What changed in this filing

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Item 2. Management’s Discussion and Analysis

2020-08-06 compared with 2020-05-07 · 462 added, 194 removed, 412 unchanged (61% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

You should read the following discussion and analysis in conjunction with our annual consolidated financial statements and related notes and our discussion and analysis of financial condition and results of operations, which were included in our 2019 Annual Report on Form 10-K filed with the Securities and Exchange Commission on February 24, 2020 , as well as Item 1.

Financial Statements in this Form 10-Q.

You should read the following discussion and analysis in conjunction with our annual consolidated financial statements and related notes and our discussion and analysis of financial condition and results of operations, which were included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the Securities and Exchange Commission on February 24, 2020, as well as Item 1.

Financial Statements in this Quarterly Report on Form 10-Q.

All references to “CF Holdings,” “we,” “us,” “our” and “the Company” refer to CF Industries Holdings, Inc.

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Notes referenced in this discussion and analysis refer to the notes to our unaudited interim consolidated financial statements in Item 1.

Financial Statements in this Form 10-Q.

Financial Statements in this Quarterly Report on Form 10-Q.

The following is an outline of the discussion and analysis included herein:

• Overview of CF Holdings

◦ Our Company

◦ Market Conditions and Current Developments

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◦ Financial Executive Summary

Results of Consolidated Operations

• Consolidated Results of Operations

◦ Second Quarter of 2020 Compared to Second Quarter of 2019

◦ Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

• Operating Results by Business Segment

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We operate manufacturing complexes in the United States, Canada and the United Kingdom, which are among the most cost-advantaged, efficient and flexible in the world, and an extensive storage, transportation and distribution network in North America.

Our 3,000 employees focus on safe and reliable operations, environmental stewardship and disciplined capital and corporate management, driving our strategy to leverage and sustainably grow the world’s most advantaged nitrogen and chemicals platform to serve customers and create long-term shareholder value.

Our 3,000 employees focus on safe and reliable operations, environmental stewardship and disciplined capital and corporate management, driving our strategy to leverage and sustainably grow our nitrogen and chemicals platform to serve customers and create long-term shareholder value.

Our principal customers are cooperatives, independent fertilizer distributors, traders, wholesalers and industrial users.

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Our other nitrogen products include diesel exhaust fluid (DEF), urea liquor, nitric acid and aqua ammonia, which are sold primarily to our industrial customers, and compound fertilizer products (NPKs), which are granular fertilizer products for which the nutrient content is a combination of nitrogen, phosphorus and potassium.

Our principal assets as of March 31, 2020 include:

Our principal assets as of June 30, 2020 include:

nitrogen manufacturing facilities located in Donaldsonville, Louisiana (the largest nitrogen complex in the world);

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• two Canadian nitrogen manufacturing facilities located in Medicine Hat, Alberta (the largest nitrogen complex in Canada) and Courtright, Ontario;

CF INDUSTRIES HOLDINGS, INC.

• two United Kingdom nitrogen manufacturing facilities located in Billingham and Ince;

• an extensive system of terminals and associated transportation equipment located primarily in the Midwestern United States;

CF INDUSTRIES HOLDINGS, INC.

• a 50% interest in Point Lisas Nitrogen Limited (PLNL), an ammonia production joint venture located in the Republic of Trinidad and Tobago that we account for under the equity method.

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Due to the use of fertilizer products in crop production, our business operations have been designated as part of the critical infrastructure by the United States and as essential businesses in the United Kingdom and Canada, with corresponding designations for those states and provinces in which we operate that have issued restrictive orders.

As a result, our manufacturing complexes continued to operate during the first quarter and have continued to operate through the date of this report.

Our production of ammonia, the basic building block for our products, totaled 2.7 million tons in the first quarter of 2020 as compared to 2.6 million tons in the first quarter of 2019 .

Through the date of this filing, we have continued to ship products through all modes of transportation to our customers, and we have not experienced any significant delays in marine, rail or truck transportation services due to the pandemic.

In the first quarter of 2020 , we did not experience a meaningful impact in customer demand as a result of the COVID-19 pandemic.

Spring weather conditions in the first quarter of this year have been substantially better than the weather conditions experienced in the first quarter of 2019 , when cold, wet and snowy conditions prevented first quarter planting activities across much of North America and Europe.

In the first quarter of 2020, spring planting began in certain locations and our total volume of products shipped in the first quarter of 2020 of 4.7 million tons was 15% higher than the prior year first quarter.

We have instituted safety precautions to protect the health and well-being of all of our employees, including our essential manufacturing workforce who operate our nitrogen complexes and distribution facilities.

These safety measures include installing thermal temperature checks at each of our sites for all personnel who arrive at our sites, adjusting schedules to support social distancing, including changes to loading and shipping procedures, maintaining a close contact log for employees, self-quarantine logs, requiring face coverings onsite, restricting visitor access, enhanced cleaning protocols and travel restrictions for employees.

We have also offered pay enhancements to the operational workforce for the March to June time period of approximately $19 million.

In addition, since mid-March 2020, the non-operational personnel at our sites who work in administrative and operational support functions have been working remotely in order to maintain social distancing following governmental guidelines.

As a result, our manufacturing complexes continued to operate during the first half of 2020 and have continued to operate through the date of this report.

Our production of ammonia, the basic building block for our products, was 5.2 million tons in both the first six months of 2020 and the first six months of 2019.

Through the date of this filing, we have continued to ship products by all modes of transportation to our customers, and we have not experienced any significant delays in marine, rail or truck transportation services due to the pandemic.

In the first half of 2020, we did not experience a meaningful impact in customer demand as a result of the COVID-19 pandemic.

Our total volume of products shipped in the first six months of 2020 of 10.1 million tons was 3% higher compared to 9.8 million tons in the first six months of 2019.

In response to the pandemic, we instituted safety precautions to protect the health and well-being of all of our employees, including the manufacturing workforce who operate our nitrogen complexes and distribution facilities.

These safety measures included installing thermal temperature checks at each of our sites for all personnel who arrive at our sites, adjusting schedules to support social distancing, including changes to loading and shipping procedures, maintaining a close contact log for employees, self-quarantine logs, requiring face coverings on site, restricting visitor access, and implementing enhanced cleaning protocols and travel restrictions for employees.

We also paid approximately $19 million of bonuses to our operational workforce under a special COVID-19 bonus program, which concluded in June.

In addition, since mid-March 2020, the majority of our non-operational personnel at our sites who work in administrative and operational support functions have worked remotely in order to maintain social distancing following governmental guidelines.

These administrative and operational support functions have operated effectively during this period, meeting our commitments to our customers and continuing to manage our business without interruption.

We have not furloughed any employees or instituted any reductions in pay or benefits or other significant cost containment measures.

We have not furloughed any employees or instituted any reductions in pay or benefits or other significant cost containment measures due to the pandemic.

We participate in a global market, which includes a global supply chain and customer base.

The long-term effects of the COVID-19 pandemic are unclear and could adversely affect our business in the future.

We have operated our business in a remote working environment under shelter in place orders and could continue to do so for an extended duration, if necessary.

We have operated our business in a remote working environment and could continue to do so for an extended duration, if necessary.

However, if the pandemic were to impact a large portion of our workforce in any one location, we might need to temporarily idle that facility, which could have an impact on our business operations, profitability and cash flow.

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As a result, we cannot predict the extent to which our business, results of operations, financial condition or liquidity will be impacted by the pandemic in the future.

There was strong demand for fertilizer in the first quarter of 2020 compared to the first quarter of 2019 , when demand was lower because of delayed spring planting activity and fertilizer applications as a result of persistent cold and wet weather.

Sales volume for the three months ended March 31, 2020 was 4.7 million product tons, an increase of 15% compared to sales volume of 4.1 million product tons for the three months ended March 31, 2019 , which resulted in an increase in net sales of approximately $173 million .

Sales volumes across all of our products increased in the first quarter of 2020 compared to the first quarter of 2019 as a result of improved weather conditions for the 2020 spring fertilizer application season.

Selling Prices

Selling prices for our products strengthened as the first quarter of 2020 progressed.

Early in the first quarter of 2020, average selling prices for our products were lower than in first quarter of 2019 due to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates in the fourth quarter of 2019 and the first quarter of

There was strong demand for fertilizer in the first six months of 2020 as we shipped 10.1 million tons of product compared to 9.8 million tons in the first six months of 2019, a 3% increase.

Our shipments can shift between quarters due primarily to shifts in weather patterns that impact fertilizer applications.

In the second quarter of 2020, our sales volumes were lower across most of our major products compared to the second quarter of 2019 as a result of higher sales volumes in the second quarter of 2019 due to the delayed spring application season as a result of persistent cold and wet weather last year.

Additionally, certain shipments of granular urea occurred earlier, in the first quarter of 2020, due to favorable weather conditions.

CF INDUSTRIES HOLDINGS, INC.

For granular urea and UAN, a combination of lower than expected imports into North America and earlier demand in the Southern Plains for spring applications due to favorable weather conditions compared to the prior year drove an increase in selling prices as the first quarter of 2020 concluded.

The average selling price for our products for the first quarter of 2020 was $207 per ton, a decrease of 16% compared to $245 per ton in the first quarter of 2019 , which resulted in a decrease in net sales of approximately $203 million .

In the three months ended June 30, 2020, sales volume was 5.4 million product tons, a decrease of 6%, compared to sales volume of 5.7 million product tons for three months ended June 30, 2019.

This decrease in sales volume resulted in a decrease in net sales of approximately $100 million.

Sales volumes in our granular urea, ammonia, Other and UAN segments decreased in the second quarter of 2020 compared to the second quarter of 2019, partially offset by an increase in our AN segmen t sales volumes.

In the six months ended June 30, 2020, sales volume was 10.1 million product tons, an increase of 3%, compared to sales volume of 9.8 million product tons for the six months ended June 30, 2019.

This increase in sales volume resulted in an increase in net sales of approximately $73 million.

Sales volumes across all products increased in the six months ended June 30, 2020 compared to the six months ended June 30, 2019.

Selling Prices

The selling prices for all products were lower in the second quarter of 2020 than the second quarter of 2019 as global energy prices remained low, driving higher global nitrogen operating rates and the resulting additional global supply availability.

In the second quarter of 2020, the average selling price for our products was $224 per ton, a decrease of 15% compared to $263 per ton in the second quarter of 2019.

This resulted in a decrease in net sales of approximately $198 million.

In the six months ended June 30, 2020, the average selling price for our products was $216 per ton, or 15% lower compared to $255 per ton for the six months ended June 30, 2019.

This resulted in a decrease in net sales of approximately $401 million.

Natural Gas Prices

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We use natural gas both as a chemical feedstock and as a fuel to produce nitrogen products.

Natural gas is a significant cost component of manufactured nitrogen products, representing approximately 35% of our production costs.

Natural gas is a significant cost component of manufactured nitrogen products, representing approximately one-third of our production costs.

Most of our nitrogen fertilizer manufacturing facilities are located in the United States and Canada.

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Due to increases in natural gas production resulting from the rise in production from shale gas formations, natural gas prices in North America have declined over the last decade, but are subject to volatility.

In addition, in the first quarter of 2020, natural gas prices were lower than in the first quarter of 2019 as a result of robust supply and lower overall demand as a result of warmer than normal weather in the first quarter of 2020 .

The average daily market price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, for the three months ended March 31, 2020 was $1.88 per MMBtu compared to $2.89 per MMBtu for the three months ended March 31, 2019 , a decrease of 35% .

Natural gas prices during the first half of 2020 were lower on average than in the first half of 2019, due in part to reduced demand related to measures designed to curb the spread of COVID-19, partially offset by reductions in supply.

The average daily market price at the Henry Hub, the most heavily-traded natural gas pricing point in North America, for the three months ended June 30, 2020 was $1.65 per MMBtu compared to $2.51 per MMBtu for the three months ended June 30, 2019, a decrease of 34%.

The average daily market price at the Henry Hub for the six months ended June 30, 2020 was $1.76 per MMBtu compared to $2.70 per MMBtu for the six months ended June 30, 2019, a decrease of 35%.

We also have manufacturing facilities located in the United Kingdom.

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The major natural gas trading point for the United Kingdom is the National Balancing Point (NBP).

The price of natural gas in the United Kingdom has declined as a result of increased availability of liquefied natural gas in the global market.

The average daily market price of natural gas at NBP for the three months ended March 31, 2020 was $3.20 per MMBtu compared to $6.56 per MMBtu for the three months ended March 31, 2019 , a decrease of 51% .

Natural gas costs in cost of sales, including the impact of realized natural gas derivatives, decrease d 29% to $2.61 per MMBtu in the three months ended March 31, 2020 from $3.68 per MMBtu in the three months ended March 31, 2019 , which resulted in an increase in gross margin of approximately $87 million .

More recently, North America and the United Kingdom have experienced reduced demand for energy, including natural gas, due to the impact of the COVID-19 pandemic.

The price of natural gas in the United Kingdom declined throughout the first half of 2020 as a result of increased availability of liquefied natural gas in the global market as well as the global economic downturn related to the COVID-19 pandemic.

The average daily market price of natural gas at NBP for the three months ended June 30, 2020 was $1.60 per MMBtu compared to $4.07 per MMBtu for the three months ended June 30, 2019, a decrease of 61%.

The average daily market price at NBP for the six months ended June 30, 2020 was $2.40 per MMBtu compared to $5.15 per MMBtu for the six months ended June 30, 2019, a decrease of 53%.

Natural gas costs in cost of sales, including the impact of realized natural gas derivatives, decreased 34% to $1.86 per MMBtu in the three months ended June 30, 2020 from $2.81 per MMBtu in the three months ended June 30, 2019, which resulted in an increase in gross margin of approximately $96 million.

Natural gas costs in cost of sales, including the impact of realized natural gas derivatives, decreased 30% to $2.20 per MMBtu in the six months ended June 30, 2020 from $3.15 per MMBtu in the six months ended June 30, 2019, which resulted in an increase in gross margin of approximately $183 million.

CF INDUSTRIES HOLDINGS, INC.

Items Affecting Comparability of Results

In addition to the impact of market conditions discussed above, certain items impacted the comparability of our financial results during the three months ended March 31, 2020 and 2019 .

In addition to the impact of market conditions discussed above, certain items impacted the comparability of our financial results during the three and six months ended June 30, 2020 and 2019.

The following table and related discussion outline these items and how they impacted the comparability of our financial results during these periods.

During the three months ended March 31, 2020 and 2019 , we reported net earnings attributable to common stockholders of $68 million and $90 million , respectively.

Three Months Ended March 31,

During the three months ended June 30, 2020 and 2019, we reported net earnings attributable to common stockholders of $190 million and $283 million, respectively.

During the six months ended June 30, 2020 and 2019, we reported net earnings attributable to common stockholders of $258 million and $373 million, respectively.

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 2019

Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax Pre-Tax After-Tax

(in millions)

Unrealized net mark-to-market (gain) loss on natural gas derivatives (1)

Loss on foreign currency transactions, including intercompany loans (2)

$ — $ — $ (1) $ — $ (12) $ (9) $ 1 $ 1

Special COVID-19 bonus for operational workforce (1)

15 12 — — 15 12 — —

(Gain) loss on foreign currency transactions, including intercompany loans (2)

(5) (4) 5 4 13 10 7 5

Engineering cost write-off (2)

8 6 — — 8 6 — —

Insurance proceeds (2)

— — — — (10) (8) — —

Gain on sale of Pine Bend facility (2)

— — (45) (35) — — (45) (35)

Louisiana incentive tax credit (3)

— — — — — — — (30)

Terra amended tax returns—interest income and income tax benefit (4)

(16) (32) — — (16) (32) — —

______________________________________________________________________________

(1) Included in cost of sales in our consolidated statements of operations.

(2) Included in other operating—net in our consolidated statements of operations.

Included in income tax provision (benefit) in our consolidated statement of operations.

CF INDUSTRIES HOLDINGS, INC.

(3) Included in income tax provision in our consolidated statements of operations.

(4) Included in interest income and income tax provision in our consolidated statements of operations.

Unrealized net mark-to-market (gain) loss on natural gas derivatives

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This can result in volatility in reported earnings due to the unrealized mark-to-market adjustments that occur from changes in the value of the derivatives, which are reflected in cost of sales in our consolidated statements of operations.

In the three months ended March 31, 2020 and 2019 , we recognized an unrealized net mark-to-market (gain) loss of $(12) million and $2 million , respectively.

Loss on foreign currency transactions, including intercompany loans

In the three months ended March 31, 2020 and 2019 , we recognized losses of $18 million and $2 million , respectively, primarily consisting of the impact of changes in foreign currency exchange rates on primarily U.S.

dollar and British pound denominated intercompany loans that were not permanently invested.

In the three months ended June 30, 2019, we recognized an unrealized net mark-to-market gain of $1 million.

In the six months ended June 30, 2020 and 2019, we recognized an unrealized net mark-to-market (gain) loss of $(12) million and $1 million, respectively.

Special COVID-19 bonus for operational workforce

In March 2020, a short-term bonus program was initiated to compensate operational employees for continuing their critical tasks during the COVID-19 pandemic.

The bonus program concluded in June 2020.

Approximately $19 million was paid as part of the program, of which approximately $15 million was recognized in cost of sales in our consolidated statement of operations for the three months ended June 30, 2020, with the remaining $4 million to be recognized in the third quarter of 2020.

(Gain) loss on foreign currency transactions, including intercompany loans

In the three and six months ended June 30, 2020, we recognized a (gain) loss of $(5) million and $13 million, respectively, primarily consisting of the impact of changes in foreign currency exchange rates on intercompany loans that were not permanently invested.

CF INDUSTRIES HOLDINGS, INC.

Engineering cost write-off

In June 2020, a project at one of our nitrogen complexes was cancelled and $8 million of previously capitalized engineering costs were expensed in the three months ended June 30, 2020.

The expense is recognized in the line titled other operating—net in our consolidated statements of operations.

Insurance proceeds

In the three months ended March 31, 2020 , we recognized income of $10 million related to insurance claims at one of our nitrogen complexes.

In the six months ended June 30, 2020, we recognized income of $10 million related to insurance claims at one of our nitrogen complexes.

The $10 million of income consists of $8 million related to business interruption insurance proceeds and $2 million related to property insurance proceeds.

These proceeds are reflected in other operating—net in our consolidated statement of operations.

These proceeds are reflected in other operating—net in our consolidated statements of operations.

Gain on sale of Pine Bend facility

During the first quarter of 2019, we entered into an agreement to sell our Pine Bend dry bulk storage and logistics facility in Minnesota.

In April 2019, we completed the sale, received proceeds of $55 million and recognized a pre-tax gain of $45 million.

The gain is reflected in other operating—net in our consolidated statement of operations for the three and six months ended June 30, 2019.

Louisiana incentive tax credit

For the three months ended March 31, 2019 , our income tax benefit included an incentive tax credit from the State of Louisiana of $30 million , net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.

For the six months ended June 30, 2019, our income tax provision included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.

Terra amended tax returns

We completed the acquisition of Terra Industries Inc.

(Terra) in April 2010.

After the acquisition, we determined that the manner in which Terra reported the repatriation of cash from foreign affiliates to its U.S.

parent for U.S.

and foreign income tax purposes was not appropriate.

As a result, in 2012 we amended certain tax returns, including Terra’s income and withholding tax returns, back to 1999 (the Amended Tax Returns) and paid additional income and withholding taxes, and related interest and penalties.

In early 2013, the Internal Revenue Service (IRS) commenced an examination of the U.S.

tax aspects of the Amended Tax Returns.

In early 2019, the IRS completed its examination of the Amended Tax Returns and submitted its audit reports and related refund claims to the Joint Committee on Taxation of the U.S.

Congress (the Joint Committee).

For purposes of its review, the Joint Committee separated the IRS audit reports into two separate matters:

(i) an income tax related matter and (ii) a withholding tax matter.

In December 2019, we received notification that the Joint Committee had approved the IRS audit reports and related income tax refunds relating to the income tax related matter, and in the second quarter of 2020, we received notification that the Joint Committee approved the IRS audit report and related withholding tax refunds relating to the withholding tax matter.

See “Liquidity and Capital Resources—Terra Amended Tax Returns,” below, for additional information.

As a result of these events, in the second quarter of 2020, we recognized $16 million of interest income and $16 million of income tax benefit, which consisted of the following:

• additional interest income of $16 million ($13 million, net of tax) related to both the income tax matter and the withholding tax matter,

• a reduction in our liabilities for unrecognized tax benefits of $12 million with a corresponding reduction in income tax expense related to the withholding tax matter, and

• an additional income tax benefit of $7 million related to the income tax matter.

We received income tax refunds, including interest, of $108 million relating to these matters in the second quarter of 2020.

In July 2020, we received an additional $2 million, which finalizes these matters with the IRS.

As a result of the finalization of these tax matters, all U.S.

federal tax years commencing before January 1, 2012 are now closed.

CF INDUSTRIES HOLDINGS, INC.

Financial Executive Summary

We reported net earnings attributable to common stockholders of $68 million for the three months ended March 31, 2020 compared to $90 million for the three months ended March 31, 2019 , a decrease in net earnings of 24% , or $22 million .

The decrease in net earnings of $22 million was due primarily to the following:

Gross margin decrease d by $16 million in the first quarter of 2020 to $204 million as compared to $220 million in the first quarter of 2019 .

The decrease in gross margin was primarily driven by a 16% decrease in average selling prices, which reduced gross margin by $203 million, partially offset by a 29% decrease in natural gas costs, which increased gross margin by $87 million, and a 15% increase in sales volume, which increased gross margin by $74 million.

Net interest expense decreased by $13 million in the first quarter of 2020 to $43 million as compared to $56 million in the first quarter of 2019 .

The decrease was due primarily to our redemption in November 2019 of all of the remaining $500 million outstanding principal amount of the 7.125% senior notes due May 2020 (the 2020 Notes) and the redemption in December 2019 of $250 million principal amount, representing 50% of the $500 million principal amount outstanding immediately prior to such redemption, of the 3.400% senior secured notes due December 2021 (the 2021 Notes).

Income tax provision increased by $21 million in the first quarter of 2020 to $13 million as compared to an income tax benefit of $8 million in the first quarter of 2019 .

The primary driver of the increase relates to an incentive tax credit of $30 million recognized in the first quarter of 2019 , which is more fully described in the section above titled “Items Affecting Comparability of Results.”

Diluted net earnings per share attributable to common stockholders decrease d 23% , or $0.09 per share, to $0.31 in the first quarter of 2020 compared to $0.40 in the first quarter of 2019 .

This decrease is due primarily to the $30 million incentive tax credit recognized in the first quarter of 2019 and lower gross margin, partially offset by a 4% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.

We reported net earnings attributable to common stockholders of $190 million for the three months ended June 30, 2020 compared to $283 million for the three months ended June 30, 2019, a decrease in net earnings of $93 million, or 33%.

The decrease in net earnings was due primarily to the following:

• Gross margin decreased by $165 million in the second quarter of 2020 to $334 million as compared to $499 million in the second quarter of 2019.

The decrease in gross margin was primarily driven by a 15% decrease in average selling prices, which reduced gross margin by $198 million, and a 6% decrease in sales volume, which decreased gross margin by $56 million, partially offset by a 34% decrease in natural gas costs, which increased gross margin by $96 million.

• Other operating—net decreased by $43 million in the second quarter of 2020 to $6 million of expense as compared to $37 million of income in the second quarter of 2019.

The second quarter of 2019 included a gain on the sale of the Pine Bend facility of $45 million.

The second quarter of 2020 includes $8 million of expense related to the cancellation of a project.

Both of these items are more fully described above under “Items Affecting Comparability of Results.”

• Net interest expense decreased by $23 million in the second quarter of 2020 to $32 million as compared to $55 million in the second quarter of 2019.

The decrease was due primarily to $16 million of interest income related to the finalization of the Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.

In addition, the decrease reflects our redemption of $750 million of aggregate principal amount of long-term debt in the fourth quarter of 2019, which is more fully described under “Liquidity and Capital Resources—Senior Notes,” below.

• Our income tax provision decreased by $69 million in the second quarter of 2020 to $33 million as compared to $102 million in the second quarter of 2019 due to lower earnings before income taxes as well as t he impact of the finalization of the T erra amended tax returns, which is more fully described under “ Liquidity and Capital Resources —Terra Amended Tax Returns,” below.

Diluted net earnings per share attributable to common stockholders decreased 30%, or $0.39 per share, to $0.89 in the second quarter of 2020 compared to $1.28 in the second quarter of 2019.

This decrease is due primarily to lower net earnings, partially offset by a 3% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.

On February 13, 2019, our Board of Directors (the Board) authorized the repurchase of up to $1 billion of CF Holdings common stock through December 31, 2021 (the 2019 Share Repurchase Program).

In 2019, we repurchased a total of 7.6 million shares for $337 million , of which approximately 1.5 million shares were repurchased in the first quarter of 2019 for $60 million .

In the first quarter of 2020 , we repurchased approximately 2.6 million shares for $100 million .

In 2019, we repurchased approximately 7.6 million shares of CF Holdings common stock for $337 million, of which approximately 4.2 million shares were repurchased in the first half of 2019 for $178 million.

No shares were repurchased in the three months ended June 30, 2020, and for the six months ended June 30, 2020, we repurchased approximately 2.6 million shares for $100 million.

See discussion under “Liquidity and Capital Resources—Share Repurchase Program,” below, for further information.

CF INDUSTRIES HOLDINGS, INC.

Results of Consolidated Operations

Consolidated Results of Operations

The following table presents our consolidated results of operations and supplemental data:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(in millions, except per share and per MMBtu)

Net sales $ 1,204 $ 1,502 $ (298) (20) % $ 2,175 $ 2,503 $ (328) (13) %

Cost of sales 870 1,003 (133) (13) % 1,637 1,784 (147) (8) %

Gross margin 334 499 (165) (33) % 538 719 (181) (25) %

Gross margin percentage 27.7 % 33.2 % (5.5) % 24.7 % 28.7 % (4.0) %

Selling, general and administrative expenses 51 62 (11) (18) % 105 120 (15) (13) %

Other operating—net

Other operating—net 6 (37) 43 N/M 12 (33) 45 N/M

Total other operating costs and expenses 57 25 32 128 % 117 87 30 34 %

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Earnings before income taxes 251 422 (171) (41) % 355 532 (177) (33) %

Income tax provision (benefit)

Income tax provision 33 102 (69) (68) % 46 94 (48) (51) %

Net earnings 218 320 (102) (32) % 309 438 (129) (29) %

Net earnings attributable to noncontrolling interest 28 37 (9) (24) % 51 65 (14) (22) %

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Diluted net earnings per share attributable to common stockholders

$ 0.89 $ 1.28 $ (0.39) (30) % $ 1.20 $ 1.67 $ (0.47) (28) %

Diluted weighted-average common shares outstanding

214.6 222.3 (7.7) (3) % 215.6 223.4 (7.8) (3) %

Dividends declared per common share $ 0.30 $ 0.30 $ — — % $ 0.60 $ 0.60 $ — — %

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Natural gas costs in cost of sales (1)

$ 1.86 $ 2.81 $ (0.95) (34) % $ 2.11 $ 3.16 $ (1.05) (33) %

Realized derivatives loss (gain) in cost of sales (2)

— — — — % 0.09 (0.01) 0.10 N/M

Cost of natural gas in cost of sales $ 1.86 $ 2.81 $ (0.95) (34) % $ 2.20 $ 3.15 $ (0.95) (30) %

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Average daily market price of natural gas National Balancing Point (UK) $ 1.60 $ 4.07 $ (2.47) (61) % $ 2.40 $ 5.15 $ (2.75) (53) %

Unrealized net mark-to-market (gain) loss on natural gas derivatives

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ — $ (1) $ 1 100 % $ (12) $ 1 $ (13) N/M

Depreciation and amortization $ 239 $ 252 $ (13) (5) % $ 450 $ 440 $ 10 2 %

Capital expenditures

$ 52 $ 74 $ (22) (30) % $ 119 $ 154 $ (35) (23) %

Sales volume by product tons (000s) 5,386 5,716 (330) (6) % 10,074 9,803 271 3 %

Production volume by product tons (000s):

2,483 2,661 (178) (7) % 5,153 5,228 (75) (1) %

Granular urea 1,206 1,324 (118) (9) % 2,491 2,630 (139) (5) %

UAN (32%) 1,708 1,589 119 7 % 3,307 3,226 81 3 %

AN 546 551 (5) (1) % 1,061 1,033 28 3 %

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CF INDUSTRIES HOLDINGS, INC.

The following is a discussion and analysis of our consolidated results of operations for the first quarter of 2020 compared to the first quarter of 2019 .

Our total net sales decreased $30 million , or 3% , to $971 million in the first quarter of 2020 as compared to $1,001 million in the first quarter of 2019 due to a 16% decrease in average selling prices, which reduce d net sales by $203 million , partially offset by a 15% increase in sales volume, which increased net sales by $173 million due primarily to favorable weather conditions in North America as compared to the prior year period.

Average selling prices were $207 per ton in the first quarter of 2020 , or 16% lower , as compared to $245 per ton in the first quarter of 2019 due to lower average selling prices across all products, primarily driven by increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Our total sales volume was 4.7 million product tons in the first quarter of 2020 , or 15% higher, as compared to 4.1 million product tons in the first quarter of 2019 due to higher sales volume across all products.

Second Quarter of 2020 Compared to Second Quarter of 2019

Our total net sales decreased $298 million, or 20%, to $1.20 billion in the second quarter of 2020 compared to $1.50 billion in the second quarter of 2019 due to a 15% decrease in average selling prices, which reduced net sales by $198 million, and a 6% decrease in sales volume, which decreased net sales by $100 million.

Average selling prices were $224 per ton in the second quarter of 2020, or 15% lower, compared to $263 per ton in the second quarter of 2019 due to lower average selling prices across all products, primarily driven by increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Additionally, in the second quarter of 2019, high water levels and flooding impacted shipping and logistics on inland rivers and reduced access to imports, which reduced supply availability and contributed to higher average selling prices in the second quarter of 2019.

Our total sales volume was 5.4 million product tons in the second quarter of 2020, or 6% lower, as compared to 5.7 million product tons in the second quarter of 2019 due primarily to lower sales volumes in our granular urea, ammonia, Other and UAN segments, partially offset by higher AN sales volumes.

The decrease was due primarily to the delayed spring application season in 2019 as a result of persistent cold and wet weather.

Additionally, certain shipments of granular urea occurred earlier, in the first quarter of 2020, due to favorable weather conditions.

The decrease in sales volumes in the second quarter of 2020 was also impacted by lower ammonia supply availability as a result of lower production.

Cost of Sales

Our total cost of sales decreased $14 million , or 2% , to $767 million in the first quarter of 2020 as compared to $781 million in the first quarter of 2019 .

The decline in our cost of sales was due primarily to lower realized natural gas costs, including the impact of realized derivatives, and lower costs related to plant maintenance activity.

These factors were partially offset by the impact of an increase in cost of sales due to higher sales volumes and higher shipping and distribution costs.

Cost of sales averaged $163 per ton in the first quarter of 2020 , a 15% decrease from $191 per ton in the first quarter of 2019 due primarily to the impact of lower realized natural gas costs.

Natural gas costs, including the impact of realized derivatives, decrease d 29% to $2.61 per MMBtu in the first quarter of 2020 from $3.68 per MMBtu in the first quarter of 2019 .

Our total cost of sales decreased $133 million, or 13%, to $870 million in the second quarter of 2020 from $1.00 billion in the second quarter of 2019.

The decrease in our cost of sales was due primarily to lower realized natural gas costs, including the impact of realized derivatives, and the impact of lower volumes, partially offset by higher costs related to plant turnaround and maintenance activity and the impact of the special COVID-19 bonus, which is more fully described in the section above titled “Items Affecting Comparability of Results—Special COVID-19 bonus for operational workforce.” Cost of sales averaged $162 per ton in the second quarter of 2020, a 7% decrease from $175 per ton in the second quarter of 2019.

Natural gas costs, including the impact of realized derivatives, decreased 34% to $1.86 per MMBtu in the second quarter of 2020 from $2.81 per MMBtu in the second quarter of 2019.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decrease d $4 million to $54 million in the first quarter of 2020 as compared to $58 million in the first quarter of 2019 .

The decrease was due primarily to lower costs related to certain corporate office initiatives.

Selling, general and administrative expenses decreased $11 million to $51 million in the second quarter of 2020 as compared to $62 million in the second quarter of 2019.

The decrease was due primarily to lower incentive compensation and lower corporate project activity as a result of the COVID-19 pandemic.

Other Operating—Net

Other operating—net was $6 million of expense in the first quarter of 2020 compared to $4 million of expense in the first quarter of 2019 .

The expense in the first quarter of 2020 was due primarily to foreign currency transaction losses of $18 million , partially offset by insurance proceeds of $10 million .

See “Items Affecting Comparability of Results—Insurance proceeds,” above, for additional information.

The $4 million of expense in the first quarter of 2019 was due primarily to foreign currency transaction losses of $2 million.

The increase in foreign currency transaction losses was due to the impact of changes in foreign currency exchange rates in the first quarter of 2020 on U.S.

dollar and British pound denominated intercompany loans that were not permanently invested.

Other operating—net was $6 million of expense in the second quarter of 2020 compared to $37 million of income in the second quarter of 2019.

The $6 million of expense in the second quarter of 2020 was due primarily to $8 million of expense related to the cancellation of a project, which is more fully described in the section above titled “Items Affecting Comparability of Results—Engineering cost write-off,” partially offset by a gain on foreign currency transactions of $5 million.

The gain on foreign currency transactions was due to the impact of changes in foreign currency exchange rates in the second quarter of 2020 on intercompany loans that were not permanently invested.

The $37 million of income in the second quarter of 2019 was primarily due to a gain recognized on the sale of the Pine Bend facility of $45 million, partially offset by foreign currency transaction losses.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate was $3 million in the first quarter of 2020 compared to $7 million in the first quarter of 2019 .

The decrease was due primarily to a decline in the operating results of PLNL as a result of lower average selling prices.

Equity in earnings of operating affiliate was $3 million in the second quarter of 2020 compared to $1 million in the second quarter of 2019.

The increase was due primarily to an increase in the operating results of PLNL.

Interest Expense—Net

Net interest expense decrease d by $13 million to $43 million in the first quarter of 2020 compared to $56 million in the first quarter of 2019 .

The decrease was due primarily to our redemption in November 2019 of all of the remaining $500 million outstanding principal amount of the 2020 Notes and the redemption in December 2019 of $250 million principal amount of the 2021 Notes, representing 50% of the $500 million principal amount outstanding immediately prior to such redemption.

For the three months ended March 31, 2020 , we recorded an income tax provision of $13 million on pre-tax income of $104 million , or an effective tax rate of 12.3% , compared to an income tax benefit of $8 million on pre-tax income of $110 million , or an effective tax rate of (7.3)% , for the three months ended March 31, 2019 .

For the three months ended March 31, 2020, our income tax provision includes a $6 million benefit related to the settlement of certain U.S.

and foreign income tax audits.

Net interest expense was $32 million in the second quarter of 2020 compared to $55 million in the second quarter of 2019.

In addition, the decrease reflects our redemption of $750 million aggregate principal amount of long-term debt in the fourth quarter of 2019, which is more fully described under “Liquidity and Capital Resources—Senior Notes,” below.

CF INDUSTRIES HOLDINGS, INC.

For the three months ended March 31, 2019 , our income tax benefit included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.

For the three months ended June 30, 2020, we recorded an income tax provision of $33 million on pre-tax income of $251 million, or an effective tax rate of 13.4%, compared to an income tax provision of $102 million on pre-tax income of $422 million, or an effective tax rate of 24.2%, for the three months ended June 30, 2019.

For the three months ended June 30, 2020, our income tax provision includes a $19 million benefit related to the settlement of the audit of the Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.

Our effective tax rate is impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended June 30, 2020 of 13.4%, which is based on pre-tax income of $251 million, including $28 million attributable to the noncontrolling interest, would be 1.6 percentage points higher if based on pre-tax income exclusive of the $28 million attributable to the noncontrolling interest.

Our effective tax rate for the three months ended June 30, 2019 of 24.2%, which is based on pre-tax income of $422 million, including $37 million attributable to the noncontrolling interest, would be 2.3 percentage points higher if based on pre-tax income exclusive of the $37 million attributable to the noncontrolling interest.

See Note 10—Income Taxes and Note 13—Noncontrolling Interest for additional information.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest decreased $9 million to $28 million in the second quarter of 2020 from $37 million in the second quarter of 2019 due to lower earnings from CFN driven by lower average selling prices due primarily to increased global nitrogen supply availability.

Diluted Net Earnings Per Share Attributable to Common Stockholders

Net earnings per share attributable to common stockholders decreased $0.39 to $0.89 per diluted share in the second quarter of 2020 from $1.28 per diluted share in the second quarter of 2019.

This decrease reflects lower net earnings, partially offset by the impact of a 3% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Our total net sales decreased $328 million, or 13%, to $2.18 billion in the first six months of 2020 as compared to $2.50 billion in the first six months of 2019 due to a 15% decrease in average selling prices, which reduced net sales by $401 million, partially offset by a 3% increase in sales volume, which increased net sales by $73 million.

Average selling prices were $216 per ton in the first six months of 2020, or 15% lower, as compared to $255 per ton in the first six months of 2019 due to lower average selling prices across all products, primarily driven by increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Additionally, in the first half of 2019, high water levels and flooding impacted shipping and logistics on inland rivers and reduced access to imports, which reduced supply availability and contributed to higher average selling prices in the first half of 2019.

Our total sales volume was 10.1 million product tons in the first six months of 2020, or 3% higher, as compared to 9.8 million product tons in the first six months of 2019 due to higher sales volume across all products, primarily driven by higher AN and UAN sales volumes.

Higher sales volume reflects the impact of more favorable weather that allowed greater fertilizer application during the spring of 2020 compared to 2019 and an increase in planted corn acres in the United States.

Cost of Sales

Our total cost of sales decreased $147 million, or 8%, to $1.64 billion in the first six months of 2020 as compared to $1.78 billion in the first six months of 2019.

The decrease in our cost of sales was due primarily to lower realized natural gas costs, including the impact of realized derivatives.

We recognized an unrealized net mark-to-market gain on natural gas derivatives of $12 million in the first six months of 2020 compared to an unrealized net mark-to-market loss of $1 million in the first six months of 2019.

These factors were partially offset by an increase in cost of sales due to higher sales volumes, higher distribution costs and costs related to the special COVID-19 bonus.

The special COVID-19 bonus is more fully described in the section above titled “Items Affecting Comparability of Results—Special COVID-19 bonus for operational workforce.” Cost of sales averaged $161 per ton in the first six months of 2020, a 12% decrease from $182 per ton in the first six months of 2019 due primarily to the impact of lower realized natural gas costs.

Natural gas costs, including the impact of realized derivatives,

CF INDUSTRIES HOLDINGS, INC.

decreased 30% to $2.20 per MMBtu in the first six months of 2020 from $3.15 per MMBtu in the first six months of 2019.

Selling, General and Administrative Expenses

Selling, general and administrative expenses decreased $15 million to $105 million in the first six months of 2020 as compared to $120 million in the first six months of 2019.

The decrease was due primarily to lower corporate project activity as a result of the COVID-19 pandemic and lower incentive compensation.

Other Operating—Net

Other operating—net was $12 million of expense in the first six months of 2020 compared to $33 million of income in the first six months of 2019.

The expense in the first six months of 2020 includes foreign currency transaction losses of $13 million and $8 million of expense related to the cancellation of a project, which is more fully described in the section above titled “Items Affecting Comparability of Results—Engineering cost write-off.” These factors were partially offset by insurance proceeds of $10 million.

See “Items Affecting Comparability of Results—Insurance proceeds,” above, for additional information.

The loss on foreign currency transactions was due to the impact of changes in foreign currency exchange rates in the first six months of 2020 on intercompany loans that were not permanently invested.

The $33 million of income in the first six months of 2019 was due primarily to the gain recognized on the sale of the Pine Bend facility of $45 million, partially offset by foreign currency transaction losses.

Equity in Earnings of Operating Affiliate

Equity in earnings of operating affiliate was $6 million in the first six months of 2020 compared to $8 million in the first six months of 2019.

The decrease was due primarily to lower operating results of PLNL as a result of lower average selling prices.

Interest Expense—Net

Net interest expense decreased by $36 million to $75 million in the first six months of 2020 compared to $111 million in the first six months of 2019.

The decrease was due primarily to our redemption of $750 million aggregate principal amount of long-term debt in the fourth quarter of 2019, which is more fully described under “Liquidity and Capital Resources—Senior Notes,” below.

In addition, the decrease reflects $16 million of interest income in 2020 related to the finalization of the Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.

For the six months ended June 30, 2020, we recorded an income tax provision of $46 million on pre-tax income of $355 million, or an effective tax rate of 13.1%, compared to an income tax provision of $94 million on pre-tax income of $532 million, or an effective tax rate of 17.7%, for the six months ended June 30, 2019.

For the six months ended June 30, 2020, our income tax provision includes a $25 million benefit related to the settlement of certain U.S.

and foreign income tax audits, which primarily related to the settlement of the audit of the Terra amended tax returns, which is more fully described under “Liquidity and Capital Resources—Terra Amended Tax Returns,” below.

For the six months ended June 30, 2019, our income tax benefit included an incentive tax credit from the State of Louisiana of $30 million, net of federal income tax, related to certain capital projects at our Donaldsonville, Louisiana nitrogen complex.

Our effective tax rate is also impacted by earnings attributable to the noncontrolling interest in CFN, as our consolidated income tax provision does not include a tax provision on the earnings attributable to the noncontrolling interest.

Our effective tax rate for the three months ended March 31, 2020 of 12.3% , which is based on pre-tax income of $104 million , would be 15.8% exclusive of the earnings attributable to the noncontrolling interest of $23 million .

Our effective tax rate for the three months ended March 31, 2019 of (7.3)% , which is based on pre-tax income of $110 million , would be 27.4% exclusive of the earnings attributable to the noncontrolling interest of $28 million and the incentive tax credit of $30 million.

Our effective tax rate for the six months ended June 30, 2020 of 13.1%, which is based on pre-tax income of $355 million, including $51 million attributable to the noncontrolling interest, would be 2.1 percentage points higher if based on pre-tax income exclusive of the $51 million attributable to the noncontrolling interest.

Our effective tax rate for the six months ended June 30, 2019 of 17.7%, which is based on pre-tax income of $532 million, including $65 million attributable to the noncontrolling interest, would be 2.4 percentage points higher if based on pre-tax income exclusive of the $65 million attributable to the noncontrolling interest.

See Note 10—Income Taxes and Note 13—Noncontrolling Interest for additional information.

CF INDUSTRIES HOLDINGS, INC.

Net Earnings Attributable to Noncontrolling Interest

Net earnings attributable to noncontrolling interest decreased $5 million to $23 million in the first quarter of 2020 from $28 million in the first quarter of 2019 due to lower earnings of CFN driven by lower average selling prices due primarily to increased global nitrogen supply availability.

Net earnings attributable to noncontrolling interest decreased $14 million to $51 million in the first six months of 2020 from $65 million in the first six months of 2019 due to lower earnings of CFN driven by lower average selling prices due primarily to increased global nitrogen supply availability.

Diluted Net Earnings Per Share Attributable to Common Stockholders

Net earnings per share attributable to common stockholders decrease d $0.09 to $0.31 per diluted share in the first quarter of 2020 from $0.40 per diluted share in the first quarter of 2019 .

This decrease is due primarily to the $30 million incentive tax credit recognized in the first quarter of 2019 and lower average selling prices, partially offset by lower realized natural gas costs and a 4% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.

Net earnings per share attributable to common stockholders decreased $0.47 to $1.20 per diluted share in the first six months of 2020 from $1.67 per diluted share in the first six months of 2019.

This decrease is due primarily to lower net earnings, partially offset by the impact of a 3% reduction in diluted weighted-average common shares outstanding due to repurchases made under our share repurchase program.

See discussion under “Liquidity and Capital Resources—Share Repurchase Program,” below, for further information.

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The following table presents summary operating results by business segment:

Ammonia Granular

(dollars in millions)

Three months ended March 31, 2020

Three months ended June 30, 2020

Net sales $ 364 $ 329 $ 308 $ 118 $ 85 $ 1,204

Cost of sales 262 205 245 91 67 870

Gross margin $ 102 $ 124 $ 63 $ 27 $ 18 $ 334

Gross margin percentage 28.0 % 37.7 % 20.5 % 22.9 % 21.2 % 27.7 %

Three months ended March 31, 2019

Three months ended June 30, 2019

Net sales $ 473 $ 433 $ 369 $ 126 $ 101 $ 1,502

Cost of sales 300 251 277 94 81 1,003

Gross margin $ 173 $ 182 $ 92 $ 32 $ 20 $ 499

Gross margin percentage 36.6 % 42.0 % 24.9 % 25.4 % 19.8 % 33.2 %

Six months ended June 30, 2020

Net sales $ 557 $ 666 $ 543 $ 234 $ 175 $ 2,175

Cost of sales 435 429 438 194 141 1,637

Gross margin $ 122 $ 237 $ 105 $ 40 $ 34 $ 538

Gross margin percentage 21.9 % 35.6 % 19.3 % 17.1 % 19.4 % 24.7 %

Six months ended June 30, 2019

Net sales $ 660 $ 776 $ 625 $ 253 $ 189 $ 2,503

Cost of sales 466 479 472 208 159 1,784

Gross margin $ 194 $ 297 $ 153 $ 45 $ 30 $ 719

Gross margin percentage 29.4 % 38.3 % 24.5 % 17.8 % 15.9 % 28.7 %

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The following table presents summary operating data for our ammonia segment:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(dollars in millions, except per ton amounts)

Net sales $364 $473 $(109) (23) % $557 $660 $(103) (16) %

Cost of sales $262 $300 $(38) (13) % 435 466 (31) (7) %

Gross margin $102 $173 $(71) (41) % $122 $194 $(72) (37) %

Gross margin percentage 28.0% 36.6% (8.6)% 21.9% 29.4% (7.5)%

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Sales volume by nutrient tons (000s) (1)

917 1,002 (85) (8) % 1,542 1,499 43 3 %

Average selling price per product ton $326 $387 $(61) (16) % $296 $361 $(65) (18) %

Average selling price per nutrient ton (1)

$397 $472 $(75) (16) % $361 $440 $(79) (18) %

Gross margin per product ton $91 $142 $(51) (36) % $65 $106 $(41) (39) %

Gross margin per nutrient ton (1)

$111 $173 $(62) (36) % $79 $129 $(50) (39) %

Depreciation and amortization $60 $53 $7 13 % $99 $82 $17 21 %

Unrealized net mark-to-market gain on natural gas derivatives

Unrealized net mark-to-market gain on natural gas derivatives $— $— $— — % $(4) $— $(4) N/M

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Nutrient tons represent the tons of nitrogen within the product tons.

First Quarter of 2020 Compared to First Quarter of 2019

Net sales in our ammonia segment increase d by $6 million , or 3% , to $193 million in the first quarter of 2020 from $187 million in the first quarter of 2019 due primarily to a 26% increase in sales volume, partially offset by an 18% decrease in average selling prices.

Sales volume was higher due to improved weather conditions in the first quarter of 2020 compared to the first quarter of 2019 and greater supply availability as a result of increased production.

Average selling prices decrease d to $253 per ton in the first quarter of 2020 compared to $309 per ton in the comparable period of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Second Quarter of 2020 Compared to Second Quarter of 2019

Net sales in our ammonia segment decreased by $109 million, or 23%, to $364 million in the second quarter of 2020 from $473 million in the second quarter of 2019 due primarily to a 16% decrease in average selling prices and a 9% decrease in sales volume.

Average selling prices decreased to $326 per ton in the second quarter of 2020 compared to $387 per ton in the second quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Sales volume was lower due to supply availability resulting from plant turnaround and maintenance activity.

Cost of Sales.

Cost of sales in our ammonia segment averaged $227 per ton in the first quarter of 2020 , a 17% decrease from $274 per ton in the comparable period of 2019 .

The decrease is due primarily to lower realized natural gas costs and lower costs related to plant maintenance activity, partially offset by the impact of higher distribution costs.

Cost of sales in our ammonia segment averaged $235 per ton in the second quarter of 2020, a 4% decrease from $245 per ton in the second quarter of 2019.

The decrease is due primarily to lower realized natural gas costs, partially offset by higher costs related to plant turnaround and maintenance activity and the impact of higher distribution costs.

Gross Margin .

Gross margin in our ammonia segment decrease d by $1 million to $20 million in the first quarter of 2020 from $21 million in the first quarter of 2019 , and our gross margin percentage was 10.4% in the first quarter of 2020 compared to 11.2% in the first quarter of 2019 .

The decrease in gross margin was due to an 18% decrease in average selling prices, which reduced gross margin by $58 million.

This decline was partially offset by a 26% increase in sales volume, which increased gross margin by $34 million, a decrease in realized natural gas costs, which increased gross margin by $10 million, a $9 million net decrease in other manufacturing and distribution costs and a $4 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2020 .

Gross margin in our ammonia segment decreased by $71 million to $102 million in the second quarter of 2020 from $173 million in the second quarter of 2019, and our gross margin percentage was 28.0% in the second quarter of 2020 compared to 36.6% in the second quarter of 2019 .

The decrease in gross margin was due to a 16% decrease in average selling prices, which reduced gross margin by $67 million, a 9% decrease in sales volume, which decreased gross margin by $27 million, and an $18 million net increase in other manufacturing and distribution costs.

These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $41 million.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales in our ammonia segment decreased by $103 million, or 16%, to $557 million in the six months ended June 30, 2020 from $660 million in the six months ended June 30, 2019 due primarily to an 18% decrease in average selling prices, partially offset by a 3% increase in sales volume.

The decrease in average selling prices was due to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Sales volume was higher due to increased fertilizer applications from favorable weather conditions and higher planted corn acres in the United States in the six months ended June 30, 2020, which resulted in higher shipments.

CF INDUSTRIES HOLDINGS, INC.

Cost of Sales.

Cost of sales in our ammonia segment averaged $231 per ton in the six months ended June 30, 2020, a 9% decrease from $255 per ton in the six months ended June 30, 2019 due primarily to the impact of lower realized natural gas costs, partially offset by higher costs related to plant turnaround and maintenance activity and the impact of higher distribution costs.

Gross Margin .

Gross margin in our ammonia segment decreased by $72 million to $122 million in the six months ended June 30, 2020 from $194 million in the six months ended June 30, 2019, and our gross margin percentage was 21.9% in the six months ended June 30, 2020 compared to 29.4% in the six months ended June 30, 2019.

The decrease in gross margin was due to an 18% decrease in average selling prices, which reduced gross margin by $125 million and a $9 million net increase in other manufacturing and distribution costs.

These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $51 million, a 3% increase in sales volume, which increased gross margin by $7 million, and a $4 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2020.

Granular Urea Segment

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The following table presents summary operating data for our granular urea segment:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(dollars in millions, except per ton amounts)

Net sales $ 329 $ 433 $ (104) (24) % $ 666 $ 776 $ (110) (14) %

Cost of sales 205 251 (46) (18) % 429 479 (50) (10) %

Gross margin $ 124 $ 182 $ (58) (32) % $ 237 $ 297 $ (60) (20) %

Gross margin percentage 37.7 % 42.0 % (4.3) % 35.6 % 38.3 % (2.7) %

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Sales volume by nutrient tons (000s) (1)

604 688 (84) (12) % 1,239 1,233 6 — %

Average selling price per product ton $ 250 $ 289 $ (39) (13) % $ 247 $ 290 $ (43) (15) %

Average selling price per nutrient ton (1)

$ 545 $ 629 $ (84) (13) % $ 538 $ 629 $ (91) (14) %

Gross margin per product ton $ 94 $ 122 $ (28) (23) % $ 88 $ 111 $ (23) (21) %

Gross margin per nutrient ton (1)

$ 205 $ 265 $ (60) (23) % $ 191 $ 241 $ (50) (21) %

Depreciation and amortization $ 66 $ 79 $ (13) (16) % $ 138 $ 145 $ (7) (5) %

Unrealized net mark-to-market (gain) loss on natural gas derivatives

Unrealized net mark-to-market (gain) loss on natural gas derivatives $ — $ — $ — — % $ (4) $ 1 $ (5) N/M

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Nutrient tons represent the tons of nitrogen within the product tons.

First Quarter of 2020 Compared to First Quarter of 2019

Net sales in our granular urea segment decrease d $6 million , or 2% , to $337 million in the first quarter of 2020 from $343 million in the first quarter of 2019 due primarily to a 16% decrease in average selling prices, partially offset by a 17% increase in sales volume.

Average selling prices decrease d to $244 per ton in the first quarter of 2020 compared to $290 per ton in the comparable period of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Sales volume was higher due to more favorable weather conditions compared to the first quarter of 2019 and greater supply availability as a result of higher inventory levels entering the first quarter of 2020.

Second Quarter of 2020 Compared to Second Quarter of 2019

Net sales in our granular urea segment decreased $104 million, or 24%, to $329 million in the second quarter of 2020 from $433 million in the second quarter of 2019 due primarily to a 13% decrease in average selling prices and a 12% decrease in sales volume.

Average selling prices decreased to $250 per ton in the second quarter of 2020 compared to $289 per ton in the second quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Additionally, high water levels and flooding in the second quarter of 2019 impacted shipping and logistics on inland rivers and reduced access to imports, which contributed to higher average selling prices in the second quarter of 2019.

Sales volume was lower due primarily to more favorable weather conditions in the first quarter of 2020, which accelerated requests for early deliveries.

In addition, the delayed spring application season in the first quarter of 2019 shifted demand into the second quarter of 2019, which contributed to higher sales volumes in the second quarter of 2019.

Cost of Sales.

Cost of sales in our granular urea segment averaged $162 per ton in the first quarter of 2020 , a 16% decrease from $193 per ton in the comparable period of 2019 , primarily driven by lower realized natural gas costs.

Cost of sales in our granular urea segment averaged $156 per ton in the second quarter of 2020, a 7% decrease from $167 per ton in the second quarter of 2019, primarily driven by lower realized natural gas costs.

CF INDUSTRIES HOLDINGS, INC.

Gross Margin .

Gross margin in our granular urea segment decrease d by $2 million to $113 million in the first quarter of 2020 from $115 million in the first quarter of 2019 , and our gross margin percentage was 33.5% in both the first quarter of 2020 and the first quarter of 2019 .

Gross margin in our granular urea segment decreased by $58 million to $124 million in the second quarter of 2020 from $182 million in the second quarter of 2019, and our gross margin percentage was 37.7% in the second quarter of 2020 compared to 42.0% in the second quarter of 2019.

The decrease in gross margin was due to a 13% decrease in average selling prices, which decreased gross margin by $50 million, and a 12% decrease in sales volume, which decreased gross margin by $25 million.

These factors were partially offset by lower realized natural gas costs, which increased gross margin by $15 million and a $2 million net decrease in other manufacturing and distribution costs.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales in our granular urea segment decreased $110 million, or 14%, to $666 million in the six months ended June 30, 2020 from $776 million in the six months ended June 30, 2019 due primarily to a 15% decrease in average selling prices.

Average selling prices decreased to $247 per ton in the six months ended June 30, 2020 compared to $290 per ton in the six months ended June 30, 2019.

The decrease was due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Additionally, high water levels and flooding in the first half of 2019 impacted shipping and logistics on inland rivers and reduced access to imports, which contributed to higher average selling prices in the first half of 2019.

Sales volume in our granular urea segment was 2.7 million tons in the first six months of each of 2020 and 2019.

Cost of Sales.

Cost of sales in our granular urea segment averaged $159 per ton in the six months ended June 30, 2020, an 11% decrease from $179 per ton in the six months ended June 30, 2019.

The decrease was due primarily to lower realized natural gas costs.

Gross Margin .

Gross margin in our granular urea segment decreased by $60 million to $237 million in the six months ended June 30, 2020 from $297 million in the six months ended June 30, 2019, and our gross margin percentage was 35.6% in the six months ended June 30, 2020 compared to 38.3% in the six months ended June 30, 2019.

The decrease in gross margin was due to a 15% decrease in average selling prices, which decreased gross margin by $114 million.

This decline was partially offset by lower realized natural gas costs, which increased gross margin by $26 million, a 17% increase in sales volume, which increased gross margin by $22 million, a $9 million net decrease in other manufacturing and distribution costs and the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2020 compared to a $1 million loss in the first quarter of 2019 .

CF INDUSTRIES HOLDINGS, INC.

This factor was partially offset by lower realized natural gas costs, which increased gross margin by $41 million, an $8 million net decrease in other manufacturing and distribution costs and the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2020 compared to a $1 million loss in the six months ended June 30, 2019.

Our UAN segment produces urea ammonium nitrate solution (UAN).

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The following table presents summary operating data for our UAN segment:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(dollars in millions, except per ton amounts)

Net sales $ 308 $ 369 $ (61) (17) % $ 543 $ 625 $ (82) (13) %

Cost of sales 245 277 (32) (12) % 438 472 (34) (7) %

Gross margin $ 63 $ 92 $ (29) (32) % $ 105 $ 153 $ (48) (31) %

Gross margin percentage 20.5 % 24.9 % (4.4) % 19.3 % 24.5 % (5.2) %

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Sales volume by nutrient tons (000s) (1)

580 591 (11) (2) % 1,016 987 29 3 %

Average selling price per product ton $ 167 $ 197 $ (30) (15) % $ 168 $ 199 $ (31) (16) %

Average selling price per nutrient ton (1)

$ 531 $ 624 $ (93) (15) % $ 534 $ 633 $ (99) (16) %

Gross margin per product ton $ 34 $ 49 $ (15) (31) % $ 33 $ 49 $ (16) (33) %

Gross margin per nutrient ton (1)

$ 109 $ 156 $ (47) (30) % $ 103 $ 155 $ (52) (34) %

Depreciation and amortization $ 65 $ 71 $ (6) (8) % $ 117 $ 117 $ — — %

Unrealized net mark-to-market (gain) loss on natural gas derivatives

Unrealized net mark-to-market gain on natural gas derivatives $ (1) $ (1) $ — — % $ (4) $ — $ (4) N/M

_______________________________________________________________________________

N/M—Not Meaningful

CF INDUSTRIES HOLDINGS, INC.

(1) UAN represents between 28% and 32% of nitrogen content.

Nutrient tons represent the tons of nitrogen within the product tons.

First Quarter of 2020 Compared to First Quarter of 2019

Net sales in our UAN segment decrease d $21 million , or 8% , to $235 million in the first quarter of 2020 from $256 million in the first quarter of 2019 due primarily to a 16% decrease in average selling prices, partially offset by a 10% increase in sales volume.

Average selling prices decrease d to $169 per ton in the first quarter of 2020 compared to $202 per ton in the comparable period of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates and increased imports into the United States as trade flows are adjusting in response to the European Union anti-dumping duties.

The increase in sales volume was due primarily to earlier demand in the Southern Plains for spring fertilizer applications in the first quarter of 2020 compared to the delayed spring application season due to unfavorable weather conditions in the first quarter of 2019 .

Second Quarter of 2020 Compared to Second Quarter of 2019

Net sales in our UAN segment decreased $61 million, or 17%, to $308 million in the second quarter of 2020 from $369 million in the second quarter of 2019 due primarily to a 15% decrease in average selling prices and a 2% decrease in sales volume.

Average selling prices decreased to $167 per ton in the second quarter of 2020 compared to $197 per ton in the second quarter of 2019 due primarily to increased imports into the United States as trade flows adjust in response to the European Union anti-dumping duties.

Additionally, high water levels and flooding in the second quarter of 2019 impacted shipping and logistics on inland rivers, which contributed to higher average selling prices in the second quarter of 2019.

The decrease in sales volume was due primarily to more favorable weather conditions in the first quarter of 2020, which accelerated requests for early deliveries.

Cost of Sales.

Cost of sales in our UAN segment averaged $139 per ton in the first quarter of 2020 , a 10% decrease from $154 per ton in the first quarter of 2019 , primarily driven by lower realized natural gas costs, partially offset by higher shipping and distribution costs.

Cost of sales in our UAN segment averaged $133 per ton in the second quarter of 2020, a 10% decrease from $148 per ton in the second quarter of 2019, primarily driven by lower realized natural gas costs.

Gross Margin .

Gross margin in our UAN Segment decrease d by $19 million to $42 million in the first quarter of 2020 from $61 million in the first quarter of 2019 , and our gross margin percentage was 17.9% in the first quarter of 2020 compared to 23.8% in the first quarter of 2019 .

Gross margin in our UAN segment decreased by $29 million to $63 million in the second quarter of 2020 from $92 million in the second quarter of 2019, and our gross margin percentage was 20.5% in the second quarter of 2020 compared to 24.9% in the second quarter of 2019.

The decrease in gross margin was due to a 15% decrease in average selling prices, which decreased gross margin by $53 million, and a 2% decrease in sales volume, which decreased gross margin by $3 million.

These factors were partially offset by lower realized natural gas costs, which increased gross margin by $24 million, and a $3 million net decrease in other manufacturing and distribution costs.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales in our UAN segment decreased $82 million, or 13%, to $543 million in the six months ended June 30, 2020 from $625 million in the six months ended June 30, 2019 due to a 16% decrease in average selling prices, partially offset by a 3% increase in sales volume.

Average selling prices decreased to $168 per ton in the six months ended June 30, 2020 compared to $199 per ton in the six months ended June 30, 2019, due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates and increased imports into the United States as trade flows adjust in response to the European Union anti-dumping duties.

The increase in sales volume was due primarily to favorable weather that allowed greater fertilizer application during the spring of 2020 compared to 2019 and an increase in planted corn acres in the United States.

Cost of Sales.

Cost of sales in our UAN segment averaged $135 per ton in the six months ended June 30, 2020, a 10% decrease from $150 per ton in the six months ended June 30, 2019.

The decrease was due primarily to lower realized natural gas costs.

Gross Margin .

Gross margin in our UAN segment decreased by $48 million to $105 million in the six months ended June 30, 2020 from $153 million in the six months ended June 30, 2019, and our gross margin percentage was 19.3% in the six months ended June 30, 2020 compared to 24.5% in the six months ended June 30, 2019.

The decrease in gross margin was due to a 16% decrease in average selling prices, which decreased gross margin by $100 million and a $16 million net increase in other manufacturing and distribution costs.

These factors were partially offset by lower realized natural gas costs, which increased gross margin by $32 million, a 10% increase in sales volume, which increased gross margin by $11 million and the impact of a $3 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2020 compared to a $1 million loss in the first quarter of 2019 .

These factors were partially offset by lower realized natural gas costs, which increased gross margin by $56 million, a 3% increase in sales volume, which increased gross margin by $8 million, and the impact of a $4 million unrealized net mark-to-market gain on natural gas derivatives in the six months ended June 30, 2020.

CF INDUSTRIES HOLDINGS, INC.

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The following table presents summary operating data for our AN segment:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(dollars in millions, except per ton amounts)

Net sales $ 118 $ 126 $ (8) (6) % $ 234 $ 253 $ (19) (8) %

Cost of sales 91 94 (3) (3) % 194 208 (14) (7) %

Gross margin $ 27 $ 32 $ (5) (16) % $ 40 $ 45 $ (5) (11) %

Gross margin percentage 22.9 % 25.4 % (2.5) % 17.1 % 17.8 % (0.7) %

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Sales volume by nutrient tons (000s) (1)

195 179 16 9 % 379 345 34 10 %

Average selling price per product ton $ 205 $ 239 $ (34) (14) % $ 208 $ 246 $ (38) (15) %

Average selling price per nutrient ton (1)

$ 605 $ 704 $ (99) (14) % $ 617 $ 733 $ (116) (16) %

Gross margin per product ton $ 47 $ 61 $ (14) (23) % $ 36 $ 44 $ (8) (18) %

Gross margin per nutrient ton (1)

$ 138 $ 179 $ (41) (23) % $ 106 $ 130 $ (24) (18) %

Depreciation and amortization $ 25 $ 21 $ 4 19 % $ 51 $ 43 $ 8 19 %

Unrealized net mark-to-market gain on natural gas derivatives

Unrealized net mark-to-market loss on natural gas derivatives $ 1 $ — $ 1 N/M $ — $ — $ — — %

_______________________________________________________________________________

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Nutrient tons represent the tons of nitrogen within the product tons.

First Quarter of 2020 Compared to First Quarter of 2019

Net sales in our AN segment decrease d $11 million , or 9% , to $116 million in the first quarter of 2020 from $127 million in the first quarter of 2019 due to a 16% decrease in average selling prices, partially offset by a 9% increase in sales volume.

Average selling prices decrease d to $212 per ton in the first quarter of 2020 compared to $253 per ton in the first quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Sales volume increase d due primarily to higher demand in North America and Europe for agricultural applications and greater supply availability as a result of higher inventory levels entering the first quarter of 2020.

Second Quarter of 2020 Compared to Second Quarter of 2019

Net sales in our AN segment decreased $8 million, or 6%, to $118 million in the second quarter of 2020 from $126 million in the second quarter of 2019 due to a 14% decrease in average selling prices, partially offset by a 9% increase in sales volume.

Average selling prices decreased to $205 per ton in the second quarter of 2020 compared to $239 per ton in the second quarter of 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

Sales volume increased due primarily to higher demand in Europe for agricultural applications and greater supply availability as a result of higher inventory levels entering the second quarter of 2020.

Cost of Sales.

Cost of sales in our AN segment averaged $188 per ton in the first quarter of 2020 , a 17% decrease from $227 per ton in the comparable period of 2019 .

The decrease was due primarily to lower realized natural gas costs and lower costs related to plant maintenance activity.

Cost of sales in our AN segment averaged $158 per ton in the second quarter of 2020, an 11% decrease from $178 per ton in the second quarter of 2019.

The decrease was due primarily to lower realized natural gas costs.

Gross Margin .

Gross margin in our AN segment was $13 million in both the first quarter of 2020 and the first quarter of 2019 , and our gross margin percentage increased to 11.2% in the first quarter of 2020 compared to 10.2% in the first quarter of 2019 .

The 16% decrease in average selling prices, which decreased gross margin by $23 million, was offset by a decrease in realized natural gas costs, which increased gross margin by $12 million, a 9% increase in sales volume, which increased gross margin by $3 million, a net decrease of $7 million in other manufacturing and distribution costs, and the impact of a $1 million unrealized net mark-to-market gain on natural gas derivatives in the first quarter of 2020.

Gross margin in our AN segment decreased $5 million, or 16%, to $27 million in the second quarter of 2020 from $32 million in the second quarter of 2019, and our gross margin percentage was 22.9% in the second quarter of 2020 compared to 25.4% in the second quarter of 2019.

The decrease in gross margin was due to a 14% decrease in average selling prices, which decreased gross margin by $22 million and the impact of a $1 million unrealized net mark-to-market loss on natural gas derivatives in the second quarter of 2020.

These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $11 million, a net decrease of $4 million in other manufacturing and distribution costs, and a 9% increase in sales volume, which increased gross margin by $3 million.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales in our AN segment decreased $19 million, or 8%, to $234 million in the six months ended June 30, 2020 from $253 million in the six months ended June 30, 2019 due primarily to a 15% decrease in average selling prices, partially offset by a 9% increase in sales volume.

Average selling prices decreased to $208 per ton in the six months ended June 30, 2020 compared to $246 per ton in the six months ended June 30, 2019 due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

The increase in sales volume was due primarily to higher demand in Europe for agricultural applications and greater supply availability as a result of higher inventory levels entering the first quarter of 2020.

CF INDUSTRIES HOLDINGS, INC.

Cost of Sales.

Cost of sales in our AN segment averaged $172 per ton in the six months ended June 30, 2020, a 15% decrease from $202 per ton in the six months ended June 30, 2019.

The decrease was due primarily to lower realized natural gas costs and lower costs related to plant maintenance activity.

Gross Margin .

Gross margin in our AN segment decreased by $5 million, or 11%, to $40 million in the six months ended June 30, 2020 from $45 million in the six months ended June 30, 2019, and our gross margin percentage was 17.1% in the six months ended June 30, 2020 compared to 17.8% in the six months ended June 30, 2019.

The decrease in gross margin was due to a 15% decrease in average selling prices, which decreased gross margin by $45 million.

This factor was partially offset by a decrease in realized natural gas costs, which increased gross margin by $23 million, a net decrease of $11 million in other manufacturing and distribution costs, and a 9% increase in sales volume, which increased gross margin by $6 million.

Other Segment

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The following table presents summary operating data for our Other segment:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2020 2019 2020 v.

2019 2020 2019 2020 v.

(dollars in millions, except per ton amounts)

Net sales $ 85 $ 101 $ (16) (16) % $ 175 $ 189 $ (14) (7) %

Cost of sales 67 81 (14) (17) % 141 159 (18) (11) %

Gross margin $ 18 $ 20 $ (2) (10) % $ 34 $ 30 $ 4 13 %

Gross margin percentage 21.2 % 19.8 % 1.4 % 19.4 % 15.9 % 3.5 %

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Sales volume by nutrient tons (000s) (1)

108 121 (13) (11) % 228 224 4 2 %

Average selling price per product ton $ 158 $ 169 $ (11) (7) % $ 153 $ 168 $ (15) (9) %

Average selling price per nutrient ton (1)

$ 787 $ 835 $ (48) (6) % $ 768 $ 844 $ (76) (9) %

Gross margin per product ton $ 33 $ 33 $ — — % $ 30 $ 27 $ 3 11 %

Gross margin per nutrient ton (1)

$ 167 $ 165 $ 2 1 % $ 149 $ 134 $ 15 11 %

Depreciation and amortization $ 17 $ 19 $ (2) (11) % $ 34 $ 36 $ (2) (6) %

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(1) Nutrient tons represent the tons of nitrogen within the product tons.

First Quarter of 2020 Compared to First Quarter of 2019

Net sales in our Other segment increase d by $2 million , or 2% , to $90 million in the first quarter of 2020 from $88 million in the first quarter of 2019 due to a 15% increase in sales volume, partially offset by an 11% decrease in average selling prices.

The increase in sales volume is due primarily to an increase in DEF and NPK sales volumes.

Second Quarter of 2020 Compared to Second Quarter of 2019

Net sales in our Other segment decreased by $16 million, or 16%, to $85 million in the second quarter of 2020 from $101 million in the second quarter of 2019 due to a 7% decrease in average selling prices and a 10% decrease in sales volume.

The decrease in average selling prices is due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

The decrease in sales volume is due primarily to a decrease in demand for urea liquor, DEF and nitric acid as a result of the COVID-19 pandemic.

Cost of Sales.

Cost of sales in our Other segment averaged $122 per ton in the first quarter of 2020 , an 18% decrease from $148 per ton in the comparable period of 2019 , due primarily to lower realized natural gas costs.

Cost of sales in our Other segment averaged $125 per ton in the second quarter of 2020, an 8% decrease from $136 per ton in the second quarter of 2019, due primarily to lower realized natural gas costs.

Gross Margin .

Gross margin in our Other segment increase d by $6 million to $16 million in the first quarter of 2020 from $10 million in the first quarter of 2019 , and our gross margin percentage increased to 17.8% in the first quarter of 2020 compared to 11.4% in the first quarter of 2019 .

The increase in gross margin was due to a decrease in realized natural gas costs, which increased gross margin by $7 million, a 15% increase in sales volume, which increased gross margin by $4 million, and a $6 million net decrease in other manufacturing and distribution costs.

These factors were partially offset by an 11% decrease in average selling prices, which reduced gross margin by $11 million.

Gross margin in our Other segment decreased by $2 million, or 10%, to $18 million in the second quarter of 2020 from $20 million in the second quarter of 2019, and our gross margin percentage was 21.2% in the second quarter of 2020 compared to 19.8% in the second quarter of 2019.

The decrease in gross margin was due to a 7% decrease in average selling prices, which reduced gross margin by $6 million, and a 10% decrease in sales volume, which decreased gross

CF INDUSTRIES HOLDINGS, INC.

margin by $4 million.

These factors were partially offset by a decrease in realized natural gas costs, which increased gross margin by $5 million, and a $3 million net decrease in other manufacturing and distribution costs.

Six Months Ended June 30, 2020 Compared to Six Months Ended June 30, 2019

Net sales in our Other segment decreased by $14 million, or 7%, to $175 million in the six months ended June 30, 2020 from $189 million in the six months ended June 30, 2019 due to a 9% decrease in average selling prices, partially offset by a 2% increase in sales volume.

The decrease in average selling prices is due primarily to increased global nitrogen supply availability as lower global energy costs drove higher global operating rates.

The increase in sales volume was due primarily to higher NPK and DEF sales volumes, partially offset by lower nitric acid sales volume.

Cost of Sales.

Cost of sales in our Other segment averaged $123 per ton in the six months ended June 30, 2020, a 13% decrease from $141 per ton in the six months ended June 30, 2019 due primarily to lower realized natural gas costs.

Gross Margin .

Gross margin in our Other segment increased by $4 million, or 13%, to $34 million in the six months ended June 30, 2020 from $30 million in the six months ended June 30, 2019, and our gross margin percentage was 19.4% in the six months ended June 30, 2020 compared to 15.9% in the six months ended June 30, 2019.

The increase in gross margin was due to a decrease in realized natural gas costs, which increased gross margin by $12 million, and a $9 million net decrease in other manufacturing and distribution costs.

These factors were partially offset by a 9% decrease in average selling prices, which reduced gross margin by $17 million.

CF INDUSTRIES HOLDINGS, INC.

Liquidity and Capital Resources

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In April 2020, due to confidence in the functioning of the credit markets and strong nitrogen fertilizer business conditions, we repaid the $500 million of borrowings that were outstanding under our revolving credit agreement as of March 31, 2020.

As of March 31, 2020 , our cash and cash equivalents balance was $753 million , an increase of $466 million from $287 million at December 31, 2019 , primarily driven by the $500 million of borrowings under our revolving credit agreement.

At March 31, 2020 , we were in compliance with all applicable covenant requirements under our revolving credit agreement, senior notes and senior secured notes.

Upon our repayment of the $500 million of revolving credit agreement borrowings in April 2020, unused borrowing capacity under our revolving credit agreement was $750 million .

As of June 30, 2020, our cash and cash equivalents balance was $563 million, an increase of $276 million from $287 million at December 31, 2019.

At June 30, 2020, we were in compliance with all applicable covenant requirements under our revolving credit agreement, senior notes and senior secured notes, and unused borrowing capacity under our revolving credit agreement was $750 million.

Cash Equivalents

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The manner, timing and amount of repurchases will be determined by our management based on the evaluation of market conditions, stock price, and other factors.

During the three months ended March 31, 2020 , we repurchased approximately 2.6 million shares for $100 million .

At March 31, 2020 , we held 2,813,869 shares of treasury stock.

During the first quarter of 2020, we repurchased approximately 2.6 million shares of CF Holdings common stock for $100 million.

No shares were repurchased in the three months ended June 30, 2020.

In the second quarter of 2020, we retired the approximately 2.6 million shares that were repurchased during the first quarter of 2020 under the 2019 Share Repurchase Program.

CF INDUSTRIES HOLDINGS, INC.

The following table summarizes the share repurchases under the 2019 Share Repurchase Program.

Shares Amounts

(in millions)

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First quarter 2.6 100

Shares repurchased as of March 31, 2020

Second quarter — —

Total shares repurchased in 2020 2.6 100

Shares repurchased as of June 30, 2020 10.2 $ 437

Capital Spending

We make capital expenditures to sustain our asset base, increase our capacity, improve plant efficiency and comply with various environmental, health and safety requirements.

Capital expenditures totaled $67 million in the first three months of 2020 compared to $80 million in the first three months of 2019 .

In light of the uncertainty caused by the COVID-19 pandemic, including uncertainty regarding the duration of government actions implemented to slow the spread of the virus and the safety precautions we have implemented to protect the health and well-being of all our employees, we are planning for a range of scenarios and taking actions to defer certain non-essential capital activity.

As a result, we currently anticipate that capital expenditures for the full year of 2020 will be in the range of $350 to $400 million, which is lower than the $400 to $450 million previously expected.

Capital expenditures totaled $119 million in the first six months of 2020 compared to $154 million in the first six months of 2019.

In light of the uncertainty caused by the COVID-19 pandemic, including uncertainty regarding the duration of government actions implemented to slow the spread of the virus and the safety precautions we have implemented to protect the health and well-being of all our employees, we continue to plan for a range of scenarios and have taken actions to defer certain non-essential capital activity.

As a result, we currently anticipate that capital expenditures for the full year of 2020 will be approximately $350 million.

Planned capital expenditures are generally subject to change due to delays in regulatory approvals or permitting, unanticipated increases in cost, changes in scope and completion time, performance of third parties, delays in the receipt of equipment, adverse weather, defects in materials and workmanship, labor or material shortages, transportation constraints, acceleration or delays in the timing of the work and other unforeseen difficulties.

All of these factors may also be influenced or exacerbated by the direct or indirect impacts of the COVID-19 pandemic.

Terra Amended Tax Returns

The Company completed the acquisition of Terra Industries Inc.

(Terra) in April 2010.

After the acquisition, the Company determined that the manner in which Terra reported the repatriation of cash from foreign affiliates to its U.S.

parent for U.S.

and foreign income tax purposes was not appropriate.

As a result, in 2012 the Company amended certain tax returns, including Terra’s income and withholding tax returns, back to 1999 (the Amended Tax Returns) and paid additional income and withholding taxes, and related interest and penalties.

In early 2013, the Internal Revenue Service (IRS) commenced an examination of the U.S.

tax aspects of the Amended Tax Returns.

In early 2019, the IRS completed its examination of the Amended Tax Returns and submitted its audit reports and related refund claims to the Joint Committee on Taxation of the U.S.

Congress (the Joint Committee).

For purposes of its review, the Joint Committee separated the IRS audit reports into two separate matters:

(i) an income tax related matter and (ii) a withholding tax matter.

In December 2019, we received notification that the Joint Committee had approved the IRS audit reports and related income tax refunds relating to the income tax related matter.

Therefore, we expected to receive cash refunds in 2020.

In the second quarter of 2020, we received notification that the Joint Committee approved the IRS audit report and related withholding tax refunds relating to the withholding tax matter and we received IRS Notices indicating the amount of tax and interest to be refunded and received with respect to the withholding tax matter and the income tax matter.

As a result of these events, in the second quarter of 2020, we recognized $16 million of interest income and $16 million of income tax benefit, which consisted of the following:

• additional interest income of $16 million ($13 million, net of tax) related to both the income tax matter and the withholding tax matter,

CF INDUSTRIES HOLDINGS, INC.

• a reduction in our liabilities for unrecognized tax benefits of $12 million with a corresponding reduction in income tax expense related to the withholding tax matter, and

• an additional income tax benefit of $7 million related to the income tax matter.

We received income tax refunds, including interest, of $108 million relating to these matters in the second quarter of 2020, consisting of $68 million related to the income tax matter and $40 million related to the withholding tax matter.

In July 2020, we received an additional $2 million related to the withholding tax matter, which finalizes these matters with the IRS.

As a result of the finalization of the income tax matter and the withholding tax matter, all U.S.

federal tax years commencing before January 1, 2012 are now closed.

Revolving Credit Agreement

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Borrowings under the Revolving Credit Agreement may be denominated in U.S.

dollars, Canadian dollars, euro and British pounds, and bear interest at a per annum rate equal to an applicable eurocurrency rate or base rate plus, in either case, a specified margin, and the borrowers are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees.

dollars, Canadian dollars, euros and British pounds, and bear interest at a per annum rate equal to an applicable eurocurrency rate or base rate plus, in either case, a specified margin, and the borrowers are required to pay an undrawn commitment fee on the undrawn portion of the commitments under the Revolving Credit Agreement and customary letter of credit fees.

The specified margin and the amount of the commitment fee depend on CF Holdings’ credit rating at the time.

The guarantors under the Revolving Credit Agreement are currently comprised of CF Holdings and CF Holdings’ wholly owned subsidiaries CF Industries Enterprises, LLC (CFE), CF Industries Sales, LLC (CFS), CF USA Holdings, LLC (CF USA) and CF Industries Distribution Facilities, LLC (CFIDF).

CF INDUSTRIES HOLDINGS, INC.

In March 2020, we borrowed $500 million under the Revolving Credit Agreement to ensure we maintained ample financial flexibility in light of the uncertainty in the global markets, including the financial credit markets, caused by the COVID-19 pandemic.

As of March 31, 2020 , we had unused borrowing capacity under the Revolving Credit Agreement of $250 million , as there were outstanding borrowings of $500 million and no outstanding letters of credit under our $750 million revolving credit facility.

There were no borrowings outstanding under the Revolving Credit Agreement as of December 31, 2019 .

Maximum borrowings under the Revolving Credit Agreement during the three months ended March 31, 2020 were $500 million .

The weighted-average annual interest rate of borrowings under the Revolving Credit Agreement during the three months ended March 31, 2020 was 2.05% .

There were no borrowings under the Prior Credit Agreement during the three months ended March 31, 2019 .

In April 2020, due to confidence in the functioning of the credit markets and strong nitrogen fertilizer business conditions, we repaid the $500 million of borrowings that were outstanding under the Revolving Credit Agreement as of March 31, 2020, which returned our unused borrowing capacity under the Revolving Credit Agreement to $750 million.

As of June 30, 2020, we had unused borrowing capacity under the Revolving Credit Agreement of $750 million and no outstanding letters of credit.

There were no borrowings outstanding under the Revolving Credit Agreement as of June 30, 2020 or December 31, 2019.

Maximum borrowings under the Revolving Credit Agreement during the six months ended June 30, 2020 were $500 million.

The weighted-average annual interest rate of borrowings under the Revolving Credit Agreement during the six months ended June 30, 2020 was 2.05%.

There were no borrowings under the Prior Credit Agreement during the six months ended June 30, 2019.

The Revolving Credit Agreement contains representations and warranties and affirmative and negative covenants, including financial covenants.

As of March 31, 2020 , we were in compliance with all covenants under the Revolving Credit Agreement.

As of June 30, 2020, we were in compliance with all covenants under the Revolving Credit Agreement.

Letters of Credit

In addition to the letter of credit capacity under the Revolving Credit Agreement, as described above, we have also entered into a bilateral agreement providing for up to $145 million of letters of credit.

As of March 31, 2020 , approximately $124 million of letters of credit were outstanding under this agreement.

Long-term debt presented on our consolidated balance sheets as of March 31, 2020 and December 31, 2019 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate

March 31, 2020

December 31, 2019

Carrying Amount (1)

As of June 30, 2020, approximately $126 million of letters of credit were outstanding under this agreement.

CF INDUSTRIES HOLDINGS, INC.

Long-term debt presented on our consolidated balance sheets as of June 30, 2020 and December 31, 2019 consisted of the following debt securities issued by CF Industries:

Effective Interest Rate June 30, 2020 December 31, 2019

Principal Carrying Amount (1)

(in millions)

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(1) Carrying amount is net of unamortized debt discount and deferred debt issuance costs.

Total unamortized debt discount was $10 million as of both March 31, 2020 and December 31, 2019 , and total deferred debt issuance costs were $32 million and $33 million as of March 31, 2020 and December 31, 2019 , respectively.

Total unamortized debt discount was $9 million and $10 million as of June 30, 2020 and December 31, 2019, respectively, and total deferred debt issuance costs were $32 million and $33 million as of June 30, 2020 and December 31, 2019, respectively.

Public Senior Notes

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Under the indentures (including the applicable supplemental indentures) governing our senior notes due 2023, 2034, 2043 and 2044 identified in the table above (the Public Senior Notes), each series of Public Senior Notes is guaranteed by CF Holdings.

CF INDUSTRIES HOLDINGS, INC.

Interest on the Public Senior Notes is payable semiannually, and the Public Senior Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

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As a result, we recognized a loss on debt extinguishment of $9 million, primarily consisting of premiums paid for the early retirement of debt for the 2021 Notes.

Under the terms of the applicable indenture, the 2021 Notes and the 4.500% senior secured notes due 2026 (the 2026 Notes, and together with the 2021 Notes, the Senior Secured Notes) of each series are guaranteed on a senior secured basis, jointly and severally, by CF Holdings and each current and future domestic subsidiary of CF Holdings (other than CF Industries) that from time to time is a borrower, or guarantees indebtedness, under the Revolving Credit Agreement.

Under the terms of the applicable indenture, the 2021 Notes and the 4.500% senior secured notes due 2026 (the 2026 Notes, and together with the 2021 Notes, the Senior Secured Notes) are guaranteed on a senior secured basis, jointly and severally, by CF Holdings and each current and future domestic subsidiary of CF Holdings (other than CF Industries) that from time to time is a borrower, or guarantees indebtedness, under the Revolving Credit Agreement.

The subsidiary guarantors of the Senior Secured Notes currently consist of CFE, CFS, CF USA and CFIDF.

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The obligations under the Revolving Credit Agreement, together with certain letter of credit, cash management, hedging and similar obligations and future pari passu secured indebtedness, are secured by the Collateral on a pari passu basis with the Senior Secured Notes.

The liens on the Collateral securing the obligations under the Senior Secured Notes of a series and the related guarantees will be automatically released and the covenant under the applicable indenture limiting dispositions of Collateral will no longer apply if CF Holdings has an investment grade corporate rating, with a stable or better outlook, from two of three selected ratings agencies and there is no default or event of default under the applicable indenture.

The liens on the Collateral securing the obligations under the

CF INDUSTRIES HOLDINGS, INC.

Senior Secured Notes of a series and the related guarantees will be automatically released and the covenant under the applicable indenture limiting dispositions of Collateral will no longer apply if CF Holdings has an investment grade corporate rating, with a stable or better outlook, from two of three selected ratings agencies and there is no default or event of default under the applicable indenture.

Interest on the Senior Secured Notes is payable semiannually, and the Senior Secured Notes are redeemable at our option, in whole at any time or in part from time to time, at specified make-whole redemption prices.

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Any cash payments received in advance from customers in connection with forward sales contracts are reflected on our consolidated balance sheets as a current liability until control transfers and revenue is recognized.

As of March 31, 2020 and December 31, 2019 , we had $239 million and $119 million , respectively, in customer advances on our consolidated balance sheets.

As of June 30, 2020 and December 31, 2019, we had $8 million and $119 million, respectively, in customer advances on our consolidated balance sheets.

While customer advances are generally a significant source of liquidity, the level of forward sales contracts is affected by many factors including current market conditions and our customers’ outlook of future market fundamentals.

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Such a delay in scheduled shipment or termination of a forward sales contract due to a customer’s inability or unwillingness to perform may negatively impact our reported sales.

CF INDUSTRIES HOLDINGS, INC.

Derivative Financial Instruments

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Volatility in reported quarterly earnings can result from the unrealized mark-to-market adjustments in the value of the derivatives.

As of March 31, 2020 , our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 9.2 million MMBtus.

As of June 30, 2020, our open natural gas derivative contracts consisted of natural gas fixed price swaps and basis swaps for 8.9 million MMBtus.

As of December 31, 2019, our open natural gas derivative contracts consisted of natural gas fixed price swaps, basis swaps and options for 41.1 million MMBtus.

Defined Benefit Pension Plans

We contributed $6 million to our pension plans during the three months ended March 31, 2020 .

We contributed $13 million to our pension plans during the six months ended June 30, 2020.

Over the remainder of 2020, we expect to contribute an additional $28 million to our pension plans, or a total of approximately $41 million for the full year 2020.

Distribution to Noncontrolling Interest in CFN

On January 31, 2020 , the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended December 31, 2019 in accordance with CFN’s limited liability company agreement.

On January 31, 2020 , CFN distributed $88 million to CHS for the distribution period ended December 31, 2019.

The estimate of the partnership distribution earned by CHS, but not yet declared, for the first quarter of 2020 is approximately $40 million .

On July 31, 2020, the CFN Board of Managers approved semi-annual distribution payments for the distribution period ended June 30, 2020 in accordance with CFN’s limited liability company agreement.

On July 31, 2020, CFN distributed $86 million to CHS for the distribution period ended June 30, 2020.

Operating Activities

Net cash provided by operating activities during the first three months of 2020 was $292 million , a decrease of $14 million as compared to $306 million in the first three months of 2019 .

This decrease was due primarily to a decrease in cash earnings generated by the business and higher cash tax payments, partially offset by changes in working capital.

Cash earnings from the business decreased due primarily to the decrease in net earnings of $27 million to $91 million in the first three months of 2020 from $118 million in the first three months of 2019 .

The changes in working capital primarily include lower amounts of cash used for working capital purposes in the first quarter of 2020 as compared to the first quarter of 2019 in inventory, accounts receivable, accounts payable and accrued liabilities, partially offset by lower amounts of cash received from customers as customer advances between the periods.

Net cash provided by operating activities during the first six months of 2020 was $718 million, an increase of $25 million compared to $693 million in the first six months of 2019.

The increase in cash flow from operations was impacted by favorable changes in net working capital, with increases across all major categories of working capital, partially offset by lower net

CF INDUSTRIES HOLDINGS, INC.

During the first six months of 2020, net changes in working capital contributed $77 million to cash flow from operations, while in the first six months of 2019 net changes in working capital reduced net cash flow from operations by $244 million.

As further described under Terra Amended Tax Returns above, we received income tax refunds, including interest, of $108 million in the first six months of 2020 related to the finalization of the amended U.S.

tax returns related to Terra.

These refunds offset cash tax payments and contributed to the net increase in working capital in the first six months of 2020.

We expect to be a domestic net cash tax payer going forward.

Investing Activities

Net cash used in investing activities was $65 million in the first three months of 2020 as compared to $75 million in the first three months of 2019 .

During the first three months of 2020 , capital expenditures totaled $67 million compared to $80 million in the first three months of 2019 .

Net cash used in investing activities was $117 million in the first six months of 2020 as compared to $91 million in the first six months of 2019.

Net cash used in investing activities in the first six months of 2019 included proceeds of $55 million related to the sale of our Pine Bend facility.

During the first six months of 2020, capital expenditures totaled $119 million compared to $154 million in the first six months of 2019.

The decrease in capital expenditures in 2020 was due primarily to actions taken to defer certain non-essential capital project activity as a result of the COVID-19 pandemic and an increase in maintenance activity.

Financing Activities

Net cash provided by financing activities was $242 million in the first three months of 2020 compared to net cash used in financing activities of $242 million in the same period of 2019 .

The first three months of 2020 included $500 million of borrowings under the Revolving Credit Agreement.

Dividends paid on common stock during the three months ended March 31, 2020 and 2019 were $65 million and $67 million , respectively.

In the first three months of 2020 , we spent $100 million to repurchase shares of common stock compared to $87 million in the comparable period of 2019, which included approximately $33 million related to shares repurchased in late 2018 that were paid for in 2019.

Distributions to noncontrolling interest totaled $88 million in the first three months of 2020 as compared to $86 million in the first three months of 2019 .

Net cash used in financing activities was $323 million in the first six months of 2020 compared to net cash used in financing activities of $426 million in the same period of 2019.

Dividends paid on common stock during the six months ended June 30, 2020 and 2019 were $129 million and $133 million, respectively.

In the first six months of 2020, we spent $100 million to repurchase shares of common stock compared to $209 million in the first six months of 2019, which included approximately $33 million related to shares repurchased in late 2018 that were paid for in 2019.

Distributions to noncontrolling interest totaled $88 million in the first six months of 2020 as compared to $86 million in the first six months of 2019.

Contractual Obligations

As of March 31, 2020 , except for the $500 million of borrowings under the Revolving Credit Agreement, there have been no material changes outside the ordinary course of business to our contractual obligations as described in our 2019 Annual Report on Form 10-K filed with the SEC on February 24, 2020 .

CF INDUSTRIES HOLDINGS, INC.

During the six months ended June 30, 2020, except for the borrowing and repayment of $500 million under the Revolving Credit Agreement, there were no material changes outside the ordinary course of business to our contractual obligations described under the heading “Contractual Obligations” in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 24, 2020.

Off-Balance Sheet Arrangements

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Critical Accounting Policies and Estimates

There were no changes to our significant accounting policies or estimates during the first three months of 2020 .

There were no changes to our significant accounting policies or estimates during the first six months of 2020.

Recent Accounting Pronouncements

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Additionally, we do not undertake any responsibility to provide updates regarding the occurrence of any unanticipated events which may cause actual results to differ from those expressed or implied by the forward-looking statements contained in this document.

Important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” in Item 1A in our 2019 Annual Report on Form 10-K filed with the SEC on February 24, 2020 and Part II, Item 1A of this Quarterly Report on Form 10-Q.

Important factors that could cause actual results to differ materially from our expectations are disclosed under “Risk Factors” in Item 1A in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 24, 2020, and Part II, Item 1A of this Quarterly Report on Form 10-Q.

Such factors include, among others:

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis