause actual results to differ materially from such statements. These risks and uncertainties include those spelled out in the Safe Harbor statement included in yesterday's news release. Consider all forward-looking statements in light of those and other risks and uncertainties. Do not place undue reliance in any forward-looking statements.
Now let me introduce Steve Wilson, our Chairman and CEO.
Thanks, Terry, and thank you, all, for joining us this morning. For the second quarter of 2010, CF Industries reported net income of $105 million or $1.54 per diluted share, down from earnings of $213 million or $4.33 per share in the same period last year. The quarter included some significant onetime costs related to our acquisition of Terra Industries and some other unusual items, which Tony will discuss later in the call.
We came in to this acquisition with a vision of a great company we can build by bringing these two businesses together. Now we have the chance to make that vision a reality, and we like what we're finding every day as we do that. Of course, there's a lot of work to integrate the business practices, systems and organizations of two public companies, and we'll be at it for some time to come. But that effort is energizing those of us who are working on it because we can see the benefits and opportunities available to us.
Briefly, those benefits and opportunities come in two forms. First is a set of synergies we've outlined in past discussions, which we've targeted at $105 million to $135 million per year. Since April 5, teams of employees with a CF Industries heritage and employees with a Terra heritage have identified scores of individual initiatives that add up to an amount greater than the high end of this targeted range. Over the coming quarters, we'll continue our rigorous process to implement these actions and make sure that these savings and more are realized.
Second, we've always believed that as the integration proceeds, we'll find that we have better market intelligence and that we'll identify expanded capabilities and a host of new options available to us. While we're far from completely optimizing the combined manufacturing, logistics and sales organizations, we are finding new improvement opportunities and rapid succession. Some of these can be implemented immediately, while others require modifications to business processes and systems. We've focused our attention on the low-hanging fruit now, even while we're finalizing plans for the future state. This allowed us to make some successful tactical moves in the second quarter and into July that wouldn't have been possible for either the legacy companies alone.
We told you in our first quarter report that our first priority through the spring would be serving our customers without any gaps or missteps. I'm proud of the way our team performed to make sure that this was the case, and I'm happy to report that we didn't drop the ball for any of our customers.
The extremely strong ammonia season challenged our ability to meet all the demand, and employees from all parts of the company responded, delivering more ammonia to our customers than many of us thought possible in a single quarter. As an example, one of our ammonia terminals, which had extended to 24-hour operations, emptied half of its 30,000-ton ammonia tank in just 3 1/2 days. For the industry, this turned out to be the highest volume of spring for direct-application ammonia volume since 1994, surpassing our industry expectations by approximately 600,000 tons.